Court Opinion

ID: 4657926
Source: CourtListenerOpinion
Date Created: 2021-02-05 20:02:46.485163+00
Date Added: 2024-06-11T08:01:25.203928
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF DELAWARE

DEAN SHERMAN,                                      §
                                                   §      No. 43, 2020
         Plaintiff Below,                          §
         Appellant,                                §      Court Below: Superior Court
                                                   §      of the State of Delaware
         v.                                        §
                                                   §      C.A. No. K18C-06-009
STEPHEN P. ELLIS, ESQUIRE,                         §
                                                   §
         Defendant Below,                          §
         Appellee.                                 §

                                Submitted: December 2, 2020
                                 Decided: February 3, 2021

Before SEITZ, Chief Justice; VAUGHN, TRAYNOR, and MONTGOMERY-
REEVES, Justices; and SLIGHTS, Vice Chancellor, * constituting the Court en
banc.

Upon appeal from the Superior Court. REVERSED AND REMANDED.

Patrick K. Gibson, Esquire, Ippoliti Law Group, Wilmington, Delaware, for
Appellant, Dean Sherman.

Gary W. Lipkin, Esquire (Argued), and Alexandra D. Rogin, Esquire, Eckert
Seamans Cherin & Mellott, LLC, Wilmington, Delaware, for Appellee, Stephen P.
Ellis, Esquire.

VAUGHN, Justice:

*
    Sitting by designation under Del. Const. Art. IV, § 12.
                                I.     INTRODUCTION

       This is a legal negligence case arising from the preparation of a premarital

agreement. The Plaintiff-Appellant, Dean Sherman, appeals from the Superior

Court’s grant of summary judgment in favor of the Defendant-Appellee, Stephen P.

Ellis, Esquire. The appeal presents two issues. One is whether the traditional “but

for” test for proximate cause applies in a “transactional” legal negligence case, or

whether it is sufficient that the alleged negligence creates an increased risk of future

damages.     The other is whether the evidence satisfies the summary judgment

requirement that there be no genuine issue as to any material fact. As to the first

issue, our conclusion is that the traditional “but for” test, not a risk of future damages

test, is the appropriate test for determining proximate cause. As to the second issue,

our conclusion is that the evidence, viewed in the light most favorable to Mr.

Sherman, raises a genuine issue of material fact and that summary judgment should

have been denied.       This second conclusion requires that the judgment of the

Superior Court be reversed and the case remanded for further proceedings.

                  II.    FACTS AND PROCEDURAL HISTORY

       In 1997, Mr. Sherman and Michelle Silverman decided to marry. 2                   They

planned a “secret” wedding in Las Vegas, which is to say that they did not inform

2
  “Silverman” is the pseudonym that has been used for this party in previous proceedings before
this Court, discussed herein.

                                              1
their families or friends of their plans to be married. Mr. Sherman desired to have

a premarital agreement prepared and executed before the wedding. At the time,

Ms. Silverman had essentially no assets.               Mr. Sherman had assets of about

$4,000,000. About a month before the wedding, he gave Ms. Silverman a draft of

a premarital agreement prepared by his attorney, Mr. Ellis, which contained terms

favorable to Mr. Sherman. The agreement provided, in pertinent part, that each

party would “retain the title, management and control of the estates now owned by

them . . . and all increases or additions thereto.”3 The agreement also provided

“that any property that either party may singly acquire . . . shall be owned and shall

be held by the respective party as though this respective party had acquired it before

the solemnization of the said marriage.”4 In other words, any property which Mr.

Sherman might acquire in his name alone during the marriage, even if defined by

statute as marital property subject to division during divorce proceedings, would

remain his separate property, not subject to division. Each party waived any right

to alimony.       The agreement provided that upon the death of one of them, the

surviving party would make “no claim by inheritance, descent, dower, curtesy, or

maintenance” against the deceased party’s estate.5 The parties waived any right to

take an elective share in the estate of the other.

