Mar 1 2018

Legal Malpractice Law Update 2/28/18

  • Court of Appeals of Indiana

Rules of Professional Conduct as Malpractice Theory: Former client’s allegation of a violation of the Rules of Professional Conduct and conflict of interest were insufficient to establish a legal malpractice claim absent an independent common law basis for breach of fiduciary duty against former attorney.

  • Superior Court of Pennsylvania

Abuse of Discretion Standard: Trial court manifestly abused its discretion in denying clients’ motion for a continuance of their legal malpractice action, which was based on the dismissal of a medical malpractice action for failing to file a certificate of merit, where the clients expeditiously sought a continuance after becoming aware, days before trial, that their medical expert was contractually precluded under a consent judgment from testifying in their case, and learning that replacement experts would not be ready for trial.

  • Supreme Court of Minnesota

Statute of Limitations: Judgment on the pleadings in favor of defendant attorney on statute of limitations grounds reversed where former client showed attorney’s subsequent actions constituted separate claims for legal malpractice, each triggering a new statute of limitations. Court of Appeals of Mississippi

Proximate Cause and Comparative Negligence: Summary judgment in favor of lawyer affirmed where former client caused his own injury at issue in the underlying case, and thus he could not establish his attorney's alleged negligence caused him to suffer damages.

  • Superior Court of New Jersey, Appellate Division

Plaintiff’s Failure to Provide Affidavit of Merit Fatal to Claim: Plaintiff was aware of his obligation to provide an Affidavit of Merit, illness and death in the plaintiff’s family did not constitute extraordinary circumstances to excuse the filing of the Affidavit, and the common knowledge exception was not applicable.

  • Oregon Court of Appeals

Legal Malpractice Jury Instruction: Jury instruction risked hopelessly confusing the jury, where to establish a duty owed by attorneys to a non-client, plaintiff had to show a specific result had been promised, but instruction stated that attorneys are not negligent merely because they do not achieve the result desired by the client.

  • Court of Appeals of Indiana

Rules of Professional Conduct as Malpractice Theory: Former client’s allegation of a violation of the Rules of Professional Conduct and conflict of interest were insufficient to establish a legal malpractice claim absent an independent common law basis for breach of fiduciary duty against former attorney.

CRIT Corp. and Peoplelink, LLC v. William J. Wilkinson, Barnes & Thornburg LLP 2018 WL 504767 (Ind. Ct. App. 1/23/2018)

By: Jillian McGrath

A former president and CEO retained the defendant attorneys in connection with severance agreements entered into with his former employer. The severance agreements included non-compete provisions. After the former president and CEO’s departure, the employer continued to use the defendant law firm as one of its key company counsel. The defendant law firm simultaneously continued to represent the former president and CEO in his acquisition of other companies. The employer later recognized that one of the former president and CEO’s acquisitions was in direct competition with the employer, in violation of the non-compete agreement. The employer sued the former president and CEO, as well as the defendant law firm, alleging a breach of fiduciary duty based upon its violation of the Rules of Professional Conduct and conflict of interest. The defendant law firm moved to dismiss the fiduciary duty claim on the ground that a violation of the Rules of Professional Conduct, on its own, does not establish a breach of the standard of care. The trial court agreed and granted the motion to dismiss. The employer filed a second amended complaint based on “the same operative facts” and added counts for fraud and constructive fraud. The defendant law firm moved to dismiss the second amended complaint and the trial court again granted a dismissal. The employer appealed, arguing the trial court misapplied case law that precludes claims for breaches of fiduciary duty merely because the alleged conduct violates a rule of professional conduct. The Court of Appeals of Indiana held that the Rules of Professional Conduct do not purport to create or describe any civil liability and are not designed to be the basis for civil liability. Indiana law allows a client to seek damages if the attorney’s conduct constitutes a breach of fiduciary duty at common law, but only when there exists an independent common law basis that is apart from a violation of the Rules of Professional Conduct. An Indiana attorney’s duty to not represent a client if the representation involves a concurrent conflict of interest is found in the Indiana Rules of Professional Conduct. The employer’s allegation of breach of fiduciary duty, therefore was based on a violation of the fiduciary duties regulated by the Rules of Professional Conduct, which Indiana case law precludes. The Court of Appeals also noted that the Preamble of the Rules of Professional Conduct states that “violation of a Rule should not itself give rise to a cause of action against a lawyer." In this case, the allegation of breach of fiduciary duty was solely based on a violation of the Rules of Professional Conduct and no independent common law basis apart from the rule violation was alleged to support the employer’s malpractice claim. The Court of Appeals concluded that the trial court did not err when it dismissed the petitioners’ initial complaint alleging breach of fiduciary duty. With regard to the employer’s argument that its legal malpractice claim sought the disgorgement of attorney fees paid to the defendant law firm, Indiana case law provides that disgorgement of compensation is an equitable, not a legal remedy. Thus, the employer did not allege any actual damages resulting from the defendant law firm’s alleged malpractice and the trial court properly granted dismissal as to the petitioners’ claim of legal malpractice. The Court of Appeals upheld the dismissal of the fraud counts on similar grounds and affirmed the trial court’s dismissal of both the initial complaint and the second amended complaint.  

