Court Opinion

ID: 987696
Source: CourtListenerOpinion
Date Created: 2013-07-02 22:19:05.382879+00
Date Added: 2024-06-11T09:12:25.561572
License: Public Domain

f~!' pp
                                        COURT OF AhT-FAISnr-'T
                                        STATE OF WASHiNGfo;*"
                                        2013 APR -8 An 3- 55

       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

TAMMY BECK, as personal
representative of the Estate of                    No. 67641-5-1
of Claud Goll,
                                                   DIVISION ONE
                     Appellant,

              v.

DARREN E. GRAFE and JANE DOE                       UNPUBLISHED OPINION
GRAFE, and the marital community
composed thereof,                                  FILED: April 8, 2013

                     Respondents.

       Becker, J. — In this legal malpractice case that was dismissed on

summary judgment, Claud Goll's estate sued Darren Grafe, the attorney who

defended Goll in a breach of contract case. By the time Goll lost the appeal that

ended the suit, the statute of limitations had run on his claims against the realtors

who could have been named as third party defendants. The primary issue now is

whether Grafe is entitled to avoid liability because he turned the case over to a

successor attorney before the statute of limitations expired. We reverse the

dismissal because there are genuine issues of material fact precluding us from

holding as a matter of law that the successor attorney was a superseding cause

that absolves Grafe of any liability.
No. 67641-5-1/2

       We review an order of summary judgment de novo, engaging in the same

inquiry as the trial court. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d

301 (1998). Summary judgment is proper if, viewing the facts and reasonable

inferences most favorably to the nonmoving party, no genuine issues of material

fact exist and the moving party is entitled to judgment as a matter of law. CR

56(c); Versuslaw, Inc. v. Stoel Rives. LLP. 127 Wn. App. 309, 319-20, 111 P.3d

866 (2005). review denied. 156 Wn.2d 1008 (2006).

       This action arose out of a real estate contract dispute that was resolved

against Goll on appeal in Chrisp v. Goll. 126 Wn. App. 18, 104 P.3d 25 (2005),

review denied, 156 Wn.2d 1004 (2006). On July 2, 2001, Goll agreed to

purchase Nancy Chrisp's home. A feature of the home that Goll found attractive

was a separate guest cottage. Goll withdrew from the purchase and sale

agreement when he discovered the separate structure did not meet code for a

guest house. Chrisp sued Goll for defaulting on the contract. Attorney Darren

Grafe, then an associate at David H. Middleton & Associates, undertook to

represent Goll in this suit.

       Chrisp claimed damages of over $100,000. Due in part to a drop in

market prices, the price Chrisp received when she eventually found another

buyer was substantially less than what Goll had agreed to pay. Goll took the

position that his damages were limited to his earnest money deposit of $2,000.

       A statute in effect at the time the parties entered into their contract

provided that a seller of residential property retained all rights and remedies upon
No. 67641-5-1/3

the buyer's default and was not limited to forfeiture of earnest money unless the

contract so specified in the way mandated by the statute. Former RCW

64.04.005 (1991); Chrisp. 126 Wn. App. at 19. The form of agreement Chrisp

and Goll used addressed the statute's specific requirements by allowing the

parties to indicate, by checking boxes, whether "forfeiture of earnest money" or

"seller's election of remedies" would apply if the buyer defaulted. Chrisp, 126

Wn. App. at 20. The statute stated that the forfeiture remedy provision would be

effective only if both the purchaser and the seller initialed or signed it; if not, the

seller was to "have all rights and remedies otherwise available at law or in

equity." Former RCW64.04.005(1)(b)(ii), (2) (1991); Chrisp, 126 Wn. App. at 23.

Chrisp, on advice of her agent, did not initial or sign or otherwise indicate her

approval of the forfeiture remedy provision.

       The case went to trial in August 2003. A few months before trial, Grafe

informed Goll he was leaving the Middleton firm. David Middleton assumed

representation of Goll.