3
    App. to Appellant’s Op. Br. at A0013 [hereinafter A__].
4
    A0014.
5
    A0013.

                                                 2
       Mr. Sherman suggested that Ms. Silverman consult with an attorney about the

agreement at his expense.       He provided her with a list of attorneys.         She selected

an attorney from the list. The attorney she selected explained the downsides to her

of signing the agreement. He attempted to negotiate substantive changes to the

agreement to benefit Ms. Silverman, but Mr. Sherman’s attorney refused all changes

except a provision relieving Ms. Silverman of any responsibility for any debts

created by Mr. Sherman before or during the marriage.6

       On the day before the parties were scheduled to leave for their Las Vegas

wedding, with the agreement at that point still unsigned, Ms. Silverman again met

with her attorney. Earlier that day, before Ms. Silverman met with her attorney,

Mr. Sherman gave Ms. Silverman a summary of his assets and liabilities.                     Ms.

Silverman’s attorney told her that the agreement was not in her best interest and

advised her not to sign it.          Anticipating that Ms. Silverman might sign the

agreement against his advice, the attorney requested that Ms. Silverman sign an

acknowledgement that his advice was that she not sign.                       She signed the

acknowledgement and then signed the agreement.                   The next day the parties

6
  The record indicates that according to correspondence between Mr. Ellis and Ms. Silverman’s
attorney, Ms. Silverman’s attorney wanted to delete language from the agreement that would have
allowed Ms. Silverman to receive alimony; tried to make sure that Ms. Willoughby did not waive
her rights to receive an elective share of Mr. Sherman’s estate if Mr. Sherman died; and proposed
that a retirement account be set up for Ms. Silverman. All of these proposals were rejected by
Mr. Sherman and Mr. Ellis. A0120 (Judy M. Jones, Esq. Dep. Tr. at 82:18-84:15).

                                               3
departed for their wedding in Las Vegas.

         In 2015, Ms. Silverman filed for divorce. She contested the enforceability

of the premarital agreement.         She claimed that she did not sign the agreement

voluntarily, that the agreement was unconscionable, that she had not been provided

with a fair and reasonable disclosure of Mr. Sherman’s assets, and that “she did not

voluntarily and expressly waive in writing any right to that disclosure.”7

         The Family Court found that Ms. Silverman signed the Agreement

voluntarily.8 Since the Family Court found that she signed voluntarily, 13 Del. C.

§ 326(a)(2) required Ms. Silverman to establish the four following statutory elements

to prevail on her claim that the agreement was unenforceable:

                (2) The agreement was unconscionable when it was
                executed and, before execution of the agreement, that
                party:

                a. Was not provided a fair and reasonable disclosure of the
                property or financial obligations of the other party;

                b. Did not voluntarily and expressly waive, in writing, any
                right to disclosure of the property or financial obligations
                of the other party beyond the disclosure provided; and

                c. Did not have, or reasonably could not have had, an
                adequate knowledge of the property or financial
                obligations of the other party.9

7
    A0033.
8
    Sherman v. Sherman, No. CS15-01396 (Del. Fam. Apr. 4, 2018).
9
    13 Del C. § 326(a)(2) (emphasis added).

                                              4
         The Family Court found that Ms. Silverman’s evidence established all four

elements and that the agreement was, therefore, unenforceable.               It found the

agreement to be unconscionable; that Ms. Silverman was not provided with a fair

and reasonable disclosure of Mr. Sherman’s assets; and that she did not have or

reasonably could not have had an adequate knowledge of his property.               It was

undisputed that Ms. Silverman did not sign a waiver of any right to disclosure of Mr.

Sherman’s assets and liabilities beyond the disclosure provided.

         The Family Court certified an interlocutory appeal of its ruling to this Court,

which this Court accepted.10

         While the interlocutory appeal was pending in this Court, Mr. Sherman filed

this action in the Superior Court, alleging that Mr. Ellis was negligent in the

preparation of the agreement.          Specifically, Mr. Sherman alleged that Mr. Ellis

neglected to include a waiver of disclosure of assets as described in 13 Del. C. §

326(a)(2)b. He also claimed that Mr. Ellis negligently failed to make a fair and

reasonable disclosure of his assets.        He further claimed that had Mr. Ellis not been

negligent, Ms. Silverman “would not have been able to file the Motion [to set aside

the agreement] and/or it would have been quickly defeated, and Mr. Sherman would

not have incurred hundreds of thousands of dollars in legal expenses,” and be subject

to the “risk that [Ms. Silverman] will be able to obtain over $5,000,000 of Plaintiff’s

10
     Silverman v. Silverman, 206 A.3d 825, 827 (Del. 2019) (en banc).

                                                 5
assets via the Divorce Action.”11

         In the interlocutory appeal, Silverman v. Silverman, this Court found that Mr.

