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

Hanna v. State, 714 N.E.2d 1162 (Ind. Ct. App. 1999)

IN: Underlying criminal case

Student Contributor: Jeff Cain

Facts: Six police officers were indicted in a criminal case. One officer was indicted for pointing a firearm, operating a motor vehicle while intoxicated causing bodily injury, and criminal recklessness, among other crimes. The other five officers were indicted for obstruction of justice and/or official misconduct. All officers hired the same lawyer to represent them.

Lawyers must provide their clients with zealous representation. But when a lawyer represents multiple clients in the same matter, there may be potential conflicts of interest. The lawyer informed each officer of the potential conflicts that joint counsel may create. Then a magistrate informed each officer how a conflict may arise and how that conflict will affect their case. Then another lawyer met with each officer to make sure that each officer’s waiver was knowing and intelligent.

The prosecution argued that joint counsel would impair the ability of the prosecution to make a deal with one of the officers in exchange of a deal for a reduced or dropped charge, and that the lawyer wouldn’t be able to cross-examine any of the officers if they became a witness against the other officers. The court ordered each officer to hire their own attorney, despite the waiver.

Issue: Can a trial court disqualify a lawyer on the ground that joint counsel may create a conflict of interest?

Ruling: The right to counsel of choice is protected by the Sixth Amendment to the Constitution of the United States. A trial court cannot disqualify a lawyer when there is no actual conflict of interest.

Lesson: The late Supreme Court Justice Felix Frankfurter said

“Joint representation is a means of insuring against reciprocal recrimination. A common defense often gives strength against a common attack.” 

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Seltrecht v. Bremer, 536 N.W.2d 727 (Wis. Ct. Apps. 1995)

WI: Underlying Medical Malpractice

Student Contributor: Jeff Cain

Facts: Patient was prescribed an anti-nausea medication during pregnancy. After baby was born with birth defects, patient retains an attorney. Attorney mistakenly claims that the statute of limitations has ran out on their claim against the doctor. By the time that the patient discovers that this was a mistake, the statute of limitations had run out. The patient sued the lawyer for legal malpractice to collect what the patient would have recovered if the attorney had not provided incorrect legal advice.

Issue: What is the extent of discovery in a legal malpractice suit based on an underlying medical malpractice suit?

Ruling: The extent of discovery in a legal malpractice suit is lower than a medical malpractice suit. In a medical malpractice suit, the doctor is the defendant. In a legal malpractice suit, the defendant is the lawyer, but where the issue depends on the actions of a doctor, the underlying medical malpractice claim must be tried. But the patient’s entire medical history may not be turned over to the opposing party’s attorneys. Medical history must be limited to only the information relevant to the claim, and must exclude all confidential information.

Lesson: Lawyers defending themselves in a legal malpractice case do not have the same access to patient information as doctors do, even though both doctors and lawyers have a duty of confidentiality.
 

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Mariscotti v. Tinari, 335 Pa. Super. 599, 485 A.2d 56 (1984).

PA: Underlying divorce case

Student Contributor: Laura Binski

Facts: The client hired a lawyer to handle her divorce. The lawyer gave the client an incorrect evaluation of the stock owned by her husband. The lawyer told the client that the stock was worthless when in fact it was valuable. The client admits that she knew her husband’s stock holdings were in his name and she did not have title to them. She claims that she would have been in a better bargaining position if she had known the value of the stock. The client claims that the lawyer’s mistake damaged her ability to receive the best possible property settlement after the divorce. The lawyer made a motion for summary judgment. The court granted summary judgment to the lawyer on the ground that the client’s loss, if any, was too speculative to allow recovery.

Issue: Was summary judgment appropriate because the client’s complaint of loss was too speculative?

Ruling: Yes. Summary judgment is appropriate when there is no genuine issue of material fact. A genuine issue of material fact did not arise in this case because the client’s claim was based purely on speculation. No one knows whether she would have achieved a better result if she had known the value of the stock. Exactly how much better the result would have been is even more speculative. Thus, dismissal of her case through summary judgment was appropriate because a jury could not have appropriately decided the issue of whether the client would have obtained a better result.

Lesson: When a client claims that a lawyer has breached his professional obligations, an essential element of the client’s claim is a showing of actual loss. If the client cannot prove actual loss, the claim may be too speculative or remote to survive.