       At trial, the court ruled that the parties had substantially complied with the

statutory requirements for electing forfeiture of earnest money as a remedy. The

court ruled that Chrisp's damages were limited to Goll's earnest money deposit of

$2,000. Goll then stipulated to forfeiture of the earnest money, and the court

dismissed the jury and awarded attorney fees to Goll.
No. 67641-5-1/4

       Chrisp appealed. This court reversed in an opinion issued in January

2005. We held that the trial court erred by applying the substantial compliance

doctrine. Chrisp, 126 Wn. App. at 23.

       Goll settled with Chrisp before he died in June 2009.

       On August 6, 2010, Goll's daughter Tammy Beck filed this malpractice suit

against Grafe on behalf of Goll's estate. The estate alleges that Grafe

mishandled the defense of Chrisp's suit by failing to preserve Goll's claims

against the realtors involved in the transaction between Goll and Chrisp. The

trial court granted Grafe's motion for summary judgment. The estate appeals.

       To establish a case of legal malpractice, the estate must prove (1) the

existence of an attorney-client relationship which gives rise to a duty of care, (2)

an act or omission by Grafe that breaches his duty of care, (3) damage to Goll,

and (4) proximate causation between Grafe's breach of duty and the damages

incurred. Hizev v. Carpenter, 119 Wn.2d 251, 260-61, 830 P.2d 646 (1992). To

avoid dismissal, Beck must show an issue of material fact as to each element.

Craig v. Wash. Trust Bank. 94 Wn. App. 820, 824, 976 P.2d 126 (1999).

                      ATTORNEY-CLIENT RELATIONSHIP

       Grafe first contends that the estate cannot meet the threshold element of

an attorney-client relationship.

       This element is met. It is undisputed that Goll and Grafe had an attorney-

client relationship from 2001 until June 2003, when Grafe filed a notice of

withdrawal and attorney Middleton took over Goll's case. Grafe is arguing that
No. 67641-5-1/5

Goll's damages from legal malpractice, if any, were incurred after Grafe

withdrew. This argument is more properly addressed in connection with the

element of causation.

                                BREACH OF DUTY

       The estate alleges that Grafe was negligent in failing to bring a third party

negligence suit against Prudential Northwest Realty before the statute of

limitations expired. Prudential's agent assisted Goll in the ill-fated transaction

with Chrisp in July 2001. Prudential failed to inform Goll that without Chrisp's

initials accepting earnest money forfeiture as the remedy for a buyer's default,

Goll would not be able to limit his damages in case of default.

       An attorney 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 Washington. Hizev, 119 Wn.2d at 261.

To establish breach of duty, it is often necessary to provide expert testimony

stating what the standard of care is and how the standard was allegedly

breached. Geer v. Tonnon, 137 Wn. App. 838, 851, 155 P.3d 163 (2007), review

denied. 162 Wn.2d 1018 (2008). The estate submitted a declaration from

attorney Randolph I. Gordon that was considered by the trial court in connection

with Grafe's motion for summary judgment.1

       1Clerk's Papers at 219-47.
No. 67641-5-1/6

        Gordon reviewed the relevant facts of the underlying litigation and

provided his expert opinion that Grafe breached the standard of care by

negligently failing to sue Prudential, by failing to ascertain the date when the

statute of limitations would expire on such a suit, and by failing to ensure that

Goll knew he had to sue Prudential before that date.

        According to Gordon, the suit against Prudential would be an "ABC" claim

as exemplified by Manning v. Loidhamer, 13 Wn. App. 766, 538 P.2d 136, review

denied, 86 Wn.2d 1001 (1975). "When the natural and proximate consequences

of a wrongful act of defendant involve plaintiff in litigation with others, there may

as a general rule be a recovery of damages for reasonable expenses incurred in

the litigation, including attorney's fees." Manning, 13 Wn. App. at 769. While

attorney fees ordinarily are not damages in a tort suit, they are damages under

the litigation theory discussed in Manning. Thus, if the negligence of Prudential

("A") caused Goll ("B") to become involved in litigation with Chrisp ("C") and as a

result to have to pay attorney fees to Grafe, the attorney fees would be damages

for which Prudential would be liable to Goll.

