Legal Malpractice Law Review

Legal Malpractice Law Review

Research, resources & expertise in the law governing lawyers

LAWYER EXPERT NOT NEEDED TO WIN A SUMMARY JUDGMENT

Posted in Pennsylvania

Gans v. Mundy, 762 F.2d 338 (3d Cir. 1985)

Underlying PA Tort Action

Student Contributor: Colleen Gaedcke

Facts: The appellant suffered injuries while commuting to work on a public bus. The appellant retained the appellee to represent him in the underlying action. The appellees filed suit against Amtrak but not against the South Eastern Pennsylvania Transportations Authority (SEPTA). After the suit was filed the appellant returned to work and sustained yet another injury. The appellant obtained different counsel to represent him because he was dissatisfied with the appellees representation during settlement negotiations. The appellants new counsel amended the original complaint to add a second count of negligence against Amtrak for the appellants second injury. The case went to trial and the jury returned a verdict in favor of the defense on both counts. The appellant then sued the appellees for legal malpractice.

Issue: Whether appellees were obligated to offer expert evidence on the professional standard of care when moving for summary judgment?

The Ruling: No. The court must view the evidence in light of the absence of a proffer of any standard of care in the legal profession.

The Lesson: Where an attorney alleges that their conduct was based on the exercise of skill and knowledge, they do not need to offer expert evidence to establish the standard of care.  

PA: MALPRACTICE (MEDICAL) BEGETS MALPRACTICE (LEGAL)

Posted in Pennsylvania

Maxer v. Security Ins. Group, 368 F. Supp. 418 (E.D.Pa. 1973)

Underlying PA Medical Malpractice Action

Student Contributor: Colleen Gaedcke

Facts: The plaintiff brought a medical malpractice action against a doctor who was insured by the defendant insurance company. At the time of the alleged medical malpractice the doctor had two insurance polices, one being with the defendant with a limit of liability for each claim in the amount of $40,000 and imposed upon the insurance company the duty to defend the doctor in medical malpractice suits. At time the underlying action was filed against the doctor, both carriers appointed attorneys to represent the doctor. The other carrier’s attorney entered into a settlement agreement with the victim’s estate and but did not notify the defendants. At this point, the attorney the defendant’s appointed to represent the doctor in the underlying action withdrew his appearance. No one ever filed a motion to join the hospital as a third-party defendant and under the local law, joinder of third-party defendants had to be within 6 months from the date when the defendant’s answer was filed. After the 6 months passed the doctor made a motion to join the hospital, which was denied. The jury set plaintiff’s damages at $89,318, $39,318 of which was not covered by the doctors insurance.

Issue: Whether the defendant is liable for legal malpractice for failing to join the hosptial?

Ruling: No.
1) An attorney is not negligent “merely because he fails to join all persons whom a jury could find to have been joint tortfeasors.”
2) “An informed judgment, even if subsequently proven to be erroneous, is not negligence.”
3) Tthere is no evidence that either the defendant insurance company or its attorney knew of the settlement. Therefore, the theory of negligence cannot stand.

Lesson:  Failure to join a party as first blush seems to be negligence, but not if a party is omitted because of a reasoned and informed professional judgment.  

NY: INTERNATIONAL BUSINESS ADVICE NOT LEGAL MALPRACTICE

Posted in New York

GUS Consulting GmbH v. Chadbourne & Parke, LLP, 74 A.D.3d 677, 905 N.Y.S.2d 158 (2010)

NY: underlying international corporate case

Student Contributor: Alexis Trezza

Facts: Defendants represented CAIB and its affiliates in international investments. Plaintiffs sued defendants for legal malpractice because plaintiffs allege that defendants failed to warn them, in 1998, of possible criminal consequences of their use of a simple partnership (SP) structure to invest in Gazprom (a Russian natural gas company). They continued to use the SP structure until 199 when their Russian offices were raided by Russian tax police and the Russian tax authorities subsequently investigated the legality of how the investments were structured. When threatened with criminal prosecutions for their investments, CAIB chose to cease all business in Russia in 2000 until the six-year statute of limitations had run and then to return to Russia to do business. Plaintiffs’ complaint allege that the SP structure was illegal under decree No. 529 of Russian law, but this assertion was rejected during a prior arbitration and any malpractice claim based on this argument is foreclosed. Defendants moved for summary judgment to dismiss plaintiffs’ complaint and same was granted. Plaintiffs appeal.

Issue: Should plaintiff’s claim for legal malpractice have been dismissed?

