Court Opinion

ID: 9573986
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:01:11.107249+00
Date Added: 2024-06-11T12:43:52.082669
License: Public Domain

GRANT, Judge,
concurring in part; dissenting in part.
I concur in Judge Greer’s analysis and holding as to the breach of contract count of the complaint and as to attorney’s fees.
As to negligence (legal malpractice) I dissent from Judge Greer’s analysis and holding.
Judge Greer agrees that a plaintiff may maintain an action in negligence by showing that the defendant owed plaintiff a duty, that the duty was breached, and that the breach proximately caused an injury, which resulted in actual damages. Donnelly Const. Co. v. Oberg/Hunt/Gilleland, 139 Ariz. 184, 187, 677 P.2d 1292, 1295 (1984). Once an attorney-client relationship is established, the elements for legal malpractice are the same as for negligence —duty, breach, injury and damages. Bowman v. TWO, 104 Wash.2d 181, 704 P.2d 140 (1985).
A duty is a “relation between individuals which imposes upon one the legal obligation for the benefit of the other____” Coburn v. City of Tucson, 143 Ariz. 50, 52, 691 P.2d 1078, 1080 (1984), quoting W. Keeton, Prosser & Keeton on The Law of Torts, § 53 at 356 (5th ed. 1984). See also Western Technologies, Inc. v. Sverdrup & Parcel, Inc., 154 Ariz. 1, 739 P.2d 1318 (App.1986). Franko does not claim that Mitchell would have owed her a duty of care had she not gone to his office and met with him. We agree. Absent that meeting, Mitchell knew only that his client was borrowing money to be secured in a certain way from another party. The law generally imposes no duty to protect an adversary in an arm’s length transaction. Probert and Hendricks, Lawyer Malpractice: Duty Relationships Beyond Contract, 55 Notre Dame Lawyer 708, 718 (1980). See R. Mallen and V. Levit, Legal Malpractice §§ 80, 81 (2d Ed.1981); Page v. Frazier, 388 Mass. 55, 445 N.E.2d 148 (1983); Clagett v. Dacy, 47 Md.App. 23, 420 A.2d 1285 (1980). See also Byrd v. Rothman, 128 Ariz. 599, 602, 627 P.2d 1097, 1099 (App.1981).
Our inquiry, therefore, must necessarily focus on the interaction between Franko and Mitchell during that meeting. Was that meeting sufficient to create a duty owed to Franko by Mitchell? In answering the question we must consider the facts in the light most favorable to appellant Fran*405ko. State ex rel. Corbin v. Challenge, Inc., 151 Ariz. 20, 725 P.2d 727 (App.1986).
Mitchell argues that an attorney-client relationship is always consensual and, because he did not agree to represent Franko, no relationship existed. Arguing that the standard should not be objective but rather subjective, Franko contends that a duty may arise when an unrepresented party reasonably believes that an attorney-client relationship has been formed. Compare Connelly v. Wolf, Block, Schorr & Solis-Cohen, 463 F.Supp. 914 (E.D.Pa.1978) with DeVaux v. American Home Assurance Co., 387 Mass. 814, 444 N.E.2d 355 (1983). Our supreme court followed the latter rule in Alexander v. Superior Court, 141 Ariz. 157, 162, 685 P.2d 1309, 1314 (1984). In deciding whether a communication should be considered privileged, the court found persuasive the party’s reasonable belief that the relationship existed. Id.; see also Hughes v. Paine, Webber, Jackson & Curtis, Inc., 565 F.Supp. 663 (N.D.Ill.E.D.1983); In re McGlothlen, 99 Wash.2d 515, 663 P.2d 1330 (1983); Westinghouse Elec. Corp. v. Kerr-McGee Corp., 580 F.2d 1311 (11th Cir.1978), cert. denied, 439 U.S. 955, 99 S.Ct. 353, 58 L.Ed.2d 346 (1978). The party does not have to pay a fee or sign a written contract for this belief to be reasonable. See Westinghouse, 580 F.2d at 1319.
