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| | Insurance Criminal Unsuccessfully Sues His Lawyer After Conviction. Fraudster Has No Loyalty
By Barry Zalma - December 6, 2011
Lawyers who represent insurance fraud perpetrators in criminal proceedings and do not win are not limited to a client who is a proven criminal. They must also defend themselves from allegations of malpractice by the fraud perpetrator since none admit they did anything wrong.
In Bahman Khodayari v. Charles Mashburn, No. B23
1779 (Cal.App. Dist.2 11/15/2011), Khodayari sued Charles Mashburn, his former criminal defense attorney in victim restitution and related probation violation proceedings, for legal malpractice and several other claims.
While represented by different counsel, Khodayari was convicted of four counts of misdemeanor grand theft and three counts of misdemeanor insurance fraud, placed on summary probation, and ordered to pay restitution. In the post-conviction proceedings in which respondent represented him, Khodayari was found in violation of probation for failing to cooperate with the financial evaluator in assessing his ability to pay restitution and for failing to pay restitution.
In his instant civil suit against Mashburn, Khodayri alleged that Mashburn’s inadequate representation caused Khodayri to be found in violation of probation. As a result, he was incarcerated longer than was necessary. Khodayri sought damages for emotional distress and lost income resulting from his incarceration.
The trial court sustained Mashburn’s demurrer to appellant’s complaint without leave to amend and dismissed the case.
The California Court of Appeal held that the policy rationale of the actual innocence requirement mandates that Khodayri show actual innocence of the probation violations allegedly resulting from respondent’s malpractice, and also obtain post-violation exoneration of those violations. Because appellant did not comply with these requirements, and has not shown that he can, the demurrer was properly sustained without leave to amend.
In August 2008, appellant appealed from the judgment of conviction in the underlying criminal case. Mashburn was appointed to represent Khodayri in November 2008. Mashburn told Khodayri that he did not have time to spend on appellant’s case because he had more important cases to work on. On November 10, 2009, the court remanded Khodayri into custody for failure to cooperate with the financial evaluator.
Khodayri claimed that because of Mashburn’s conduct, the proceedings regarding restitution were unnecessarily delayed, Khodayri was found to be in violation of probation for failing to cooperate with the financial evaluator, and he was forced to remain in custody longer than would otherwise have been required.
MASHBURN’S DEMURRER
Mashburn filed a demurrer and motion to strike portions of the complaint. In the demurrer, Mashburn argued, among other things, that the demurrer must be sustained because appellant was unable to establish actual innocence of the underlying charges and probation violations and did not obtain post-conviction relief. The trial court sustained the demurrer without leave to amend as to all the causes of action, but did not state specific reasons.
DISCUSSION
When a former criminal defendant sues his or her attorney for legal malpractice resulting in conviction, the former defendant’s actual innocence of the underlying criminal charges is a necessary element of the cause of action. In short, all of Khodayri’s claims are based on legal malpractice that allegedly resulted in his being found in violation of probation, and he seeks compensation for the consequences of those violations (damages for his incarceration and for his brother’s restitution payment) as well as “disgorgement” of fees paid by any third party to respondent based on Mashburn’s allegedly deficient performance.
The Court of Appeal explained that a defendant’s own criminal act remains the ultimate source of his predicament irrespective of counsel’s subsequent negligence and any harm suffered by Khodayri is not only because of’ alleged attorney error but principally due to the client’s original criminal acts.
Because Khodayri failed to allege his actual innocence of his probation violations, i.e., facts showing that he timely paid restitution and fully cooperated with the financial evaluator, and also made no showing that he obtained post-violation exoneration, the demurrer to all his causes of action was properly sustained. Because he has made no showing that he can comply with these requirements, leave to amend was properly denied.
ZALMA OPINION
Mr. Mashburn and his errors and omissions insurer regret that he was appointed to defend Khodayri since the cost of defending the spurious lawsuit far exceeded whatever the state paid him for handling the post conviction legal matters. It also points out that the courts are simply too lenient with insurance fraud perpetrators by only sentencing them, after conviction, to probation and restitution. Mr. Mashburn would have saved the costs of defending the malpractice action had the court sentenced Khodayri to the 5 years imprisonment called for by California Penal Code Section 550.
© 2011 – Barry Zalma
Barry Zalma, Esq., CFE, is a California attorney, insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud. Mr. Zalma serves as a consultant and expert, almost equally, for insurers and policyholders. He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. He recently published the e-books, “Zalma on Insurance,” “Heads I Win, Tails You Lose — 2011,” “Zalma on Rescission in California,” “Zalma on Diminution in Value Damages,” “Arson for Profit,” “Insurance Fraud,” and others that are available at www.zalma.com/zalmabooks.htm.
Mr. Zalma has published three new E-Books: “Zalma on Insurance,” “Murder and Insurance Fraud Don’t Mix” a short novel and “Zalma on California Claims Regulations – 2011 is now available for $5 and $25 respectively.
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