Title: Jackson State Bank v. King

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Jackson State Bank v. King1993 WY 1844 P.2d 1093Case Number: 91-45Decided: 01/06/1993Supreme Court of Wyoming
 
The 
JACKSON STATE BANK, a Wyoming corporation, and Maurice E. Miles,

Appellants 
(Plaintiffs),

v.

Floyd R. KING, Appellee 
(Defendant).

 

Appeal from United States 
Court of Appeals for the Tenth Circuit

Patrick M. 
Hunter, Casper, for appellants.

Terry W. Mackey, 
Cheyenne, for appellee.

Before MACY, C.J., and 
THOMAS, CARDINE, URBIGKIT* and GOLDEN, JJ.

* Chief Justice 
at time of oral argument

THOMAS, 
Justice.

[¶1]      The questions in 
this case are certified to this court by the United States Court of Appeals for 
the Tenth Circuit pursuant to Wyo.R.App.P. 11 and Wyo. Stat. §§ 1-13-104 to -107 
(1988), the Federal Court State Law Certificate Procedure Act. The questions 
certified by the federal court are:

A. Does Wyoming's 
comparative negligence statute, Wyo. Stat. § 1-1-109(a) (1977), bar 
plaintiff's

recovery in a legal 
malpractice action based on claims for breach of contract and breach of 
fiduciary

duty when the jury 
apportions fault in the following manner: plaintiff, thirty-five percent; 
defendant,

thirty-five percent; and 
a third party, thirty percent?

B. If the comparative 
negligence statute does not bar recovery on these claims, does it or some 
other

principle of Wyoming law 
require that plaintiff's recovery be reduced by his percentage of 
fault?

We answer both 
of the certified questions in the negative.

[¶2]      On February 26, 
1973, Rosemary Miles died, and her husband, Maurice Miles (Miles), and her son 
from a previous marriage, William Hutson, and his family (Hutsons) survived her. 
Her will divided her estate into two parts. One part, equivalent to the maximum 
marital deduction, was left directly to Miles. The other portion was left in a 
testamentary trust for the benefit of the Hutsons. Her will also provided that 
Miles should be appointed as the executor of her estate. Floyd R. King (King) 
was retained by Miles to represent him in accomplishing his duties as executor 
of the estate.

[¶3]      In April of 1979, 
the probate court entered an order approving the accounting and a decree of 
distribution in Rosemary Miles' estate, and the estate was closed in October, 
1979. In July of 1986, the Hutsons brought an action against Miles in the 
federal district court asserting breach of his fiduciary duties as executor of 
the estate. Miles then filed a third-party complaint against King, alleging 
legal malpractice in connection with King's representation of Miles as the 
executor of the Rosemary Miles estate and asserting claims based on theories of 
negligence, breach of contract, and breach of a fiduciary 
duty.

[¶4]      Miles entered 
into an agreement with the Hutsons, settling their claim against him, and 
pursued his malpractice action against King. The legal malpractice action was 
tried before a jury and, on June 30, 1989, following a five-day trial, the jury 
returned a verdict finding that Miles had suffered damages in the amount of 
$46,500 as the result of King's actions. In its verdict, the jury apportioned 
fault, defined as "negligence causing damage," for Miles' damages, as follows: 
Miles 35%; King 35%; and the Jackson State Bank, not a party to the action, 
30%.  The jury found that King, in 
his attorney-client relationship with Miles, had been negligent, had breached 
the fiduciary duty owed by an attorney to a client, and had breached his 
contract with Miles.

[¶5]      On August 17, 
1989, the United States District Court for the District of Wyoming ruled that 
the assessment of comparative fault by the jury applied to all three of Miles' 
claims, and it denied recovery. Miles then took an appeal to the United States 
Court of Appeals for the Tenth Circuit asserting that there was error in this 
ruling by the United States District Court, and that is the thrust of the 
questions certified to this court. We disagree with the ruling of the United 
States District Court.

[¶6]      At the time this 
case arose, the comparative negligence statute in effect in Wyoming 
provided:

Contributory negligence 
shall not bar a recovery in an action by any person or his legal representative 
to recover damages for negligence resulting in death or in injury to person or 
property, if the contributory negligence was not as great as the negligence of 
the person against whom recovery is sought. Any damages allowed shall be 
diminished in proportion to the amount of negligence attributed to the person 
recovering.