The test of whether damages are remote or speculative has nothing to do with the difficulty in calculating the amount, but deals with the more basic question of whether there are identifiable damages…thus damages are speculative only if the uncertainty concerns the fact of damages rather than the amount.   Pashak v. Barish, 303 Pa. Super. 559, 561-562, 450 A.2d 67, 69

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Ayre v. JD Bucky Allshouse, PC, 942 S.W.2d 24 (Tex. App. Houston 14th Dist. 1996)

TX: Underlying divorce action

Student Contributor: Megan Diodato

Facts:  The malpractice suit arises from a divorce action. The client hired an attorney to enforce a court order against her husband and enjoin his firm in action. The attorney instead negotiated a settlement agreement, which the client approved. However, before the court rendered the divorce final the client requested that the attorney withdraw her consent to the agreement. The attorney failed to do so and client was bound by her consent. The client hired a new attorney and filed a motion for a new trial, which was denied. The client sued former attorney for legal malpractice for failing to withdraw her consent and precluding her from receiving a just division of the marital estate. The former attorney argued that the client’s claim should have been brought during the new trial stage of the underlying divorce action or were issues already litigated during the motion for a new trial. The court ruled in favor of attorney and client appealed.

Issue: Whether the client’s malpractice claims are barred because they should have been brought in previous suit or were issues previously litigated?

Ruling: No

A party cannot bring a second action based on matters previously litigated and on claims that arise out of the same subject matter that could have been litigated in the first suit. Parties may not re-litigate identical issues already resolved in a prior suit. To prevent suit, a party must establish that the parties were adversaries in the first action. There is no evidence that the parties were adversaries during the new trial stage. The party barring suit must also have been a party or connected to a party in the prior litigation. The attorney was not a party, nor in privy during the hearing on her motion for a new trial and withdrew from representing the client after the court entered the final divorce decree. The mere fact that the client based her motion on the attorney’s negligent conduct did not make the attorney an adversary. The client directs the complaint at the attorney’s negligence in failing to withdraw her consent and not on the fairness of the underlying action. The issues decided in the first action, her consent, are not identical to the issue in the present action, her legal representation. The client’s negligence claims did not need to be asserted in previous litigation. When an attorney is alleged to have committed malpractice during the representation of a matter in litigation, there is no injury to client until the underlying suit becomes final. The client did not appeal the underlying divorce decree and therefore her malpractice suit accrued when the trial court denied her motion for a new trial.

Lesson: A malpractice action will not be precluded where the party was unable to raise claims in previous litigation.

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Williams v. Joynes, 278 Va. 57, 677 S.E.2d 261 (2009)

VA: Underlying Personal Injury Claim

Student Contributor: Vanessa L. Wachira

Facts: In 2003, Leo Williams (Client) retained Louis Joynes, II and David Dildy (Attorneys) to represent him in a personal injury claim that stemmed from an automobile accident involving two other vehicles—one driven and owned by a Virginia resident (Brown) and one driven by a Maryland resident (Kiker) and owned by a Maryland corporation (Millstone Enterprises, Inc. (Millstone)). On June 1, 2005, Attorneys filed a motion for judgment against Kiker, Millstone, and Brown; the motion was denied for failure to comply with the state’s two-year statute of limitations. Attorneys advised Client that he might maintain an action against Kiker and Millstone under Maryland’s three-year statutory period, but that the action would not apply to Brown. Attorneys suggested Client hire a Maryland attorney. After allegedly receiving advice from numerous Maryland attorneys that litigating the case in Maryland posed “too many problems,” Client decided not to file the action in Maryland. In January 2006, Client brought a malpractice action against Attorneys in Virginia based upon their failure to timely file the initial personal injury action. Client alleged that “but for” Attorneys’ negligence, he would have been able to recover damages against Kiker, Millstone and Brown. In their motion for summary judgment, Attorneys denied that they were the proximate cause of Client’s lost personal injury action and asserted that Client’s own failure to file in Maryland was a superseding event, which severed their liability.

Issue: Is a client’s failure to file a personal injury action in a foreign jurisdiction a superseding event, which severs the link of proximate causation between the attorney’s failure to timely file the initial action and the client’s loss of his personal injury claim?

Ruling: No. In Virginia, a superseding act that severs causation arises only when that act “entirely supplants the operation of the initial tortfeasor's negligence [so that] that the intervening act alone, without any contributing negligence by the initial tortfeasor… causes the injury.” An intervening act will not be deemed “superseding” when it is “set in motion by the initial tortfeasor’s negligence.” Here, Attorneys’ failure to file the Virginia action set in motion the need for Client to consider filing a Maryland lawsuit. As a matter of law, Client’s failure to file the action in Maryland could not be deemed “superseding.” Moreover, since Brown was not subject to Maryland’s jurisdiction, Attorneys’ failure to file the Virginia action provided sole cause for the permanent exclusion of Brown from the suit. Client’s decision not to file suit in Maryland had no bearing on the loss of personal injury claim against Brown and thus, could not have severed the link of proximate causation between Attorneys' negligence and his loss of claim.

Lesson: Lawyers cannot circumvent liability by claiming that clients have a duty to correct their mistakes. 

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Beese-Munoz v. Barbone, Esq., N.J. App. Div.  (per curiam) Decided May 20, 2011).

