Virtanen

An attorney representing the purchaser of stock agreed to act as an escrow holder for the transaction. The seller delivered his stock certificates to the attorney, to be held in escrow. After delays in the closing of the transaction, the seller decided to terminate the sale. He provided to both the purchaser and the attorney a written notice of rescission and demand to return documents. This notwithstanding, the attorney proceeded to close the transaction and to deliver the stock certificates to the transfer agent with instructions to effectuate the transfer of the shares.

In the ensuing litigation, the seller obtained a $1,985,000 judgment against the attorney and his law firm. The attorney and his law firm appeal. They contend that closing escrow with the expectation that the seller would sue was the “functional equivalent” of filing an interpleader action. They also argue that the court erred in precluding the introduction of evidence of privileged communications with their clients and in permitting the use of jury instructions that identified the seller as a party to whom the attorney owed a duty as an escrow holder. Furthermore, the attorney and his law firm try to…