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

Hirsch v. Weitz, 16 So.3d 148 (Fla. App. 2009)

FL: Underlying divorce, negotiated marital settlement agreement

Student Contributor: Farah Shahidpour

Facts: Client hired a NY Attorney to represent him in his divorce from his former wife and to negotiate the marital settlement agreement (“agreement”). Under the agreement, the parties’ rights and obligations were to be interpreted under NY law. A NY court entered the final judgment of the divorce, including the agreement. Under the agreement, Client’s grocery store chain was to be sold for $87,500,000. Client’s former wife was to receive 55.7% of shares of stock and 55.7% of the proceeds from the sale. The former wife’s attorney received a letter from another NY attorney stating that the grocery store chain was being reduced by $2,000,000, but her number of shares would increase to make up for the loss. Client’s former wife sued client in a NY court, and won $4.2 million plus interest. This award was the difference between what client paid her and what she was owed under the settlement agreement. Client’s former wife then filed an action in Florida to garnish Client’s bank account in Florida. Client sued attorney for legal malpractice, alleging that attorney was negligent in failing to incorporate language into the settlement agreement that would make sure him and his former wife would get their respective shares.

Issue: Whether there is statutory basis for jurisdiction in Florida when all of the necessary legal work was performed in New York?

Ruling: No, the facts do not bring it within Florida’s long arm statute, and the attorney did not have sufficient “minimum contacts” with Florida to satisfy due process requirements. The tort of legal malpractice occurred, if at all, in New York because it was a NY court that entered judgment against client, not a FL court.

Lesson: A tort occurs in Florida if (1) attorney engaged in acts that injured the client in Florida and (2) client cause of action in tort is substantially related to attorney’s acts. Specifically, courts will look at where the legal work was performed and where court settlement agreements or judgments are entered to determine where a tort occurred.

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Schorsch v. Moses & Singer LLP, 60 A.D.3D 557, 876 N.Y.S.2d 367 App. Div. 1st Dep’t 2009).

NY: Underlying insurance claim

Student Contributor: Nicole Milone

Facts: M.R.S. Antiques was a family-owned business that sold art and antiques. The business was run by Margaret Schorsch, her brother David Schorsch, their mother Marjorie Schorsch, and two other unrelated employees. M.R.S. Antiques had an insurance policy through Utica Mutual Insurance Company (Utica). On September 23, 1995, M.R.S. Antiques was robbed. Their inventory, valued at roughly $2 million dollars, was missing. M.R.S. Antiques reported the theft to the police and filed a claim of loss with Utica. Margaret Schorsch believed that her brother David had committed the theft. Based on this belief, she retained Moses and Singer, LLP (Moses) to represent her and the company in an action against her brother. Moses also came to represent M.R.S. Antiques in the Utica insurance claim regarding the theft. In 1997, Utica denied M.R.S. Antiques’ claim due to the “dishonest acts exclusion” of their policy. The policy denies coverage for a loss caused by dishonest acts committed by anyone with an interest in the property. Utica mistakenly quoted the wrong policy in their letter informing M.R.S. Antiques that they were denying the claim. However, the policy quoted in the letter is materially the same as the policy that covers M.R.S. Antiques in this claim.

Issue: Whether the lower court erred in dismissing the client’s case where the attorney did not pursue a legal action against an insurance company who mistakenly cited an incorrect policy when denying client’s insurance claim?

Ruling: No. The error made by the insurance company and the lawyer’s failure to pursue a cause of action against them for their mistake would not have changed the outcome of the underlying matter. The policy incorrectly cited by the insurance company was only slightly different than the policy that actually covered M.R.S. Antiques. The “dishonest acts exclusion” still applies because Margaret Schorsch claimed David Schorsch, an employee with an interest in the company, committed the theft. This clearly applies as an exclusion under the insurance policy, proving that coverage was properly denied.

Lesson: Even if an error was committed in the underlying matter by opposing counsel which goes unnoticed by their adversary, that does not guarantee a legal malpractice claim. A client must prove their attorney’s negligence was the proximate cause of their damages.

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Morters v. Aiken & Scoptur, S.C., 712 N.W.2d 71 (Wis. App. 2006)

WI: Underlying personal injury suit

Student Contributor: Jeffrey Cain

Facts: Morters retained Aiken & Scoptur to represent him in an personal injury case stemming from a car accident. Unsatisfied with their work, Mortens sued the firm for legal malpractice. The trial court dismissed the case, since the former client could not prove all of the elements of malpractice. The lawyers sought attorney’s fees based on a state frivolous claim law. The trial court ruled that the suit was not frivolous, and the lawyers appealed. The court of appeals ruled that the suit was frivolous, and remanded the trial court to determine reasonable fees. The court ordered the client to pay $10,123.09 in trial court fees and $17,820.02 in appeals court fees. Mortens appealed the trial court’s determination that the appeal was frivolous.