Sherman did provide Ms. Silverman with a fair and reasonable disclosure of his

property and financial obligations.12 Since Mr. Sherman provided Ms. Silverman

with a fair and reasonable disclosure of his property and financial obligations, we

found that Ms. Silverman had failed to establish one of the four statutory factors

required to establish unenforceability of the agreement. 13          Accordingly, we

reversed the Family Court’s finding that the agreement was not enforceable.14

         Mr. Sherman has continued to prosecute this suit in an effort to recover his

legal fees and other expenses incurred in litigating the agreement’s enforceability.

The theory of his claim is that if Mr. Ellis had included the waiver of disclosure

language described in 13 Del. C. § 326(a)(2)b in either the agreement or in a separate

document signed at the time of execution of the agreement, one of the four elements

needed to be shown to establish unenforceability of the agreement could not be

shown, and a challenge to the enforceability of the agreement would have been

unlikely.

         The Superior Court described Mr. Ellis’ motion for summary judgment as

11
     A0008.
12
     Silverman, 206 A.3d at 833-34.
13
     Id. at 834.
14
     Id.

                                            6
presenting three arguments.           The first was that there was no genuine issue of

material fact regarding the standard of care. In support of this argument, Mr. Ellis

relied upon his expert’s opinion that the standard of care did not require that the

disclosure waiver language be included in the agreement. The second argument

was that Mr. Sherman’s claim must fail as a matter of law because Mr. Sherman

could not show that he would have received a better result in the divorce proceedings

if the waiver language had been included.               This is so, he argued, because the

premarital agreement was ultimately determined to be enforceable.               The third

argument was that Mr. Sherman’s claim was “fatally speculative.”15 This is so, Mr.

Ellis argued, because a jury would have to engage in speculation before it could find

that he had proximately caused damages to Mr. Sherman. Such speculation would

concern a number of points, he argued, such as whether Ms. Silverman would have

signed the agreement if the waiver of disclosure language had been included, or

whether she would have challenged the agreement in any event, if it had been

included.

         In response, Mr. Sherman argued that issues of fact existed regarding the

standard of care and whether Mr. Ellis deviated from the standard of care. Mr.

Sherman also urged the court “to apply a relaxed approach when evaluating

proximate cause of damages,” and that damages are not speculative when such a

15
     Sherman v. Ellis, 2020 WL 30393, at *4 (Del. Super. Jan. 2, 2020).

                                                 7
relaxed standard is applied.16

          The Superior Court found that issues of fact remained regarding the standard

of care and whether Mr. Ellis breached the standard of care.17 Next, the Superior

Court found that the traditional “but for” test for proximate causation applies in a

legal negligence case involving alleged transactional negligence. 18       Finally, the

court decided that “applying that standard, because record evidence does not support

an inference that Mr. Sherman’s ex-wife would have likely accepted the [waiver]

term, the trier of fact would be forced to speculate regarding whether Mr. Ellis’s

alleged negligence proximately caused Mr. Sherman harm.”19 For this reason, the

court granted Mr. Ellis’ motion for summary judgment.20

          Mr. Sherman raises three claims on appeal. First, he claims that the Superior

Court erred when it found that there was insufficient evidence to allow a jury to

conclude that Ms. Silverman would have signed the agreement had the waiver of

disclosure clause been included. Second, Mr. Sherman claims that the Superior

Court erred by finding that the evidence does not create a genuine issue of material

fact regarding proximate cause of damages.          These two claims are related and

essentially challenge the Superior Court’s finding that there was no genuine issue as

16
     Id.
17
     Id. at 5-8.
18
     Id. at 13.
19
     Id. at 2.
20
     Id.

                                            8
to any material fact. Third, Mr. Sherman claims that the Superior Court erred by

finding that the traditional “but for” test, rather than an increased risk of harm test,

would apply to proximate causation.

                          III.   STANDARD OF REVIEW

       This Court reviews a grant of summary judgment de novo “to determine

whether, viewing the facts in the light most favorable to the nonmoving party, the

moving party has demonstrated that there are no material issues of fact in dispute

and that the moving party is entitled to judgment as a matter of law.”21 “Questions

of law, including the interpretation of statutes, are also reviewed de novo.”22

                                  IV.    DISCUSSION

                                            A.

