Legal Malpractice Law Review : Professional Responsibility Case Summaries & Commentary : Bennett J. Wasserman : LegalMalpractice.com : Lawyer Malpractice & Legal Ethics

Bagoly v. Riccio, 102 Conn. App. 792, 927 A.2d 950 (2007)

CT: Underlying post marital dissolution matter

Student Contributor: Nicholas Kingsbury

Facts: The former client was dissatisfied with the result of his marital dissolution agreement, and had an attorney file a motion to clarify and modify the agreement. The attorney negotiated with the other side and agreed that the client’s alimony payments would be replaced with his former wife being named as the beneficiary of the client’s life insurance policy. However, the signed agreement they reached (dated Feb 1997) only added the life insurance provision and did not remove the alimony obligation, thereby putting the client on the hook for even more money. In Nov 2001, the client discovered the defect. At a hearing, the attorney testified in favor of the client that the written agreement did not reflect the actual agreement reached. The client lost and then sued the attorney for malpractice in January 2002 alleging negligence and breach of contract. The court granted the attorney’s motions to dismiss, ruling that the client’s negligence claim was barred by the statute of limitations, and his breach of contract claim was barred by collateral estoppel and res judicata. The client argues that because the attorney testified for him in 2001, this constituted continuing representation which quelled the statute of limitations problem. The client also argues that collateral estoppel and res judicata do not bar his breach of contract claim because “neither the parties, nor the issues were the same.”

Issue: (1) Does an attorney’s affidavit and testimony on behalf of the client serve to quell the statute of limitations?
(2) Is a legal malpractice action barred by res judicata and collateral estoppel?

Ruling: (1) No. In order to satisfy the statute of limitations, the attorney would have had to, first, represent the client continually on this same matter. Since an affidavit and testimony on behalf of the client to repair any alleged damage in the prior representation does not constitute representation, the client cannot assert the continuing representation doctrine to defeat the statute of limitations.
(2) No. Res judicata (claim preclusion) only bars a claim when the same claim was already decided upon among the same parties. Here, the first claim was for a modification of the divorce settlement. The second claim is for money damages and attorney’s fees (from the lawyers who screwed up). The same is true for collateral estoppel (issue preclusion), involving the parties. The first action was the client against his ex-wife. The second action is the client against his former attorney. These two principals are there to ensure the same litigation doesn’t happen more than once. Therefore, neither res judicata nor collateral estoppel should bar the client’s breach of contract claim.

Lesson: (1)  The Connecticut statute of limitations for attorney negligence is 3 years.  After you’ve paid your attorney’s bill, the representation generally is completed.  If that lawyer testifies for you regarding an error on his part, this is not a continuation of that representation.  

               (2) Bringing a legal malpractice claim against your former attorney will not face problems with res judicata or collateral estoppel because you are asserting that your lawyer erred, not that you’re still trying to prevail in the  underlying lawsuit  where the lawyer originally erred.

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Olympia Mortgage Corp. v. Klein, 61 Conn. App. 305, 763 A.2d 1055 (2001)

CT: Underlying legal advice and representation matter 

Student Contributor:  Nicholas Kingsbury

Facts: Client sued his former attorney and served him with a summons and complaint. The court dismissed the client’s complaint ruling that the client wrote an improper return date on the document. An improper return date will raise a subject matter jurisdiction problem (the court’s power to hear a given dispute), which will kill a plaintiff’s claim. Here, the client put a return date 3 months from when he filed the summons and complaint, instead of the requisite 2 months. The client appealed the dismissal of his claim, arguing that General Statutes 52-72 allows him to amend his complaint to change the return date and fix the subject matter jurisdiction problem. The client filed a request with the court to amend his documents with the correct date; and the attorney did not object to it. However, the correct return date had already passed. The correct return date would have been May 1st, but the client put in the request on June 8th.

Issue: Can a malpractice plaintiff back-date the return date on the complaint (thereby saving his claim from dismissal) if the correct return date has already passed?