NJ Underlying Work Place Discrimination Claim

Facts: In this legal malpractice case, plaintiff appeals from the order granting defendant's summary judgment motion and dismissing her case. Plaintiff retained defendant to pursue her discrimination claims against the Lakehurst Naval Station and others. Her lawyer drafted and filed a complaint on plaintiff's behalf. The Department of the Navy moved to dismiss on three grounds; two procedural--failure to effect proper service of process and one substantive--failure to state a cause of action. The Judge  granted the motion to dismiss  without prejudice on the basis of improper service of process. Defendant lawyer forgot to notify his client of the dismissal for 13 months.  Plaintiff  alleges defendant's failure to notify her of the  Court's decision in a timely fashion deprived her of the opportunity to cure the procedural deficiency, and thus precluded her from prosecuting her cause of action against the Navy. Now, the defendant lawyer moves for summary judgment dismissing the malpractice complaint for claiming that the client would have been unable to establish proximate cause--that she had no meritorious underlying claim.

Issue: If the client's underlying claim was dismissed without prejudice because of the lawyer's negligence, can the lawyer move to dismiss the malpractice complaint on other grounds?  

Ruling:  Yes

Notwithstanding  the  negligent failure to notify plaintiff of the dismissal, plaintiff cannot prevail in this legal malpractice case because her complaint against the Navy was substantively without merit and procedurally barred by her failure to exhaust administrative remedies in that she failed to cooperate with the administrative processing of her discrimination claim. 

Lesson:

The trial court correctly found that defendant's negligence was not a proximate cause of plaintiff's inability to successfully prosecute [the underlying case]. Rather, it was plaintiff's failure to cooperate...This lack of cooperation amounted to failure to exhaust administrative remedies, thus creating an independent procedural bar to the prosecution of her [underlying] claim. The fact that [the Judge in the underlying action] based his decision on a different discrete issue does not preclude the trial court [in the malpractice action] from determining a different and independent basis for dismissing plaintiff's case [in the underlying action]. 

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Abramson v. Wildman, 184 Md.App.189, 964 A.2d 703 (2009)

MD: Underlying Custody Dispute

Student Contributor: Vanessa L. Wachira

Facts: Ronald Wildman (Client) retained Joel Abramson (Attorney) to advise and represent him in a custody dispute. The retainer agreement informed Client that he could “expect [Attorney’s] firm to be both sensitive and professionally responsive to [his] situation.” Attorney filed a breach of contract action against Client seeking recovery of $13,000 in unpaid legal fees. Client counterclaimed for $24,525 alleging breach of contract for Attorney’s failure to represent him in a professionally responsive manner. Specifically, Client alleged Attorney a) prepared and presented a false financial statement to the court; b) failed to timely advise him of a subpoena requesting certain documents; c) failed to present competent evidence and testimony of his financial circumstances; d) failed to properly advise him of the merits of his case and his settlement options; and e) charged him for unnecessary and duplicative work. At trial, the jury found in Client’s favor and awarded him $24,525—the total fee Client had paid to Attorney.

Issue: Does an attorney’s written promise to be “professionally responsive” create an express contractual obligation to provide competent legal advice and representation, such that a client alleging breach of that duty may assert his claim as an action in contract?

Ruling: Yes.  When an attorney makes an express promise of professional responsibility, he creates a contractual obligation to provide his client with legal services that reflect the standard of competence required by his profession. Under Maryland case law, an attorney is required to exercise reasonable “care and diligence” as well as certain “degree of professional skill and knowledge.” Cochrane v. Little, 71 Md. 323, 331-32, 18 A. 698 (1889).
Here, the retainer agreement contained a specific promise that Attorney would “be professionally responsive,” thus creating an express contractual obligation. Consequently, Attorney’s failure to conform to accepted professional standards was enforceable as a breach of express contract. Moreover, even in the absence of the written promise of professional responsibility, under the “law of the place” doctrine, existing laws (including that cited above) “enter into and form part of a contract as if ‘expressly’ referred to or incorporated in its terms.” As the court so aptly concluded, although “‘[f]ew modern actions against attorneys are for breach of a written or express contract,’ this is one of them.”

Lesson: Whether or not a retainer agreement contains an express promise of professional responsibility, a lawyer will be contractually obligated to provide competent legal advice and representation. Also, if a lawyer plans to sue a client for unpaid fees, he should first make sure he’s earned them.

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James v. Murray, NJ Law Div. (trial court) Docket No. ESX-L-9471-09 (May 17, 2011)

NJ Underlying Divorce

Facts: Legal Services of NJ provides  free legal representation to indigent litigants. Its revenue comes mostly from  governmental as opposed to private charitable donations.  Plaintiff here was represented by Legal Services in her divorce action.  She was  the beneficiary of two life insurance policies,  which she lost due to her lawyer's negligence in failing to advise her that by statute, N.J.S.A. 3B:3-14,  she would automatically forfeit spousal rights to insurance proceeds in the event of divorce.  Here, plaintiff assumed she still had right to collect the $60,000 in life insurance proceeds. She only found out she was not after her husband died and she  had paid for his funeral expenses. Defendant Legal Services moved for Summary Judgment asserting it was entitled to protection of the Charitable Immunity Law. 