        Under this legal theory, Prudential's conduct began to cause damages to

Goll in 2001, as soon as he incurred attorney fees to defend against Chrisp's

lawsuit. Gordon testified that the three-year statute of limitation on the claim

against Prudential would have expired between July and October 2004, with the

exact date being a fact question dependent upon when Goll first incurred such

fees.

                                          6
No. 67641-5-1/7

       The facts of the underlying litigation, seen in the light most favorable to the

estate, support Gordon's opinion that Grafe did not act as a reasonably prudent

lawyer. Grafe failed to realize that the element of damages, a necessary

prerequisite to a negligence suit, is satisfied in an ABC scenario by the payment

of attorney fees. He persisted in the erroneous view that Goll would not incur

damages that Prudential could be liable for unless a court ordered him to pay

Chrisp more than the earnest money. This view led him to the erroneous

conclusion that the statute of limitations on Goll's claim against Prudential would

not begin to run unless and until Chrisp prevailed with finality on her underlying

lawsuit against Goll.

       Beck declares that she and Goll raised the topic of suing the realtors at

every meeting and conversation they had with Grafe. "Each time it came up, Mr.

Grafe told my father and I that suit could not be filed against the real estate

brokerage firms until my father had been harmed and could show damages."

She says Grafe "made it clear that the statute of limitations would not start until

the current lawsuit was finished because that was the time in which we would

know that my father had, in fact, suffered damages as a result of their role in the

transaction." At one point, Beck pointed out that her father had already spent

$15,000 in attorney fees as evidence of damages. Grafe responded that he

thought a motion to dismiss would resolve the case and allow Goll to recover his

attorney fees.
No. 67641-5-1/8

       In responding to the allegation that he breached his duty of care by failing

to timely sue Prudential, Grafe does not dispute the estate's claim that an ABC

suit against Prudential would have been the vehicle for recovering Goll's attorney

fees iftimely brought. Rather, Grafe claims that he made a reasonable decision

that the best strategy for protecting Goll was to defeat Chrisp's lawsuit by arguing

substantial compliance with the statute on seller's remedies. Grafe claims this

strategy was reasonable, even though in hindsight it was unsuccessful, because

the statute was relatively new and there was no authority to the contrary. He

relies on the rule that mere errors in judgment or in trial tactics do not subject an

attorney to liability for legal malpractice, particularly "when the error involves an

uncertain, unsettled, or debatable proposition of law." Halvorsen v. Ferguson. 46

Wn. App. 708. 717. 735 P.2d 675 (1986). review denied, 108Wn.2d 1008

(1987).

       Grafe does not identify any evidence in the record supporting his claim

that he made a deliberate tactical choice to pursue one strategy over the other.

And in any event, this is not a case involving an uncertain, unsettled, or

debatable proposition. As we held in Chrisp, the statute in question is

unambiguous:

                We do not see how a plain reading of this statute allows
       applications of the substantial compliance doctrine. The statute
       itself clearly states the consequences of failure to comply: the seller
       retains all remedies. Excusing a party's failure to meet the
       requirements of subsection (1) would render meaningless the clear
          language of subsection (2).
No. 67641-5-1/9

Chrisp. 126 Wn. App. at 23. A reasonably prudent attorney recognizes that a

statute itself is authority. The absence of an appellate opinion construing the

statute does not mean the law is unsettled. Under these circumstances, Grafe

cannot be excused from liability on the basis that he made a reasonable strategic

decision in an uncertain area of the law.

       This is not to say that pursuing the theory of substantial compliance was

malpractice in itself. If Grafe breached the standard of care, it was by failing to

recognize the prudence of suing Prudential as a backup plan to protect Goll in

case the substantial compliance strategy ultimately failed.