Ruling: Yes. The original “intent of the legislature in enacting § 52-72 was to prevent the loss of jurisdiction merely because of a defective return date." 52-72 is a very liberal rule, even allowing a plaintiff to correct the return date on his documents even if the proper date has already passed. This statutory rule reflects the court system’s general policy to save a plaintiff’s claim from being dismissed merely because of a procedural problem. Because of the liberal nature of the statute, the fact that the plaintiff filed an official request to change the date, and the fact that the opponent never objected, the plaintiff should be allowed to back-date his complaint to the correct return date.

Lesson: The courts appear to be lenient if a plaintiff makes a procedural error in her complaint against an allegedly negligent attorney. If you file the wrong return date, General Statutes 52-72 will give you an opportunity to fix the defect, even if the correct return date has already passed. However, it’s safer to get it right the first time. If the defending attorney had objected to the client’s request to amend the return date, this might have turned out differently.

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Calvert v. Scharf, 217 W. Va. 684 (2005)

WV: Wills, Trusts, and Estates

Student Contributor: Rachel Vincent

Facts: Estate administrator and will beneficiaries are suing attorney for legal malpractice in connect to drafting a will. Erma and Garret were married. They had no children together, but each had children from previous marriages. The plaintiffs in this action are the children of James A. Calvert, Sr., (son of Erma who is deceased) and the executor of his estate (who is his son James A. Calvert, Jr.). On July 18, 1978 Garrett executed his will, grating a testamentary general power of appointment over the property in the martial trust to his wife Erma. Garrett’s will also established a charitable trust to pay five percent of its net fair market value annually to his daughter Delores to start after his death. Upon Delores’ death, the principal of the residuary trust was to be split equally between the Union Mission Settlement, Inc., and World Vision, Inc. In the event that Erma failed to exercise the power of appointment granted to her in Garrett’s will, the principal of the marital trust was to be combined with the residuary trust created for the benefit of Delores and the charities. Erma died in 199 at which time One Valley Bank, successor-in-interest to the executor of Erma’s estate filed a declaratory judgment that it should distribute the assets of Garrett’s Marital Trust into the Living Trust. The declaratory action was settled. On March 12, 2001, the Calverts filed a legal malpractice action the attorney’s who drafted Erma’s will. Two questions were certified.

Issues:
1. Whether the beneficiaries of a will have standing to assert a malpractice claim against the attorney who drafted the will?
2. Whether beneficiaries who voluntarily settled declaratory action challenging will can establish that negligence in drafting will proximately caused the injury.

Ruling:
1. No. Beneficiaries of a will have limited standing to assert a malpractice claim alleging negligence on the part of the lawyer who prepared the will.
2. Yes. Beneficiaries who voluntarily settled declaratory action challenging will could not establish that any negligence in the drafting of will proximately caused injury.

Lesson: “Only the direct, intended, and specifically identifiable beneficiaries of a will” have standing to sue the lawyer who prepared the will, and only where “it can be shown that the testator’s intent, as expressed in the will, has been frustrated by negligence on the part of the lawyer so that the beneficiaries’ interest(s) under the will is either lost or diminished.” 

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Racquet v. Grant, 318 Ill. App. 3d 831 (2000)

IL: Underlying Property action

Student Contributor: Rachel Vincent

Facts: Plaintiff’s were being sued by their neighbor who was trying to enjoin plaintiffs from doing construction on their land. Defendants were responsible for representing plaintiffs in the suit (Platenka suit). Plaintiffs allege that defendants breached their duty of care to plaintiffs by failing to advise plaintiffs adequately of Platenka’s claims and the remedies he sough; failing to do sufficient pretrial discovery or preparation of witnesses; failing to prepare plaintiff for deposition; inadequately advising plaintiffs of the legal effect of the trial court’s denial of Platenka’s request for a temporary restraining order; advising plaintiffs they could proceed with the order; advising plaintiffs they could proceed with the modifications of their property despite the pending litigation; failing to raise necessary defenses to Platenka’s suit; failing to appeal the judgment despite assuring plaintiffs that they would do so; failing to file a timely cross-appeal after Platenka appealed; and not advising plaintiffs to seek a variance for their property. Defendant filed motion to dismiss. The trial court granted defendant’s motion to dismiss because it was barred by the two-year statute of limitations. Plaintiff’s appeal.

