Mar 1 2017

Legal Malpractice Law Update 2/28/17

Mark P. Harty, 1951–2017

Mark HartyMany of you already know, but Morrison Mahoney lost a giant earlier this month with the death of Mark Harty. Mark chaired Morrison Mahoney’s Professional Liability Practice Group before becoming Managing Partner. Mark’s mentorship, friendship, affability and graciousness touched us all, many quite profoundly. We mourn his passing and will continue to miss him.


Rulings

Court of Appeal of Louisiana, First Circuit

Statute of Limitations: Dismissal of legal malpractice action on statute of limitations grounds affirmed where evidence showed that claimant had sufficient knowledge to put it on notice that its lawyers were negligent in failing to provide claimant with material information prior to settling a civil claim more than one year prior to commencing suit.

California Court of Appeal, Third District

Actual Innocence Requirement: Civilly confined former client suing former attorney for negligence with respect to representation in commitment proceedings under Sexually Violent Predator Act need not show actual innocence, but cannot sue until he can show commitment proceedings were favorably terminated.

Court of Appeals of Ohio, Sixth District, Erie County

Statute of Limitations: Former client’s legal malpractice claim was barred as untimely under Ohio’s one-year statute of limitations, which began to run upon the termination of the attorney-client relationship.

Court of Appeals of Nevada

Summary Judgment: Summary judgment appropriate on client’s breach of contract claim when fee agreement was unambiguous and could not be contradicted by parol evidence, but summary judgment reversed on legal malpractice claim due to factual dispute as to whether law firm made legal arguments that lacked merit and failed to fully explain the chances of overturning adverse decision.

Court of Appeals of Georgia

Judgmental Immunity: The doctrine of judgmental immunity prevented the plaintiff from proceeding on her claims for legal malpractice where she failed to follow the advice of her attorneys in a divorce action.

District Court of Appeal of Florida, Second District

Subject Matter Jurisdiction: State court legal malpractice action dismissed, without prejudice, as premature because the malpractice claim's "case within a case" required a federal court ruling on a patent’s scope, validity or infringement, which falls outside the state court's subject matter jurisdiction.


Case Summaries

Court of Appeal of Louisiana, First Circuit

Statute of Limitations: Dismissal of legal malpractice action on statute of limitations grounds affirmed where evidence showed that claimant had sufficient knowledge to put it on notice that its lawyers were negligent in failing to provide claimant with material information prior to settling a civil claim more than one year prior to commencing suit.
Satterfield & Pontikes Construction, Inc. v. Breazeale Sachse & Wilson, LLP, et al., 2017 WL 105953 (La. App. 1. Cir. 1/10/2017)

A corporation sued its former counsel for legal malpractice alleging that counsel had failed to disclose material information to the corporation prior to the corporation’s settlement of a construction dispute with a property owner. In August 2011, the corporation, a general contractor, retained the firm to represent it in connection with a school construction project. At that time, counsel obtained a conflict waiver from the corporation in light of counsel’s longstanding representation of the project’s architect. Although counsel had represented the architect in connection with the school project, that representation ended at the architect’s request in November 2011. In February 2012, the property owner sent a notice of consideration of default to the corporation alleging that the corporation had failed to meet deadlines and failed to perform the construction as ordered. Counsel responded to the notice on behalf of the corporation and, in March 2012, attended a settlement conference at which a settlement was reached. The day after the settlement conference, March 6, 2012, counsel sent a letter to the corporation expressing concern that the corporation may have a claim against the project’s architect for errors in the structural steel drawings related to the project. Counsel reminded the corporation that it had represented the architect for many years and advised that it would not pursue an action against the architect on the corporation’s behalf. However, counsel advised that it was willing to represent the corporation to pursue other claims arising out of the project. On March 7, 2012, the corporation acknowledged receipt of counsel’s letter and instructed counsel to proceed with prosecuting claims other than the claim against the architect. Counsel did so in April 2012. In August 2013, the corporation retained new counsel and requested its file. In July 2014, the corporation filed a petition for damages alleging legal malpractice against former counsel. The corporation maintained that, following its retention of successor counsel, it learned of an October 2011 e-mail to the architect copied to counsel discussing the structural steel issue and referencing the issue in the context of an errors and omissions claim. The corporation alleged that, had counsel informed the corporation of the contents of the e-mail before the settlement, it would not have accepted the settlement terms. Counsel filed a peremptory exception raising the objection of peremption arguing that the information the corporation alleged had been withheld was provided to the corporation in the March 6, 2012 letter, and thus any claim for malpractice expired in 2013 under the applicable statute of limitations. The trial court agreed and dismissed the claim. The corporation appealed. The Court of Appeal began its analysis by acknowledging that a claim for legal malpractice in Louisiana must be brought within one year of the date of the alleged act or omission, or within one year of the date the claimant discovered or reasonably should have discovered the alleged act or omission, however, “mere apprehension that something may be wrong is insufficient”. Furthermore, a legal malpractice claim cannot be filed later than three years of the date of the alleged act or omission. Reviewing the trial court’s decision under the manifest error-clearly wrong standard of review, the Court of Appeal affirmed the trial court’s decision that the March 6, 2012, letter was adequate to put the corporation on notice of a potential legal malpractice claim, and that the legal malpractice action was untimely and therefore the trial court’s dismissal was affirmed.

