Court Opinion

ID: 6330446
Source: CourtListenerOpinion
Date Created: 2022-04-13 00:16:33.103069+00
Date Added: 2024-06-11T09:23:00.811718
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 JAMES ANGELO,                              No. 82388-4-I

                      Appellant,            DIVISION ONE

               v.
                                            UNPUBLISHED OPINION
 JERRY KINDINGER and RYAN
 SWANSON & CLEVELAND,

                      Respondent.

      COBURN, J. — James Angelo appeals the trial court’s order granting

summary judgment to Jerry Kindinger and Ryan Swanson & Cleveland (RSC) in

Angelo’s malpractice action and the award of attorney fees to RSC. Because we

conclude there are genuine issues of material fact, we reverse the trial court’s

decisions to grant summary judgment, vacate the judgment entered on

February 12, 2021, and remand for further proceedings.

                                      FACTS

      James Angelo served as the CEO of Touch Seattle, an event productions

subsidiary of British company Touch Worldwide, from 2006 to 2012. When

Angelo resigned from Touch, he agreed to provide the company with consulting

services related to Microsoft’s Worldwide Partner Conference (“WPC”) in 2013.

Angelo also agreed to settle a dispute with Touch regarding his stock redemption

by securing the renewal of Touch’s contract with Microsoft for WPC 2014 in

exchange for Touch redeeming his stocks. During the 2013 drafting of the
No. 82388-4-I

consulting and stock redemption contracts, Angelo sought legal advice and

representation from attorney Jerry Kindinger of the RSC law firm. In addition to

serving as his attorney, Kindinger was Angelo’s neighbor and friend.

       In February 2014, Touch lost the Microsoft WPC 2014 contract Angelo

had secured for the company. Touch Worldwide CEO Richard Bamford then

refused to pay Angelo’s stock redemption, arguing that the stock redemption

contract required Touch to successfully complete their Microsoft contract through

the end of WPC 2014. In October 2014, Kindinger initiated a demand for

arbitration against Touch on behalf of Angelo.

       According to Kindinger, the arbitration to settle the contract dispute should

have been a “relatively simple, straightforward” matter, resolving a contract

ambiguity of whether Angelo was entitled to the benefit of the redemption

agreement. Kindinger told Angelo the arbitration would last about six months

and cost $75,000 to $150,000.

       During the course of arbitration, Kindinger sought the production of

financial records from Touch. Touch objected on the basis that the documents

were proprietary and Angelo could use them to compete against the company.

On April 21, 2015, Kindinger wrote a letter on behalf of Angelo to the arbitrator

stating that Touch was refusing to produce requested documents and assuring

the arbitrator that Angelo was not a Touch competitor:
       [A]ttorneys for Touch incorrectly asserted that they declined to
       produce these documents because Mr. Angelo was a competitor.
       No support whatsoever was provided for this wholly inaccurate
       statement. Mr. Angelo is not in competition with Touch at all. In

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        fact, he has referred business to Touch since he left the company
        because he does not engage in the Touch related business area.

Angelo was copied on the letter. Touch produced the requested documents after

the entry of a stipulated protective order which prevented the use of the materials

outside of the arbitration.

        The arbitration hearings were held in August and September 2015.

Shortly before the hearings began, Kindinger learned from a potential arbitration

witness that WPC 2016 was going out to bid. Kindinger shared this information

with Angelo.

        Angelo and his wife maintain that Kindinger encouraged Angelo to pursue

the WPC 2016 contract. Angelo also states that Kindinger assured him there

would not be an issue in applying for the bid. Angelo insists that he would not

have bid without Kindinger’s support or if he had been aware of the potential to

compromise the pending arbitration. Kindinger concedes for purposes of

summary judgment that he did encourage Angelo to compete for the WPC 2016

bid.1

        Kindinger asserts that four days into the arbitration, Angelo told him he

decided to bid. Kindinger acknowledged that he believed doing so would be a

“colossal misjudgment” and would potentially risk an unfavorable outcome at

arbitration. Kindinger explained in his deposition, “Given the arbitrator’s history

and the very aggressive approach of the Touch attorneys and Touch, I thought

        1Other than the concession for the purposes of summary judgment,
Kindinger maintains that he did not have a conversation with Angelo about
Angelo’s consideration of whether or not to bid between Kindinger notifying him
of the opening and Angelo’s decision to pursue it.

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there was a distinct possibility it could sidetrack or get this arbitration off the

tracks.” Kindinger did not share these thoughts with Angelo.2

       Kindinger decided not to disclose Angelo’s bid to the arbitrator, concluding

that disclosure to the arbitrator “could put [Angelo’s] arbitration interest at severe

risk” and no rule required him to make such a disclosure.

       Angelo was awarded the WPC 2016 bid in mid-October. Angelo did not

know that Touch was also competing for the WPC 2016 bid until after he

submitted his proposal. Angelo did not believe his bid “had any bearing on what

the arbitration was about,” and did not know he was required to disclose it.

