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

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

TX: Underlying divorce action

Student Contributor: Megan Diodato

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

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

Ruling: No

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

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

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Johnson v. Babcock, Court of Appels of Oregon, November 10, 2010 (Unpublished). 

Facts:  After being sentenced to 30 years in prison, Dwayne Johnson filed a post-conviction appeal in which he was represented by Attorney Babcock.  The Appellate Division remanded the case for a resentencing hearing.  The trial court again found Johnson to be a dangerous offender and imposed the 30 year sentence.  

Plaintiff then pursued a petition for post-conviction relief, alleging ineffective assistance of counsel at the resentencing hearing.  Plaintiff argued that under Oregon law, the maximum sentence he could have received was 80 months.  The trial court denied this petition and the appellate court affirmed, finding that Plaintiff failed to show his former attorney's performance was "unreasonably deficient."

Shortly thereafter, Plaintiff sought habeas relief in the United States District Court for the District of Oregon.  The federal court concluded that the attorney's representation did not comport with constitutionally minimum standards of effective assistance.  Specifically, the federal court determined that the attorney's failure to object to the 30 year sentence on the basis of pertinent Oregon case law was unreasonable and prejudiced Johnson.  Ultimately, the state court stipulated to a sentence of 80 months. 

Plaintiff then initiated this legal malpractice action.  Babcock argued that the suit was barred by the doctrine of issue preclusion because the state court had already decided that his performance had not been "unreasonably deficient."

Issues:  When two separate courts have rendered two separate findings with regad to the same issue, is that issue precluded from relitigation in another proceeding? 

Ruling:  No.  

First, the Court set out the five factors that must be present in order for the doctrine of issue preclusion to apply 

1. The issue in the two proceedings is identical.
2. The issue was actually litigated and was essential to a final decision on the merits in the prior proceedings.
3. The party sought to be precluded has had a full and fair opportunity to be heard on that issue.
4. The party sought to be precluded was a party or was in privity with a party to the prior proceeding.
5. The prior proceeding was the type of proceeding to which this court will give preclusive effect.

The Court then noted that the doctrine does not come without exceptions.  One exception is the existence of inconsistent determinations of the pertinent issue: 

Those courts and commentators which have considered the question are in virtually unanimous agreement that where outstanding determinations are actually inconsistent on the matter sought to be precluded, it would be patently unfair to estop a party by the judgment it lost.

Given the disparate determinations on the issue of the adequacy of Babcock's representation in the state and federal courts, the issue preclusion doctrine did not bar Johnson's subsequent suit for legal malpractice.

Lesson:  Inconsistent determinations on the issue of ineffective assistance of counsel, or legal malpractice, will not bar relitigation of the issue in a subsequent suit where the sufficiency and adequacy of the attorney's representation is again at issue.

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Perry v. Emerson, Supreme Judicial Court of Maine, October 26, 2010. 

Facts:  Emerson initiated a fee arbitration proceeding against her former attorneys, alleging that she never agreed to be responsible for the legal fees incurred in her divorce action and she was led to believe her husband would be responsible for the fees.

The arbitration panel determined that: 

Emerson routinely asked Perry and K&P about her obligation to pay fees billed to her, indicating that she doubted that her husband would actually pay her fees, and that she "was fully cognizant of" the possibility that a provision requiring her then-husband to pay her attorney fees "might not be a part of the ultimate judgment or settlement agreement." The panel also found that Emerson was aware that the final divorce agreement did not require her husband to pay her legal fees.

Based on this determination, Emerson's attorneys moved for summary judgment in a pending malpractice action.  The lower court concluded that Emerson's prior litigation of factual issues concerning her obligation to pay her own attorney's fees before the arbitration panel precluded re-litigation in the form of a malpractice complaint.  Emerson appealed.

Issues:  Can the factual determinations of a fee arbitration committee preclude litigation of a pending malpractice action? 

Ruling:  Perhaps. 

The findings made by a Fee Arbitration Panel, to the extent necessary to its determination, have preclusive effect for purposes of collateral estoppel.  A valid and final award by arbitration has the same effect under the rules of res judicata as a judgment of a court, so long as the process contains the essential elements of "adjudication":

(1) adequate notice, (2) the right to present evidence and legal argument and to rebut opposing evidence and argument, (3) a formulation of issues of law or fact to apply rules to specified parties concerning a specified transaction, (4) the rendition of a final decision, and (5) any other procedural elements as may be necessary to constitute the proceeding a sufficient means of conclusively determining the matter in question.

