Friday, January 24, 2020

Hindsight And Transactional Malpractice

The Nevada Supreme Court affirmed a district court's grant of summary judgment to a legal malpractice defendant, holding that the same causation test applies to allegations of transactional malpractice as to litigation matters.

The client was the seller in a failed Reno real estate transaction who had been subject to a mechanic's lien claim. The client had lost on the issue, discharged and sued the law firm but eventually prevailed on the lien.

Iliescu alleges that Hale Lane committed professional malpractice by negligently representing Iliescu during the failed real estate transaction, and during subsequent litigation to expunge the mechanic's lien. Iliescu argues that Nevada treats litigation malpractice and transactional malpractice differently for purposes of establishing proximate causation. Specifically, Iliescu argues that Hale Lane could have taken various preventive measures during the failed real estate transaction to  protect against the risk of a mechanic's lien, and that Hale Lane's alleged transactional negligence should be subject to a substantial factor test for causation, rather than the but-for test. We are not persuaded that different standards for proximate causation control in this case.

The court

This case does not implicate a concurrent independent cause. Hale Lane's purportedly negligent failure to warn or protect against a mechanic's lien was not sufficient, by itself, to bring about the filing of the mechanic's lien. The developer's hiring of the architect who filed the lien, the architect's performance of offsite design services, and the developer's default and subsequent failure to compensate the architect for his work, also had to occur in order for the lien to be filed and for Hale Lane's alleged transactional negligence to be actionable. These multiple forces necessarily depended on one another, and were insufficient of themselves, to bring about the filing of the lien. Accordingly, no concurrent independent cause is implicated here, and Iliescu must instead establish that, but for Hale Lane's alleged transactional negligence, a mechanic's lien would not have been filed.

And failed to do so

Iliescu has not raised any genuine issue of material fact by simply alleging various steps Hale Lane should have taken to protect Iliescu from the filing of a mechanic's lien. Iliescu's transactional malpractice claim cannot survive under the but-for causation test as a matter of law.

As to litigation malpractice

Iliescu also alleges that, after the mechanic's lien was filed, Hale Lane negligently failed to sufficiently challenge the legal deficiencies invalidating the lien. Iliescu specifically alleges that Hale Lane erroneously invited the district court to order discovery in the underlying mechanic's lien litigation, by focusing the court's attention on a fact issue of whether or not Iliescu had sufficient actual knowledge of the off-site work that predicated the filing of the lien. Iliescu argues that Hale Lane should have treated the fact question of actual knowledge as legally insignificant, and instead should have argued as a matter of law that Iliescu's knowledge was irrelevant because the design services were performed off-site. We conclude this argument is unavailing and that Iliescu has failed to raise a genuine fact issue sufficient to overcome summary judgment.

It is difficult to grasp how Hale Lane could have made an onsite/offsite legal distinction in its 2007 litigation to expunge the mechanic's lien, given the state of the law at that time.

...we affirm the district court's rejection of Iliescu's proposed amended complaint. The district court correctly concluded that Iliescu's attempt, with the benefit of more than ten years of hindsight, to allege various steps Hale Lane should have taken during the transaction, would have been futile.

The opinion in Iliescu v. Hale Lane was issued on January 23, 2020. (Mike Frisch)

January 24, 2020 in Clients | Permalink | Comments (0)

Friday, January 10, 2020

No Conversion In Handling Entrusted Funds; New Jersey Rejects Non-Client Claims

The New Jersey Supreme Court rejected claims arising from Fox Rothschild's handing of entrusted funds per the court's head note

This appeal involves claims of conversion and breach of fiduciary responsibility leveled at an attorney, Anthony Argiropoulos, Esq., and his then-law firm, Fox Rothschild LLP (collectively, “the firm”), regarding funds wire-transferred to the firm’s trust account.

As alleged in this matter, an intermediary entity wired funds for plaintiff Moshe Meisels, a London-based real estate investor, to the firm’s trust account in connection with a real estate deal in which Eliyahu Weinstein, the firm’s client, was engaged. Prior to the commencement of this litigation, the firm was admittedly unaware of Meisels’s  existence. It is undisputed that Meisels did not speak to, or otherwise communicate with, Argiropoulos or Fox Rothschild.

In his pleadings, Meisels alleges that he had Rightmatch Ltd., an entity located in London, transfer over $2.4 million to the attorney trust account of Fox Rothschild, Weinstein’s attorneys at the time. Rightmatch wired the money in two transfers, executed by Cambridge Mercantile Group. Confirmations for each transfer were sent, “[f]or and on behalf of Cambridge Mercantile Corp.,” to Rightmatch, with a single line indicating “Attn: Moshe Meisels.” The transfers themselves did not identify plaintiff as the funds’ owner or include any instructions regarding limitations or conditions.

Defendants distributed the funds as their client directed. Meisels alleges that Weinstein instructed the firm to distribute the funds for purposes other than the agreed upon real estate transaction. According to Meisels, the purchase of the Irvington property was never consummated; Weinstein defrauded Meisels and his related co-plaintiffs.

Plaintiff commenced this action in 2012 and, after discovery and the filing of an amended complaint, defendants sought summary judgment on the grounds that (1) plaintiff did not produce evidence to support ownership of the funds that Rightmatch wired to Fox Rothschild and therefore lacked standing to sue; and (2) plaintiff had no contact with anyone from Fox Rothschild and, therefore, could not establish the essential elements of any of the claims.

The motion court granted summary judgment to the firm and dismissed the amended complaint with prejudice. The Appellate Division affirmed as to the fiduciary duty claim but reversed as to the conversion claim, rejecting defendants’ argument “that Meisels was required to show that he demanded the return of his property.”

The Court granted defendants’ petition for certification, seeking review of the Appellate Division’s judgment reinstating the conversion claim. 236 N.J. 67 (2018). The Court also granted plaintiff’s cross-petition, seeking review of the Appellate Division’s judgment dismissing the breach of fiduciary duty claim. 236 N.J. 44 (2018).

HELD: The firm did not breach any fiduciary duty where the firm was not made aware, nor did it have any basis on which it reasonably should have been aware, of plaintiff or of a claim by plaintiff to the funds. As such, there was no relationship between the firm and plaintiff on which a fiduciary duty was owed. On that issue, the Court affirms the judgment of the Appellate Division. However, defendants cannot be found to have engaged in conversion in this matter. Where, as here, a law firm lawfully holds in trust wired funds for its client’s real estate transaction, which funds are received with no limiting direction or instruction and for which the firm receives no demand from the nonclient, the firm’s disposition of the trust funds in accordance with the client’s instructions does not give rise to a claim for conversion. The Court rejects the reasoning that under these circumstances the obligation to make a demand is excused and reverses as to the conversion claim.