Issues: 

1) Even if defendants were negligent, is  a Legal Services organization entitled to the benefit of the NJ Charitable Immunity Law-- N.J.S.A.2A:53A-7(a),  which grants immunity to  employees of non profits organized for religious, charitable or educational purposes?  

2) Are IOLTA funds, which are imposed on NJ attorneys as part of their license registration requirement and are allocated by the NJ Supreme Court for funding of Legal Services to be considered governmental funding or private contributions, the latter of which would afford Legal Services immunity? 

Ruling: 1) No;  2) Stay tuned for an App. Div. decision.

Quoting from Legal Services' own mission statement, the Court noted:

...free legal services to low-income, senior and disabled county residents in order to assure that their legal rights are portected and that access to the civil justice system is not denied...simply because they cannot afford a private attorney...

The defendant had to show that it was engaging in charitable or educational purposes at the time it was rendering the services at issue in order to claim immunity. Whether the Legal Services satisfied that criteria was a fact sensitive analysis which requires the Court to look beyond the defendant's non-profit structure and social service activities to take into account its source of funding.  Here, the Court pointed to Legal Services source of revenues which showed that 99% came from governmental grants and only 1% came from private contributions.  

Moreover, defendants failed to present evidence suggesting that they solicit or depend upon private charitable contributions for funding. In short,...defendants have failed to demonstrate that hey are organized exclusively for charitable purposes.

Lesson:   This was plaintiff's second divorce. If the attorney representing her in either of her divorces advised her that she would forfeit her spousal life insurance benefits because of her divorce, would she have proceeded to divorce? The decision doesn't answer that question, but that would surely be an important question of fact especially in view of the lawyer's duty under RPC 1.4 to communicate such information to the client so that she could have made an informed choice about that statutory forfeiture.  Could the forfeiture been avoided if it were addressed in the  Property Settlement Agreement?  Questions to ponder. And lessons to be learned...  Check back for an Appellate Division decision concerning this trial court decision. 

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Augman v. Colwart, 874 So. 2d 191 (La. App. 2004)

LA: Underlying Criminal Case

Student Contributor: Laura Stein

Facts: Plaintiff was charged with possession of a firearm by a convicted felon and the court assigned him counsel. He was convicted and that conviction was eventually affirmed on appeal but his sentence was amended. His instant petition alleged his lawyer committed malpractice by failing to seek enforcement of a supposed plea bargain that would have let him plea to a misdemeanor, misrepresenting the terms of the plea bargain, not properly supervising client, not issuing certain trial subpoenas and conflict of interest. Lawyer filed exception of Prematurity in response which the trial court sustained and the client appealed.

Issue: Is a civil petition alleging legal malpractice in representing a criminal defendant premature pending the final disposition of the criminal proceeding?

Ruling: Any appreciable and actual harm flowing from the attorney's negligent conduct establishes a cause of action upon which the client may sue. Here, his harm (conviction, sentencing and jail time) occurred prior to the filing of this action. Therefore, his petition would not appear to be premature. The trial court erred in sustaining the exception. The court of appeal held that “until the judgment giving rise to the malpractice claim becomes definitive, a legal malpractice claim does not ripen into a cause of action.” The holding cannot be that a suit for legal malpractice would always be premature pending a final and definitive judgment on the relevant issue in an underlying action, even if the preemptive period accrues prior to that time which would extinguish a cause of action- that would be unreasonable and unjust. The case was reversed and remanded but the court noted it was a narrow issue.

Lesson: A plaintiff may bring a legal malpractice action while the underlying criminal case is still pending.

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Evans v. Hamby, 2011 Ark. 69 (February 17, 2011)

Facts: Evans sued his former attorneys alleging that they failed to raise the defense of usury and failed to advise him to reinstate a corporate charter. Defendants argued that they committed no malpractice, since the defense of usury-- according to their understanding of the law, was not applicable and, under the statutory scheme at the time, reinstating the corporate charter would have been fruitless.

Issue: Could Evans pursue his claims for malpractice?

Ruling: No. 

An attorney is not liable to a client when, acting in good faith, that attorney makes mere errors of judgment. Moreover, an attorney is not, as a matter of law, liable for a mistaken opinion on a point of law that has not been settled by the highest court of jurisdiction and on which reasonable attorneys may differ.

The Court held that the attorneys' conclusion that the defense of usury was not applicable was reasonable, since Evans himself selected the interest rate at issue.

With regard to reinstatement of the corporate charter, the Court noted that the statute allowing corporations to reinstate their charter would have been applicable until July 30, 1999-- several months after plaintiff's corporation lost its authority to do business in Arkansas. 

