Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc.

In this aggressively litigated business dispute between a major creditor and the assignee for the benefit of creditors of a troubled company, the creditor moved to amend its complaint to name the assignee’s attorney as a defendant and to add a cause of action against the attorney and the assignee alleging an attorney-client conspiracy to deplete the assets of the assignor corporation.

We face the question of whether California law allows this plaintiff to pursue such conspiracy claims based solely on allegations of unnecessary and excessive fees charged by assignee’s counsel that derive from the contention that counsel for an assignee for the benefit of creditors also owes a fiduciary duty to creditors, including a creditor that is adverse to the client assignee.

We reject this contention.

INTRODUCTION

Plaintiff Berg & Berg Enterprises, LLC (Berg) sued defendant Sherwood Partners, Inc. (Sherwood) in this action for breach of fiduciary duty and related causes of action concerning Sherwood’s performance as an assignee for the benefit of creditors. Berg was the largest creditor of the assignor, Pluris, Inc. Berg later sought leave to file a second amended complaint that…