Viner v. Sweet

70 P.3d 1046 (2003)


(We briefed the entire case) Michael Viner and his wife, Deborah Raffin Viner (Ps), founded Dove Audio, Inc. (Dove). The company produced audio versions of books read by the authors or by celebrities, and it did television and movie projects. Dove went public by issuing stock at $10 a share. P discussed with longtime friend David Povich, a partner in defendant law firm Williams & Connolly. Norton Herrick proposed buying Ps' entire interest in Dove. Povich assigned the matter to his partner, D, a corporate transactional attorney. D was not a member of the California Bar and was not familiar with California law. D learned that under Ps' employment agreements with Dove, the latter owed Ps a substantial amount of unpaid dividends on their preferred stock. D also learned that Ps wanted to preserve their right to engage in the television and movie businesses. The deal was not consummated. Media Equities International (MEI) approached Ps. Ps and MEI entered into an agreement under which MEI was to invest $4 million, and Ps $2 million, to buy Dove stock. Disputes arose, and the parties to the agreement each threatened litigation. MEI and Ps, without D's involvement, agreed that MEI would buy Ps' stock in Dove and Ps would terminate their employment with Dove. D got involved and negotiated the final agreement. The deal consisted of a securities purchase agreement and an employment termination agreement. MEI agreed to buy a significant portion of the Ps' stock for more than $3 million. Ps' employment with Dove was terminated, mutual general releases were given, and Dove was to pay Ps a total of $1.5 million over five years in monthly payments, with Dove's series 'E' preferred stock to be held in escrow for distribution to Ps if Dove defaulted on the monthly payments to them. The employment termination agreement contained a noncompetition provision for a period of four years and a nonsolicitation provision for employees of Dove. D led Ps to believe that the employment termination agreement gave them three years of monthly payments by Dove, retained the indemnity protection they had with Dove and provided credit for work done before their departure from Dove. P also thought that they could use their celebrity contacts for any work that did not compete with Dove's audiobook business and involvement in film and television productions, and that if Dove defaulted on the agreed-upon monthly payments to them, the noncompetition clauses would be voided. The contracts did not so provide. Ps brought a malpractice action against Ds. The jury found Ds liable on all seven claims of malpractice, awarding $13,291,532 in damages. The Court of Appeal reduced the damage award to $8,085,732 but otherwise affirmed the judgment. It was undisputed that Ps did not attempt to prove that without Ds' alleged negligence, MEI would have given them a better deal on the contract terms here in issue. D appealed.