Angelo had previously signed a non-compete agreement with Touch, but that

restriction had expired in August 2013. The parties do not dispute that Angelo

was legally entitled to compete with Touch at the time of the arbitration. Angelo

maintains that he did not use any of the Touch materials obtained as part of the

stipulated protective order but did rely on other Touch documents he retained

from his time as CEO that he believed he was permitted to use.

       On November 5, Angelo sent Kindinger an email asking if he could send

the arbitrator the information related to his obtaining the WPC 2016 bid.

Kindinger responded, “Suggestion: Not a good idea to communicate your news

to [the arbitrator], but I am proud of you anyway. Kudos.” Kindinger decided not

to disclose to the arbitrator that Angelo won the bid, concluding that neither he

nor Angelo had an obligation to do so.

       2
       Angelo also disputes that Kindinger told Angelo that his decision to bid
would cost him a lot of money and that he did not want anything to do with it.

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No. 82388-4-I

       On November 10, Angelo prevailed in the arbitration and was awarded the

amount owed to him under the redemption agreement along with his attorney

fees and costs (the “Merits Order”). The final award due to Angelo was

$982,316.71.

       In mid-December, Touch discovered that Angelo won the bid for WPC

2016. On December 21, Touch notified the arbitrator about Angelo’s bid and

asked for a reconsideration of the Merits Order. Touch accused Angelo of failing

to disclose his competitive activities and requested discovery sanctions based on

Kindinger’s April 21 letter representing that Angelo was not competing with

Touch. The arbitrator reopened the arbitration proceedings on December 22,

and Angelo’s merits award was frozen.

       The sanctions hearings occurred in April 2016. Kindinger continued to

represent Angelo during the sanctions hearing. During the course of the

proceedings, Angelo engaged in several acts of misconduct. First, when Angelo

was unable to produce a journal for submission as evidence, he manufactured a

new journal, falsely represented it to be the original, and perjured himself during

subsequent questioning about the evidence under oath. Kindinger did not know

Angelo had falsified evidence or provided false testimony and promptly told the

arbitrator once Angelo confessed to him what he had done.

       Second, the arbitrator found that Angelo attempted to induce members of

his WPC 2016 team to “conform their recollections to his,” pertaining to the use

of past Touch budgets.3 Next, the arbitrator found that Angelo attempted to

       3   Angelo’s April 2016 email to his business partner stated:

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No. 82388-4-I

conceal violations of the stipulated protective order.4 Last, the arbitrator found

that Angelo failed to produce documents in connection with Touch’s sanctions

motion, including at least one document that was required by a subpoena.5

       On July 26, 2016, the arbitrator issued the sanctions order. The arbitrator

granted Touch’s motions for sanctions based, in part, on “determinations

hereinabove set forth,” which included summaries of Angelo’s misconduct

including determination number 12. That determination stated:
       In his sworn testimony, as the first witness in his case-in-chief as
       part of the Merits Hearing, Mr. Angelo testified about his intention to
       leave the field of event production to pursue other non-event-
       production interests which, after an initial dispute with Richard
       Bamford, eventually led to the Redemption Agreement and other
       successor contracts in evidence in this arbitration. . . .
       Mr. Kindinger[] made assuring express and implied representations
       on Mr. Angelo’s behalf to the Arbitrator by letter dated April 21,
       2015—on which Mr. Angelo was “cc’d” and on which
       representations the Arbitrator reasonably relied, in overruling
       Respondents strong objections and opposition, that Mr. Angelo was
       not a competitor of Respondent and that there was no risk to
       Respondents would become one—so that all requested documents
       and Respondents’ “keys to the kingdom” sensitive data in them
       (including WPC-related budgets, hours, profitability, etc.) requested
       by Mr. Angelo as necessary to discover and prove for his breach-

       I will be saying that though I sent you some old budgets as
       background info, you and Shonda created our [WPC 2016] budget
       from scratch without the help of any other budgets.
       If they try to dispute that . . . we might need you to come [to the
       sanctions hearing] on Tuesday.
       Will that work for you?
       4 It was discovered during later sanctions proceedings that Angelo did not

use any documents he received during the arbitration to compete against Touch,
but he did use documents he had retained during his time as CEO in violation of
his Touch employment agreement.
       5 The document was an email Angelo sent to his colleague stating, “I

shouldn’t have this but I do…it’s the [statement of work] from ZED Ink WPC
2014.”

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       of-implied-covenant claim should be produced to him—it was Mr.
       Angelo’s continuing duty to immediately inform the Arbitrator and
       Respondents of his change of mind and intention. . . . Instead, Mr.
       Angelo kept silent and—except as to trusted Microsoft executives
       and select others he recruited for WPC2016 Team Angelo—Mr.
       Angelo secretly [sic] his changed intention and used information
       subject to the Protective Order to materially assist his qualification
       (e.g., timely submitting a budget within a set budgetary “cap”) and
       ultimate success in the WPC 2016 “RFP” process.
              Mr. Angelo’s Merits Hearing testimony and Mr. Kindinger[]’s
       representations in his April 21, 2015 letter to the Arbitrator were
       continuing representations which became continuing
       misrepresentations—because they were not corrected and
       concealed actions were taken under the cover of those uncorrected
       representations, on which the Arbitrator reasonably relied until
       Respondents’ papers of December 22, 2015 brought Mr. Angelo’s
       misconduct to first light.

