Degenarro v. Geiger & Merritt
The basic facts of this case are simple: Client is represented by law firm in a civil case. Client, unhappy with the representation received, fires the law firm and hires a new firm. The old law firm sues client for unpaid legal fees. Client and the old law firm execute a settlement agreement. Client then serves on the old law firm the malpractice lawsuit it had filed before the settlement agreement was executed.
The question before us on appeal is whether client’s failure to file the malpractice claim as a compulsory cross-complaint, rather than as a separate lawsuit, requires its dismissal. We conclude, based on the record before it, the trial court correctly sustained the old law firm’s demurrer because the malpractice claim was a compulsory cross‑complaint.
However, on appeal, client asks for leave to amend the complaint to allege the compulsory cross-complaint rule is inapplicable because of the terms of the settlement agreement. Given the liberal rules of granting leave to amend, client should be given an additional opportunity to try to state a cause of action and explain in a pleading why the compulsory cross-complaint rule does not apply as a result of the settlement agreement.
We therefore reverse the judgment and remand with directions to the trial court to sustain the demurrer with leave to amend.
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