Wyo. Stat. § 
1-1-109(a) (1977).

The statute was 
amended in 1986, but that amendment was substantive in nature and, consequently, 
has no retrospective application to the questions certified to this 
court.

[¶7]      In the specific 
context of the comparative negligence statute, we recently quoted the summarized 
standard for statutory construction in this way:

Where the language of a 
statute is plain and unambiguous and conveys a clear and definite meaning, we do 
not resort to rules of statutory construction.  * * * Neither this Court nor the agency 
charged with administering the statute has a right to look for and impose 
another meaning.

Phillips v. 
Duro-Last Roofing, Inc., 806 P.2d 834, 837 (Wyo. 1991) (citing Wyoming Ins. 
Dept. v. Avemco Ins. Co., 726 P.2d 507, 510 (Wyo. 1986)).

Then we further 
quoted:

Whenever this court is 
engaged in the construction of a statute, the primary consideration is to 
discern the intention of the legislature. * * * That legislative intent should 
be ascertained, as nearly as is possible, from the language incorporated in the 
statute, which is viewed in the light of its object and purpose. * * * In those 
instances in which the language in the statute is plain and unambiguous, the 
words used are to be accorded their plain and ordinary meaning unless there is 
some manifestation of a legislative intent that they not be accorded the plain 
and ordinary meaning.

Phillips, 806 P.2d  at 837 (citing Belle Fourche Pipeline Co. v. State, 766 P.2d 537, 542 (Wyo. 
1988)).

[¶8]      In Phillips, we 
refused to extend our comparative negligence statute, beyond its intended and 
express application to negligence, into warranty and strict liability theories 
as articulated in RESTATEMENT (SECOND) OF TORTS §§ 402A and 402B (1965). 
Phillips, of course, did not encompass an issue of legal malpractice but, 
nevertheless, we perceive the case as controlling. Both Miles and King agreed in 
the briefs they submitted to this court that Phillips is controlling, but they 
disagreed as to the result it directed.

[¶9]      King urges 
Phillips as controlling on the premise that even though, concededly, § 1-1-109 
applies only to those cases involving negligence, Miles' claim in the trial 
court was founded in negligence, no matter how it might be characterized. This 
was the view adopted by the United States District Court, and King argues that 
decision manifested the correct application of § 1-1-109 to the case involved. 
Miles, on the other hand, distinguishes between a cause of action based on 
contract theories and a cause of action based on tort theories. Miles agrees 
Phillips stood for the proposition that § 1-1-109 reached only to those causes 
of action arising out of negligence.  
Miles argues, therefore, that the statute has no application to a legal 
malpractice action, which is a contractual claim based on the implied warranty 
that the work performed by an attorney for his client will be performed in a 
skillful and professional manner.

[¶10]   We agree with Miles that the cause 
of action in a legal malpractice claim is contractual in nature and that § 
1-1-109 is not applicable based upon its clear and unambiguous language. We 
reach that result, however, upon a different analysis from that urged by 
Miles.

[¶11]   The relationship of attorney and 
client is contractual in nature. Grievance Committee, Wyoming State Bar v. 
Riner, 765 P.2d 925 (Wyo. 1988); Chavez v. State, 604 P.2d 1341 (Wyo. 1979), 
cert. denied 446 U.S. 984, 100 S. Ct. 2967, 64 L. Ed. 2d 841 (1980); Pizel v. 
Zuspann, 247 Kan. 54, 795 P.2d 42, opinion modified on denial of reh'g, 247 Kan. 
699, 803 P.2d 205 (1990) (citing Bowman v. Doherty, 235 Kan. 870, 686 P.2d 112 
(1984)); Pittman v. McDowell, Rice & Smith, 12 Kan. App. 2d 603, 752 P.2d 711 (1988) (citing Bowman); Massey v. Cunningham, 420 So. 2d 1036 (La. App. 
1982); Zych v. Jones, 84 Ill. App.3d 647, 40 Ill.Dec. 369, 406 N.E.2d 70 (1980). 
The contract may be an express contract, or it may be implied from the actions 
of the parties, such as, the furnishing of advice and assistance or even the 
awareness of the attorney of reliance on the relationship. Riner. The 
attorney-client relationship can be created by a retainer or an offer to retain 
or the payment of a fee. Zych. Even though legal malpractice may be attributable 
to negligence on the part of the attorney, still the right to recompense is 
based upon the breach of the contract with the client. It follows that, because 
this relationship is contractual in nature and is to be treated according to the 
law of contracts, there is no justification to invoke the comparative negligence 
statute.