The arbitrator largely left in place the Merits Order, but to address Angelo’s

“highly serious wrongful conduct” ordered him to: (1) disgorge a percentage of

his business profits related to WPC for a period of five years; (2) pay Touch’s

legal fees and costs incurred from the production of documents as part of the

stipulated protective order, discovery of Angelo being named the producer of

WPC 2016, and the subsequent motion for sanctions; and (3) forfeit his attorney

fees and costs related to the Merits Order except those “solely applicable to

[Angelo’s] sustained contract-interpretation claim.” The arbitrator continued the

freeze on Angelo’s award from the Merits Order. Additional hearings would be

required to address the fees owed to Touch.

       A few weeks later, in August 2016, Kindinger referred Angelo to a

bankruptcy attorney.6 Around the same time, Angelo disclosed to one of

       6Angelo did file for bankruptcy in December 2016. Touch contested
Angelo’s bankruptcy filings, arguing that Angelo did not qualify for Chapter 13

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No. 82388-4-I

Kindinger’s RSC colleagues that Kindinger had been the one to say Angelo could

bid for WPC and inquired whether Kindinger or the firm was responsible for the

outcome of the sanctions hearing. After Angelo’s inquiry, RSC resigned from

Angelo’s representation in the arbitration, citing a conflict of interest. In October

2016, Angelo retained new counsel.

       The sanctions proceedings continued. Five years after Kindinger filed

Angelo’s demand for arbitration in October 2014, the arbitration concluded with a

settlement agreement between Angelo and Touch in October 2019.7

       In July 2019, Angelo filed a complaint against Kindinger and RSC alleging

negligence. Angelo made several claims in the complaint and subsequent filings,

some of which are not at issue in this appeal. Angelo claimed that Kindinger

advised Angelo that he could apply for WPC 2016 and failed to inform him of the

potential consequences of doing so, failed to notify the arbitrator that he decided

to compete against Touch, and failed to advise Angelo to retain new legal

counsel once a conflict of interest emerged during the sanctions hearing.

       Angelo included with his complaint a declaration from legal malpractice

expert attorney Robert Gould about Kindinger’s deviations from the standards of

care. Relevant to this appeal, Gould concluded that Kindinger and RSC failed to

meet the standard of care when (a) Kindinger advised Angelo that he could

bankruptcy and his filing was made in bad faith. The case was dismissed in June
2017. The dismissal was later affirmed by the U.S. District Court.
       7 According to the agreement, in May 2019, the Arbitrator entered the

Merits award for Angelo in the amount of $511,265, a sanctions award for Touch
valued at $1,011,656 and the potential for an additional sanctions award which
Touch claimed could reach $500,000. In the agreement, Angelo surrendered a
Utah condominium and $100,000, in addition to other non-tangible assurances.

                                          8
No. 82388-4-I

compete for WPC 2016 without informing him of “arbitration-related limitations”;

(b) Kindinger failed to notify the arbitrator that the April 2015 representation was

no longer accurate and did not tell Angelo of the need to notify the Arbitrator; and

(c) Kindinger failed to advise Angelo to obtain new counsel or provide Angelo

with relevant defenses to the sanctions hearing when Kindinger had an “interest

in minimizing his own potential sanctions liability, and that interest conflicted with

minimizing Mr. Angelo’s potential liability.”

       Kindinger and RSC answered the complaint, denying that Angelo had any

causes of action against them and claiming that any damages incurred to Angelo

were the result of his own misconduct. In addition, Kindinger and RSC raised a

counterclaim, stating that Angelo owed the firm $70,671.56 in legal fees. Soon

thereafter, Kindinger and RSC filed a motion for summary judgment, arguing that

Angelo failed to show proximate cause on any of his allegations, emphasizing

that Angelo could not show that “but for” Kindinger’s alleged malpractice Angelo

would have had a better result in the arbitration. They also claimed they were

entitled to summary judgment on RSC’s counterclaim for unpaid attorney fees

and costs.

       At the summary judgment hearing, Kindinger and RSC emphasized

Angelo’s misconduct during the sanctions hearings, telling the court that Angelo

failed to demonstrate proximate cause for his allegations because “[t]he

sanctions order ultimately . . . was based on Angelo’s illegal use of Touch’s

documents, and Angelo’s attempted cover up.” The court agreed, finding that the

only potential breach would have been Kindinger not informing the arbitrator that

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No. 82388-4-I

Angelo’s circumstances had changed, but that Angelo could not show proximate

cause because the sanctions were imposed “due to Mr. Angelo’s willful,

outrageous, egregious, misconduct . . . . That’s not on his lawyer. That’s on

Mr. Angelo.” The trial court found in favor of Kindinger and RSC on all claims,

including RSC’s counterclaim. The trial court ruled that the final judgment due to

RSC was $70,671.56 plus pre-judgment interest of $35,906.07 and fees and

costs of $440, for a total award of $107,017.63.