Issue: Does a trial court have the authority to make a finding that an appeal of a frivolous legal malpractice suit is frivolous?

Ruling: No. The authority to make a finding that an appeal is frivolous in Wisconsin lies in either the court of appeals or the supreme court.

Lesson: Lawyers have no duty to mitigate damages by alleging frivolity at the first hint of frivolousness. They may wait until after the discovery process has begun to allege frivolity, after they obtained objective evidence to prove frivolity.  

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Gombert v. Herzner, Conn. Super., September 9, 2010 (Unpublished)

CT: Underlying child abuse case

Facts: Plaintiff filed a complaint against defendant, who was appointed by the court as an attorney for his minor child in a neglect case against the child’s mother. During the course of such representation, the defendant filed a petition for termination of parental rights as to the plaintiff. Plaintiff alleged that he suffered loss of communication with his daughter and emotional stress as a result of defendant’s negligently filed petition for termination of his parental rights. Plaintiff also alleged legal malpractice against defendant for deviating from the standard of care required by attorneys who represent children, and for failing to advocate the position of the child.

The Defendant filed a motion to dismiss the complaint arguing that she is entitled to absolute quasi-judicial immunity as an attorney for a minor child, and that plaintiff lacks standing to pursue his claims against the defendant.
.
Issue: Is Defendant is entitled to quasi-judicial immunity as an attorney appointed to represent a minor child?

Ruling: Yes. Attorneys appointed by the court pursuant to statutory law of Connecticut are entitled to absolute, quasi-judicial immunity for actions taken during or activities necessary to the performance of functions that are integral to the judicial process. The purpose of appointing counsel for a minor child is to ensure independent representation of the child’s interests, and such representation must be entrusted to the professional judgment of appointed counsel within the usual constraints applicable to such representation. Absolute immunity in this situation is both appropriate and necessary in order to ensure that the guardian will be able to function without the worry of possible later harassment and intimidation from dissatisfied parents.

The Court ruled that plaintiff also lacked standing to bring this legal malpractice action against defendant because there was never an attorney-client relationship between the defendant and plaintiff. And while plaintiff attempted to argue next of friend of the minor child, it has been recognized by the Connecticut Supreme Court that in order to have standing to bring a claim as next of friend, a person must “1) must be truly dedicated to the best interests of the person on whose behalf he seeks to litigate…[and] 2) must provide an adequate explanation such as inaccessibility, mental incompetence, or other disability why the real party in interest cannot appear on his own behalf to prosecute the action.” The plaintiff in this case fails to meet the criteria and, therefore, lacks standing.

Lesson: Court appointed counsel for minor children are entitled to absolute, quasi-judicial immunity.
 

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Brock v. Owens, 532 A2d 1168 ( PA. 1987).

PA: Underlying employment discrimination case

Student Contributor: Laura Binski

Facts: Brock (client) was a professor at Lincoln University. She believed she was the victim of race and gender discrimination, so she hired a lawyer. She first hired Kalemjian, but he withdrew from the case. Next, the client hired Wusinich. She replaced Wusinich with Owens. The client sued all three of the lawyers for legal malpractice after the court dismissed her case for lack of subject matter jurisdiction. The client represented herself in the lawsuit against the lawyers, and asserted that all three handled her case negligently. At a jury trial, the lawyers filed a motion for non-suit. The motion was granted and the client now appeals.

Issue: Did the trial court properly grant the motion for non-suit in favor of the lawyers?

Ruling: Yes. To avoid non-suit in the case, the client had to show (1) the employment of the lawyers as a basis for their duty to her, (2) the lawyer’s failure to exercise ordinary skill and knowledge in handling the case, and (3) that the lawyer’s failure to handle the case diligently was a cause of the damage to the client. Here, the client presented no evidence to show that the lawyers failed to exercise ordinary skill or knowledge in handling the case, or that she would likely have prevailed in her suit against Lincoln, or that the lawyers handling of her case was a proximate cause of her failure to win the lawsuit against Lincoln. Thus, the client did not meet the requirements to establish her malpractice claim.

Lesson: The client here failed to prove malpractice because she did not show that the lawyers handled her case with less than the requisite ordinary skill and care or that their handling of the case was a proximate cause of her failed claim against Lincoln. She also did not present any evidence to show that it is more likely than not that she would have won her underlying lawsuit if not for the lawyers’ negligence. If the client does not present any evidence that the lawyers failed to exercise ordinary skill and knowledge or evidence that she would likely have won her case against Lincoln University, the client cannot prevail in the legal malpractice claim.
 

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Diaz v. Paul Kennedy Law Firm, 289 F.3d 671 (10th Cir. 2002).