Although a duty may be found pursuant to a contract, privity of contract is not a necessary element of a duty in a tort claim. Donnelly, 139 Ariz. at 187, 677 P.2d at 1295. This is acknowledged in Judge Greer’s opinion.
We are in agreement with Franko that our decision in Chalpin v. Brennan, 114 Ariz. 124, 559 P.2d 680 (App.1976) does not preclude Franko’s claim for negligence.
In view of Chalpin's demise, and the Donnelly court’s statement that questions of duty in malpractice cases brought by non-clients must be determined on a case-by-case basis, Judge Greer deemed it appropriate to follow the Fickett balancing test in resolving the question of duty presented to us here. 27 Ariz.App. at 795, 588 P.2d at 990; quoted supra at 399, 762 P.2d at 1353. However, we must do so by looking at the facts in the light most favorable to Franko. First, Mitchell’s preparation of a promissory note to evidence a $30,000 loan from Franko to Markoff was obviously intended to affect Franko to a great extent. It was Franko who provided the funds, and it was for Franko that the promissory note ostensibly created and defined Markoff’s repayment obligations. Second, since Franko’s legal rights and remedies for enforcing repayment of Markoff’s debt depended on the provisions of the note Mitchell was to draft, harm to Franko was clearly foreseeable in the event Markoff was unable or unwilling to repay Franko’s loan. Third, it is undisputed that Markoff failed to repay the loan and that the note was uncollectible, and thus there is a high degree of certainty that Franko suffered injury. Fourth, for the same reasons, Mitchell’s conduct toward Franko was closely connected to the injury Franko ultimately suffered. Fifth, Mitchell’s conduct toward Franko was morally blameworthy. Even though Mitchell himself admitted in the trial court that “[i]t does appear that there may have been a reasonable basis for Ms. Franko to have ‘assumed’ she was being represented by Mr. Mitchell,” Mitchell never bothered to inform Franko that he was not acting as her lawyer or looking out for her interests, nor did he advise her that she should consult her own independent counsel. Mitchell’s conduct may have violated former DR 7-104(A)(2),5 DR 5-105(A) and (B),6 Rule *40629(a), Rules of the Supreme Court, in effect at the time Franko consulted Mitchell.
Finally, imposing a duty of care on Mitchell would promote the policy of preventing future harm by attaching potential civil liability to the moral and ethical breach that occurred here. In our opinion the Fickett analysis requires the conclusion that Mitchell owed a duty to exercise reasonable care to protect Franko’s interests under the circumstances of this case. The trial court accordingly erred in granting summary judgment for Mitchell on Franko’s claim for professional negligence.
Mitchell could have discharged his duty of care without impairing his own client’s legitimate interests merely by making it clear to Franko that he was not representing her and that she should consult her own attorney concerning whether the promissory note he had drafted included legally acceptable protection of her interests.
As previously stated duty may be found pursuant to a contract, but privity of contract is not a necessary element of a duty in a tort claim. Donnelly, 139 Ariz. at 187, 677 P.2d at 1295. This is logical because:
[ i]f a lawyer could avoid liability in such a situation by claiming that there was no contract between the plaintiff and himself, the policies underlying attorney malpractice actions would be frustrated. There would be no incentive for lawyers who have not been formally retained to refrain from negligently giving legal advice, and parties harmed by such negligent advice would be uncompensated.
Note, Attorney Malpractice: Use of Contract Analysis to Determine the Existence of an Attorney-Client Relationship, 63 Minn.L.Rev. 751, 757 (1979).