       Angelo appeals.
                                    DISCUSSION

       We review summary judgment rulings de novo, considering the same

evidence as the trial court and viewing all evidence in the light most favorable to

the non-moving party. Slack v. Luke, 192 Wn. App. 909, 915, 370 P.3d 49

(2016). Under CR 56(c), summary judgment is proper where there are no

genuine issues of material fact and the moving party is entitled to judgment as a

matter of law. Lavigne v. Chase, Haskell, Hayes & Kalamon, PS, 112 Wn. App.

677, 682, 50 P.3d 306 (2002). “Only when reasonable minds could reach but

one conclusion on the evidence should the court grant summary judgment.”

Versuslaw, Inc. v. Stoel Rives, LLP, 127 Wn. App. 309, 319, 111 P.3d 866

(2005).

       Legal malpractice claims, similar to other torts, require a plaintiff to

demonstrate four elements: “(1) The existence of an attorney-client relationship

which gives rise to a duty of care on the part of the attorney to the client; (2) an

act or omission by the attorney in breach of the duty of care; (3) damage to the

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No. 82388-4-I

client; and (4) proximate causation between the attorney’s breach of the duty and

the damage incurred.” Hizey v. Carpenter, 119 Wn.2d 251, 260–61, 830 P.2d

646 (1992).

       In order to comply with an attorney’s duty of care owed to a client, they

“must exercise the degree of care, skill, diligence, and knowledge commonly

possessed and exercised by a reasonable, careful, and prudent lawyer in the

practice of law in this jurisdiction.” Id. at 261.

       To establish legal malpractice, a plaintiff must demonstrate that an

attorney’s negligence was the proximate cause of the injury. Smith v. Preston

Gates Ellis, LLP, 135 Wn. App. 859, 864, 147 P.3d 600 (2006). Proximate cause

includes both cause in fact and legal causation. Lavigne, 112 Wn. App. at 682.

In the legal malpractice context, a plaintiff must show that “but for” the attorney’s

negligence the plaintiff would have obtained a more favorable outcome. Smith,

135 Wn. App. at 864. Legal causation relies on “‘policy considerations

determining how far the consequences of a defendant’s act should extend.’”

Lavigne, 112 Wn. App. at 683 (quoting City of Seattle v. Blume, 134 Wn.2d 243,

252, 947 P.2d 223 (1997)). Though a court determines proximate cause if the

question involves a “pure matter of law,” Lavigne, 112 Wn. App. at 683,

proximate cause is “usually the province of the jury.” Smith, 135 Wn. App. at

864.
                  Encouraging Angelo’s Bid without Advising Him
                            of the Potential Consequences
A. Duty and Breach

       At issue is whether Kindinger had a duty to advise Angelo of the potential

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No. 82388-4-I

consequences of bidding on WPC 2016.

       It is undisputed that Angelo could lawfully compete with Touch at the time

of the arbitration. Kindinger argues that he had no duty to dissuade Angelo from

doing something he had a lawful right to do. Angelo contends that the basis for

Kindinger’s liability is not whether it was legal for Angelo to compete, but rather,

whether Kindinger violated the standard of care by proffering such advice.

       Malpractice liability is premised on the conduct of the “reasonable” lawyer.

Hizey, 119 Wn.2d at 262. The question is not whether Kindinger’s advice related

to a lawful act, but whether Kindinger “exercise[d] the degree of care, skill,

diligence, and knowledge commonly possessed and exercised by a reasonable,

careful, and prudent lawyer” when he encouraged Angelo to compete for the

WPC bid without advising of the potential consequences. Id. at 261.

       A “mere error[]” in an attorney’s judgment cannot sustain a malpractice

claim. Halvorsen v. Ferguson, 46 Wn. App. 708, 717, 735 P.2d 675 (1986).

Washington has adopted the “attorney judgment rule” to determine when an error

in an attorney’s judgment breaches their duty of care to a client. Clark County

Fire Dist. No. 5 v. Bullivant Houser Bailey P.C., 180 Wn. App. 689, 704, 324 P.3d

743 (2014). This rule provides:
       [A]n attorney cannot be liable for making an allegedly erroneous
       decision involving honest, good faith judgment if (1) that decision
       was within the range of reasonable alternatives from the
       perspective of a reasonable, careful and prudent attorney in
       Washington; and (2) in making that judgment decision the attorney
       exercised reasonable care.