       It is settled law in Delaware that to prevail on a legal negligence claim, the

plaintiff must establish three elements: “a) the employment of the attorney; b) the

attorney's neglect of a professional obligation; and c) resulting loss.” 23          In the

context of legal negligence alleged to have occurred in the course of litigation, we

have stated that “[i]n connection with the final element, the plaintiff must

demonstrate that the underlying action would have been successful but for the

21
   Homeland Ins. Co. of N.Y. v. CorVel Corp., 197 A.3d 1042, 1046 (Del. 2018) (en banc).
22
   City of Wilm. v. Nationwide Ins. Co., 154 A.3d 1124, 1127 (Del. 2017).
23
   Oakes v. Clark, 2013 WL 3147313, at *1 (Del. June 18, 2013) (TABLE) (citing Weaver v.
Lukoff, 1986 WL 17121, at *1 (Del. Jul. 1, 1986) (TABLE)); See also Flowers v. Ramunno, 2011
WL 3592966, at *2 (Del. Aug. 16, 2011) (TABLE).

                                             9
attorney’s negligence.”24

         Mr. Sherman argues that the traditional “but for” test for proximate causation

should not apply in a legal negligence case involving alleged transactional

negligence.      He would have us adopt a more relaxed “increased risk of harm”

standard. Under the traditional “but for” causation standard, Mr. Sherman will be

required to show that he would not have suffered damages in the form of increased

litigation expenses “but for” Mr. Ellis’ alleged negligence. Under the standard he

urges us to adopt, he would establish a prima facie case by showing that Mr. Ellis’

alleged negligence created an increased risk that he would suffer such damages.

         The practical difference between the two standards, as we understand it, is

that under the “but for” test, Mr. Sherman will be required to prove that Ms.

Silverman would have signed the agreement if the waiver of disclosure clause had

been included, but under the “increased risk of harm” standard, he would be required

to show merely that Mr. Ellis’ “failure to include the statutory waiver language in

the Agreement left it susceptible to challenge by Ms. [Silverman],” a challenge

which did, in fact, occur and resulted in the increased litigation expenses.25 Under

this theory, Mr. Sherman would not be required to show that Ms. Silverman would

have signed the agreement had the waiver of disclosure language been included.

24
     Oakes, 2013 WL 3147313, at *1 (citing Weaver, 1986 WL 17121, at *1).
25
     Appellant’s Op. Br. at 33.

                                              10
         Mr. Sherman cites one Delaware case, United States v. Anderson, as

supporting his position. 26         That case, however, involved a claim for medical

negligence, not legal negligence. The “increased risk of harm doctrine” provides

“that a person may recover damages if the person’s risk of suffering a negative

medical condition is increased because of medical malpractice.”27 Mr. Sherman’s

reliance on Anderson is misplaced. In that case, we held that “increased risk of

harm accompanied by physical injury is a compensable element of damages under

Delaware law.”28 We went on to conclude that “[c]ompensating a tort victim for

an increase in risk which results from some harm caused by a tortfeasor fits

comfortably within traditional damage calculation methods.”29 In that case we did

not redefine the traditional “but for” test for establishing proximate cause. A more

correct reading of the increased risk of harm doctrine is that an increased risk of

harm is an element of damages in medical negligence cases after it is established

that the medical professional was negligent and his negligence caused injury, i.e.,

where causation has already been established. In fact, in that case we declined to

consider whether an independent cause of action could be brought for an increased

risk of future cancer.

26
     669 A.2d 73 (Del. 1995).
27
     Id. at 75 (quoting U.S. v. Cumberbatch, 647 A.2d 1098, 1100, n.3 (Del. 1994)).
28
     Id. at 74.
29
     Id. at 78.

                                                11
       Mr. Sherman has not pointed to any case from this Court, nor are we aware of

one, where the proximate cause test he advocates has been adopted.                      In legal

negligence cases involving alleged litigation negligence, we have applied the “but

for” test for causation.30 We see no basis to depart from that standard when the

case involves alleged transactional legal negligence.