Issue: Whether the trial court erred in granting defendant’s summary judgment motion?

Ruling: Yes. Fact issues as to when clients should have known of alleged malpractice precluded summary dismissal on statute of limitations grounds. “Ordinarily when a party becomes charged with knowledge that his injury was wrongfully caused, the beginning of the two-year period for bringing suit for attorney malpractice, is a question of fact” and “genuine issues of material fact existed as to when clients knew or should have known that their attorney may have committed malpractice either in the trial of the case or in failing to appeal or cross-appeal.” Therefore “defendant’s were not entitled to dismissal of complaint on the ground that if failed to plead date of discovery of cause of action for purposes of discovery of injury for purposes of discovery rule, where untimeliness of action was not apparent from face of complaint itself, but defendants raised statute of limitations defense and introduced affidavits and other evidence in attempt to prove that suit was untimely.”

Lesson: Defendant’s will not be granted summary where there is a material issue of fact. 

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Winstock v. Galasso, ___ N.J. Super. ___ (App. Div. 2013) (Decided May 6, 2013)

NJ: Underlying Criminal Plea due to bad legal advice

FACTS: This is an appeal from a dismissal by way of summary judgment of plaintiffs' legal malpractice claim against their former attorney. Plaintiffs sue defendant lawyer for incorrect legal advice which resulted in plaintiffs' conviction by way of a plea agreement for promotion of gambling activities in violation of N.J.S.A. 2C:37-2a(2). Plaintiff's wife, the legal owner and registered agent for the LLC  that operated and promoted the gambling enterprise sues defendant as well. She did not plead guilty but she was required as part of the plea, to enter into a Pretrial Intervention Program (PTI) as part of a global plea agreement involving others indicted for the gambling offenses,including her husband.  Plaintiffs argue that  plaintiffs  retained defendant lawyer to ensure that their business model was proper and lawful and but for the lawyer's incorrect legal advice, they would not have engaged in the conduct that gave rise to the criminal charges.  Plaintiffs also argued that their claim for emotional distress damages should not have been dismissed.

Plaintiff, who was a police officer, organized a "poker tournament" at the local firehouse that involved friends and acquaintances. The popularity of the tournaments grew and involved as many as 100 players. The top 10% of the participants would share a portion of the money raised. The other 90% would get nothing.  The plaintiff would supply the cards and chips for thepoker games and also awarded the top ten winners shirts and hats in addition to their winnings.

Plaintiff met defendant at a VFW poker tournament. He called the defendant to "ask his legal advice on the legality of" opening his own club. Plaintiff, based on his training as a police officer,  had some understanding about the legality of gambling activities under New Jersey law. He testified that "as long as the house wasn't taking profit from the gambling, we were not in violation. That's exactly why I contacted  [defendant attorney] to verify that." Plaintiff also testified that defendant attorney was retained to "monitor the operation". 

Plaintiff and his wife then started a business to be known as "Fifth Street Club LLC" as a private social club offering adult recreational activities including pool tables, dart boards, backgammon, chess and a card table area. The club would operate in a fully renovated 8000 square foot warehouse area. Defendant attorney appeared before the local zoning board to obtain approval for operating the Club. Plaintiff alleged that defendant choreographed the presentation to the zoning board so as "to downplay the fact that poker tournaments would be held at the facility..." The Zoning Board members approved the plaintiff's application. Plaintiff, as a police officer, was then asked to submit a legal memo to his police chief regarding "the legality of the club" that could be submitted to the prosecutors office.  The legal memo was prepared by the defendant attorney, at plaintiff's request. A PBA attorney representing one of plaintiff's partners in the venture wrote that he was concerned that the defendant attorney's memo "does not sufficiently address the legal issues involved in this business venture."  The County Prosecutor's Office began investigating the Fifth Street club for alleged illegal gambling activities. Plaintiff was arrested and suspended from duty as a police officer. He and his wife were then indicted on multiple counts of perjury and illegal gambling. Plaintiffs then entered a global plea agreement. He thereafter sought to withdraw the guilty plea as having been coerced, which was denied and affirmed on direct appeal. Plaintiffs then filed  this legal malpractice claim which was dismissed by way of summary judgment, based on Alampi v. Russo, 345 N.J. Super 360 (App. Div. 2001) where because of the  underlying guilty plea, the malpractice plaintiff would  be barred in  a later malpractice action against the  lawyer from taking an inconsistent position with the factual basis he gave to induce the criminal court to accept his guilty plea.  Here, however, the facts are distinguishable. 