       Grafe contends that it would have "necessarily undermined" the defense

of substantial compliance in the Chrisp lawsuit if, at the same time, he had

pursued a negligence claim against Prudential. Grafe deposed the Prudential

agents as witnesses to support the position that Goll could not be held liable

beyond the $2,000 in earnest money, and he implies that he did not want to

alienate these witnesses by suing Prudential. This is not an argument that can

sustain dismissal on summary judgment. Whether Chrisp could hold Goll liable

for more than the earnest money was going to turn on an interpretation of the

statute, not on the testimony of witnesses. And even if Grafe reasonably thought

the Prudential employees would be helpful witnesses, he does not explain why

their testimony would necessarily have been less available if he had made

Prudential a third party defendant in the suit.
No. 67641-5-1/10

       According to Grafe, Goll always knew Grafe had made a decision not to

sue Prudential while the litigation against Chrisp was still going on. Grafe also

points out that he wrote Goll a letter in November 2001 explaining that if Goll

were to bring a claim against Prudential in the future, it would have to be within

the statute of limitations. But Grafe does not show how Goll's knowledge of

these facts would prevent a jury from finding that Grafe breached his duty.

Grafe's alleged breach of duty consists of his failing to recognize that the statute

of limitations on a suit against Prudential was already running, failing to identify

the date when it would expire, and failing to inform Goll of these facts. A client

depends on the lawyer to provide that type of information.

       A jury could find, based on Gordon's expert testimony, that Grafe

breached the standard of care of a reasonable attorney.

                                PROXIMATE CAUSE

       The estate claims that Grafe's negligence caused damages to Goll

consisting of Goll's attorney fees and costs in the Chrisp lawsuit, the money he

paid to settle with Chrisp, and any lost proceeds from a lawsuit against

Prudential. Grafe maintains that even if a jury could find that he handled Goll's

case negligently, there could be no finding of proximate cause because when he

turned the case over to Middleton shortly before trial in 2003, there was at least a

year to go before the statute of limitations would expire on Goll's claim against

Prudential.

                                          10
No. 67641-5-1/11

       To establish proximate cause, the estate must demonstrate that "but for"

Grafe's alleged negligence, Goll would have obtained a better result in the Chrisp

lawsuit. Smith v. Preston Gates Ellis. LLP. 135 Wn. App. 859, 864, 147 P.3d 600

(2006), review denied, 161 Wn.2d 1011 (2007). The trial court can decide

proximate cause as a matter of law if reasonable minds could not differ, but

proximate cause is usually a question for the jury. Smith, 135 Wn. App. at 864.

The jury acts as the second trier of fact. Daugert v. Pappas, 104 Wn.2d 254,

257-58, 704 P.2d 600 (1985), citing Cline v. Watkins. 66 Cal. App. 3d 174, 179,

135 Cal. Rptr. 838 (1977). As such, a jury in this malpractice case would have to

decide what a reasonable jury would have done, but for Grafe's negligence, in a

timely claim by Goll against Prudential.

       Grafe contends that the chain of causation between his alleged

negligence and Goll's damages was broken when Middleton took over the case

in 2003. Grafe characterizes Middleton as an independent intervening cause,

citing Maltman v. Sauer. 84 Wn.2d 975, 982, 530 P.2d 254 (1975). Under

Maltman, proximate cause is not proved if the injury is the result of an intervening

cause which came into active operation after the negligence of the defendant

ceased. If the intervening act is not foreseeable, it will break the causal

connection between the defendant's negligence and the plaintiffs injury.

Maltman, 84 Wn.2d at 982. Grafe cites a case that translates this rule of

causation into the following general statement applicable to legal malpractice

cases: "A withdrawn attorney is absolved of continuing liability where there

                                           11
No. 67641-5-1/12

remains time for successor counsel to remedy his negligence." Diamond v.

Sokol, 468 F. Supp. 2d 626, 642 (S.D.N.Y. 2006). Grafe contends he must be

absolved of liability because there was enough time for Middleton to remedy

Grafe's alleged negligence after Grafe withdrew.

       According to Gordon's expert testimony on behalf of the estate, Grafe was

negligent in failing to add Prudential to the Chrisp lawsuit as a third party

defendant and Middleton did not have time to cure that negligence because he

inherited the case from Grafe two and a half months before trial when the

"architecture of the case" had already been established. A joint pretrial order had

already been entered, stating that all essential parties had been named. In

Gordon's opinion, a trial judge would have been unlikely to grant Middleton's

motion to amend to bring in a new party with so little time remaining before trial.

