Legal Malpractice Summary Dismissal Victory by Phillip E. Seltzer and Samantha Heraud

Phil and Samantha 2017As their initial response to a Legal Malpractice Complaint, the Lipson Neilson team of Phillip E. Seltzer and Samantha Heraud challenged the timeliness of the lawsuit under the applicable statute of limitations, after plaintiff terminated a Tolling Agreement. Plaintiff entered into a consent judgment of divorce, which contained a forfeiture provision that allowed for the complete forfeiture of any asset not disclosed at the time of the entry of the judgment.

Plaintiff failed to disclose his ownership and beneficiary status of a 1.5 Million Dollar life insurance policy on his sibling, who died six weeks before the entry of Judgment. Plaintiff’s ex-wife filed a post-judgment motion to enforce the forfeiture clause and obtain the proceeds. Plaintiff then sued his divorce lawyer for including the forfeiture clause in the Consent Judgment. While the underlying litigation over the forfeiture clause played out over the next two years, plaintiff and his prior lawyer (represented by the Lipson, Neilson team) negotiated a limited Tolling Agreement.

A key provision of the Agreement limited the tolling of the legal malpractice claims to those “as currently alleged” in the filed Complaint. It also expressly prohibited the filing of any new claim during the duration of the Tolling Agreement, unless the Agreement was cancelled by providing a thirty-day notice. The Agreement also confirmed that other claims or defenses were not waived or diminished by the agreement.

After plaintiff lost the forfeiture battle to retain the life insurance proceeds, he cancelled the Tolling Agreement. Under Michigan’s two-year statute of limitations, plaintiff only had three untolled days to file a timely complaint, once the 30-day termination notice period expired. Plaintiff’s new counsel eventually filed a new Complaint, but did so five days after the untolled time expired. The new Complaint also contained brand new claims of legal malpractice and new claims of breach of fiduciary duty (which has a longer statute of limitations).

The Lipson Neilson team filed a Summary Disposition motion in response to the Complaint. The Trial Court granted the motion and dismissed the new Complaint with prejudice, based on three findings:

    1. All claims were time barred under Michigan’s two-year statute of limitations, which started accruing from the date the lawyer discontinued serving the client regarding the matter out of which the alleged malpractice arose. In this case, discontinuance occurred on the date the matter was completed via entry of the Consent Judgment, even though additional communications between Plaintiff and the lawyer continued for months concerning the prior completed divorce matter;
    2. The new legal malpractice claims that were added, beyond the original claim, were independently time barred because they were not tolled under the terms of the Tolling Agreement and plaintiff could have cancelled at any time to timely bring those claims and did not; and
    3. The new Breach of Fiduciary Duty claim was also never tolled under the limited terms of the Tolling Agreement, as was now time barred. This claim was also deemed legally redundant of and subsumed in the time barred legal malpractice claim.

This case highlights the importance of “thinking ahead” at all stages in the litigation, including during the negotiation of any pre-suit agreements.

Dax Watson Moderates Panel Discussion Titled “What’s Your Verdict? Potential Pitfalls in PL Defense” at 2017 PLUS International Conference

Dax Watson, Managing Partner of Lipson Neilson’s Phoenix office, was selected by the Professional Liability Underwriting Society (PLUS) to moderate a panel discussion titled, “What’s Your Verdict? Potential Pitfalls in PL Defense.”

The trial of a professional liability loss allows for a number of defenses, but presenting such defenses to a jury poses a number of challenges. This panel explored those challenges through a mock trial of a legal malpractice claim involving estate planning with disgruntled family members. The audience viewed evidence, heard arguments, and was asked to decide the case as if they were on the jury.

Stacked with top speakers from across the country, the 2017 PLUS Conference was a destination event for professional liability insurance professionals. Held during November 1-3, 2017 at the Marriott Marquis in Atlanta, Georgia, this year marked the 30th Anniversary for this event.

Dax Watson focuses his law practice in commercial litigation with an emphasis in real estate matters and professional liability defense. His clients include professionals in the fields of real estate, law, accounting, architecture, and engineering. He regularly appears and represents clients in regulatory matters before the Arizona Department of Real Estate and other state and federal agencies.