N.M.: Underlying criminal matter

Student Contributor: Manju Sunny

Facts: Plaintiffs, clients in the matter, brought suit against defendants, their attorneys. Plaintiffs retained defendants to represent them in criminal cases filed in the New Mexico state court. Defendants charged plaintiffs a flat fee of $15,000. There was no written fee agreement. Clients became unhappy with attorneys’ representation especially with regards to clients accepting a plea offer that attorneys believed to be highly favorable. As a result, plaintiffs rejected the plea offer, discharged the attorneys, and demanded the retainer fee back claiming ineffective representation.

Issue: Does  a court have the power to reduce the amount fixed by a contract between a client and attorney, if there is no showing of misconduct or neglect on the part of the lawyer?

Ruling: No. Under New Mexico law, if the parties have reached a contract of retainer that fixes the amount of the attorney’s compensation, and the attorney has not offended it , either through misconduct or neglect in providing professional services, the court does not have the power to reduce the amount fixed by the contract.

Lesson: Although the laws vary state to state, in New Mexico, where the attorney has not committed misconduct or neglect, a client cannot simply change the retainer fee agreement, and only pay the attorney for services rendered up to the discharge. If this were allowed, there would be no purpose in a client and attorney contracting, and would thus put the attorney at an unfair disadvantage.

Editor's Note: Interestingly, the Court must have felt that the flat fee  charged for the underlying defense services was reasonable under the circumstances, since  it did not mention that all attorneys fees are required to be reasonable, under RPC 1.5. 

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Kaplan v. Cowan Liebowitz & Latman, P.C., 832 So.2d 138 (Fla. App. 2002)

FL: Underlying private placement securities offering

Student Contributor: Farah Shahidpour

Facts: Medical Research Industries, Inc. (MRI) was a Florida corporation in the business of marketing medical products. William Tishman, was the majority shareholder, CEO, Chairman, secretary, treasurer, and director of MRI. MRI wanted to raise money to expand their business by selling shares through private placement memoranda (PPM) which is a non-public offering. The Attorneys counseled MRI on securities issues and prepared the PPM. As a result, MRI raised $50,000,000 over two and a half years. MRI became insolvent after Tishman borrowed $18,000,000 from the money raised through the private placements. MRI appointed Donald Kaplan as assignee for the benefit of MRI’s creditors. Kaplan brought a legal malpractice suit against Attorneys alleging that they knew or should have known that the PPM were false and misleading because they did not disclose that the money raised was not used to expand business but for loans to Tishman.

Issue: Whether an assignee for the benefit of creditors, acting as a fiduciary for a corporation has standing to bring a legal malpractice against the corporation’s attorneys in an action on behalf of the now-insolvent corporation?

Ruling: Yes. Under Florida law, legal malpractice claims are not assignable because of the “highly personal nature of legal representation and confidentiality.” However, an exception to this rule applies to claims that, “involve reliance on the allegedly confidential information by interests other than the entity for whom the information was prepared.” KPMG Peat Marwich v. National Union Fire Ins. Co., 765 So.2d 36, 38-39 (Fla.2000). Kaplan has standing to bring the malpractice claims against the Attorneys because their legal services involved the publication of incomplete information to the investors.

Lesson: When attorneys provide legal services that involve the publication of corporate information to third parties (investors), they, “owe ultimate allegiance to the corporation’s creditors and stockholders, as well as to the investing public.” KPMG at 38. Therefore, an assignee has standing to bring legal malpractice claims against the corporation’s securities attorney who made the incomplete disclosures. 

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Roni LLC, et al. v. Afra et al., 2010 WL 3703047, September 16, 2010

NY: Underlying real estate investments

Facts: This action arose from a series of business transactions in which investors acquired membership interests in limited liability companies that purchased and managed multi-family residential buildings in NY. The Defendants, either directly or through their wholly owned companies, located the properties, arranged financing, organized the limited liability companies, and managed the properties. Plaintiffs alleged, amongst other things, that Defendants made a secret profit at the expense of Plaintiffs’ and their LLCs. While Defendants allegedly disclosed some of the profits made from the business venture, they allegedly concealed that property sellers and mortgage brokers directly or indirectly paid them commissions of up to 15% of the purchase price of the property.

Plaintiffs asserted claims of breach of fiduciary duty, fraud (both actual and constructive) and waste. Defendants filed a motion to dismiss for, among other things, failure to state a cause of action and failure to plead actual fraud and breach of fiduciary duty with specificity.

Issue: Whether a fiduciary duty claim had been sufficiently pled based on both the parties’ relationship and on the defendants’ status as the organizers of the business venture?

Ruling: The parties business or personal relationship is not sufficient to establish a fiduciary relationship. A conventional business relationship between parties dealing at arms length does not give rise to fiduciary duties, unless the plaintiff shows the defendant “had superior expertise or knowledge about some subject and misled the plaintiff by false representations concerning that subject”. While Defendants held themselves out to be experts, Plaintiffs did not allege that Defendants misled them in any way that would affect the transactions.

