Link: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20070308_C268550_51_268550.OPN.PDF
Underlying Case or Transaction: Probate
Key Concepts: (1) judicial estoppel and (2) causation
Petitioners appealed a probate court order granting summary disposition in favor of respondent law firm on the basis of judicial estoppel and the law firm appealed the denial of summary judgment based on causation. The court of appeals affirmed.
Brian Kelly ("decedent") died unexpectedly. He had a complex estate plan including several trusts. Two of the petitioners (Dennis and Sean Kelly) were trustees of the Family Trust ("trust"), which was a contingent beneficiary of an IRA that decedent had opened with Charles Schwab. The IRA was funded by six mutual funds, which were very volatile and the value of the IRA diminished dramatically before the funds could be distributed to the beneficiaries.
The basis of petitioners' claims was that the law firm allegedly delayed in advising or assisting them in effectuating the transfer of the IRA to the petitioners' control. Allegedly, the delay caused a significant diminution in value of the IRA. The complaint alleged that when decedent died on August 20, 2000, the value of the IRA was $675,000, but because of the law firm's delay the petitioners could not obtain access to the IRA until April 2001, by which time the value of the IRA had decreased by approximately $470,000.
The law firm moved for summary disposition on the grounds that petitioners' damages were speculative, the statute of limitations had expired, the petitioners were judicially estopped from asserting a different, higher value for the IRA than the value the petitioners had previously asserted in their First Annual Account of Fiduciary, which had been accepted by the Emmet County Circuit Court, and on the ground that there was no genuine issue of material fact regarding whether the respondents had caused petitioners' damages.
Regarding judicial estoppel, the law firm asserted that the petitioners had previously been sued by their siblings due to the decrease in the value of the IRA. During that proceeding, the petitioners had filed an accounting for the trust. That accounting, which was approved by the circuit court, asserted that the value of the IRA on the date the decedent died was $393,112.22. Therefore, the law firm argued, petitioners were estopped from disputing the value of the IRA as established in the accounting.
The probate court granted the law firm's motion, ruling that the petitioners were judicially estopped from claiming that the value of the decedent's IRA was more than $393,116.22 on the date of his death. This ruling effectively eliminated a large portion of the petitioner's claimed damages. While the probate court granted the portion of the law firm's summary disposition motion based on estoppel, the probate court denied the portion of the law firm's motion based on causation.
On appeal, the court affirmed the probate court's ruling on judicial estoppel. The court first explained the elements and rationale of judicial estoppel: "The purpose of judicial estoppel is to protect the integrity of the judicial process. The doctrine of judicial estoppel is sometimes described as the doctrine against the assertion of inconsistent positions. Judicial estoppel is widely viewed as a tool to be used by the courts in impeding those litigants who would otherwise play fast and loose with the legal system. It is intended to protect the courts from being manipulated by chameleonic litigants who seek to prevail, twice, on opposite theories. Judicial estoppel must be cautiously applied. It is an extraordinary remedy that should only be invoked when a party's inconsistent behavior would otherwise result in a miscarriage of justice. Michigan has adopted the prior success model of judicial estoppel, which prevents a party who has successfully and unequivocally asserted a position in a prior proceeding from asserting an inconsistent position in a subsequent proceeding. The mere assertion of inconsistent positions is not sufficient to invoke judicial estoppel. In order for the doctrine to apply, there must be some indication that the court in the earlier proceeding accepted the party's position as true, and the claims in the earlier proceeding and the subsequent proceeding must be wholly inconsistent." [Citing Opland v Kiesgan, 234 Mich App 352 (1999) and Paschke v Retool Industries, 445 Mich 502 (1994)].
The court then described how the facts of this case warranted a finding that the petitioners were judicially estopped from asserting a higher value for the trust than what they had previously asserted. In the prior action, the petitioners had been sued by their siblings for mismanaging the trust. One of the issues in that case was the value of the IRA on the date of the decedent's death. The petitioners had filed an accounting for the trust placing the value of the IRA on that date at $393,116.22. The siblings filed objections to the accounting, but the court accepted the petitioners' accounting.