[¶12]   In Cline v. Sawyer, 600 P.2d 725 
(Wyo. 1979), appeal after remand, 618 P.2d 144 (Wyo. 1980), this court held the 
trial court was obligated to make special findings of fact in determining the 
amount of damages and the percentage of negligence attributable to each party 
under § 1-1-109(b).1  In Cline, the owners of a trailer park 
had brought an action against a plumber to recover damages for allegedly 
defective work, asserting both contract and negligence theories. We there 
said:

In construction 
contracts, there is an implied warranty that the work will be performed in a 
skillful, careful, diligent and workmanlike manner.  Where negligence on the part of the 
contractor results in a breach of this warranty, a cause of action ex contractu 
and a tortious action premised on negligence, or both, are available to the 
contractee.

Cline, 600 P.2d  
at 732.

More 
importantly, for purposes of this case, we also said:

If this is only a 
contract action, it may be said that these findings of fact and conclusions of 
law are sufficient. They reflect the existence of a contract, performance by 
appellees, its breach, and the resulting damages. As only a contract action, the 
findings required by § 1-1-109(b) would not be necessary. The same cannot be 
said if this is also a negligence action.

Cline, 600 P.2d  
at 731 (emphasis added). The conclusion to be drawn from the decisions of this 
court in Cline, and more recently in Phillips, is that the Wyoming Comparative 
Negligence Statute, as drafted by the legislature and interpreted by this court, 
is limited to those actions based on negligence only. Clearly, it should not be 
extended to actions based on contract. We, therefore, hold that § 1-1-109(a) 
does not bar recovery by a plaintiff in a legal malpractice action, which 
necessarily is based on claims for breach of contract and breach of fiduciary 
duty.

[¶13]   We recognize that the United States 
Court of Appeals for the Tenth Circuit had a similar case before it in 1986. 
That court held that Wyoming's comparative negligence statute was not intended 
to bar recovery of damages by the plaintiff under a warranty theory. Sheldon v. 
Unit Rig & Equipment Company, 797 F.2d 883 (10th Cir. 1986), cert. denied, 
479 U.S. 1090, 107 S. Ct. 1300, 94 L. Ed. 2d 156 (1987). The court did conclude, 
however, that the thrust of the statute was to require the damages be reduced by 
the plaintiff's percentage of fault. King argues here the United States Court of 
Appeals for the Tenth Circuit misread Wyoming precedent and, for that reason, 
reached the wrong result in that case, urging the statute should have served as 
a bar. Contrarily, Miles argues § 1-1-109 does not require the reduction of 
recovery by a plaintiff by his percentage of fault, although he appears to 
concede an argument could be structured that the fault of the plaintiff could be 
invoked to apportion damages because of proximate cause issues like those in 
Sheldon. Miles then urges it would not be appropriate to apportion damages in 
this case.

[¶14]   Whether Sheldon is correctly 
decided is not before us in this case. Phillips was decided after the Sheldon 
decision, and that case would have furnished additional guidance to the United 
States Court of Appeals in addressing legislative intention with respect to the 
adoption of the comparative negligence statute and its interpretation by this 
court. We clearly refused to extend the comparative negligence statutes to 
theories of warranty and strict liability in Phillips. Extension of the Phillips 
rule to the case at bar demands the conclusion that the statute does not apply 
and it would not be proper to apportion damages to reduce recovery based on a 
contractual claim. It is likely the Sheldon court would have reached that result 
had the Phillips case been available as precedent.