California Court of Appeal, Third District

Actual Innocence Requirement: Civilly confined former client suing former attorney for negligence with respect to representation in commitment proceedings under Sexually Violent Predator Act need not show actual innocence, but cannot sue until he can show commitment proceedings were favorably terminated.
Jones v. Whisenand, 2017 WL 543329 (Cal. App. 3d 2/10/2017)

The California Court of Appeal concluded that the actual innocence requirement does not apply to legal malpractice claims stemming from representation in proceedings under the Sexually Violent Predator Act (“SVPA”). A client sued his former public defender for negligence alleging that the attorney neglected his SVPA case over a period of years. The client's first malpractice complaint was dismissed with leave to amend because of client's failure to plead actual innocence, failure to show unlawful detention, and failure to show that his attorney was a state actor. A first amended complaint was filed and dismissed without leave to amend. The client filed a timely appeal on the trial court's judgment of dismissal. The Court of Appeal noted that a former criminal defendant suing his attorney for legal malpractice resulting in a conviction must prove actual innocence. Actual innocence consists of proving actual innocence of the underlying criminal charges and also post-conviction relief in the form of a final disposition of the underlying criminal case. The former client argued that SVPA proceedings were civil, not criminal in nature and therefore the actual innocence requirement did not apply. The attorney argued that SVPA proceedings shared many features in common with criminal proceedings and therefore the actual innocence requirement should apply, including that the procedure for determining Sexually Violent Predator status ends with a trial by jury; the verdict must be unanimous; and “beyond a reasonable doubt” is the applicable standard. The Court of Appeal agreed with the former client, noting that SVPA proceedings take place after an offender has served his prison term and therefore for the most part offenders cannot obtain post-conviction relief and cannot satisfy the actual innocence requirement in a SVPA situation. However, in its place, the Court of Appeal required individuals filing malpractice actions against their former criminal defense attorneys to prove the SVPA proceeding had "favorably terminated." The favorable termination requirement avoids parallel litigation over issues of probable cause and guilt and collateral attacks on the conviction through a civil suit. The Court of Appeal also reasoned that a successful malpractice claim would imply the invalidity of determinations made during the SVPA proceeding, including any eventual order of confinement, by suggesting that they were the result of incompetent counsel, because of the “but for” standard, rather than the lawful operation of the SVPA. The court reasoned that this decision did not leave the former client without redress because he had alternate remedies for ineffective assistance of counsel, including Marsden motions. Citing the strong judicial policy against the creation of two conflicting resolutions arising from the same or identical transaction, the court precluded the former client from pursuing his cause of action for SVPA-proceeding legal malpractice unless and until the SVPA proceeding had been terminated in his favor. The particular former client in the case at bar could not meet this standard because his SVPA trial had not occurred yet. Therefore the Court of Appeal upheld the dismissal of his malpractice claim but vacated the prejudice assigned to the dismissal to allow him to amend his complaint and pursue a malpractice claim against his former attorney if and when he could meet the favorable termination requirement.