The court of appeals explained that judicial estoppel applied here because: (1) the petitioners asserted the lower value for the IRA in the prior action; (2) the court in that action accepted the lower value; and (3) the higher value claimed in this litigation was wholly inconsistent with the lower value claimed in the previous litigation. The result of the court of appeals' ruling was that the damages the petitioners could seek was limited to the difference between the value the petitioners had previously successfully asserted and the subsequent diminution in value.
The court then addressed the law firm's causation argument. The probate court had denied the law firm's motion on this ground. On appeal, the court affirmed the probate court's denial of summary disposition.
Petitioners claimed that the law firm's delay in helping them gain access and control over the decedent's IRA caused the decrease in the value of the IRA. The petitioners also claimed that the law firm orchestrated the transfer of the funds in the IRA to the trust in a manner which would have caused a substantial tax liability to the estate.
The court noted that it was clear that the petitioners were relying on the skill and knowledge of the law firm regarding the handling of the decedent's estate and specifically the IRA. Petitioners claimed that they informed the law firm that the mutual funds in the IRA were very volatile on August 21, 2000. The law firm's own records showed that the firm was having discussions with the brokerage for the IRA as early as September 8, 2000. Petitioner's expert testified that within 48 hours of learning that an asset in the estate is volatile, a reasonable and prudent probate lawyer would have undertaken to transfer the funds into more conservative holdings. The funds were not transferred for more than three months after the decedent's death. Viewing the evidence in the light most favorable to the petitioners, the court of appeals held that the law firm knew the funds in the IRA were volatile. The evidence also showed that a reasonable attorney would have taken steps within 48 hours to transfer the funds into safer investments, yet the law firm did not do so. Therefore, the petitioners had established a question of fact regarding causation.
Wednesday, June 13, 2007
Monday, June 11, 2007
LN Land Company, Inc v Schwartz Law Firm, et al, unpublished per curiam opinion of the court of appeals, issued January 30, 2007 (Docket No. 262263)
Link:
http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20070130_C263363_61_263363.OPN.PDF
Underlying Case or Transaction: Real Estate Transaction
Key Concepts: (1) damages
In this case, a law firm represented a client in the acquisition of real estate ("Parcel A"). Parcel A was to be accessed by an easement over Parcel B. But the law firm failed to prepare and record a proper access easement over Parcel B. Thus, when the MDOT subsequently purchased Parcel B, Parcel A became inaccessible. Prior to trial, the law firm admitted that it was negligent, but disputed the client's claim for damages. The jury, by special verdict, determined that the client was entitled to over $400,000 in damages.
On appeal, the law firm challenged the trial court's denial of its motion for a directed verdict and post-trial motion for judgment not withstanding the verdict claiming that the evidence did not provide a reasonable basis for the damage award.
The court of appeals began by noting that the client was required to prove an actual injury caused by the law firm's failure to record an easement across Parcel B, not merely the potential for injury. Colbert v Conybeare Law Office, 239 Mich App 608, 620 (2000). The relevant time for assessing damages was the date that the MDOT purchased Parcel B. And the proper measure of damages was the dimunition in value of Parcel B caused by the loss of the easement.
Expert testimony was not required to establish the value of Parcel A. Michigan Mut Ins Co v CNA Ins Co, 181 Mich App 376, 385 (1989). In a tort action, value is generally determined based on the value of the market, rather than a personal value to the plaintiff. Newton Realty Co v Fileccia, 20 Mich App 674, 676-678 (1969). A regular market value for damages furnishes the redress that the law seeks to give for the injury. Bernhardt v Ingham Regional Med Ctr, 249 Mich App 274, 280 (2004). Where there is no regular market, another means of value may be used so long as it is susceptible to pecuniary measure. Berhardt, supra at 280.