  1. As officers of the courts, attorneys owe a duty of care that finds helpful benchmarks in the Rules of Professional Conduct (RPCs). Standing alone, a violation of the RPCs does not create a cause of action for damages in favor of a person allegedly aggrieved by that violation. In this matter, the RPCs provide relevant information for assessing the claimed violation of a fiduciary duty with which the firm is charged. RPC 1.15 addresses an attorney’s obligation to safeguard property in his or her possession, including property received from a non-client third party. (pp. 12-14)
  2. Here, RPC 1.15 does not provide a pathway for finding a fiduciary duty that was breached by the firm. Meisels maintains that an attorney “owes a fiduciary duty to persons, though not strictly clients, who he knows or should know rely on him in his professional capacity.” However, case law extending an attorney’s duty to a third party not in privity with the attorney has been approached with care so as to be fair to all; generally stated, it is cabined by considerations of reasonableness. Meisels admits that defendants had no knowledge of his existence, had no contact with him, possessed no knowledge about any purported agreement between him and Weinstein, and made no representations to Meisels. It is simply not reasonable to expect a lawyer to have fiduciary obligations to an individual under such circumstances. Meisels produced no evidence to show that he relied upon defendants in their professional capacity. The circumstances of this case, moreover, offer no indicia that defendants endeavored to induce Meisels to rely on the firm. Inducement of reliance cannot be ascribed to the firm simply because the funds for its client’s commercial real estate transaction were permitted to be wired to and held in the firm’s trust account. In these circumstances, the firm’s disposition of the funds held in its trust account in compliance with the client’s instructions, as required by RPC 1.2, was not a breach of fiduciary duty. No fiduciary duty was owed by the firm to Meisels. (pp. 14-18)
    3. The Court traces the history of the tort of conversion. To determine whether a conversion has occurred, there must first be an assessment into whether defendant has independent dominion and control over the subject property. Additionally, where the defendant lawfully acquired plaintiff’s property, the plaintiff must show that he demanded the return of the property and that the defendant refused compliance. The demand is the linchpin that transforms an initial lawful possession into a setting of tortious conduct, if the demand is refused. Accordingly, in such circumstances, a demand is essential; a claimant must make a demand at a time and place and under such circumstances as defendant is able to comply with if he is so disposed, and the refusal must be wrongful. There are circumstances, to be sure, where demand may be futile, but that is and must be viewed as an exception. (pp. 18-22)
    4. Funds held in an attorney’s trust account for its client are the client’s funds, not the firm’s. Here, with no knowledge of a competing claim to the funds -- and, indeed, no knowledge whatsoever about Meisels and his role in the transaction -- the firm acted appropriately in adhering to the client’s directions. Meisels cannot prove that the firm itself exercised independent dominion and control over his funds. That requirement for a conversion claim is lacking in this matter. The lack of independent dominion and control, moreover, renders more serious the lack of demand here. The demand would have been the means to alert the firm that a competing claim existed and would have triggered the firm’s obligation to reasonably inquire further, and perhaps seek judicial assistance, before embarking on fulfillment of a client’s direction. Violation of the demand might then create the tort of conversion. Only when an attorney misdirects or misappropriates funds, or when an attorney has acted contrary to a known, competing claim -- or a competing claim that reasonably should have been known -- can there be an independent dominion or control over the funds by the firm to the repudiation of the rights of the proper owner. (pp. 23-25)

The judgment of the Appellate Division is AFFIRMED IN PART and REVERSED IN PART, and the Court orders the conversion claim DISMISSED. CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE LaVECCHIA’s opinion.

Oral argument linked here. (Mike Frisch)

January 10, 2020 in Clients, Current Affairs | Permalink | Comments (0)

Friday, January 3, 2020

The Silver Bullet

The Delaware Superior Court has granted summary judgment to the defendant in a legal malpractice suit.

The attorney had represented the former client in drafting a pre-marital agreement to protect his client's assets. The soon-to-be wife had signed the agreement notwithstanding the advice of her counsel.

When divorce came, the ex-wife sought to set aside the agreement on grounds of unconscionability. She prevailed in family court but lost in the Delaware Supreme Court. 

The unhappy former client sued the drafting attorney for the expenses of defending the attack on the agreement, claiming that the attorney's failure to include a waiver of disclosure clause (a "silver bullet" according to plaintiff's expert) in the agreement had led to his travails.

The court found disputed questions of fact as to standard of care and breach of that standard but granted summary judgment on causation.

The evidence required speculation on whether the "silver bullet" was agreeable to the ex-wife. 

In a question of first impression, the court applied the same causation test for alleged legal malpractice in transactional matters as in litigation matters.

Because the evidence

does not support an inference that Mr. Sherman's ex-wife likely would have likely accepted the term, the trier of fact would be forced to speculate regarding whether Mr. Ellis's alleged negligence proximately caused Mr. Sherman's harm.

(Mike Frisch)

January 3, 2020 in Clients | Permalink | Comments (0)

Friday, September 13, 2019

Hail Concordia! Idaho Endorses Disgorgement For Fiduciary Breach

This post is for Professor (and ex-Bar Counsel) Mike Oths' class at Concordia Law and involves a recent decision of the Idaho Supreme Court.

The court's headnote

Rebecca Parkinson appealed a district court’s dismissal of her claim for breach of fiduciary duty against her attorney, James Bevis. Parkinson filed a complaint alleging Bevis breached his fiduciary duty when he disclosed a confidential email to the opposing attorney after a settlement had been reached in Parkinson’s divorce action. Bevis filed a motion to dismiss under I.R.C.P. 12(b)(6), arguing that Parkinson’s complaint failed to state a claim for relief. The district court dismissed Parkinson’s claim after finding it was, in essence, a legal malpractice claim, which Parkinson could not prevail on because she suffered no damages as a result of the disclosure. Parkinson filed a motion to amend her complaint to clarify that the remedy she sought was the equitable relief of fee disgorgement, which the district court denied.

The Idaho Supreme Court reversed and remanded, recognizing that a lawyer can violate his fiduciary duty, causing no damage, in which case an equitable remedy like Parkinson sought may be recoverable. The Court held that Parkinson could sue her attorney for breach of a fiduciary duty arising out of the attorney-client relationship, just as any other principal may sue an agent who owes a fiduciary duty. The Court explained that its holding was narrow, and offered relief to a client only in those cases in which the client seeks fee disgorgement as a solitary remedy. For these reasons the Court held that the district court also abused its discretion when it denied Parkinson’s motion to amend.

The allegation

In 2015, Bevis, a licensed attorney, represented Parkinson in her divorce proceedings. Parkinson alleged that Bevis breached his fiduciary duties to her by forwarding to opposing counsel a copy of an email she sent to Bevis that accused Bevis of failing to represent her adequately at a mediation conference.

The question on review

The principal question here is whether a client can sue an attorney for breach of fiduciary duty when the cause of action arises from the attorney-client relationship, no matter whether the breach caused the client actual damages. Parkinson argues that Bevis breached his fiduciary duty by disclosing a confidential attorney-client email and that this breach impaired the value of Bevis’ services to Parkinson. On the other hand, Bevis maintains that when an attorney breaches a fiduciary duty to a client, the only cause of action that arises from the attorney-client relationship is legal malpractice.

Damage for fiduciary breach

We agree with, and now adopt, the Restatement’s approach in section 37 as we have stated it. The sanction of fee forfeiture is available when an attorney violates his duty to his client in a serious way. The criteria listed in section 37 are to be used to determine whether the trial court may order forfeiture of all or a portion of an attorney’s fee as an appropriate equitable remedy in these circumstances. To reiterate, those factors are (1) the extent of the misconduct, (2) whether the breach involved knowing violation or conscious disloyalty to a client, (3) whether forfeiture is proportionate to the seriousness of the offense, and (4) the adequacy of other remedies. Id.

The reason for such a remedy makes sense. “[A] lawyer’s clear and serious violation of a duty to a client destroys or severely impairs the client-lawyer relationship and thereby the justification of the lawyer’s claim to compensation.” Id. at cmt. b. The equitable remedy of fee forfeiture discourages an agent from disregarding his or her duty of loyalty to a principal under the theory the principal will suffer no damages. To limit the remedy of forfeiture to situations in which the principal suffers actual damages would defeat the purpose of the rule. It is this breach of loyalty, not actual damages, which violates the fiduciary relationship. The primary purpose of an equitable remedy of forfeiture is to protect the relationship between a principal and her agent by discouraging the agent’s disloyalty...