       In rejecting Mr. Sherman’s relaxed, “increased risk of harm” standard for

proximate causation, the Superior Court, relying on a Supreme Court of Mississippi

decision,31 held that:

               Proving causation in a transactional malpractice claim, as
               in a litigation malpractice claim, requires proof that, but
               for the attorney's negligence, the plaintiff would have
               obtained a more favorable result. While ultimate success
               in litigation in a case like Mr. Sherman's does not per se
               bar a malpractice claim, when the claim involves alleged
               negligence in not proposing or including an additional
               term in a proposed agreement, the plaintiff-client must
               first show that the other party would have agreed to the
               omitted term.32

30
   Oakes, 2013 WL 3147313, at *1 (citing Weaver, 1986 WL 17121, at *1); See also Flowers,
2011 WL 3592966, at *2.
31
   Sherman, 2020 WL 30393, at *12 (citing Gulfport OB-GYN, P.A. v. Dukes, Dukes, Keating &
Faneca, P.A., 283 So.3d 676, 681 (Miss. 2019) (“Causation in a negligence-based legal-
malpractice claim for a breach of the duty of care requires proof that, but for the attorney's
negligence, a more favorable result would have been obtained. Thus, when the complaint is that
the attorney should have proposed different or additional terms to a transaction, the malpractice
plaintiff must show that such terms would have been accepted by the other party or that the client
would not have entered into the deal and would have been better off for doing so. Absent such
proof there exists no genuine issue of material fact as to causation of damages, and summary
judgment is appropriate.”)).
32
   Id. at *13.

                                               12
      We agree with this ruling. In order for Mr. Sherman to prevail in his legal

negligence claim against Mr. Ellis, he must show that Ms. Silverman would have

agreed to the omitted waiver of disclosure clause.

      Mr. Sherman has cited authorities from other jurisdictions which he contends

support applying the “risk of harm” standard in legal negligence cases. We find

those cases unpersuasive, and decline to follow them.

                                          B.

      We disagree, however, with the trial court’s grant of summary judgment.       In

the agreement, Ms. Silverman assented to the waiver of many rights, including a

waiver of alimony, a waiver of the elective share, a waiver of any rights of any share

in Mr. Sherman’s estate, and even a waiver of her rights in marital property which

Mr. Sherman might acquire in his name alone during the marriage. Reviewing the

grant of summary judgment de novo, we think that the sweeping extent of these

waivers, together with Ms. Silverman’s acknowledgement that her attorney advised

her not to sign the agreement, her signing after almost all attempts at negotiation had

failed, and the attendant facts and circumstances, create a circumstantial, jury

question of fact as to whether she would have signed had the clause waiving the

disclosure of assets beyond the disclosure provided been included. Accordingly,

we believe that the grant of summary judgment must be reversed.

                                          13
                                           C.

         Mr. Ellis has filed a cross-appeal in which he states the question presented as

follows: “Whether the Superior Court erred in holding that a waiver of disclosure

of assets provision in a premarital agreement bars any subsequent challenge to that

agreement on unconscionability grounds, even if the disclosure of assets has not

been fair and reasonable.”33 He argues that 13 Del C. §326(a)(2)b should not be

read in such a manner. It should be read, he argues, to mean that the parties waive

their rights to additional, supplemental or future disclosures.   It should not be read,

he argues, to shield a party from making inaccurate or fraudulent disclosures.

         When the agreement involved in this case was before us in Silverman v.

Silverman, we stated that “to render the premarital agreement unenforceable under

the statute, the spouse contesting enforcement must prove that the agreement was

unconscionable and prove three other grounds – lack of fair and reasonable

disclosure of the other spouse’s property or financial obligations, non-waiver, and

lack of adequate knowledge of Husband’s property and financial obligations.” 34

We reaffirm that ruling here.

         In this case the waiver of disclosure clause was not included in the agreement.

Therefore, how it might be interpreted if it were included is not before us.         In

33
     Appellee’s Ans. Br. at 18.
34
     Silverman, 206 A.3d at 832-33.

                                           14
Silverman, we found that the disclosure in this case was, in fact, a fair and reasonable

disclosure of Mr. Sherman’s financial condition. Therefore, the effect of an unfair,

unreasonable, or fraudulent disclosure is not before us.       We are not inclined to

consider questions which are beyond the scope of the facts of this case.

                               V.     CONCLUSION

      For the foregoing reasons, the judgment of the Superior Court is reversed and

the matter is remanded for further proceedings consistent with this opinion.

                                          15