[¶15]   With respect to the claim of breach 
of a fiduciary duty, it has been held that the defense of contributory 
negligence is not available to what is an action in equity. Federal Savings 
& Loan Insurance Corporation v. Huff, 237 Kan. 873, 704 P.2d 372 (1985). See 
also Miller v. Pine Bluff Hotel Company, 286 F.2d 34 (8th Cir. 1961) (refusing 
to extend the Arkansas comparative negligence statute to any and all tort 
actions, specifically holding the statute did not apply to guest's action 
against hotel for theft of property entrusted to hotel's care). In Huff, the 
Supreme Court of Kansas ruled that the Kansas comparative negligence statute did 
not extend to an action for economic loss brought by the receiver of a savings 
and loan association against individual officers and directors of the 
association on a theory of breach of their respective fiduciary duties. The 
court there said that it was legally impossible for the savings and loan 
institution to be contributorily negligent and, accordingly, contributory 
negligence was not available as a defense to the individual defendants. The 
action against the defendant underwriter of the fidelity bond was simply 
characterized as an action predicated upon contract law, and the Kansas court 
held that its comparative negligence statute was inapplicable to contract 
actions.

[¶16]   We are in accord with Miles' 
position that the plain and unambiguous language of § 1-1-109(a) demonstrates 
that the statute applies only to those causes of action arising out of 
negligence. It does not extend to those that are based upon a theory of contract 
or a theory of breach of fiduciary duty. It follows that the statute does not 
serve as a bar to those claims by Miles, nor can it be invoked to reduce his 
recovery by any percentage of fault. We are not cognizant of, nor has anyone 
called to our attention, any other principle of Wyoming law that would require 
Miles to reduce his recovery by his percentage of fault as to his claims on 
contract theories.

[¶17]   In summary, we hold that Wyoming's 
comparative negligence statute, Wyo. Stat. § 1-1-109(a) (1977), does not bar 
plaintiff's recovery in a legal malpractice action based on claims for breach of 
contract and breach of fiduciary duty, even though the jury has apportioned 
fault in the following manner: plaintiff, 35%; defendant, 35%; and a third 
party, 30%. We further hold that neither the comparative negligence statute nor 
any other principle of Wyoming law requires that the plaintiff's recovery be 
reduced by his percentage of fault.

URBIGKIT, J., filed an opinion 
concurring in the result.

CARDINE, J., filed a dissenting 
opinion.

URBIGKIT, Justice, concurring in 
the result.

[¶18]   I concur in the result of this 
decision, but have a concern that the opinion is directed beyond the certified 
question and may be clearly wrong in the context of the extended 
discussion.

[¶19]   The question presented, by 
certification from the Tenth Circuit Court of Appeals, was clearly limited to a 
legal malpractice claim based on a contractual theory of liability. I find no 
justification to extend our discussion into questions of legal malpractice that 
might be based on negligent theories of actionable wrong.

[¶20]   Even worse, in my opinion, is the 
further mistake in opinion evaluation that legal malpractice proceedings must be 
contractual in nature. A review of the law demonstrates that either or both 
contract and tort theories have interchangeably been used by the client to 
pursue attempted recovery for the claimed wrong from his attorney. Even though I 
consider this portion of the decision pure dictum, I still find the possibility 
of confusion to be created for trial judges and the practicing 
bar.

[¶21]   The concept is stated in the 
standard authority, 2 Ronald E. Mallen & Jeffrey M. Smith, Legal 
Malpractice, § 27.4 (3rd ed. 1989), and similarly found in Irving J. Sloan, 
Professional Malpractice at 65 (1992), that "[c]ourts disagree on the underlying 
theory of the attorney malpractice action." See also Dennis J. Horan & 
George W. Spellmire, Jr., Attorney Malpractice: Prevention and Defense, ch. 11 
(1989), which also recognizes the potential negligent theory basis of 
recovery.  See Honorable Blanche M. 
Manning, Legal Malpractice: Is it Tort or Contract?, 21 Loy.U.L.J. 741 (1990). 
Further discussion is provided in Page Keeton, Professional Malpractice, 17 
Wn.burn L.J. 445, 448 (1978); H.H. Henry, Annotation, What Statute of 
Limitations Governs Damage Action Against Attorney for Negligence in Performance 
of Professional Services, 49 A.L.R.2d 1216, 1219-21 (1956); and Joseph Timothy 
Kleespies, Comment, Liability of Lawyers to Third Parties for Professional 
Negligence in Oregon, 60 Or.L.Rev. 375 (1981). 1 Mallen & Smith, supra, § 
8.10 (footnote omitted) describe in their final 
conclusion:

The most common form of a 
legal malpractice action is for negligence. The cause of action for legal 
malpractice involves the same basic elements as any ordinary negligence action: 
duty, negligent breach of duty, proximate cause and damage. Yet, one court, 
emphasizing the contractual nature of the attorney-client relationship, stated 
that a legal malpractice action is not an action in tort. That, however, is not 
the rule.

