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Gunster, Yoakley & Stewart, P.A. v. McAdam, 965 So.2d 182 (2007)
FL: Underlying probate representation
Student Contributor: Farah Shahidpour
Facts: Personal representatives of Client’s brought an action against their probate Attorney asserting claims of breach of fiduciary duty, constructive fraud, civil conspiracy, negligence and unjust enrichment. Client asserts that Attorney wrongfully procured J.P. Morgan Trust Company, N.A.’s (“J.P. Morgan”) appointment as corporate fiduciary and caused the estate administration to be more expensive. Clients sought compensation for all avoidable probate expenses and the return of all fees paid to Attorney by the decedent. The trial court entered final judgment of $1,043,430, in favor of Client. Attorney appeals.
Issue: Whether the trial court properly determined that Attorney was liable to the estate for administration expenses and damages arising out of the appointment of J.P. Morgan?
Ruling: Yes. Attorney had a duty to fund a revocable trust during decedent’s lifetime. There was sufficient evidence that Attorney implicitly agreed to do so. The appellate court noted that Client could collaterally attack the appointment of J.P. Morgan.
Lesson: A testator’s estate can maintain a legal malpractice action against attorney who prepared the will of the deceased in order to address issues not remedied in probate court. A breach of fiduciary duty may be maintained where, “a relationship exists[s] with respect to the acts or omissions upon which the malpractice claim is based,” and a party may demonstrate this relationship by showing that his attorney implicitly agreed to undertake these responsibilities. Lane v. Cold, 882 So.2d 426, 438 (2004).
Elkind v. Bennett, 958 So.2d 1088 (2007).
FL: Underlying labor dispute
Student Contributor: Farah Shahidpour
Facts: Client hired Attorney to represent himself, his business venture, and his business partner in a labor dispute brought against the business. The suit was one for harassment. The matters were settled, and Attorney signed the settlement on behalf of Client. Six months later, Attorney wrote a latter to the trustees of the business, revealing confidential information he learned from his prior representation of Client. The company used this information to have Client fired and removed from the venture, causing him damage. Client sued Attorney, alleging legal malpractice. The trial court dismissed the complaint because Client had not stated a cause of action for legal malpractice. The court noted that Attorney had disclosed the confidential information obtained from Client after his representation of Client, and thus was not in privity with Client at the time of disclosure. The trial court reasoned that the complaint should be dismissed for failure to allege privity. Client now appeals.
Issue: Whether the trial court properly dismissed Client’s action for legal malpractice for failing to allege privity?
Ruling: No, the trial court improperly dismissed Client’s action for legal malpractice because Attorney had a continuing duty to his Client not to disclose confidences. This duty continued even past the termination of the matter for which representation was sought.
Lesson: Florida recognizes a cause of action for disclosure of confidential information. In a legal malpractice action, a plaintiff must prove three elements: the attorney’s employment, the attorney’s neglect of a reasonable duty and that such negligence resulted in and was the proximate cause of loss to the plaintiff. Brennan v. Ruffner, 640 So.2d 143, 145 (1994). A plaintiff must allege what confidence was breached and how its disclosure damaged the Plaintiff.
Kastner v. Jenkens & Gilchrist, P.C., 231 S.W.3d 571 Tex. App. 2007
TX: Underlying Commercial Real Estate Action
Student Contributor: Megan Diodato
Facts: The non-client, as owner of one of fifteen limited partnership interests in a partnership, asserted claims against counsel for the partnership based on his participation in the purchase of the partnership’s sole asset. The partnership was created between two businessmen in the interest of acquiring real estate. The partnership was to be the purchase entity acquiring an apartment complex. These men hired said attorney to prepare necessary documents. In order to raise funds for the purchase they solicited participation in the real estate investment through the sale of limited partnership interests in the partnership. The attorney prepared the partnership agreement in accordance with the information provided by the clients. The attorney provided the fully executed copy of the purchase agreement to all partners. The real estate investment began to experience financial difficulties and this suit ensued.
