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

Roberts v. Langdale, 363 S.E.2d 591 (Ga. App. 1987)

GA: Promissory Notes; Personal Guarantees

Student Contributor: Paul Barnhill

FACTS: Client hired Attorney in connection with a business deal involving a company called Versa-Tile. Versa-Tile issued two promissory notes in favor of The First National Bank of Valdosta, and Client became a personal guarantor on these notes. In the underlying action, First National Bank sued Client for payment, and Client added Attorney as a third-party defendant claiming legal malpractice to indemnify Client from having to pay on the personal guaranty. To rebut the legal malpractice claim, Attorney filed three affidavits in his defense from three attorneys who claimed to be familiar with the case and facts surrounding Attorney’s representation of Client, and that in their opinions, Attorney represented Client with the proper degree of “skill, prudence, and diligence.” Additionally, these attorneys all were deposed and demonstrated how they felt Attorney’s representation was proper in the context of this particular case. In contrast, Client submitted an affidavit in support of his malpractice claim, but the affidavit said only that Attorney, “violated one or more provisions of the Georgia Code of Professional Responsibility.” Client’s brief made no mention of negligence or dropping below the standard of care of attorneys. The trial court granted Attorney summary judgment, and Client appealed.

ISSUE: Does the fact that Client’s supporting affidavit of merit fails to mention negligence on Attorney’s part make the affidavit insufficient in a legal malpractice case.

RULING: In Georgia, it is presumed that an attorney’s representation of a client is performed in a skillful manner. Here, this was reinforced in by Attorney’s three affidavits which actually went into great detail saying exactly how Attorney upheld the proper standard of care. Previously Georgia courts have held that allegations of violating a professional rule of conduct alone are not sufficient to support a claim, especially one as thoroughly rebutted as this one. Therefore, Client’s affidavit did not allege any act that constituted legal malpractice, and summary judgment for Attorney was affirmed.

LESSONS: The lesson here is simple, but important.  When an attorney rebuts a legal malpractice claim with an affidavit stating the attorney demonstrated proper care, the suing client must have a countering affidavit alleging that the standard of care was not met in sufficient detail to raise a material question of fact.  Otherwise, no issue of fact remains, and summary judgment for the attorney is proper and will be granted. Also, alleging that an attorney broke a rule of professional conduct is not enough to overcome this; the client must show a specific departure from the standard of care. 

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Gallo v. Brady, 925 So.2d 363 (Fla. App. 2006)

FL: Underlying Estate Planning

Student Contributor: David Drescher

FACTS: Ann Gasponi employed Frank R. Brady and his law firm Brady & Brady P.A. to carry out her estate planning. In the course of this representation, Brady suggested that Gasponi create a charitable remainder trust. Gasponi apparently agreed to do so and Brady wrote up the document. Following Gasponi’s death, the federal government assessed $72,000 in tax from Gasponi’s estate. Florence Gallo, as the personal representative of Gasponi’s estate, brought a legal malpractice claim alleging that “(1) the purpose of establishing the charitable trust was to save on federal estate taxes; (2) the trust failed to comply with mandatory requirements set forth by the United States Tax Code and related regulations; and (3) as a consequence of the trust's deficiencies, a tax deduction was not available to the estate and the estate paid in excess of $72,000 in estate taxes that could have been avoided but for Brady's negligence.” Brady filed a motion for summary judgment alleging that there was no evidence in the trust creation documents that the purpose of the trust was to limit tax liability and that extrinsic evidence could not legally determine Gasponi’s intent. The trial court granted the motion for summary judgment.

ISSUE: 1) Were there material issues of fact in dispute relating to the intent of Gasponi?
2) Is looking to extrinsic evidence permitted in this case, i.e. is a third party beneficiary entitled to bring a malpractice suit when they themselves weren’t in privity with the attorney?

RULING: 1) Yes. “[A] jury could look at the facts alleged by the personal representative and, without resort to extrinsic evidence, reasonably infer that one of Gasponi's purposes for setting up the charitable remainder trust was to effectuate federal tax savings”
2) “Generally, a legal malpractice claim may be brought only by one who is in privity with the attorney… [t]here is, however, an exception that permits an intended third party beneficiary of the legal services to bring suit where ‘testamentary intent as expressed in the will . . . [was] frustrated by the attorney's negligence and as a direct result of such negligence the beneficiaries' legacy [wa]s lost or diminished.’” (citing Angel, Cohen, & Rogovin v. Oberin Inv., N.V., 512 So.2d 192, 194 (Fla. 1987))

LESSON: Liability in legal malpractice still attaches in cases of negligence in the construction of testamentary documents once the testator/grantor is deceased. A third party beneficiary has standing to bring a legal malpractice action in FL.

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Lovett v. Estate of Lovett, 250 N.J. Super. 79, 593 A.2d 382 (Ch. Div. 1991)

NJ: Underlying will and estate contest

Student Contributor: James Quinn

Facts: Plaintiffs are two former guardians and children of decedent, who passed away during this action. They allege malpractice by attorney in drafting a more simple will for their father, eliminating a more complex will that had been in existence. They are additionally claiming attorney (“defendant”) committed malpractice by allowing decedent’s wife to have power of attorney over the decedent. There were tape recordings of dialogue during the drafting of new testamentary writings, and decedent’s wife remained mostly quiet during drafting. However, she sold three properties of decedent using her power of attorney. Defendant acted as lawyer and broker, taking commission instead of attorney fees for sale of properties. Wife passed away, the plaintiffs obtained guardianship over their father, and began this action against defendant.

Issues: 1. Plaintiffs allege negligence, stating that defendant should have had separate counsel review documents, should have held all will conversations outside presence of decedent’s wife, and gotten a psychiatric evaluation to prevent will challenges
2. Did defendant breach his ethical duty by acting as lawyer and broker for sale of home, and accepting commission instead of legal fees?

Rulings:  1. Defendant was not negligent in executing the new will. Although plaintiff relies on numerous instances, their claims lacks direct proof. The actions taken by defendant were proper with regard to the will, there did not exist a conflict of interest by granting power of attorney to wife and writing husband’s will, a lawyer’s search for information need to be reasonable to inform his client, and The court wrote:

“I am not persuaded that [the lawyer]  did not employ the knowledge, skill and ability ordinarily possessed and exercised by other members of the Bar similarly situated. Nor have I concluded that the prudence and care that he did exercise was unreasonable. Plaintiffs have therefore failed to satisfy me by the preponderance of the evidence that defendant's actions constituted legal malpractice” (92-93)

2. An attorney cannot act as broker and attorney in the same transaction. Simply labeling commission as fees will not immunize the attorney from an ethical violation. In doing so, he violated an ethical obligation to his client. The steps by the defendant were not ancillary to his role as attorney. However, the plaintiffs failed to establish legal malpractice was proximate cause of plaintiff’s losses. Defendant was barred from receiving commission for sales.

Lesson: Plaintiffs in legal malpractice case must show direct proof to show breach of attorney-client relationship. That breach must demonstrate the lawyer did not employ knowledge, skill and ability of similarly situated. Additionally, an attorney should never act as broker and attorney in real estate transaction. Attorney will be barred from collecting fees, and if proximate cause is shown to plaintiff losses.

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Prosser v. Zeldin, 2010 WL 5392707

NJ: Underlying Divorce; Affidavit of Merit 

Student Contributor: Mordechai Buls

FACTS: Defendant represented plaintiff in a divorce proceeding for a marriage in which the ceremony was performed in Ocho Rios, Jamaica. In the divorce case Plaintiff claimed that since there was no valid license, the marriage was not legal. The court rejected this claim stating that a lack of license doesn’t prove the marriage was illegal when there are other circumstances presented during the proceedings that would establish the marriage. Plaintiff settled on the first day of trial.
Subsequently, the plaintiff filed a malpractice suit against the defendant lawyer claiming that he coerced the plaintiff to accept the terms of the settlement and that throughout the proceedings Plaintiff kept telling the defendant that there was no public record of a valid marriage license. When the plaintiff failed to submit an affidavit of merit even after a three-week extension the court dismissed the complaint with prejudice.  On appeal, l the plaintiff claimed that an affidavit of merit was not required since the act was “blatant and a matter of common sense”.

Issue: Does the Plaintiff need to submit an affidavit of merit in this case?

