Opinion ID: 2570635
Heading Depth: 2
Heading Rank: 1

Heading: legal malpractice claims

Text: ¶ 21 Legal malpractice is a general term used to describe a lawyer's wrongful action or omission that causes injury to a client. Clients wronged by their lawyers may sue for damages based on breach of contract, breach of fiduciary duty, or negligence. Kilpatrick v. Wiley, Rein & Fielding, 909 P.2d 1283, 1289 (Utah Ct.App.1996) (citing Roy R. Anderson & Walter W. Steele, Jr., Fiduciary Duty, Tort and Contract: A Primer on the Legal Malpractice Puzzle, 47 SMU L.Rev. 235 (1994)); see also Dunn v. McKay, Burton, McMurray & Thurman, 584 P.2d 894, 904 (Utah 1978) (Maughan, J., dissenting) (An action for legal malpractice may be framed conceptually as either a tort or a breach of contract.). No matter which of the three causes of action (tort, breach of contract, or breach of fiduciary duty) a client brings, the main purpose of legal malpractice actions is to guard against and to remedy exploitation of the power lawyers possess over their clients' lives and property. Kilpatrick, 909 P.2d at 1289 (citing Anderson & Steele, supra, at 236). ¶ 22 This appeal includes all three theories of legal malpractice. We note in passing the elements of each. In a legal malpractice action based on negligence, a plaintiff must prove (i) an attorney-client relationship; (ii) a duty of the attorney to the client arising from their relationship; (iii) a breach of that duty; (iv) a causal connection between the breach of duty and the resulting injury to the client; and (v) actual damages. Harline v. Barker, 912 P.2d 433, 439 (Utah 1996); see also 1 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 8.13 (2008 ed.) [hereinafter Legal Malpractice ]. ¶ 23 We have established the elements required for a legal malpractice claim based on a breach of fiduciary duty: (1) an attorney-client relationship; (2) breach of the attorney's fiduciary duty to the client; (3) causation, both actual and proximate; and (4) damages suffered by the client. Kilpatrick, 909 P.2d at 1290; see also Restatement (Third) of the Law Governing Lawyers, § 49 (2000). Clearly, the elements required to prove both theories of legal malpractice are substantially the same. [7] ¶ 24 An action for breach of contract, however, is very different from the other two legal malpractice theories discussed above. A legal malpractice claim based on contract deals directly with the attorney's breach of a specified term in a contract between the attorney and the client, within the scope of the attorney-client relationship, that causes the client to suffer damages. In other words, [r]ules of contract, not rules of legal malpractice, govern an action for breach of a promise. Legal Malpractice § 8.6. In Bennett v. Jones, Waldo, Holbrook & McDonough, we recognized that to state a legal malpractice action based on breach of contract, a plaintiff must show (1) a valid and enforceable contract; (2) performance by the plaintiff; (3) breach of the express promise by the defendant; and (4) damages to the plaintiff resulting from the breach. 2003 UT 9, ¶ 32, 70 P.3d 17; see also Legal Malpractice § 8.6.