Issue: Whether attorney negligently misrepresented information knowing a non-client would rely upon
Ruling: Negligent misrepresentation liability is based from the attorney’s manifest awareness of the non-client’s reliance on the misrepresentation and the attorney’s intention that the non-client rely on that misrepresentation. The duty imposed on an attorney to a non-client is limited and a non-client cannot rely on an attorney’s representation unless it is invited. The reliance element is absent in this case as there is no evidence attorney invited or was aware of non-client’s reliance. Here, the only communication attorney had with non-client was in the form of a cover letter attached to the purchase agreement. The cover letter contained no legal opinions. The attorney represented the partnership and it is well established that an attorney’s representation of a partnership does not extend to each of the individual partners.
Lesson: Attorney’s dealing with legal issues involving the formation of partnerships should warn all parties involved of who they represent and that each should seek their own individual attorney.
Cadle Co. v. Sweet & Brousseau, PC, (US Dist. Court, ND Texal, Dallas Div. 2006)
TX: Underlying litigation
Student Contributor: Megan Diodato
Facts: The client brought this action against former attorney and designated a former Texas Supreme Court Justice as an expert witness concerning legal malpractice issues in this case. Former Justice issued an expert report stating that the firm and their employee lawyer was negligent and guilty of malpractice in their conduct. The Justice opined that if an opposing lawyer asks the court to take judicial notice of the court’s file, the other lawyer’s duty is to either know exactly what is in file or call for a recess to determine what’s in there before he can agree that the judge take judicial notice of it. The attorney filed a motion to exclude this expert testimony.
Issue: Can client qualify a former Justice as an expert witness offering testimony on legal malpractice under the Federal Rules of Evidence.
Ruling: No. In evaluating whether expert testimony may be admitted the key factors are reliability and relevance. The client did not produce sufficient evidence to qualify witness as an expert because of the failure to produce evidence hat Justice has sufficient specialized knowledge to assist the trier of fact in deciding the malpractice issues in this case. The client only provided evidence that when the Justice has conducted expert work it was primarily in legal malpractice cases. The particular issues the Justice addressed in such cases is unknown. A person who may be licensed attorney or Judge, who holds years of experience in the practice of law will not qualify him/her to give an expert opinion on every legal question. The client and expert did not demonstrate the facts or data relied upon in reaching opinion and therefore not the product of reliable principles and methods.
Lesson: Lifetime experience as a lawyer or Judge does not qualify one as an expert in all areas of law-specialized knowledge in particular area is necessary.
David J. Sacks, P.C. v. Haden 266 S.W.3d 447 (TX Supreme Ct. 2008)
TX: Underlying Fee Agreement Dispute
Student Contributor: Megan Diodato
Facts: The client hired the attorney on behalf of himself and company owner as his appellate counselor. The parties signed a written engagement letter prepared by the attorney that included a description of the services to be provided as well as the rate for this particular matter. The agreement stated that the normal rate charged by the attorney is $300 per hour but in this matter will be $200 per hour. The attorney’s signature appears at the end of the letter and below the signature is the statement, “ Your signature below indicates acceptance of the terms of this fee agreement.” The parties later agreed to change the amount of the retainer from $10,000 to $5,000. The engagement letter shows that the client signed the agreement, making that change by crossing out the original retainer amount and writing in the new amount above the original typewritten numbers in handwriting, adding his initials beside the change. After filing the brief on behalf of the client the attorney sent the client an invoice and stated that in order to provide excellent service the cost is often times more expensive then anticipated. The attorney then sent a second invoice for the services he provided in preparing and filing the reply brief. The client only paid an additional $5,000 and contested the remaining fees owed. The client stated that the attorney was only to review the brief already drafted by his trial counsel and that it was made clear that $5,000 was all he could afford to spend.
Issue: Whether a written attorney fee agreement can be modified by presenting proof of an oral fee capping agreement?
Ruling: No. Evidence of an oral agreement capping attorney’s fees is not valid because parol evidence cannot modify a written agreement unless there is ambiguity in the agreement. The contract was explicit as to the services to be provided and the manner that would be used in determining the price.