Ruling: Yes. A condition precedent to maintaining a claim for legal malpractice against an attorney is an affidavit of merit. Although an exception is made where the claimed malpractice involves matters of common knowledge, which refers to the ability of the jury to resort to “ordinary understanding and experience, to determine a defendant's negligence”. This case is different since validity of a marriage is determined by the laws of the jurisdiction where it was performed and Jamaica’s marriage laws are not common knowledge in New Jersey.

Lesson: When suing an attorney for malpractice in New Jersey always err on the side of caution and get an affidavit of merit.

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Kellos v. Sawilowsky, 325 D.E.2d 757 (Ga. 1985).

GA: Legal Malpractice Standards in General

Student Contributor: Paul Barnhill

FACTS: In a legal malpractice case, Attorney made a motion for summary judgment and supported this motion with an affidavit claiming to have met the proper standards of an attorney “in the State of Georgia.” Clients responded to this with an affidavit written by an attorney claiming exactly the opposite. Without elaborating on any reasons, the trial court found in Attorney’s favor, and the Court of Appeals of Georgia upheld this finding, claiming that no questions of fact were raised after the affidavits were filed. However, the Supreme Court of Georgia heard the case to determine whether attorneys should be held to local standards of care (as the documents said “in the State of Georgia”) for Georgia or to standards in the legal profession as a whole.

ISSUE: Are attorneys in Georgia held to local standards of conduct or standards that cover the legal profession as a whole?

RULING: There is no way to determine standards of the legal profession as a whole, so to make the filing process easier, the standard of care required is that of a practitioner in Georgia. Since Clients did not show how Attorney fell below this standard in the affidavit, the judgment was affirmed.

LESSON: While the distinction here concerns semantics more than anything else, the court made two important distinctions that led to the decision. While the standard of care theoretically does not change, its application can in a different locale. First, the number of options available to an attorney and time the attorney has to consider a case can easily change. Though the technology gap is closing, a sole practitioner in small town Blue Ridge, Georgia may not have the same resources as an attorney working for a sizeable firm in a larger city. The court also held that an attorney’s chance to investigate a case can change based on the attorney’s circumstances and familiarity with the case. While this is a nuanced distinction, the court decided that while the standard of care itself remains the same for any attorney, application of this standard may change depending on the jurisdiction or the situation of an attorney’s case. Thus, the standard of care in Georgia is applied based on what an attorney in Georgia would be expected to know and do, but the standard itself it the same as in other jurisdictions.
 

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Ayyildiz v. Kidd, 220 Va. 1080, 266 S.E.2d 108 (Va. 1980)

VA: Underlying personal injury action

Student Contibutor: Karen Dindayal

Facts: Plaintiff, Ayyildiz is a doctor who was sued for malpractice by his patient, Grubb, and won the suit. Thereafter, Ayyildiz filed a motion for judgment against Grubb’s counsel, Edward S. Kidd, Jr., alleging malicious prosecution, seeking damages by way of money spent to defend the medical malpractice action, loss of present and future earnings and profits in the practice of medicine and injury to Ayyildiz’s professional reputation.

Furthermore, Ayyildiz’s motion contained a second count that alleged that Kidd fell below the legal standards of the community in which he practiced and that Ayyildiz incurred damages due to Kidd’s willful or negligent acts.

The trial court sustained Kidd’s demurrer, holding that an action for malicious prosecution cannot be brought from a civil action unless the plaintiff was arrested, his property was seized or there was a special injury.

Issues:

1. Will an action for malicious prosecution in a civil case be maintained where the plaintiff was not arrested, there has been no seizure of property or special injury?
2. Do allegations of loss of earnings and profits, damage to professional reputation and money spent to defend a maliciously prosecuted medical malpractice action constitute special injury?
3. Is Kidd liable for negligence to Ayyildiz arising out of the medical malpractice case?

Rulings:

1. No. In malicious prosecution actions arising out of civil proceedings, the plaintiff must allege and prove an arrest, seizure of property or special injury incurred to maintain said action.
2. No. Ayyildiz’s allegations do not constitute a special injury to sustain an action for malicious prosecution.
3. No. Kidd was under no legal duty to Ayyildiz and was therefore not liable for negligence to him.

Lesson:  A prevailing party has no cause of action against the adverse party's attorney for malicious prosecution. Generally, an attorney’s liability for damages is only to his client,  based arising from some duty owed to the client.

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Summer v. Allran, 100 N.C.App. 182, 394 S.E.2d 689 (N.C.App. 1990)

NC: Underlying separation agreement

Student Contributor: Karen Dindayal

Facts: Plaintiff, Summer retained defendant William J. Allran to prepare a separation agreement with her ex-husband. Allran prepared three drafts of the agreement, and the parties signed the final draft on February 5, 1982.  A few months thereafter, Summer filed suit against her former husband for equitable distribution of marital property, temporary alimony and subsistence, and for the separation agreement to be set aside. The court dismissed the alimony and subsistence claims, and granted the claim for setting aside the separation agreement. In addition, Summer brought an action for legal malpractice against attorney Allran, alleging negligent legal representation, in that Summer lost alimony, reduced child support, and an inadequate share of the couple's marital property.

The trial court granted Allran’s motion for directed verdict and Summer appealed.

Issue: Did the trial court err in granting defendants' motion for directed verdict at the close of all the evidence?

Ruling: No. Allran was entitled to a directed verdict because Summer failed as a matter of law to show actionable negligence.

Lesson: In a legal malpractice action, a plaintiff must show actionable negligence by proving by the greater weight of the evidence that the attorney breached the duties owed his client, and that said negligence proximately caused plaintiff’s damages.

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Russo v. Griffin, 510 A.2d 436 (Vt. 1986)

VT: Underlying commercial transfer

Student Contributor: Eric B. Kang

Facts: Joseph Russo had a paving business in Rutland, Vermont that he wanted to turn over to his sons, Tony and Frank. Lawyer Griffin was hired to help them with the process of incorporation, and he drew up the corporate charter, filed it with the Secretary of State, and arranged the necessary transfer of assets. Further, the annual meetings were held at Griffin’s office. Then, Frank wanted to purchase a laundromat and spoke to Tony about selling his interest in the corporation. The two, along with the elder Russo, met in Griffin’s office to discuss the arrangements. At the meeting, Tony gave a $6,000 promissory note to Frank in exchange for Frank’s resignation as president and transfer of his stock to the corporation. Three months later, Frank went back into the paving business in direct competition with his brother’s corporation. Tony then sued Griffin, arguing that a properly drafted noncompetition covenant would have prevented this from occurring. At trial, Tony introduced expert witnesses who testified that Griffin’s failure to advise the corporation to draft a covenant not to compete deviated from the standard of care required of attorneys practicing in Vermont at that time. Griffin introduced expert witnesses who testified that his conduct did in fact comport with the standard of care expected of attorneys practicing in Rutland, Vermont at that time. The trial court found for Griffin, holding that “those attorneys whose practice primarily was conducted in the Rutland, VT area prior to and during 1978 are more familiar with the standard of care then required of lawyers"..

Issue: Whether the standard of care is based on the  local  community, the state or is it a national standard?

Ruling:  The Court noted that “the ability of the practitioner and the minimum knowledge required should not vary with geography.”  Thus, the Court held that “in selecting a territorial limitation on the standard of care … the most logical is that of the state.”  In Vermont, the rules governing the practice of law is consistent throughout the state, and all attorneys must complete the requirements for admission as established by this Court and administered by the Vermont Board of Bar Examiners in order to practice law.  

“the appropriate standard of care to which is held in the performance of professional services is ‘that degree of care, skill, diligence and knowledge commonly possessed and exercised by a reasonable, careful and prudent lawyer in the practice of law in this jurisdiction.’”

Id. (quoting Cook, Flanagan & Berst v. Clausing, 438 P.2d 865,867 (Wash. 1968). 

