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Court Rejects Collateral Estoppel Defense To Legal Malpractice Action

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.)

“Under res judicata principles, a prior judgment between the same parties can preclude subsequent litigation on those matters actually and necessarily resolved in the first adjudication.” Orca Yachts, L.L.C. v. Mollicam, Inc., 287 F.3d 316, 318 (4th Cir. 2002) (citing In re Varat Enters., Inc., 81 F.3d 1310, 1315 (4th Cir. 1996)). “The doctrine of res judicata encompasses two concepts: 1) claim preclusion and 2) issue preclusion, or collateral estoppel.” Id. (citing Varat, 81 F.3d at 1315 (citing Allen v. McCurry, 449 U.S. 90, 94 (1980))). “[I]ssue preclusion . . . applies when the later litigation arises from a different cause of action between the same parties.” Id. (citing Varat, 81 F.3d at 1315). “Issue preclusion operates to bar subsequent litigation of those legal and factual issues common to both actions that were `actually and necessarily determined by a court of competent jurisdiction in the first litigation.'” Id. (citing Varat, 81 F.3d at 1315 (quoting Montana v. United States, 440 U.S. 147, 153 (1979))). “Issues are not `actually litigated’ for collateral estoppel purposes if they merely could have been litigated and determined in the prior action, but actually were not. In re Schriver, 218 B.R. 797, 806 (E.D. Va. 1998) (citing Restatement (Second) of Judgments § 27 cmt. e (1980)).

“Under Virginia law, a party invoking the doctrine of collateral estoppel bears the burden of establishing the following five elements: (1) that the parties to the two proceedings are `the same or in privity’; (2) that the prior proceeding `resulted in a valid and final judgment against the party against whom preclusion is sought or his privy’; (3) that the factual issue to be precluded was `actually litigated in the prior proceeding’; (4) that the factual issue to be precluded was `essential to the judgment in the prior proceeding’; and (5) that there was `mutuality, that is, a party is generally prevented from invoking the preclusive force of a judgment unless that party would have been bound had the prior litigation of the issue reached the opposite result.'” Lewis v. Long, 521 B.R. 745, 748-49 (W.D. Va. 2014) (citing In re Duncan, 448 F.3d 725, 728 (4th Cir. 2006) (quoting TransDulles Center, Inc. v. Sharma, 252 Va. 20 (1996))).

Here, the issue of whether Griffin committed legal malpractice was not actually litigated in the divorce proceeding. Even if, as Griffin argues, the divorce decree Roseanne signed “waiv[ed] experts, discovery and other methods of scrutiny to reach an agreement . . . [and] forfeited any claim of fraud or deceit that she may have arguably had against her former husband,” it does not follow that the decree also waived any claim of legal malpractice. (Dkt. No. 13 at 9.) Because neither the claim of legal malpractice nor gross negligence was litigated in the divorce proceedings, neither Count I nor Count II is barred by collateral estoppel.

The court denied the motion to dismiss.

Comment: Collateral Estoppel is rarely a good defense to a legal malpractice action. One reason is that in every malpractice case the client has lost the underlying case. If courts were to collaterally estop those plaintiffs from suing, no one could sue for legal practice.

Ed Clinton, Jr.

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