It is well settled that before and after a corporation comes into existence, a promoter, much like Defendants’ role in this case, acts as the fiduciary to the corporation and its present and anticipated shareholder. By extension, the organizer of an LLC is a fiduciary of the investors it solicits to become members. Therefore, Plaintiffs’ allegations that the Defendants planned the business venture, solicited plaintiffs to invest and organized the LLC are sufficient to establish a fiduciary relationship.

The fiduciary duty includes the obligation to fully disclose any interests of the promoter that might affect the company and its members, including profits. Therefore, Plaintiffs’ allegations that the Defendants: failed to reveal that they would receive commissions from sellers and mortgage brokers in addition to their other, disclosed profit from the venture was sufficient to establish a cause of action for breach of fiduciary.

Lesson: In order to establish a breach of fiduciary duty claim between promoters and investors, there must be sufficient facts alleged to establish the fiduciary relationship as well as the duties owed within that relationship.
 

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Today we celebrate the 1st anniversary of “going live”.  In our first year,  we have welcomed more than 77,000 visitors to our blog. The Legal Malpractice Law Review has become the #1 site for everything you need or want to know about legal malpractice.

We are grateful to all the Lawyers, litigants, Judges, Professional Liability Insurance professionals, law students, law professors, even lay people who have come to visit and utilize our resources. While the overwhelming welcome we have received this past year has been wonderful, we would love to receive your comments to help celebrate this landmark event. Just click the "Comments" button on the lower left of this post and send us a few nice words. 

In April of this year, the American Bar Association’s Lawyers Professional Liability Committee took note of us and showcased this blog at its conference for 500+ legal malpractice lawyers and insurance industry executives, underwriters, brokers and claims professionals.

One guru of the legal malpractice bar-- whose name we all would recognize, commented that when it comes to educating law students and practicing lawyers, the way we’re doing it at the Legal Malpractice Law Review, is now “the way to go”. A busy Law Journal reporter  called us “cutting edge.” 

We are a totally web based blog whose goal it is to build an archive of all of the most important sources and resources in the law governing lawyers. In the past year, we have become the “go to” place for law students and lawyers conducting legal research in the field.  Every weekday we post a new case summary, hyperlinked to a copy of the full text court decision. Case summaries are researched and written by senior law students who are focused on studying legal malpractice law in a full semester law school course in the subject. Experienced legal malpractice practitioners and law professors edit the student’s work before posting.

Our archive of the most critical legal malpractice cases covers the entire country and is easily accessible without any cost to our visitors, at any time, day or night, 24/7. All you need is an internet connection, from your PC, Mac, iPhone, iPad, Blackberry, Droid or other smartphone. Our advanced word search engine on the left hand column will get you right to the cases or  other resources you’re looking for.

So, in court, in the law library, in your office or on the go, day or night, you know where to find us. We’re here. For you.

So, from the Editorial Board: Thanks for making this 1st year so successful!

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Holvenstot v. Nusbaum, et al., N.J. App. Div., September 21, 2010 (Unpublished)

NJ: Underlying probate action

Facts: This action sought an appeal from an order granting Defendants’ motion for summary judgment and, thereby, dismissing Plaintiff’s complaint that sought damages from legal malpractice and misrepresentation. A malpractice claim was brought by Plaintiff based on services rendered by Nusbaum to Plaintiff’s mother prior to her death. Plaintiff claims that Nusbaum breached his duties to Plaintiff’s mother that, in turn, caused Plaintiff damages. A misrepresentation claim was based on an allegation that Nusbaum provided false information in opposition to a guardianship action that Plaintiff previously filed. Nusbaum provided a certification in opposition to the guardianship action that included a representation that Plaintiff’s mother executed a new will that disinherited him, which Plaintiff claimed was false.

Issue: Whether Plaintiff’s claims against Defendant for malpractice survive summary judgment?

Ruling: The Appellate Court held that Defendants were entitled to judgment as a matter of law on plaintiff’s legal malpractice claim, since there is no evidence that there was an attorney-client relationship or some independent basis for concluding that Nusbaum and his firm owed a duty to Plaintiff. The only facts relevant to Plaintiff’s relationship with Nusbaum and the firm are that Nusbaum represented Plaintiff in a municipal court matter previously, Plaintiff accompanied his mother when she sought advice from Nusbaum about property she owned, and that he was the intended beneficiary of her will.

However, by assuming responsibility for representing Plaintiff in municipal court, Nusbaum did not undertake a broader and ongoing duty to his former client in unrelated matters. Moreover, when an attorney undertakes preparation of a will, the attorney’s professional and fiduciary duties are owed to the testator and not the testator’s potential beneficiaries. Even when an attorney undertakes to represent the executor of a will, the attorney may not act in furtherance of the interests of the testator’s beneficiaries when those interests are inconsistent with the testator’s interest as expressed in the will.

