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

Wilson v. Clancy, 747 F.Supp. 1154 (1990)

MD: Underlying Wills and Estates Planning

Student Contributor: Vanessa L. Wachira

Facts: In 1968, Joseph Clancy (“Attorney”) prepared separate wills for Dr. Thomas Hurney (“Client”) and his wife (“Testator”), under which their property was to be distributed in a particular manner to their relatives upon the death of the survivor. Under the wills, Beverly Wilson (“Beneficiary”) was to receive a one-eighth share of the estate. In1987, Client (but not Testator) requested that Attorney draft a new will in order to accommodate the aging couple’s healthcare needs. Client’s 1987 will established two trusts—one to care for Testator and, the other, in the event that Testator predeceased him, to care for Client’s sister until her death. Under the new will, all of Client’s property was to be used to fund the trusts. After the deaths of the trust beneficiaries, the residue was to be divided equally between Beneficiary and one of Testator’s relatives. When Client predeceased Testator, all of the couple’s assets were held in joint tenancy with the right of survivorship. Accordingly, all of Client’s assets passed to Testator outside of the will. Upon Testator’s death, the property was distributed in accordance with her only will—the will drafted in 1968. Because, under the provisions of the earlier will, Beneficiary received a one-eighth share as opposed to one-half, Beneficiary brought a third-party malpractice suit against Attorney, alleging that “the 1987 will was prima facie a piece of malpractice, in that it purported to devise jointly held property, a legal impossibility.”

Issue: Whether a will that proposes dispositions of property that are  legal impossibilities is prima facie evidence of the drafter’s malpractice.

Ruling: No. A will that proposes legal impossibilities is not necessarily malpractice on its face. Although the assets that Client’s will purported to convey were subject to joint tenancy survivorship rights, and ultimately passed to Beneficiary under Testator’s will, the language in Client’s will would have accomplished Client’s true desires if he had taken action to transfer his share of the couple’s jointly-held assets to his sole ownership. Attorney testified that he properly advised Client to do so.

Lesson: Poor drafting will not always expose an attorney to malpractice liability, but, in states like Maryland which permit disappointed beneficiaries to sue, a lawsuit will likely be in his future.
 

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Bank of New York v. Sheff, 382 Md. 235, 854 A.2d 1269

MD: Underlying Bond Issuance

Student Contributor: Vanessa L. Wachira

Facts: In a complex sale of nearly $50 million tax-exempt revenue bonds held by Prince George’s County involving numerous borrowers, Bondholders (represented by The Bank of New York (“Trustee”)), underwriters and attorneys, Piper & Marbury (“Attorneys”) was assigned the duty of drafting several critical documents. Among these, the Loan Agreement and the Trust Indenture each provided that Borrowers—the health care providers receiving the bond proceeds—would be responsible for filing all financing statements. Financing statements were needed to perfect a lien that Bondholders had placed on Borrowers’ assets as part of a security for repayment. Because the Borrowers included health-care providers located in both PG County and DC, filing was required in both locations. However, Attorneys drafted and circulated only the financing statements for filing in Maryland. Prior to the closing, a binder of all documents relating to the transaction was circulated to all parties; the binder did not contain any financing statements for DC. In 1997, Borrowers agreed to sell certain accounts receivables, which should have been subject to Bondholder’s 1993 lien, to Daiwa-Healthco-2 LLC (“Purchaser”). At some point between June and September of 1998, an analyst with one of the municipal bond funds holding the 1993 bonds became aware of and expressed concern to Trustee about Borrowers’ agreement with Purchaser. On November 20, 1998, he discovered that there were no financing statements on file in DC and that, consequently Bondholders did not have a perfected lien on the assets sold to Purchaser. On November 23, 2001, Trustee filed suit against Attorneys in DC. Finding that Maryland had a substantial interest in having the case litigated there, the DC court dismissed the action. Trustee re-filed in PG County on August 28, 2002.

Issue: Whether Bondholder were barred by the statute of limitations from asserting claims against Attorneys for their failure to perfect a lien on Borrower’s assets.