The Court explained that Evans' argument that the statute might have had retroactive effect was not enough to avoid summary judgment in favor of Defendants: 

An attorney is not, as a matter of law, liable for a mistaken opinion on a point of law that has not been settled by a court of the highest jurisdiction and on which reasonable attorneys may have different opinions. This court has never settled the issue of the retroactive application of Act 522 before its effective date. For that reason alone, it is clear to this court that Jerry Evans cannot prove that Hamby's conduct fell below the generally accepted standard of practice and proximately caused his damages. While Hamby could have advised Jerry Evans that the option to reinstate the charter may be available to him, this fact alone is too tenuous to support proximate cause for legal malpractice.

***

Retroactivity is a matter of legislative intent. Unless it expressly states otherwise, we presume the legislature intends for its laws to apply only prospectively.

Lesson: An attorney will not be liable for strategic decisions made with reasonable professional judgement and analysis, unsettled questions of law, or laws that went into effect after the alleged negligence. 

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Augusta v. Keehn & Assoc., 193 Cal.App.4th 331 (March 4, 2011). 

Facts: August sued his former attorney, Keehn, for legal malpractice in December, 2008. The parties' contract included a provision for binding arbitration, but Augusta did not invoke it until six-seven months after the filing of his Complaint. 

Issue: Did Augusta waive his right to arbitration? 

Ruling: Yes. 

Augusta attempted to argue that Keehn led him to believe the arbitration would occur without any action on his part, but the Court held it was up to Augusta to protect his own rights in the malpractice action. 

Further, the Court placed a great deal of significance on the fact that Augusta had prejudiced Keehn by obtaining discovery from him and then refusing to reciprocate after invoking the binding arbitration provision which did not allow for formal discovery: 

The vice involved here, whether characterized as `unreasonable delay,' `bad faith misconduct,' `gamesmanship' or `unilateral discovery' . . . is that defendants used the discovery processes of the court to gain information about plaintiff's case which defendants could not have gained in arbitration. After obtaining discovery from plaintiff by court processes, defendants then belatedly sought to change the game to arbitration, where plaintiff would not have equivalent discovery rights. . . . Here, the trial court could reasonably find the discovery conducted was not equivalent for both sides and would work an unfair advantage for defendants if arbitration were ordered. These facts support the trial court's finding of waiver.

Accordingly, the Court held that Augusta had waived his right to binding arbitration and must proceed with the litigation. 

Lesson: Clients and lawyers should raise any binding arbitration clause in a timely manner and certainly before either party undertakes formal discovery to avoid waiver. 

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The Tax Authority, Inc. v. Jackson Hewitt, Inc., 187 N.J. 4 (2006)

NJ Underlying Commercial Action

Student Contributor:  Melissa Goldberg

Facts: This is an appeal from the decision of the N.J. Superior Court enforcing a settlement agreement. Franchisees sued Jackson Hewiit for improperly retaining funds in a loan risk pool after delinquent loans had been paid.  A settlement agreement was reached between the attorneys for the franchisees and Jackson Hewitt, but certain of the franchisees refused to sign, and brought suit against their attorney for conducting an improper "aggregate settlement" by allocating settlement awards without prior settlement authority from each individual plaintiff for his or her award in violation of R.P.C. 1.8(g) which provides: 

A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregated agreement as to guilty or no contest pleas, unless each client gives informed consent after a consultation that shall include disclosure of the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement.

Issue: Did the attorney's decision to allocate a lump sum settlement offer amongst his clients, without previously obtaining a release from each individual client, constitute an aggregate settlement in violation of R.P.C. 1.8(g)?

Ruling: Yes, however, the Court held that its ruling would be applied prospectively.  The Supreme Court of New Jersey defined an aggregate settlement as one where an attorney negotiates a settlement for a group of claimants directly with the defendants and then allocates individual awards to each claimant. The Court held that no claimant should be bound without full disclosure and specific agreement. As such, where an attorney does wish to settle a multi-claimant matter in the aggregate, he must advise each claimant of the proposed settlement with the defendant, his proposed division of the proceeds, and obtain each claimant’s consent.

Given that this was the Supreme Court’s first opportunity to interpret R.P.C. 1.8(g), and that the franchisee’s counsel made a plausible, although incorrect, effort to have all franchisees agree to be bound by a majority vote, the Court deemed it fair to enforce the aggregate settlement against the franchisees and apply its holding prospectively.

Lesson: R.P.C 1.8(g) requires that an attorney entering into an "aggregate settlement" on behalf of his clients first advise each of his clients of (1) the lump sum offer by the defendant; (2) explain the allocation of that lump sum offer to the individual plaintiffs in the class action; and (3) obtain independent consent from each plaintiff for the aggregate settlement prior to finalizing the settlement and distributing the awards.