Id. A plaintiff can defeat summary judgment on breach of duty for an error in

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No. 82388-4-I

judgment by showing that the attorney’s exercise of judgment was not within the

range of reasonable choices from the perspective of a reasonable, careful and

prudent attorney in Washington. Id. “If there is a genuine issue as to whether

the attorney’s decision was within the range of reasonable choices, the jury must

be allowed to decide the issue.” Id. at 706.

       Angelo does not contend that, in isolation, Kindinger advising Angelo to

bid was negligent. As Angelo’s malpractice expert Gould explained, Kindinger is

alleged to have failed to meet the minimum standard of care by advising Angelo

“that he could compete with Touch without informing him of any arbitration-

related limitations on him doing so despite Mr. Kindinger previously representing

to the Arbitrator that Mr. Angelo did not compete with Touch in order to procure

certain documents in discovery.” (Emphasis added.) In other words, it is not the

isolated fact of Kindinger encouraging Angelo to bid, it is doing so without

advising of potential consequences under the circumstances of arbitration with

Touch and the previous representation that Angelo was not competing with

Touch. The question is whether Kindinger exercised reasonable care when he

encouraged Angelo to bid without advising him that doing so was a “colossal

misjudgment” that could risk the outcome from the arbitration.

       Kindinger admitted that he was aware that Angelo bidding on WPC 2016

would create a “distinct possibility” to “sidetrack or get this arbitration off the

tracks” and risk a favorable outcome of the arbitration. Kindinger said his fear

was based on his knowledge of the arbitrator’s history and the “very aggressive”

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No. 82388-4-I

approach of Touch and their attorneys. Kindinger provides no tactical decision

as to why he would not advise Angelo to these potential negative consequences.

      Furthermore, Angelo presented expert testimony that Kindinger’s conduct

did not meet “the minimum standard of care of a reasonable State of Washington

commercial litigation practitioner in the same or similar circumstances.”

      Angelo met his burden to defeat summary judgment by showing that a

genuine issue of fact existed as to whether Kindinger acted as a reasonable

attorney when he encouraged Angelo to bid on WPC 2016 but failed to inform

him of the potential consequences of doing so under these circumstances.

B. Proximate cause

      Kindinger contends that even if Angelo establishes Kindinger breached a

duty related to his advice on the bid for WPC 2016, Angelo has failed to establish

proximate cause.

      The “but for” test of proximate cause requires “‘an immediate connection

between an act and injury.’” Versuslaw, Inc., 127 Wn. App. at 328 (quoting

Blume, 134 Wn.2d at 251-52). A party must establish that a defendant’s “act or

omission” “probably caused the subsequent injury.” Id.

      Angelo claims that he only bid on WPC 2016 because Kindinger had

endorsed the decision to do so, both in his encouragement and his failure to alert

Angelo to the negative outcomes. For the purposes of summary judgment, we

must assume this is true. To establish cause in fact, Angelo needed only to

show that “but for” Kindinger’s encouragement and failure to warn him of the

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No. 82388-4-I

consequences, Angelo would have received a better outcome in the arbitration

with Touch.

          In this case, Angelo’s “injury” was the sanctions order. He was therefore

required to demonstrate some evidence that Kindinger’s encouragement to bid

without advising of the potential consequences probably caused the sanctions.

We note that the arbitrator did not apportion the sanctions imposed to the various

issues of misconduct during the arbitration. The record establishes that

sanctions were imposed based on both Angelo’s undisputed misconduct as well

as the failure to inform the arbitrator that Angelo changed his mind and decided

to compete with Touch.

          Regardless of Angelo’s own misconduct during the sanctions proceedings,

Angelo has met his burden to defeat summary judgment, showing that there

remains a genuine issue of material fact as to whether or not Kindinger’s failure

to advise Angelo of the possible negative consequences of bidding on WPC

2016 during the arbitration directly resulted, in at least some of, the sanctions

imposed against Angelo.

          Should this case proceed to trial, Kindinger will no doubt argue, as he did

below, that the sanctions were caused by Angelo’s misconduct and any of

Kindinger’s actions or inactions were too remote to satisfy legal causation.

Because the question of proximate cause in this case does not involve a pure

matter of law, it is best left to the province of a jury. A jury can decide whether

Angelo proves proximate cause, and if so, what damages Angelo incurred as a

result.

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       The trial court erred in granting summary judgment as to this claim

because there are material issues of fact regarding duty and proximate cause.

                      Not Disclosing Angelo’s WPC 2016 bid
A. Duty and Breach

       Angelo contends that Kindinger was negligent by not disclosing to the

arbitrator Angelo’s changed circumstances regarding competing with Touch.

       Kindinger counters that the April 2015 letter was accurate at the time

written and Kindinger “made no representations as to what might happen in the

future.” Thus, he argues, he had no duty to disclose that Angelo changed his

mind and did what he had a legal right to do: bid on WPC 2016. Kindinger

mischaracterizes the evidence.

