Legal Malpractice Update

Legal-Malpractice Update

By: Michael J. Sullivan and David C. Anderson, Collins Einhorn Farrell P.C.

michael.sullivan@ceflawyers.com, david.anderson@ceflawyers.com

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Courts will review a plaintiff's underlying claims for frivolousness individually when determining whether an award of attorney fees and costs to the prevailing party is appropriate pursuant to MCL 600.2591. Where each claim is frivolous, an award of all fees and costs incurred in the matter may be justified. [1]

Law Offices v First Merit Bank, unpublished opinion per curiam of the Court of Appeals, issued November 15, 2016 (Docket Nos. 328197; 328699); 2016 WL 6781558.

The Facts:Plaintiff entered into a loan agreement with First Merit Bank and gave it two promissory notes, one of which was secured by a mortgage on real property purchased and used as the situs of plaintiff’s law office. After a default on the notes, the bank filed a collection action and initiated foreclosure proceedings in circuit court. Plaintiff filed counterclaims based on various tort, contract, and statutory theories. The foreclosure went through and the bank purchased the property at a sheriff's sale. Plaintiff law office did not redeem the property, but failed to vacate.

The bank then filed a district court action for summary possession to remove plaintiff from the property. The bank succeeded and the district court issued an order declaring that the sheriff's sale was valid and the bank was entitled to possession. The district court authorized an attorney and a court officer (also defendants) to assist in removing the tenant and restoring the possession of the property to the bank, which was accomplished shortly after issuance of the order.

Plaintiff sought leave to appeal the district court ruling. At that time, the bank's claims as well as plaintiff's counterclaims were still pending in the circuit court action. The circuit court ultimately denied leave to appeal the eviction, awarded summary disposition to the bank, and dismissed plaintiff's counterclaims.

Notwithstanding the full litigation of the propriety of the foreclosure and eviction, plaintiff filed a new circuit court suit against the bank, attorney, law firm, court officer, and law office alleging forcible ejectment and unlawful detainer, trespass, abuse of process, tortious interference with business relationships, defamation, and conversion. The circuit court dismissed each claim on defendants’ motions for summary disposition. The circuit court also found that plaintiff's claims were frivolous and awarded all of the defendants their attorney fees and costs. Plaintiff appealed the decision.

The Ruling: The Court of Appeals first dismissed plaintiff's argument that the circuit court judge should have recused himself because the same judge had a role in the eviction matter. The Court of Appeals was quick to point out that the judge only heard the eviction matter pursuant to the circuit court's appellate jurisdiction and dismissed plaintiff's motion for leave to appeal on procedural grounds. In doing so, the Court rejected plaintiff's argument that the judge's "rulings in his appellate capacity (and on procedural grounds) indicate[d] that the judge must have formed beliefs about the merits of the current action that cannot be set aside." The Court reasoned that a trial court’s acquaintance with a party's prior history is not indicative of bias or prejudice requiring recusal. And because there was no other evidence of actual impropriety or the appearance of impropriety, the judge had no obligation to recuse himself.

Next, the Court addressed each of plaintiff's claims and the circuit court’s award of attorney fees and costs. In doing so, the Court looked at each claim individually. As to the forcible ejectment and unlawful detainer claim, the Court held it was frivolous because the bank ejected plaintiff only pursuant to court orders. Plaintiff was aware of those orders when it filed its complaint, asserting the eviction was "without a court order and without notice." These claims were "devoid of legal merit and factually untrue," making the claim frivolous. The same applied to plaintiff's trespass claim. Plaintiff knew that defendants were authorized to enter the premises, and therefore could not trespass. The Court found plaintiff’s abuse-of-process claim equally deficient because it "lacked sufficient facts to establish any ulterior motive," which is required for such a claim. Because "[o]n its face, the bank's motive for obtaining the eviction order was to regain possession of the property securing a promissory note that was in default," the claim was frivolous. The bank’s legitimate motive also dismantled plaintiff's intentional-interference-with-business-relations claim. That claim required a showing that "defendants acted both intentionally and either improperly or without justification." Defendants had not acted improperly, but only pursuant to court order. Further, as to plaintiff's defamation claim, the court found that "plaintiff does not identify any oral or written statement made by any defendant." Without any such allegation, the claim was frivolous and failed to allege the required elements. Finally, plaintiff's conversion claim was similarly deficient. The claim required a showing that the bank wrongfully used plaintiff's personal property for the bank’s own personal interest. The only arguable "use" of plaintiff's property was when the bank removed it from the premises—but this was lawful and consistent with the bank’s rights pursuant to court order, and thus could not establish conversion.

Finally, the Court of Appeals held that all of the fees awarded were reasonable. This included $10,399.88 for the court officer and law office, $15,074 for the bank, and $56,814 for the attorney and law firm. The Court held that the award for the attorney and law firm was justified as their counsel also became co-counsel for the bank. The court found that the rates were reasonable, and relied on testimony that the first counsel for the bank and counsel for the attorney and law firm shared information in order to reduce costs.

A denial of an application for leave to appeal for "lack of merit in the grounds presented" is tantamount to a decision on the merits. Such a decision will sever the proximate-cause element of a legal-malpractice claim based on failing to timely file an appeal of right. [2]

MacDowell v Attorney and Law Firm, unpublished opinion per curiam of the Court of Appeals, issued August 23, 2016 (Docket No. 328902); 2016 WL 4468714.

The Facts: Attorney represented plaintiff in his divorce, with a trial occurring in January 2013. A written opinion was issued in February 2013, and a judgment of divorce was entered on May 6, 2013. Plaintiff asserted that attorney didn't advise him of the judgment until the end of June 2013, after the time for filing an appeal of right had passed. The attorney filed an application for leave to appeal, which was denied “for lack of merit in the grounds presented.” Plaintiff asserted the failure to inform him of the judgment prior to the time to file an appeal of right constituted malpractice because it cost him the ability to file such an appeal. The defendants argued, and the trial court agreed that, because the Court of Appeals denied the application "for lack of merit in the grounds presented," the appeal would not have been successful. As a result, the plaintiff could not show that but for the attorney's actions, he would have succeeded on appeal. Plaintiff appealed that ruling.

The Ruling:The Court of Appeals affirmed the trial court's ruling. The Court upheld the legal principle that "denial of an application 'for lack of merit in the grounds presented' is a decision on the merits of the issues raised." Such a decision was "tantamount to a decision on the merits of the arguments which would have been raised in a timely filed appeal of right." The Court pointed out that the issues raised in the denied application for leave to appeal were the same issues that plaintiff would have asserted in a timely filed brief in an appeal of right. And because those same issues were denied "for lack of merit in the grounds presented," plaintiff couldn't establish that defendants' failure to file a timely appeal of right proximately caused his injury.

In sum: A decision on the merits of an application for leave to appeal may prevent an adversely affected client from successfully pursuing a malpractice claim. This is particularly true when an appeal of right is not timely filed and an application for leave to appeal is denied "for lack of merit in the grounds presented."



[1] The authors acknowledge the valuable assistance of Jason M. Renner, a former associate of the firm.

[2] The authors acknowledge the valuable assistance of Joshua N. Brekken, an associate of the firm.

Categories: Volume 7-3

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