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Frazier v. New Jersey Manufacturers Insurance Company, 142 N.J. 590 (1995)

Student Contributor: Selena Marchan

NJ Underlying Insurance Action

Facts: Plaintiff filed a worker’s compensation claim after sustaining an injury at work. The Defendant, Plaintiff’s employer’s workers compensation carrier, accepted the claim and settled with the Plaintiff.

After settling with the carrier, Plaintiff filed suit for malpractice against his former workers compensation attorney for failure to file a third party action against the general contractor who was responsible for Plaintiff’s injuries. The malpractice suit was later settled. Plaintiff’s new attorney sent a letter to the workers compensation carrier to determine the amount of benefits paid to the Plaintiff. The carrier responded stating that it would file a lien against Plaintiff’s recovery in the malpractice suit.

Plaintiff then filed a declaratory judgment action alleging that the carrier could not place a lien on any proceeds obtained from the malpractice suit. The Superior Court granted summary judgment in favor of the Plaintiff, the Appellate Division reversed, and Plaintiff subsequently appealed to the New Jersey Supreme Court.

Issue: Could the workers compensation carrier attach a lien to Plaintiff’s recovery from the legal malpractice suit?

Ruling: Yes. N.J.S.A. 34:15-40 provides that plaintiff may not recover from both a workers compensation claim, and a third party tortfeasor, for the same injury. Therefore, the carrier was permitted to attach a lien on Plaintiff’s recovery from the malpractice suit.

Lesson: N.J.S.A. 34:15-40 is intended to prevent an employee from obtaining a double recovery for the same injury. It is applicable when an employee receives a settlement from both a workers compensation carrier and from a third party tortfeasor who contributed to the employee’s injuries. It is not limited, however, to only those cases where the employee receives recovery directly from the third party. It also applies to cases where an employee’s recovery stems from the third party’s actions.

In this case, for example, but for the actions of the general contractor, the employee would have no cause of action against his former attorney. Plaintiff’s recovery in the malpractice suit, therefore, necessarily stems not only from the negligence of his attorney, but also from the negligence of the contractor. As such, N.J.S.A. 34:15-40 applies, and Plaintiff would not be allowed to recover both from the workers compensation carrier, and his attorney, for the same injury.

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Fraser v. Bovino, 317 N.J.Super. 23 (App. Div. 1998).

Student Contributor: Lisa Larato

NJ Underlying Real Estate/Land Use Transaction

Facts: A deal for the sale of land fell through due to delays caused by challenges to the municipal approval of a condominium project. The real estate agent (Fraser) and the landowners (Genlaws) brought an action against the adjoining landowner (Defendant Bovino) who objected to the condominium project, his attorney, and others involved in ruining the deal. Fraser asserts that Bovino’s attorney (Allen) committed malpractice and acted unethically. The Genlaws also filed a claim against their attorneys Martini and Blessing who had been retained to prosecute their action against Bovino and his attorney.

The only claims still viable for the Genlaws were those which fell under the six year statute of limitations. It was undisputed that the attorneys returned the Genlaws’ file to them a few weeks before this statute of limitations expired, on January 28, 1997. The complaint, however, was not filed until April 25, 1997.

The Superior Court, Law Division, granted summary judgment to certain defendants in both actions. Appeals were filed and consolidated.

Issues: (1) Is Bovino’s attorney liable to the real estate agent, Fraser, for legal malpractice? (2) Are Martini and Blessing liable to the Genlaws for failure to file a timely complaint?

Ruling: (1) Bovino’s attorney (Allen), representing an individual who contested the proposed land use application, did not owe Fraser, the broker, even a limited duty of care. (2) Since Martini and Blessing returned the Genlaws’ file to them several weeks before the statute of limitations on their claims expired, their withdrawal from representation did not adversely affect the clients’ interests so as to warrant liability.

Lesson: Allen, who was not Fraser’s attorney, but the attorney of his adversary, did not owe Fraser any level of a duty of care so as to make him liable to Fraser under a professional malpractice claim.
Under New Jersey Rule of Professional Conduct 1.16, Martini and Blessing did not commit malpractice because they (1) did not wait for the statute of limitations to run before withdrawing, and (2) left enough time for the Genlaws to file their complaint within the statute of limitations. That the Genlaws failed to timely file their complaint, was entirely their own negligence, and bore no relation to the decision of Martini and Blessing to withdraw as counsel in a timely manner.
Editor's Note: In all cases, make sure that before withdrawing, there is a reasonable amount of time left for the client to get substitue counsel to file a complaint before the statute of limitations runs. If it's getting close, consider a pro se complaint for the client thus giving the client even more time to get new counsel and thereby preventing the client's claim from becoming time barred. Do what is reasonable to help the client preserve their cause of action if you're not going to continue with representation, at least until they get new counsel.

