Shefman v Law Office of Ernst Assoc, PLC, et al, unpublished per curiam opinion of the court of appeals, issued March 27, 2007 (Docket No. 269757)

Link: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20070327_C269757_69_269757.OPN.PDF

Underlying Case or Transaction: litigation

Key Concepts: (1) release and (2) frivolous claims

Shefman retained the Ernst firm to represent him in two legal actions. A dispute arose over fees. The Ernst sued for unpaid fees and Shefman counterclaimed for malpractice. On the eve of trial, Shefman's attorney withdrew and the court declared a mistrial. Shefman then retained new counsel and subsequently, the parties put a settlement agreement on the record releasing each other from all claims against each other that occurred before that date. Later, Shefman refused to sign a settlement agreement. Nevertheless, the court entered an order settling the case based on the settlement and release of claims that had been put on the record.

Shefman, representing himself, then sued the Ernst firm and two of its lawyers over their representation of him in the two legal actions. The defendants moved for summary disposition based on the release and for sanctions under MCR 2.114 and MCL 600.2591. The trial court granted the motion for summary disposition based on the settlement and release that was placed on the record. The trial court also awarded sanctions reasoning that Shefman's position was devoid of arguable legal merit.

The court of appeals upheld the sanction award and noted that Shefman's legal position was "devoid of legal merit because any claim that he had against defendants in this case was released in the settlement that he approved on the record and the subsequent settlement order entered in the district court, which was affirmed on appeal in the circuit court, and which was not further appealed to this Court. An agreement between the parties or their attorneys made in open court is binding upon the parties. Michigan Bell Telephone Co v Sfat, 177 Mich App 506, 515; 442 NW2d 720 (1989); see also MCR 2.507(G)."

Gibbons v Thompson, O'Neil & Vanderveen, et, al., unpublished per curiam opinion of the court of appeals, issued March 27, 2007 (Docket No. 271628)

Link: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20070327_C271628_37_271628.OPN.PDF

Underlying Case or Transaction: Medical Malpractice

Key Concepts: (1) Attorney-Judgment Rule (2) Use of experts

In this case, Dr. Hartzler performed surgery on plaintiff for a strangulated hernia. During the procedure, plaintiff's small bowel ruptured. A general surgeon, Dr. Lee Britton, took over plaintiff's post-operative care. Plaintiff became hypotensive and went into septic shock and later suffered a heart attack and stroke.

Plaintiff hired defendants to pursue any medical malpractice claims he had against Hatzler, Britton, and the Alpena General Hospital nursing staff. After defendants consulted with Dr. McDonell, a general surgeon, Dr. VanHoutzen, an internist, and a nurse, defendants decided to file a notice of intent only against Hartzler. Plaintiff's case against Hartzler went to trial and plaintiff received a $600,000 judgment.

Plaintiff then sued defendants for malpractice. Plaintiff claimed that defendants failed to sufficiently investigate his potential malpractice claims against Britton and the nursing staff. Plaintiff also claimed that defendants failed to inform him of the limitation period and the fact that they had not filed a notice of intent against Britton and the nursing staff before the limitation period expired. Defendants moved for summary disposition on the basis that their decision not to pursue claims against Britton and the nursing staff was protected by the attorney-judgment rule. The trial court agreed and granted summary disposition.

The court of appeals began by explaining the attorney-judgment rule: "An attorney has an implied duty to exercise reasonable skill, care, discretion, and judgment in representing a client. Further, an attorney is obligated to act as an attorney of ordinary learning, judgment, or skill would under the same circumstances. However, an attorney is not a guarantor of the most favorable possible outcome, nor must an attorney exercise extraordinary diligence or act beyond the knowledge, skill, and ability ordinarily possessed by members of the legal profession. Further, where an attorney acts in good faith and in honest belief that his acts and omissions are well founded in law and are in the best interest of the client, the attorney is not answerable for mere errors in judgment." [Citations and internal quotes omitted] [Generally citing Mitchell v Doughtery, 249 Mich App 668, 677; 644 NW2d 391 (2002) and Simko v Blake, 448 Mich 648, 655-656; 532 NW2d 842 (1995)].

