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Attorney’s entry into business transaction with client violated Rules of Professional Conduct and also amounted to undue influence.
Summary
2nd District California Court of Appeal, Division 4
Maynard Brittan retained attorney Jerome Janger for an easement action. The owner was willing to sell the property at issue for dismissal of the easement action. Janger, his friend Robert Goldman and Brittan formed an oral joint venture by which each would acquire a share in the property and contribute a share of the capital. Brittan was dissatisfied with the venture’s operating agreement. Brittan bought the property with other parties. Janger and Goldman sued Brittan. Brittan argued the agreement was void or voidable because Janger entered into a business transaction with his client, Brittan, without disclosure, advice and informed consent. The trial court found Janger violated Rule of Professional Conduct 3-300 and Probate Code Section 16004. It held the agreement was void.
Affirmed. When an attorney enters into a business transaction with a client, Rule 3-300 requires written full disclosure of fair and reasonable terms, written advice that the client seek independent counsel and client consent. Janger failed to provide full written disclosure of the oral joint venture. The agreement was not fair and reasonable because it placed Brittan in a vulnerable position. Brittan never gave written consent to its terms. Janger’s conduct violated Rule 3-300 and amounted to undue influence under Section 16004. Thus, the agreement is voidable, not void. Brittan was entitled to, and did void, the alleged oral agreement.
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