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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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Greycas, Inc. v. Proud, 826 F. 2d 1560 (7th Cir. 1987)

Underlying loan transaction--duty to adversary

Student Contributor: Clem Durham

Facts: Theodore S. Proud, Jr., a member of the Illinois bar who practices law in a suburb of Chicago, appeals from a judgment against him for $833,760, entered after a bench trial. The original plaintiff, Wayne Crawford, like Proud was a lawyer but devoted most of his attention to a large farm that he owned in downstate Illinois. The farm fell on hard times and by 1981,  Crawford was in dire financial straits. He had pledged most of his farm machinery to lenders, yet now desperately needed more money. He approached Greycas, Inc., the plaintiff in this case, a large financial company headquartered in Arizona, seeking a large loan that he offered to secure with the farm machinery. He did not tell Greycas about his financial difficulties or that he had pledged the machinery to other lenders, but he did make clear that he needed the loan in a hurry. Greycas obtained several appraisals of Crawford's farm machinery but did not investigate Crawford's financial position or discover that he had pledged the collateral to other lenders, who had perfected their liens in the collateral. Greycas agreed to lend Crawford $1,367,966.50, which was less than the appraised value of the machinery. Crawford was required to submit a letter to Greycas, from counsel whom he would retain, assuring Greycas that there were no prior liens on the machinery that was to secure the loan. Crawford asked Proud to prepare the letter, and he did so, and mailed it to Greycas, and within 20 days of the first contact between Crawford and Greycas the loan closed and the money was disbursed. A year later Crawford defaulted on the loan; shortly afterward he committed suicide. Greycas then learned that most of the farm machinery that Crawford had pledged to it had previously been pledged to other lenders.

Issues: Does a lawyer have a duty of care to an adversary’s client when the primary purpose and intent of the attorney-client relationship itself was to benefit or influence the third party?

Ruling: Yes. By addressing a letter to Greycas intended to induce reliance on the statements in it, Proud made himself prima facie liable for any material misrepresentations, careless or deliberate, in the letter, whether or not Proud was Crawford's lawyer or for that matter anyone's lawyer. Knowing that Greycas was relying on him to determine whether the collateral for the loan was encumbered and to advise Greycas of the results of his determination, Proud negligently misrepresented the situation, to Greycas's detriment. Crawford hired Proud not only for the primary purpose, but for the sole purpose, of influencing Greycas to make Crawford a loan; and therefore, is liable under Illinois law for legal malpractice.

Lesson: Privity, normally required as a pre-requisite to attorney liability, is not a bar where the adverse party relied on the lawyer's representations to its detriment. The duty of care and candor extends even to adverse parties where the lawyer knows that the adversary will rely on his/her representations to its determiment.  
 

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Bush v. Goren, Michigan Court of Appeals, February 1, 2011. 

Facts: In 2005, Plaintiffs consulted the defendant attorneys with respect to a medical malpractice claim related to a cardiac surgery completed on August 24, 2004 to evaluate the safety of a new vascular closure device.  After obtaining opinions of various cardiologists and vascular surgeons, the Defendant attorneys opted not to pursue the matter. On June 5, 2006, advised Plaintiff that the statute of limitations for her claim may expire within the next two months.  

Plaintiff was not successful in locating another attorney, allegedly because of the two-month time frame remaining for her medical malpractice claim.  She subsequently filed a malpractice action against the Defendants alleging that they were negligent in not advising her that the products liability statute of limitations did not expire for another year, until August, 2007.

Defendants argued that their decision not to mention the products liability claim, or the applicable statute of limitations, was protected by the "attorney judgment rule."  In other words, they believed "in good faith" that plaintiff would advise any subsequent attorney about the use of the medical device, and that attorney would know the statute of limitations.

Issue: Did Defendants commit malpractice by not addressing each of Plaintiffs' potential claims and applicable statute of limitations in their disengagement letter? 

Ruling: Maybe. 

In drafting his closing letter to his clients, defendant was not making a tactical decision in which he had to choose between courses of action in an adversarial situation whose viability turned on many factors beyond his control such as the actions of an opposing counsel or the unknown views of a judge or jury. Rather, defendant, in the controlled environment of his own office was advising plaintiffs, whose case he had declined, what options they retained and what they had to do to exercise those options. We reject the argument that giving only partial advice about a matter as fundamental as the applicable statute of limitations when sending a closing letter to a client can be viewed as a matter of tactics. An attorney and his or her advice certainly need not be perfect or infallible. However [] all attorneys have a duty to behave as would an attorney of ordinary learning, judgment or skill under the same or similar circumstances.

While the failure to include the information in the disengagement letter was not protected by the "attorney judgment rule," it may or may not have been "malpractice":

Plaintiffs presented the trial court with affidavits from two attorneys. One stated that, in his professional opinion, the standard of practice for a lawyer in defendant's position required him to tell plaintiff of both statutes of limitations applicable to her claims and that the failure to do so constituted a breach. The other relied on Michigan Rule of Professional Conduct (MRPC) 1.4(b) and a Michigan Ethics Opinion discussing that rule to state that he concluded that defendant's action violated that rule. Based on the rule and the opinion, he also opined that plaintiff could not make an informed decision about how to pursue her products liability claim when she was not informed of the applicable statute of limitations; and that defendant's position that he was justified in withholding information from plaintiff on the ground that he believed it to be in her best interest was without merit.

The Court held that whether or not Defendants exercised reasonable care, skill and diligence under the circumstances would be a fact question to be ultimately resolved by a jury. 

Lesson: The attorney judgment rule does not automatically shield an attorney who provides an allegedly incomplete legal analysis to his or her client.  To err on the safe side, a disengagement letter might lay out the facts presented by the client to the attorney, each of the potential causes of action, and the amount of time within which the client must act to preserve each potential claim.

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DePouli v. Barasch, McGarry, Salzman & Penson, New York Supreme, New York County, January 24, 2011.

Facts: Defendant law firm participated in an information session given by the New York City Bar Association for victims of a crane collapse.  At that session, Defendants provided a letter, along with a notice of claim, to prospective claimants.

After the session, DePouli, one of the attendees, retained the law firm.  The firm, however, upon further review of the matter, decided that it would not represent DePouli.  In the meantime, DePouli's time to file his notice of claim had expired.

DePouli, thereafter, sued the firm for malpractice, and the firm presented several defenses, including (1) plaintiff had adequate time and information to file the notice of claim himself; and (2) the firm's decision not to file a notice of claim was protected by the "Professional Judgment Rue."

Issue: Did the firm commit malpractice by failing to timely file a notice of claim on behalf of DePouli?

Ruling: No.

The Court held that it was sufficient for the firm to have notified DePouli that a notice of claim must be filed by a certain date, provided him with a form notice of claim and attachments.  Indeed, the firm had even advised DePouli where the notice must be mailed.  

Furthermore, the Court held that the firm's decision not to pursue suit against the City for plaintiff's injuries was covered by the "Professional Judgment Rule" in any event.  

BMS&P's choice to not pursue claims against the City, but rather to recover solely from the construction companies, does not support a claim for malpractice. Selection of one among several reasonable courses of action does not constitute malpractice...Neither an error in judgment, nor in choosing a reasonable course of action constitutes malpractice...In order to state a claim for malpractice, plaintiff must allege that the chosen course is bereft of legal authority.

Lesson: The decision would appear to support the notion that counsel are not liable for missing deadlines that a plaintiff could have observed, provided the attorney put them on notice of the deadline and gave them the information necessary to comply with the deadline.  Furthermore, an attorney's decision not to sue every potential defendant is not malpractice, so long as the decision is well-reasoned and can find support in prevailing legal authority.

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State of New Jersey v. Frensel Gaitan, Appellate Division, February 7, 2011.

Underlying case: Ineffective Assistance of Counsel, Criminal Defense

Facts: Defendant pled guilty to third-degree distribution of a controlled substance within 1000 feet of a school, and was sentenced to 5 years probation.  Approximately three years later, defendant filed suit against his former attorney alleging ineffective assistance of counsel.  More specifically, he alleged that his attorney failed to discuss with him the deportation consequences of his guilty plea.  

The lower court denied defendant's petition for ineffective assistance of counsel and he appealed.

Issue: Does the failure to provide any advice with regard to deportation consequences of a guilty plea constitute ineffective assistance of counsel?

Ruling: Yes.  The Appellate Division granted defendant an evidentiary hearing as to the content and scope of his former attorney's advice, if any, regarding his potential removal from the country upon entering a guilty plea and noted: 

Silence under these circumstances would be fundamentally at odds with the critical obligation of counsel to advise the client of the advantages and disadvantages of a plea agreement...When attorneys know that their clients face possible exile from this country and separation from their families, they should not be encouraged to say nothing at all.