Plaintiff claimed that defendants should not have relied on opinions from experts who were not willing to testify at trial. The court of appeals held that "there is no requirement either in law or in logic that the experts used to determine whether plaintiff has a potential claim must be the experts called at trial." In fact, the Michigan Supreme Court has recognized that, depending on the stage of the litigation, plaintiffs will likely use different experts in the course of establishing their medical malpractice claims. Grossman v Brown, 470 Mich 593, 598-599; 685 NW2d 198 (2004).

Next, plaintiff claimed that defendants conducted an unreasonable investigation because MCL 600.2961(1) requires a medical professional who is testifying regarding the standard of care to be a specialist in the same area as the person against whom the malpractice claim is made and VanHouzen was not qualified to testify about the standard of care for a general surgeon and neither VanHouzen or McDonnell were qualified to testify about the standard of care for the hospital nursing staff. The court of appeals held that the requirements of 600.2961(1) do not apply to experts who testify to causation and both VanHouzen and McDonell opined that, even if they breached the standard of care, neither Britton nor the nursing staff caused plaintiff's injuries. Since the experts did not believe that Britton or the nursing staff caused plaintiff's injuries, the defendants did not act unreasonably when they failed to obtain additional standard of care witnesses under MCL 600.2169(1).

Finally, plaintiff claimed that defendants breached a duty to him when they failed to timely inform him and his family that they would not serve a notice of intent to Britton or the nursing staff. However, plaintiff testified that defendants told him when the limitation period would expire for his malpractice claims. Further, plaintiff testified that defendants told him that a notice of intent had to be filed against each person they intended to sue before the limitation period expired. Plaintiff could not create a genuine issue of material fact by arguing that defendants had a duty to inform his family about the limitations period when his own testimony makes clear that he, the client, knew the limitation period and understood that all notices of intent had to be served within the limitation period.

Stanke et. al v. Varnum, Riddering, L.L.P, et. al., unpublished per curiam opinion of the court of appeals, issued March 20, 2007 (Docket No. 263446)

Link: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20070320_C263446_36_263446.OPN.PDF

Underlying Case or Transaction: Personal Injury Litigation

Key Concepts: (1) attorney-judgment rule

Plaintiff Isabella Bank & Trust, as trustee of the Jacob S. Stanke Trust (plaintiff) sued the Varnum firm (Varnum) for malpractice arising from personal injury litigation. After the trial court granted summary disposition to Varnum, plaintiff appealed.

Five-year old Jacob Stanke (Jacob) was injured at a "Mini Grand Prix" event. Jacob's mother (Linda) engaged Varnum to pursue a personal injury claim on Jacob's behalf. The case eventually settled. Varnum then moved the circuit court to approve the settlement with the proceeds to be placed in trust for Jacob. Varnum attached a copy of the trust document to the motion, signed by Linda and Jacob's father (Jeffrey). Linda was named in the trust document as the trustee. The circuit court approved the settlement and authorized establishment of the trust.

Varnum then moved in the probate court, with Jeffrey's approval, to have Linda appointed as Jacob's conservator and to have the settlement funds transferred into the trust. The probate court granted the motion, appointed Linda as Jacob's conservator, approved use of the trust as a receptacle for the settlement proceeds, authorized the deposit of the proceeds into the trust, and ordered that an Acceptance of Trust be filed in lieu of a bond.

Subsequently, plaintiff filed this case on Jacob's behalf against Varnum and Linda alleging that Linda had depleted the trust's assets and that Varnum had committed malpractice in the manner in which it drafted the trust and handled matters before the probate court. Specifically, plaintiff alleged that Varnum had committed malpractice by: (1) constructing the trust in a manner that allowed Stanke to misappropriate funds; (2) asking the circuit and probate courts to approve the trust as drafted; (3) allowing Linda to appointed as trustee; and (4) not causing the probate court to pass on the sufficiency of a bond, a bond to be filed, or hearings to be held regarding the approval of the trust in the probate court.