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Guarantee Insurance Co. v. Saltman, 217 N.J. Super. 604, (App. Div. 1987)

NJ Underlying Legal Malpractice Action

Student Contributor: Colleen Gaedcke

Facts: A few months after obtaining professional malpractice coverage from the plaintiff, one of the partners at the defendant law firm was served with a legal malpractice complaint. The defendant submitted the complaint to the plaintiff who provided a defense under a reservation of rights to disclaim pending an investigation of any misrepresentation by the law firm on its application for coverage. This investigation ultimately revealed that the defendant law firm did not have knowledge of the malpractice claim at the time it submitted its application.

Despite the results of its own investigation, however, plaintiff moved to disclaim its duty to defend and indemnify the firm for alleged fraudulent misrepresentations and intentionally withholding information concerning the malpractice action. Additionally, plaintiff sought reimbursement for all defense costs.

The law firm, in turn, filed a counterclaim against the plaintiff arguing that it owed a defense and indemnity for the pending malpractice claim, and furthermore, sought indemnification for all legal fees incurred in defending the plaintiff’s declaratory judgment action. The court found that the plaintiff’s policy with the defendant was valid and required plaintiff to provide a defense and indemnity in the malpractice action. Moreover, under Court Rule 4:42-9(a)(6), the law firm was awarded a significant portion of the legal fees it incurred in defending the declaratory judgment action.

Issue: Can an insured recover counsel fees from an insurer for costs and expenditures incurred in defending an insurer’s disclaimer of coverage?

Ruling: Under the American Rule, a prevailing party cannot collect attorney’s fees from the losing party. The New Jersey Supreme Court has, however, carved out an exception to this Rule in R. 4:42-9(a)(6) for an insured who is forced to litigate for its policy benefits against an insurer who erroneously disclaims coverage under a liability or indemnity policy of insurance.

Lesson: New Jersey Courts recognize that counsel fees must be awarded to insureds in order to make certain that they are receiving the full value of the coverage afforded by liability and indemnity policies in instances where an insurer’s disclaimer is not supported by the policy’s exclusions, conditions, or limitations on coverage.

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Rathblott v. Levin, 697 F. Supp. 817 (D.C. N.J. 1988)

NJ Underlying Probate Action

Student Contributor: Christopher S. Henn

Facts: The decedent, an attorney, suffered esophageal cancer for ten years until his passing. During his final days he executed several wills with the aid of the defendant, a partner in the decedent’s law firm. The last will was unsuccessfully challenged by the decedent’s children from his former marriage against his wife.

The wife, who had been successful in the underlying probate action, alleged that the defendant had been negligent in preparing the wills by (1) failing to establish testamentary capacity, and (2) by choosing Florida as decedent’s domicile instead of New Jersey. Due to this alleged negligence, the plaintiff averred that she suffered expenses in defending the will contest that effectively nullified her husband’s estate.

On plaintiff's motion for summary judgment, the defendant’s primary defense was that he owed no duty to the plaintiff, since she had no attorney-client relationship with him.

Issue: Whether the lack of privity is a defense to a legal malpractice action?

Ruling: The United States District Court, District of New Jersey recognized that:

[a] defendant owes a duty of care to take reasonable measures to avoid the risk of causing economic damages…to particular plaintiffs…comprising an identifiable class with respect to whom defendant knows or has reason to know are likely to suffer such damages from its conduct.

             ***

[There is no] valid legal difference between a plaintiff who loses the right to one-half of an estate and a plaintiff who loses one-half of an estate in protecting her rights. If either was caused by an attorney's negligence in drafting, that attorney should be liable.

The Court qualified its holding to the facts of this particular case and provided:

The extent to which this opinion represents an expansion of the exception to the privity requirement stems wholly from the unusual facts in this case…

Lesson: If an attorney knows or should know that individuals other than his client will suffer damages as a result of his negligence on a particular matter, he may be held responsible for their losses despite the lack of an attorney-client relationship.

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Bennett v. Hill-Boren, P.C., 52 So. 3d 364 (Miss. 2011).

Facts: Plaintiff sued former attorney for malpractice. Attorney argued that the statute of limitations had expired and plaintiffs' claim should be dismissed. Plaintiff argued that the statute of limitations doesn't begin to run until the attorney's representation ends. 

Issue: When did the statute of limitations begin to run? 

Ruling: Mississippi does not follow the "continuous representation doctrine." Consequently, the statute of limitations begins to run on the date that the plaintiff learns, or through reasonable diligence, should have learned, of the negligence of the lawyer: 

The discovery rule will toll the statute of limitations until a plaintiff should have reasonably known of some negligent conduct, even if the plaintiff does not know with absolute certainty that the conduct was legally negligent.

Lesson: In Mississippi, the three year statute of limitations will begin to run on the date the client reasonably should have known that the lawyer was negligent.

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Laclette v. Galindo, 184 Cal. App. 4th 919 (2010).