About Lipson Neilson
Founded in 1985, Lipson, Neilson, Cole, Seltzer, Garin, P.C. has offices in Arizona, Nevada, and Michigan. The firm is widely known for its excellence in the professional liability lines, offering invaluable insight and experience to its clients across all industries.

Contact: Dax Watson
Phone: 602-382-1500
Email: DWatson@lipsonneilson.com

Summary Dismissal Victory Affirmed by Phillip E. Seltzer and Samantha K. Heraud In Defense of Lawyer and Law Firm on Claim of Legal Malpractice

Phil and Samantha 2017By Opinion dated October 24, 2017, the Michigan Court of Appeals recently affirmed a prior trial court victory achieved by the Lipson, Neilson team in obtaining summary dismissal of a legal malpractice claim on the ground of collateral estoppel. In this case, a former divorce Client sued his attorneys for allegedly coercing him to enter into a Consent Judgment of Divorce, which he asserted was inadequate and patently unfair. The Client had previously tried to set aside the Consent Judgment, through other counsel, based on the claim the Client had been coerced to settle. He was unsuccessful before the trial court and the Court of Appeals. The Michigan Supreme Court also denied leave, ending the post-judgment effort to set aside the divorce Consent judgement.

Afterward, the client filed his legal malpractice claim against his former attorneys. Although the client alleged numerous grounds of malpractice, they were ultimately predicated upon the notion that the negligence and misconduct of the attorneys resulted in forcing and coercing the underlying Consent Judgment. However, because the Client had a full opportunity to litigate the issue of coercion, and lost on that, he was now collaterally estopped from relitigating the same issue of coercion in the legal malpractice case. The summary dismissal entered by the trial court was affirmed by a unanimous panel of the Michigan Court of Appeals.

Summary Dismissal Victory Achieved by Phillip E. Seltzer and Shawn Grinnen In Defense of Lawyer on Claim of Legal Malpractice

Phil and Shawn PhotoA first responsive motion for summary dismissal of a legal malpractice claim was recently granted in favor of a Defendant-Lawyer represented by Lipson Neilson attorneys Phillip E. Seltzer and Shawn Grinnen. The Defendant-Lawyer represented Plaintiff in a prior criminal proceeding involving his alleged failure to register as a sex offender for a prior offense and engaging in sexually abusive conduct with a minor over Facebook. After waiving the preliminary hearing and obtaining discovery, the Plaintiff decided to terminate Defendant-Lawyer and new counsel was appointed. Defendant-Lawyer formally withdrew via court order.

Over a month later, while represented by successor counsel, Plaintiff entered into a voluntary plea agreement, admitted his guilt of the criminal charges on the record, admitted to the location of the crimes, affirmed that his decision to plead guilty was voluntary and without threats or other inducements, and that he was knowingly waiving his right to trial and defend. While serving a four-year sentence, Plaintiff sued Defendant-Lawyer for malpractice, claiming that the waiver of the preliminary exam was critical since the alleged crimes occurred in a different county and no jurisdictional basis existed for his prosecution or guilty plea in the County Court where he was charged.

As an initial response to the Complaint, the Lipson Neilson team filed a motion for summary dismissal arguing that the claim of legal malpractice was barred because: (i) Plaintiff’s voluntary plea of guilty cut off all causation for Plaintiff’s injuries (wrongful incarceration and loss of business and loss of income) as a matter of law, and (ii) Plaintiffs’ statements on the record, concerning his guilt and the location of the underlying crimes, judicially estopped Plaintiff from asserting the crimes occurred elsewhere or that Defendant-Lawyer failed to raise a jurisdictional argument at the preliminary exam. Additionally, during the dismissal motion hearing, Plaintiff’s asserted for the first time that his plea agreement was not voluntary and he lied under oath because his lawyer supposedly told him to so in order to get a more lenient sentence.

As a result, the Lipson Neilson defense counsel spontaneously argued that the legal malpractice claim was also barred under the the doctrine of in pari delicto – the wrongful conduct rule – because Plaintiff’s criminal conduct in committing perjury at his plea hearing was the central cause of his incarceration and consequential damages. Accordingly, such wrongful conduct prohibited Plaintiff from pursuing any civil remedy. The Trial Court granted the motion, adopting the legal grounds presented, and summarily dismissed the case.