Here, the plaintiff admitted to the illegal activities which occurred only  "after he had retained defendant [lawyer] as his legal advisor..."

defendant reviewed and approved plaintiffs' business model...Although defendant's legal opinion may not have absolved [his client] of criminal responsibility for his actions, [the client's] admission of criminal culpability did not relieve defendant of his duty to provide plaintiffs with legally correct advice."

ISSUES: (1) Does an underlying guilty plea preclude plaintiff in a later legal malpractice action to take a position that is inconsistent with the guilty plea that seeks to hold the lawyer liable for malpractice in inducing the plea?  (2) Can plaintiffs' recover emotional distress damages under these facts?

RULING:  (1) No.  In a civil action, the party who entered the guilty plea may rebut or explain the circumstances surrounding the  guilty plea.  

[Plaintiff's admissions at the plea hearing may be evidential in his civil claims of professional malpractice against defendant. His plea alone, however, does not preclude him or [his wife] from arguing that defendant's alleged professional negligence was a proximate cause of the damages they incurred by operating the [gambling club]. It is undisputed that defendant represented plaintiffs in filing the necessary documents to create the LLC and represented plaintiffs before the...Zoning Board...to obtain approval to operate the club. However, whether defendant was the mastermind and chief choreographer of a plan to mislead the Board and conceal the club's true purpose as a gambling resort, as plaintiffs claim, or, as defendant alleges, he was simply following the directions given to him by plaintiffs, are material issues of fact that cannot be resolved by way of summary judgment.

(2) Regarding dismissal of emotional distress, the Court found no "egregious or extraordinary circumstances" warranting such relief. 

LESSONS: This is a landmark ruling because even though a client pleads guilty, where the activities leading to the plea are a result of and follow  the legal advice received from the attorney, the attorney's advice can well become a substantial factor in causing the guilty plea.  In other words, "but for" the attorney's negligent advice, the criminal conduct would never have come about.   

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Mooney v. Frazier, 225 W. Va. 358 (2010)

WV: Criminal Law

Student Contributor: Rachel Vincent

Facts: Plaintiff is suing his attorney for ineffective assistance of counsel. Plaintiff came home form work one night and wife, who was drunk, pulled a gun on him. Plaintiff took the gun from his wife and attempted to call 911 to report the incident. Plaintiff called 911 several times but each time his wife disconnected the call. Plaintiff decided to go to his job and have his boss call the police to turn in the gun. When plaintiff left the house, his wife called 911 and informed them that plaintiff was in possession of her gun and was headed to his job. When plaintiff arrived at his job the police arrested him. Plaintiff was charged for being a felon in possession of a firearm. Although plaintiff insisted he was innocent, he pleaded guilty because his appointed counsel advised him that there was no defense for a felon-in possession charge. Plaintiff tried to withdraw his please but was denied. Plaintiff was sentenced to 180 months in prison. Plaintiff filed a motion to vacate his conviction and sentence based on a claim of ineffective assistance of counsel. He claimed that he plead guilty because his attorney failed to research the defense of justification to plaintiff’s charge. The district court denied plaintiff’s motion. Plaintiff appealed the denial of his federal habeas petition. The decision was reversed and remanded and the federal government declined to reprosecute. Plaintiff severed five years before being released. Plaintiff filed a malpractice against attorney. Defendant filed a motion to dismiss. Prior to ruling on the motion the court certified three questions to the Supreme Court, one of which was answered.

Issue: Whether an attorney who is court appointed to represent a criminal defendant in a federal criminal prosecution is immune from purely state law claims of legal malpractice stemming from the underlying criminal proceedings?