       The arbitrator specifically noted that Angelo “testified about his intention to

leave the field of event production to pursue other non-event-production interests

which, after an initial dispute with Richard Bamford, eventually led to the

Redemption Agreement and other successor contracts.” Kindinger’s letter to the

arbitrator stated:
       [A]ttorneys for Touch incorrectly asserted that they declined to
       produce these documents because Mr. Angelo was a competitor.
       No support whatsoever was provided for this wholly inaccurate
       statement. Mr. Angelo is not in competition with Touch at all. In
       fact, he has referred business to Touch since he left the company
       because he does not engage in the Touch related business area.

The letter did not restrict the statement to any time frame. Nor is it realistic to

believe that Touch would have been concerned about whether Angelo was a

competitor only in April 2015, when the letter was written.

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No. 82388-4-I

       Kindinger next invokes the attorney judgment rule. Kindinger insists that

he exercised his “best judgment” when he concluded that Angelo’s decision to

bid “did not involve any issues relevant to the arbitration.” Contrary to

Kindinger’s conclusion, Angelo’s decision to bid was in fact, relevant to the

arbitration. Touch did not want to provide the discovery documents Angelo was

requesting. Kindinger’s April 2015 letter to the arbitrator was key in persuading

the arbitrator to order Touch to release the proprietary documents under a

protective order. Kindinger also argues that Angelo is unable to point to any

evidence that “no reasonable Washington attorney would have made the same

decision.” However, Angelo’s expert Gould opined that Kindinger “failed to meet

the minimum standard of care of a reasonable State of Washington commercial

litigation practitioner in the same or similar circumstances” when “Mr. Kindinger

represented to the Arbitrator that Mr. Angelo did not compete with Touch and

then (a) failed to notify the Arbitrator that this prior representation was no longer

accurate and (b) failed to advise Mr. Angelo of the need to notify the Arbitrator of

the same.”

       Gould referenced Rule of Professional Conduct (RPC) 3.3(a). This rule

requires an attorney to “correct a false statement of material fact or law

previously made to the tribunal by the lawyer.” RPC 3.3(a)(1). RPC 3.3(c)

further states that if a lawyer offers material evidence which he later “comes to

know of its falsity” the lawyer is required to “promptly disclose this fact to the

tribunal.” Where such disclosure would be prohibited due to client confidentiality,

the lawyer “shall promptly make reasonable efforts to convince the client to

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No. 82388-4-I

consent to the disclosure.” RPC 3.3(d). While ethical rules can be the basis for

attorney discipline, they cannot support an independent cause of action for

malpractice or be used as evidence of malpractice. Hizey, 119 Wn.2d at 263-66;

Behnke v. Ahrens, 172 Wn. App. 281, 297, 294 P.3d 729 (2012). However, duty

of care experts may still rely on the ethics rules as the basis for their opinions, so

long as they address the “breach of the legal duty of care, and not simply the

supposed breach of the ethics rules.” Hizey 119 Wn.2d. at 265 (emphasis in

original). Expert Gould did just that.8

       Angelo asked Kindinger if he should tell the arbitrator about winning the

WPC 2016 bid and Kindinger expressly advised him that he should not do so:

“Not a good idea to communication your news to [the arbitrator].” “Misleading the

court is never justified.” Deutscher v. Gabel, 149 Wn. App. 119, 136, 202 P.3d

355 (2009).9

       8   Angelo also cites to Civil Rule 26(e)(2) as a potential basis of Kindinger’s
legal duty. CR 26(e)(2) states in part that, “A party who has responded to a
request for discovery with a response that was complete when made is under no
duty to supplement the response to include information thereafter acquired,
except . . . [where] the party knows that the response though correct when made
is no longer true and the circumstances are such that a failure to amend the
response is in substance a knowing concealment.” This rule is not applicable
here, where Kindinger’s April 2015 letter was not a submission to a request for
discovery. Angelo also refers to Joyce v. Department of Corrections, 155 Wn.2d
306, 119 P.3d 825 (2005), for the position that “foreseeability of harm may, in
itself, trigger a duty of care.” Joyce does not impute a duty to a party wherever
there may be foreseeable risk, but rather referred specifically to the “special
relationship” that exists between an offender and the State. Joyce, 155 Wn.2d at
310. This case also is inapposite.
         9 Angelo assigns additional error to the trial court’s finding that Kindinger’s

duty of confidentiality prohibited him from disclosing the bid. However, Kindinger,
on appeal, does not raise this defense as to why he did not disclose.

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No. 82388-4-I

       Under these facts, the trial court erred in ruling as a matter of law

Kindinger had no duty to disclose the change of circumstances.

B. Proximate cause

       Even if a duty existed, Kindinger contends, Angelo’s acts of misconduct

broke “the chain of causation” and were the cause of the sanctions.