Lesson: Attorney should be clear and forthright explaining the possibility of fees exceeding what was originally expected in order to avoid fee disputes.
Alvarez v. Casita Maria Inc., 269 F. Supp. 2d 834 (N.D. Tex. 2003)
TX: Underlying conviction for illegal reentry into the U.S.
Student Contributor: Megan Diodato
Facts: The clients, illegal aliens, contacted Casita Maria, Inc. to arrange for immigration counseling services. In the course of that counseling, the clients met with multiple Casita employees, who counseled them to file certain forms and fees with the Immigration and Naturalization Service (INS). An employee of Casita filled out these forms for the clients and afterward an attorney reviewed the forms and opined that they were complete and ready to be filed. Upon advice of another Casita employee, the clients mailed the documents to their local district’s INS. Once the INS became aware of the client’s whereabouts, the INS scheduled an interview with them, which a Casita employee attended. At the interview, the clients were notified that his application to register for permanent residence would likely be denied. The client was later arrested, charged with illegally reentering the U.S., and sentenced to prison. The client alleged that the attorney is liable for legal malpractice in failing to counsel him to submit the correct INS forms and but for this negligence he would not have been imprisoned.
Issue: Whether claims of legal malpractice may be brought where the conviction has not been overturned?
Ruling: No. Under Texas law, claims of malpractice and negligence based on a criminal conviction may not be brought unless that conviction has been overturned. Peeler v. Huges & Luce, 909 S.W.2d 494 (Tex. 1995). In Peeler, the Court held that “as a matter of law, it is the illegal conduct rather than the negligence of a convict’s counsel that is the cause in fact of any injuries flowing from the conviction, unless the conviction has been overturned.” Id. at 498. Although the client’s claims of negligence and malpractice arise from representation in an administrative law setting rather than criminal, the harm to him is the same. Client seeks damages for his incarceration. Convicts may not shift the consequences of their crime to a third party. The client was incarcerated here because he plead guilty to a charge of illegal re-entry, not because of any action or inaction on part of attorney. Attorney’s motion to dismiss granted.
Lesson: Claims of legal malpractice seeking damages due to incarceration, including administrative law settings, may not be brought unless the conviction has been overturned.
Gillespie v. Scherr, 987 S.W.2d 129 (Tex. App. 1998).
TX: Underlying class action suit
Student Contributor: Megan Diodato
Facts: The case arises from a class action suit that was filed by attorney’s on behalf of all chiropractors in Texas against various insurance companies who refused or delayed payment of the doctors’ bills for services to patients. The class was never certified and during the period between the filing and dismissal of the class action, settlements were entered and approved for some of the named clients. The other named clients, who were left out of the settlements, sued their attorney’s for fraud and breach of fiduciary duty a settlement was reached. The unnamed clients intervened in that case asserting similar claims and a separate trial was ordered. Both the clients and attorneys filed for summary judgment. The court granted summary judgment for attorneys and clients appealed.
Issue: Whether there is an implied attorney client relationship upon filing a class action suit will all potential class members?
Ruling: No
A lawyer’s professional duty generally does not extend to persons whom the lawyer never represented, even where the lawyer’s work was intended to benefit them. A class action may be maintained only by order of the trial court. See Tex.R. Civ. P. 42(c)(1). Until a trial court determines that all prerequisites to certification are fulfilled, there is no class action, the case proceeds as an ordinary lawsuit, and attorneys for named class members have no authority to represent or act on behalf of the unnamed class members. Under these circumstances the named class member’s attorneys owe no duty to any unnamed class members.
Lesson: There is no attorney client relationship or fiduciary duty owed to all potential class members once a class action suit it filed.
Flatow v. Ingalls, Court of Appeals of Indiana, August 16, 2010 (Unpublished).
Facts: Ingalls sued the Flatow Defendants for legal malpractice, alleging that defendants were negligent in failing to respond to a cross-motion for summary judgment. Defendants argued that they had no duty to do so under the parties' Retainer Agreement, which provided that the defendants would represent the Ingalls only as to one particular count in the underlying action by drafting a motion for summary judgment and a reply brief.