Ruling: Yes. In Maryland, a claim for legal malpractice must be brought within three years of the date upon which it accrues. Under Maryland’s “discovery rule,” an action is held to accrue, and the statute of limitations begins to run, at the moment a “plaintiff has knowledge of circumstances which would cause a reasonable person in the position of plaintiff to undertake an investigation which, if pursued with reasonable diligence, would have led to knowledge of the alleged cause of action.” Here, Attorneys argued that Trustee had knowledge of the alleged cause of action as early as 1993 when it received the binder of documents which lacked the DC paperwork. The Court, however, determined that, although the claim was statutorily barred, the statute of limitations began to run at some point between September and November 20, 1998 when Trustee was explicitly informed of the missed filing.

Lesson:  Not all states give plaintiffs the benefit of a "discovery rule" to prolong the time period for bringing claims. Check the applicable jurisdictions' rules and cases carefully to make sure. 
 

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Fox v. Willis, 390 Md. 620, 890 A.2d 726 (2006)

MD: Underlying Divorce Proceeding

Student Contributor: Vanessa L. Wachira

Facts: Katherine Fox (“Client”) is a minor child whose parents were divorced pursuant to a judgment entered by the Circuit Court for Montgomery County. In the subsequent proceedings to determine custody and visitation, the court appointed Vincent Wills (“Attorney”) as Client’s guardian (in accordance with Maryland Code § 9-109 of the Courts and Judicial Proceedings Article) and counsel (in accordance with § 1-202 of the Family Law Article). On behalf of Client, Client’s mother brought action for legal malpractice against Attorney in the Circuit Court alleging that Attorney negligently represented Client, abdicated his responsibilities as counsel for the child, was in fact an advocate for the child’s father who was suspected of sexually abusing Client, and breached his duties as counsel by improperly allowing his friendship with the child’s father to influence his judgment regarding the child’s best interest. At trial, Attorney argued that, because of his position as counsel for the child under § 1-202, he was entitled to “judicial immunity” and that he was functioning on behalf of and for the benefit of the court.

Issue: Whether a minor’s statutorily appointed attorney is entitled to immunity from tort liability while acting in his capacity under the statute?

Ruling: An attorney appointed under § 1-202 of the Family Law Article has no immunity from tort liability with respect to legal malpractice suit filed against him by a third party on behalf of a minor child. Although an attorney appointed under the statute is appointed by the court, “neither language nor history of [the] statute” suggests that he owes his principal duty of allegiance to court rather than the minor child. To rely, as the lower courts did in this case, “on the notion that an appointed guardian functions ‘as an agent or arm of the court, to which it owes its principal duty of allegiance, and not strictly as legal counsel to a child client’” is to ignore the fact that the sole function of counsel appointed under Section 1-202 is “to represent the minor child.”
Furthermore, under common law, “[a] guardian is “liable to his ward for such damages as may result from any culpable omission or neglect on his part.” Speck v. Speck, 42 Ga.App. 517, 156 S.E. 706, 707 (1931). Inhabitants of Maryland are entitled to the Common Law under Article 5 of the Maryland Declaration of Rights. Although common law can be altered by statute or decision of Maryland’s highest court, no statute or decision have granted tort-immunity to attorneys appointed pursuant to § 1-202 of the Family Law Article. Accordingly, attorneys appointed under the statute have no immunity from malpractice suits

Lesson: Like retained counsel, guardians appointed by the court have legal responsibilities to their clients. Violations of these duties amount to malpractice for which the Court will not grant immunity. 

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Vogel v. Touhey, 151 Md.App. 682, 828 A.2d 268 (2003)

MD: Underlying Divorce Proceeding

Student Contributor: Vanessa L. Wachira

Facts: In 1999, following the couple’s separation, Dr. Harold Alfert and attorney Karen Vogel (Client) entered into a property settlement agreement that provided for the equal division of their marital assets (valued at approximately two million dollars). After apparently discovering that her husband had failed to fully disclose the true value of the couple’s assets, Client retained T. Joseph Touhey (Attorney) to represent her in her divorce proceeding and to renegotiate the property settlement agreement. Dissatisfied with Attorney’s services, Client discharged Attorney and settled the dispute on her own for $50,000—a sum she agreed at the time was “fair and equitable.” Several months later, Client brought a malpractice action against Attorney, alleging that because he had failed to properly request and review documents pertaining to her husband’s finances, she had been forced to settle for an inadequate sum.