[¶22]   A valuable text, Duke Nordlinger 
Stern & Jo Ann Felix-Retzke, A Practical Guide to Preventing Legal 
Malpractice, § 1.01 (1983) (emphasis in original), delineates the definitional 
confusion:

Defining legal 
malpractice can be an exercise in frustration. The many courts that have 
addressed the question are prone to add their personalized verbiage to what has 
become many definitions. Some sound in tort while others are framed in terms of 
express or implied contract. Still others tend to combine both theories, and 
some courts have said that neither approach is correct. Yet, by whatever 
definition, legal malpractice is increasing in frequency of occurrences and 
severity of loss payments.  The more 
practical approach is to analyze attorney malpractice not in terms of 
theoretical definitions, but rather by the multitude of claims that have been 
made against members of the legal profession. The substantial majority of claims 
are never tried, and of those that are, even fewer are appealed. The body of 
case law pales by comparison to the body of claim law. Even the significant 
percentage of claims which result in no indemnity payments still can result in 
substantial sums being paid for defense. The cost in terms of damage to an 
attorney's reputation can be still greater.

[¶23]   2 Mallen & Smith, supra, at § 
27.4 (footnotes omitted), recognizes the significance of the selection of a 
legal theory which motivates my concern about the text of this majority 
decision:

On occasion, the legal 
theories available to a plaintiff may involve choice of law issues. The issue 
may concern the principle governing the underlying action or the legal 
malpractice action itself. For a federal court, choice of law principles are 
those of the forum in which it sits.

In most jurisdictions, 
the plaintiff in a legal malpractice action may have a choice between proceeding 
upon the theory of negligence, breach of contract, or a statutory remedy. 
Although the plaintiff may have facts available which constitute an express 
promise, the contract action can sometimes be based upon the implied promise to 
exercise ordinary skill and knowledge. The implied promise usually has the same 
legal and practical result as a tort claim.

In some instances, 
however, a contract theory may not only be preferable, but also the only viable 
course of action. Thus, if either the attorney or client is deceased, survival 
of the cause of action can depend upon the theory of liability asserted. A 
statute of limitations applicable to tort actions usually expires well before a 
statute applying to an action founded upon a contract. A suit predicated upon a 
contract or statute may be preferable because it may not be subject to the 
contributory negligence defense. Interest may be recoverable for a breach of 
contract but not for negligence. Punitive damages, however, are not usually 
recoverable for breach of a contract.

[¶24] 
Consequently, I concur in the majority decision, but would leave for another 
day, when the issue is directly presented, whether either or both contract or 
negligence confine or describe a legal malpractice 
proceeding.

CARDINE, Justice, 
dissenting.

[¶25] Each case 
of this kind presents a new and different problem that adds confusion to what 
ought to be simple. See Schneider Nat'l, Inc. v. Holland Hitch Co., 843 P.2d 561 
No. 91-44 (Wyo., Dec. 9, 1992) (Cardine, J., dissenting). This case creates an 
injustice by requiring a party to pay 100 percent of a loss of which he caused 
only 35 percent. I would hold that when negligence is asserted and, as in this 
case, is an element of a claim, the case sounds in negligence, and negligence 
law and principles apply. Should the injured party sue only upon the contract, 
negligence principles would not apply. This would leave intact a pure contract 
action and result in a more reasonable approach to justice between the parties. 
See also Phillips v. Duro-Last Roofing, Inc., 806 P.2d 834, 838 (Wyo. 1991) 
(Cardine, J., dissenting).

  

FOOTNOTES

1Wyo. Stat. § 1-1-109(b) (1977) 
provided, in pertinent part:

(b) The court may, and when 
requested by any party shall:

(i) If a jury trial, direct the jury 
to find separate special verdicts;

(ii) If a trial before the court 
without jury, make special findings of fact, determining the amount of damages 
and the percentage of negligence attributable to each party. The court shall 
then reduce the amount of such damages in proportion to the amount of 
negligence 
attributed to the person recovering; (iii) Inform the jury of the consequences 
of its determination of the percentage of negligence.