Articles Posted in National Legal Malpractice Cases

The Tenth Circuit Court of Appeals has modified the dismissal of a legal malpractice action to be “without prejudice” rather than “with prejudice”. In Bryner v. Lindberg a client brought a case in a Utah state court, alleging federal claims against several defendants as well as a legal malpractice claim against his former attorney under Utah state law. Defendants removed the case to U.S. District Court, which dismissed the federal claims under the Younger abstention doctrine, which is a challenged to subject matter jurisdiction.

In the absence of any federal issues, the state court malpractice claim was also subject to dismissal. The attorney asked the magistrate to dismiss with prejudice and the client sought dismissal without prejudice, to permit re-filing of the claims in state court. The magistrate ordered the case dismissed with prejudice, articulating that the client had failed to state a claim for malpractice under Utah law. However, the magistrate’s final order dismissed the case with prejudice, simply declining to exercise supplemental jurisdiction over the state malpractice claim. The client appealed.

The Tenth Circuit reversed and remanded the case with instructions that the case be dismissed without prejudice. It reasoned that a dismissal under the Younger doctrine is jurisdictional. If a district court dismisses all federal claims for lack of subject matter jurisdiction, then it must dismiss the remaining state claims as well. In the absence of any jurisdiction to hear a claim, a court may not dismiss a claim with prejudice, which goes to the merits. The magistrate erred when he dismissed the case with prejudice.

Decision: Bryner v. Lindberg

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A Texas appeals court has affirmed a summary judgment granted for an attorney in a legal malpractice action because the client failed to meet the required standard of proof in the case as to causation and damages. In Orcutt v. Goldberg, a client sued her former attorney for malpractice resulting from the attorney’s failure to give her former husband proper service and provide him with notice of a hearing for temporary orders during their divorce proceedings. The client’s former husband failed to attend the hearing and the court entered temporary support orders by default.

The former husband then moved to vacate the temporary orders due to lack of notice. A hearing took place on the husband’s motion, but there was no indication in the record whether or not the court vacated the prior Order. The court then issued a final divorced decree, without mention of the temporary Orders.

The client then sued her attorney, arguing that the attorney’s omissions either resulted in the temporary orders to have been vacated by the Court or void as a matter of law.. In either case, the result precluded them from being incorporated in the divorce decree.

The trial court granted summary judgment in favor of the attorney and the client appealed. The appellate court affirmed the judgment in favor of the attorney, finding that the client could not prove that the attorney’s conduct caused the client’s alleged damages. The Court reviewed the lower court record, which did not indicate that the temporary orders had been vacated or that the temporary orders had any effect on the final divorce decree.

Decision: Orcutt v. Goldberg

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A Florida appeals court has affirmed a summary judgment granted for an attorney on the basis that the Florida two year statute of limitations for legal malpractice claims had expired prior to the filing of the complaint. In McLeod v. Bankier, a client sued an attorney for failing to timely advise his client to file a legal malpractice claim against another former attorney. The first attorney had represented the client in an action against an investment bank, which allegedly made an improper margin call on his securities account.

Although the underlying case eventually settled, the client believed that the settlement agreement required his investment bank to restore his account to its former status. When the funds were not returned, the client hired a new attorney to pursue a claim against the investment bank through the National Association of Securities Dealers (“NASD”). In 2003, the NASD’s arbitration panel ruled in favor of the investment bank. In 2004, the second attorney ended his representation of the client but referred him to a third lawyer to pursue a legal malpractice claim against the first attorney.

The third lawyer advised the client that he did not have a legal malpractice claim against the first attorney. The client then hired another attorney to pursue an appeal of the NASD ruling. This fourth attorney advised the client to file a legal malpractice action against the first attorney rather than pursue the appeal. The client took no action against any of his former attorneys until 2008 when he filed a malpractice complaint against the second lawyer.

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The U.S. District Court for the Middle District of Florida has dismissed a legal malpractice action, while granting leave to file a second amended complaint. In Mengle v. Goldsmith, a real estate investor brought an action against an attorney who represented the non-party real estate developer. The Chicago law firm drafted documents and performed legal services, assisting the developer to raise $11 million from investors in order to acquire and sell six Florida properties.

The venture failed, resulting in foreclosure or losses on sale of the properties. The investor then filed an action against the developer’s law firm, alleging that it had negligently prepared documents, which caused him losses and that he was an intended third party beneficiary of the law firm’s services.

The law firm moved to dismiss the complaint for lack of personal jurisdiction and failure to state a claim. Personal jurisdiction arises either through general or specific jurisdiction. The federal court found no general jurisdiction because the law firm had not engaged in substantial and non-isolated activities within Florida that showed “a general course of business activity in the [s]tate for pecuniary benefit.” The court relied on the fact that all of the firm’s services were performed in Chicago and an attorney for the firm had attended a single meeting in Florida.

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The U.S. Court of Appeals for the Eighth Circuit has reversed the dismissal of a legal malpractice case, which had been dismissed below based on a statute of limitations bar. In Joyce v. Armstrong Teasdale, LLP, a client sued a law firm, which represented him and a company jointly owned with his wife and had prepared patent and licensing documents granting the company exclusive rights to sell a computer firewall technology he had invented.

Seven years later the client and his wife divorced, which resulted in the client losing one half of his rights in the patent. The client sued the law firm in Missouri Federal Court, claiming that the firm had negligently prepared the agreements, which resulted in the loss of his rights.

The firm moved to dismiss claiming the action was barred by Missouri’s five year statute of limitationsi. The District Court below granted the motion, finding that the client’s damages were ascertainable when he first signed the license agreement. The client appealed.