       Grafe attacks Gordon's expert opinion as irrelevant and admissible. He

contends that whether the trial judge would have allowed an amendment to bring

in Prudential is a question of law for the court. It is true that under some

circumstances, the proximate cause determination in a malpractice case is a

question of law for the court. See, e.g., Nielson v. Eisenhower & Carlson, 100

Wn. App. 584, 594, 999 P.2d 42, review denied, 141 Wn.2d 1016 (2000). In this

case, however, whether Middleton could have successfully moved to amend to

bring in Prudential is properly treated as a question of fact. See Diamond, 468 F.

Supp. 2d at 642-43. The disposition of motions to amend the pleadings is

discretionary with the trial court, and its refusal to permit such an amendment will

                                          12
No. 67641-5-1/13

not be overturned except for a manifest abuse of discretion. Lincoln v.

Transamerica Inv. Corp., 89 Wn.2d 571, 577. 573 P.2d 1316(1978). As in

Diamond, it remains an issue for trial whether the factors courts typically consider

in deciding a motion to amend would have played out in favor of imposing liability

on Grafe as well as on Middleton. Gordon's expert opinion on this issue is

relevant and admissible. A jury could find that by the time Middleton took over, it

was already too late to bring Prudential in by amendment.

       But, Grafe argues, even if he did not leave Middleton enough time to move

to amend to bring in Prudential as a third party defendant in the Chrisp lawsuit,

Middleton still had enough time to bring a separate lawsuit against Prudential.

The trial of the Chrisp lawsuit ended in August 2003. The estate asserts that the

statute of limitations on such a claim expired as early as July 2004. Grafe argues

that because Middleton had approximately a year to bring a separate suit,

Middleton's negligence in failing to cure Grafe's negligence was, as a matter of

law, an independent intervening cause. For this proposition, he relies not only on

Diamond but also on a trio of Illinois cases, Land v. Greenwood, 133 III. App. 3d

537, 478 N.E.2d 1203 (III. App. Ct. 1985); Mitchell v. Schain. Fursel & Burnev,

Ltd.. 332 III. App. 3d 618, 773 N.E.2d 1192 (III. App. Ct. 2002); and Cedeno v.

Gumbiner, 347 III. App. 3d 169, 806 N.E.2d 1188, 1192 (III. App. Ct. 2004). In

Land, the court states that the "successor counsel had the duty to preserve his

client's cause of action. It was viable when he received it; it was not when he got

through with it." Land, 478 N.E.2d at 1205. Following Land, Mitchell holds that

                                         13
No. 67641-5-1/14

the first attorney is excused from liability unless there is a factual issue "whether

a viable cause of action still remained after the first attorney was discharged."

Mitchell, 773 N.E.2d at 1196. Cedeno summarizes Land and Mitchell by stating,

"If the underlying cause remained actionable upon the discharge of the former

attorney, plaintiff can prove no set of facts which connect defendant's conduct

with any damage plaintiff sustained." Cedeno, 806 N.E.2d at 1192.

       Neither Grafe nor the estate has briefed the issue whether a separate suit

by Goll against Prudential was still viable when Middleton took over the case.

We will assume for purposes of analysis that a separate suit was viable and that

Middleton, to the same extent as Grafe, was negligent in failing to file it before

the statute of limitations expired. We are not, however, persuaded that the cases

Grafe cites set forth an absolute rule requiring the conclusion that Middleton was

an independent intervening cause as a matter of law. Mitchell, for example,

recognizes that as a general proposition "it is for the jury to determine whether

successor counsel's failure to cure the negligence of the first counsel represents

a superseding cause of the plaintiffs injury." Mitchell, 773 N.E.2d at 1195.