  • Superior Court of Pennsylvania

Abuse of Discretion Standard: Trial court manifestly abused its discretion in denying clients’ motion for a continuance of their legal malpractice action, which was based on the dismissal of a medical malpractice action for failing to file a certificate of merit, where the clients expeditiously sought a continuance after becoming aware, days before trial, that their medical expert was contractually precluded under a consent judgment from testifying in their case, and learning that replacement experts would not be ready for trial.

Rutyna v. Schweers

2018 WL 284496 (Pa. Super. 1/4/2018)

By: Christopher S. Storm

Clients hired a medical malpractice attorney to bring claims for alleged surgical negligence against an orthopedic surgeon arising from a laminectomy that the surgeon performed on one of the clients. However, the attorney failed to file a certificate of merit, resulting in the termination of the clients’ medical malpractice action. The clients then brought legal malpractice claims against the attorney. After a long procedural history (including two successful appeals that overturned summary judgment against the clients based on alleged shortcomings in their medical expert's opinions), the attorney successfully moved to bifurcate the case, so that the court would first hear the medical malpractice trial. In November 2015, the attorney moved to continue the trial because of recently-retained counsel’s unavailability. The administrative trial judge granted the continuance, placing the medical malpractice trial on the list for the end of May 2016, but noted that no further continuances would be granted. On May 16, 2016, the clients moved for their own continuance after discovering, six days prior, that their medical expert witness had signed a consent judgment in an unrelated case in which he had agreed not to testify against physicians practicing at the medical center, or the medical center itself, where the client’s laminectomy occurred. The clients consulted other potential experts but could not procure one who could prepare for trial on such short notice. The attorney opposed the continuance on the basis that the clients failed to do their due diligence for learning so late about their expert’s inability to testify, and also filed a motion in limine precluding the clients’ expert from testifying at trial or introducing his expert report. The trial court granted the attorney’s motion in limine precluding the clients’ expert’s testimony on the basis that the expert did not possess adequate qualifications according to the Pennsylvania Medical Care Availability and Reduction of Error (“MCARE”) statute. On the same day, the court entered an order dismissing the clients’ legal malpractice action with prejudice because the clients did not have a medical witness to opine about the standard of care and breach thereof, and therefore could not prove their case as a matter of law. The clients appealed to the Superior Court of Pennsylvania asserting that the trial court erred in denying their motion for a continuance to permit them sufficient time to procure a replacement expert. The Superior Court agreed, finding that under a totality of the circumstances the trial court manifestly abused its discretion in denying clients motion where, “through no fault of their own, their expert was precluded from testifying.” In analyzing whether a trial court abuses its discretion by denying a request for a continuance, the reviewing court must consider (1) whether there was prejudice to the opposing party by a delay; (2) whether the opposing counsel was willing to continue the case; (3) the length of delay requested; and (4) the complexities involved in presenting the case. Analyzing the first two factors, the court weighed the attorney’s opposition to the continuance and the attorney’s claim of prejudice, due to the possibility that his medical expert, who was suffering from renal failure, might not survive the additional delay, against the late date that the information became available to the clients, and steps the clients took to remedy their expert’s incapacity. The Superior Court credited the clients’ efforts to find a replacement expert less than three weeks before trial, crediting their present counsel’s diligence. The Superior Court agreed with the clients’ assertion that they were unable to secure a competent expert without sufficient time to acquaint herself with the “case within a case.” Conversely, the Superior Court characterized as a “red herring” the attorney’s argument that the clients should have been aware of their medical expert’s problems meeting MCARE standards from a 2010 Superior Court decision reporting that the clients’ expert was suspended from the same medical center after performing surgery on the wrong side of a patient. The Court noted that the expert’s qualifications were not ultimately at issue, but rather his contractual preclusion from testifying. With respect to the third factor, the length of continuance, the Superior Court noted that while the swift resolution of cases is “the lynchpin of judicial economy” it is not an end in itself, particularly where an additional seven-month delay would be negligible in light of the already protracted life of the case. With respect to the fourth factor, the Superior Court relied on the complexity of this matter, and the vital nature of an expert’s testimony to prove a breach of the standard of care to the clients’ chances, in concluding that the trial court’s decision was “manifestly unreasonable” and essentially “sealed the clients’ fate” by denying a continuance.