The result here is narrow, offering relief to a client only in those cases in which the client seeks fee disgorgement as a solitary remedy. To the extent that legal malpractice plaintiffs seek both damages and fee disgorgement, the principles articulated in this decision would apply to the equitable portion of the claim. But, if the breach of fiduciary duty claim includes a claim for damages, that claim is appropriately subsumed by the legal malpractice claim.

We thus conclude that whether an attorney must forfeit any or all fees for a breach of fiduciary duty to a client must be determined by applying the rule as stated in section 37 of the Restatement (Third) of the Law Governing Lawyers and the factors we have identified to the individual circumstances of each case. In light of this conclusion, the district court’s determination that Parkinson could not pursue her claim on an equitable basis as a matter of law was incorrect. We therefore vacate the judgment of dismissal and reverse the district court’s grant of the motion to dismiss.

(Mike Frisch)

September 13, 2019 in Clients | Permalink | Comments (0)

Thursday, August 15, 2019

It Ain't Over Till...

The Utah Supreme Court has held that the statute of limitations had not run on a legal malpractice claim against an attorney who had failed to protect a judgment in a bankruptcy 

Kelly and Monty Moshier lost their opportunity to collect $874,805.68 owed to them in a bankruptcy proceeding when their attorney, Darwin C. Fisher, failed to file their nondischargeability claim before the statute of limitations expired. Several years later, the Moshiers sued Mr. Fisher for malpractice. The district court dismissed their malpractice claim as untimely. Because we find that the malpractice claim did not accrue until the bankruptcy court confirmed the final distribution plan, the Moshiers’ claim was timely. Accordingly, we reverse.

At issue in the underlying case was a judgment that the attorney had secured

In September 2010, the Cottams filed for bankruptcy. The Moshiers again hired Mr. Fisher to represent them in the bankruptcy proceedings. He timely filed the Moshiers’ proof of claim. Because the Moshiers’ claim was based on a judgment for money obtained by fraud, their claim was exempt from discharge under section 523 of the Bankruptcy Code.  Creditors claiming this exemption from discharge must commence an independent action by filing a complaint alleging nondischargeability.  But Mr. Fisher failed to file
the Moshiers’ claim for nondischargeability by the deadline, December 29, 2010.  Instead, he filed the claim almost a year after the deadline, which the bankruptcy court dismissed as untimely. On January 31, 2012, the bankruptcy court confirmed the Cottams’ bankruptcy plan for distribution.

Shortly thereafter the attorney advised the clients of the error and notified his malpractice insurer.

The Moshiers assert they did not believe they needed to initiate any legal action against Mr. Fisher, because they believed his claim with his malpractice insurer was the equivalent of them initiating a legal proceeding. They also argue that they believed their claim was fully secured and that they would still receive the full value of their claim. By 2013, the bankruptcy trustee informed the Moshiers they would not receive payment of their full claim.

Not SOL on SOL grounds when the plaintiffs sued in October 2015

The Moshiers argue that their legal malpractice claim did not accrue until they learned that the bankruptcy trustee “would not pay all of their claims,” on or about July 31, 2014.  Mr. Fisher asserts that the claim accrued when he missed the deadline to file their nondischargeability claim—December 29, 2010. We find that the Moshiers’ malpractice claim accrued when the bankruptcy court confirmed the final bankruptcy plan—January 31, 2012. Based on that accrual date, the Moshiers’ malpractice claim was timely filed. Accordingly, we reverse.


In the case now before us, we conclude that the damages and harm were sufficiently final when the bankruptcy court confirmed the final bankruptcy plan, and that the claim therefor accrued on that date.  Until that stage of the bankruptcy concluded, the Moshiers could not be certain whether Mr. Fisher’s alleged malpractice had resulted in damages, or whether they could expect to be made whole despite his error. Mr. Fisher missed a filing deadline, which precluded the Moshiers from litigating their nondischargeability claim. But the harm was not sufficiently final until the bankruptcy plan was finalized.  It was at that point that the Moshiers knew, with certainty, that they would not receive the full value of their claim, and that Mr. Fisher’s actions had, in fact, prejudiced them. And based on that accrual date, the Moshiers’ October 6, 2015 malpractice claim was timely.

The Court of Appeals opinion is linked here. (Mike Frisch)

August 15, 2019 in Clients | Permalink | Comments (0)

Thursday, July 18, 2019

Conviction Bars Malpractice Suit

The Maine Supreme Judicial Court affirmed the dismissal of a legal malpractice claim brought by a criminal defendant against an attorney appointed to represent him after retained counsel withdrew.

After consulting with Haddow, Goguen stated in  open court that he did not dispute that he had committed a sex offense while in  failure to register status. The court sentenced Goguen to a term of months and  a period of supervised release with conditions.

And thereafter violated the terms

In 2013, after Goguen left prison on supervised release, the United  States Probation Office moved to revoke his release on the ground that he had  accessed pornography at the Penobscot Judicial Center law library in violation  of his conditions of release. Haddow was again appointed to represent Goguen.  In open court, Goguen waived his right to an evidentiary hearing and admitted that he had viewed pornography in violation of the conditions of his supervised  release. Goguen was sentenced, and his conviction was affirmed on appeal to  the United States Court of Appeals for the First Circuit.

He sued for malpractice but

Because undisturbed judgments have been entered, here based on  Goguen’s in-court admissions, finding that he committed a sex offense while in  failure to register status and that he accessed pornography in violation of his  conditions of release, Goguen is collaterally estopped from asserting that  inaccurate legal advice—rather than his own conduct—caused the injuries that  he alleges...

Goguen has not, however, alleged that any one of the pertinent  court orders—the judgment of conviction for failing to register, the sentence  imposed upon that conviction, or the order revoking his release—has been set  aside for any reason. Because Goguen has not, through his complaint, presented any facts necessary to overcome the Maine collateral estoppel bar,  we need not, on the record presented here, opine on whether the elements of  actual innocence or exoneration are necessary or sufficient to proceed with a  professional malpractice claim under Maine law when the alleged malpractice  involved the entry of a judgment of conviction or a subsequent revocation of  release. Further, to the extent that Goguen’s complaint may be seen to allege malpractice affecting the sentence imposed by the federal court after Goguen  pleaded guilty to failing to register, the complaint fails to state a claim for relief  because, as is revealed by Goguen’s allegations themselves, the sentence  imposed was at the bottom of the applicable range of the federal sentencing  guidelines given the offense level that pertained to Goguen for his crime of  failure to register.

(Mike Frisch)

July 18, 2019 in Clients | Permalink | Comments (0)

Friday, July 5, 2019

When It's Over It Starts

The Utah Supreme Court reversed the entry of summary judgment for the defendant in a legal malpractice claim, holding that the four-year statute of limitations had not expired. 

Matthew Ross Thomas claims he was convicted of two felonies because of malpractice by his trial counsel, Lyle Hillyard. Following his trial, Mr. Thomas hired new counsel and was able to secure a new trial. He then accepted a plea deal in which he achieved a better result than he had received at trial—replacing two felony convictions with three misdemeanor convictions. We must determine when his malpractice cause of action accrued.

The former client prevailed 

We conclude that Mr. Thomas’s claim accrued at the conclusion of his criminal case—when he pled guilty to three misdemeanors. Because we find that Mr. Thomas’s claim was timely filed, we reverse.

Mr. Thomas was charged and convicted of two counts of aggravated sexual abuse. He hired Mr. Hillyard as his attorney. On October 26, 2012, a jury found him guilty of both felony counts. Mr. Thomas contends that Mr. Hillyard’s representation at trial was deficient in several respects. Specifically, he argues that Mr. Hillyard failed to object to inadmissible testimony from Mr. Thomas’s daughter and her counselor, failed to object to inadmissible other-acts evidence presented in his ex-wife’s testimony, failed to request key jury instructions, and failed to object to prejudicial statements in the prosecutor’s closing argument.

