## Facts

- Edmond Mirabito, a long-time San Francisco shoe-shop owner, retained his second cousin, attorney Leonard J. Liccardo, for recurring legal work and later estate planning.
- Beginning in 1983, while acting as Mirabito’s attorney and trusted adviser, Liccardo repeatedly solicited Mirabito to fund “high technology” and other ventures.
- Liccardo induced Mirabito to loan and invest increasing sums by personally guaranteeing repayment; over roughly 16 months, Mirabito invested more than $1.5 million, much of it raised through mortgages on his properties.
- In late 1984, Liccardo persuaded Mirabito to invest more than $700,000 in a movie venture, again with a personal guarantee.
- Liccardo did not advise Mirabito to obtain independent counsel before these transactions and did not disclose material facts, including Liccardo’s personal involvement in the movie venture and his earlier personal bankruptcy.
- The ventures failed, Liccardo could not satisfy his guarantees, and Mirabito suffered major losses, including foreclosure on property and multi-million-dollar damages.

## Issues

1. Whether, in a civil action alleging fraud and breach of fiduciary duty, the trial court may admit expert testimony concerning the California Rules of Professional Conduct and instruct the jury using rules-based concepts.
2. Whether the Rules of Professional Conduct may be considered as evidence bearing on an attorney’s fiduciary duties and standard of conduct in business transactions with a client, notwithstanding their disciplinary purpose.

## Decision

- The Court of Appeal affirmed the judgment for Mirabito.
- The trial court did not err in allowing an ethics expert to testify about professional-conduct requirements relevant to attorney-client business transactions.
- The trial court did not commit prejudicial error by giving jury instructions patterned after the Rules of Professional Conduct, where the instructions did not treat rule violations as automatic civil liability.

## Legal Principles

- The Rules of Professional Conduct, though promulgated for attorney discipline, may be relevant and admissible in civil litigation as evidence bearing on an attorney’s fiduciary duties and standard of conduct.
- A violation of an ethics rule does not, by itself, create a private cause of action or establish liability per se; civil liability still depends on proof of the elements of the pleaded claims.
- In business dealings with a client, an attorney owes heightened fiduciary duties, including full disclosure of material facts (and the attorney’s personal interests), advising the client to seek independent counsel, and ensuring informed consent and fairness.
- Jury instructions may draw from professional-conduct rules to explain fiduciary obligations, so long as they do not misstate the law by converting disciplinary rules into independent civil causes of action.

## Conclusion

The court upheld a verdict against an attorney’s estate where the attorney induced client investments without required disclosures or advice to seek independent counsel, and it approved the use of ethics rules and related expert testimony to inform the jury’s assessment of fiduciary duty and conduct in attorney-client business transactions.


Mirabito v. Liccardo, 5 Cal. Rptr. 2d 571 (Ct. App. 1992)