The lack of de novo review of the panel's decision is not a factor that is considered in determining the decision's preclusive effect. 

Based on this analysis, the Court held that Emerson's claim of an oral agreement/contract with her former attorneys that she would not pay her own attorney's fees was necessarily barred. 

The Court also barred, for different reasons, Emerson's claim of negligence against her former attorneys for their failure to include a provision in the settlement agreement providing that her husband would pay her attorney's fees.  The Court noted that the arbitration panel's determinations would have no bearing on this issue, since it was not necessary to the resolution of the fee dispute. Rather, Emerson was estopped from pursuing her negligence claim because she failed to present necessary expert testimony: 

The appropriate standard of care, and whether [the attorneys] breached a duty of zealous representation to Emerson by negotiating a divorce settlement that did not include a requirement that Emerson's ex-husband pay all of her attorney fees, is not obvious or within a layman's common knowledge and would have required expert testimony.

Lesson:  A fee arbitration panel's determinations will have preclusive effect on a pending or subsequent malpractice litigation, so long as those factual determinations were necessary to a resolution of the fee dispute.  Expert opinion is necessary to contest whether or not an attorney adequately drafted a settlement agreement.

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Stanton v. Schultz, 222 P.3d 303 (CO Jan. 11, 2010). 

Facts:  Schultz brought a post-conviction motion for a new trial based on newly discovered evidence in a federal criminal prosecution.  In that motion, he argued that his attorneys failed to call an essential witness, Pedro Castillo, whose testimony would have led to Schultz's acquittal.  

The district court denied Schultz's motion and held:  (1) Schultz failed to show that this newly discovered evidence could not have been discovered through the exercise of due diligence; (2) even if Castillo had testified, Schultz likely would have been convicted.  The Tenth Circuit upheld the district court's ruling only on ground one and expressly refused to consider whether or not Castillo's testimony would have had any impact on Schultz's conviction. 

Schultz then filed a legal malpractice action against his former attorneys.  The trial court granted the attorneys' motion to dismiss on the basis that the malpractice action was precluded by the court's holdings in Schultz's post-conviction motion.  The appellate court reversed and the attorneys appealed.

Issue:  Can a claim for legal malpractice be precluded by factual determinations in the underlying action? 

Ruling:  Perhaps.

In making its determination, the Court first set forth each of the requirements that must be satisfied to bar re-litigation under issue preclusion, or collateral estoppel: 

(1) the issue is identical to an issue actually litigated and necessarily adjudicated in the prior proceeding; (2) the party against whom estoppel was sought was a party to or was in privity with a party to the prior proceeding; (3) there was a final judgment on the merits in the prior proceeding; and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issues in the prior proceeding.

The first requirement was satisfied in that Schultz had to demonstrate, in both proceedings, that he would not have been convicted had his former attorneys presented Castillo's testimony.  This issue, however, was not "necessarily adjudicated" in the previous proceeding, since the Tenth Circuit denied Schultz's motion only on due diligence grounds, and expressly declined to consider whether Castillo's testimony  would have led to an acquittal.  The Court relied on Comment o to The Restatement (Second) of Judgments, Section 27: 

Effect of an appeal. If the judgment of the court of first instance was based on a determination of two issues, either of which standing independently would be sufficient to support the result, and . . . the appellate court upholds one of these determinations as sufficient and refuses to consider whether or not the other is sufficient and accordingly affirms the judgment, the judgment is conclusive as to the first determination.

Since the only ground actually considered and upheld by the appellate court may be given preclusive effect, the issue of whether or not Castillo's testimony would have impacted Schultz's conviction was open to litigation in the malpractice proceeding.  The Court further noted that comment o was supported by sound reasoning:

when the Tenth Circuit declined to review the causation issue, it effectively denied Schultz his right to appeal that issue. Preclusive effect should not be given to such a determination because our precedent requires an opportunity for review before a judgment can be considered final for purposes of issue preclusion.

Lesson: An issue presented in a legal malpractice action will be subject to preclusion only where it has previously been considered and upheld by the appellate court in the underlying action.  If the appellate court declines to consider certain grounds, those grounds are subject to re-litigation in a future proceeding.  