The statute of limitations for criminal defense malpractice begins at the end

We hold that a legal malpractice claim based on alleged malpractice committed in the course of a criminal proceeding does not accrue until the underlying action has concluded and there is no appeal of right available. Additionally, we hold that if a defendant chooses to pursue a claim under the Post-Conviction Remedies Act (PCRA), the statute of limitations will be tolled throughout the pendency of the claim. Under this framework, Mr. Thomas’s claim was timely. So we reverse and remand to the district court.


Today we hold that where there is an ongoing proceeding, the resolution of which informs the fact of malpractice or damages, the claim does not accrue until the conclusion of that proceeding...

We hold that a malpractice claim does not accrue until the underlying direct action has concluded and there is no appeal of right available. Once there is no appeal of right available, the harm is sufficiently final. So the cause of action accrues and the statute of limitations begins to run. Defendants may, of course, decline to bring a direct appeal, in which case they may bring a malpractice action following expiration of the time to file an appeal. But if a defendant chooses to appeal, the statute of limitations will not begin to run until the appeal is final.

(Mike Frisch)

July 5, 2019 in Clients | Permalink | Comments (0)

Thursday, May 23, 2019

No Fee Recovery For Self-Representation In Connecticut

The Connecticut Appellate Court has held that a self-represented lawyer or law firm may not recover attorneys fees in litigation.

The attorney had received an award in arbitration

On March 3, 2014, the plaintiff petitioned the legal fee resolution board of the Connecticut Bar Association (board) to resolve a fee dispute that had arisen between the parties. On December 24, 2014, a panel of three arbitrators found that the plaintiff was owed $109,683 in fees for its representation of the defendant. The plaintiff subsequently filed an application to confirm the arbitration award in the Superior Court, which the court, Scholl, J., granted on March 17, 2015. The defendant appealed to this court, which affirmed the trial court’s judgment confirming the arbitration award, and our Supreme Court denied the defendant’s petition for certification to appeal. See Rosenthal Law Firm, LLC v. Cohen, 165 Conn. App. 467, 473, 139 A.3d 774, cert. denied, 322 Conn. 904, 138 A.3d 933 (2016). Attorney Edward Rosenthal, the sole member of the plaintiff, represented the plaintiff throughout the proceedings before the board and in the trial and appellate courts.

The attorney then sued for his fees relying on the retainer agreement

the plaintiff claimed that it had incurred $59,600 in ‘‘legal fees’’ in connection with the arbitration and related court proceedings, which reflected the time spent by Rosenthal on these matters.

The trial court relied on precedent

The plaintiff’s sole claim on appeal is that the trial court erred in determining that the law barring self represented non attorney litigants from recovering statutory attorney’s fees also precludes a self-represented law firm from recovering contractual attorney’s fees.

The court here rejected the suggestion that the precedent was dictum

The court intentionally took up and analyzed the issue and concluded that the general rule announced in Lev would bar the plaintiff attorneys in Jones from recovering attorney’s fees. Although the court discussed the issue only briefly, there is nothing in its opinion or the record to suggest that its conclusion was less carefully reasoned than it might otherwise have been. In sum, the court’s conclusion cannot reasonably be characterized as a merely casual, passing comment made without analysis or due consideration of conflicting authorities. It is clear that the court made a deliberate decision to resolve this issue and that it undeniably decided it. Accordingly, the court’s conclusion that self-represented attorney litigants cannot recover attorney’s fees constitutes an alternative holding, not dictum.

A firmly-held view

we need not determine whether the plaintiff’s status as a law firm litigant renders this case materially distinguishable from Jones, which involved attorney litigants. We note, however, that among the courts that have considered these issues in jurisdictions in which self represented attorney litigants are barred from recovering attorney’s fees, the majority agree that there is no meaningful distinction between solo practitioners who represent themselves and law firms that are represented by their own attorneys.

(Mike Frisch)

May 23, 2019 in Billable Hours, Clients | Permalink | Comments (0)

Wednesday, May 22, 2019

Google Docs And Legal Malpractice

The Massachusetts Supreme Judicial Court vacated a judgment of dismissal of a legal malpractice claim

In the summer of 2008, after the plaintiff and Michelle Barnes decided to marry, they "collaboratively" drafted a "Google [d]oc" to "identify [their] premarital assets and debts and to define [their] mutual rights and obligations regarding property and finances after" marriage. The Google doc contained a section titled "Real Estate Bought for Cash," which provided that "[i]f one partner's savings are used to purchase real estate with no mortgage, the other partner will accrue a 2.5 percent ownership interest in the real estate every year after the purchase, assuming the marriage is intact, up to a maximum ownership interest of 50 percent." The plaintiff and Barnes clarified the intended operation of the provision with an example: "A house is purchased in 2010 . . . and paid for entirely from [the plaintiff's] money market funds. In the event of a divorce in 2020, [Barnes] would receive 25 percent of the value of the house. In the event of a divorce in 2030 or after, the house equity would be split 50/50."

In August 2008, Barnes hired attorney Karen Kearns to draft an antenuptial agreement based on the Google doc. The plaintiff hired the defendant Leon C. Boghossian, III, on September 8, 2008, and noted that Kearns was to "turn this Google document into a standard pre-nup." The plaintiff told "Boghossian that one of the most important terms in the Google doc was a section entitled on [sic] 'Real Estate Bought for Cash.'"

Several drafts of the antenuptial agreement thereafter circulated among Kearns, Barnes, the plaintiff, and Boghossian. The plaintiff reviewed the drafts and sent his feedback to both attorneys, but he relied on Boghossian "to create a document that implemented the terms of the Google [d]oc and protected [his] interests." On October 3, 2008, the plaintiff and Barnes executed the final version of the antenuptial agreement. Article III, paragraph 12 (paragraph 12) of the antenuptial agreement -- the relevant text of which is reproduced in the margin -- detailed the plaintiff's and Barnes's respective ownership interests in a principal residence acquired during the marriage in various factual circumstances.

The couple proceeded to marry, purchase a home, have a child and get divorced.

On October 5, 2008, the plaintiff and Barnes married. Two days later, on October 7, 2008, the plaintiff used his separate property to buy a house in Lincoln for $1.4 million (house), taking title in his name alone. The house became the plaintiff's and Barnes's principal residence during their marriage. The couple had a baby in August 2009. Barnes filed for divorce on September 29, 2011. During the divorce proceedings, Barnes challenged the validity of the antenuptial agreement. A Probate and Family Court judge (probate judge) found the antenuptial agreement valid, and determined that paragraph 12(c)(iv) (rather than paragraph 12[a]) applied to the couple's respective rights in the house, because the couple had a minor child and both the plaintiff and Barnes wished to retain the house. The probate judge ordered that Barnes could buy out the plaintiff's interest in the house for $727,500. Had the provisions of paragraph 12(a) (which incorporated the equity accrual provisions set forth in the Google doc) been applied, Barnes's interest in the house would have been only 7.5 percent, instead of fifty percent. Barnes completed her purchase of the plaintiff's interest in the house by making the $727,500 payment in July 2014.

Plaintiff sued for malpractice. The trial court held he needed a causation expert.

The court disagreed

We conclude that the motion judge erred in ruling that the plaintiff was required to present expert evidence on the issue of causation in the form of an opinion that the antenuptial agreement would have been determined valid if drafted in accordance with the equity accrual provisions set forth in the Google doc.11 We therefore vacate the judgment and remand for additional proceedings consistent with this opinion.