Court of Appeals of Ohio, Sixth District, Erie County

Statute of Limitations: Former client’s legal malpractice claim was barred as untimely under Ohio’s one-year statute of limitations, which began to run upon the termination of the attorney-client relationship.
Deeb v. Bailey, 2017 WL 400093 (Ohio App. 6th Dist. 1/27/2017)

The Court of Appeals affirmed a judgment of the Erie County Court of Common Pleas granting summary judgment in favor of the defendant attorney and his law firm in a claim for legal malpractice. In this case, the plaintiff hired the defendant attorney in 2011 to provide legal representation to defend a criminal matter. The plaintiff had been indicted on five counts of rape and five counts of importuning for allegedly soliciting and engaging in sexual conduct with a minor under the age of 13. The plaintiff pled guilty to one count of rape and two counts of importuning and was sentenced to ten years in prison on July 26, 2012. The plaintiff alleged that the defendant acknowledged to the trial court at sentencing that he had reviewed a letter from the victim and plaintiff’s pre-sentence investigation report (“PSI”), but never shared the documents with the plaintiff. The defendant disputed plaintiff’s claim, stating that at sentencing he saw the PSI but not the victim letter and that he shared the contents of the PSI with the plaintiff on August 25, 2011. The defendant withdrew from the matter on September 26, 2012. Plaintiff hired new counsel and appealed his conviction and sentence. On November 22, 2013, the Court of Appeals of Ohio reversed the plaintiff’s sentence and remanded the matter for resentencing only. The plaintiff alleged that at the resentencing hearing that occurred on July 25, 2014, the trial court indicated that the letter from the victim had been “taken into consideration” during the original sentencing on July 26, 2012, along with the fact the plaintiff had a relationship with another 13-year-old female, all of which led the trial court to find that it was necessary to “protect society from future crimes by this defendant.” The plaintiff further asserted that the trial court noted that counsel should have disputed what was in the PSI and the victim’s letter but failed to do so. As a result, the plaintiff filed an action for legal malpractice on July 27, 2015 alleging that the defendant failed to read the victim statement and PSI, failed to discuss the documents with him and failed to dispute any errors, mistakes, or omissions therein with the trial court in order to provide the plaintiff with the best possible outcome at his sentencing hearing. On October 15, 2015, the defendant filed a motion for summary judgment on the sole issue of whether plaintiff’s complaint was barred by the one-year statute of limitations. The trial court granted defendant’s summary judgment motion, finding the plaintiff had not filed the action within the applicable statute of limitations. The Court of Appeals noted that R.C. 2305.11(A) requires an action for legal malpractice be brought within one year after the cause thereof accrues and under R.C. 2305.11(A), an action for legal malpractice and the statute of limitations begin to run when (1) there is a cognizable event whereby the client discovers or should have discovered that his injury was related to the attorney’s act or non-act and the client is put on notice of a need to pursue his possible remedies; or (2) when the attorney-client relationship for that particular transaction or undertaking terminates, whichever occurs later. The Court of Appeals determined the cognizable event in this case occurred at the plaintiff’s sentencing hearing on July 26, 2012, where the defendant allegedly failed to review the letter from the victim along with the plaintiff’s PSI and, therefore, failed to communicate the information to the plaintiff. The plaintiff was present for the sentencing hearing, which was sufficient to show constructive knowledge of the facts that might have supported his claim for malpractice. The attorney-client relationship terminated on September 26, 2012, the later of the two dates, when the trial court granted the defendant’s motion to withdraw from representation of the plaintiff. The Court of Appeals held that the plaintiff’s legal malpractice claim accrued upon termination of the attorney-client relationship, on September 26, 2012, therefore the plaintiff’s July 27, 2015 filing of the legal malpractice action was untimely.