Issue: Under these circumstances, was it appropriate for the defendants to not oppose a cross-motion filed against their clients?
Ruling: Yes.
Indiana Professional Conduct Rule 1.2(c) allows 'the scope and objectives of the representation' to be limited 'if the limitation is reasonable under the circumstances and the client gives informed consent.' It is appropriate where:
1. [T]he client has limited objectives; and
2. [T]he terms upon which the representation is undertaken may exclude specific means that might otherwise be used to accomplish the client's objectives.
In light of the specific language of the parties' Retainer, the Court held that a response to a cross-motion against Ingalls was not part of the limited representation to which the parties had agreed. The fact that the cross-motion was related to the particular count for which defendants sought summary judgment was not enough to sway the Court's decision. Rather, the Court relied on the language of the retainer itself: "Defendants agreed to file only a motion for summary judgment and reply in [this] matter...[I]t was incumbent upon [Ingalls] to seek any further representation he needed as to the [cross-motion]."
Lesson: A very specific and unambiguous retainer is key where an attorney agrees to limited representation. The agreement should spell out the means by which the client's limited objectives will be accomplished. At least in Indiana, it appears that the agreement will be upheld even where there is an omission by the attorney as to directly related issues. The attorney would be wise to, as the Flatow Defendants did here, provide prompt notice of all issues that are not within the scope of the agreement, and allow the client to timely seek additional representation.
Diaz v. Maney, District Court of Appeal of Florida, Second District, August 11, 2010 (Unpublished).
Facts: Diaz retained Attorney Maney's services with regard to her acrimonious relationship with her husband, Rood. During a counseling session, as a gesture of his sincerity in desiring reconciliation, Rood offered Diaz one-half of the inheritance he would receive upon the death of his father. Diaz asked Maney to draft an agreement memorializing Rood's offer. The executed assignment prepared by Maney referenced "good and valuable consideration," but did not identify the nature of the consideration.
Approximately seven weeks later, Diaz filed for divorce which was finalized in April, 1996. Upon the death of Rood's father in April, 2000, Diaz filed a claim with the estate based upon Rood's assignment. Rood defended the action successfully based upon a lack of consideration. After an appeal and evidentiary hearing, this decision was affirmed by the appellate court.
Diaz then filed a legal malpractice action against Maney. Maney contended that the two year statute of limitations, which began to run in April, 1996, barred Diaz' malpractice claim. More specifically, Maney argued that the marital settlement agreement stated that it superseded all other agreements, and should have put Diaz on notice of the unenforceability of Rood's assignment.
Diaz argued that the malpractice claim did not accrue until the appellate division made a final determination that Rood's assignment was not valid for lack of consideration.
Issue: Does an action for legal malpractice accrue only after a final determination of the pertinent issue by an appellate court?
Ruling: Yes.
[A] cause of action for legal malpractice does not accrue until the underlying proceeding has been completed on appellate review because, until that time, one cannot determine if there was any actionable error by the attorney...In the instant case, had this court reversed the trial court's determination in Diaz's civil suit that Rood's assignment was unenforceable, Diaz would not have had a cause of action against Maney or his firm. However, when the determination that the assignment was unenforceable was affirmed by this court, a cause of action against Maney for negligent representation accrued. Then, and only then, did the statute of limitations begin to run.
Lesson: In Florida, the statute of limitations will not begin to run on a legal malpractice case until appellate review of the underlying action is complete. It would also appear, then, that it is incumbent on plaintiff to seek appellate review of the trial court's decision in the underlying action before proceeding with an action for legal malpractice.
Grassi v. Hyden, 2010 Ark. App. 203 (March 3, 2010).
Facts: Grassi retained Hyden with regard to the disposition of his majority interest in a lumber company. Ultimately, upon Hyden's advice, Grassi proceeded with an Employee Stock Retirement Plan ("ESOP"). The lumber company, however, was unable to make payments to the ESOP after several years and, as a result, Grassi lost hundreds of thousands of dollars. He subsequently sued Hyden for legal malpractice.