       To be regarded as a superseding cause negating the claim of proximate

or legal cause, the intervening act must be one that is not reasonably

foreseeable. Maltman, 84 Wn.2d at 982. Applying this principle in a malpractice

case involving successive attorneys, the California Court of Appeals defined the

question in this way: "Is the substitution of another lawyer for one whose prior

representation of the client in the matter has been negligent such an exceptional

                                          14
No. 67641-5-1/15

circumstance that all duty and responsibility for the prevention of harm normally

flowing from the negligence passes to substituted counsel?" Cline, 66 Cal. App.

3d 179. The court answered in the negative. The issue is to be resolved by a

trier of fact on the question of foreseeability, not as a matter of law. Cline, 66

Cal. App. 3d at 179-80.

       Where the first attorney has explicitly advised the client and successor

counsel of the necessity of timely action, there may be no genuine issue of

material fact as to foreseeability. An example is Meiners v. Fortson & White, 210

Ga. App. 612, 436 S.E.2d 780 (1993), holding that where the second attorney is

"specifically advised by the first attorney" that a party needs to be served and the

second attorney has more than six months to accomplish that service, as a

matter of law "it is not reasonably foreseeable that the second attorney will fail to

cure the first attorney's error and perfect service." Meiners. 436 S.E.2d at 781.

Meiners dealt with "an obvious statute of limitation problem of which the second

attorney was specifically advised," and distinguished Cline on the basis that it

"involved a less noticeable problem of which the second attorney was not aware."

Meiners, 436 S.E.2d at 781. Another example is Lockhart v. Grieve. 66 Wn. App.

735, 741, 834 P.2d 64 (1992). In Lockhart. successor attorneys took over the

case from Murphy, the original attorney, 90 days before the statute of limitations

expired. The successor attorneys failed to make timely service on the

defendants. This court affirmed an order dismissing Murphy from the plaintiff's

malpractice suit. Pivotal to the analysis in Lockhart was the undisputed fact that

                                          15
No. 67641-5-1/16

Murphy took care to advise both the plaintiff and the new attorneys of the

necessity of timely service within the brief window of time remaining before the

statute of limitations expired. Lockhart, 66 Wn. App. at 742.

       The present case resembles Cline more than Meiners and Lockhart.

Because Grafe did not recognize that Goll's potential claim against Prudential

was based on the ABC theory in which attorney fees are damages, he did not

realize the statute of limitations on a suit against Prudential was already running.

Thus, he did not advise Goll or Middleton that action needed to be taken soon to

preserve that claim. Middleton adopted Grafe's conclusion that Goll had not as

yet sustained damages as a result of Prudential's negligence. A jury could find

that Grafe should reasonably have foreseen that Middleton would adopt Grafe's

erroneous conclusion and carry on with the case along the path Grafe had laid

out.

       Our analysis is consistent with Gordon's expert opinion that Grafe and

Middleton committed malpractice as a single continuous course of inaction,

making Middleton's negligence a concurrent cause of the damage rather than an

independent intervening cause.2 Gordon opined that Grafe's misunderstanding
of the law "not only gave up the most cost-effective, logical opportunity" to toll the

statute of limitations by bringing in Prudential as a third party defendant, but also

"deterred and burdened" Goll and Middleton from taking corrective action in the

year after Goll succeeded in the trial court. A trier of fact could find on this record

        Clerk's Papers at 238-43.
                                          16
No. 67641-5-1/17

that either Grafe or Middleton or both were proximate causes of Goll's damage; if

both, the apportioning of liability is also a question of fact.

        In assessing the case within this case, the reasonable fact finder must

determine whether the estate's projected better result—a successful third party

suit against Prudential achieving indemnification of Goll's expenses in the Chrisp

suit—would more likely than not have occurred if Grafe had either initiated the

suit before he withdrew or specifically advised Goll and Middleton that initiating

the suit by a specific date was necessary to avoid expiration of the statute of

limitations.

       We conclude that Grafe has failed to extinguish issues of fact and

establish as a matter of law that the successor attorney was an intervening,

independent cause.

       Reversed.

                                                     "i^&>£?
WE CONCUR:

                    J^X
      f/r/w=^, fry, j „                              nTNvtvQh*

                                           17