Court of Appeals of Nevada

Summary Judgment: Summary judgment appropriate on client’s breach of contract claim when fee agreement was unambiguous and could not be contradicted by parol evidence, but summary judgment reversed on legal malpractice claim due to factual dispute as to whether law firm made legal arguments that lacked merit and failed to fully explain the chances of overturning adverse decision.
Slaughter v. Coffing, 2017 WL 462250 (Nev. App. 1/24/2017)

The Court of Appeals of Nevada affirmed the Eighth Judicial District Court, Clark County’s award of summary judgment to the defendant law firm on its breach of contract claim and the former clients’ breach of contract claim, but reversed the district court’s order granting summary judgment to the law firm on the clients’ legal malpractice claim. In this case, the clients hired the law firm to challenge a probate commissioner’s report and recommendation that invalidated a trust of which the clients were beneficiaries. When the law firm was unsuccessful in overturning that decision, the clients failed to pay attorney’s fees pursuant to the parties’ fee agreement. The law firm filed a claim against the clients for breach of that agreement. The clients counterclaimed for legal malpractice and breach of contract regarding the parties’ second fee agreement relating to the appeal of the decision invalidating the trust. With regard to summary judgment on the clients’ breach of contract claim, the clients alleged that there was no valid contract, as they were fraudulently induced into entering the fee agreement by the law firm’s oral guarantee of success in the probate case. The Court of Appeals held that the district court properly concluded that the clients’ evidence, the law firm’s oral guarantee, was inadmissible evidence pursuant to the parol evidence rule, as it directly contradicted the fee agreement’s clear and unambiguous language which stated that the clients “understand that the [law firm] has not and cannot guarantee results.” The Court also held that affidavits regarding conversations predating the execution of the second agreement could not be considered under the parol evidence rule due to the fact that the affidavits contradicted the clear and unambiguous language of the second fee agreement. Finally, the Court of Appeals reversed the district court’s ruling granting summary judgment to the law firm on the clients’ legal malpractice claim. The Court concluded that genuine issues of fact remained since the law firm provided no argument countering the clients’ assertion that, in the effort to overturn the probate decision, the law firm put forth legal arguments that lacked merit and failed to fully explain the chances of overturning the decision invalidating the trust, so that the clients could make an informed decision regarding representation. Such failures were deemed breaches of the law firm’s duty to “use such skill, prudence, and diligence as lawyers of ordinary skill and capacity possess in exercising and performing the tasks which they undertake.” The Court of Appeals also held that there was a genuine issue of fact as to whether these breaches were the proximate cause of the attorney-fee related damages. As a result, the award of summary judgment on the clients’ legal malpractice claim was reversed.

Court of Appeals of Georgia

Judgmental Immunity: The doctrine of judgmental immunity prevented the plaintiff from proceeding on her claims for legal malpractice where she failed to follow the advice of her attorneys in a divorce action.
Engelman v. Kessler, et al., 2017 WL 641262 (Ga. App. 2/16/2017)