Lesson: Attorneys have an affirmative obligation to discuss the possibility of deportation when providing advice about the pros and cons of entering a guilty plea. Going forward, before a non-citizen defendant pleads guilty to a deportable offense, the Court must hold a hearing as to whether the defendant in a criminal case received the effective assistance of counsel. 

Other Cases: Padilla v. Kentucky, (US Sup. Ct. 2010);  State of NJ v. Nunez-Valdez (NJ Sup. Ct. 2009)

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Porreca v. City of Millville, N.J. App. Div., January 24, 2011. 

Facts: Porreca sued the City of Millville and demanded counsel fees in his pleading.  Eventually, the parties decided to settle the matter and, allegedly, entered into "detailed negotiations."  In the final version of the settlement agreement, the release provided as follows:

The City and Porreca do hereby remise and release the other, its or his respective agents, servants, employees, attorneys, heirs, administrators, successors or assigns of all claims for damages that were or could have been advanced by Porreca or the City against the other...

After entering into this agreement, Plaintiff contended he was also entitled to counsel fees as a prevailing party who obtained a prospective financial benefit for all taxpayers in the City. 

Issue: Did the language of the settlement agreement allow Plaintiff to pursue a subsequent claim for counsel fees? 

Ruling: Undecided.  The Appellate Division provided guidance and remanded the matter for further proceedings. 

First, the Appellate Division examined federal law involving claims for statutory attorney's fees.  In that context, Third Circuit case law was clear:  a general release in a settlement agreement does not preclude an award of attorney's fees, unless specifically and expressly waived.  

However, the Court noted that:

The parties have not cited and we have not located any case in this State applying the federal bright-line rule to a counsel fee request not premised on a fee-shifting statute.  As the law on this issue is far from settled, and is essentially non-existent, the parties would not have had an expectation that plaintif's attorney fee claim would survive unless expressly and specifically waived...

The Court then commented that "by releasing all claims related to either action, plaintiff was presumably releasing any claims to counsel fees."  Moreover, the Court noted that, since there were no other monetary "damages" at issue, "[i]t is arguable that the parties' release of their respective 'claims for damages' was meaningless if it were not intended to apply to attorney's fees."  

Towards the end, the Appellate Division provided guidance as to what the attorneys' standard of care might be in drafting a more thorough settlement agreement: 

In hindsight it would have been preferable for the City to have acted defensively and made clear during negotiations that it was entering into a global settlement with no loose ends. Plaintiff, however, was in a better position to be up front about his intention to pursue a discretionary attorney fee claim. We are troubled by the strategy employed by plaintiff's attorney. He was intentionally silent about the counsel fee  issue, holding back a material term for a substantial claim, apparently lying in wait for the City to sign the agreement, and springing the claim after the fact. Plaintiff's attorney's behavior, certainly calculated to work an advantage . . . based on information that was uniquely his . . . [is] a course of conduct that we neither applaud nor encourage.  This apparent lack of candor is particularly troubling in a suit where the counsel fee is to be borne by taxpayers.

 

Lesson: Counsel would be well advised to clearly state in the settlement agreement whether counsel fees have been waived as a result of the settlement.  If fees are not waived, the settlement agreement should specify that the amount of money being paid thereunder is in satisfaction of all of plaintiff's claims, including counsel fees.

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Gorjuice Wrap, Inc. v. Okin, Hollander & De Luca, LLP, N.J. App. Div., January 12, 2011 (Unpub.)

Facts:  Kang retained Attorney Watkins to assist her in negotiating a commercial lease with the Talmos.  Unbeknownst to Kang, Watkins had been a longtime attorney for the Talmos.  In fact, he had represented them in their purchase of the property Kang now wanted to lease.  Kang relied on Watkins' advice that the property was suitable for her business purposes.  Further, Kang asked Watkins to petition the Planning Board to allow Plaintiff to commence its business operations. Watkins, however, failed to take action and Kang retained another attorney. 

Several months later, the Talmos, with the assistance of Watkins, sold a contiguous parking lot to another business.  As a result of this sale, the Planning Board determined that the available parking was insufficient to support Plaintiff's business.  

Moreover, Plaintiff learned of leaks and structural issues which the Talmos never fixed.  Apparently, Watkins had been aware of these concerns but never brought them to Kang's attention.  

After serious flooding damaged Plaintiff's property, Kang filed a claim with the insurance carrier for loss of business revenue and property damage.  Indeed, Kang later testified that the day of the flood was the last day Plaintiff was in business.  

In the meantime, Plaintiff had defaulted on its rent obligation and was locked out of the premises. Kang alleged that she was never provided the opportunity to remove valuable computer equipment, disks, books, and records.  At that point, Kang retained De Luca to secure the return of the personal property, and another firm to commence a malpractice action against Watkins.

According to De Luca, the Talmos notified him that they would allow Kang to enter the premises and gather her belongings in or around June 13, 2001.  Kang disputes that De Luca ever forwarded the message to her.  According to Kang, the new owners of the building allowed her to enter in or around November, 2001.  By that time, however, all of her property had allegedly been removed.  

In the meantime, Kang settled with the insurance carrier for $152,000 for "the whole loss and damage" caused by the flood.  She acknowledged that a portion of the payment was for "business loss."  

Plaintiff's action against Watkins alleged conflict of interest, failure to file an appropriate and timely site plan approval, failure to advise Plaintiff of its right and remedies against the Talmos, and other violations of the Rules of Professional Conduct.  Watkins' carrier settled the matter for $250,000.

Plaintiff then filed suit against De Luca for his failure to secure the removal of its property after the lockout.  In this regard, Plaintiff served damage reports claiming lost profits of approximately $8,000,000.

The trial court granted De Luca's motion for summary judgment and Plaintiff appealed.

Issue:  Did De Luca violate the applicable standard of care.  If so, could Plaintiff establish proximate cause and damages? 

Ruling:  De Luca violated the standard of care, but Plaintiff could not establish proximate cause and damages for lost profits.

In granting De Luca's motion for summary judgment, the trial court relied on Puder v. Buechel for the proposition that Plaintiff could not settle its case and then sue its attorney for an additional recovery. The Appellate Division held that the trial court's application of Puder was erroneous.  First, the Appellate Division noted that Plaintiff had not indicated that the settlements in the underlying matters were "fair" or "acceptable."  Moreover, De Luca was not involved in the underlying settlements.  The Appellate Division noted that "[n]othing in Puder prevents [Plaintiff] from asserting a malpractice action against De Luca that does not arise out of legal services provided in connection with the settlement of those prior matters."

The trial court also relied on "judicial estoppel" in granting De Luca's motion for summary judgment. The Appellate Division held that to be erroneous as well:

[T]he doctrine of judicial estoppel only applies when a court has accepted a party's position, a party ordinarily is not barred from taking an inconsistent position in successive litigation if the first action was concluded by a settlement.

Nevertheless, the Appellate Division granted De Luca's motion in part because Plaintiff could not establish proximate cause and damages.  The Appellate Division found that De Luca's failure to secure the return of the property had nothing to do with Plaintiffs' lost profits, since the business had been shut down even before the lockout.  Moreover, lost profits were not available as "damages" under the new business rule:

[A]lleged lost profits that are dependent on entry into unknown markets, or the success of a new and unproved enterprise, cannot be recovered because the business venture is so risky as to preclude recovery of lost profits in retrospect.

The Appellate Division reversed the trial court in part to allow a jury to determine when De Luca advised Kang that she could reenter the premises to retrieve any property left behind, and if he did not timely advise her, for a determination as to the value of the property lost.

Lesson: Puder's holding is not applicable to a malpractice suit commenced against an attorney where the attorney did not provide legal advise in related underlying settlements.  Further, showing a violation of the standard of care is not enough to win in a legal malpractice action.  Establishing proximate cause and damages are essential to recovery.  