Stated another way, the attorney must reasonably anticipate that harm or injury is likely to result from his or her conduct. W. Keeton, Prosser & Keeton on the Law of Torts § 53 (5th ed. 1984); see also Note, 63 Minn.L.Rev. at 759 n. 52.; Byrd v. Roth-man; Lewis v. Swenson, 126 Ariz. 561, 617 P.2d 69 (App.1980); Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686 (Minn.1980); Bradford Sec. Processing Serv., Inc. v. Plaza Bank and Trust, 653 P.2d 188 (Okla.1982). An attorney will incur a duty when he or she “knowingly or negligently lead[s] a non-client to believe he is dealing fairly and carefully with him and his interests.” Probert & Hendricks, 55 Notre Dame Lawyer, 726-27. By doing so he or she may make “the situation worse, either by increasing the danger or by lulling the plaintiff into false security, or by depriving him of the possibility of help from someone else, or inducing him to forego it.” W. Prosser, The Borderland of Tort and Contract in Selected Topics on the Law of Torts, 380, 418 (1953). See also R. Mallen and V. Levit, Legal Malpractice § 77 at 149-50; Ishmael v. Millington, 241 Cal.App.2d 520, 50 Cal.Rptr. 592 (1966). In sum, a court should look at the nature of the work involved and the circumstances of the interaction.
All the evidence indicates that Franko believed that Mitchell was looking out for her interests. We must ask whether that belief was reasonable and whether Mitchell should have anticipated the harm. Sufficient facts were alleged by Franko to answer in the affirmative. First, the meeting took place at Mitchell’s office with no other attorneys present. Obviously, specific advice given to an unrepresented party in a formal office setting carries more weight than general advice given at a cocktail party. Second, Franko asked for and Mitchell gave what appeared to be “legal advice.” Tormo v. Yormark, 398 F.Supp. 1159 (D.N.J.1975). Legal advice is often defined as giving an opinion as to the law applicable to the subject matter. Togstad v. Vesely, 291 N.W.2d at 692-93. See also Vonck v. Harris, 531 F.Supp. 672, 674 n. 3 (1982) and authority cited therein.
When an attorney explains to the other party that he or she is not representing their interest, the preparation and mere presentation of a note for execution does *407not, without more, constitute advice or otherwise create an attorney-client relationship. Dolan v. Hickey, 385 Mass. 234, 236, 431 N.E.2d 229, 230 (1982). See also Williams v. Burns, 540 F.Supp. 1243 (D.Colo.1982). In this case not only was there no disclaimer about representation but there was also much more that the preparation and presentation of the note. Franko asked whether the note was “legal” and how she could enforce its terms. Although the questions were vague, they were clearly requests of Mitchell for his legal opinion on the validity and enforceability of the note. Finally, Mitchell addressed Franko as if she were a client. He gave the impression that he was equally concerned that the note reflect her intentions as well as Markoff's. He asked her, as well as Markoff, whether the note contained everything it should. These factors, taken together, support as reasonable, Franko’s belief that Mitchell was representing her interests and should have alerted Mitchell to the possibility of harm to Franko because of it. Indeed, Mitchell admitted in the trial court that “[i]t does appear that there may have been a reasonable basis for Ms. Franko to have ‘assumed’ she was being represented by Mr. Mitchell.”
Mitchell is not entirely wrong in asserting that an attorney must consent to an attorney-client relationship before it can arise. An attorney can always refuse to take oh all the duties incident to the relationship. However, that refusal must be unequivocal. In re Weiner, 120 Ariz. 349, 586 P.2d 194 (1978); Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686 (Minn.1980); Rice v. Forestier, 415 S.W.2d 711 (Ct.Civ.App.Tex.1967); R. Mallen & V. Levitt, Legal Malpractice, § 72. This is critical in the case of an unrepresented person. See DR 7-104(A)(2), Rules of the Supreme Court, in effect at the time Franko consulted with Mitchell. Therefore I would reverse and remand for further proceedings on this count.

. DR 7-104(A)(2) provided:
(A) During the course of his representation of a client a lawyer shall not:
(2) Give advice to a person who is not represented by a lawyer, other than the advice to secure counsel, if the interests of such person are or have a reasonable possibility of being in conflict with the interests of his client.

. DR 5-105(A) and (B) provided:
(A) A lawyer shall decline preferred employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of proffered employment, or if it would be likely to involve him in representing differing interests except to the extent permitted under DR 5-105(C).
*406(B) A lawyer shall not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, or if it would be likely to involve him in representing differing interests, except to the extent permitted under DR 5 — 105(C).