Ruling: Yes. Summary judgment dismissing the entire legal malpractice action was correctly granted because CAIB failed to present evidence in admissible form sufficient to raise a triable issue of fact as to proximate cause, which requires a showing that Chadbourne’s alleged failure to warn  of potential criminal consequences of its use of the SP structure proximately caused reasonably ascertainable damages. CAIB submitted no admissible evidence to dispute Chadbourne’s showing that the 1999 tax police raid was precipitated by a terminated employee in an effort to delay CAIB’s discovery of his theft of 100 million shares of Gazprom stock. Also, the shares of Gazprom stock that were “arrested” by Russian authorities following the 1999 raids were eventually released to CAIB, and no formal criminal prosecution was ever commenced against CAIB or any of its affiliates or officers. CAIB’s claim that, had Chadbourne properly advised it of potential criminal exposure, it would have changed or ceased its use of the SP structure and then would have been able to maintain its presence in Russia and grow its business there over the next six years, while the Russian economy rebounded, is too speculative to support a legal malpractice claim.

Lesson: An attorney who advises you that a particular investment  is legal doesn’t assure  that it is free from risk. The attorney’s careless advice may leave you exposed but may not rise to the level of legal malpractice.

NC: Statute of Limitations | Legal Malpractice| Appeals

Posted in North Carolina

Ventriglia v. Deese, 194 N.C. App. 344, 669 S.E.2d. 817 (2008)

NC: Underlying Matrimonial trial 

Student Contributor: David Yanoff

Facts:

Plaintiff retained defendant to represent him in divorce proceedings. Plaintiff separated from his wife on October 27, 2000, who filed for absolute divorce on October 29, 2001. Plaintiff counterclaimed for equitable distribution and alimony. Absolute divorce was granted on December 7, 2001. Plaintiff and wife were both attorneys, and had entered a prenuptial agreement. Plaintiff and wife stipulated that the agreement was binding. Trial was conducted in August 2003, and the trial court found that while the agreement didn’t preclude equitable distribution, it did define separate property such that there was no marital property. Plaintiff’s equitable distribution claim was denied in August 2003 and filed in January 2004. Plaintiff appealed, and the court reversed the ruling that equitable distribution was not precluded, but upheld the finding that there was no marital property. In January, 2007, Plaintiff sued defendants for legal malpractice, alleging that defendants were negligent in representing plaintiff in the divorce lawsuit. Defendants moved to dismiss plaintiff’s claims as time-barred, and the motion was granted. Plaintiff had moved to amend the complaint during the hearings on the motion to dismiss, but the court dismissed the claims without ruling on the motion to amend. In the hearings, plaintiff suggested that although he was requesting leave to amend, the complaint should still have been able to survive a motion to dismiss. It did not survive. Plaintiff appealed, arguing that the court erred in failing to rule on the motion to amend before ruling on the motion to dismiss, and that the complaint should not have been dismissed even as originally alleged. According to plaintiff, defendants were negligent for failing to challenge the validity of the prenuptial agreement on appeal as well as at trial, and thus defendants’ last act for statute of limitations purposes occurred at the appeal.

Issue(s):

1) Did the court err in dismissing the complaint without first ruling on plaintiff’s motion to amend?

2) Did defendant’s alleged negligence continue into the appeal, for statute of limitations purposes, because he didn’t raise an issue he omitted at trial?

Ruling(s):

1) No. Plaintiff never specifically asked the court to rule on the motion to amend. Though he tried to explain to the court that it would be better if they waited until the complaint was amended to rule on the dismissal motion, he did so after defendant’s motion had been argued. Plaintiff also told the court that he thought the claim could survive as it was.

2) No. NC Rules of Appellate Procedure require that an issue can only be raised on appeal if it was raised at trial. Though defendant’s failure to raise the issue at trial may have been malpractice, his failure to raise it again on appeal could not constitute malpractice, as defendant was simply adhering to the rules of the court at that time.

Lesson(s):

Clients who believe their attorney has committed malpractice should file against the attorney as quickly and as practically possible. Giving the attorney a chance to appeal could cost the client the malpractice claim, as the last act for statute of limitations purposes usually will be found to have occurred before the appeal, and the three year limitations period could easily run before the appeal is decided. 

Texas | Implied Relationship | Lawyer Malpractice | Privity |Contract Breach|

Posted in Discovery Rule, Privity, Texas

Sotelo v. Stewart, 281 S.W.3d. 76 (Tex App. 2008)

TX: Underlying Contract law

Student contributor: David Yanoff

Facts:  Defendant had represented plaintiff’s husband in a breach of contract action. The husband had signed a contract to purchase real property in 1991, to which plaintiff was not a party. When he defaulted, a judgment of $82,000 was entered against him in December 1994. Defendant had withdrawn from representing the husband in March, 1994, but not before filing a motion for continuance (February 1994) in which he added plaintiffs name to the caption, allegedly without her knowledge or consent. Plaintiff and her husband divorced in 2000. In August 2001, a third party obtained a writ of execution for the breach of contract action and had some of plaintiff’s property sold at a sheriff’s sale. Plaintiff filed suit, alleging that defendant had committed legal malpractice by making her a defendant in the breach of contract case in the absence of any allegations against her. Defendant moved for summary judgment, alleging lack of duty and statute of limitations defenses. Plaintiff argued in response that a fact issue remained with respect to limitations, as the discovery rule tolled the accrual of her cause of action. She produced an affidavit from her daughter explaining that all certified mail to the residence was delivered directly to plaintiff’s husband, without plaintiff seeing it. Plaintiff also contended that fact issues remained regarding the existence of an attorney-client relationship. The trial court granted summary judgment for defendant, and plaintiff appealed.