Here, the evidence, viewed most favorably to the client, showed that after the MDOT purchased Parcel B, Parcel A became inaccessible and that there was no market for Parcel A. The lay opinion of the client's owner that Parcel A had no value was based on the lack of access. Even though the opinion was subjective, it provided a sufficient explanation to the jury to consider in determining damages.
In sum, the client (apparently relying solely on lay opinion testimony) presented sufficient evidence for the jury to conclude that the law firm's negligence caused Parcel A to become worthless to the client. The value to the client was a proper measure of damages because there was no market for Parcel A once it became inaccessible.
http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20070130_C263363_61_263363.OPN.PDF
Underlying Case or Transaction: Real Estate Transaction
Key Concepts: (1) damages
In this case, a law firm represented a client in the acquisition of real estate ("Parcel A"). Parcel A was to be accessed by an easement over Parcel B. But the law firm failed to prepare and record a proper access easement over Parcel B. Thus, when the MDOT subsequently purchased Parcel B, Parcel A became inaccessible. Prior to trial, the law firm admitted that it was negligent, but disputed the client's claim for damages. The jury, by special verdict, determined that the client was entitled to over $400,000 in damages.
On appeal, the law firm challenged the trial court's denial of its motion for a directed verdict and post-trial motion for judgment not withstanding the verdict claiming that the evidence did not provide a reasonable basis for the damage award.
The court of appeals began by noting that the client was required to prove an actual injury caused by the law firm's failure to record an easement across Parcel B, not merely the potential for injury. Colbert v Conybeare Law Office, 239 Mich App 608, 620 (2000). The relevant time for assessing damages was the date that the MDOT purchased Parcel B. And the proper measure of damages was the dimunition in value of Parcel B caused by the loss of the easement.
Expert testimony was not required to establish the value of Parcel A. Michigan Mut Ins Co v CNA Ins Co, 181 Mich App 376, 385 (1989). In a tort action, value is generally determined based on the value of the market, rather than a personal value to the plaintiff. Newton Realty Co v Fileccia, 20 Mich App 674, 676-678 (1969). A regular market value for damages furnishes the redress that the law seeks to give for the injury. Bernhardt v Ingham Regional Med Ctr, 249 Mich App 274, 280 (2004). Where there is no regular market, another means of value may be used so long as it is susceptible to pecuniary measure. Berhardt, supra at 280.
Here, the evidence, viewed most favorably to the client, showed that after the MDOT purchased Parcel B, Parcel A became inaccessible and that there was no market for Parcel A. The lay opinion of the client's owner that Parcel A had no value was based on the lack of access. Even though the opinion was subjective, it provided a sufficient explanation to the jury to consider in determining damages.
In sum, the client (apparently relying solely on lay opinion testimony) presented sufficient evidence for the jury to conclude that the law firm's negligence caused Parcel A to become worthless to the client. The value to the client was a proper measure of damages because there was no market for Parcel A once it became inaccessible.
Thursday, June 7, 2007
Hall v Cohen, unpublished per curiam opinion of the Court of Appeals, issued January 30, 2007 (Docket No. 270949)
Link: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20070130_C270949_46_270949.OPN.PDF
Underlying Case or Transaction: Divorce
Key Concepts: (1) collateral estoppel
In this case, defendant represented plaintiff in a divorce proceeding. A judgment was entered on the divorce and, at a hearing, plaintiff testified about the settlement that was reached at mediation. Defendant, as plaintiff's attorney, questioned plaintiff about whether she was satisfied with the settlement, satisfied with defendant's legal representation of her, and whether she was acting free of duress and coercion. Plaintiff answered all of the questions affirmatively.
Subsequently, plaintiff sued defendant alleging that defendant negligently handled the divorce. Defendant moved for summary disposition, which the trial court granted under 2.116(C)(7) on the basis that plaintiff was barred from bringing the suit on the doctrine of collateral estoppel.
