Kessler v. Gray

Citations: 77 Cal. App. 3d 284; 143 Cal. Rptr. 496; 1978 Cal. App. LEXIS 1212Docket: Civ. 50689

Court: California Court of Appeal; January 31, 1978; California; State Appellate Court

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Irving Kessler filed a lawsuit against attorney Dudley Gray for professional negligence after Gray failed to bring Kessler's cross-complaint against Milton Koomer and Joel Bressel to trial, resulting in its dismissal. Gray admitted negligence but argued against Kessler's recovery, claiming that Kessler would not have succeeded in the underlying lawsuit. A jury awarded Kessler $25,500 for damages he would have recovered. On appeal, Gray raised two points: (1) insufficient evidence regarding Koomer and Bressel's knowledge of a crucial fact necessary for establishing fraud, and (2) improper jury instructions that allowed for joint liability based on a sale of shares, potentially inflating the collectibility of the judgment. The court found any lack of substantial evidence to be invited error and deemed any instructional error to be harmless, thereby affirming the judgment. 

The background involves the Lido Hotel, encumbered by a deed of trust to Home Savings and Loan Association. In 1966, Edgar De Britto leased part of the hotel to WHAB VIII, owned by Koomer and Bressel. Following a default on the deed of trust, Koomer and Bressel sold WHAB VIII to Kessler without informing him of an impending foreclosure. Kessler later discovered financial troubles with the hotel and failed to make payments, leading to foreclosure and subsequent legal action from Koomer and Bressel against him for nonpayment.

Kessler filed a cross-complaint alleging fraud and misrepresentation by Koomer and Bressel. After Gray and Patrick Smith, acting as Kessler's counsel, failed to bring the case to trial within the required five years, the cross-complaint was dismissed for lack of prosecution. Kessler subsequently sued Gray for malpractice. During the trial, Gray admitted negligence but argued that Kessler suffered no damages, necessitating a reevaluation of Kessler's claims against Koomer and Bressel related to potential collectibility of any judgment. Kessler attempted to introduce testimony from Charles Buckner, a former employee, regarding Koomer's knowledge of impending foreclosure, but Gray's hearsay objection was upheld, preventing the testimony from being heard. The jury ruled in favor of Kessler, awarding $25,500 in damages. On appeal, Gray contended that there was insufficient evidence regarding Koomer's prior knowledge of foreclosure. However, under the doctrine of invited error, Gray could not challenge the evidentiary deficiencies resulting from his own objection to Buckner's testimony. The court noted that had the evidence been admitted, it would have been relevant and admissible as an admission by Koomer and indicative of his state of mind. The trial court's discretion to exclude evidence under Evidence Code section 352 was criticized for being improperly exercised, as the relevance of the evidence outweighed concerns of prejudice or confusion.

The trial court must exercise discretion under Evidence Code section 352 by balancing the probative value of evidence against potential prejudice, time consumption, and confusion. This involves assessing the evidence's relevance to key issues, its necessity for the proponent’s case, and the grounds for exclusion outlined in section 352. Stronger probative value increases the risk of exclusion due to prejudice or confusion. In this case, the Buckner testimony was critical in establishing Koomer's knowledge of an impending foreclosure, and no other evidence matched its significance. Thus, excluding it lacked a reasonable basis.

Regarding jury instructions, the trial court informed the jury that if one partner commits fraud within the partnership's scope, all partners are jointly liable. Gray contested the existence of a joint venture between Koomer and Bressel, claiming the instructions were erroneous. However, even if the instructions were flawed, the error was deemed harmless; it was unlikely to have affected the outcome since Koomer's assets could satisfy any judgment in favor of Kessler, and Koomer's knowledge was central to the case. The judgment is affirmed.