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This is an opinion of the Iowa Supreme Court, holding that a legal malpractice case was time-barred. The case is Skadburg v. Gately, 17-0151. Skadburg was the administrator of an estate and alleged that she hired the defendant to give her legal advice. Skadburg claimed that she used funds from a life insurance policy to pay debts of the estate. Skadburg alleged that the lawyer failed to inform her that the life insurance proceeds were exempt from any claims and would pass directly to the beneficiary. Thus, in Skadburg’s view, the lawyer’s failure to advise her that the life insurance was exempt cost her the life insurance proceeds.

The case had one huge problem – the estate was closed on August 18, 2010. The malpractice case was filed more than five years later on August 19, 2015. The trial court held the case was time-barred but the appellate court reversed. The Iowa Supreme Court reversed that decision.

The Iowa Supreme Court found that Skadburg had notice of her cause of action in 2008 when she paid the creditors and that the case was filed after the five-year statute of limitations expired.  The continuous representation exception to the statute of limitations did not apply because the plaintiff had actual or constructive notice of her claim before the attorney-client relationship ended. Further, there was no exception for fraudulent concealment of the cause of action.

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The case is Tebbens v. Levin & Conde, 2018 IL App (1st) 170777. Tebbens believed that his former divorce counsel made an error in drafting the marital settlement agreement and drafted an agreement that was not consistent with what the parties had verbally agreed to.  This is a tough case to win as Tebbens signed the agreement. The defense would ask why he did not read what he had signed. However, Tebbens made a further and fatal error to his malpractice claim.

The Divorce statute allows a lawyer to file a fee petition before the judge who heard the divorce. Here Levin & Conde filed such a fee petition. Tebbens made the mistake of alleging malpractice in his response to the fee petition. The court ruled against him and awarded fees. Then Tebben sued for malpractice. The problem is that the doctrine of res judicata barred his claim because the malpractice issue has already been heard and decided in the fee petition case.

This is a litigation blunder that I have personally witnessed on several occasions. As the Eminem song says “you get one shot, one opportunity” to allege legal malpractice. “Don’t let it slip.” You won’t get a second chance.

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Judicial estoppel is a doctrine that penalizes a litigant who takes one position in one lawsuit and a contrary position in another lawsuit. In other words, the litigant’s position shifts based on the litigant’s interests in a particular case. Kershaw v. Levy, Tennessee Court of Appeals, No. M2017-01129-COA-R3-CV., is a divorce malpractice case where the plaintiff’s claims against her former lawyer ran into the judicial estoppel doctrine. The lawyer entered the divorce case and Kershaw was promptly held in contempt of court and sentenced to 30 days in jail. Later, the lawyer settled the divorce case and obtained an order vacating the contempt finding.  When Ms. Kershaw sued him for legal malpractice the lawyer filed a motion arguing that she was judicially estopped from bringing claims based on the divorce settlement.

The court summarizes the judicial estoppel argument in this fashion:

On March 1, 2017, Mr. Levy filed a motion for summary judgment contending that Ms. Kershaw should be judicially estopped from claiming in the malpractice case that her damages from Mr. Levy’s negligence resulted from an inequitable settlement agreement with Elliot Kershaw when she previously claimed under oath that the settlement had been equitable. Further, Mr. Levy argued that Ms. Kershaw should not be allowed to pursue any malpractice claim against him based on her criminal contempt convictions because they had been vacated and she voluntarily relinquished her right to pursue any post-conviction relief related to them in the MDA. Ms. Kershaw responded in opposition to the motion for summary judgment, asserting the damage resulting from Mr. Levy’s alleged negligence left her with no bargaining power in her settlement negotiations with Mr. Kershaw, and the fact that she entered into an agreement several months after Mr. Levy’s involvement that stated the settlement with Mr. Kershaw was fair and equitable was irrelevant.

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In a legal malpractice case, the plaintiff is required to prove a case-within-a-case or that had the lawyer met the standard of care the plaintiff would have won the case. The case here is Roumbos v. Vazanellis and Thiros & Stracci,  Case No. 45S03-1710-CT-635. decided by the Indiana Supreme court on April 12, 2018.

The client hired the lawyer to file a personal injury case, against a hospital. The plaintiff who was elderly had fallen when she went to visit her husband at the hospital. The lawyer allegedly failed to file with the limitations period. In the malpractice litigation against the lawyer, the lawyer defended the case on the ground that the plaintiff could not prove that her fall was proximately caused by the negligence of the hospital. The trial court granted summary judgment but the Indiana Supreme Court reversed. It held that the plaintiff had introduced sufficient evidence that the hospital was negligent to proceed to trial.

The opinion is thoughtful and well-written and it does a great job of explaining how the proof of a case-within-a-case works.

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The case is Grayson v. Michael J. Korst, P.C., and Michael J. Korst, 16 c 1297 N. D. Ill.  Grayson and his business partner were represented by the Defendants in a transaction in which Grayson and his business partner sold the business (a Domino’s franchise) to a buyer. Grayson alleged that Korst had a conflict in that he represented the company and the two partners and that their interests conflicted. Grayson claimed that Korst failed to notify him that he was entitled to a share of the sale proceeds.

There was also evidence in the record that Grayson was going through a divorce and tried to claim that his interest in the company had a negligible value so that he would not have to make payments to his soon to be ex-wife.

Ultimately, because the case involved complicated conflict issues, Grayson had a duty to obtain an expert. Because he had no expert, he had no ability to explain how the lawyer’s performance failed to meet the standard of care. The lawyer had had both business partners, including Grayson, sign a waiver of any potential conflict, which further weakened the case.