Lesson: In order for a legal malpractice claim to survive summary judgment, there must be evidence of an attorney client relationship or some independent basis to show that a duty was owed. 

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Strauss v. Fost, 209 N.J. Super. 490, 507 A.2d 1189 (App. Div. 1986)

NJ Underlying Personal Injury Suit

Student Contributor: Evan Kusnitz

Facts: Client’s insurance company retained Attorney to defend Client in a personal injury suit arising from a car accident. Attorney informed Client that if he wished to make a cross-claim for property damages, he must do so in this action. Client responded that he wanted Attorney to represent him for the cross-claim. Attorney then wrote to Client twice in order to discuss his fees. Client did not respond until after the second letter, stating that he had made other arrangements in order to collect property damages. However, Attorney had already filed the cross-claim. Although Client informed Attorney of his decision to pursue other methods of collecting his property damages, Attorney did not inform the court or opposing counsel that he no longer represented Client in the cross-claim. More importantly, he did not inform Client of the pending motion that he had filed, did not send him the relevant papers, and did not inform Client of the court’s dismissal of the cross-claim. Attorney only explained to Client the entire situation after he later found out that Client had not yet collected property damages and was waiting until after the trial to file a claim.

Issue: Does an attorney who is representing a client for one matter owe any duty to the client regarding another claim after the client rejects representation for that claim?

Ruling: An attorney must protect a client’s interests even after the client has rejected representation for a certain claim. See N.J. R.P.C. 1.16(d). Thus, an attorney is negligent as a matter of law when he

1) fails to inform a client who has rejected his representation of the dismissal of the client’s claim; and

2) fails to inform the court and opposing counsel that he longer represents a client in a matter.

Lesson:

1) An attorney who has already initiated a claim on behalf of a client may not abandon that client when he rejects the attorney’s representation. The attorney must notify the client, the court and opposing counsel, in order to protect the client’s interests. See N.J. R.P.C. 1.16(d).

2) As the court here noted, an attorney can avoid these problems if he meets with the client in person from the outset!

NOTE: The court modified this case with regard to the amount of damages. Strauss v. Fost, 213 N.J. Super. 239, 517 A.2d 143 (App. Div. 1986). 

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DeAngelis v. Rose, 320 N.J. Super. 263, 727 A.2d 61 (App. Div. 1999)

NJ Underlying Divorce Action

Student Contributor: Evan Kusnitz

Facts: A father guaranteed in writing his daughter’s fees for her divorce attorney. He was not a party to the agreement between his daughter and the attorney. When the legal fees exceeded more than double the expected amount, and his daughter defaulted on the fees, the father sued the attorney and his firm for legal malpractice. The daughter did not join as a plaintiff, and the court noted that there was no evidence of her dissatisfaction with the attorney’s services.

Issue: Does an attorney have any duty towards a guarantor of his client’s legal fees?

Ruling:

1) There is generally no attorney-client relationship between an attorney and a guarantor of legal fees, and thus, there can be no claim of legal malpractice.

2) However, an attorney may owe a duty to a non-client when the attorney knows, or should know, that a non-client will rely on the attorney’s representations, and the connection between the attorney and the non-client is not too remote.

Here, the father did not rely on any communication of the attorney, and thus he had no claim of legal malpractice.

Lesson: An attorney generally has no duty to non-clients, including guarantors of legal fees. However, a duty may arise when an attorney knows, or should know, that a third party is relying on a representation of the attorney.

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Cameron & Mittleman v. Chapman, N.J. App. Div., March 17, 2010 (Unpublished).

Facts:  Plaintiff sued his former attorneys ("Firm A") for professional negligence, alleging that it lost royalty income for which it had bargained in the sale of certain assets.  Plaintiff claimed that the loss was caused by Firm A's failure to disclose to Plaintiff the negotiation of a further transfer of the assets by the acquiring company.  Plaintiff alleged that this failure deprived it of the ability to take certain preventive measures.  

Firm A filed a third-party complaint against "Firm B", the attorneys who represented Plaintiffs in a later transaction wherein they structured the agreement governing the sale of the Plaintiffs' assets to the acquiring company.  Firm A alleged that the loss of the royalties would have been avoided had Firm B structured the agreement to prohibit any further transfer of the assets, or otherwise protected Plaintiffs' interests with respect to the royalty payments in the event of such transfer.  

Firm B filed a motion to dismiss and argued that it was not a "Joint Tortfeasor" under N.J.S.A. 2A:53A-1 et seq., given that the two firms represented Plaintiffs in "two separate and distinct corporate transactions, that happened at separate points in time."