Ruling: Yes. “Any action for legal malpractice against a federal public defender must be brought directly against the United States, and not the attorney; under federal law, an attorney employed by a federal public defender office who is sued in an individual capacity can convert the action to one against the United States, thereby obtaining indirectly the benefit of the United States’ sovereign immunity.”

Lesson: A federal public defender has immunity even if they did in fact render ineffective assistance of counsel.

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Hilario v. Reardon, 158 N.H. 56 (2008).

NH: Underlying Criminal Procedure, Guilty Plea

Student Contributor: Peter J. Jannace

FACTS: Plaintiff was indicted on various charges; he then entered into a plea arrangement with the State which provided that if he met certain conditions, including cooperating in other prosecutions, the State would petition for the suspension of a portion of his sentence. After plaintiff served a portion of his minimal sentence, defendant who was representing him filed a motion to withdraw the plaintiff’s plea of guilty and request a trial. Plaintiff claimed that he was not aware of and did not authorize the motion. When the plaintiff, acting pro se, filed a motion to suspend a portion of his sentence pursuant to the plea agreement, the State objected, arguing that the plaintiff breached the plea agreement when he filed a motion to withdraw his guilty plea. The trial court agreed with the State and ruled accordingly. Plaintiff filed suit against defendant, pro se; the trial court dismissed the complaint, plaintiff appealed.

ISSUE: Are strategic or tactical decisions made by an attorney after the plea and sentencing of a client which are unrelated to the client’s conviction subject to Mahoney requirements (allege and prove actual innocence) in a client’s malpractice action for those decisions?

RULING:  No. Where “the questionable behavior is unrelated to the accused’s culpability for the underlying acts and is, in all relevant respects, unrelated to those acts, we are not convinced that Mahoney bars those claims.” A claimant need not allege and prove actual innocence to prevail in a malpractice suit.

LESSON: Although generally an ex-client in a malpractice action has a high proximate cause burden to satisfy if his/her attorney represented him/her in a criminal action, the burden is significantly lower if the alleged malpractice did not relate to the underlying acts that culminated into a conviction. 

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DeYoung v. Ruggiero, 185 Vt. 267 (2009).

VT: Wills, Trusts & Estates

Student Contributor: Peter J. Jannace

FACTS: Plaintiffs hired defendant to close on the purchase of a house in Vermont. Plaintiffs later inherited a substantial amount; due to a communication breakdown between the decedent and the plaintiffs, plaintiffs hired defendant to ensure that plaintiffs received their inheritance. Defendant advised plaintiffs to invest in defendant’s real estate business, plaintiffs rejected defendants advice. Defendant received a partial distribution of the estate funds, and then transferred the funds into his own account for investment purposes. Plaintiffs made repeated inquiries as to when the funds would become available; defendant lied to cover up his theft. Plaintiffs found out that the funds had already been distributed, plaintiffs filed suit against defendant. Defendant entered a default judgment against himself; the trial court did not find “malice” which is an antecedent to an award of punitive damages, plaintiffs appealed.

ISSUE(s):  Does the “malice” requirement to an award of punitive damages require “ill will” towards the victim of the “malicious” behavior?

RULING(s): No. “Malice may arise from deliberate and outrageous conduct aimed at securing financial gain or some other advantage at another’s expense, even if the motivation underlying the outrageous conduct is to benefit oneself rather than harm another.”

LESSON(s): A lawyer is in a fiduciary relationship with his/her client, so if that lawyer steals money from the client and then takes steps to cover it up, there is basically a presumption in Vermont that the behavior is “malicious”, and the only issue for the jury is the amount of punitive damages. As if there wasn’t enough incentive not to engage in this type of activity; by the way, the attorney was disbarred as well. 

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New Orleans'  Jazz Fest 2013 attracted  The American Board of Professional Liability Attorneys--ABPLA's  2013 national  meeting from April 25 to 27. ABPLA was organized in 1972 as  the only organization accredited by the American Bar Association to identify and  certify attorneys in the areas of legal and medical malpractice. The coveted Board Certification is granted only  to those practicing attorneys who, because of their demonstrated  experience and ability  are recognized as bona fide specialists   in these specific practice areas of  professional liability law.  Certified specialists from both the plaintiff's and defendant's bar joined together for two and a half days  in a unique spirit of collegiality where the "masters" learned from the "masters"  sharing  stimulating, eye-opening and intensive  programs helping each other learn and  appreciate the work of the other. 