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Ex parte Gregory, 378 S.C. 430 (S.C. 2008)

SC: Underlying tort action-settlement

Student Contributor: Karen Dindayal

Facts:  Jerry Bittle sustained brain injuries from an automobile accident, rendering him mentally incompetent. Bittle’s mother, Melton, retained Malloy to represent Bittle for his injuries. Melton and Bittle reached a settlement with the insurance company for the claims made, and made several attempts to contact Malloy regarding receiving the settlement funds, but could not reach him. As a result, Melton terminated Malloy’s services for failing to account for the settlement money. Melton then retained Gregory to represent her and Bittle in recovering the settlement funds from Malloy. Fearing that the statute of limitations would soon run, Gregory filed the instant action against Malloy alleging causes of action for negligence, conversion, breach of contract, breach of contract accompanied by a fraudulent act, and constructive trust.

After the action was commenced, Malloy transferred the funds in dispute to Gregory, and filed a motion for Rule 11 Sanctions and counsel fees and expenses against Gregory, claiming specifically that the allegations of conversion were frivolous. Malloy reasoned that Sanctions were appropriate since Gregory relied soley upon Melton’s statements that she did not know where the settlement funds were, instead of conducting a thorough and independent investigation himself to determine the status of the funds.

Issues:  

Did the circuit court correctly find that the suit against Malloy was frivolous because Gregory failed to conduct a proper investigation?

Did the circuit court properly award Malloy attorney fees and expenses?

Ruling:  Yes. An attorney may be sanctioned and subject to counsel fees and expenses for bringing a frivolous claim due to that attorney’s failure to first conduct a proper and reasonable investigation into the facts.

Lesson: Before commencing an action, it is important to first always conduct a thorough and reasonable investigation to ensure a sufficient basis for the action(s) being brought. 

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Vang Lee v Mansour, 104 Ark. App. 91 (2008)

AR: Underlying litigation

Student Contributor: Meghan Jean

Facts:  Mansour was one of two attorneys client Vang Lee hired to represent him in a lawsuit. When Attorney #2 (also named Lee)  left for a month-long vacation, he left instruction for Mansour to schedule a pretrial conference between the parties of the suit. Soon afterwards, Attorney #2 became unresponsive to any attempts Mansour made at communication. After several failed attempts, Mansour sent two letters to Attorney #2 informing him that if he did not hear from him, he would have no choice but to request withdrawal from the case. Mansour did not copy Client Lee either letter. When Attorney #2 failed to respond, Mansour requested withdrawal indicating that he and Client Lee did not communicate, that Client Lee would not be prejudiced by his removal because Attorney #2 spoke Client Lee’s native language, and that Attorney #2  was in possession of all necessary paperwork for the case. The court granted the withdrawal. Unfortunately, because Mansour did not inform Client Lee of the withdrawal or Attorney #2's  lack of communication, Client Lee failed to appear at the pretrial conference and a judgment was entered  against him.

Issue: Whether a court’s granting of an attorney’s request for withdrawal from a case precludes the attorney from a malpractice suit on that basis.

Ruling: No.   Arkansas Rule of Civil Procedure 64 provides that an attorney, in his desire to withdraw from a case, must take steps to avoid any foreseeable prejudice to his client, including giving due notice to his client, allowing time for employment of other counsel, and has tendered or stands ready to tender any client papers and unearned fees. Mansour’s failure to communicate the date of the pre-trial conference, and his knowledge that Attorney Lee had become unresponsive to any communication was a foreseeable prejudice to Client Lee. Mansour took no steps to avoid such prejudice.

Lesson: In choosing to withdraw from a case, an attorney must be certain to provide to the client all proof of notification and communicate all issues that might impede or prejudice his case, including that of an unresponsive co-counsel, thereby allowing the client a chance to mitigate his or her damage caused by Attorney #2. 

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Harris v. Farmer, Court of Appeals of Michigan, February 4, 2010

Facts:  Defendant served as Plaintiff's court-appointed attorney in a criminal proceeding in which plaintiff was charged with identity theft.  The prosecution alleged that plaintiff attempted to use another individuals social security number to obtain employment.  Plaintiff was convicted and his claim for ineffective assistance of counsel was rejected. 

Plaintiff subsequently filed an action for legal malpractice against his court-appointed attorney, alleging that he had failed to properly cross-examine a witness, failed to object to evidence offered by the prosecution, and failed to present necessary evidence.  The attorney moved for summary judgment, and the lower court granted his motion.  Plaintiff appealed.

Issue:  Are counsel's alleged shortcomings at trial actionable as professional negligence? 

Ruling:  No. 

Although an attorney has the duty to fashion a strategy so that it is consistent with prevailing Michigan law, he does not have a duty to ensure or guarantee the most favorable outcome possible

***

[M]ere errors in judgment by a lawyer are generally not grounds for a malpractice action where the attorney acts in good faith and exercises reasonable care, skill, and diligence.

The Court further noted that even if the attorney had done everything Plaintiff complained he did not do, the result of the proceeding would not have been different.  Accordingly, the Court affirmed the dismissal of the malpractice action.

Lesson:  Decisions involving trial tactics or litigation strategy are not subject to attack in an action for legal malpractice pursuant to Michigan law.  This is especially so where counsel's professional judgment was not the cause in fact of his former client's alleged injuries. 

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McHugh v. Litvin, Blumberg, Matusow & Young, 525 Pa. 1, 574 A.2d 1040 (Pa. 1990)

PA Underlying Representation: Personal Injury

Student Contributor: John Anzalone

Facts: Plaintiffs retained Attorney 1 to sue Plaintiff Husband's employer for injuries suffered while working. Attorney 1 later referred Plaintiffs' case to Defendant Attorneys. Defendant Attorneys also were retained by Plaintiff Wife in her action for loss of consortium. The suits were dismissed for improper service. Plaintiffs brought a malpractice suit.

Issue: Was the Plaintiffs' malpractice suit for the loss of the wife's consortium action prohibited because the cause of action only applied to the loss of a wife's consortium when Plaintiff Husband was injured?

Ruling: In reversing the lower court's dismissal of the lost consortium claim, the court held that the wife's consortium claim was valid, based on the following considerations:
1) In Pennsylvania, court decisions changing the law are to be applied retroactively unless the court holds that it's not to be applied retroactively.
2) Since the Plaintiffs had already filed an action when the law was changed, Plaintiffs were entitled to rely on the change of the law.
3) Since the Plaintiffs' claims were pending when the change of law happened, they could rely on the new law.
4) Defendants additionally filed for the loss of consortium claim for the Plaintiffs after the change in the law. The court inferred from this that Defendants believed that the change was applicable to the Plaintiffs. The court held that after filing the claim, the Defendants can not claim that they had no duty to not file it negligently.

Lesson: Attorneys  are responsible for complying with changes in the law that effect the standards of care that occur while cases they are representing clients in are pending. Attorneys especially can not claim that they did not believe that the change in law applied to a case they were representing a client when they made a claim based on that change of law.

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O’Brien v. Cleveland, 2010 Bankr. LEXIS 171 (Bankr. D.N.J. Jan. 22, 2010).

Underlying commercial action

Facts: Debtors filed a chapter 13 bankruptcy after falling behind on their mortgage payments. Even after the Chapter 13 filing, however, the debtors were unable to keep up with their payments under the the court ordered plan. Eventually, the first mortgage holder commenced a mortgage foreclosure on the debtors’ home. To avoid a sheriff’s sale of their property, the debtors entered into a mortgage rescue arrangement with Cleveland.

The rescue plan was a scam by Cleveland to defraud the debtors. It required the debtors to transfer title in their property, worth over $800,000, to Cleveland, with an option to buy it back at $650,000. Cleveland was to take out a new mortgage on the property, pay off the debtors’ old mortgage and some other outstanding debts in bankruptcy, and permit the debtors to continue to occupy the house in exchange for a payment of $5,000 per month to be used to service the new mortgage.

Cleveland’s attorney, William E. Gahwyler, Jr., prepared all of the closing documents for this transaction, including the HUD-1 statement. The statement contained a number of misrepresentations, including an incorrect sale price, a misrepresentation of Cleveland’s investment in purchasing the property, and a misrepresentation of the debtors’ proceeds from the sale. Moreover, the transaction was never reported by Gahwyler to the bankruptcy court for approval.

The debtors subsequently learned that Cleveland had mortgaged their property for over $100,000 in excess of the outstanding mortgages for its personal benefit. Likewise, the debtors’ $5,000 monthly payments were not being used to satisfy the debt on the property. Eventually, the lender moved to foreclose on the property, and the debtors filed an adversary complaint against Cleveland and its attorney, Gahwyler, alleging fraud, legal malpractice, conspiracy, and violation of a number of statutes.

