FBBC wins at Court of Appeals, arbitration agreement declared unenforceable
In a hotly contested malpractice case, where FBBC’s clients suffered $20,000,000 in damages from the transactional representation provided by their former law firm, FBBC had its arguments tested—and validated–by the California Court of Appeals. FBBC’s clients were a family who had been represented for decades by a prominent and prestigious large law firm. During the real estate boom, the law firm advised the clients to structure a proposed sale of large multi-family residential property in a manner that was supposed to protect the clients’ interest whether the boom continued, or whether a bust occurred. When the clients attempted to enforce the deal, the proposed purchasers sued the clients in a class action.
When the clients were forced to settle the class action (after losing on the liability phase of the trial), they had to give up not only their property, but also became liable for millions of dollars in damages to the purchasers. In response to FBBC filing suit against the former law firm, the former law firm contended that an arbitration provision of a new fee agreement applied retroactively to all prior representation, including the transactional representation from over five years prior. On an expedited briefing scheduled, FBBC convinced the trial court that the former law firm was wrong. The former law firm appealed. In a unanimous opinion by Justice Gilbert, the Court of Appeals agreed with FBBC’s arguments, finding that the defendant law firm could not enforce the arbitration agreement retroactively. (Click here to read the Court of Appeals decision.)