Case Explained: IN RE: KOI DESIGN LLC, ET AL V. MARRON LAWYERS, APC, ET AL

Court: United States Court of Appeals for the Ninth Circuit Filed: 2026-08-06 Docket: : The ninth-circuit reversed the district court’s grant of summary judgment in favor of Marron Lawyers, APC, in a legal malpractice action brought by Koi Design LLC, and remanded the case for further proceedings. The panel held that genuine disputes of material fact existed regarding whether Marron breached its duties to Koi and whether Marron’s conduct caused Koi harm, which are essential elements of Koi’s claims for legal malpractice, breach of fiduciary duty, and negligent supervision under California law. The court applied the standard that breaches of the California Rules of Professional Conduct may be used to prove a lawyer has breached their fiduciary duties or the standard of care required for a legal malpractice claim. The panel identified two specific duties owed by Marron: a duty to disclose material facts and significant developments in the underlying SPI litigation, and an obligation to adequately supervise its employees. The court concluded that a reasonable jury could find Marron breached these duties by failing to inform Koi of Mastroianni’s incompetence, malpractice risks, and failures to comply with court deadlines, as well as by failing to supervise Mastroianni’s handling of the case despite internal knowledge of his deficiencies. Regarding causation, the panel applied the “but for” test, concluding that under California law, the substantial factor causation standard required in this context necessitates a showing that Koi would have obtained a more favorable judgment or settlement but for Marron’s conduct. The court determined that a reasonable jury could find it more likely than not that competent counsel would have avoided the default judgment and treble damages award, or that Koi would have replaced Mastroianni with competent counsel had Marron disclosed his misconduct. The panel rejected the district court’s conclusion that causation was lacking as a matter of law, noting that conflicting expert testimony and evidence regarding the impact of Mastroianni’s specific misconduct while employed by Marron created genuine factual disputes. Additionally, the panel held that the district court did not violate Federal Rule of Civil Procedure 56(f)(2) because Koi had adequate notice of the causation theory relied upon by the court. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.