(Mike Frisch)

May 22, 2019 in Clients | Permalink | Comments (0)

Tuesday, March 26, 2019

Wisconsin Declines To Expand Legal Malpractice Liability To Third Parties

The Wisconsin Supreme Court rejected a call to expand malpractice liability in third party beneficiary cases.

We conclude that the narrow Auric exception to the rule of nonliability of an attorney to a non-client applies to the administration of an estate in addition to the drafting and execution of a will. That is, a non-client who is a named beneficiary in a will has standing to sue an attorney for malpractice if the beneficiary can demonstrate that the attorney's negligent administration of the estate thwarted the testator's clear intent.

Applying Auric to the facts of this case, we determine that Charles MacLeish's clear testamentary intent was not thwarted by any alleged negligence on the part of Boardman. As a result, we conclude that the MacLeish children's claim against Boardman for legal malpractice was properly dismissed.

MacLeish died in 1984 leaving a one-page will.

Attorney Forrest Hartmann, a former partner of the will's drafter, and subsequently a member of the Boardman firm, handled the administration of the estate. He advised Thelma MacLeish, Charles's wife, to claim full use of the federal estate tax marital deduction.

Thelma followed Attorney Hartmann's advice and treated all the assets of Charles's estate as though they passed directly to her. She also claimed a federal estate tax marital deduction for those assets.

The effect of this action was that Charles's estate was not subject to estate tax in 1984. Instead, the assets that had been in Charles's estate would be subject to estate tax at the time of Thelma's death.

Thelma followed Charles in 1988. The heirs were concerned about the tax advice.

The circuit court entered summary judgment to the defendants which was affirmed by the Court of Appeals

We are asked to review whether the MacLeish children have standing to bring this legal malpractice action against Boardman. A determination of standing presents a question of law reviewed independently of the determinations rendered by the circuit court and court of appeals.


The MacLeish children contend that the Restatement presents a better approach than the well-established general rule of nonliability and the Auric exception. They argue that broad immunity for attorneys from claims by non-clients is bad public policy. In their view, the Restatement provides a workable standard that narrows such immunity.

Adopting the Restatement as the MacLeish children urge would significantly change the general rule of attorney nonliability to non-clients. In the context of this case, adopting the MacLeish children's position would result in the elimination of the specific requirement that a third party beneficiary demonstrate that the testator's clear intent was thwarted in order to proceed with a legal malpractice claim.

The court squarely rejected this approach but

We therefore conclude that the narrow Auric exception to the rule of nonliability of an attorney to a non-client applies to the administration of an estate in addition to the drafting and execution of a will. That is, a non-client who is a named beneficiary in a will has standing to sue an attorney for malpractice if the beneficiary can demonstrate that the attorney's negligent administration of the estate thwarted the testator's clear intent.

The Auric exception

the Auric exception and cases interpreting it are grounded in the constitutional right to make a will and have it carried out according to the testator's intentions.

...when presented with the opportunity in the past, we have been reluctant to expand attorney liability to non-clients in the estate planning context. For example, in Tensfeldt we concluded that "[e]xtending the Auric exception to attorneys who give negligent advice stretches the exception too far." Tensfeldt, 319 Wis. 2d 329, ¶77. The court was explicit in its instruction that the Auric exception "is a narrow one."

The proof here was insufficient to establish a thwart. (Mike Frisch)

March 26, 2019 in Clients | Permalink | Comments (1)

Thursday, February 14, 2019

Ohio Drops A Hot Potato

A staff report on the web page of the Ohio Supreme Court 

The Ohio Board of Professional Conduct has issued an advisory opinion concerning the representation of current or former clients in unrelated matters when the clients are directly opposed.

Advisory Opinion 2019-01 replaces a 1988 opinion concerning a lawyer’s representation of employers in workers’ compensation matters when the lawyer represents the claimant employee in unrelated matters.

The former opinion also addressed whether a lawyer may withdraw from the representation of the claimant employee in order to undertake the more profitable representation of the employer. The opinion analyzes the same questions previously posed to the board, but under the current Rules of Professional Conduct.

In the new opinion the board reiterates that absent informed written consent of the client, lawyers may not represent clients who will be directly adverse to another client the lawyer is representing in an unrelated matter.

The board finds that the situation creates a conflict of interest because there is a substantial risk that the lawyer’s duties to one client may be materially limited by the responsibilities to the adverse client or the lawyer’s own personal interests.

Ohio courts and other jurisdictions have historically declined to uphold a practice, known as the “hot potato” doctrine, in order that the lawyer or law firm may undertake the representation of a new client under a less-stringent conflict of interest analysis. The board consequently holds that a withdrawal from representation under the “hot potato” doctrine is not ethically appropriate and does not constitute “good cause” for withdrawal under the conduct rules.

The opinion also addresses questions concerning the representation of clients involving former clients in matters that are not substantially related and the ability of lawyers to recommend other lawyers to prospective clients when the lawyer is unable to undertake representation due to a conflict of interest.

(Mike Frisch)

February 14, 2019 in Clients, Law & Business | Permalink | Comments (0)

Monday, February 4, 2019

An Ordinary Arrangement

A newly-released opinion of the District of Columbia Bar Legal Ethics Committee

Ethics Opinion 376

Mandatory Arbitration Provisions in Fee Agreements

Fee agreements containing mandatory arbitration provisions are "ordinary fee arrangements," and the requirements of Rule 1.8 which addresses business transactions between lawyers and clients do not apply. The standard for obtaining client consent to fee agreements containing mandatory arbitration provisions is set forth in Comment [13] to Rule 1.8, and Legal Ethics Opinions 211 and 218 are superseded by Comment [13] and this opinion.  
If it is explained
For a client to appreciate the "scope and effect" of a mandatory arbitration provision, the lawyer must provide a client with sufficient information about the differences between litigation in the courts and arbitration proceedings. As a general matter, a discussion regarding at least the following differences between the two methods of dispute resolution is prudent: (1) the fees incurred;(2) the available discovery;(3) the right to a jury; and (4) the right to an appeal. As with the application of the informed consent standard, the scope of this discussion depends on the level of sophistication of the client.
(Mike Frisch)

February 4, 2019 in Billable Hours, Clients | Permalink | Comments (0)

Wednesday, November 21, 2018

The Domino's Theory

The New York Appellate Division for the Second Judicial Department reversed the grant of summary judgment to a defendant law firm in a legal malpractice action

On November 4, 2011, the plaintiff, a pedestrian, allegedly was injured when he was struck by a motor vehicle. Thereafter, the plaintiff retained the defendant law firm, Lozner & Mastropietro, P.C. (hereinafter the law firm), to represent him in connection with the accident, and the law firm commenced an action on behalf of the plaintiff against the operator of the vehicle. In January 2017, the plaintiff commenced this action against the law firm and two of its principals, inter alia, to recover damages for legal malpractice. The plaintiff alleged that the driver of the offending vehicle was working for Domino’s Pizza, LLC (hereinafter Domino’s), making a pizza delivery at the time of the subject accident, and that the defendants were negligent in failing to timely commence an action against Dominos. The defendants moved pursuant to CPLR 3211(a) to dismiss the complaint. In the order appealed from, the Supreme Court, inter alia, granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the first cause of action to recover damages for legal malpractice.

There is a claim properly alleged

The evidentiary submissions did not establish that a material fact alleged in the complaint is not a fact at all and that no significant dispute exists regarding it (see Bodden v Kean, 86 AD3d at 526). Contrary to the defendants’ contention, the plaintiff was entitled to commence this legal malpractice action even though the underlying personal injury action was still pending, as the legal malpractice action accrued, at the latest, in November 2014 (see Johnston v Raskin, 193 AD2d 786, 787).

