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.
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.
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.
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:
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.
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.
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.
This unpublished opinion resolves an appeal in a legal malpractice case. The plaintiff sued his lawyer despite the fact that the lawyer settled the underlying case (a medical malpractice case) for $1.5 million.
The Defendant attorney moved to dismiss the case on the ground that the plaintiff was judicially estopped from proceeding because he consented to the settlement of the underlying case. The alleged malpractice was the lawyer’s alleged coercion of an expert witness (a medical doctor) into providing an opinion on surgical issues (and not informed consent). The trial court dismissed the case on estoppel grounds reasoning that because plaintiff had approved the settlement, he could not sue for legal malpractice.
The Appellate Court reversed. It held that it was premature to dismiss the case without conducting discovery and without holding a hearing. The key part of the opinion is quoted below:
This opinion arises in an unusual procedural setting – plaintiff sought summary judgment on liability. Plaintiff claimed that an estate planning attorney erred in drafting a Will. The documents are quoted here:
On August 19, 2006, Elizabeth executed a revised Last Will and Testament presented to her by Defendants. (Id. at ¶¶ 14-16.) For the purposes of this motion, there are three relevant sections to the Last Will and Testament. Section One reads, in pertinent part:
I give, devise and bequeath all of my property of whatever nature, both real and personal, personal effects, household goods, automobiles, and all other items of goods and chattels to my children who survive me in equal shares of substantially equal value, per stirpes and not per capita.
It is unfortunate that this case was not published, but it is still worth considering. The plaintiffs sued their lawyer who had drafted a Stock Purchase Agreement under which they sold their stock in a privately held company. When the company was sold, there was litigation pending. The parties negotiated an indemnification provision relating to the litigation. The court describes the facts in this brief summary:
In July 2011, respondent-attorney Joseph A. Turman prepared a stock purchase agreement for the sale of appellants James and Elizabeth Leach’s company, IDA of Moorhead Corporation, to SNAPS Holding Company. At the time of the sale, the Leaches were defending a wrongful-termination lawsuit brought by a former employee, Reed Danuser. The purchase agreement provided that SNAPS was aware of the litigation, and, subject to the indemnity provision in the purchase agreement, agreed to indemnify and pay the expenses and judgment associated with the lawsuit. The indemnification provision in the purchase agreement stated: “[SNAPS] shall hold and indemnify [the Leaches] harmless from the claims of Reed Danuser up to the sum of $100,000.00. In the event the amount necessary to resolve the issues with Reed Danuser exceed[s] $100,000.00 [the Leaches] shall be responsible for that portion.”
Unfortunately for the plaintiffs, the litigation resulted in a judgment exceeding $800,000. They then sued their attorney. The court dismissed the complaint holding that the plaintiffs clearly understood, and admitted they understood, that they were liable for any amount in excess of $100,000. Thus, they could not allege damages and had no lawsuit. Case dismissed. The dismissal was then affirmed by the Court of Appeals.