Phillip Seltzer and Shawn Grinnen Successfully Defend Law Firm Client Against Tortious Interference and Slander of Title Claims

Victory Achieved by Phillip E. Seltzer and Shawn Grinnen In Defense of a Law Firm Client against Tortious Interference and Slander of Title Claims

Phil and Shawn PhotoThe client-Law Firm, which specializes in representing condominium and community entities, initiated a lawsuit against a condominium developer seeking monetary and declaratory relief. The suit was based on a statute that appeared to mandate the automatic reversion of legal title of unbuilt condominium units to the Condo Owner Association if, after ten years, the Developer failed to build and complete those units per a filed Master Plan.

After a ten-year building hiatus, the Developer began undertaking the build out of three lots (out of dozens still unbuilt) and was in the process of selling one of the lots. The Law Firm, citing the statute, filed a Claim of Interest in the real estate records, on behalf of its client (the Condo Owner Association), asserting property rights in all unbuilt lots, including the three under construction.

A lawsuit followed by the client-Law Firm (on behalf of the Condo Association) against the Developer. Developer filed separate legal claims against the Law Firm claiming that its legal advice and actions constituted slander of title and tortious interference with contractual relations and interference with the economic expectancies of the Developer.

The Lipson, Neilson team argued that no improper tortious interfering conduct existed to sustain the interference claims, only lawful and professional legal advice to clients proffered in good faith to assist in protecting disputed property rights. The trial judge agreed and dismissed the interference claims, noting that the filing of a lawsuit to declare disputed property rights is the essence of proper – not tortious – conduct. The Trial Court also agreed that no slander of title claims could survive because of the lack of legal malice – namely, the law firm engaged in a good faith interpretation of a statute that had never been the subject of a legal opinion by any appellate court or the Michigan Supreme Court.

Under this circumstance, malice did not exist when the position advocated by the law firm is in good faith and posited a reasonable belief in a valid protectable property interest. The non-existence of malice was underscored by the lack of any existing legal authority to contradict the Law Firm’s reasoned belief (even if it is later determined to be legally inaccurate.)

A Bankruptcy Court Order Permitting Creditors to Pursue Legal Malpractice Claims in State Court in the Name of a Debtor’s was an Impermissible Assignment and Violates Public Policy

Joe Garin and Jessica Green 2016By Joseph P. Garin, Esq. and Jessica A. Green, Esq., of Lipson, Neilson, Cole, Seltzer & Garin, P.C., Las Vegas, Nevada; as published in the March 2017 issue of the eAdvisory published by the American Bar Association’s Standing Committee on Lawyers’ Professional Liability

In Tower Homes, LLC v. William H. Heaton, the Nevada Supreme Court concluded a bankruptcy court order permitting a group of creditors to pursue a legal malpractice claim in the debtor’s name constituted an impermissible assignment of the claim which, as a matter of public policy, is prohibited under Nevada law.

Tower Homes, LLC (“Tower”) retained attorney William Heaton to assist with a residential common ownership project. Various individual investors (hereinafter the “Purchasers”) made earnest money deposits before the project was complete and entered into contracts with Tower to reserve condominiums. The project failed and Tower entered Chapter 11 bankruptcy protection.

The Purchasers were among the many creditors in the bankruptcy proceedings. In 2008, the bankruptcy trustee created a plan of reorganization and the bankruptcy court entered a confirmation order. Per the order, the trustee and bankruptcy estate retained all legal claims. In 2010, the bankruptcy trustee entered into a stipulation and order with the Purchasers recognizing the trustee did not have sufficient funds to pursue any legal malpractice claims related to the Purchasers’ lost earnest money deposits, and instead allowed the Purchasers to pursue the claim in Tower’s name.

