Unreported / Non-Citable
Background
Robert Salazar and his companies sued Wood Smith Henning & Berman LLP and attorneys Alicia Kennon and Kristin Smith over their work settling an employment action brought by former employee Rodrigo Tovar. While that case was pending, Tovar’s attorney, Brian Whelan, made public statements connecting Salazar to firebombing and witness-tampering allegations. Salazar separately sued Whelan and his firm for defamation. An appellate court later held that Whelan’s statements were protected activity for purposes of the first anti-SLAPP prong, but Salazar voluntarily dismissed the defamation action with prejudice before the trial court reconsidered the second prong.
Salazar alleged that WSHB negligently drafted the Tovar settlement so that it released Whelan from the defamation claims despite an agreement to preserve them. The written agreement broadly released the parties and listed attorneys among the released persons, but other language referred to claims arising from Tovar’s employment. Its confidentiality provision also preserved Whelan’s ability to defend the defamation suit. WSHB moved for summary judgment, arguing that the release did not cover Whelan and, alternatively, that Salazar could not prove causation or damages. The trial court found no intended third-party beneficiary relationship, entered judgment for WSHB on October 1, 2024, and Salazar appealed.
The Court’s Holding
The Second District Court of Appeal, Division Four, affirmed. It treated causation as an element common to Salazar’s malpractice, fiduciary-duty, and good-faith-and-fair-dealing claims because each rested on allegedly negligent legal services. Salazar therefore had to show that, but for WSHB’s drafting, he would have obtained a better result. His theory depended on Whelan actually receiving an enforceable release. Because Whelan was not a settlement party, he could enforce the release only as an intended third-party beneficiary.
The court found the agreement at least ambiguous: its broad release language coexisted with employment-specific language and a provision protecting Whelan’s defense of the defamation case. The release alone consequently could not establish the contracting parties’ intent. WSHB supplied uncontradicted extrinsic evidence that the parties intended to settle only the employment dispute, including the May 2022 hearing statements and Salazar’s declaration that he understood the defamation claim was preserved. Salazar offered no competent contrary extrinsic evidence. Factual overlap between the two disputes and related discovery questions did not show an intent to benefit Whelan. With no conflicting extrinsic evidence, beneficiary status was a question of law, and summary judgment on causation was proper.
The court also rejected Salazar’s argument that the hearing should have been continued for Whelan’s deposition. Salazar never requested that continuance or connected his subpoena efforts to opposing summary judgment, so he made none of the required statutory showing. Finally, the court assumed without deciding that the trial court inadequately specified its reasons under section 437c, subdivision (g), but held any error harmless because independent review established the judgment’s validity. The summary-judgment order was affirmed and respondents were awarded appellate costs.
Key Takeaways
- A broadly worded release does not by itself prove that a nonparty attorney was an intended third-party beneficiary.
- When release language is ambiguous, a malpractice plaintiff relying on that release needs competent extrinsic evidence of the contracting parties’ intent to survive summary judgment.
- A party seeking more discovery to oppose summary judgment must request a continuance and support it with the required affidavit showing.
- A trial court’s failure to specify reasons for summary judgment does not require reversal when independent appellate review confirms that the judgment is valid.
Why It Matters
The decision links third-party-beneficiary doctrine directly to legal-malpractice causation: an allegedly overbroad release causes no actionable loss if the settling parties never intended the nonparty to enforce it. It also illustrates how hearing statements, negotiation evidence, and a client’s own declaration can resolve beneficiary intent as a matter of law when the opposing party supplies no contrary extrinsic evidence.
The court did not decide WSHB’s alternative arguments that the earlier oral settlement was independently enforceable or that the defamation action’s lack of merit defeated damages. It also left undecided whether the trial court actually violated the statutory requirement to specify reasons, resolving that issue through harmless-error review.