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Pechko v. Gendelman,  20 A.D.3d 404; 799 N.Y.S.2d 80 (2nd Dept. 2005)

NY Underlying Medical Malpractice Action

Student Contributor: Natalie Resto

Facts: The plaintiff underwent a mammogram while a patient with Doctor #1, who, she claimed, told her that the mammogram was normal. Later that year she underwent a mammogram with Doctor #2 and was diagnosed with cancer. The surgeon recalled seeing in the first mammogram certain “micro-calcifications” that were “suspicious of cancer.” The plaintiff sued Doctor #1 for medical malpractice. During the course of representation, the attorney who was representing her forwarded the mammogram films to a radiologist for evaluation, who before the evaluation misplaced them. The plaintiff then retained an appellate law firm to represent her in the medical malpractice action. Doctor  #1 moved for summary judgment arguing that the films constituted key evidence, and that the loss of that evidence irreparably prejudiced his ability to defend the action. The lower court granted the doctor’s summary judgment because the plaintiff failed to counter the motion with expert affidavits sufficient to create issues of fact. The plaintiff then brought this action against the law firm to recover damages for legal malpractice for failing to properly defend her against the summary judgment motion in the medical malpractice action.  The law firm argued that because it was not responsible for the loss of the mammogram film, which occurred before it was retained, its negligence was not the proximate cause of the plaintiff’s damages. The law firm moved for a motion to dismiss for failure to state a claim. The lower court denied it and the law firm appealed.

Issue: Was the law firm negligent in its representation of the plaintiffs in a medical malpractice action?

Ruling: Yes. The court found that the motion was properly denied because the absence of the mammogram films did not require the conclusion that the plaintiff would be unable to establish the law firm’s negligence. Here the firm did not rebut the plaintiff’s claim that they were negligent in failing to obtain secondary evidence concerning the films.

Lesson: Even when a court’s determination in an underlying medical malpractice action may be read as holding that the plaintiff will be unable to establish the merits of the medical malpractice action, that determination should not be given collateral estoppel effect against the plaintiff when he or she has alleged that the determination in the underlying action was the result of his or her attorney’s negligence.

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Alaimo v. McGeorge, 893 N.Y.S.2d 331 (3rd Dept. 2010)

Underlying Personal Injury Action

Facts:  Plaintiffs initiated a pro-se personal injury action in 1999.  In May, 2004, Plaintiffs retained the defendant attorneys to prosecute their claims.  Approximately one month later, Plaintiffs' action was struck for failure to present a medical expert.  Plaintiffs were given one year to restore the case, but failed to timely comply.  Defendants subsequently refunded the retainer and terminated representation. 

Shortly thereafter, Plaintiffs moved to restore their complaint pro-se.  The Supreme Court denied the motion and dismissed the case with prejudice for failure to present a reasonable excuse for not refiling the personal injury action within the one year time limit.  The Court further noted that the reports from Plaintiffs' medical providers with the motion to reinstate "failed to establish any causal connection between any allegedly improper conduct [and the injuries complained of]."

Plaintiffs subsequently sued the defendant attorneys for legal malpractice.

Issue:  Is Plaintiffs' legal malpractice action barred by the doctrine of collateral estoppel, since the Court had already made a determination as to the Plaintiffs' inability to succeed in the underlying personal injury matter?  Did Plaintiffs state a cause of action for legal malpractice in light of the Supreme Court's finding that they failed to establish proximate cause?

Ruling:  Plaintiffs stated a cause of action for legal malpractice and the doctrine of collateral estoppel did not apply. 

The Appellate Division explained the elements of collateral estoppel:

• An identical issue decided in the prior action that is decisive of the instant action; and
• The party to be precluded from relitigating the issue had a full and fair opportunity to contest the prior determination.

The Court ruled that collateral estoppel did not apply, since Plaintiffs' motion to reinstate the case required a showing of merit sufficient to establish a triable issue of fact, and that in that setting conclusory allegations are insufficient.  In contrast, on defendants' motion to dismiss, even conclusory allegations with respect to the medical evidence are deemed to be true.  Accordingly, defendants failed to establish that the showing of proximate cause as to Plaintiffs' alleged injuries was identical in the underlying action and the malpractice action.