       The Sanctions Order was clear that the sanctions were issued, at least in

part, due to Kindinger’s and Angelo’s failure to update the arbitrator:
       [A]nd assuming that Mr. Angelo changed his intention, only after his
       lawyer, Mr. Kindinger, made assuring express and implied
       representations on Mr. Angelo’s behalf to the Arbitrator by letter
       dated April 21, 2015 . . . on which representations that Arbitrator
       reasonably relied . . . that Mr. Angelo was not a competitor of
       Respondent and there was no risk to Respondents [he] would
       become one . . . it was Mr. Angelo’s continuing duty to immediately
       inform the Arbitrator and Respondents of his change of mind and
       intention and, further, to immediately turn back all copies of all
       documents which Respondents had produced . . . . Instead Mr.
       Angelo kept silent[.]
              ...
       Mr. Kindinger’s representations in his April 21, 2015 letter to the
       Arbitrator were continuing representations which became
       continuing misrepresentations—because they were not corrected
       and concealed actions were taken under the cover of those
       uncorrected representations, on which the Arbitrator reasonably
       relied until Respondents’ papers of December 22, 2015 brought Mr.
       Angelo’s misconduct to first light.
              ...
             Based on . . . the determinations hereinabove set forth . . .
       [Touch’s] motion for sanctions hereby granted[.]

(Emphasis added.)

       The record does not indicate what portion of the sanctions were attributed

to the nondisclosure as compared to Angelo’s conceded misconduct.

Nonetheless, the only question before us is whether Angelo provided enough

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evidence to establish a genuine issue of material fact that Kindinger’s alleged

breach of duty—failing to disclose to the arbitrator—probably caused Angelo’s

injury. It is undisputed that the sanctions were, in part, based on the

nondisclosure of the bid for WPC 2016 and that Kindinger did not disclose the

information to the arbiter and also advised Angelo not to disclose the information

to the arbiter. The fact that Angelo’s conduct also caused sanctions does not

insulate Kindinger from a claim of malpractice for his actions that led to the

sanctions.

       The trial court erred in ruling that there are no issues of material fact and

granting summary judgment as a matter of law as to this claim.

                           Kindinger’s Conflict of Interest

       Angelo contends that the trial court overlooked evidence of Kindinger

conflicts of interest during the sanctions proceedings. We agree.

       At the summary judgment hearing, Angelo argued that Kindinger had a

conflict of interest in representing Angelo starting on December 21, 2015, the

date that the arbitrator became aware of Angelo’s bid. The trial court disagreed,

finding that Kindinger withdrew as Angelo’s counsel when a conflict of interest

arose, which was only at the point “when counsel found out that he had been a

party to perjury and false evidence” during the sanctions proceedings.

       Attorneys owe clients a duty of “undivided loyalty” and must avoid “any

self-interest that would conflict with the interests of the client.” In re Marriage of

Wixom & Wixom, 182 Wn. App. 881, 884, 332 P.3d 1063 (2014). This principle

is described in RPC 1.7(a) which states in part that “a lawyer shall not represent

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No. 82388-4-I

a client if the representation involves a concurrent conflict of interest.” One such

concurrent conflict is when there is a “significant risk” that the representation will

be limited by a personal interest of the lawyer. RPC 1.7(a)(2). The “interest of

the lawyer” can be defined as a “financial or familial interest or an interest arising

from the lawyer’s exposure to culpability.” Wixom, 182 Wn. App. at 898.

       At the time the sanctions hearing was scheduled, Kindinger knew (1) he

had previously represented that Angelo was not competing with Touch, (2)

encouraged Angelo to bid on WPC 2016, (3) did not disclose to the arbitrator

about the bid, and (4) advised Angelo also not to disclose the information to the

arbitrator. At that point Kindinger was in direct conflict with Angelo as to who was

to blame for the nondisclosure that eventually resulted in sanctions against

Angelo. Despite this conflict, Kindinger did not advise Angelo of the conflict or

withdraw from representing him in the arbitration. Angelo’s expert Gould opined

that Kindinger had a conflict at the moment the arbitrator ordered the sanctions

hearings: “[Kindinger’s] personal interests were to ensure that any sanction be

levied upon his client, Mr. Angelo, rather than on himself; however, it was in his

client’s best interests for Mr. Kindinger to ‘fess up’ to what had happened so that

a sanction (if any) was directed to Mr. Kindinger[.]” Expert Gould went on to

explain that a “reasonable practitioner” in this situation would have informed

Angelo of the conflict and the potential need for new counsel, informed the

arbitrator of his error giving rise to the sanction, and made “the most effective

arguments” for Angelo including those that related to properly apportioning

blame.

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No. 82388-4-I

       For the reasons addressed above, we conclude that the trial court erred in

ruling, as a matter of law, no conflict existed that supported a malpractice claim

and granting summary judgment as to this claim.

       As a result of Kindinger’s conflicted representation, Angelo argues he is

entitled to two possible remedies if successful at trial: (1) damages as a result of

a successful legal malpractice claim, and/or (2) disgorgement of attorney fees as

a result of Kindinger’s purported violation of the RPCs. We agree.