  • Supreme Court of Minnesota

Statute of Limitations: Judgment on the pleadings in favor of defendant attorney on statute of limitations grounds reversed where former client showed attorney’s subsequent actions constituted separate claims for legal malpractice, each triggering a new statute of limitations.

Frederick v. Wallerich

2018 WL 735829 (Minn. 2/7/2018)

By: Alan E. Brown

A client sued his former attorney for legal malpractice arising out of an antenuptial agreement and will the attorney prepared for the client. In 2006, the attorney drafted the antenuptial agreement but failed to include the statutorily required witness signatures. The client married later in 2006. In 2007, the attorney drafted a will for the client that incorporated the antenuptial agreement by reference. In 2012, the client’s spouse filed for divorce and alleged that the antenuptial agreement was invalid due to the lack of requisite signatures. Later in 2012, the client commenced a legal malpractice suit against his former counsel. Although the antenuptial agreement was drafted and the client married beyond the six-year statute of limitations governing legal malpractice claims in Minnesota, the client alleged that subsequent representations by the attorney concerning the validity of the antenuptial agreement, including during the preparation of the will, each constituted separate legal malpractice claims that triggered a new statute of limitations. The attorney moved and obtained judgment on the pleadings on statute of limitations grounds. The Court of Appeals affirmed. Reviewing the decision granting judgment on the pleadings de novo, the Supreme Court of Minnesota decided that the attorney’s subsequent representations concerning the validity of the antenuptial agreement, including at the time the client’s will was prepared, constituted separate causes of action, each triggering a new statute of limitations. The Supreme Court reasoned that the client’s damages were worsened in 2007 when his attorney failed to inform him that the antenuptial agreement was invalid. Put another way, had the client learned in 2007 that the antenuptial agreement was invalid, he could have obtained a new agreement or sought a divorce at that time in order to avoid the loss of the appreciation in his assets between 2007 and 2013. Likewise, the Supreme Court held that the type of negligent conduct that occurred in 2007 (which included negligent estate planning) was different than the type of negligent conduct that occurred in 2006 (which did not include negligent estate planning but did include negligent marital planning). Next, the Supreme Court held that the fact that the negligent acts occurred at different times (2006 and 2007) and in connection with different transactions (preparation of an antenuptial agreement and preparation of a will) supported a conclusion that the causes of action were distinct and had different accrual dates. Finally, the Supreme Court held that the attorney’s negligence in 2006 in no way prevented her from meeting the standard of care during preparation of the will in 2007. In so holding, the Supreme Court declined to adopt a bright-line rule that every time a client consults with a lawyer about a previously completed project the lawyer owes a new professional and fiduciary duty. Rather, the Court elected to adopt a fact-specific approach that considers the timing, nature and outcome of any representation arising out of a previously completed project. The Court went on to hold that the client’s loss of the appreciation in his assets between 2007 and 2013 were both factually and proximately caused by the 2007 negligence in preparation of the will. Thus, the court reversed and remanded the case for further proceedings. The dissent argued that the 2007 failure by the attorney to remedy her earlier error should not constitute a separate claim for malpractice and that, under the Minnesota rule that a legal malpractice claim accrues when the client incurs “some damage” from the alleged malpractice (and not when the client knows or should know of the injury; i.e., the “discovery rule”), the subject claims should be dismissed on statute of limitations grounds given that the client indisputably incurred “some damage” resulting from the 2006 antenuptial agreement at the time of his marriage.

  • Court of Appeals of Mississippi

Proximate Cause and Comparative Negligence: Summary judgment in favor of lawyer affirmed where former client caused his own injury at issue in the underlying case, and thus he could not establish his attorney's alleged negligence caused him to suffer damages.