Issue: Did Gahwyler owe a duty to the debtors in his capacity as attorney for Cleveland?

Holding: The court held that the debtors were entitled to a judgment against Cleveland based on causes of action arising in fraud, violation of the New Jersey Consumer Fraud Act, Truth in Lending Act, Home Ownership and Equity Protection Act, and New Jersey Home Ownership Security Act of 2002.

The court further held that the lack of an attorney-client relationship between the debtors and Gahwyler was no bar to obtaining relief against him:

Mr. Gahwyler should have withdrawn from representing Mr. Cleveland as soon as the nature of the transaction became known to him…[a]s an attorney, Mr. Gahwyler had an ethical obligation to prepare an accurate closing statement and should have withdrawn from representing Cleveland rather than create an inaccurate closing statement . . . had Gahwyler fulfilled his ethical responsibilities, Cleveland could not have carried out his plot. Gahwyler’s failure to perform his ethical obligations proximately caused damages to the debtors in the amount of the increased debt encumbering this house.

Lesson: An attorney who knowingly participates in the fraudulent scheme of his client will be held responsible for damages proximately sustained by a third-party as a result of the deceptive conduct.

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Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA et al., 2010 WL 1558977 (U.S. April 21, 2010).

Facts:  Jerman sued Carlisle, McNellie, Rini, Kramer & Ulrich (the “Defendant law firm”) for, allegedly, violating the Federal Debt Collection Practices Act (“FDCPA”) by representing to Jerman that her debt would be assumed valid unless she disputed the debt “in writing” even though the FDCPA does not require a written dispute.
 

The Defendant law firm argued that their mistake was excused under the FDCPA’s bona fide error defense:

A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

Issue:  Can attorneys avoid liability for a mistake of law under the FDCPA's bona error defense? 

Ruling:  The Supreme Court reversed the Appellate Division and held that the bona fide error defense does not apply to a violation resulting from a debt collector’s mistaken interpretation of the legal requirements of the FDCPA. The Court declined to adopt an expansive reading of the defense and relied upon the “common maxim” that “ignorance of the law will not excuse any person, either civilly or criminally”.

The Court reasoned that the bona fide error defense’s requirement of maintaining “procedures reasonably adapted to avoid any such error…naturally evokes procedures to avoid mistakes like clerical or factual errors”:

The dictionary defines procedure as a series of steps followed in a regular orderly definite way…In that light, the statutory phrase is more naturally read to apply to processes that have mechanical or other such regular orderly steps to avoid mistakes…But legal reasoning is not a mechanical or strictly linear process.

The Court next considered the Defendant law firm’s argument that Congress’ decision to amend only the bona fide error defense in the Truth in Lending Act to specifically exclude “errors of legal judgment” evidenced its intent to include mistakes of law in the FDCPA’s bona fide error defense. The Court disagreed:

[I]t is not obvious that the amendment changed the scope of TILA’s bona fide error defense in a way material to our analysis, given the uniform interpretations of three Courts of Appeal holding that the TILA defense does not extend to mistakes of law.

Furthermore, the Court stated that Congress likely did not intend the defense to apply to mistakes of law, since Congress did not expressly include mistakes of law in any of the parallel bona fide error defenses elsewhere in the U.S. Code.

In response to the argument that the threat of liability under the FDCPA might create an irreconcilable conflict between an attorney’s personal financial interest and her ethical obligation of zealous advocacy on behalf of a client, the Court noted that “an attorney’s ethical duty to advance the interests of his client is limited by an equally solemn duty to comply with the law and standards of professional conduct”.

Finally, the Court noted that the FDCPA contains a safe harbor defense for “any act done or omitted in good faith in conformity with any [Federal Trade Commission] advisory opinion” that is more tailored to address the mistake at issue than the bona fide error defense. Although the Court recognized that the Federal Trade Commission has issued only four opinions in the past decade, and has an average processing time in excess of three months, the Court concluded that the existence of this separate, more apposite provision weighs against “stretching” the bona fide error defense to provide protection for mistakes of law.

Lesson:  An attorney cannot rely upon the FDCPA's bona fide error defense for misinterpretations of the statute's legal requirements.

Editor's Note:  Jerman involves only a mistake of law under the FDCPA. Accordingly, it is not clear whether Jerman is applicable to mistakes of state law or federal law on issues other than the FDCPA.  The Courts of Appeal have expressed different views on this issue.

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Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, 538 F.3d 469 (6th Cir. 2008)

Facts:  Plaintiff alleged that the Defendant law firm violated the Federal Debt Collection Practices Act (“FDCPA”) by representing to her that her debt would be assumed valid unless she disputed the debt “in writing” even though the FDCPA does not require a written dispute.  Defendants filed a motion for summary judgment on the basis that that they qualified for the FDCPA bona fide error defense. The district court granted the motion and Jerman appealed on two grounds: (1) the district court erred in concluding that the FDCPA’s bona fide error defense may apply to mistakes of law, and (2) even if the defense does apply to mistakes of law, a question of fact remains as to whether defendants maintained procedures reasonably calculated to avoid the violation.
 

Issue:  Was the Defendant law firm's mistake a bona fide error under the FDCPA?

Ruling:  Yes.

The FDCPA bona fide error defense (15 U.S.C. § 1692k(c)) provides:

A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

Whether the bona fide error defense applies to mistakes of law or procedural/clerical error was an issue of first impression for the Court. The Court reviewed the case law from the Sixth Circuit as well as other jurisdictions, and ultimately rejected Jerman’s argument that the FDCPA bona fide error defense should apply only to clerical mistakes because the Truth In Lending Act (“TILA”) bona fide error defense applies only to clerical errors, since the TILA, unlike the FDCPA, is explicitly limited to “clerical, calculation, computer malfunction and programming, and printing errors, except that an error of legal judgment with respect to a person's obligations under this subchapter is not a bona fide error.” The FDCPA, on the other hand, has no such provision.

The Court also rejected Jerman’s argument that the phrase “maintenance of procedures reasonably adapted to avoid any such error” references clerical errors because “ it makes no sense that a collector can maintain procedures reasonably adapted to avoid mistakes of law”.  The Court stated:

[T]here is nothing unusual about attorney collectors maintaining procedures, such as frequent education and review of the FDCPA.

After concluding that mistakes of law may be considered bona fide errors, the Court held that defendants had , in fact, set up satisfactory procedures in an effort to avoid such errors by:

• Designating a principal of the firm for handling compliance issues;
• Regularly attending seminars on FDCPA issues;
• Subscribing to relevant publications; and
• Counseling attorneys and other employees on the firm’s obligations under the FDCPA and providing them with a procedures manual;

Finally, the Court rejected Jerman’s argument that adoption of the model language contained in the International Guide to the FDCPA of the American Collector’s Association is the only acceptable procedure to avoid the legal error at issue.

Lesson:  Attorneys may be able to rely on the bona error defense to avoid liability under the FDCPA for mistakes of law by incorporating compliance mechanisms into their practice, keeping abreast of pertinent developments, and educating support staff of the firm's obligations under the FDCPA.

Note: The US Supreme Court has granted cert. See 129 S.Ct. 2863 (2009),  as  there is conflict among the circuits with the 2d, 8th and 9th circuits holding that the bona fide error defense does not apply to violations resulting from legal mistakes. Stay tuned. We will keep  you posted as soon as the Court rules. 

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The American Bar Association's Lawyers' Professional Liability Committee's National Legal Malpractice Conference in Washington DC has been a smash hit, with 500+ lawyers in attendance.

The Legal Malpractice Law Review was showcased at a well-attended roundtable discussion called  "Teaching Tomorrow's Lawyers to Avoid Legal Malpractice". It  demonstrated this blog as the latest cutting edge internet based method for teaching law students --and practicing lawyers, about how malpractice occurs and how to avoid those risks.  Pointing out that  a mere 10 per cent of the 193 ABA approved law schools in the US offer their students a full semester course on legal malpractice, panelists Ben Wasserman, Susan Fortney, Mitch Simon and Jett Hanna, sought to enlist  the professional liability insurance industry in a pro-active drive to encourage more law schools to offer such a course to their law students.  Ron Mallen, co-author of the leading treatise, Legal Malpractice,  has long called for legal malpractice to be taught as a required course in law school and he was there to join in the discussion. 

