Camenisch v. Superior Court
52 Cal. Rptr. 2d 450, 44 Cal. App. 4th 1689 (1996)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A client cannot recover damages for emotional distress caused by an attorney's professional negligence when the malpractice results solely in economic loss. This rule applies in both litigation and non-litigation contexts, such as tax and estate planning.
Facts:
- In 1983, Robert Burns hired attorney Shela Camenisch to prepare trust and estate documents, including a life insurance trust, with the stated goal of ensuring the policy's proceeds would not be part of his taxable estate.
- Camenisch prepared the trust and assured Burns that the proceeds of the life insurance policy would not be taxed.
- Within two years, Burns's financial advisors informed him that the trust was incorrectly formed and would result in estate taxes, a conclusion Camenisch disputed.
- In 1993, after two other attorneys reviewed the trust and recommended changes, Camenisch made revisions but maintained the trust was effective.
- Burns eventually substituted Camenisch with another attorney and, in June 1995, transferred ownership of the life insurance policy to his daughters to correct the alleged defects.
- As a result of the transfer, Burns's estate faced an immediate $25,000 gift tax liability and a potential future estate tax liability of approximately $525,000 if he died within three years.
- Upon learning of these actual and potential tax liabilities, Burns suffered severe emotional distress, including anxiety, grief, and loss of sleep, due to worry about his family's financial security.
Procedural Posture:
- Robert Burns and his family filed a complaint in superior court against their former attorney, Shela Camenisch, alleging professional malpractice and negligent infliction of emotional distress.
- Camenisch filed a demurrer to the emotional distress cause of action and a motion to strike specific damage claims.
- The trial court overruled the demurrer and denied the motion to strike, allowing the claim for emotional distress damages to proceed.
- Camenisch petitioned the intermediate appellate court for a writ of mandate to compel the trial court to strike the request for emotional distress damages.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a client have a cognizable claim for emotional distress damages against an attorney whose alleged professional negligence in an estate planning matter resulted only in economic harm, specifically unexpected tax liability?
Opinions:
Majority - Corrigan, Acting P. J.
No. A client cannot recover emotional distress damages for attorney malpractice when the injury is purely economic. The court held that the general rule barring such damages applies equally to malpractice in a non-litigation context, like tax planning, as it does to litigation-related negligence. The court reasoned that the primary interest protected by the duty to avoid malpractice is the client's economic interest, not their emotional tranquility. Following the analysis in Merenda v. Superior Court, the court found that serious emotional distress is not a foreseeable or inevitable consequence of economic loss. Furthermore, public policy considerations, such as preventing a substantial increase in the cost of legal services, support the conclusion that compensating for the economic loss alone is a sufficient remedy and deterrent.
Analysis:
This decision extends the rule from Merenda v. Superior Court, clarifying that the bar on emotional distress damages in legal malpractice cases involving only economic loss is not limited to the litigation context. It firmly establishes that transactional work, such as estate planning, is governed by the same principle. The court's focus on the 'nature of the interest harmed' (economic vs. a non-economic interest like liberty) provides a clear framework for future cases. This ruling reinforces a significant limitation on damages in professional negligence claims and impacts how such cases are valued and litigated, discouraging claims for emotional distress where the underlying harm is purely monetary.