At trial, Grassi presented the testimony of an attorney, Wyck Nisbet. Nisbet testified about the general process of creating an ESOP, and stated that a feasibility study is a critical part of deciding whether to form one. He did not, however, specifically say that Hyden's representation fell below the standard of care, or that in this particular instance, the ESOP was not a reasonable recommendation in light of the lumber company's profitability.
Hyden moved for summary judgment in the malpractice suit, alleging that Grassi's did not present expert testimony as to the applicable standard of care, breach, and proximate cause.
Issue: What elements of the legal malpractice action must an "expert" witness address?
Ruling: Expert testimony must establish that the allegedly negligent attorney departed from the applicable standard of care, and that this caused the plaintiff to sustain the damages of which he complains.
Recognizing that feasibility of an ESOP is a complex subject that is not within the province of a jury, the Court first held that the issue presented by this case was not one of "common knowledge," and that an expert was certainly necessary.
Interestingly, the Court did not view Nisbet as Grassi's expert. Instead, it ruled that Nisbet's testimony demonstrated a need for an expert to opine on whether or not, based upon the then existing conditions, it was a reasonable for Hyden to advise Grassi to proceed with an ESOP. In other words, Nisbet's general statements as to when and how an ESOP should be created were not enough - Grassi needed an expert to opine as to the specific standard of care applicable to Hyden and how he breached that standard.
Accordingly, the Court granted Hyden's motion for summary judgment.
Lesson: In a legal malpractice case where the issues are not subject to the rare "common-knowledge exception," it is essential for plaintiff to present expert testimony on (1) the applicable standard of care; (2) the breach of that standard; and (3) how the breach proximately caused the plaintiff's damages.
Johnson v. Babcock, Court of Appels of Oregon, November 10, 2010 (Unpublished).
Facts: After being sentenced to 30 years in prison, Dwayne Johnson filed a post-conviction appeal in which he was represented by Attorney Babcock. The Appellate Division remanded the case for a resentencing hearing. The trial court again found Johnson to be a dangerous offender and imposed the 30 year sentence.
Plaintiff then pursued a petition for post-conviction relief, alleging ineffective assistance of counsel at the resentencing hearing. Plaintiff argued that under Oregon law, the maximum sentence he could have received was 80 months. The trial court denied this petition and the appellate court affirmed, finding that Plaintiff failed to show his former attorney's performance was "unreasonably deficient."
Shortly thereafter, Plaintiff sought habeas relief in the United States District Court for the District of Oregon. The federal court concluded that the attorney's representation did not comport with constitutionally minimum standards of effective assistance. Specifically, the federal court determined that the attorney's failure to object to the 30 year sentence on the basis of pertinent Oregon case law was unreasonable and prejudiced Johnson. Ultimately, the state court stipulated to a sentence of 80 months.
Plaintiff then initiated this legal malpractice action. Babcock argued that the suit was barred by the doctrine of issue preclusion because the state court had already decided that his performance had not been "unreasonably deficient."
Issues: When two separate courts have rendered two separate findings with regad to the same issue, is that issue precluded from relitigation in another proceeding?
Ruling: No.
First, the Court set out the five factors that must be present in order for the doctrine of issue preclusion to apply
1. The issue in the two proceedings is identical.
2. The issue was actually litigated and was essential to a final decision on the merits in the prior proceedings.
3. The party sought to be precluded has had a full and fair opportunity to be heard on that issue.
4. The party sought to be precluded was a party or was in privity with a party to the prior proceeding.
5. The prior proceeding was the type of proceeding to which this court will give preclusive effect.
The Court then noted that the doctrine does not come without exceptions. One exception is the existence of inconsistent determinations of the pertinent issue:
Those courts and commentators which have considered the question are in virtually unanimous agreement that where outstanding determinations are actually inconsistent on the matter sought to be precluded, it would be patently unfair to estop a party by the judgment it lost.
Given the disparate determinations on the issue of the adequacy of Babcock's representation in the state and federal courts, the issue preclusion doctrine did not bar Johnson's subsequent suit for legal malpractice.