The Eighth Circuit ruled that the client could not have discovered his injuries prior to the divorce because the law firm had advised him, at the time of signing, that his interest would not be harmed in a divorce. The Court also found that nothing outside of the existing attorney-client relationship could have put him on notice that the agreements as drafted would cause him harm. Thus, the statute began to run only when the injury occurred and the action was not barred. The Court remanded the case for further proceedings.

Decision: Joyce v. Armstrong Teasdale, LLP

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A California Appeals Court has affirmed a lower court’s denial of a motion to compel arbitration in a legal malpractice action. In Augusta v. Keehn & Associates, a client moved to compel arbitration six and one half months after filing a complaint against his former attorney.

The client had filed an opposition to the attorney’s demurral to the first amended complaint served discovery papers, noticed the attorney’s deposition and filed two motions to compel discovery. Although the deposition was cancelled, the attorney did finally respond to discovery requests.

The client then filed a motion to compel arbitration. The attorney opposed the motion, claiming that the client had waived his right to arbitrate due to his previous inconsistent court actions and undue delay in seeking arbitration. The lower l court denied the motion and the client appealed.

The appeals court agreed, finding that the client’s delay was unreasonable, given that he was aware of the arbitration provision at the time the complaint was filed Further, the client’s court actions indicated that there was no initial intent to arbitrate, but rather an indication that the client intended to litigate in the courts The court also found that prejudice would have resulted if arbitration were permitted since the attorney had divulged certain trial theories in his discovery responses.

Decision: Augusta v. Keehn & Associates

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The U.S. Court of Appeals for the Federal Circuit has ruled that it lacked jurisdiction to entertain an appeal of a remand order by a U.S. District Court in a legal malpractice suit. In ARC Products, LLC, v. Kelly, a company brought a legal malpractice claim against its former attorney who represented it in patent application proceedings for two plastic transportation devices. The company claimed that the attorney’s negligence caused the U.S. Patent and Trademark Office to reject the application for one of the devices.

The company filed its suit in a state court in Missouri. The attorney then removed the action to the Eastern District Court of Missouri on the grounds that the complaint was based on federal patent law. Once in federal court, the company moved to remand the case to state court. The company asserted that the case was based on state contract and negligence claims and did not require a resolution of substantive issues involving federal patent law. The District Court agreed and granted the company’s motion.

The attorney then appealed to the U.S. Court of Appeals for the Federal Circuit. Under relevant case law, a federal appellate court is prohibited from reviewing a remand decision, which is based on lack of subject matter jurisdiction. Since it was clear in the District Court’s Order that its ruling was based on lack of subject matter jurisdiction, the Court of Appeals found that it had no authority to hear the appeal and thus granted the company’s motion to dismiss the appeal. The case thus proceeds in Missouri state court.

Decision: ARC Products, LLC, v. Kelly

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An appellate court in Louisiana has affirmed a judgment in a legal malpractice case, which included damages for mental anguish. In Anthony v. Yokum, a client sued her former attorney for legal malpractice arising from his representation in a personal injury matter. The client’s case was settled and the attorney received the settlement proceeds. However, he failed to apply them to her outstanding medical expenses, which were about $23,000.00.

As a result of the attorney’s conduct, the client received collection notices and multiple phone calls from creditors. The client felt like she was being harassed. After a bench trial in the malpractice case, the judge found in favor of the client and awarded her damages, including $5,500.00 for mental anguish.

The attorney appealed, claiming that the evidence did not support an award for emotional damages. Under Louisiana law, damage awards for pain and suffering are based on severity and duration. In this case, the fact that the client felt harassed and “was upset a lot” were determining factors in the trial court’s award. The appellate court upheld the judgment, citing the trial court’s broad discretion to assess damages.

Decision: Anthony v. Yokum

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An appellate court in California has dismissed an appeal brought in a legal malpractice action seeking a waiver from paying court fees and costs. In
Garmallo v. Daley, a client brought a legal malpractice suit against his former attorney. Upon filing his complaint, the client filed a fee waiver request. However, the court rejected the request because it was incomplete.

In its rejection order, the court notified the client that he had 10 days to either submit a revised request or pay the filing fees. After 14 days, the client submitted a revised request, which the court rejected as untimely. Subsequently the court sent the client a Notice of Administrative Void, which deemed his complaint invalid, and entered a judgment accordingly.

The client filed an appeal 71 days later. However, the appellate court found that the appeal was untimely because it was not filed within 60 days from when the client received notice of the entry of judgment. The appeal was therefore also dismissed.

Decision:
Garmallo v. Daley

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The Supreme Court of Arkansas has affirmed a summary judgment granted for an attorney in a legal malpractice case. In Evans v. Hamby, a client claimed that his former attorney negligently represented him during a case brought by a creditor seeking to collect on a promissory note against the client’s company.

The client lost the collection suit and then brought a legal malpractice claim against the attorney. The trial court granted summary judgment for the attorney and the client appealed. In order to prove legal malpractice a client must show that the attorney’s improper conduct resulted in loss of the underlying case. In this case, the client alleged that his attorney’s failure to assert the defense of usury and failure to advise him to reinstate the company’s charter amounted to negligence.

Usury laws protect borrowers from lending agreements with excessive interest rates. Here, while the interest rate charged was higher than the limit allowed by law, the court ruled that the client was estopped from raising the defense because there was evidence that he had suggested the rate, preventing a claim that the attorney negligently failed to raise the defense.

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