Pursuant to the 2010 order, in 2012, the Purchasers filed a legal malpractice lawsuit against Heaton, naming Tower as plaintiff. Dissatisfied with the Purchasers’ standing to pursue the legal malpractice claim, the state trial court allowed the Purchasers to seek an amended order from the bankruptcy court. In 2013, the bankruptcy court entered an additional order authorizing the Purchasers to pursue any and all claims on behalf of Tower (specifically including the malpractice case against Heaton) and noted that the recovery “shall be for the benefit of the [P]urchasers.”

Heaton moved for summary judgment in the district court arguing the 2013 bankruptcy stipulation and order constituted an impermissible assignment of a legal malpractice claim. The Purchasers argued federal law permits a Chapter 11 bankruptcy plan to allow named representatives of the estate to bring legal malpractice claims on behalf of the estate, with or without an assignment. The Purchasers also contended that they were assigned only the proceeds, not the entire malpractice claim. The Nevada Supreme Court previously determined that in a personal injury context, the difference between an assignment of an entire claim and an assignment of proceeds was the retention of control; reasoning that when only proceeds are assigned, the original party maintains control over the claim, but when an entire claim is assigned, a new party gains control over it. Despite these arguments, the trial court granted summary judgment in Heaton’s favor on the basis that there was an assignment of the legal malpractice claim contrary to Nevada law. The Purchasers appealed.

The Nevada Supreme Court affirmed summary judgment in favor of the attorney. In its decision, the Nevada Supreme Court reinforced the traditional notion that the assignment of legal malpractice claims is generally prohibited and “[a]s a matter of public policy, [Nevada] cannot permit enforcement of a legal malpractice action which has been transferred by assignment…but which was never pursued by the original client” as “[t]he decision to bring a malpractice action against an attorney is one peculiarly vested in the client.” The Nevada Supreme Court agreed that while a bankruptcy plan may allow an estate representative to pursue the estate’s claim without an assignment so long as the representative is prosecuting the claim “on behalf of the estate,” “[i]f a party seeks to prosecute the action on its own behalf, it must do as an assignee, not a special representative.” The Court reasoned that because the bankruptcy court’s order transferred control and proceeds of the legal malpractice claim to the Purchasers, the Purchasers were not pursuing claim on behalf of the estate as permitted by federal law, but rather pursuing it for their own benefit.

Practice Note: This decision runs contrary to recent decisions in other jurisdictions that seem to relax the standard privity requirements in legal malpractice claims and permit assignments of legal malpractice claims to non-clients in a business context.

Phillip E. Seltzer on Panel of Experts for ICLE Webinar Titled “Identify and Pursue Legal Malpractice Claims”

Phillip E. Seltzer, a Principal and Shareholder of Lipson, Neilson, Cole, Seltzer, Garin, P.C., was selected by the prestigious Institute for Continuing Legal Education (ICLE) to be on a panel of experts for a webinar titled “Identify and Pursue Legal Malpractice Claims.” Posted on ICLE.org, this webinar is available for member viewing and provides continuing legal education credits.

The overall theme of this webinar addresses identifying legal malpractice as a claim, the elements necessary to sustain such a claim, and the available defenses that may bar or defeat such an action. Topics discussed include: strategies for identifying the required elements for a potential malpractice action; the evaluation of the defenses that might bar recovery or defeat a claim; establishing or refuting the applicable standard of care with expert testimony; identifying when a conflict of interest results in divided loyalties, when such a conflict may form the basis of a claim, and the defenses to such conflict of interest claims; and distinguishing malpractice liability from a violation of professional ethical standards and if or when such standards are relevant to litigating a malpractice claim.

Phillip E. Seltzer is an AV-Preeminent® rated attorney that is recognized nationwide for his work in defending legal malpractice claims. He focuses his practice on the litigation of business torts and the defense of professional liability claims, primarily dealing with lawsuits against attorneys. Mr. Seltzer also defends professionals in other fields, including architecture and design professionals, accountants, real estate agents, insurance agencies and insurers, and E&O claims against directors, officers, and employers.

He has served as a hearing officer for the Character and Fitness Committee of the State Bar of Michigan, has published numerous articles and has publicly presented on a variety of topics regarding the defense of legal malpractice claims. He is actively involved in organizations focusing on the law governing lawyers, professional liability, and lawyers’ ethical responsibilities.