The two and a half day conference started off with a wonderful presentation by Associate Supreme Court Justice Antonin Scalia, who spoke with Bryan A. Garner of Law Prose, Inc. about the basics contained in  their new book, Making Your Case: The Art of Persuading Judges. (very worthwhile reading)

A central theme of the Conference focused on how emerging legal technology is reshaping the lawyer's  standards of care in the 21st century and how this brings new malpractice risks to practicing lawyers.

And as the lawyers at the Conference saw this web-based cost-free educational blog and heard from  Hofstra Law  students who helped to create it, the Legal Malpractice Law Review welcomed the 30,000th "visitor"  to its pages in the less than 6 months since it went live. "A great blog" , one lawyer in attendance at the Conference immediately "tweeted".  

Kudos to the Committee for a job well done!

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McMahon v. Shea, 547 Pa. 124 (1997)

Student Contributor: Justin Lieberman

Underlying Divorce Matter

Facts: The husband in an underlying divorce action brought a professional malpractice suit against his attorneys, claiming that they had failed to properly advise him in his divorce settlement. More specifically, the husband claimed that his attorneys had failed to advise him as to the length of his duty to pay alimony and to generally read and review the alimony agreement in its entirety.

The wife remarried two months after the divorce was finalized, and husband moved to terminate his alimony payments. The court denied the termination of alimony payments, holding that the alimony agreement survived the divorce since it was not merged with the divorce decree. The court ordered continued payment of alimony until the parties’ youngest child turned twenty-one. Consequently, husband further alleged that his attorneys had been negligent in advising him to stipulate that the alimony agreement be incorporated but not merged with the divorce decree.

The attorneys argued that husband’s action had to be dismissed, since a dissatisfied plaintiff may not file a malpractice suit following a settlement to which he agreed, unless he could show he was fraudulently induced into settling the action.

Issue: Can an attorney be held liable for advice rendered to a client in a settlement to which the client subsequently agreed?

Holding: The Court rejected the attorneys’ argument and held that an attorney’s use of ordinary skill and knowledge extends to the conduct of settlement negotiations:

The fact that the legal document at issue had the effect of settling a case should not exempt his attorneys from liability…An attorney may not shield himself from liability in failing to exercise the requisite degree of professional skill in settling the case by asserting that he was merely following a certain strategy or exercising professional judgment.

Lesson: Negligence in failing to advise a client as to the controlling law applicable to a contract is actionable as malpractice, even if the contract serves to settle the underlying dispute.

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Smith v. Spisak, 130 S.Ct. 676 (Jan. 12, 2010).

Underlying Criminal Matter

Facts:  Frank G. Spisak, Jr. was convicted in an Ohio trial court of three murders and two attempted murders. He was sentenced to death. He filed a habeas corpus petition in federal court alleging constitutional errors at trial. Spisak claimed that he suffered significant harm, in part, as a result of his counsel’s inadequate closing argument at the penalty phase of the proceeding. The Federal Court of Appeals accepted Spisak’s argument and ordered habeas relief. The State of Ohio sought certiorari and the United States Supreme Court granted the petition.

Spisak claimed that his counsel’s closing argument at the sentencing phase of his trial was so inadequate as to violate the Sixth Amendment. In his closing argument at the penalty phase, Spisak’s counsel allegedly portrayed him as “sick, twisted and demented…[that he] was never going to be any different”, and that even if Spisak was not legally insane so as to warrant a verdict of not guilty by reason of insanity, he nonetheless was sufficiently mentally ill to lessen his culpability to the point where he should not be executed. Counsel further argued that “humanity” required the jury to weigh the evidence “fairly”.

Spisak claimed the closing argument was constitutionally inadequate because it (1) emphasized the gruesome nature of the killings and Spisak’s threats to continue his crimes, (2) understated the facts that demonstrated Spisak’s mental illness; (3) said nothing about mitigating circumstances; and (4) made no explicit request for a verdict against death.

Issue:  Did the flaws in counsel's oral argument constitute valid grounds for Spisak's claim for ineffective assistance of counsel? 

Ruling:  The Supreme Court found that there was no reasonable probability that a better closing argument would have made a significant difference, given counsel’s concerted effort to bring Spisak’s mental illness to the forefront by producing three experts who testified at length with respect to the connections between Spisak’s crimes and his mental illness. More importantly, the Court found that Spisak’s own damning testimony that Adolf Hitler was his “spiritual leader in a war for survival…[and] his duty [was] to inflict the maximum amount of casualties on the enemies…again and again and again and again” left no doubt that counsel’s closing argument did not make any significant difference in the jury’s decision to sentence Spisak to death. Furthermore, the Court noted that Spisak could point to no mitigating circumstances, and counsel’s references to “humane people” and “humane society” were sufficient appeals for mercy.

Lesson:  Any inadequacies in counsel's arguments at trial may be rendered moot if the client's admissions leave no reasonable probability that a more adequate performance by counsel would have changed the jury’s verdict.  

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Rosemary E. Smith v. Jerome R. Lewis,  12 Cal. 3d 349 (Cal. 1975)

CA Underlying divorce action

Student Contributor: Evan Michael Hess

Facts:  Defendant attorney was retained to represent Plaintiff in a divorce proceeding. The Plaintiff brought the malpractice action asserting Defendant negligently failed to assert Plaintiffs community interest in the retirement benefits of her husband. Defendant alleges that the law with regard to retirement benefits was unclear at the time of representation, thus insulating him from liability for failing to assert said claim.

Issue: How much research is enough for an attorney to avail oneself from malpractice?

Ruling: The Supreme Court of California held:

I.

 “The law is now settled in California that "retirement benefits which flow from the employment relationship, to the extent they have vested, are community property subject to equal division between the spouses in the event the marriage is dissolved." (In re Marriage of Fithian, 10 Cal.3d 592, 596, (1974) citing Waite v. Waite, 6 Cal.3d 461 (1972));

II.

“In determining whether defendant exhibited the requisite degree of competence in his handling of plaintiff's divorce action, the crucial inquiry is whether his advice was so legally deficient when it was given that he may be found to have failed to use "such skill, prudence, and diligence as lawyers of ordinary skill and capacity commonly possess and exercise in the performance of the tasks which they undertake." (Lucas v. Hamm, 56 Cal.2d 583, 591 (1961))”;

III.

“an attorney does not ordinarily guarantee the soundness of his opinion . . . he is expected, however, to possess knowledge of those plain and elementary principles of law which are commonly known by well informed attorneys, and to discover those additional rules of law which, although not commonly known, may readily be found by standard research techniques.”

Lesson: Regardless of the state of the law, an attorney must, at the very least conduct due diligence to assure that the advice he gives his client is legally sound. If an attorney conducts a reasonable assessment of the state of the law, an attorney will not be held liable for failing to anticipate how that unsettled point of law will be resolved.

Note: Smith v. Lewis was overturned on other grounds in In re Marriage of Brown, 15 Cal. 3d 838, 851 (Cal. 1976).

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Collas v. Garnick, 425 Pa. Super. 8; 624 A.2d 117 (1993)

Underlying PA Tort Action

Student Contributor: Colleen Gaedcke

Facts: The plaintiff employed the defendant to represent her in an automobile tort action. The defendant reached a settlement with the plaintiff for $245,000. The plaintiffs were asked to sign a general release, which discharged the driver and all other parties who might be liable for the damages. The plaintiff asked the defendant whether the release would have any effect on her desire to sue the manufacturer of the vehicle. The defendant responded that it would not. In reliance on his advice she signed the release. She subsequently filed an action against the manufacturer, which the court dismissed stating that the action was barred by the release. The plaintiff then filed this action against the defendant for legal malpractice.

Issue: “If a lawyer negligently advises a client regarding the effect of a release and the client, in reliance on the lawyer’s advice, signs a release which unintentionally has the effect of barring an action contemplated by the client, is the lawyer immune from liability because the release was executed as part of the settlement of a prior, separate action?”

Ruling: No.

1) A lawyer has a duty to know how a proposed settlement will affect his client…conducting  legal research sufficient to allow the client to make an informed decision.