Lesson: Inconsistent determinations on the issue of ineffective assistance of counsel, or legal malpractice, will not bar relitigation of the issue in a subsequent suit where the sufficiency and adequacy of the attorney's representation is again at issue.
Hoagland v. Sandberg, Phoenix & Von Gontard, 385 F. 3d 737 (2004)
7th Cir.: Underlying legal malpractice claim
Student Contributor: Clem Durham
Facts: The district court determined after a bench trial that Hoagland's suit failed as a suit for legal malpractice. Hoagland doesn't disagree. His grievance is that he should have been allowed either to amend his complaint to make clear that his claim, which he believes the district judge misunderstood, is not malpractice but is rather breach of contract or alternatively breach of fiduciary duty, or allowed to dismiss his suit without prejudice and start over. The claim, in substance and without regard to how it might be characterized, is that the Sandberg law firm represented the adversaries — a corporation (Midwest) and its swindling president — in a derivative action and used its dual representation to prevent the corporation from recovering assets of which the president had wrongfully deprived the corporation; that the law firm had wrongfully accepted payment of its fees from the corporation (the client whose interests the firm had sacrificed); and that it should therefore be required to rebate ("disgorge") the fees to Hoagland for the benefit of the corporation.
Issue: Is it proper to dismiss a claim as duplicative, when a breach of fiduciary duty claim is based on the same operative facts as a legal malpractice claim, and results in the same injury?
Ruling: Yes. Hoagland cannot be permitted, by recharacterizing the claim — whether by calling the conflict of interest a breach of fiduciary obligation or by contending that his contract with the law firm contained an implied promise not to commit such conflicts — to get around the requirement of presenting expert testimony. That is the kind of formalist move that courts rightly reject. Illinois courts hold that "when a breach of fiduciary duty claim is based on the same operative facts as a legal malpractice claim, and results in the same injury, the later claim should be dismissed as duplicative." The fact that restitution was sought instead of conventional damages also does not alter the nature of the suit. Restitution is a remedy, at least when sought as here as reparations for a tort. Asking for restitution doesn't change the cause of action.
Lesson: Make sure all claims are included in the initial complaint, because if a new theory of recovery is brought too late, it may be deemed duplicative.
Kim v. O’Sullivan, 133 Wash. App. 557 (2006)
WA: Underlying Personal Injury Action
Student Contributor: Ben Doyle
Facts: Client was sued by injured party following a bar fight. Client believed that Defendant attorney who was assigned to represent client by insurance company committed malpractice. As a part of the settlement in the underlying action, Client assigned his rights to the malpractice action to the injured party. The malpractice claim was filed and summary judgment was granted in favor of attorney.
Issue: Whether a legal malpractice claim can be assigned and brought by the opposing party to the underlying lawsuit.
Ruling: The appellate court held that the party bringing the action was not the real party in interest in the malpractice action and barred from brining the suit. When the client returned, the court again held dismissal was proper this time because client did not bring sufficient evidence of damages caused by the alleged malpractice.
Quoting Kommavongsa, 149 Wn.2d at 311,
In sum, we can see no advantage flowing to the legal system or the public that it serves from permitting assignments of malpractice claims to adversaries in the same litigation that gave rise to the alleged malpractice.”
Lesson: The malpractice alleged in this case was that the attorney inadequately conducted discovery and underestimated the strength of his opponent’s case. As a result, a settlement for $200,000 was allowed to expire by attorney. Client found his own counsel and, without consenting attorney, agreed to a settlement in which he consented to a judgment the amount of $3,000,000 to be entered against him provided that his opposition never enforce the judgment against him personally. After client realized that his assignment was not proper, he agreed to take up the case and then assign his judgment, which was permitted because it was not the court’s intention to protect lawyers.
Tolliver v. McDonnell, 155 Ohio App.3d 10 (2003).
OH: Underlying criminal defense; ineffective assistance of counsel.