       In his briefing, Kindinger does not respond to Angelo’s conflict-of-interest

and disgorgement arguments. Instead, he focuses his argument as to why

Angelo cannot recover attorney fees under the ABC Rule.10 Regardless of

whether the ABC rule is applicable in this instance, Angelo’s ability to seek

damages against Kindinger is not limited to his attorney fees, but may include

other damages incurred by Angelo as a result of any malpractice. Such

damages would be decided by a jury.

       10  Though Angelo did not assert the ABC Rule or brief it, he did not agree
with respondents that it did not apply to the facts in his case.
       The ABC Rule is an equitable rule under which attorney fees are
       compensable as consequential damages in certain situations. The
       ABC Rule has three elements: ‘(1) a wrongful act or omission by A
       ... toward B ...; (2) such act or omission exposes or involves B …in
       litigation with C …; and (3) C was not connected with the initial
       transaction or event ..., viz., the wrongful act or omission of A
       toward B. All three elements must be satisfied for the ABC Rule to
       apply.’
LK Operating, LLC v. Collection Grp., LLC, 181 Wn.2d 117, 123-24, 330 P.3d
190 (alterations in original) (citations and internal quotation marks omitted)
(quoting Blueberry Place Homeowners Ass’n v. Northward Homes, Inc., 126 Wn.
App. 352, 359, 110 P.3d 1145 (2005)).

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No. 82388-4-I

       Even if Angelo were to fail on his claim of malpractice related to

Kindinger’s conflict of interest, he may still be entitled to disgorgement of his

attorney fees. Angelo raised disgorgement as a possible result of Kindinger’s

conflict of interest before the trial court. As a result of the trial court’s finding that

Kindinger did not represent Angelo with a conflict of interest, the trial court never

addressed disgorgement.

       A breach of an attorney’s ethical duties may result in a denial or

disgorgement of fees. Eriks v. Denver, 118 Wn.2d 451, 462, 824 P.2d 1207

(1992). “Disgorgement of fees is a reasonable way to discipline specific

breaches of professional responsibility, and to deter future misconduct of a

similar type. ‘Such an order is within the inherent power of the trial court to

fashion judgments.’” Behnke, 172 Wn. App. at 298 (quoting Eriks, 118 Wn.2d at

463). This is true regardless of whether there has been a finding of malpractice.

See Eriks, 118 Wn.2d at 462-63. Whether an attorney has violated a rule of

professional conduct is a question of law. Id. at 457-58. While courts cannot rely

on the RPCs to impose malpractice liability, they may rely on the ethics rules in

actions to recover attorney fees. Behnke, 172 Wn. App. at 297-98.

       Based on the evidence available before the trial court, Angelo is entitled to

pursue his disgorgement claim on the basis that Kindinger provided him with

conflicted representation in violation of RPC 1.7.

                       RSC’s Counter-Claim for Attorney Fees

       RSC filed a counterclaim arguing that they were entitled to recover their

unpaid attorney fees from representing Angelo in the amount of $70,671.56 plus

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No. 82388-4-I

prejudgment and post-judgment interest. The trial court granted summary

judgment on RSC’s counterclaim and ordered an award totaling $107,017.63.

       Angelo states that all of the fees that RSC seeks to recover were incurred

after April 2016, “well into the period of Kindinger’s conflicted representation.”

For the purposes of summary judgment, we must assume that is true.11

Kindinger does not address the delineation of fees in his briefing.

       On appeal, the parties dispute whether the “accounts stated” doctrine12

applies to these fees. We need not address this doctrine here because inferring

all evidence in favor of Angelo, the attorney fees at issue in this appeal were

connected to Kindinger’s representation provided after the point of the alleged

conflict of interest. Thus, RSC’s award of attorney fees is intertwined with the

outcome of Angelo’s claims on remand and must be reversed.

                                   CONCLUSION

       There are genuine issues of material fact in this case that preclude

granting summary judgment in favor of Kindinger and RSC and dismissing

Angelo’s claims. Angelo may be entitled to damages or disgorgement as a result

of the alleged misconduct. Based on the record before us, RSC’s counterclaim

       11 Angelo’s first bill after the commencement of the sanctions proceedings
was January 11, 2016, at which time he owed RSC a balance of $39,524.78,
some of which was related to invoices from the sanctions hearing. Angelo made
thousands of dollars in payments over the course of the sanctions hearing,
payments which would, in total, have covered the balance due before the
sanctions proceedings started.
       12 The doctrine of “account stated” applies when the creditor and the

debtor manifest that a stated sum as an accurate computation of an amount due.
Sunnyside Valley Irrig. Dist. v. Roza Irrig. Dist., 124 Wn.2d 312, 315, 877 P.2d
1283 (1994) (citing RESTATEMENT (SECOND) OF CONTRACTS § 282(1) (1981)).

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No. 82388-4-I

for attorney fees is intertwined with Angelo’s claims and cannot be decided as a

matter of law in favor of RSC. We therefore reverse and remand to the trial court

for further proceedings.

WE CONCUR:

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