Freedman v. Brutzkus
182 Cal. App. 4th 1065, 2010 Cal. App. LEXIS 320, 106 Cal. Rptr. 3d 371 (2010)
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Rule of Law:
An attorney's signature on a document under the recital 'Approved as to Form and Content' serves as advice to the attorney's own client and does not, by itself, constitute an actionable representation to an opposing party or their counsel.
Facts:
- Gary A. Freedman, an attorney, represented Teddi of California, Inc. (Teddi) in negotiating a trademark license agreement with Carol Anderson, Inc. (CAI).
- Freedman had previously provided legal services to CAI, and the final agreement contained a clause stating Freedman represented only Teddi and a waiver of any conflict of interest by CAI.
- Mark Brutzkus, an attorney, was retained to represent CAI in the negotiations.
- The final agreement contained an integration clause stating that no promises or statements outside the written agreement were valid.
- Both Freedman and Brutzkus signed the final agreement under the legend 'Approved as to Form and Content.'
- Unbeknownst to Freedman, CAI's principal had told Brutzkus that CAI was relying on its 'long standing professional relationship' with Freedman in the transaction.
- Brutzkus knew about his client's undisclosed reliance on Freedman but did not disclose this fact to Freedman.
- A dispute later arose between Teddi and CAI regarding their obligations under the agreement.
Procedural Posture:
- After the agreement was signed, CAI sued Teddi, which was then forced into bankruptcy.
- CAI subsequently sued Freedman, claiming he had represented them in the transaction.
- Freedman’s malpractice insurance carrier settled the lawsuit with CAI.
- Freedman then sued Brutzkus and his law firm in a California trial court, alleging fraud and misrepresentation.
- The trial court sustained Brutzkus's demurrer (a motion to dismiss for failure to state a claim) without leave to amend.
- The trial court entered a final judgment in favor of Brutzkus.
- Freedman, as appellant, appealed the judgment to the California Court of Appeal.
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Issue:
Does an attorney's signature on an agreement under the legend 'Approved as to Form and Content' constitute an actionable representation to the opposing party's attorney about the accuracy of the agreement's substantive terms?
Opinions:
Majority - Epstein, P. J.
No. An attorney's signature approving an agreement 'as to form and content' is not an actionable representation to opposing counsel. The court reasoned that this common recital signifies that the attorney has advised their own client that the document is in the proper form and accurately embodies the deal made between the parties. It is a communication directed at the attorney's client, not a representation or legal opinion made to the opposing party. Holding otherwise would upend a common legal practice and interfere with an attorney's absolute duty of loyalty to their own client, as it would imply the attorney is making representations on behalf of the opposing side, which is impermissible.
Analysis:
This decision establishes a clear and protective rule regarding the common legal practice of signing documents 'approved as to form and content.' It clarifies that this phrase does not create a duty or a representation to opposing counsel, thereby insulating attorneys from fraud claims based solely on this recital. The ruling reinforces the adversarial nature of legal negotiations, emphasizing that an attorney's duty of loyalty is strictly to their own client. This precedent significantly limits the ability of one attorney to sue another for misrepresentation based on standard approval language in a contract.
