Bivins v. Rogers, 2017 WL 5526874 (S.D. Fla., June 01, 2017)
The general trend in Florida is that a third-party beneficiary of your legal services can sue you for malpractice — and it doesn’t matter that the third party was never your client, had zero privity of contract with you, and may have even been adverse to your actual client in related litigation.
This risk is especially acute in contested probate and guardianship proceedings.
Past examples include cases in which the beneficiaries of a deceased ward’s estate had standing to sue the guardian’s lawyers for malpractice (see here), estate beneficiaries had standing to sue a decedent’s estate planning attorneys for malpractice (see here), a ward had standing to sue the attorney for his former court-appointed guardian for malpractice (see here), and a successor personal representative had standing to sue his predecessor’s attorney for malpractice (see here).
The way most probate and guardianship attorneys manage this kind of risk is to obtain court orders approving the actions of their fiduciary clients (preferably in advance). Surely you can’t get sued for actions a judge has previously ruled are OK, right? That’s the question addressed in this U.S. District Court order entered in the Bivins case (which has already been the subject of some commentary on this blog; see here for my take on the court’s ruling regarding Florida’s attorney-client privilege statute as applied to fiduciaries).
Will a guardianship judge’s orders approving your client’s actions shield you from third-party malpractice liability? NO
This case involves a contested guardianship proceeding involving millions of dollars in assets that bled over into a probate proceeding. After the ward died his son (who had been locked in ugly litigation against his father’s court-appointed guardians for years prior to his father’s death) was appointed personal representative of his father’s estate. And guess what he did next? He sued the same lawyers he’d been litigating against for malpractice.
The guardian’s lawyers cried foul, arguing that the claims against them were barred by either res judicata or collateral estoppel because the wrongful actions they were being accused of had all previously been approved of by the guardianship judge.
In what will probably come as a shock to most practitioners — the federal judge ruled against the lawyers despite the prior approving orders. Why? Because the lawyers weren’t actually parties to the underlying guardianship litigation; they were just counsel for one of the parties (the guardian). And because they weren’t parties, they don’t get the defensive benefits of those great orders the guardianship judge had entered saying they and their client had done a great job. Here’s how the court explained its ruling:
These claims are not barred by either res judicata or collateral estoppel for the simple reason that the Defendant attorneys were not parties or in privity with any party before the guardianship court. In Keramati v. Schackow, the court held that res judicata did not bar bringing a legal malpractice case against attorneys who had represented the plaintiffs in an earlier case even though the earlier case was settled and the clients certified that the settlement was “fair and just.” Keramati v. Schackow, 553 So.2d 741 (Fla. Dist. Ct. App. 1989). The court observed that, in the first case, “the adequacy of the amount settled for was not litigated.” Id. at 744. Here, Plaintiff did not have an opportunity to bring its legal malpractice and breach of fiduciary duties against the Defendant attorneys before the guardianship court.
In so finding, the Court rejects the Defendant attorneys’ argument that they are “joint tortfeasors” with the guardians and that there is no way to distinguish the alleged harm by the Defendant attorneys from the alleged harm by the guardians. To the contrary, the Defendant attorneys owe duty of care to the ward as well as to the guardian. Fla. AGO 96–94, 1996 WL 680981 (Fla. A.G. Nov. 20, 1996); see Saadeh v. Connors, 166 So. 3d 959, 964 (Fla. Dist. Ct. App. 2015) (finding that the ward is an intended third-party beneficiary of the attorney for the guardian and that therefore the attorney owed the ward a duty of care).
Next, in arguing that summary judgment should be granted on the claims against the Defendant attorneys for malpractice and breach of fiduciary duty, Defendants contend that the guardianship court already determined that all the actions being complained of were made in the best interest of the ward. The Court rejects this argument. As discussed supra, the guardianship court never considered whether the Defendant attorneys engaged in malpractice or breached their fiduciary duties. As such, the Court will not grant summary judgment on these claims on the basis of the guardianship court’s rulings.
Jury hits lawyers with $16.4M verdict:
So what do you think happened next? Here’s where your natural instincts as a practicing attorney used to thinking un-appealed court orders actually mean something, might be your undoing. If a judge has previously approved every transaction you’re currently being sued over, surely a jury of your peers isn’t going to slam you for that same conduct, right? Wrong!
When the case went to trial things went very, very badly for the defendant attorneys, as reported by the Palm Beach Post in Jury hits lawyers with $16.4M for doing senior wrong in guardianship. Here’s an excerpt:
Advocates for guardianship reform clamored in vain for years that Florida’s system failed to properly protect incapacitated seniors, that its primary purpose had been perverted to line the pockets of greedy attorneys and professional guardians with the hard-earned life savings of the elderly.
Now they can point to a new federal verdict awarding a whopping $16.4 million in a lawsuit claiming that two West Palm Beach attorneys breached their fiduciary duties while running up “unnecessary and excessive fees” of $1 million. .
The jury found on July 28 that attorneys Brian M. O’Connell and Ashley N. Crispin of the Ciklin, Lubitz & O’Connell firm not only breached their fiduciary duty but committed professional negligence.
The lawsuit claimed they failed to get appraisals on two high-end New York City properties being divided among family. They were not of equal value and as a result, Julian Bivins ended up with one that was worth millions less than other.
The jury’s decision to award $16.4 million makes up the difference.
So what’s the takeaway?
Shortly after the trial the primary parties settled, which means there likely won’t be any appeals of the trial court’s pre-trial orders. So for now, the last word we’ll have on whether a res judicata or collateral estoppel defense works in this kind of third-party malpractice litigation is the Bivins case, which I predict is going to give a lot of probate and guardianship lawyers heartburn. Forewarned is forearmed …..