Legal Malpractice Issues

July 26, 2013

Connelly v. Hayashi, CA No. G046247: California Appellate Court Reverses Dismissal of Legal Malpractice Action

by Boston Lawyer

The Court of Appeals of California has reversed a lower court’s dismissal of a legal malpractice action on the basis that an implied attorney-client relationship existed. In Connelly v Hayashi, a physician who invented a protein enriched sports drink sought investors to form a new business venture to develop and market the product. The doctor recruited two investors, who recommended an attorney to help them form the new entity.

The attorney prepared various documents in order to establish the company. The attorney also met separately with the doctor and prepared a document, which governed the doctor’s contributions to the entity. The agreement specified that certain intellectual property owned by the doctor would be withheld and directed how his monetary contribution would be applied. Unbeknownst to the doctor, the attorney did not include the requested terms and added other items to the agreement, including language which disclaimed any attorney-client relationship between him and the doctor.

The venture failed and the doctor sued the attorney for legal malpractice. The trial court dismissed the case ruling that the doctor had failed to establish that an attorney-client relationship existed based on the language in the agreement. The court also held that the doctor could not have relied on the attorney’s advice because he admitted that he did not read the agreement before signing it. The client appealed.

The appeals court reversed finding that the attorney’s agreement to prepare the contribution document on behalf of the doctor created an implied attorney-client relationship. The doctor therefore justifiably relied on the attorney to draft the agreement in accordance with his instructions and the attorney’s failure to do so constituted a breach of the attorney’s duty of care.

Decision: Connelly v. Hayashi

July 2, 2013

Vincent v. DeVries, 2013 VT 34, Case No. 2012-026: Supreme Court of Vermont Affirms Economic Damage Award in Legal Malpractice Case

by Boston Lawyer

The Supreme Court of Vermont has affirmed an economic damage award in a legal malpractice action. In Vincent v. DeVries, a client and his sister contracted to sell their home for $52,000 to buyers. Shortly before the scheduled closing, the sister died and the client refused to go forward with the sale. The buyers then sued the client seeking specific performance of the contract. The client hired an attorney to defend him in the action.

Instead of responding to the complaint, the attorney moved for summary judgment. The buyers made their own motion for summary judgment, which the trial court granted. The attorney then filed an answer to the complaint and a series of motions seeking relief from the judgment alleging that the client was fraudulently induced into signing the contract. However, the trial court enforced the judgment finding that the client was precluded from raising new legal issues after judgment had entered.

The client then terminated the attorney. He eventually entered into a settlement agreement with the buyers, which allowed him to keep his home in exchange for a payment of $103,000, which included the buyers’ attorney’s fees incurred to prosecute the case. The client then sued the attorney for legal malpractice alleging that he negligently failed to raise appropriate defenses and counterclaims to the buyers’ suit.

May 31, 2013

Aseel v. Jonathan E. Kroll & Assoc., PLLC, 2013 NY Slip Op 03806: New York Appellate Court Affirms Dismissal of Legal Malpractice Action

by Boston Lawyer

A New York appellate court has affirmed the dismissal of a legal malpractice action. In Aseel v. Jonathan E. Kroll & Assoc., PLLC, a client hired an attorney to represent him in his divorce proceedings. The client subsequently brought a legal malpractice suit against the attorney for negligently representing him in the divorce.

The attorney moved to dismiss the case on the grounds that it was barred by a three year statute of limitations. The trial court granted the motion. The client appealed arguing that the statute of limitations was tolled by the continuous representation doctrine, which applies when there is a mutual understanding between the lawyer and client to continue the representation for the matter underlying the malpractice claim.

The appellate court affirmed. The client had removed his case file from the attorney’s office without his knowledge, which the court held constituted termination of the attorney-client relationship. Therefore, the case was properly dismissed as time barred because it was commenced more than three years from that date.

Decision: Aseel v. Jonathan E. Kroll & Assoc., PLLC.doc

May 18, 2013

Haddy v. Caldwell, No. 08-12-00131-CV: Texas Appellate Court Affirms Summary Judgment in Favor of Attorney in Legal Malpractice Action

by Boston Lawyer

A Texas appellate court has affirmed a summary judgment for an attorney in a legal malpractice case. In Haddy v. Caldwell, a client retained an attorney to bring a medical malpractice suit against United States Army physicians, who treated the client’s then wife. The trial court granted summary judgment in favor of the doctors and the case was dismissed.

