Fireman's Fund Insurance v. McDonald, Hecht & Solberg

Plaintiffs Fireman’s Fund Insurance Company, General Star Indemnity Company, and North Star Reinsurance Corporation (together Insurers) appeal a judgment of dismissal entered after the superior court sustained without leave to amend the demurrer of defendants McDonald, Hecht & Solberg et al. (together Law Firm) to Insurers’ cause of action in subrogation for legal malpractice. Seeking reversal of their dismissal as plaintiffs in this lawsuit, Insurers contend the court erred in concluding California law prohibited prosecution of a legal malpractice cause of action by a subrogee. We affirm the judgment.

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Introduction

Insurers paid more than $10 million to settle a lawsuit against their developer insureds by homeowners alleging misrepresentations in the sales of residential units. The insureds then filed a legal malpractice case against their attorneys (Law Firm) for causing those misrepresentations to be made. Later, Insurers joined the malpractice lawsuit as plaintiffs under a theory of subrogation. Law Firm successfully demurred on the ground California law prohibiting assignment of legal malpractice actions also precluded Insurers from proceeding as subrogees to…