Varnum moved for summary disposition on several different grounds, including that plaintiff's claims were barred by the attorney-judgment rule. The trial court granted Varnum's motion.

On appeal, the court of appeals affirmed because the attorney-judgment barred plaintiff's claims. First, the court of appeals explained the attorney judgment rule: "our Supreme Court explained that an attorney has an implied duty to exercise reasonable, skill, care, discretion and judgment in representing a client. Further, an attorney is obligated to act as an attorney of ordinary learning, judgment or skill would act under the same or similar circumstances. However, an attorney is not a guarantor of the most favorable possible outcome, nor must an attorney exercise extraordinary diligence or act beyond the knowledge, skill, and ability ordinarily possessed by members of the legal profession. Thus, an attorney is not liable for what, in hindsight, were errors of judgment where the attorney made those judgments in good faith and in the honest belief that the decisions were well founded in the law and made in the best interests of the client. Accordingly, while a gross error in judgment may be actionable, a mere error in judgment made in good faith is not. Therefore, where a plaintiff's allegations cannot support a breach of duty because they are based on mere errors of professional judgment and breaches of reasonable care, summary disposition is appropriate." [Individual citations omitted. Generally citing Simko v Blake, 446 Mich 648, 655-659; 532 NW2d 842 (1995) and Estate of Mitchell v Doughtery, 249 Mich App 668, 677-679; 664 NW2d 391 (2002).

The court then explained that each of plaintiff's allegations of malpractice fell within the attorney-judgment rule. First, Varnum's recommendation to use a trust to manage Jacob's assets in lieu of a bonded conservatorship was a matter of judgment -- a conscious choice made by Varnum in the course of tort litigation. Plaintiff presented no evidence that Varnum's judgment in this regard was motivated by anything other than good faith, with the honest belief that its decisions were well-founded in applicable law and made in the best interest of Varnum's client. Second, plaintiff had not and could not show that Linda was not an appropriate choice for trustee. Indeed, "it is almost routine to appoint parents to manage the interests of their minor children." In re Estate of Powell, 160 Mich App 704, 711; 408 NW2d 525 (1987). Finally, the decision to file the Acceptance of Trust instead of a bond was a pleading judgment and therefore, it too, came within the attorney-judgment rule.

In sum, since plaintiff had not presented any evidence that Varnum's errors, if any, were anything more than mere errors in judgment, there was no genuine issue of material fact regarding defendant's alleged negligence.

Crutcher, et. al. v Clark Hill, P.L.C., et. al., unpublished per curiam opinion of the court of appeals, issued March 20, 2007 (Docket No. 271599)

Link: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20070320_C271599_64_271599.OPN.PDF
Underlying Case or Transaction: Commercial Litigation

Key Concepts: (1) collateral estoppel; (2) attorney-judgment rule; (3) causation

In the underlying litigation, Clark Hill represented Crutcher and others ("Crutcher") who were the defendants in an action seeking the accounting of various partnership dealings. In the subsequent malpractice action, Crutcher claimed that Clark Hill committed negligence in the underlying action by (1) approving or failing to object to an order (the "Clarification Order") which required Crutcher to pay amounts that he was not obligated to pay under the court's rulings; (2) failing to present evidence to rebut a certain exhibit ("Ex. 73"); (3) stipulating to the admission of Ex. 73; and (4) failing to raise a statute of limitations defense.