Issue: Was Client judicially stopped from asserting a malpractice claim against Attorney for his negligent representation in connection with her divorce after representing to the court that the settlement agreement in which she was entering was “fair and equitable”?

Ruling: Yes. Client’s decision to accept the settlement award prevented her from being able to later assert a claim for legal malpractice. The doctrine of judicial estoppel bars an individual from making inconsistent statements to the court. Having fired Attorney for his negligent conduct, Client was aware that the settlement agreement he had proposed was drafted without full knowledge of the facts of the case. Client was under no obligation to either agree to its terms or assert to the court that its terms were “fair and equitable.” Having done so, however, she was judicially estopped from later claiming that Attorney’s negligence caused her to accept an award that was inadequate. As the appellate court had stated:

“when a person who is particularly knowledgeable as a lawyer stands up, after being dissatisfied with her own lawyer and says, after having the documents in her hands that she later is going to use as the basis of a malpractice action, [] that everything is fair and equitable, I don’t see how this can proceed in violation of the judicial estoppel rule.”

Lesson: In Maryland, a client will be judicially estopped from asserting a claim for malpractice if she first conveys to the court that she is satisfied with the actions of, or the settlement produced by, her attorney. (And no, coercing your client into making such statements on the record is not a good idea.)

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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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Suder v. Whiteford, Taylor & Peston, LLP, Court of Appeals of Maryland, April 9, 2010. 

Facts:  Suder filed an action for legal malpractice against her former attorneys, alleging failure to timely file a request for a fifth extension which, ostensibly, caused her to receive approximately $270,000 less under a will than she otherwise would have.  The defendant attorneys admitted that they failed to timely request an extension, but argued that that omission was not the cause of Suder's alleged damages.  

The defendant attorneys argued that even if they had timely filed a request for a fifth extension, Suder would not have collected her statutory share because of the invalidity of her original request for extension at which time she was not represented by the defendant attorneys.  Accordingly, the attorneys contended that their "mistake" did not place Suder in a worse position, and that Suder could not prove proximate cause under the "case within a case" doctrine. 

Suder argued that the "case within a case" doctrine constitutes a "hypothetical...rewrite of history," and even if it is to be used, the defendant attorneys must be limited by the underlying defendants' waiver of their right to challenge a previous extension. 

Issue:  Must Plaintiff establish proximate cause by proving the underlying case in the malpractice case?  If so, are the former attorneys limited to only those defenses previously raised by the underlying adversary?

Ruling:  Suder must show proximate cause under the "case within a case" doctrine.  The defendant attorneys were not limited to only those defenses raised previously by Suder's adversary in the underlying action. 

The trial-within-a-trial doctrine is "the accepted and traditional means of resolving issues involved in the underlying proceeding in a legal malpractice action. It should be applied where there is no bright line malpractice... The trial-within-a-trial doctrine exposes "what the result `should have been' or what the result `would have been'" had the lawyer's negligence not occurred.

Accordingly, the Court held that the "case within a case" method was the appropriate way to determine whether Suder's adversary in the underlying litigation would have successfully challenged her requests for extensions, had the defendant attorney timely requested a fifth extension.  In that regard, the Court noted that Suder's adversary in the underlying litigation was permitted to challenge the validity of any extension throughout the appellate process, up until close of the estate administration.  

Moreover, the Court noted that the defendant attorneys were limited to those defenses Suder's adversary "would have" raised in the underlying action upon the filing of a fifth extension, rather than only those defense that had been raised previously:

Here, [the defendant attorneys are] given the chance to present the defense as merely the knife that severs the causal link between its own negligence and Suder's damages in this malpractice action. Relitigating the underlying action for the purposes of a malpractice suit is simply a tool by which the litigants are able to wind back the clock to determine whether the attorney proximately caused the injury.

To ascertain what defenses Suder's adversary would have raised with regard to a fifth extension, "the trier of fact should examine the record of the underlying controversy and hear testimony from the parties and counsel."

Lesson:  The "case within a case" method continues to be the golden test for proximate cause in legal malpractice matters.  In defending against malpractice actions, attorneys will be limited to those defenses the underlying adversary "would have" raised -- a fact sensitive determination. 

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