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Jordache Enterprises Inc. v. Brobeck7/30/1998
's pre-existing predicament-the attorneys' alleged omissions had diminished the client's right to its liability insurance benefits.
The loss or diminution of a right or remedy constitutes injury or damage. (Adams, supra, 11 Cal.4th at p. 590 (lead opn. of Arabian, J.).) Neither uncertainty of amount nor difficulty of proof renders that injury speculative or inchoate. (Ibid.) The coverage action settlement was not the first realization of injury from the alleged malpractice; the settlement simply resolved one alternative means to mitigate that injury. (See Foxborough v. Van Atta (1994) 26 Cal.App.4th 217, 226.) Accordingly, the undisputed facts established that the client sustained actual injury more than one year before it commenced this suit.
Factual and Procedural Background
Jordache Enterprises, Inc., and Avi, Joe, and Ralph Nakash (the Nakashes), retained the law firm of Brobeck, Phleger & Harrison (Brobeck) in 1984 to defend them in Georges Marciano et al. v. Joe Nakash et al. (the Marciano action), a lawsuit filed in Los Angeles Superior Court. The Marciano action involved several claims, including that Jordache was marketing "knockoffs" of Guess?, Inc., apparel. Two weeks after that action was filed in November 1984, Jordache contacted its insurance broker, Advocate Brokerage Corp. (Advocate Brokerage), and requested advice on insurance coverage for the action. Advocate Brokerage informed Jordache its insurance provided no coverage for that lawsuit. Neither Jordache nor Advocate Brokerage gave Jordache's insurers notice of the Marciano action.
Jordache did not request from Brobeck, and Brobeck did not offer, any advice concerning insurance coverage for the Marciano action. Brobeck did not ask about Jordache's insurance or otherwise investigate whether any potential for coverage might trigger an insurer's duty to defend the Marciano action.
In April 1987, Jones, Day, Reavis & Pogue replaced Brobeck as Jordache's counsel of record in the Marciano action. Its new counsel advised Jordache there was potential insurance coverage for that action. In August 1987, Jordache instructed its counsel to demand that its insurers defend the Marciano action and two related cases then pending in Delaware and Hong Kong. Counsel sent copies of the fifth amended complaint in the Marciano action and the Delaware and Hong Kong complaints to Advocate Brokerage and asked it to submit the claims to Jordache's insurers.
In December 1987, Jordache retained the law firm of Conkle & Olesten and gave it "exclusive authority" to make and prosecute claims concerning the Marciano action against Jordache's liability insurers. By December 1987, Jordache had discovered Brobeck's alleged negligence in not notifying or advising Jordache to notify its insurers of the Marciano action.
At the outset, Jordache and its new counsel discussed the predicament in which Jordache found itself because of Brobeck's omissions. A "big issue" in these early Discussions was the probability that the insurers would raise a late notice defense to Jordache's coverage claim. For instance, one of Jordache's liability insurance policies required Jordache to notify the insurer "whenever [Jordache] has information from which may reasonably conclude that an Occurrence covered . . . involved injuries or damages which, in the event that [Jordache] should be held liable is likely to involve policy . . . ."
More than three years after the Marciano action began, Conkle & Olesten formally tendered defense of the action directly to Jordache's liability insurance carriers. Soon after, in February 1988, Jordache sued its insurers, alleging they failed to prov
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