At the same time,  the ABA's  Spring 2013 National Legal Malpractice Conference  was also held just up the street. There, cutting edge topics were addressed by prominent members of the ABA's Standing Committee on Lawyers' Liability and the insurance industry. 

Given the numbers of legal malpractice lawyers in attendance at both events, there is no doubt that the substantive area of  legal malpractice law continues to grow.  ABPLA has announced that its next meeting will be in Miami in May next year. The ABA's fall National Legal Malpractice Conference is planned for  San Diego in September.   

Both,  worthwhile organizations and events  promoting the importance of this substantive area of the law  and raising the level of competence, quality, and ethical practices  among the bar.   Kudos to both organizations!

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Theobald v. Byers, 193 Cal. App. 2d 147, 13 Cal. Rptr. 864 (1961)

CA: Underlying Loan Transaction; Debtor Creditor  

Student Contributor: Louis Dell

Facts: The plaintiffs hired the defendant attorneys to prepare a note and chattel mortgage in connection with a loan that the plaintiffs were making to a third party. The secretary for defendant delivered the completed papers to the plaintiff. No directions were given to the plaintiff in relation to the documents. The defendant never informed plaintiff that he must have the mortgage recorded. Sometime later the third party went into bankruptcy. Since the mortgage was not recorded the plaintiff was considered an unsecured creditor. As a result the plaintiff suffered damages. The defendant alleged that the plaintiff was contributorily negligent in not inquiring as to whether the mortgages were supposed to be recorded.

Issue: Is contributory negligence a defense in a legal malpractice case?

Ruling: Yes, contributory negligence is a defense. Where a client chooses to ignore the legal advice of his attorney the contributory negligence is available. The fact that the plaintiff never inquired into the documents is not enough to sustain the defense.

Lesson: An attorney should document all communications with his client so that the attorney can show what advice was given.  

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Camenisch v. Superior Court, 44 Cal. App. 4th 1689, 52 Cal. Rptr. 2d 450 (1996)

Underlying Action: CA: Torts

Student Contributor: Louis Dell

Facts: The plaintiff hired Camenisch to prepare trust and estate documents. He informed defendant that he did not want the proceeds of his life insurance tryst to become a taxable part of his estate. The attorney prepared a trust to meet the plaintiffs requirements. Sometime later the plaintiff informed defendant that he believed the trust was not prepared correctly. Defendant made some changes to the trust at that time. Plaintiff was required to pay taxes on the trust. Plaintiff then brought a suit for malpractice and negligent infliction of emotional distress. Plaintiff alleged that because he had to pay taxes he suffered severe emotional distress and anxiety.

Issue: Is the tort of negligent infliction of emotional distress applicable in a case for professional malpractice?

Ruling: No, in a case for legal malpractice negligent infliction of emotional distress is not normally available. In cases where the malpractice has led to conviction and imprisonment, negligent infliction of emotional distress has been allowed.

Lesson: An attorney cannot be held liable for negligent infliction of emotional distress when the only damage to the defendant is economic. This is true whether the damages occurred in litigation or in another context.  

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Truong v. Glasser, 181 Cal. App. 4th 102, 103 Cal. Rptr. 3d 811 (2009)

CA: Real Estate; Commercial Lease

Student Contributor: Louis Dell

Facts: VMI (the plaintiff) is a manufacturer of circuit boards. In 2005 the plaintiff moved into a new property. VMI was dissatisfied with the condition of the property and hired Glasser to draft an addendum to the lease. VMI alleged that Glasser was negligent and breached his fiduciary duty when he did not properly advise VMI concerning the lease addendum. The plaintiffs had incurred many expenses in connection to the lease addendum including attorney fees, and losses while attempting to rescind the lease addendum. The plaintiff also suffered losses because they were unable to use the property.  Glasser moved for summary judgment on the basis that the claim for malpractice was barred because the statute of limitations had expired. The trial court granted summary judgment to Glasser. VMI contends that the statute was tolled because they suffered no injury until they lost a lawsuit trying to rescind the addendum and because Glasser provided continuous representation until less than one year prior to the malpractice suit. The court found that Glasser did not provide continuous representation. His representation ended when he completed the addendum.