Issue:  Can attorneys be liable as joint tortfeasors where they represent the client in separate matters at separate times? 

Ruling:  Yes.  In deciding the issue, the Court first noted that the purpose of the Joint Tortfeasor Contribution Law ("JTCL") is "to promote the fair sharing of the burden of judgment by joint tortfeasors and to prevent a plaintiff from arbitrarily selecting his or her victim."

The Court then determined that Firm A and Firm B were responsible for the "same injury," i.e. loss of royalty income.  Moreover, the Court noted that Plaintiffs' claims against Firm A and Firm B arose at essentially the same time: 

[W]e have concluded that, for the purposes of the JTCL, [Plaintiffs'] putative cause of action against both [Firm A and Firm B] arose at essentially the same time, i.e., the finalization of the transaction...When that transaction was finalized without [Firm B] having structured the agreement to protect against further transfer of the assets and without [Firm A] having disclosed...the negotiations concerning the planned, subsequent sale...the alleged wrongs by the parties to this action that are said to have caused the loss of the royalty income were essentially complete.

Accordingly, the Court held that Firm A could in fact pursue a claim for contribution against Firm B under the Joint Tortfeasor Contribution Law.

Lesson:  In order to show that multiple attorneys are responsible for Plaintiff's damages under the Joint Tortfeasor Contribution Law, it is necessary to establish that each attorney's negligence contributed to the "same injury", and that Plaintiff's cause of action against each of the attorneys arose at the same time.

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Connelly v. Frohling, Hudak & McCarthy, P.C., N.J. App. Div., September 9, 2010 (Unpublished).

Facts:  After Plaintiffs' house sustained extensive damage, including destruction of the roof and resulting mold infestation, as a result of several storms, Plaintiffs sued their homeowners' insurer pro se.  After their complaint was dismissed, Plaintiffs consulted defendants with regard to reinstatement within the one year time frame.  Despite Plaintiffs' claim that the defendants had agreed to take their case on contingency, more than a year went by without an executed retainer agreement or reinstatement of Plaintiffs' complaint.  Plaintiffs then pursued this malpractice action.

Issue:  Can Plaintiffs establish an attorney-client relationship in the absence of an executed retainer agreement? 

Ruling:  Yes.  The Court considered, in detail, all of the factual circumstances by which Plaintiffs came to believe the defendants would handle their claims against the insurer.  The Court noted that Plaintiffs met with the defendant attorneys at their offices on multiple occasions, the attorneys comments to the effect that Plaintiffs had a "very strong case against [the insurer]," and that they "would be willing to help with the matter."

The Court further noted the firm's alleged willingness to accept the case "on a contingency fee basis" after reviewing documents related to Plaintiffs' claims against their insurer, including their insurance policy, proofs of payment, medical records, and maps of their property. 

When a retainer agreement finally was presented to Plaintiffs, it required them to pay a $10,000 retainer fee for "services rendered" to be "credit against" the "final bill."  Although these terms were allegedly different from what Plaintiffs had originally agreed to, at least one of the Plaintiffs signed the agreement given the impending deadlines. 

Subsequently, defendants prepared a certification for Plaintiffs to sign in support of their motion to reinstate which, allegedly, contained materially inaccurate statements pertaining to the delay in retaining counsel and Plaintiff's medical condition.  Shortly after Plaintiffs refused to sign this certification, defendants asked Plaintiffs to pick up their documents and "withdrew" their letter of engagement.

Despite defendants' position that they did not represent Plaintiffs in their claims against the insurer, the Court found that Plaintiffs had presented "more than adequate evidence to demonstrate defendants' negligence in not moving to vacate the dismissal in a timely manner and in failing to advise plaintiffs that the firm would not represent them."

Accordingly, the Court held that the first prong of a legal malpractice action - the existence of an attorney-client relationship - had been satisfied.  Upon finding that the Plaintiffs had presented at least some evidence of damages as a result of the defendants' alleged negligence, the Court reversed the dismissal of the malpractice action.

Lesson:  An attorney cannot rely on the absence of a fully executed retainer agreement to argue that an attorney-client relationship does not exist.  Courts will conduct a fact intensive analysis and consider (1) whether the attorney discussed the matter in any amount of detail with the prospective client; (2) whether the issue of attorney's fees was discussed or agreed upon; and (3) whether the attorney reviewed documents or performed any other investigation or work in connection with the prospective matter.  The decision suggests that this list is not exhaustive, and that each relationship will entail a different fact sensitive analysis.  The language used by the Court in coming to its determination demonstrates the need for attorneys to provide timely notice in all prospective cases they decide not to pursue.

Editor's Note:  As a side note, this matter also presents an interesting issue about whether a judge ought to recuse himself in legal malpractice matters where he fails to disclose the existence of prior malpractice claims filed against him in unrelated matters.  The Appellate Division noted: 

We know of no obligations of a trial judge to provide a list of malpractice claims filed against him or the firm with whom he practiced merely because it is requested without any additional contention or assertion warranting such a disclosure.