Contact: Phillip E. Seltzer
Phone: 248-593-5000
Email: PSeltzer@lipsonneilson.com

Attorney Amber Williams Joins Lipson Neilson Las Vegas Office

Amber WilliamsAttorney Amber Williams has joined the firm’s Las Vegas office as an associate. Ms. Williams’ practice focuses primarily in the areas of insurance defense, commercial litigation, and construction law. She also has experience in the areas of family law, trusts, estate and probate law, and personal injury law.

Ms. Williams graduated cum laude from the University of Nevada, Las Vegas with a B.S. in Economics and a B.S. in Business Management. She received a J.D. from the Arizona Summit School of Law in Phoenix, Arizona. While in law school, Ms. Williams was a member of Arizona Summit moot court team and participated in three national moot court competitions, winning a best brief award in two of the competitions. Admitted to practice law in Nevada, Ms. Williams previously worked for several civil litigation firms in Nevada.

About Lipson Neilson
Founded in 1985, Lipson, Neilson, Cole, Seltzer, Garin, P.C. has offices in Las Vegas, Phoenix, and Bloomfield Hills. The firm is widely known for its excellence in the professional liability lines, offering invaluable insight and experience to its clients across all industries. The firm represents clients in Nevada, across the USA and around the world.

Lipson Neilson Attorneys to Speak on Professional Liability Topics at 2016 Claims and Litigation Management Conference

Joe Garin, Karen Smyth, and Dax Watson, will be featured on panels of professional liability industry professionals at the 2016 Claims and Litigation Management Boston Conference held on July 14-15, 2016.

Joseph Garin resize 3Joe Garin, Managing Partner of the firm’s Las Vegas office, will discuss “The Lawyers: Global Perspectives on Data Collection, Transfer, Use and Disclosure.” This panel will cover expense and loss exposure to law firms and their clients inherent in data collection, transfer, use and disclosure; describe the emerging legal, regulatory and ethical issues facing the legal profession; and explore techniques to manage and transfer these risks. Joe Garin is consulted nationally on the defense of professional liability claims, ethics, employment, insurance coverage disputes, director and officer claims, and risk management. He is also experienced in complex and commercial litigation matters, including cases involving breach of contract and unfair business practices. Joe is a graduate of the Litigation Management Institute.

_DSC9496-8_0x10_0-03A-Q01Karen Smyth, a Partner in the firm’s Bloomfield Hills office and President of the Michigan Claims and Litigation Management Chapter, will discuss “Cyber Attacks on Professionals – How Far Will They Raise The Standard of Care?” This session will discuss types of attacks against professionals that give rise to claims by their clients, how to prevent and then defend lawsuits relating to such attacks, and the quandary of the standard of care: The more we improve how we deal with attackers the higher the standard becomes for everyone. Karen Smyth has considerable experience in the defense of professional liability cases, including legal malpractice, medical malpractice, and employment practices litigation. Karen is a graduate of the Litigation Management Institute.

Dax 81 x 81 compressedDax Watson, Managing Partner of the firm’s Phoenix office, will discuss “Ripped From the Headlines, Don’t Be Next!” Panelists will discuss case studies and volunteer commentary on legal issues and ethical implications. This presentation focuses on identifying these social media risks through recent headlines. The panel will emphasize how lawyers, insureds, claim professionals, and risk managers can successfully navigate social media. Dax Watson’s practice is focused in commercial litigation with an emphasis in real estate matters and professional liability defense. He defends professionals in the fields of real estate, law, accounting, architecture, and engineering. He also defends officers, directors and employers in employment practice liability disputes. Dax has appeared and represented clients in every county in Arizona; and has extensive litigation and civil trial experience, having tried dozens of jury trials.

About Lipson Neilson
Founded in 1985, Lipson, Neilson, Cole, Seltzer & Garin, P.C. has offices in Bloomfield Hills, Las Vegas, Phoenix and Grand Rapids. The firm is widely known for its professional liability lines, offering invaluable insight and experience to its clients across all industries. The firm represents clients throughout the USA and around the world. You can learn more at www.lipsonneilson.com.