Articles Posted in Collateral Estoppel

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Plaintiff lost his malpractice claim against his lawyers because the court deemed his expert reports inadmissible.  In the alternative, Plaintiff argued that his lawyers were negligent by failing to dispute the court’s finding that the operations of a company were illegal. The New Jersey Appellate Court rejected that argument on the basis that plaintiff invited the error.

Finally, plaintiff contends that the Orloff court erred in concluding that UNO’s operation was illegal. He argues that “[t]he court below assumed UNO was illegal, as the trial court in Orloff offhandedly so concluded[.]” According to plaintiff, “the defendants failed to disabuse [the trial court in the Orloff litigation] of the notion that UNO was `illegal,’ and to advance the conclusions to the contrary of international compliance experts, Graves, Erb and McDonald.” We disagree.

First, the facts of this case fall squarely within the invited-error doctrine. “The doctrine of invited error operates to bar a disappointed litigant from arguing on appeal that an adverse decision below was the product of error, when that party urged the lower court to adopt the proposition now alleged to be error.” Brett v. Great Am. Recreation, 144 N.J. 479, 503 (1996). The doctrine “is intended to `prevent [a party] from manipulating the system’ and will apply `when a [party] in some way has led the court into error’ while pursuing a tactical advantage that does not work as planned.” State v. Williams, 219 N.J. 89, 100 (2014) (quoting State v. A.R., 213 N.J. 542, 561-62 (2013)). A party “cannot beseech and request the trial court to take a certain course of action, … then condemn the very procedure he sought and urged, claiming it to be error and prejudicial.” State v. Pontery, 19 N.J. 457, 471 (1955).

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In Amari v. Griffin, 5:20-cv-00050 (W.D. Virginia January 27, 2021), the district court denied an attorney’s motion to dismiss a divorce malpractice case.  Amari argued that her former attorney in her divorce case (Griffin) failed to properly investigate her ex-husband’s assets and failed to retain appropriate experts. This is, in my experience, a typical divorce malpractice claim.

In his motion to dismiss Griffin argued that because Amari signed the divorce decree that estopped her from claiming that her lawyer committed legal malpractice. The Court rejected that argument:

Griffin argues that Count I, Roseanne’s claim for legal malpractice, is barred by collateral estoppel. (Dkt. No. 7 at 24-25.) Griffin claims that because Roseanne signed the divorce decree and the property settlement agreement during the divorce proceedings, issue preclusion bars her from bringing a legal malpractice claim. (Id. at 26.)

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After his divorce case concluded Lancaster sued his former attorney for malpractice. The claim included allegations of fraudulent billing and other claims. The lawyer raised the defense of res judicata. Res judicata is a phrase borrowed from Latin which bars a litigant from re-litigating a claim that was previously litigated to judgment. The basis for the res judicata claim was that the lawyer had filed a fee petition in the divorce case seeking a judgment for fees against Lancaster. The trial court awarded fees. The legal malpractice case was held to be barred by res judicata. The court agreed with the lawyer that the claims for legal malpractice could have been raised in the fee proceeding.

Comment: this is a fairly broad reading of res judicata. Courts are often reluctant to allow the res judicata defense in legal malpractice cases because the whole point of the legal malpractice case is usually that the client lost the underlying case because the lawyer made an error. If the courts applied res judicata in every case that the client lost, malpractice liability would be swallowed up by res judicata. Because this particular case contained allegations that the lawyer’s bills were fraudulent after they had been approved by a court, res judicata makes more sense here. In any event, res judicata remains a controversial defense to the legal malpractice action.

Edward X. Clinton, Jr.

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This issue comes up every now and then. An attorney files a collection lawsuit against a client and obtains a judgment against the client. (Here the client did not appear and a default judgment was entered). Later, the client reviews the attorney’s work and files a legal malpractice lawsuit. May the lawyer argue that the legal malpractice case is barred by the doctrine of res judicata? Here the answer is “No.”

The court includes a discussion of res judicata:

The purpose of this common law doctrine is to “relieve the parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance on adjudication.” Allen v McCurry, 449 US 90, 94; 101 S Ct 411; 66 L Ed 2d 308 (1980). “For the sake of repose, res judicata shields the fraud and cheat as well as the honest person. It therefore is to be invoked only after careful inquiry [as to whether foreclosing plaintiff’s case would protect] the interests served by res judicata.” Brown v Felsen, 442 US 127, 132; 99 S Ct 2205; 60 L Ed 2d 767 (1979). “The burden of establishing the applicability of res judicata is on the party asserting the doctrine.” Richards v Tibaldi, 272 Mich App 522, 531; 726 NW2d 770 (2006).

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Collateral estoppel is a doctrine that allows a court to bar relitigation of an issue that was already decided in a prior case. This case, Hexum v. Parker and Parker & Halliday, 2017 IL App (3d) 150514-U, is unpublished. The decision is one of many that reject a collateral estoppel defense to a legal malpractice action.

Hexum sued his lawyers for legal malpractice for allegedly giving him negligent advice in his divorce case; specifically as to the amount of maintenance he would owe.

In the underlying divorce case, Hexum entered into an agreement with his ex-wife to pay her $6250 per month and 35% of any bonus or stock option that he exercised.

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Source: Sheth v. Premier Bank, Dist. Court, WD Wisconsin 2015 – Google Scholar

The plaintiff in this case, Kamlesh Sheth, lost a state court foreclosure case. Sheth then sued a law firm for legal malpractice and the bank that obtained the judgment against him for fraud and other torts.

Sheth claimed that the defendant bank had agreed not to pursue a deficiency judgment against Sheth. Sheth cited an agreement between himself and the bank and drafted by the defendant law firm under which the Bank waived the right to pursue the deficiency if Sheth obtained a buyer for the property and the sales price was $1,100,000 and the buyer agreed to pay off the mortgage note. Sheth claimed that he met his obligations under the agreement and that the Bank had no right to seek a deficiency judgment.

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In the appeal captioned, Stevens v. McGuirewoods, LLP, 2014 IL App (1st) 13-3952, the Illinois Appellate Court reversed a grant of summary judgment in favor of McGuirewoods. The Appellate Court held that the trial court erred in applying collateral estoppel to bar the claims.

In their complaint against McGuireWoods, the plaintiffs alleged that the law firm breached its fiduciary duty to plaintiffs by failing to assert claims against Sidley Austin LLP (Sidley). McGuireWoods moved for summary judgment on the ground that in the underlying case the trial judge ruled that the plaintiffs lacked standing to sue Sidley.

The plaintiffs were former minority shareholders of Beeland Management LLC. They hired McGuireWoods to bring both individual and derivative claims on their behalf and derivative claims on behalf of Beeland against Beeland’s managers and majority shareholder. In the litigation, the plaintiffs eventually sued Sidley for breach of fiduciary duty and other claims. (In a derivative claim, the shareholder stands in the shoes of the corporation and files a lawsuit against someone who has allegedly breached a duty to the corporation.).

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