The plaintiff brought this legal malpractice against her former attorneys in connection with their representation of her in a divorce action. Prior to her marriage, the plaintiff signed a prenuptial agreement with her ex-husband. When the plaintiff began to suspect that her ex-husband was seeking a divorce she retained the attorneys to examine the prenuptial agreement. The attorneys subsequently met with the ex-husband’s counsel to discuss the potential litigation and the prenuptial agreement, after which the ex-husband sent the attorneys a settlement offer. Two days after being provided the offer, the plaintiff emailed the attorneys to inform them that she was working on two separate counter offers for the ex-husband. She did not indicate that she had reviewed the offer. The attorneys subsequently encouraged her to review the offer and consider accepting it. The attorneys informed the plaintiff that the initial offer would be taken off the table should they present a counter offer. The attorneys further advised the plaintiff that they would “zealously advocate” for her should she choose to reject the offer. The plaintiff ignored the attorneys’ suggestion that they undertake mediation or an informal meeting with the ex-husband prior to presenting the counter-offer, stating that she was closing on a new house and needed the settlement funds in the very near future. The attorneys drafted a settlement agreement, which the plaintiff approved and which was forwarded to the ex-husband’s counsel. Upon completion of the ex-husband’s review, the plaintiff was informed by the attorneys to print the agreement and carefully review and inform them of any questions. The plaintiff insisted that she sign the settlement agreement the following day and did so. The settlement agreement specifically provided that the signatory was entered into the agreement without conducting any discovery and without any disclosure of the opposing party’s income and assets. Three years after the execution of the settlement agreement, the plaintiff filed suit; bringing claims of legal malpractice, among others. The attorneys moved for summary judgment, which was granted as to the legal malpractice claim. In granting the attorney’s motion for summary judgment, the trial court found that the attorneys were protected by the doctrine of judgmental immunity. Georgia law holds that an attorney cannot be liable for legal malpractice for their acts or omissions during the course of litigation so long as those acts or omissions are the result of honest professional judgment. In order to prevail on a legal malpractice claim in Georgia, a plaintiff must establish that she engaged the defendant attorney, that the attorney failed to exercise ordinary care skill and diligence and that their failure to do so was the proximate cause of the plaintiff’s damages. The Court of Appeals’ de novo review of the entry of summary judgment found that the plaintiff was well advised of the terms of the prenuptial agreement and the advantages and disadvantages of accepting the settlement offer or seeking to invalidate the prenuptial agreement. The plaintiff was found to have disregarded the advice of the attorneys regarding the presentation of a counter offer and the necessity for a thorough review of the ultimate settlement offer. The Court of Appeals upheld the trial court’s application of judgmental immunity proper and affirmed the entry of summary judgment in favor of the defendant attorneys.

District Court of Appeal of Florida, Second District

Subject Matter Jurisdiction: State court legal malpractice action dismissed, without prejudice, as premature because the malpractice claim's "case within a case" required a federal court ruling on a patent’s scope, validity or infringement, which falls outside the state court's subject matter jurisdiction.
Solar Dynamics, Inc. v. Buchanan, Ingersoll & Rooney, P.C., 2017 WL 519314 (Fla. 2d DCA 2/8/2017)

The District Court of Appeal of Florida, Second District, affirmed a trial court’s dismissal of a malpractice lawsuit because it lacked subject matter jurisdiction. In this case, a company hired a law firm in spring 2006 to obtain a patent for a shade system. The United States Patent and Trademark Office issued a patent in January 2008. Shortly afterward, the company entered into negotiations with another entity for an exclusive license to use the patented invention. The negotiations stalled however because the entity objected to the agreement, claiming the patent was too weak. Another attorney in the same law firm then advised the company that the patent failed to adequately protect the company’s idea and function, and it provided no protection. The company then filed a state court lawsuit claiming attorney malpractice. The trial court allowed the firm’s motion to dismiss for lack of subject matter jurisdiction, because the case involved the validity of a patent, which is governed under federal law. On appeal, the company argued that prior cases involving patent law had allowed attorney malpractice cases to proceed in state court. The defendant law firm argued that because the malpractice case would require determination of the validity of the patent, the state court lacked subject matter jurisdiction. The District Court of Appeal of Florida agreed with the defendant law firm, basing its decision on recent United States Supreme Court precedent, including Gunn v. Minton, 133 S.Ct. 1059 (2013). The Court determined that the cases on which the company relied were distinguishable from the case at bar. In this case, the Court explained that the company’s argument “avoids a critical step; it fails to create the first ‘case’ needed to provide the context for a subsequent legal malpractice claim.” In deciding that the state court could not resolve the alleged attorney malpractice issues without deciding core issues of patent law, the District Court of Appeal agreed with the trial court’s dismissal without prejudice. The Court concluded that the company should first pursue an infringement action in federal court, and that ruling could “tee-up the necessary ‘case within a case’” for a subsequent legal malpractice action in state court.


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