The client then sued the attorney for negligently failing to designate an expert witness and file an expert report in the medical malpractice suit. The attorney moved for summary judgment, which the trial court granted. The client appealed.

The appellate court affirmed. In a legal malpractice case arising from litigation, in addition to proving that the attorney was negligent, the plaintiff must also prove the “case within the case”. This means that he must show that he would have succeeded in the underlying suit but for the attorney’s negligence.

Here, the client submitted an affidavit of a medical professional with his opposition to the attorney’s motion for summary judgment, but failed to present expert witness testimony regarding the attorney’s negligence. Therefore, summary judgment was appropriate because the client could not show that the attorney’s failure to designate a medical expert constituted a breach of the standard of care for a reasonable lawyer.

Decision: Haddy v. Caldwell

May 1, 2013

Frasco, Caponigro, Wineman, & Scheible, PLLC v. IGC Management, Inc., No. 308405: Michigan Court of Appeals Affirms Summary Judgment In Favor of Attorney In Legal Malpractice Case

by Boston Lawyer

A Michigan appellate court has affirmed a summary judgment in favor of an attorney in a legal malpractice action. In Frasco, Caponigro, Wineman, & Scheible, PLLC v. IGC Management, Inc., a sub-contractor hired an attorney to recover funds from a general contractor. The general contractor later filed for bankruptcy, and a bank was found to have a priority security interest against the contractor’s assets.

The attorney, who also represented other unpaid sub-contractors, negotiated a mediated settlement with the financers of the project. However, the original sub-contractor did not assent to the terms of the settlement. The attorney informed the mediator and requested that the agreement contain a separate signature line for the sub-contractor, which the mediator failed to include. Nevertheless, the attorney executed the agreement and the bankruptcy court found that the sub-contractor was bound by its terms because the attorney signed on its behalf.

The sub-contractor then sued the attorney for legal malpractice. The attorney moved for summary judgment, which the trial court granted. The sub-contractor appealed.

The appellate court affirmed, finding that although the attorney’s conduct may have breached his ethical duties, it did not constitute malpractice. Under Michigan law, liability for settling a case without a client’s consent stems from a bad faith breach of contract rather than negligence. Here, the attorney did not intend to sign the agreement on behalf of the sub-contractor and had informed the mediator that he did not have such authority. Thus, the attorney acted in good faith and summary judgment was appropriate.

Decision: Frasco, Caponigro, Wineman, & Scheible, PLLC v. IGC Management, Inc.

April 25, 2013

Kouransky, Bouwer & Poracky, P.C. v. The Bar Plan Mutual Insurance Co., No. 10 CV 535: Court Affirms Summary Judgment Declaring that Law Firm Not Entitled to Insurance Coverage in Legal Malpractice Action

by Boston Lawyer

The Seventh Circuit Court of Appeals has affirmed a summary judgment declaring that an insurance company did not have to provide coverage for a legal malpractice claim brought against a law firm. In Koransky, Bouwer & Poracky v. Bar Plan Mut. Ins., an Indiana law firm represented a potential buyer in the purchase of four drugstore franchises in Ohio. The first three sales were consummated and the buyer signed the fourth sales contract and delivered it to the law firm.

However, the firm inadvertently misfiled the fourth contract and failed to forward it to the seller. The seller informed the buyer that it was rescinding the contract because it did not receive an executed contract prior to an agreed upon deadline. An attorney at the firm immediately informed the seller of its error and requested that it go forward with the deal. The seller refused, and commenced an action in Alabama seeking a declaratory judgment that the contract was null and void.

Several weeks later, the law firm renewed its professional liability insurance policy, but did not notify its insurer of the buyer’s potential malpractice claim. Approximately six months later, the buyer wrote the law firm a letter notifying it that he was going to pursue a legal malpractice claim. The law firm forwarded the letter to its insurer.

April 10, 2013

Lewis v. Album, No. 12-CA-854: Louisiana Court of Appeals Affirms Summary Judgment for Attorney in Legal Malpractice Case

by Boston Lawyer

A Louisiana appellate court has affirmed a summary judgment in favor of an attorney in a legal malpractice action. In Lewis v. Album, a client retained an attorney in order to bring a claim against the Louisiana Commissioner of Insurance. Several months later, the client terminated the attorney’s representation.

Nearly three years later, the Commissioner’s office served the attorney with an ex parte motion to dismiss the case for abandonment and a court order granting the motion. The attorney forwarded the filings to the client, and filed a motion to withdraw as counsel of record. The following month, the client moved to set aside the Order of Abandonment, which the trial court denied because the case had already been dismissed.