(Mike Frisch)

November 21, 2018 in Clients | Permalink | Comments (0)

Sunday, November 11, 2018

A Buck And A Bed Leads To A Legal Malpractice Matter Of First Impression In Idaho

A disinherited son lost his legal malpractice case in the Idaho Supreme Court which affirmed the grant of summary judgment by the district court.

The court considered a matter of first impression: the problem of a "hypothetical appeal." 

Thomas Lanham (Thomas) appeals from the district court’s dismissal of his legal malpractice action against his former attorney, Douglas Fleenor (Fleenor). Fleenor represented Thomas in a will contest regarding the will of Gordon Lanham (Gordon), Thomas’s father. After the magistrate court ruled against Thomas at the summary judgment stage, Fleenor filed an untimely appeal, which was rejected on that basis.

Because the appeal brought by Fleenor was untimely, Thomas brought a legal malpractice action against Fleenor in district court. Thomas alleged that the failure to timely appeal the magistrate’s ruling proximately caused him financial loss because he had a meritorious appeal that he never got to pursue due to Fleenor’s negligence.

The will

The facts in this case are largely undisputed. On November 16, 2010, Gordon began dictating his Will via an audio recording device. Gordon recorded his Will intermittently on nine separate days, concluding on January 7, 2011. On January 19, 2011, the ten dictated paragraphs were transcribed into his written Will. On February 19, 2011, the Will was signed, witnessed, and notarized. Thomas has not contested the validity of the Will.

In his Will, Gordon explicitly limited the inheritance of Thomas and Thomas’s brother Keith Lanham to one dollar and one wooden bed each.

After Gordon died

Thomas later retained Fleenor to challenge certain portions of the Will. Fleenor filed a motion for summary judgment arguing that the Will failed to properly dispose of the residue of Gordon’s estate (including the subject properties); the effect of which would mean any property not specifically devised would pass to Thomas and Keith as Gordon’s intestate heirs. In response, Judd, acting on behalf of Gordon’s estate, filed a cross-motion for summary judgment arguing Thomas’s claim should be dismissed because Gordon’s intent to disinherit his sons was clear and the Will fully and properly disposed of all of Gordon’s property.

When Thomas lost

Fleenor filed a notice of appeal to the district court on August 13, 2014, forty-nine days after the magistrate’s written judgment was filed. (The time for filing an appeal is forty-two days. I.R.C.P. 83(b)(1)(A).) The district court dismissed the appeal as untimely and found that the June 20, 2014 motion to reconsider did not toll the period for appeal, because the magistrate’s written decision was filed after the motion for reconsideration was filed.

At issue 

the district court ruled that a determination of whether an underlying, unperfected appeal would have been successful, if pursued in a timely way, was a question of law for the court to decide. (An unperfected appeal giving rise to a legal malpractice suit will be referred to in this decision as a “hypothetical appeal.”)

The court here found that the attorney was properly awarded summary judgment by the district court

Although this Court has decided many legal malpractice cases, it does not appear to have decided one in which the basis for the legal malpractice claim was an unperfected appeal. Consequently, we must decide, as a matter of first impression, if the potential success of a hypothetical appeal is an issue of fact to be decided by a jury, or rather is it a question of law for the court to decide. We conclude, as have twenty-eight other jurisdictions (twenty-seven states and the District of Columbia, 4 RONALD E. MALLEN, LEGAL MALPRACTICE § 33:118 at n.9 (2018 ed.)), that it is a question of law to be decided by the court. 

An appeal would have lost

In reviewing the tripartite test set out in Krokowsky each component has been met. Gordon intended to create an unfettered power allowing Judd to distribute his estate “in any way he sees fit”; he granted the authority to his “friend and cousin” Judd Lanham; and he specified the property over which the power existed: “all my personal and real property” not bequeathed in the Will.

The fact that Gordon also clearly and unequivocally disinherited Thomas in the Will supports the conclusion that Gordon intended to convey a general power of appointment to Judd and that he did not want the residue go to Thomas. As Gordon wrote in his Will:

Thanksgiving is over and I just wanted to add to this program that my son, Thomas Everett Lanham, 48 years old, has already been given all he needs to have and that I am going to leave $1 more dollar [sic] against whatever is legal to him and then he is going to be on his own.

Giving Gordon’s Will the technical interpretation Thomas suggests would only frustrate Gordon’s intent.

Thomas is not obligated to pay attorney's fees

In this case, Thomas is not asking this Court to second-guess evidence or findings of fact. The core issue turns on an unsettled question of law. The issue before this Court is a matter of first impression. The Will did not include the phrase “power of appointment.” It was therefore reasonable for Thomas to appeal in order to have an unsettled question of law answered.

Consequently, Fleenor’s request for attorney’s fees is denied.

Shout out to Mike Oths and Concordia Law students who make up our Idaho readership. (Mike Frisch)

November 11, 2018 in Clients | Permalink | Comments (0)

Monday, November 5, 2018

No Rule 8.5 In Nevada

A lawsuit to collect unpaid legal fees was governed by Nevada rather than California law, according to a recent decision of the Nevada Supreme Court.

 The client relied on a conflict to deny his obligation to pay

Edward Stolz owns several radio stations and other business interests. In 2012, Stolz approached Robert Schumacher, an attorney in Gordon Rees Scully Mansukhani LLP's (Gordon & Rees) Las Vegas office, about potentially representing him and some of his entities in pending litigation in Nevada. One of the matters they discussed was a lawsuit in California alleging Stolz's stations had not paid for the rights to the music it broadcasted. They additionally discussed whether Stolz could be indemnified by his insurance company. Stolz said that his insurer was The Hartford (Hartford), but that he did not have a policy that would indemnify him. Schumacher advised Stolz that Hartford was a Gordon & Rees client, and that the firm could not represent Stolz in any litigation against Hartford; however, Gordon & Rees could write Hartford a letter requesting that it assume Stolz's defense in that lawsuit. Gordon & Rees advised Stolz that if it wrote Hartford a letter, and Hartford denied the request, Stolz would have to seek other counsel if he wished to pursue Hartford further. When Hartford denied the request, Stolz hired an insurance coverage attorney recommended by Gordon & Rees, but never pursued litigation.

The client counterclaimed alleging malpractice but that claim was dismissed on statute of limitations grounds. The law firm prevailed in a jury trial.

On choice of law

We conclude that the district court correctly applied Nevada law. The incident in question—whether Gordon & Rees should have disclosed the Hartford conflict in writing before representing Stolz— occurred in Nevada. The fee agreement, in fact, was signed by the managing partner in Gordon & Rees's Las Vegas office. Additionally, Nevada has an interest in regulating Nevada attorneys and adjudicating disputes for Nevada businesses. Nevada and California have the same public policy interest here because the guidelines for the ethical conduct at issue are virtually the same in both states.

Moreover, Nevada did not adopt the ABA model rules choice of law provision, which would have required that conduct in connection with a matter pending before a tribunal be governed by the rules of the jurisdiction in which the tribunal sits, even though Nevada did adopt the ABA jurisdictional rule. Compare RPC 8.5, with Model Rules of Profl Conduct r. 8.5 (Am. Bar Ass'n 2017). The district court was correct in noting this when determining not to use the California Rules of Professional Conduct as jury instructions. Accordingly, we conclude the district court was correct in applying Nevada law.