McDaniel v. Ferrell

2017 WL 5614597 (Miss. Ct. App. 11/21/2017)

By: Jacqueline A. Welch

An air-traffic specialist with the Federal Aviation Association was electrocuted in the course of his employment when he attempted to replace a fuse at a runway. In his journal, he wrote that prior to the electrocution, the runway lost power to the approach lights whenever it rained. On the date of the incident, he did not realize that power to the high-voltage transformer was still on. When he attempted to change the fuse, he had contact with a live wire, causing his injury. As a result, he could no longer work in his prior position. A report by the FAA concluded that the electrical system configuration violated the Electrical Code. The employee retained an attorney to represent him in a personal injury action, and filed a complaint in September 2009. Due to inaction on the case for more than 13 months, including lack of discovery, defendants moved for dismissal. The trial court dismissed the underlying action for failure to prosecute in 2013. The employee’s attorney did not appeal the dismissal. During a meeting regarding the dismissal, the attorney explained to his client that he could not identify a defective piece of equipment responsible for the injuries. In 2014, the former client filed suit against the attorney. The attorney moved for summary judgment, relying on the client’s admission that he failed to de-energize the transformer before attempting to change the fuse. The attorney argued that this admission precluded success in the underlying case as it established the client's actions caused his own injuries. The trial court, in allowing the attorney’s motion, explained that the client had the burden of showing that but for his attorney’s negligence, he would have prevailed in the underlying case. On appeal, the client argued that a comparative negligence analysis regarding the underlying case was appropriate, measuring damages based on a percentage of liability. The Court of Appeals of Mississippi, in rejecting this theory, explained that the doctrine of comparative negligence only applies when there is proof of more than one proximate cause of an injury. The Court concluded that the comparative negligence theory does not apply “if the negligence of the injured party is the sole cause of the injuries,” as was the case here. The Court of Appeals explained that even if one of the defendants negligently designed the system, the injured party’s act in not turning off the power was in fact the proximate cause of his injuries. As a result, he could not have prevailed in the underlying action. Because he could not have succeeded in the personal injury case, he likewise could not establish that his attorney was negligent. Accordingly, the Court affirmed the trial court’s dismissal.

  • Superior Court of New Jersey, Appellate Division

C.P.B. v. Torchin,

2018 WL 394888 (N.J. Super. App. Div. 1/12/2018).

By: Ashley Johnson

Plaintiff’s Failure to Provide Affidavit of Merit Fatal to Claim: Plaintiff was aware of his obligation to provide an Affidavit of Merit, illness and death in the plaintiff’s family did not constitute extraordinary circumstances to excuse the filing of the Affidavit, and the common knowledge exception was not applicable.

The plaintiff filed a legal malpractice complaint against his former attorneys alleging that the defendants improperly counseled him during an investigation by the Division of Child Protection and Permanency (“Division”) related to an action pending in family court. The plaintiff alleged that because he was facing criminal charges relating to a gun offense, the defendants agreed with the Division that any gun related questions were off-limits because of said criminal charges. Additionally, the plaintiff alleged that the defendants ultimately allowed him to give statements to the Division regarding the gun. The plaintiff’s complaint for legal malpractice included causes of action against the defendants for general and specialty duties of care. In response, the defendants filed an answer to the plaintiff’s complaint asserting the plaintiff’s failure to file an Affidavit of Merit (AOM) as an affirmative defense. In a legal malpractice action in New Jersey, an AOM must be filed by a plaintiff and provided to each defendant demonstrating that an appropriately licensed person having the skill or knowledge in the particular field had reviewed the subject complaint and determined that the defendants acted in a way that fell outside of acceptable professional or occupational standards. In response to the defendants’ answer and affirmative defense, the plaintiff asked the defendants for a thirty-day extension of time to file the AOM, to which the defendants agreed. Prior to the expiration of the thirty-day extension, the plaintiff asked the defendants for another thirty-day extension of time to file the AOM, to which the defendants did not consent. The defendants thereafter filed a motion to dismiss plaintiff’s complaint based on the plaintiff’s failure to file an AOM. The plaintiff, in opposition, argued that the AOM was not necessary based on the common knowledge exception. The plaintiff also argued that the court was required to hold a Ferreira conference, and given that the court did not do so, the court was required to grant an extension of time in which to file the AOM. The plaintiff further argued that there were extraordinary circumstances that would justify an extension of time to file the AOM, specifically, that there were outstanding criminal charges against him, that his cousin recently passed away, and that his mother-in-law was ill. The trial court granted the defendants’ motion to dismiss, with prejudice, and the plaintiff appealed. On appeal, the Superior Court of New Jersey, Appellate Division, addressed the statute that requires the AOM to be filed, indicating that failure to do so constitutes a failure to state a cause of action. The common knowledge exception excuses a plaintiff from having to file an AOM only where the defendants’ acts are so obvious that a plaintiff would not need to present expert testimony at trial to establish the standard of care. Here, the defendants’ actions involved litigation strategy, which requires the exercise of legal judgment, thereby requiring expert testimony. Addressing the plaintiff’s argument regarding the Ferreira conference, the Appellate Division agreed that the AOM statute required the court to hold a case management conference, at which time if an AOM had not been filed, the court was to remind the parties of their obligations. However, here the plaintiff was aware of his obligation to file an AOM, as he had requested extensions of time to file it. So, being reminded by the trial court of his obligation was unnecessary. Finally, with regard to extraordinary circumstances, the plaintiff conceded to the motion judge that the reason he did not seek an AOM was because he considered it, but declined to do so because of financial concerns and because he believed the common knowledge exception applied. Noting that plaintiffs who do not file an AOM in reliance on the common knowledge exception do so at their own peril, and in light of the plaintiff’s concession before the motion judge, the Appellate Division refused to consider other explanations to support the plaintiff’s extraordinary circumstances argument. The Superior Court of New Jersey, Appellate Division, therefore, wholly affirmed the trial court’s judgment for defendants.