Over one year later, the client filed a legal malpractice claim against the attorney, alleging that he had negligently allowed the previous suit to be dismissed for lack of prosecution. The attorney moved for summary judgment, which the trial court granted on the basis that the suit was barred by a one-year statute of limitations on legal malpractice claims.

The appellate court affirmed, finding that the statutory period began to run when the attorney informed the client that his case had been dismissed, or, at the latest, the following month when the client moved to set aside the judgment. Under either scenario, the client failed to commence his action within one year of either event. Summary judgment was therefore proper.

Decision: Lewis v. Album

March 29, 2013

Vara v. Williams, No. 03-10-00861-CV: Texas Appellate Court Affirms Summary Judgment for Attorney in Legal Malpractice Case

by Boston Lawyer

A Texas appellate court has affirmed a summary judgment in favor of an attorney in a legal malpractice action. In Vara v. Williams, a client hired an attorney to represent her in a divorce proceeding. The parties reached a mediated settlement, and the trial court entered a final divorce decree, which included a provision directing the parties to sign an operating trust agreement (“OTA”) allocating community property assets. Subsequently, disputes arose regarding the OTA, and the client hired a new attorney to represent her in that transaction.

The client later filed an action against the first attorney for negligently handling the OTA negotiations and several other causes of action. The attorney moved for summary judgment, which the trial court granted on the basis that the client had failed to timely designate an expert witness.

The appellate court affirmed, finding that contrary to Texas law, the client had attempted to transform a single count for legal malpractice into several other claims. In failing to timely designate an expert, the client could not succeed on her malpractice claim because she could not prove that the attorney had breached the standard of care. Summary judgment was therefore appropriate.

March 16, 2013

Bailey v. Robinson, No. 2 CA-CV 2012-0098: Arizona Appellate Court Affirms Summary Judgment for Attorney in Legal Malpractice Case

by Boston Lawyer

An Arizona appellate court has affirmed summary judgment in favor of an attorney in a legal malpractice action. In Bailey v. Robinson, a taxpayer hired an attorney to represent him in a civil action against the Internal Revenue Service (“IRS”), seeking a refund from a prior tax year. After a trial in the U.S. District Court for the District of Arizona, the court entered judgment for the IRS. The attorney then withdrew his representation.
The client filed a motion seeking relief from the judgment, arguing that an IRS agent had perjured herself and submitted falsified documents at trial. The client also argued that his attorney failed to discover or argue these issues. The trial court denied the motion, specifically ruling that the client failed to show that the agent had lied under oath or presented falsified documents, and therefore identified no reason for the attorney to have inquired into these subjects.

Several years later, the taxpayer sued his former attorney in state court for malpractice, again alleging that the attorney negligently failed to discover the IRS agent’s alleged perjury. The attorney successfully moved for summary judgment and the taxpayer appealed.

The appellate court affirmed, finding that the taxpayer was estopped from arguing that the agent perjured herself, because this issue was fully litigated and essential to the District Court’s judgment. Thus, there were no remaining issues of material fact and summary judgment was properly granted.

Decision: Bailey v. Robinson

March 3, 2013

Facchinato v. Gerds, No. 305129: Michigan Appellate Court Affirms Summary Judgment for Attorney in Legal Malpractice Action

by Boston Lawyer

A Michigan appellate court has affirmed a summary judgment in favor of an attorney in a legal malpractice action. In Facchiano v. Gerds.doc, a husband and wife hired an attorney to draft an agreement to transfer a 40% interest in their second home to their daughter. The transaction was completed and the daughter subsequently obtained a mortgage on her interest in the property.

Over two years later, the daughter defaulted on the loan and filed for bankruptcy. The parents consulted another attorney to investigate their options. The second attorney advised the couple that there was nothing they could do to prevent the lender from foreclosing on the mortgage. However, the attorney did not inform the couple that they might have a negligence claim against the attorney who drafted the agreement.

Almost one year later, the parents filed a legal malpractice action against the first attorney. The attorney successfully moved to for summary judgment on the basis that the claim was barred by a statute of limitations. The parents appealed.

Under Michigan law, legal malpractice actions must be brought within two years of the act or omission of the attorney, which caused the clients’ damages. The statute is tolled for an additional six months from the date when the clients discovered or should have discovered the alleged injury.