The opinion of the court was delivered by: FERN M. SMITH
Plaintiff is an attorney licensed to practice in California. He has filed a complaint against his former employers, defendants Castleman & Haskell, Lorin Castleman and William Haskell ("law firm defendants"), and against a client of the law firm defendants, Allstate Insurance Inc. ("Allstate"). Plaintiff contends that in July 1992, the law firm defendants reduced his compensation and told him to plan to leave the firm altogether. The law firm defendants allegedly told Plaintiff such action was necessary because Allstate indicated it wanted its files handled by younger attorneys in the firm. Plaintiff has alleged age discrimination and related claims against the law firm defendants, and has alleged both intentional and negligent interference with business relations against Allstate (Seventh and Eighth Claims for Relief).
Allstate now moves to dismiss the claims for relief alleging intentional and negligent interference with business relations on the grounds that the, complaint fails to state a claim upon which relief can be granted.
Under Fed. R. Civ. P. 12(b)(6), a complaint may be dismissed for failure to state a claim only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).
II. GROUNDS FOR MOTION TO DISMISS
Allstate raises three grounds in its motion to dismiss: 1) that plaintiff's claims are precluded by Allstate's "absolute right" to choose an attorney of its choice, 2) that its conduct was privileged as a matter of law, and 3) that the complaint fails to sufficiently allege the requisite intent element.
The California Supreme Court has also recognized the tort of negligent interference with prospective economic advantage. J'Aire Corp. v. Gregory, 24 Cal. 3d 799, 803-805, 157 Cal. Rptr. 407, 598 P.2d 60 (1979). An appellate court has allowed a cause of action for negligently causing economic damage. Chameleon Engineering Corp. v. Air Dynamics Inc., 101 Cal. App. 3d 418, 423, 161 Cal. Rptr. 463 (1980).
A. Plaintiff's Claims Are Not Precluded As A Matter of Law By Allstate's Right to Select Counsel
Allstate maintains that a cause of action in tort brought by an attorney against a client of his former employer on the grounds that the client interfered with the attorney's employment contract with the law firm due to the attorney's age should not be recognized. Allstate rests its argument on its "absolute right" to terminate an attorney-client relationship, relying primarily on Fracasse v. Brent, 6 Cal. 3d 784, 100 Cal. Rptr. 385, 494 P.2d 9 (1972).
In Fracasse, the California Supreme Court held that an attorney discharged with or without cause by a client cannot recover contractual damages from the former client, but is limited to recovery in quantum meruit for the reasonable value of the services rendered. Id. at 792. In reaching its conclusion, the court noted that California has long recognized that a client's power to discharge an attorney, with or without cause, is absolute, id. at 790, and that such a discharge does not constitute a breach of contract for the reason that the right to discharge without cause is implied into the contract ...