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Pasqua v. Masone, N.J. App. Div., August 19, 2010 (Unpublished).

Facts:  Plaintiff, the administrator of his mother's estate, appeals from the dismissal of the estate's complaint against the defendant attorney.  In May, 1992 Plaintiff's mother had suffered traumatic injuries which left her with severely diminished cognitive functions.  Thereafter, Plaintiff's brother hired an attorney who prepared a will, power of attorney, and trust agreements naming him trustee.  The will resulted in the brother and his lineal descendants receiving a greater portion of the mother's estate. 

in January, 1999 suit was brought on the mother's behalf alleging breach of fiduciary duty and conversion against the brother and his family.  In or around that time, other family members had begun to question certain disbursement from the mother's estate.  Soon after the mother's death, there was a will contest in probate court.  The court found in favor of Plaintiff and noted that the mother's signature on the new will appeared on a page by itself, that her relationship with the brother was "very sketchy," and that, to a reasonable degree of medical certainty, the mother had no ability to truly understand the attorney's advice regarding the new will.  As a result of its decision, the probate court appointed Plaintiff administrator of his mother's estate.

Several days later, on February 9, 2006, Plaintiff commenced an action against the attorney who had drafted and obtained the mother's signature on the new estate documents rejected by the probate court.  The defendant attorney argued that Plaintiff's action was time-barred under New Jersey's six-year statute of limitations for legal malpractice actions.  Plaintiff argued that his action was timely, since (1) there was no ascertainable loss until the probate court awarded attorney's fees; and (2) he could not maintain an action on behalf of the estate until the probate court appointed him as administrator of the estate.

Issue:  Was Plaintiff's time to file a legal malpractice action tolled until he could identify an "ascertainable loss"?  Could Plaintiff maintain a legal malpractice action on behalf of the estate without first being appointed administrator? 

Ruling:  The Court rejected Plaintiff's position that no damages had occured until the probate court rendered its decision.   The Court noted that Plaintiff and his family members had begun questioning disbursements as early as 1999.

To trigger the statute of limitations, only the fact, not the amount of damages need be certain.

The Court further rejected Plaintiff's argument that the statute of limitations ought to be tolled until he had been appointed administrator by the probate court.  The Court noted that there was no authority to support such an argument, and that in fact, Plaintiff had pursued ongoing litigation in probate court while his brother was still trustee.  Accordingly, the Court held that Plaintiff's malpractice claim was barred by the applicable statute of limitations.

Lesson:  The six year statue of limitations for legal malpractice begins to run as soon as Plaintiff learns of the attorney's negligence and that the negligence will result in some injury or damage, even though the extent of the damage may not yet be known.  The statute of limitations will not be tolled for a beneficiary until he is appointed administrator.

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 Community Capital Bank v. Fischer & Yanowitz 47 A.D.3d 667, 850 N.Y.S.2d 508
N.Y.A.D. 2 Dept., 2008

NY: Underlying Commercial Transaction

Student Contributor: Ryan O'Donnell

Facts: Plaintiff filed a legal malpractice action against Fischer & Yanowitz, and Jeffery Yanowitz. Plaintiff filed a motion to join Patricia Fischer and Jeffery Yanowitz as partners based upon partnership law and the doctrine of partnership by estoppel. The Supreme Court, Kings County granted plaintiff’s motion to consolidate, and denied a motion by Yanowitz for summary judgment dismissing the complaint insofar as asserted against him.

Issue: Does a partnership exist between parties who do not agree to share in the profits or losses of a business?

Ruling: A partnership did not exist between Fischer and Yanowitz, as there was no mutual promise or undertaking to share in the profits in the business or to submit to the burden of making good the losses. The doctrine of partnership by estoppel was inapplicable because Yanowitz never represented that him and Fischer were partners, there was no evidence that he consented to Fischer representing him as a partner, nor was there any indication that plaintiff relied on Fischer and Yanowitz being partners in retaining Fischer as counsel.

Lesson: If there is no written agreement between the parties, a court will look to the conduct, intention, and relationship of the parties to determine if a partnership exists. A partnership does not exist if there is no “mutual promise or undertaking of the parties to share in the profits of the business and submit to the burden of making good the losses.”

A court will impose a partnership under the doctrine of partnership by estoppel, Partnership Law §27, when

“a person, by words spoken or written or by conduct, represents himself, or consents to another representing him to any one, as a partner in an existing partnership or with one or more persons not actual partners, he is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made.”