Collateral estoppel precludes the relitigation of an issue between the same parties or their privies when the earlier proceeding's determination of the issue was necessary to reach a final judgment. Monat v State Farm Ins Co, 469 Mich 679, 682-684 (2004). However, the doctrine only bars relitigation of an issue if the parties had a full and fair opportunity to litigate those issues in the prior proceeding.
The court of appeals reversed the trial court's grant of summary judgment because the adequacy of defendant's representation was not actually litigated, was not determined by a valid and final judgment, and was not essential to the final judgment. The court of appeals noted that plaintiff made statements on the record based upon the knowledge that she had at the time, and although those statements constitute evidence of state of mind, they do not conclusively foreclose a later action for malpractice.
Underlying Case or Transaction: Divorce
Key Concepts: (1) collateral estoppel
In this case, defendant represented plaintiff in a divorce proceeding. A judgment was entered on the divorce and, at a hearing, plaintiff testified about the settlement that was reached at mediation. Defendant, as plaintiff's attorney, questioned plaintiff about whether she was satisfied with the settlement, satisfied with defendant's legal representation of her, and whether she was acting free of duress and coercion. Plaintiff answered all of the questions affirmatively.
Subsequently, plaintiff sued defendant alleging that defendant negligently handled the divorce. Defendant moved for summary disposition, which the trial court granted under 2.116(C)(7) on the basis that plaintiff was barred from bringing the suit on the doctrine of collateral estoppel.
Collateral estoppel precludes the relitigation of an issue between the same parties or their privies when the earlier proceeding's determination of the issue was necessary to reach a final judgment. Monat v State Farm Ins Co, 469 Mich 679, 682-684 (2004). However, the doctrine only bars relitigation of an issue if the parties had a full and fair opportunity to litigate those issues in the prior proceeding.
The court of appeals reversed the trial court's grant of summary judgment because the adequacy of defendant's representation was not actually litigated, was not determined by a valid and final judgment, and was not essential to the final judgment. The court of appeals noted that plaintiff made statements on the record based upon the knowledge that she had at the time, and although those statements constitute evidence of state of mind, they do not conclusively foreclose a later action for malpractice.
Tuesday, June 5, 2007
Barnes v Krupp Law Offices, et al, unpublished opinion per curiam of the Court of Appeals, issued May 22, 2007 (Docket No. 27479)
Link: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20070522_C274749_39_274749.OPN.PDF
Underlying Transaction: Divorce
Key Concepts: (1) proximate cause and (2) damages
In this case arising from a divorce proceeding, the plaintiff alleged that the defendants committed malpractice by failing to inform him that one of the attorneys handling plaintiff's case was involved in disciplinary proceedings with the State Bar, and by failing to promptly realize that the divorce petition had been filed in the wrong county. Plaintiff alleged that defendants' act of carrying on the case in the wrong county caused him to suffer emotional and financial damages.
Defendants moved for summary judgment pursuant to MCR 2.116(C)(7) [statute of limitations] arguing that the complaint was filed more than two years after the last legal services were provided to plaintiff and (C)(8) [failure to state a claim] arguing that the complaint failed to did not suffer actionable damages as a direct result of the alleged negligence. The trial court granted defendants' motion on both grounds.
On appeal, the plaintiff failed to counter the trial court's conclusion that the plaintiff suffered no loss as a result of the alleged negligence. For that reason alone, the court of appeals affirmed the trial court.
The court, citing Coble v Green, 271 Mich App 382, 386 (2006), explained that the plaintiff must prove (1) the existence of an attorney-client relationship; (2) negligence in the legal representation; (3) that the negligence was the proximate cause of the injury; (4) the fact and extent of the injury alleged.