Issue(s):

 1) Does a triable issue of fact exist with respect to the discovery rule when a plaintiff claims she did not learn of her harm because she didn’t get the mail?

2) If an attorney adds a party’s name to a caption, does that create an attorney client relationship automatically?

Ruling(s):

1) Yes. Even if it seems far-fetched, it is up to the trier of fact to determine if a plaintiff’s witness is credible. Plaintiff’s daughter testified that plaintiff didn’t and couldn’t have learned of defendant’s acts until after her divorce, and the court cannot ignore that testimony.

2) Maybe not, but it does create a triable issue. In a summary judgment motion, the defendant must prove the non-existence of such a relationship as a matter of law. Because an attorney-client relationship can be implied in various instances, including from an attorney’s gratuitous rendering of professional services, any evidence suggesting an implied relationship can defeat a summary judgment. This does not mean that a relationship does exist, only that it might.

Lesson(s):  Texas has a relatively lenient discovery rule. Actions may still be viable years after the limitations period should have expired if a plaintiff can show that he/she could not reasonably have discovered the wrong/harm any earlier. In cases of fraudulent concealment, this is a given.
An attorney-client relationship is not as hard to show in Texas as in some states. While it generally requires privity of contract, oral or written, it can also be implied.

Texas | Lawyer Fraud | Fiduciary Duty | Professional Negligence

Posted in Texas

Shih v. Tamisiea, 306 S.W.3d. 939 (Tex. App. 2010)

TX: Contract law

Student contributor: David Yanoff

Facts:  Plaintiff invested in a new restaurant by purchasing shares of a company (ABF) that leased retail space for the restaurant. Plaintiff also personally guaranteed the lease payments. The restaurant developers contracted with a third party (Momentum Group) for construction work to finish the space. Plaintiff met once with Momentum, but did not negotiate or approve a contract with them. Plaintiff was allegedly named on the construction contract without her knowledge or consent. Momentum later stopped work and filed a mechanic’s lien for non-payment. The landlord threatened to cancel the lease because of the lien. One of the other developers contacted an attorney, who suggested that they file a declaratory judgment action to have the mechanic’s lien declared invalid. That attorney referred them to defendant, who filed suit against Momentum on behalf of the developers, including plaintiff. Plaintiff alleged this was also done without her knowledge or consent. Momentum counterclaimed against the developers for amounts due under the construction contract. As a result of the counterclaim, a judgment lien was filed on plaintiff’s real property. Plaintiff learned of the lien when she tried to sell the property. Plaintiff, through another attorney, managed to get the judgment overturned. Plaintiff then sued defendant for professional negligence in commencing a lawsuit in her name without her consent. Plaintiff sought reimbursement for attorneys fees she incurred in getting the judgment against her overturned. Defendant’s counterclaimed for quantum meruit and breach of contract, alleging she was unjustly enriched by defendant’s representation. Plaintiff added claims for breach of fiduciary duty and violation of the Deceptive Trade Practices Act. Defendants moved for summary judgment arguing that plaintiff’s breach of fiduciary duty and DPTA claims were impermissibly fractured professional negligence claims, and that attorney’s fees and loss of use of money were not recoverable in professional negligence claims. The court granted summary judgment to defendant on all claims, and plaintiff appealed, arguing that the facts supporting her breach of fiduciary duty claim were separate and distinct from those supporting the professional negligence claim, and that attorney’s fees were recoverable.

Issue(s):

1) Were plaintiff’s DTPA and breach of fiduciary duty claims viable in light of her concurrent claims for professional negligence?

2) Is a plaintiff entitled to attorney’s fees and loss of use of money damages in a professional negligence action?

Ruling(s):

1) No. Plaintiff did not offer evidence in response to defendant’s motion regarding improper fracturing of claims, so defendant’s motion was properly granted. Professional negligence is exempt from DTPA claims absent unconscionable conduct.

2) Plaintiff may be entitled to attorney’s fees in some cases, so summary judgment was improper. However, loss of use of money is not recoverable beyond what it would have earned at pre-judgment interest rates, so that portion of the summary judgment was proper.

Lesson(s):

 In responding to a  summary judgment motion,  plaintiff must  address each of defendant’s claims so as to establish genuine and material factual issues. Failure to do so will preclude the possibility of a successful appeal. 

CT: LEGAL MAL STATUTE OF LIMITATIONS and THE CONTINUOUS REPRESENTATION RULE

Posted in Connecticut

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.

CT: LEGAL MAL COMPLAINT: PROCEDURE vs. SUBSTANCE

Posted in Connecticut

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.

WV: Legal Malpractice Claims Limited for Estate Beneficiaries

Posted in West Virginia

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.” 

IL: Legal Malpractice Summary Judgements Denied!

Posted in Illinois, Real Estate

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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