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Allbritton v. Gillespie, Rozen, Tanner & Watsky, P.C.180 S.W.3d 889 (Tex. App. 2005)

TX:  Underlying Contract Litigation

Student Contributor: Evan Kusnitz

Facts: Attorneys represented Client 1 and Client 2 in a breach of contract suit against their employer. Attorneys told the two clients to calculate their own damages for presentation at the trial. Client 2 had a financial background; Client 1 did not. Both clients testified at trial regarding their damages. The jury found for both clients on the breach of contract claim. However, while it awarded Client 2 $4,000,000, it awarded nothing to Client 1.

In Client 1’s subsequent malpractice suit against Attorneys, he alleged that Attorneys were negligent because they failed to hire a damages expert, because Client 1 had no financial background. In response to Attorneys’ summary judgment motion, Client 1 filed two affidavits: one from Expert Attorney, and the other from Expert Accountant.

Issue: Can a non-lawyer provide expert testimony in a legal malpractice case?

Ruling: Yes. A non-lawyer expert may testify to an issue in controversy that is within his expertise. Furthermore, sometimes an expert attorney’s testimony is insufficient to establish causation, and a non-legal expert would be required. See Rangel v. Lapin, 177 S.W.3d 17 (Tex. App. 2005) (accident reconstruction expert needed in addition to attorney expert).

Lesson: A non-lawyer expert can testify in a legal malpractice case to matters within his expertise. 

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Phillips v. Moran & Kufta, P.C., 53 A.D.3d 1044, 862 N.Y.S.2d 875 (2008)

NY: Underlying personal injury claim against municipality

Student Contributor: Michael Park

Facts: The plaintiff retained attorney in an underlying personal injury claim which occurred on municipal property. Attorney failed to commence an action against the municipality and also failed to make an application for leave to serve a late notice of claim against the municipality. Attorney made a motion for summary judgment and the trial court denied it. The attorney then appealed.

Issue: Was the motion for summary judgment properly denied?

Ruling: Yes. In affirming the decision by the Supreme Court, Monroe County, the Supreme Court, Appellate Division, Fourth Department held for the plaintiff for the following reasons:
1) The Court relied on the decision in Ippolito v. McCormack, Damiani, Lowe & Mellon, 265 A.D.2d 303, 696 N.Y.S.2d 203 and ruled that it is the burden of the defendant in bringing the motion for summary judgment to show that the plaintiff is unable to prove at least one of the elements of their legal malpractice claim, of which elements are:
1. the defendant attorney failed to exercise that degree of care, skill, and diligence commonly possessed by a member of the legal community
2. proximate cause
3. damages
4. the plaintiff would have been successful in the underlying action had the attorney exercised due care

2) Defendant failed to meet their burden and actually raised a triable issue of fact on “whether discretionary leave to file a late notice of claim...would have been available”.

Lesson: The defendant in a legal malpractice case needn't disprove every element of the plaintiff's case. Rather, they just need to establish that at least one of the elements cannot be proven by the plaintiff. In creating a triable issue of fact, the defendant actually helped the plaintiff by showing that a trial would be required to see if the plaintiff could have been successful in the underlying action.

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Donnelly v. O'Malley & Langan, P.C., et al., United States Court of Appeals, Third Circuit, March 16, 2010

Facts:  Plaintiff, proceeding pro se, filed suit against his former attorneys who had represented him in his underlying workers compensation claim.  He alleged that his attorney has failed to adequately investigate his claim prior to negotiating a settlement, and tendered his letter of resignation to his employer before settlement.  Plaintiff raised breach of contract and legal malpractice amongst other claims.

The attorneys moved to dismiss based, in part, on Plaintiff's failure to produce a Certificate of Merit.  The District Court granted the attorneys' motion as to both the breach of contract and legal malpractice claims for failure to produce a Certificate of Merit.  It held that Plaintiff provided no reasonable explanation for failing to file the certificate, and his promise to produce a legal expert in the future did not satisfy the requirement.

Plaintiff appealed and argued that no certificate of merit was necessary as to his breach of contract claims, since that claim did "not call for expert testimony to explain the [attorney's] lapses in judgment or failures in performance."

Issue:  Can Plaintiff proceed with a breach of contract claim against his former attorney without an affidavit/certificate of merit?  

Ruling:  No.

Regardless of how [Plaintiff] chooses to characterize his claim...[his] allegations pertain to the quality of [his former attorney's] professional representation of him, and thus a [Certificate of Merit] is required. 

Since Plaintiff could offer no reasonable explanation or legitimate excuse for his failure to furnish the certificate of merit, the Court dismissed Plaintiff's claim without prejudice.  Unlike New Jersey, the Pennsylvania statute does not require dismissal with prejudice for failure to file the required certificate of merit.

Lesson:   A certificate of merit must be filed in Pennsylvania with regard to any claim that requires the analysis of whether or not an attorney breached the applicable standard of care.  Whether the claim is characterized as beach of contract or legal malpractice is of no consequence. 

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