¶ 25 Although each of the theories discussed above deals with a different type of harm, the same standard of causation applies whether the alleged wrong is a negligent act, a fiduciary breach, or even a contractual breach. Kilpatrick, 909 P.2d at 1291. It is causation that is at issue here. ¶ 26 We have long recognized that the standard for causation in a legal malpractice action requires [t]he client ... [to] show that if the attorney had adhered to the ordinary standards of professional competence and had done the act he failed to do or not done the act complained about, the client would have benefited. Harline v. Barker, 854 P.2d 595, 600 (Utah Ct.App. 1993). In Kilpatrick, the court of appeals required that in order to meet the standard for causation for a breach of fiduciary duty in a legal malpractice action, clients must show that if the attorney had adhered to the ordinary standards of professional conduct ... the client would have benefited. 909 P.2d at 1291 (emphasis omitted). Similarly in a breach of contract action, the non-breaching party is required to show that the breach proximately caused the damages sought. Eleopulos v. McFarland & Hullinger, LLC, 2006 UT App 352, ¶ 13, 145 P.3d 1157. Generally, an award of damages in a breach of contract case attempts to place the aggrieved party in the same economic position the party would have been in if the contract was not breached. Id. ¶ 10 (citing Mahmood v. Ross (In re Estate of Ross), 1999 UT 104, ¶ 19, 990 P.2d 933). This burden of establishing causation remains the same for all three legal malpractice theories. Under each theory, the client is required to show that absent the conduct complained of whether it is a breach of an express promise or fiduciary duty by the attorney or non-adherence to proper professional conduct the client would have benefitted. Thus, in this case, Slusher must show that absent Appellees' conduct, he would have received more than he ultimately received from the Campbell litigation.
¶ 27 Slusher argues that the trial court erred in granting Appellees' summary judgment motion on the issue of legal malpractice because there were material facts still in dispute. We cannot identify any such disputed facts, and Slusher has failed to call any to our attention. ¶ 28 In Kilpatrick, the court of appeals held that where plaintiffs' case presented genuine issues of fact surrounding the element of causation, the trial court improperly granted summary judgment to defendants. 909 P.2d at 1293. In that case, plaintiffs brought an action against defendant law firm for simultaneously representing plaintiffs and several other clients with conflicting interests, despite plaintiffs' objections. Id. at 1286-88. During their representation, plaintiffs were advised by defendant to accept a financing offer from one of defendant's clients whose interests conflicted with plaintiff, rather than a similar offer made by a non-client company. Id. In addition, the defendant simultaneously represented plaintiffs and two other clients in business transactions between plaintiffs and the two clients, including a joint venture. Id. During these simultaneous representations, the defendant prepared promissory notes and other documents containing terms disfavoring plaintiffs. Id. Plaintiffs brought their claim when they realized that under the documents prepared by defendant, plaintiffs were obligated to pay off debts incurred by the joint venture even after its dissolution. Id. at 1289. The court in Kilpatrick held that the trial court erred in weighing evidence presented by the parties, finding that [a]lthough the trial court explicitly recognized disputed facts in its oral ruling, it nonetheless pressed forward, judging the credibility of and weighing the evidence when it should have only concerned itself with whether genuine issues of fact existed. Id. at 1292. ¶ 29 In the case before us, the trial court did not identify nor did it weigh any facts in dispute. Slusher argues that there are material issues of fact as to whether Appellees' breach caused Slusher to miss out on a settlement opportunity, but neglects to point out these issues. The relevant facts as to the causation element are as follows: State Farm mailed the Settlement Letter to Appellees. The Settlement Letter stated that as a condition to the settlement offer of $150,000,000, (a) the Utah Supreme Court must vacate its October Opinion; (b) the Campbells must join State Farm in filing a notice with the Utah Supreme Court, pursuant to Utah Rules of Appellate Procedure 37, stating that the matter had been settled and is now moot; and (c) the