To prove proximate cause, a plaintiff must establish that the defendant's action was a cause in fact of the claimed injury. Charles Reinhart Co v Winiemko, 444 Mich 579, 586 (1994). A plaintiff must show that but for the attorney's alleged malpractice, he would not have been injured, and a claim of malpractice requires a showing of actual injury, not just the potential for injury. Colbert v Conybeare Law Office, 239 Mich App 608, 619-620 (2000).
The court held that the plaintiff failed to allege that he suffered actionable damages. The plaintiff alleged that the defendants committed malpractice by failing to inform him that the attorney handling his case was subject to disciplinary proceedings, and by failing to promptly recognize that the divorce petition was filed in the wrong county. The plaintiff alleged that he had to attend court proceedings and had to rent an apartment. But the complaint failed to specify how the alleged malpractice caused these damaged. A statement of conclusions unsupported by factual allegations is insufficient to satisfy the injury element of a legal malpractice action. Kloian v Schwartz, 272 Mich App 232, 241 (2006). Moreover, the plaintiff acknowledged that defendants' actions had no detrimental effect on the outcome of the divorce case. Therefore, plaintiff suffered no actionable loss due to any negligent conduct by defendants. Alar v Mercy Mem Hosp, 208 Mich App 518, 531 (1995) ("Injuries that would have occurred anyway [such as attending court proceedings] cannot be said to have been proximately caused.")
Underlying Transaction: Divorce
Key Concepts: (1) proximate cause and (2) damages
In this case arising from a divorce proceeding, the plaintiff alleged that the defendants committed malpractice by failing to inform him that one of the attorneys handling plaintiff's case was involved in disciplinary proceedings with the State Bar, and by failing to promptly realize that the divorce petition had been filed in the wrong county. Plaintiff alleged that defendants' act of carrying on the case in the wrong county caused him to suffer emotional and financial damages.
Defendants moved for summary judgment pursuant to MCR 2.116(C)(7) [statute of limitations] arguing that the complaint was filed more than two years after the last legal services were provided to plaintiff and (C)(8) [failure to state a claim] arguing that the complaint failed to did not suffer actionable damages as a direct result of the alleged negligence. The trial court granted defendants' motion on both grounds.
On appeal, the plaintiff failed to counter the trial court's conclusion that the plaintiff suffered no loss as a result of the alleged negligence. For that reason alone, the court of appeals affirmed the trial court.
The court, citing Coble v Green, 271 Mich App 382, 386 (2006), explained that the plaintiff must prove (1) the existence of an attorney-client relationship; (2) negligence in the legal representation; (3) that the negligence was the proximate cause of the injury; (4) the fact and extent of the injury alleged.
To prove proximate cause, a plaintiff must establish that the defendant's action was a cause in fact of the claimed injury. Charles Reinhart Co v Winiemko, 444 Mich 579, 586 (1994). A plaintiff must show that but for the attorney's alleged malpractice, he would not have been injured, and a claim of malpractice requires a showing of actual injury, not just the potential for injury. Colbert v Conybeare Law Office, 239 Mich App 608, 619-620 (2000).
The court held that the plaintiff failed to allege that he suffered actionable damages. The plaintiff alleged that the defendants committed malpractice by failing to inform him that the attorney handling his case was subject to disciplinary proceedings, and by failing to promptly recognize that the divorce petition was filed in the wrong county. The plaintiff alleged that he had to attend court proceedings and had to rent an apartment. But the complaint failed to specify how the alleged malpractice caused these damaged. A statement of conclusions unsupported by factual allegations is insufficient to satisfy the injury element of a legal malpractice action. Kloian v Schwartz, 272 Mich App 232, 241 (2006). Moreover, the plaintiff acknowledged that defendants' actions had no detrimental effect on the outcome of the divorce case. Therefore, plaintiff suffered no actionable loss due to any negligent conduct by defendants. Alar v Mercy Mem Hosp, 208 Mich App 518, 531 (1995) ("Injuries that would have occurred anyway [such as attending court proceedings] cannot be said to have been proximately caused.")
Subscribe to:
Posts (Atom)