Articles Posted in Legal Malpractice

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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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In this case, the Minnesota Court of Appeals holds that a client’s executor has standing to pursue a legal malpractice claim against an estate planning attorney.

Gordon Savoie sought estate planning advice from a law firm. That law firm prepared an estate plan for him. Upon his death, a bank was appointed to be his executor. The bank, on behalf of the estate, sued the law firm for legal malpractice because the firm had failed to adequately plan for generation-skipping taxes. The law firm moved for judgment on the pleadings based on the formalistic argument that the law firm did not have an attorney-client relationship with the law firm. The district court accepted this argument, but the Court of Appeals reversed.

The argument that there was no attorney-client relationship with the bank and therefore no duty is poorly reasoned. If the argument were accepted, no victim of legal malpractice could ever sue if the victim passed away. No such rule applies in personal injury cases, medical malpractice cases, or even breach of contract cases. In all those cases the Estate steps into the shoes of the decedent.

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This is a rare patent malpractice case. According to the court, the plaintiff alleged that the lawyers failed to properly file and amend various patent claims and that the errors of the lawyers caused them economic damages. The lawyer defendants moved to dismiss on the ground that the plaintiff had not adequately alleged proximate causation. In particular, the defendants argued that the alleged errors did not cause plaintiff any economic damages. The court disagreed, holding that the plaintiff pleaded lost licensing revenue and royalties.

Source: ECONOMIC ALCHEMY LLC v. BYRNE POH LLP, 2017 NY Slip Op 31640 – NY: Supreme Court 2017 – Google Scholar

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The underlying case was a personal injury case. The plaintiff hired a lawyer to represent her in that case and the lawyer obtained a settlement of the lawsuit that the plaintiff accepted. Despite accepting the settlement, the plaintiff sued for legal malpractice. The trial court dismissed the lawsuit and the appellate court affirmed. The fatal flaw with the case was that the plaintiff did not allege how the lawyer breached any professional duty to the plaintiff.

Source: Tarrant v. Ramunno, Del: Superior Court 2017 – Google Scholar

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Source: HARBORD v. SAFEWAY, INC., Wash: Court of Appeals, 1st Div. 2017 – Google Scholar

The plaintiff claimed that her lawyer committed malpractice by agreeing to the entry of a stipulated protective order. The lawyer had brought a wrongful employment termination case against Safeway, Inc. Plaintiff did not prevail in that action and sued her lawyer for malpractice. The court held that the plaintiff could not establish proximate causation in that the entry of a protective order did not cause her to lose the underlying case.

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The Supreme Court of Washington has held that a client who sues his former attorney for legal malpractice may not allege that the lawyer’s withdrawal from the underlying case was improper if that withdrawal was approved by a judge.

The court succinctly puts the issue this way:

In this case, former clients are suing their attorneys for legal malpractice based, in part, on the attorneys’ withdrawal from a prior case. But the attorneys obtained that withdrawal by court order. In the original case, the former clients appealed the court’s order approving withdrawal, and that appeal was rejected. The attorneys thus argue that collateral estoppel applies to bar a malpractice action based on their withdrawal. We agree. We hold that the fact of withdrawal by court order in an earlier proceeding is dispositive in a later malpractice suit against the attorney. Although other malpractice complaints unrelated to the withdrawal would not be precluded, a client cannot relitigate whether the attorney’s withdrawal was proper. If we are to have rules permitting attorney withdrawal, we must allow attorneys to have confidence in those rules. We, therefore, reverse the Court of Appeals.

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One of the more vexing issues in the area of legal malpractice is what happens when the plaintiff settles the underlying case. In most states, the plaintiff would have to prove that but for the negligence of the defendant attorney, he would have obtained a better financial result in the underlying case. North Carolina, however, holds that the decision to settle the underlying case gives the negligent lawyer a complete defense to the legal malpractice action. This is an unpublished decision, but it is worth reviewing because it illustrates how the decision to settle the underlying case protects negligent attorneys.

The plaintiff alleged that the lawyers failed to properly serve a breach of contract lawsuit.  The negligence alleged, if true, is fairly shocking:

On 5 May 2006, the Horne defendants filed a complaint against the Hill defendants in Pitt County Superior Court alleging breach of contract. However, the Horne defendants never served the Hill defendants with a summons or a copy of the complaint, the action was discontinued, and plaintiff was never informed about the status of the action. When plaintiff emailed the Horne defendants on 23 October 2006 to inquire about its status, defendant Horne II responded:

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This issue comes up fairly frequently and almost all of the courts which have considered it have answered it the exact same way. An owner of a unit of a condominium does not have standing to sue the attorney for the condominium association.

The lawyer for the association is responsible to the association’s board of directors, not the unit owners. Allowing random unit owners to sue the lawyer for the association would place the lawyer in a situation where he would have to serve numerous “clients” all of whom have conflicting interests.

Source: GUEHL v. CARILLON HOUSE ASSN., INC., 2017 Ohio 5491 – Ohio: Court of Appeals, 2nd Appellate Dist. 2017 – Google Scholar

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This case is instructive for plaintiff lawyers because it is a reminder that, if the client has filed for bankruptcy, the claim for legal malpractice may belong to the bankruptcy estate. Because the alleged negligence occurred before the bankruptcy petition was filed, the claim belonged to the bankruptcy estate.

Source: LABGOLD v. REGENHARDT, Dist. Court, ED Virginia 2017 – Google Scholar

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The underlying case was routine and it arose out of an automobile accident. The defendant lawyers filed suit timely as to most of the defendants, but they failed to file a timely case as to one defendant. The underlying case settled for $10,000.

The lawyers won a summary judgment motion in the trial court, but summary judgment was reversed. The plaintiff had submitted sufficient evidence of a breach of duty (missing the statute of limitations) that caused damage to the plaintiff.

Source: ATIENCIA v. PINCZEWSKI, 2017 NY Slip Op 1839 – NY: Appellate Div., 2nd Dept. 2017 – Google Scholar