A jury has delivered a $5 million legal malpractice verdict against a Detroit law firm in the U.S. District Court for Eastern Michigan. Jaffe, Raitt, Heuer & Weiss was retained to “vet” a Minneapolis-based office furniture manufacturer for potential acquisition for a client. The firm allegedly failed to advise the client concerning the buyer’s $3.26 million underfunded pension liability. In fact, the firm advised its clients that it had no exposure for the liability.
The Appellate Division of the Supreme Court of New York has reversed a lower court’s Order that emails between firm lawyers and their in-house counsel were not protected under attorney-client privilege. The reversal follows a national trend as the highest Courts in Massachusetts, Oregon, and Georgia have also reached similar decisions.
The case involved an employee who hired a firm to negotiate a separation agreement with his former employer. After consulting with lawyers at the firm, the employee initiated a lawsuit in federal court and instituted arbitration proceedings against the employer. Just prior to the arbitration, the employer advised that they intended to call one of the employer’s attorneys to testify. The attorney had met with in-house counsel regarding his ethical obligations. The employee lost his arbitration and then settled the federal court case for a nominal amount.
Two years later, the employee initiated a legal malpractice action against the firm. During discovery, a firm attorney claimed that discussions in emails between him and in-house counsel were protected under attorney-client privilege. The employee moved to compel production of the emails, which the lower court granted.
The Texas Court of Appeals has reversed a trial court’s Order, granting a law firm and two of their attorneys’ motion to dismiss a legal malpractice action. The Defendants had asserted that Plaintiff’s legal malpractice action was barred by the statute of limitations. While the trial court had not specified its reasons for granting the motion, the Court of Appeals found that the trial court had abused its discretion.
The legal malpractice case arose from a 1992 suit in which several parties had sued the Plaintiff, seeking a declaration of rights regarding a water well. The Defendants in the present legal malpractice action had represented the Plaintiff. Plaintiff lost the case and appealed. During the pendency of his appeal, the Plaintiff filed for bankruptcy. In January, 1998, the Texas Court of Appeals reversed, in part, and remanded.
On July 31, 2002, the Plaintiff filed his legal malpractice action against the Defendants. That suit was subsequently dismissed in July, 2011 for lack of prosecution and final judgment entered on July, 2013. On June 24, 2015, Plaintiff re-filed his legal malpractice claim. The trial court dismissed, assessed sanctions of $8,500 and awarded attorneys’ fees to Defendants, designating the Plaintiff as a “vexatious litigant”.
This case involves a company, Henry S. Miller Commercial Company (“HSM”), who set up commercial property transactions by a buyer who claimed to be the beneficiary of a large trust fund. The buyer was in fact a truck driver who had no trust fund. When the deals failed to close, the prospective sellers were forced to liquidate their properties at a loss. They then sued HSM for fraud, and obtained a judgment in the amount of $8.9 million. HSM then sued its insurance carrier when it refused to pay the judgment. HSM eventually settled that action for close to $6 million.
HSM also sued its lawyers in the underlying case for legal malpractice and also for gross negligence. HSM asserted that the lawyers were grossly negligence for failing to name the truck driver in the underlying action. The trial judge in the legal malpractice action granted a direct verdict for the lawyers on the gross negligence claim, but permitted the legal malpractice claim to go forward. At trial, a jury found in favor of HSM in the amount of $4.6 million. The judge issued a final judgment with no monetary award, after applying the $6 million paid by the insurer. Both parties appealed.
The Fifth Circuit Court of Appeals reversed the directed verdict for the lawyers on gross negligence, and remanded the case for a new trial rejecting all other appellate issues. The Appeals Court found that the truck driver was a person the jury could have considered to be responsible for the unsuccessful real estate transactions, and that the lawyers’ failure to name him may have shifted additional liability on HSM. The court found that it was a factual question whether the lawyers were grossly negligence in failing to bring the truck driver into the case.
The Fourth District Court of Appeals of California recently reversed a decision of the trial court dismissing a legal malpractice claim based on a lapsed one-year statute of limitations. In Kelly v. Orr, a grantor created a trust agreement that named a successor trustee upon the resignation of the current trustee. However, when the current trustee resigned, the daughter of the grantor seized control of the trust and became trustee. She then retained a law firm using trust assets and followed their advice on how to manage the trust.
The Appellate Division of the Supreme Court of New York recently affirmed the decision of New York’s Supreme Court, dismissing a legal malpractice claim. In McPhillips v. Bauman, a physician employed by the Department of Corrections sued an Assistant Attorney General who was assigned to represent him in a lawsuit brought by the estate of a deceased inmate.
The Supreme Judicial Court (“SJC”) recently suspended a Massachusetts attorney, who made intentional misrepresentations to four of his clients. In the matter of Alexander R. Cain, an attorney was found to have fabricated documents, lied to his clients, and failed to diligently pursue his client’s claims and interests.
The New York Appellate Division has affirmed a judgment dismissing a legal malpractice claim against a New York attorney and his law firm. In Mizuno v. Nunberg, a client hired an attorney to represent him in bankruptcy proceedings, after a bank foreclosed on the client’s property. The client was unable to stop the foreclosure, and then filed a legal malpractice action against the attorney. He was successful in that action and recovered the value he lost as a result of the foreclosure sale.
California’s Fourth District Court of Appeals has upheld a lower court’s dismissal of a legal malpractice action on the basis that it was barred by the applicable statute of limitations. In Torres v. Blankenship, a client hired an attorney to represent her in various legal proceedings over a two year period. Unbeknownst to the client, the attorney had been under investigation by the State Bar of California, and was suspended from practicing law for the final two months of his representation. The attorney subsequently informed the client of his suspension and she terminated his services.