Similarly, although the medical evidence may not have been sufficient for purposes of the motion to reinstate the underlying matter, it was entitled to the benefit of every reasonable inference on a motion to dismiss for failure to state a claim.   

Lesson:  Where the plaintiff's burden of proof is heavier in the underlying action than in a preliminary motion in the malpractice action, plaintiff's claims will not be barred based upon its failure to meet a heavier burden in the underlying matter.  

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Alevras v. Tacopina, 399 F.Supp.2d 567, (N.J. 2005); 

NJ Underlying criminal action.

Student Contributor: Colleen Gaedcke

Facts: The plaintiff was prosecuted and indicted on various counts of criminal violations in federal criminal court. He was appointed counsel but later retained the defendants to represent him. With the advice of his attorneys the plaintiff accepted an unfavorable plea agreement and began serving his sentence. After the plaintiff entered his guilty plea, he brought a 20 U.S.C. β 2255 motion, pro se, alleging ineffective assistance of counsel. His motion was denied by the District Court and the plaintiff appealed to the Third Circuit. The District Court held four evidentiary hearings on remand regarding the plaintiff’s motion, but the plaintiff’s petition was denied for a second time and affirmed by the Third Circuit. Then the plaintiff filed a seven count civil complaint against the defendant alleging legal malpractice. The defendant moved to dismiss the complaint and made a motion for summary judgment.

Issue: Whether the doctrine of collateral estoppel bars a criminal defendant from making civil legal malpractice claims for criminal malpractice where claims for ineffective assistance of counsel have been adjudicated, decided and rejected in a 20 U.S.C. β 2255 criminal proceeding?

Ruling: Yes. In granting the defendants’ motion for summary judgment and dismissing the plaintiff’s complaint with prejudice, the District Court held that the doctrine of collateral estoppel bars a legal malpractice claim against a criminal defense attorney based on the following reasoning:
1) The doctrine of collateral estoppel prevents a party from re-litigating issues that have previously been adjudicated and decided previously by another court of competent jurisdiction. Thus, where the issue of ineffective assistance of counsel has been fully litigated in the post-conviction proceeding, it may not be considered again in a civil proceeding.
2) As a matter of public policy, we cannot allow criminal defendants to re-litigate issues in civil court where the same issue was litigated by a court of competent jurisdiction. To allow otherwise would undermine the effective administration of the judicial system.  

Lesson: A criminal defendant cannot bring a legal malpractice case concerning the quality of his criminal defense counsel when he raised or had a full and fair opportunity to raise the issue  of ineffective assistance of counsel and he knew the facts regarding the attorneys alleged malpractice during the criminal proceedings.

 

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Alevras v. Tacopina, 399 F.Supp.2d 567 (D.N.J. 2005)

NJ Underlying criminal action

Student Contributor: Colleen Gaedcke

Facts: The plaintiff was indicted and prosecuted on various counts of criminal violations in federal court. He was appointed counsel, but later retained the defendants to represent him. Upon advice of the defendant attorneys, plaintiff accepted an unfavorable plea agreement and began serving his sentence. At some point thereafter, the plaintiff brought a 20 U.S.C. 2255 motion, pro se, alleging ineffective assistance of counsel. His motion was denied by the United States District Court, District of New Jersey, and the plaintiff appealed to the Third Circuit. The Court held four evidentiary hearings regarding the plaintiff’s motion, but the plaintiff’s petition was denied. The Court of Appeals, Third Circuit, affirmed the denial. Plaintiff subsequently filed a civil complaint against the defendants alleging legal malpractice. The defendants argued that the legal malpractice claim was barred by the doctrine of collateral estoppel, given the adjudication of plaintiff’s claim for ineffective assistance of counsel.

Issue: Whether the doctrine of collateral estoppel bars a criminal defendant from bringing a civil legal malpractice claim after the adjudication of a claim for ineffective assistance of counsel?

Ruling: Yes. The doctrine of collateral estoppel prevents a party from re-litigating issues that have previously been decided by another court of competent jurisdiction. Thus, where the issue of ineffective assistance of counsel has been fully litigated in the underlying criminal proceeding, it may not be considered again in a civil proceeding under the cloak of a professional negligence claim.

Lesson: New Jersey courts will not allow criminal defendants a second bite at the apple with a civil malpractice complaint after an adjudication on the very same issues in an ineffective assistance of counsel proceeding in the underlying criminal action.

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