Facts: The trial court retained jurisdiction after the underlying matter was settled to monitor compliance with the settlement agreement. During this time Galindo remained counsel of record for Laclette, but Galindo was never called upon to perform any services for Laclette. In a subsequent malpractice suit, Laclette alleged that the statute of limitations was tolled during the time Galindo remained "counsel of record," even though no actual services were rendered. 

Issue: Does the continuous representation doctrine apply to toll the statute of limitations even where an attorney is not actively representing the clients' interests? 

Ruling: Yes. 

The Court noted that the continuous representation doctrine should be viewed "objectively" from the client's perspective: 

Absent actual notice to the client that the attorney will perform no further legal services or circumstances that reasonably should cause the client to so conclude, a client should be entitled to rely on an attorney to perform the agreed services and should not be required to interrupt the attorney-client relationship by filing a malpractice complaint.

***

Irrespective of the lack of contact between Galindo and Laclette during said two-year period, the evidence established the following: the trial court retained jurisdiction over the Laclette/Ramirez settlement; the settlement obligated Laclette to pay Ramirez $175,000 at the rate of $3,500 per month; Laclette was paying the installments as agreed; and Galindo remained Laclette's counsel of record.

Given these circumstances, and objectively viewing continuous representation from the client's perspective, we cannot say as a matter of law that Laclette could not reasonably expect Galindo to represent her in the event of issues arising concerning the performance of the settlement. We reject Galindo's theory that the two-year hiatus, when no legal services were required of Galindo with respect to the settlement agreement, necessarily had the effect of implicitly terminating Galindo's representation of Laclette.

Lesson: In California, the continuous representation doctrine will toll the statute of limitations in a malpractice action for the period of time the attorney is listed as counsel of record-- even where no active representation is undertaken. To avoid such a situation, attorneys may consider a disengagement letter and/or motion to withdraw. 

Editor's Note: The case notes that in New York, the continuous representation doctrine appears to apply only where "there are clear indicia of an ongoing, continuous, developing and dependent relationship between the client and the attorney [and the relationship] is marked with trust and confidence."  Muller v. Sturman, NY App. Div. 1981.

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Perez v. Stern, 777 N.W.2d 545 (Neb. 2010).

Facts: Plaintiff, Guido, was the personal representative of Martinez. In that capacity, she pursued a wrongful death claim on behalf of his estate. She subsequently alleged that the attorney, Stern, committed legal malpractice when Stern breached her duty to timely prosecute the wrongful death claim. She also alleged that Stern owed an independent duty to the minor children, and that the statute of limitations was tolled on their legal malpractice claims. 

Stern, on the other hand, argued that because the children, who were minors at the time, never had their own claims for relief in the underlying wrongful death action, they lacked standing to bring professional negligence claims against Stern.

Issue: Did Stern owe a duty to Guido's children as beneficiaries of the estate of her deceased husband? 

Ruling: Yes: 

In coming to this determination, the Court considered these factors: 

(1) the extent to which the transaction was intended to affect the third party, (2) the foreseeability of harm, (3) the degree of certainty that the third party suffered injury, (4) the closeness of the connection between the attorney's conduct and the injury suffered, (5) the policy of preventing future harm, and (6) whether recognition of liability under the circumstances would impose an undue burden on the profession.

The Court noted, however, that an attorney is free to limit his scope of representation: 

An attorney may limit the scope of his or her representation by obtaining the informed consent of his or her client. For example, it has been held that the attorneys for the decedent's heirs in a wrongful death action owed no duty to the decedent's mother, where the personal representative specifically told the attorneys and the mother that he did not want them to represent her.

The Court further stated that the beneficiary must be "intended" and not "incidental," i.e. second wife is incidental beneficiary of divorce proceeding. Of course, the Court also recognized that no duty is owed to a third-party that has a conflicting or adverse interest to that of the client. 

Where a direct beneficiary is at issue, however, "it is entirely in keeping with the fiduciary and ethical duties attorneys owe their clients to require an attorney, who has been informed of the client's intent to benefit a third party, to exercise reasonable care and skill in that regard." With regard to the instant action, the Court held: 

In fact, under Nebraska's wrongful death statute, there could be no other purpose to Stern's representation. A wrongful death claim is brought in the name of the decedent's personal representative "for the exclusive benefit" of the decedent's next of kin. The personal representative's sole task is to distribute any recovery in accordance with the statute, to the discrete and identifiable class of beneficiaries that the Legislature has specifically designated. Under § 30-810, the only possible purpose of an attorney-client agreement to pursue claims for wrongful death is to benefit those persons specifically designated as statutory beneficiaries. The very nature of a wrongful death action is such that a term is implied, in every agreement between an attorney and a personal representative, that the agreement is formed with the intent to benefit the statutory beneficiaries of the action.

Lesson: Under Nebraska law, an attorney owes a duty to all intended, direct beneficiaries of his service, unless he effectively limits the scope of his representation. 

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