Jury Returns Unanimous Defense Verdict in Legal Malpractice Zoom Trial

UPDATE: Congratulations to Haight partners Krsto Mijanovic and Steven Scordalakis who were recognized in the Daily Journal’s February 15, 2023 “Top Verdicts of 2022” Special Report on the largest and most significant verdicts and appellate reversals in California in 2022. [Read about the Verdict in Vukelich v. Palmer, et al. here]

On August 24, 2022, Krsto Mijanovic and Steven Scordalakis obtained a unanimous defense verdict in a legal malpractice action filed in Alameda County Superior Court. Plaintiff Karla Vukelich filed suit against her former attorneys, Defendants Thomas Palmer and Wendel, Rosen, Black & Dean LLP, for professional negligence and breach of fiduciary duty. She alleged that Defendants committed malpractice in connection with Plaintiff’s sale of $3 million in shares to a privately-held company (Color Spot), which Plaintiff’s deceased husband Michael Vukelich had co-founded.

Plaintiff claimed Defendants erred because Color Spot should have paid cash for her stock in 2011, rather than issue a promissory note for $3 million. Plaintiff alleged, in the alternative, that the promissory note should have included a payment schedule and security, and that the promissory note should have included terms that ensured that she would receive payment in full in 2014 as she expected. Finally, Plaintiff claimed that Defendants should have counseled Plaintiff to file suit against the company after it refused to pay off the promissory note in 2014 and failed to disclose a conflict of interest, reasoning that Defendants then realized they had erred in negotiating the stock repurchase in 2011. In May 2018, Color Spot – which had been impacted by the California drought and flooding in Texas – filed for bankruptcy. The bankruptcy wiped out Plaintiff’s promissory note, which had an outstanding principal balance of $2.65 million, because she was an unsecured creditor. In January 2019, Plaintiff sued Defendants.

With prejudgment interest, Plaintiff sought damages of approximately $4 million. In June 2020, Plaintiff issued a statutory offer for $3.1 million. In July 2020, Defendants issued a statutory offer for $100,000. During trial, Plaintiff’s lowest demand was $2.35 million, and Defendants highest offer was $750,000.

Prior to trial, Defendants filed a motion for summary judgment on a statute of limitations defense. The court denied the motion, finding triable issues as to when Plaintiff discovered Defendants’ alleged errors, when Plaintiff sustained “actual injury,” and whether Defendants continued to represent Plaintiff after 2014. The trial was bifurcated, which allowed Defendants to try their statute of limitations defense in the first phase of the trial. After a four-week trial, the jury deliberated for three hours and returned a unanimous defense verdict, finding that Plaintiff’s claim was barred by the one-year statute of limitations.

[Click Here to Read More About This Verdict in The Daily Journal Verdicts & Settlements]

August 24, 2022