2) Here,

the fact that the written agreement was prepared as part of the settlement of their prior action was incidental; it did not relieve counsel of an obligation to exercise care in determining the effect of the agreement which his clients were being asked to sign…counsel was required to exercise the same degree of care as he or she would have exercised in advising a client about a complex agreement not a part of the settlement of a legal action. 

Lesson: An attorney is not expected to be perfect.  But, where the attorney gives erroneous advice that falls below standards that the client has a right to expect form their lawyer they will be held liable for malpractice.

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Darby & Darby, P.C. v. VSI International, Inc. 95 N.Y.2d 308 (2000)

NY Underlying insurance coverage

Student Contributor: Maninder (Meena) Saini

Facts: Defendant (VSI International Inc.), a Florida corporation retained plaintiff (Darby & Darby) a New York law firm to represent it in two Florida lawsuits. Even though defendant paid a portion of a substantial legal bill, the defendant still owed nearly $200,000 in outstanding legal fees. Plaintiff moved to withdraw as counsel because the defendants did not pay them. The plaintiff was relieved as counsel in October 1993. In August 1996, plaintiff commenced an action to recover the outstanding amount in legal fees, plus interest and incidental costs. The defendant then asserted a counterclaim, alleging the plaintiff committed legal malpractice and breached a fiduciary duty by failing to advise defendant that its then-existing general liability insurance policy could have covered defendant’s litigation expenses.

Issue: Does a NY law firm specializing in patent litigation,  retained to defend a corporate client in a Florida patent infringment action have a duty to advise the client about possible insurance coverage to cover the cost of litigation?

Ruling:

 ...attorneys should familiarize themselves with current legal developments so that they can make informed judgments and effectivey counsel their clients... However, [the law firm] should not be held liable for failing to advise [the client] about a novel and questionable theory pertaining to their insurance coverage.

In a legal  malpractice action, a party must demonstrate that an attorney failed to employ “the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession”. What is reasonable skill and knowledge is to be determined at the time of representation.

Lesson: The standard of reasonable care applicable even to specialist-attorneys does not require attorneys to comply with   novel and questionable theories of law. An attorney only has a duty to represent a client in a manner that is reasonable and consistent with the law, as it existed at the time of representation.

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Levinson v. D'Alfonso & Stein, 320 N.J.Super. 312 (App. Div. 1999)

NJ Underlying personal injury action

Student Contributor: Michael Park

Facts: Plaintiff hired attorney to handle his personal injury/automobile negligence claim. Plaintiff and attorney entered into a written retainer agreement, which contained a clause that provided that any settlement would require plaintiff's authorization before being accepted. However, at some time during the case, the attorney accepted settlement on plaintiff's behalf, despite not having authorization. The client filed an action against the attorney alleging negligence-professional malpractice, fraud, and breach of contract, but failed to provide an affidavit of merit. The action was then dismissed for failure to provide the affidavit of merit.

Issue: Was an affidavit of merit required to file a complaint of negligence-professional malpractice?

Ruling: The Superior Court, Appellate Division affirmed in part, and reversed and remanded in part the decision by the Superior Court, Law Division for the following reasons:
1) The court affirmed that the Affidavit of Merit statute, N.J.S.A. 2A:53A-26 to 29, applied to the plaintiff's claims of malpractice because the legally significant facts that gave rise to the cause of action did not occur until after June 29, 1995, the effective date of the statute. The court deferred to the Supreme Court's interpretation in Alan J. Cornblatt, P.A. v. Barow, 153 N.J. 218 (1998), where an affidavit requirement was not applicable where the principal facts that gave rise to a cause of action that occurred before the statute's effective date. Therefore, the plaintiff should have provided an affidavit from an appropriate licensed person, which would state that there is a reasonable probability that a departure from acceptable standards occurred.
2) The fraud alleged by the plaintiff was simply a repeat of the malpractice charge with the word “fraud” tacked on, and should therefore be dismissed.
3) The court reversed and remanded the decision by the lower court to dismiss the breach of the retainer agreement's approval-of-settlement clause because an expert evaluation is not needed to see that a simple breach of contract had occurred.

Lesson: When a complaint against an attorney alleges legal malpractice, an affidavit of merit must be provided, with few exceptions. The only way for the court to know whether a standard of care has been deviated from is if an expert in that profession will attest to that possibility by affidavit. For matters that would be obvious to laymen or those which do not involve a deviation from a professional standard of care,  such as breach of a  clause in a contract, an affidavit of merit is not required.

Practice Note:  Play it safe. Get your expert's affidavit of merit before you file your Complaint. You might even attach the Affidavit to your Complaint and file and serve them together. That eliminates the chance of missing the time limitations for timely serving an affidavit of merit, which can then lead to a dismissal of an otherwise meritorious Complaint. 

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Toth v. Vazquez, 3 N.J. Super. 379 (Ch. Div. 1949) (PDF with permission of Thomson West)

Student Contributor: Anthony J. Forzano

NJ Underlying Real Estate Transaction

Facts: Plaintiff, a potential land buyer, brought an action for legal malpractice against the defendant-attorney, Arthur A. Wolpin, who had been engaged by the plaintiff to examine the title and procure a survey of the premises prior to closing.  Plaintiff alleged that Wolpin failed and neglected to obtain an accurate survey.

Issue: Can an attorney be held liable for malpractice for failing to find a deficiency in the work of another professional, even though he acted in a prudent manner in selecting that professional on behalf of his client?

Ruling: No. Although it is the duty of an attorney who is retained to examine the title to real estate to make a reasonably diligent and zealous investigation of the public records, and to impart to his client all of the observable defects, deficiencies, and imperfections of the title, he is required only to exercise ordinary care, skill and diligence.

Given that Wolpin inspected all pertinent records and rendered an accurate report of record title, he had satisfied the standard of “ordinary care, skill, and knowledge”. The Court further noted:

“Nor is it evident that this defendant in acting for the plaintiffs failed to exercise reasonable care and precaution in the selection of a competent surveyor, even assuming a duty so to do. Assuredly, this defendant did not expressly agree to warrant the precision and accuracy of the survey”.

Lesson: An attorney must act in a reasonably diligent fashion in terms of his investigation of the pertinent issues and retention of other professionals, and cannot be held liable for malpractice as a result of damage incurred by his client owing to the negligence of others involved in the transaction.

Editor's Note: What if the attorney had engaged a process server who negligently failed to properly serve a complaint and the statute of limitations ran?  The lawyer's immunity for the negligence of an independent contractor hired to aid in the representation of a client is not so clear. See, e.g., Kleeman v. Rheingold, 81 N.Y.2d 270 (1993):

As plaintiff's attorneys, defendants had a non-delegable duty to her and, accordingly, they cannot evade legal responsibility for the negligent performance of that duty by assigning the task of serving process to an "independent contractor."

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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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Joyce A. Popwell v Law Offices of Broome and Horn, 363 N.J. Super. 404 (App. Div. 2002)

NJ Underlying  Personal Injury action

Student Contributor: Candice Deaner

Facts: After the court appointed arbitrator found that plaintiff had no cause of action for negligence against the underlying defendant plaintiff’s attorney failed to file for a trial de novo within the time limits set out by R. 4:21A-6(b)(1),  A trial de novo filing would have preserved plaintiff’s claim for trial and would not have subjected it to dismissal. Defendants made a cross motion to dismiss, alleging that Plaintiff’s failure to submit an affidavit of merit in the legal malpractice action,  as required by statute, required the  grant  of summary judgment  dismissing the malpractice complaint.

Issue: Does the Plaintiff’s failure to submit an expert's affidavit of merit  to support its allegation of legal malpractice when it was common knowledge that failure to file a timely application for a trial de novo amounts to negligence per se for which no expert affidavit or testimony would be necessary.

Ruling:   The requirement of the filing of an affidavit of merit is not applicable in this matter because Plaintiff's allegations do not require the testimony of an expert in order to permit the jury to determine the issue of negligence.  Affidavits of merit are not required where, as here, it was  “common knowledge” that the defendant attorney was negligent in blowing a time limit the consequences of which included the dismissal with prejudice of plaintiff's causes of action.

Lesson: In clear cases of attorney negligence, where it is common knowledge that the attorney was negligent by violating a statutory time limit  that caused plaintiff to forefeit her claim, no expert's affidavit is required,  because the jury can determine whether the Defendants is negligent based on "common knowledge" and without the need for expert testimony.

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