Issue: Is actual injury sustained at the time of obtaining a lawyer or when the plaintiff loses the lawsuit?
When is an attorney’s representation completed?

Ruling: Actual injury is sustained at the time of obtaining a lawyer. The “determination of actual injury requires only a factual analysis of the claimed error and its consequences.” An actual settlement or judgment is not required.  An attorney’s representation is completed when “the agreed tasks or events have occurred.” In this case the representation of the attorney ended when communications concerning the lease addendum ended.

Lesson: An attorney should always use a termination letter to avoid allegations of continuous representation. Actual injury occurs at the time that the injury is realized and not when a court declares a judgment. 

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Argoe v. Threee Rivers Behavioral Center and Psychiatric Solutions, 388 S.C. 394, 697 S.E.2d 551 (2010)

SC: Underlying Trusts, Real Estate; Breach of Fiduciary Duty

Student Contributor: Nicholas Seabrooks

Facts: Martha Argoe’s husband and son retained the defendant attorney Walsh to help protect her from her own irresponsible and erratic behavior. According to the husband and son Argoe was acting strangely and had become financially irresponsible. Specifically Martha had taken out a loan on her condominium, allowed the loan to go into default, and the property was about to go into foreclosure. In order to avoid financial disaster Walsh helped  in the transfer of the title to the property to a trust for the benefit of Martha, with remainder to himself in the event of her death. Martha then filed suit against Walsh for malpractice alleging breach of fiduciary duty for transfer of the title to the property without her knowledge.

Issue: Did Walsh have fiduciary duty to Martha t while representing her husband and son, therefore committing malpractice?

Ruling: No. There was no attorney-client relationship established between the plaintiff and the defendant while representing her husband and son. I

Lesson: An attorney is generally immune from liability to third parties arising from the performance of professional activities on behalf and with knowledge of his client. Furthermore an attorney owes no duty to a non-client unless he breaches some independent duty to a third party or acts in his own personal interests, outside of the scope of representing the client.  

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Harris Teeter, Inc. v. Moore & Van Allen, PLLC, 390 S.C. 275, 701 S.E. 2d 742 (2010)

S.C. Underlying arbitration/breach of lease

Student Contributor: Nicholas Seabrooks

Facts:  Harris Teeter was a supermarket that leased property from a company that later sold the property to Eastbay Venture LLC. In the lease renewal contract Eastbay decided to amend the contract with new terms that Harris Teeter would  not  agree to. Harris Teeter refused to pay the extra expenses in the lease, over a period of time, after which Eastbay sent Harris a letter terminating the lease. During the arbitration to  determine if Harris Teeter  breached the lease and owed Eastbay the defaulted expenses, they retained the respondents Moore & Van Allen to represent them in the arbitration. The arbitrator found for Eastbay and the plaintiffs fired the respondents and eventually negotiated a settlement  with Eastbay. Harris Teeter then filed a complaint against Moore & Van Allen alleging that respondents committed malpractice by failing to (1) introduce any evidence in regards to two "Kiriakides"  factors; (2) advise Harris Teeter of the risk of lease termination; and (3) settle the case prior to arbitration.

Issue: Did Moore & Van Allen commit malpractice by failing to introduce case law evidence, advise the plaintiff of the risk of lease termination, and settle the case prior to arbitration?

Ruling: No. The respondents clearly introduced evidence of the Kiriakides case in the arbitration and advised the plaintiff that his case wasn’t going to be an easy one to win warning that termination may be the result of the arbitration. Lastly the respondents tried to negotiate on the behalf of the plaintiffs but the plaintiffs refused the offer from Eastbay.

Lesson: To prove malpractice there has to be a breach of the standard care  by the attorney. A bad outcome in arbitration is not proof that there was malpractice. Furthermore under the judgmental immunity rule attorneys are not liable for acts and omissions in the conduct of litigation, which are based on honest exercise of professional judgment. 

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