Campbells must join State Farm in requesting that the Utah Supreme Court vacate its October Opinion. Humpherys consulted with all the clients regarding the letter on November 16, 2001. Humpherys informed the Clients of the amount and the conditions. The settlement offer was rejected by the Ospitals and the Campbells, but Slusher did not approve an outright rejection of the offer. Slusher was informed about the settlement offer and also about the other clients' rejection of the offer. The entire decision-making process consisted of Humpherys contacting the clients individually via telephone to discuss the settlement; these discussions took only two hours. There was an agreement requiring a unanimous consent to settle in place at the time the offer was made and discussed. State Farm filed a Petition for Rehearing with this court on November 19, 2001, which was denied. Finally, State Farm filed a Petition for Certiorari in the U.S. Supreme Court, which was granted and ultimately resulted in a reduced award of $9,018,780.75. ¶ 30 These facts are not in dispute. Slusher has raised questions as to the unanimity agreement, specifically stating that the `unanimous-consent' agreement [Humpherys] was referring to was purportedly entered into orally by the Clients in September 1995... [and] was formally memorialized ... three weeks after State Farm's Settlement Letter was sent to and rejected by [Humpherys]. It is not clear if Slusher is implying that there was no unanimous-consent agreement in place prior to the memorialization of the oral agreement in December 2001. If that is his contention, there is simply no evidence supporting it. Both the Ospitals and the Campbells in their depositions agreed that there was such an agreement; Slusher never denied that there was such an agreement; the January 2001 letter from Humpherys to the Clients specifically referenced the prior agreement to settle unanimously; the Clients had already unanimously agreed to reject a $10,000,000 settlement; and the Clients and the attorneys signed the December 2001 Agreement, which reiterated the unanimous agreement provision. ¶ 31 Slusher argues that there are disputed facts as to the existence of an attorney-client relationship between him and Humpherys, whether there was a breach of duty by Appellees, and whether Slusher suffered any damages. None of these asserted factual disputes, however, go to causation. In addition, Slusher argues that there are material issues as to whether Appellees' alleged breachincluding Appellees' alleged failure to fully advise the Clients, haste in rejecting the offer, and failure to adequately explore the vacatur conditioncaused Slusher to miss out on a settlement opportunity. Once again, Slusher neglects to point out the factual disputes to which he refers. ¶ 32 Slusher further argues that a jury was required to determine the causation question. We disagree. This argument is based mainly on the court of appeals' statement in Kilpatrick that [c]ausation is a highly fact-sensitive element of any cause of action. 909 P.2d at 1292. We agree that causation is highly fact-sensitive, but trial courts must still apply Utah's Rules of Civil Procedure in ruling on summary judgment motions. Slusher also directs us to the court of appeals' holding in Kilpatrick that because the evidence proffered by plaintiffs showed that they would have likely made different choices which could have benefitted them if the defendant had not breached its duty of loyalty, the evidence created factual issues as to the causation element. Id. at 1292. Slusher argues that according to Kilpatrick, likelihood is all that is necessary to get past summary judgment, and that given State Farm's and his desire to settle, it was very likely that a settlement would have taken place. We interpret Kilpatrick differently. Here, Appellees' and Slusher's actions are not in dispute; the parties agree on what happenedSlusher wanted to settle and the Ospitals and the Campbells refused. Their agreement required unanimity for a settlement, and nothing the Appellees did or failed to do would have affected the outcome. Thus Slusher's bare assertion that settlement was likely is insufficient to get past summary judgment.
¶ 33 There are two ways in which Slusher could have received more money than he did: First, through a unanimous acceptance by the Clients of the offer contained in the Settlement Letter or any subsequent offers; or second, through an individual settlement with State Farm. We agree with the trial court that any damages suffered by Slusher were not as a result of Appellees' actions or omissions.