The case is ROYCE INT'L BROAD. CORP. VS. GORDON & REES, LLP C/W 72148. (Mike Frisch)

November 5, 2018 in Billable Hours, Clients | Permalink | Comments (0)

Friday, September 7, 2018

Client Autonomy And Concessions Of Guilt

The Louisiana Supreme Court has reversed a murder conviction, finding that defense counsel's concession of guilt over the defendant's objection amounted to ineffective assistance of counsel

During the trial, defense counsel conceded defendant killed [12 year old victim] Justin. However, defense counsel argued that the jury could not find defendant guilty of first-degree murder because the state failed to prove defendant had specific intent to kill and failed to prove defendant was engaged in an aggravated kidnapping or a second degree kidnapping when Justin died. The defense rested in the culpability phase of the trial without calling any witnesses.

A unanimous jury found defendant guilty of first-degree murder and determined defendant should be sentenced to death.

The court cited the recent United States Supreme Court decision  in McCoy v. Louisiana, -- U.S. --, 138 S. Ct. 1500 (2018). 

In this case, Mr. Horn argues his Sixth Amendment right to counsel was violated when his attorney conceded his guilt over his explicit objection. The record demonstrates that defendant’s attorney admitted that defendant killed Justin and also suggested to the jury that the evidence supported a finding that he molested, or attempted to molest Justin. Counsel specifically told the jury he was not asking them to find defendant “not guilty,” and further stated that the facts fit second-degree murder or manslaughter. The record further demonstrates that Mr. Horn disagreed with his counsel’s decision to concede guilt as part of the defense strategy and that defendant made the district court aware of the disagreement both before and during the trial...

In this court, defendant asserts the Supreme Court’s decision in McCoy is dispositive and requires a reversal of his conviction. By contrast, the state suggests McCoy is not controlling in this case because defendant did not claim outright innocence and instructed his attorneys to make an argument for accidental killing under the negligent homicide statute. After review of the record and considering the Court’s decision in McCoy, we reject the state’s argument and decline to restrict application of the holding in McCoy solely to those cases where a defendant maintains his absolute innocence to any crime. McCoy is broadly written and focuses on a defendant’s autonomy to choose the objective of his defense. Although Mr. McCoy’s objective was to pursue a defense of innocence by presenting an alibi defense, Mr. Horn’s objective was to assert a defense of innocence to the crime charged and the lesser-included offenses, i.e. asserting his innocence to any degree of murder. Mr. Horn was charged with first-degree murder. The only verdicts the jury was permitted to enter were “guilty,” “guilty of second degree murder,” “guilty of manslaughter,” or “not guilty.” See La. C.C.P. art. 814. The jury would not have been permitted to enter a plea relative to negligent homicide. The fact that defendant instructed his attorney to admit guilt to this different crime as part of his defense objective did not give defense counsel the authority to admit guilt to the crime charged or the lesser-included crimes, and does not cause us to disregard the holding of McCoy. While defense counsel may use his professional judgment to develop defense theories and trial strategies based on his assessment of the evidence, he cannot usurp the fundamental choices provided directly to a criminal defendant under the Constitution.

Chief Justice Johnson authored the opinion. Justice Weimer concurred and wrote on the sufficiency of evidence for first degree murder. (Mike Frisch)

September 7, 2018 in Clients | Permalink | Comments (0)

Monday, July 30, 2018

A Good Day To Be A Utah Attorney

The Utah Supreme Court took away significant damages awarded to a legal malpractice plaintiff

Erik Highberg, a personal injury attorney for Gregory & Swapp, PLLC, failed to bring a claim against two truck drivers who severely injured Mr. Highberg’s client, Jodi Kranendonk, before the statute of limitations ran on Ms. Kranendonk’s claim. Mr. Highberg then failed to disclose to Ms. Kranendonk for ten months the fact that he missed the statute of limitations. During that time, he sought other legal avenues to correct his mistake. Ms. Kranendonk ultimately sued Mr. Highberg and Gregory & Swapp (collectively, the Swapp Defendants) for legal malpractice, breach of contract, breach of fiduciary duty, and negligent hiring, training, and supervision.

At trial, Mr. Highberg testified that he withheld information from Ms. Kranendonk because he wanted to protect her from stress and worry. In response to this testimony, she sought to admit two statements in which he had written that she was becoming “a pain [in] the ass” and was “a moron.” The district court refused, under rule 403 of the Utah Rules of Evidence, to admit these statements and the trial went forward.

The four claims ultimately went to a jury, which found in favor of Ms. Kranendonk on each. The jury first awarded her $750,000, the amount the jurors believed she would have received if Mr. Highberg had timely brought her personal injury claim against the truck drivers. The jury also awarded her $2.75 million for non-economic damages, i.e., emotional distress she sustained as the result of Mr. Highberg’s malpractice in this case. This second award did not relate in any way to the emotional distress she sustained from the original personal injury. The jury did not award punitive damages.

After the jury’s decision, Ms. Kranendonk moved for attorney fees and litigation expenses on the ground that the Swapp Defendants had breached their fiduciary duties. The district court awarded her $1,166,666.67 in attorney fees—the amount she owed under her contingency fee agreement—but did not award her litigation expenses.

The court vacated both the non-economic damages and attorney fees.

Because the nature and language of the contract in this case do not show that emotional distress damages were explicitly contemplated by the parties, the district court erred in upholding the $2.75 million jury award for non-economic damages under a breach of contract theory.

...we hold that the jury had no evidence upon which to base its verdict that Ms. Kranendonk suffered emotional distress damages as a result of Mr. Highberg’s intentional concealment and, therefore, the district court erred in dismissing the Swapp Defendants’ motion for JNOV under a breach of fiduciary duty theory. And because the $2.75 million jury award for non-economic damages is not supported under either a breach of contract or breach of fiduciary claim in this case, we vacate it.

...We also vacate the district court’s award of $1.666,667.67 in attorney fees because Ms. Kranendonk’s breach of fiduciary duty claim—the only claim that could support this award—failed. And we hold that her claim on cross-appeal for litigation expenses also fails for the same reason.

The court rejected her claims based on exclusion of the "pain in the ass/moron" evidence

we decline to reach Ms. Kranendonk’s challenge of the district court’s decision to exclude Mr. Highberg’s two statements. Ms. Kranendonk seeks the admission of these statements in order to support her prayer for punitive damages. But because her breach of fiduciary duty claim fails, punitive damages cannot be awarded in this case regardless of our decision on this issue. So the issue is moot.

(Mike Frisch)

July 30, 2018 in Clients | Permalink | Comments (0)

Friday, June 29, 2018

Choice Of Law Analysis Dooms Legal Malpractice Claim

A legal malpractice claim failed due to the application of a shorter (Pennsylvania) rather than longer (New Jersey) statute of limitations, according to a decision of the New Jersey Appellate Division

 Plaintiff MTK Food Services, Inc. alleges defendants, attorney Richard Grungo, Jr. and his former firm, Archer & Greiner, P.C. (Archer),  committed legal malpractice regarding an insurance claim for fire damage at plaintiff's restaurant. 

The fire occurred in the little town of Bethlehem Pennsylvania

We agree with appellants that the trial court erred in concluding the New Jersey statute of limitations applied to this case. The only pertinent connection to New Jersey – that Grungo, a New Jersey licensed attorney, worked in a New Jersey office – falls short of establishing a substantial interest for New Jersey to apply its statute of limitations here. All other relevant facts point to Pennsylvania: the fire and resulting loss occurred in Pennsylvania; plaintiff is incorporated in Pennsylvania; Robbins enlisted Grungo because he is licensed in Pennsylvania; and Grungo filed the underlying complaint in Pennsylvania...