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The case is captioned Camelot, Inc. v. Burke Burns & Pinelli, Ltd., 2017 IL App (2d) 170038-U. The Burke firm had handled shareholder litigation for the plaintiffs. That litigation ended in 2004. Ten years after the representation ended, in 2014, it attempted to serve a lien on certain real property owned by the Plaintiffs. The Plaintiffs sued for declaratory judgment.Plaintiffs obtained summary judgment that the lien was invalid.

The Appellate Court affirmed the grant of summary judgment and held that the lien claim was invalid under the Illinois Attorneys Lien Act 770 ILCS 5/1. The court found a number of problems with the lien claim. First, the lien was asserted ten years after the representation ended, in violation of Illinois law. ¶23. Second, the court held that the “Act does not provide a remedy of foreclosure.” ¶24. The court also held that it lacked jurisdiction to consider the lawyers’ equitable lien claim.

Comment: It took chutzpah to assert a lien on a parcel of real estate ten years after the attorney-client relationship ended. In my view this lien claim was frivolous and the lawyers should have paid the plaintiffs’ attorneys fees.

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This case, KLIGER-WEISS INFOSYSTEMS, INC., Respondent, v. RUSKIN MOSCOU FALTISCHEK, P.C., Appellant. 2015-06404, Index No. 606457/14., 2018 NY Slip Op 01456, was recently decided by the New York Appellate Division. KWI sued its former lawyers for legal malpractice for failing to include a so-called “evergreen” provision in a settlement agreement in an underlying software licensing dispute. The evergreen provision would have renewed the agreement every year. The explanation:

In 2001, the plaintiff, Kliger-Weiss Infosystems, Inc. (hereinafter KWI), entered into an agreement (hereinafter the 2001 agreement) to license and market certain software from STS Systems, LTD, a predecessor in interest to Epicor Retail Solutions Corporation (hereinafter Epicor). In relevant part, the 2001 agreement contained a provision providing for automatic one-year renewals of the 2001 agreement (hereinafter the evergreen provision). In 2004, Epicor’s predecessor in interest commenced an action against KWI and others in the United States District Court for the Eastern District of New York (hereinafter the federal action) seeking, inter alia, to terminate the 2001 agreement due to alleged breaches by KWI. In early 2007, KWI retained the defendant to negotiate a settlement of the federal action, which resulted in a settlement agreement (hereinafter the 2007 settlement agreement). KWI alleges that it instructed the defendant to incorporate the evergreen provision into the 2007 settlement agreement, but that the defendant, unbeknownst to KWI, failed to do so.

In 2011, Epicor commenced an arbitration proceeding against KWI seeking to terminate the 2007 settlement agreement due to KWI’s alleged uncured breaches. The defendant represented KWI in the arbitration, which resulted in a 2013 determination that the 2007 settlement agreement did not contain an evergreen provision.

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This is an issue that has become controversial. In most states, a criminal defendant who was convicted cannot sue for legal malpractice unless he establishes “actual innocence” or in New York, a colorable claim of innocence. Roy v. The Law Offices of B. Alan Seidler, P.C., (17 Civ. 5644 S.D. N.Y.)   is one such case.  Roy was convicted of wire fraud and conspiracy to commit wire fraud and was sentenced to 87 months in prison. His conviction was affirmed on appeal.  His legal malpractice complaint, which alleged several alleged failings by his trial counsel, was dismissed.

The court explained the rule in this way:

Plaintiff’s legal malpractice claim must be dismissed. As the Second Circuit has repeatedly held, “under New York law, a plaintiff cannot state a malpractice claim against his criminal defense attorney if his conviction `remains undisturbed.'” Hoffenberg v. Meyers, 73 F. App’x 515, 516 (2d Cir. 2003) (quoting Britt v. Legal Aid Soc., Inc., 95 N.Y.2d 443, 446, 718 N.Y.S.2d 264 (2000)); see also Abuhouran v. Lans, 269 F. App’x 134, 135 (2d Cir. 2008) (“Thus, to succeed, [plaintiff] would have had to show innocence or a colorable claim of innocence.”).

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The case is Fulton Market Retail Fish, Inc. v. Todtman, Nachamie, Spizz and Johns, 2018 NY Slip Op o1o38 (Appellate Division First Department).

Plaintiffs, who sued their lawyers for legal malpractice, were concerned that the same judge who heard the underlying case was going to hear the legal malpractice case. They waited ten months after bringing the case to move for recusal. The court explained:

Plaintiffs’ claims are undermined by the fact that, while they argue that the court made biased rulings in the underlying landlord-tenant litigation, they never moved for recusal in that lawsuit, which lasted over a decade (see Glatzer v Bear, Stearns & Co., Inc., 95 AD3d 707 [1st Dept 2012]). Even after the same justice was assigned to the instant action, plaintiffs did not move for recusal until 10 months after the case commenced, and then only after the court, at oral argument on a motion to dismiss, questioned the viability of plaintiffs’ legal malpractice claim on collateral estoppel grounds.

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The case is captioned Kalomakls Management v. Lawrence & Walsh, P.C., 2018 NY Slip Op 00282. The plaintiff filed an arbitration proceeding against a contractor who worked on the renovation of Plaintiff’s diner. The Defendant law firm represented the plaintiff during that trial. The arbitrator ruled in favor of the contractor and dismissed Plaintiff’s claims. Plaintiff then sued the law firm for legal malpractice. The law firm obtained summary judgment and that decision was affirmed on appeal because the Plaintiff could not prove that absent the negligence it would have won the underlying case. Because plaintiff could not prove proximate causation (or negligence) the grant of summary judgment was affirmed.

Ed Clinton, Jr.

http://www.clintonlaw.net