  • Oregon Court of Appeals

Legal Malpractice Jury Instruction: Jury instruction risked hopelessly confusing the jury, where to establish a duty owed by attorneys to a non-client, plaintiff had to show a specific result had been promised, but instruction stated that attorneys are not negligent merely because they do not achieve the result desired by the client.

Sherertz et al. v. Brownstein, Rask, Sweeney, Kerr, Grim, Desylvia & Hay LLP

288 Or. App. 719 (11/8/2017)

By: Rebecca A.G. Robertson

The personal representative of a decedent’s estate brought a legal malpractice action against the defendant law firm, alleging negligence in preparing the decedent’s estate plan. The law firm created an irrevocable life insurance trust (ILIT) for the decedent. The personal representative alleged that the decedent created the ILIT to pay estate taxes, which would permit the decedent to pass to one of his sons all of the stock in the decedent’s business. The ILIT was insufficient for that purpose, so a significant amount of stock had to be sold to pay estate taxes. The law firm asserted the decedent did not create the ILIT to cover estate taxes, but instead the decdent intended to equally divide the proceeds amongst all of the decedent’s four children, which presumably the ILIT did. The trial court entered a general judgment and supplementary judgment following a jury trial and verdict dismissing plaintiff’s claims for legal malpractice against the defendant law firm and awarding damages on the defendant’s counterclaim. Plaintiff appealed, arguing that the trial court erred in giving defendant’s special requested jury instruction. The jury instruction, which was based on the Uniform Civil Jury Instruction applicable to physicians, read, “Attorneys are not negligent merely because they do not achieve the result desired by the client. An attorney does not guarantee a good result by undertaking to perform a service.” The Court of Appeals held that the trial court erred in giving the instruction because it was reasonably likely to confuse or mislead the jury, and in the specific context of this case, the risk of prejudice to plaintiff was significant. The Court of Appeals analyzed the claim as being brought by a non-client, which required plaintiff to show that the defendant attorney actually made an express or implied promise to the decedent under circumstances that indicate that the decedent intended to give the plaintiff the benefit of the promised performance. Under such circumstances, the court is required to examine the nature and specificity of the promise to determine whether it is merely an attorney’s promise to the testator to use the skill and care customary among lawyers in the relevant community, or instead is a promise to obtain a particular result for the plaintiff’s benefit that will support a third-party negligence claim for financial loss. The facts surrounding a lawyer’s alleged promise is the central point of inquiry. The Oregon Court of Appeals held that the jury instruction given in this case “hopelessly” confused what was at issue, which was the importance of the result promised by the defendant law firm. The jury instruction told the jury that the defendant was not negligent merely for failing to achieve the desired result, when to have a claim in the first place the non-client plaintiff could only establish a duty by showing that a specific result had been promised. The Oregon Court of Appeals reversed the trial court’s judgment and remanded for further proceedings, noting that the jury instruction error substantially affected plaintiff’s rights and, therefore, had a detrimental influence on her rights in an important or essential manner.

Back to Newsletters