Furthermore, as the New Jersey State Bar Association contends in its amicus brief, applying New Jersey's six-year statute of limitations here would frustrate the purpose of  adopting the substantial-interest test and defy public policy. In McCarrell, the Court explained that the substantial-interest test: "places both this State's and out-of-state's citizens on an equal playing field, thus promoting principles of comity; advances predictability and uniformity in decision-making; and allows for greater certainty in the expectations of the parties." McCarrell, 227 N.J. at 593. If Robbins had obtained assistance from an attorney in Pennsylvania, the Pennsylvania statute of limitations would apply without question. That Robbins sought assistance from an attorney, who holds a New Jersey license and works in New Jersey, bears no relation to the malpractice allegation and therefore should not change the outcome here. To hold otherwise would subject New Jersey attorneys also practicing in other states to disparate, unfair treatment.

We would not want unfair treatment to New Jersey attorneys. (Mike Frisch)

June 29, 2018 in Clients | Permalink | Comments (0)

Tuesday, June 26, 2018


A legal malpractice claim against two law firm survived summary judgment per the New York Appellate Division for the First Judicial Department

The complaint sufficiently alleges a claim for legal malpractice against both the Budin defendants and the Neimark defendants as plaintiff has sufficiently met the minimum pleading requirements (see Schwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d 193, 198 [1st Dept 2003]).

The Budin defendants, as successor counsel, had an opportunity to protect plaintiff's rights by seeking discretionary leave, pursuant to General Municipal Law § 50-e(5), to serve a late notice of claim. Whether the Budin defendants would have prevailed on such motion will have to be determined by the trier of fact (see Davis v Isaacson, Robustelli, Fox, Fine, Greco & Fogelgaren, 284 AD2d 104 [1st Dept 2001], lv denied 97 NY2d 613 [2002]; F.P. v Herstic, 263 AD2d 393 [1st Dept 1999]). We do not find this determination to be speculative given that Supreme Court will weigh established factors in exercising its General Municipal Law § 50-e(5) discretion (see e.g. Rodriguez v City of New York, 144 AD3d 574 [1st Dept 2016]; Matter of Strohmeier v Metropolitan Transp. Auth., 121 AD3d 548 [1st Dept 2014]).

We agree with plaintiff's argument that the Neimark defendants' failure to serve a timely notice of claim, as of right, on the New York City Department of Education in the underlying personal injury action remains a potential proximate cause of his alleged damages. Plaintiff has a viable claim against the Neimark defendants despite the fact that the Budin defendants were substituted as counsel before the expiration of time to move to serve a late notice of claim. Thusthe Budin defendants' substitution can only be deemed a superseding and intervening act that severed any potential liability for legal malpractice on the part of the Neimark defendants if a determination is made that a motion for leave to serve a late notice of claim would have been successful in the underlying personal injury action (see Pyne v Block & Assoc., 305 AD2d 213 [1st Dept 2003]).

(Mike Frisch)

June 26, 2018 in Clients | Permalink | Comments (0)

Thursday, June 7, 2018

Law Firm's Suit Against Former Client For Fraud Revived

The District of Columbia Court of Appeals has held that a law firm's fraud claim against a former client for alleged misrepresentations  regarding fee payments survives the resolution of the unpaid fees awarded by the Bar's Attorney Client Arbitration Board ("ACAB").

 Appellant Ludwig & Robinson PLLC ("L&R" or "the law firm") appeals from the Superior Court‘s dismissal of its claims alleging fraud and conspiracy by defendants/appellees BiotechPharma, LLC ("BTP"), BTP‘s wholly-owned subsidiary Converting Biophile Laboratories, Inc ('CBL"), BTP‘s principal Raouf Guirguis (together, the "BTP defendants"), and Martin Kalin (alleged to be a BTP lender "who has held himself out" as BTP‘s "Executive Vice President." For the reasons set out below, we reverse and remand.

 L&R‘s complaint alleges that in 2011, BTP engaged the law firm‘s services to provide the company with "advice and representation regarding cross-border intellectual property claims." The engagement, which entailed extensive motions practice in the Eastern District of Virginia (the "Rocket Docket") and elsewhere as well as depositions and interviews "across the country and overseas," began after Kalin contacted L&R seeking representation for the company. 

There were a series of retainer agreements as unpaid bills mounted.

On January 31, 2013, after attempts to collect payment proved unsuccessful, L&R brought suit in the Superior Court, suing BTP for breach of contract (Count I); CBL and Guirguis for breach of guarantee (Count II); each of the BTP defendants for "Failure to Pay Accounts Stated" (Count III); and all defendants for fraud (Count IV), and conspiracy (Count V). The complaint alleges that as of June 5, 2012, BTP had incurred but failed to pay hourly fees of $1,233,683.08, a "success fee' of $358,659.96, and expenses of $196,605.67, for a total of $1,788,948.71.

The court

Here, the L&R-BTP relationship was an open-ended engagement; i.e., it had no fixed termination date. L&R‘s complaint alleges that the law firm reserved the right to "move to withdraw absent payment" and threatened to invoke that right when confronting Guirguis and Kalin about BTP‘s failure to pay billed amounts. The complaint further alleges that during those conversations, BTP (through Guirguis) and Kalin induced L&R to continue providing legal services to BTP under modified engagement letters, and thus not to withdraw, through false statements about payment sources available to pay the law firm‘s bills (e.g., CBL‘s purported credit line) and through omissions about "the fact and magnitude of liens" against BTP, loans by Kalin to BTP, and BTP‘s level of "indebtedness." In the context of these alleged transactions, the defendants/appellees had a duty independent of the subsequent modified engagement letters to "state truly"what "they told the law firm and also not to suppress or conceal any facts within [their] knowledge which would materially qualify those [representations] stated."

The scope of the ACAB authority 

Under the rules of then ACAB, that body‘s jurisdiction is limited to disputes "about the fee paid, charged, or claimed for legal services." D.C. Bar Att‘y-Client Arb. Bd. R. 3 (b). In addition, the Superior Court did not find, and none of the parties has argued that, Kalin is a privy of any of the BTP defendants such that he could be bound by the ACAB decision to which the BTP defendants were subject. For those reasons, the ACAB arbitration decision did not have res judicata effect as to L&R‘s claims sounding in fraudulent inducement and civil conspiracy against the BTP defendants, and likewise is not a res judicata bar with respect to any claim against Kalin.


In this case, the amount L&R billed BTP for legal services under the second modified engagement letter is some measure of what the law firm could have earned if the lawyers involved had withdrawn from representing BTP and taken on work for another or other clients. As L&R has suggested, its damages (if any) in this regard were likely "up to" rather than equivalent to the billed $1.8 million, because that amount was billed for what L&R has asserted was "round-the-clock work" and also because it included a success fee ($358,659.96) that the law firm would not necessarily have earned through other engagements, as well as expenses ($196,605.67, for, inter alia, "depositions and interviews across the country and overseas") the law firm would not necessarily have incurred in representing other clients. Whatever L&R might be able to prove in the way of "damages . . . up to the claimed 1.8 million dollars," the point we make here is that L&R‘s inclusion of a prayer to recover such an amount as damages for alleged fraudulent inducement does not necessarily require a conclusion that the law firm is attempting to recharacterize a contract claim as a fraud claim, or is merely trying to obtain the benefit of its bargain under its contract with BTP.  Though monetarily equivalent to L&R‘s claimed damages for breach of contract, the law firm‘s prayer in Counts IV and V for approximately $1.8 million in damages may have a different basis and may pertain to damages that are not compensable under contract principles.

Associate Judge Thompson authored the opinion. (Mike Frisch)

June 7, 2018 in Billable Hours, Clients | Permalink | Comments (1)