Student Contributor: Shiv Vydyula
Facts: Because appellant Tolliver was indigent, the court overseeing his indictment for conspiracy and for murder appointed McDonnell as his attorney. A jury acquitted Tolliver of murder but found him guilty of conspiracy to commit aggravated murder. The court sentenced Tolliver to a term of incarceration. A few months after, McDonnell withdrew as Tolliver’s counsel. The court appointed new counsel for purposes of appeal. Tolliver instructed his new counsel to file a claim for ineffective assistance of counsel alleging that McDonnell had failed to assert a defense for the conspiracy charge where the statute of limitations had run on that charge. The trial court dismissed Tolliver’s legal malpractice claim against McDonnell as untimely. Tolliver claims though that the statute of limitations tolled until the court rendered the opinion in the appeal of the criminal action.
Issue: Did the statute of limitations on the legal malpractice claim effectively toll until the court ruled on the appeal in the criminal matter?
Ruling: The court ruled that the claim was untimely. The court leaned on case law that supported that cognizable events begin the statute of limitations focus on what the client is aware of and not on extrinsic judicial determinations. The court ruled that the cognizable event here was when Tolliver instructed his new counsel to file the appeal.
Lesson: Cognizable events and their analysis seem to lean towards prevention. Here, it prevents the attorney being sued for malpractice from being exposed to suits with overly broad statutes of limitations for bringing claims. Clearly the outcome in the criminal case suggests there was something that McDonnell could have seen, but ultimately, the statute of limitations saved him.
Barry v. Barry, App. Div. of N.J., October 29, 2010 (Unreported)
NJ: Underlying Matrimonial Case
Facts: The Plaintiff’s former law firm appeals an order denying its motion to intervene in a matrimonial case, contending that Plaintiff’s current counsel mishandled the case. The former firm obtained a final judgment of divorce, entitling Plaintiff to half of defendant’s pension benefits. Subsequently, Plaintiff learned that Defendant/Spouse had been receiving pension benefits for 10 years without her knowledge. Plaintiff questioned the former firm as to why she hadn’t received her share of defendant’s pension to which it admitted that it did not timely serve a qualified domestic relations order with the State Division of Pensions.
After it conceded this failure to file and fault for consequential non payment, the former firm attempted to correct its mistake. It filed an amended supplemental order to the final judgment of divorce. The Division informed Plaintiff she would receive a check monthly going forward and former firm took no further action. Plaintiff’s present attorney sought payment of ten years of pension benefits from defendant that plaintiff had not received. The Court denied the application. Plaintiff neither moved to reconsider nor filed an appeal from the denial. The former firm took no action until it filed a motion to intervene, stating that plaintiff’s counsel failed to argue that defendant was unjustly enriched and that the motion judge erred by not establishing a constructive trust. And although the former firm failed to serve the qualified domestic relations order for 10 years, the divorce decree entitled plaintiff to half of defendant’s pension.
Issue: Whether Plaintiff’s former firm may intervene to mitigate its damages in a potential legal malpractice lawsuit?
Ruling: The Court, treating this as a motion for reconsideration since the former firm is rearguing the fact that the motion judge erred by not granting plaintiff reimbursement for 10 years of pension benefits, affirmed the motion judge’s holding. Intervention was not warranted because the application was untimely, primarily because the time to reconsider the prior order expired and may not be enlarged. The former firm waited months before it filed its motion to intervene, which proved fatal.
While R. 4:50-1 allows for relief from an order to a party or party’s legal representative, the former firm was neither a party nor counsel for Plaintiff. It filed the motion to limit its potential exposure in an expected legal malpractice lawsuit, not because plaintiff rehired the firm to pursue the unpaid benefits. If plaintiff were granted the benefits, any damages resulting from the former firm’s negligence would be reduced. Although plaintiff would benefit from a ruling amending the order, the former firm does not represent plaintiff and, therefore, the R 4:50-1 is inapplicable.
Lesson: When an attorney is faced with a possible malpractice claim, and has the opportunity to correct the mistake in the underlying case, it should do so quickly as the time limitations for reconsideration/intervention are strict and short.
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