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 al., unpublished per curiam opinion of the court of appeals, issued March 20, 2007 (Docket No. 271599)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.