Clark Hill moved for summary disposition and the trial court granted the motion. On appeal, the court first held that Crutcher's claim regarding the Clarification Order was barred by collateral estoppel. "Collateral estoppel precludes relitigation of an issue a subsequent, different cause of action between the same parties when the prior proceeding culminated in a valid final judgment and the issue was actually and necessarily determined in the prior proceeding." Barrow v Pritchard, 2235 Mich App 478, 480; 597 NW2d 853 (1999). Generally, for collateral estoppel to apply three elements must be satisfied: (1) a question of fact essential to the judgment must have been actually litigated and determined by a valid and final judgment; (2) the same parties must have had a full and fair opportunity to litigate the issue; and (3) there must be mutuality of estoppel. Monat v State Farm Ins Co, 469 Mich 679, 682-684; 677 NW2d 843 (2004). However, the defensive use of collateral estoppel does not require mutuality. Id. at 691-692.

In the underlying action, the accuracy of the Clarification Order was actually litigated and was the subject of a motion for reconsideration by Crutcher in which he argued that the court had made computational errors. Crutcher's motion for reconsideration was denied. Subsequently, Crutcher moved to amend the final judgment, which incorporated the Clarification Order. The trial court denied also denied Crutcher's motion to amend the judgment. Accordingly, because the accuracy of the Clarification Order was (1) a question of fact essential to the underlying judgment that was actually litigated and (2) Crutcher had a full opportunity to litigate the issue, collateral estoppel barred Crutcher's claim in the subsequent malpractice action.

Next, Crutcher claimed that Clark Hill committed negligence when it failed to present the underlying bank records during trial to rebut Ex. 73. In the underlying action, the plaintiff's expert relied on Ex. 73 to establish that the plaintiffs had paid Crutcher $200,000. During cross examination, Clark Hill elicited that the $200,000 entry was written in different ink than the other entries on the document. Clark Hill then presented Crutcher's accountant as a rebuttal witness. She testified that the Ex. 73 was identical to another exhibit, which did not contain the $200,000 entry. Clark Hill did not offer any bank records to show that the $200,000 payment was not made and the trial court found that the plaintiffs had paid Crutcher the $200,000 embodied in Ex. 73.

In the subsequent malpractice action, Crutcher claimed that Clark Hill's decision not to produce the bank records to rebut Ex. 73 constituted negligence. During his deposition, the Clark Hill lawyer who handled the trial indicated that he believed that the accountant's testimony had adequately rebutted Ex. 73 and that the bank records did not detail individual transactions, rather they only showed total monthly disbursements. The court of appeals held that "when an attorney acts in good faith and in the honest belief that his actions are well founded in law and his client's best interest, he is not accountable for mere errors in judgment. Simko v Blake, 448 Mich 648; 658; 532 NW2d 842 (1995). Further, the decision whether to call witnesses at trial is a matter of trial strategy. Id. at 660. Therefore, the court of appeals held that Crutcher had failed to show that Clark Hill's decisions regarding the rebuttal of Ex. 73 and the bank records were more than mere errors in judgment that could rise to the level of negligence.

Next, Crutcher claimed that Clark Hill was negligent in stipulating to the admission of Ex. 73 because it was not admissible. Crutcher contended that without Ex. 73 there would have been no evidence of the $200,000 payment. The court of appeals disagreed because the version of MRE 703 (which governs the bases of expert testimony) that was in effect at the time of the trial in the underlying action allowed experts to base their opinions on evidence that was not contained in the record. Therefore, it was within the trial court's discretion to allow the plaintiffs' expert to testify about the $200,000 payment even if Ex. 73 was not in evidence. Thus, the court of appeals held that Crutcher failed to prove that Clark Hill's stipulation to the admission of Ex. 73 was the proximate cause in the introduction of evidence of that payment.

Finally, Crutcher asserted that Clark Hill should have asserted a statute of limitations defense in the underlying action. The court of appeals disagreed because the statute of limitations applicable to partnership accounting actions does not begin to run until dissolution occurs or there has been a settlement of or accounting of partnership dealings. Reindel v Reindel, 253 Mich 680, 682-683; 235 NW2d 861 (1931). In the underlying action, the evidence showed that the partnerships that were the subject of the action had not been dissolved.