¶ 34 Prior to the receipt of the Settlement Letter, the Clients had a binding agreement requiring unanimity for the acceptance of any settlement offer. Upon the receipt of the Settlement Letter, Humpherys contacted the Clients and informed them of the offer and conditions contained in the letter. The Ospitals and the Campbells both rejected the offer after Humpherys' explanation, but Slusher argues that their decision was uninformed because the effects of a reversal, the possibility of a reversal, and the vacatur condition were not fully explained and explored by Humpherys. Slusher's argument fails because both the Ospitals and the Campbells in their depositions were adamant that they rejected State Farm's offer because they were more concerned about preserving the October Opinion than they were about the money. Inez in her affidavit stated that, [i]t was as if State Farm was trying to pay us to keep our mouths shut and to hide what we finally uncovered. When asked if she would have accepted the offer if Slusher had spoken with her and explained to her how much the money meant to him, or if Barrett had advised her that there was a fifty-percent chance the U.S. Supreme Court would grant State Farm's Petition for Certiorari, Inez responded that she would not have changed her mind. The Ospitals in their affidavits stated, We did not feel we could accept the condition that the judgment would have to be vacated as part of the settlement. The Ospitals made their decision based on the principle that a vacatur would be unfair. Besides, they already had a judgment for $145 million payable without the requirement of a vacatur. The Ospitals and the Campbells rejected the $150,000,000 settlement offer not because they were a hundred percent sure that they were guaranteed the awards granted by the October Opinion, but because they were opposed to the idea of vacating the October Opinion's substance. ¶ 35 Slusher further argues that in addition to their failure to fully explore the Settlement Letter terms with the Clients, Appellees failed to fully explore the vacatur condition or to negotiate the settlement terms with State Farm. Once again, Slusher's argument does not pass muster. The Settlement Letter was clear on its terms and did not contemplate negotiation, especially regarding the vacatur. [8] Moreover, Appellees had no control over future negotiations with State Farm because, as disclosed by Zimmerman in his deposition, State Farm would not have negotiated any further unless the October Opinion was vacated. There was no possibility of negotiation; State Farm was adamant that the opinion be vacated, and the Campbells, without whom a vacatur request would be impossible, were equally adamant that there would be no vacatur. Therefore, we find that Appellees' conduct was not the reason why the Settlement Letter offer was rejected nor was it the reason why no subsequent negotiations took place.
¶ 36 Slusher argues that Appellees' binding of the Clients to a unanimous consent agreement was improper and deprived the Clients of the opportunity to settle individually. Slusher further contends that but for [Appellees'] breach of [their] duty of loyalty in refusing to follow Slusher's desires ... and [Appellees'] representation of other clients with adverse and conflicting interests ... there is a reasonable probability that Slusher could have settled his interest in the litigation. Also, according to Slusher, Appellees' representation of clients with conflicting and adverse interests is a violation of the Utah Rules of Professional Conduct, and is the actual and proximate cause of Slusher's lost settlement opportunity. ¶ 37 A violation of the Rules of Professional Conduct does not itself give rise to causes of action against a lawyer because the rules were not created as a basis for civil liability. Utah Rules of Prof'l Conduct, Scope. The existence of a conflict of interest only shows that Appellees breached an applicable standard of conduct, and does not speak to whether such breach proximately caused damages, and therefore Appellees' alleged representation of clients with conflicting interests is of no moment. The issue of whether appellants were representing clients with adverse and conflicting interests is irrelevant to our decision in this case, and thus we decline to speak to it. ¶ 38 Contrary to his position here, Slusher could not have settled individually with State Farm because the condition for any settlement was a vacatur of the October Opinion. As noted in the previous section, the only clients able to join in requesting a vacatur, the Campbells, were strongly against a vacatur. We note that Slusher was given the option to settle individually with State Farm and to assign his rights to a litigation financing company on at least one occasion prior to the receipt of the Settlement Letter. Humpherys informed the Clients that they had the option of settling with State Farm or selling their rights in the litigation to a litigation financing company in the January Letter. Humpherys also requested that the Clients inform him of their settlement desires in both the January and December Letters. Despite being given these choices, Slusher did not opt to either attempt to settle individually with State Farm or through a litigation financing company, and if he ever desired to settle individually, he neglected to inform Appellees of such desires. Furthermore, the question of what a litigation financing company would have paid for Slusher's interests is one of speculation, and causation cannot be shown through conjecture or speculation. Dunn v. McKay, Burton, McMurray & Thurman, 584 P.2d 894, 896 (Utah 1978). ¶ 39 The parties touched upon the issue of whether this court would have vacated the October Opinion in their briefs, but we need not address that question because we reject Slusher's arguments on causation. We conclude that absent Appellees' actions, Slusher would not have benefitted and thus affirm the trial court's summary judgment ruling.