Feddersen v . Garvey, et a l . CV-03-323-JD 01/24/05 P UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Frederick Feddersen
v. Civil N o . 03-323 JD Opinion N o . 2005 DNH 009 Carolyn S . Garvey and Douglas, Leonard & Garvey, P.A.
O R D E R
Frederick Feddersen brings a legal malpractice claim against
Carolyn S . Garvey and the law firm of Douglas, Leonard & Garvey,
P.A., arising from their representation of him during his divorce
proceedings. Garvey and the law firm move for summary judgment
on the ground that Feddersen’s claims are barred by the statute
of limitations. Feddersen objects.
Background
Attorneys Charles Douglas and Carolyn Garvey and the firm
that preceded Douglas, Leonard & Garvey, P.A., represented
Frederick Feddersen in his divorce from Shelley (Cannon)
Feddersen between the fall of 1993 and July of 1995. During that
time, Feddersen’s company, FMT Corporation, was involved in
patent litigation with both Nissei Corporation and Constar
Corporation. FMT received a judgment in the amount of $3.5
million in the Nissei case after years of litigation and great expense to the company, but Nissei appealed the judgment. The
Constar case remained pending, although developments in the case
were favorable to Feddersen.
Feddersen and Cannon signed a property stipulation in
December of 1994. They agreed that Cannon would waive her
interest in any proceeds from the Constar case in exchange for a lump sum payment. Because Feddersen did not have enough money on
hand to pay the agreed amount, the parties also agreed, as part
of the divorce stipulation, that he would pay when Nissei paid
FMT, making the divorce stipulation contingent on the payment of
the Nissei judgment. The stipulation was filed in escrow with
the court pending payment of the Nissei judgment. Counsel for
Feddersen and Cannon were granted several extensions of time,
delaying the final divorce hearing while they waited for the
Nissei judgment to be paid, which would finalize the property stipulation. A later request for a stay was denied, however, and
the court scheduled a contested hearing which, after
continuances, was scheduled for July of 1995.
In April of 1995, the Constar case unexpectedly settled for
$11 million, to be paid in installments. On May 3 1 , 1995, FMT
received the first installment payment of $5 million. The Nissei
judgment still had not been paid, and it was not paid until
several months later. Feddersen’s attorney, Charles Douglas,
2 wrote to the court that the “contingency” in the parties’
stipulation had occurred and asked that the case be scheduled
immediately for an expedited uncontested final hearing.
Feddersen’s attorneys sent Cannon’s attorney a check for the
stipulated amount, without disclosing that the Constar case had
settled and that the Constar settlement, rather than the Nissei judgment, was the source of the money paid to Cannon.
Feddersen’s other attorney, Carolyn Garvey, prepared
Feddersen’s financial affidavit for the final hearing. The
affidavit showed the value of FMT Corporation as of December 3 1 ,
1992, because Garvey thought the parties had agreed that
valuation would be used. The affidavit represented that a full
disclosure had been made of all of Feddersen’s assets, although
no disclosure was made of the Constar settlement. The parties’
stipulation, which had been signed in December of 1994, was approved by the court, and the final divorce decree issued on
July 1 4 , 1995.
Three years later, Cannon, now represented by a new
attorney, Patricia Murphy, petitioned for review of child
support. Carolyn Garvey withdrew from representing Feddersen in
May of 1998, and Attorney Steven Grill filed an appearance on his
behalf. The trial on the child support petition and other issues
was scheduled for March 2 3 , 1999. As part of discovery produced
3 in that proceeding, Cannon’s attorney learned just weeks before
trial of the undisclosed Constar settlement, that the value of
FMT Corporation stated in Feddersen’s affidavit was the value in
1992 rather than 1995, and that Feddersen’s income had been
considerably greater than he had indicated in his affidavit.
Cannon’s lawyer, Murphy, told Feddersen’s lawyer, Grill, that these were significant issues. During trial, in a chambers
conference, Murphy raised the issue of whether the circumstances
of the parties’ divorce stipulation violated the requirements of
the New Hampshire Supreme Court’s decision in Shafmaster v .
Shafmaster, 138 N.H. 460 (1994), and indicated that she would
file a motion to set aside the property settlement if the parties
did not settle the child support issue. Because of the
“Shafmaster” issue, the marital master, Peter Bourque, halted the
trial to give the parties an opportunity to mediate. After the trial was suspended, Grill told Feddersen that
Murphy was considering filing pleadings to overturn the divorce
property settlement because the Constar settlement had not been
disclosed. Grill described the problem as a “Shafmaster” issue.
Feddersen immediately called his former attorney, Carolyn Garvey,
who told him that all disclosures required by law had been made
and that Cannon had waived her interest in the Constar case.
Garvey told him that a motion to set aside the property
4 settlement would not be successful. Grill was upset that
Feddersen had called Garvey about the issue.
Grill sent Feddersen a letter dated March 2 6 , 1999, that
outlined his review of the divorce case, noting that the
affidavit, filed in 1995, used Feddersen’s 1993 income, the 1992
value of FMT, and failed to disclose the Constar settlement. He wrote, “You should also be aware that it was Chuck Douglas (or
Carolyn Garvey of his office) who prepared the Financial
Affidavit that you submitted to the Court in connection with the
final hearing approving the Permanent Stipulation.” Def. Ex. 5
at 0643. Grill stated that the affidavit filed was not a
“current affidavit and therein lies the problem. The bottom line
is that this is a complicated and potentially very dangerous
issue for you.” Id. at 0644. He strongly recommended that
Feddersen settle the matter with Cannon. Grill also reiterated his concern about Feddersen having contacted Garvey on his own,
and he warned Feddersen that “having been alerted to the
potential problem with your June 1995 Financial Affidavit,
Attorney Douglas may attempt to protect himself against any
potential malpractice claim.” Id. Grill filed a motion to
withdraw as counsel in April of 1999, before Murphy filed the
motion to set aside the property settlement.
Feddersen met with Attorneys Matthew Cairns and Garry Lane
5 of the Ransmeier & Spellman law firm on April 1 4 , 1999.1
Feddersen described his understanding of the problem with the
property settlement to them. He said that his former wife was
challenging the property settlement on the ground that he had not
disclosed information about the Constar settlement and had used
the 1992 value of FMT in his 1995 financial affidavit. With
regard to the 1992 value, he explained that he did not know why
Garvey put that reference in the affidavit. He also said that
Grill had told him that those omissions were fraud and that he
tried to explain it was not fraud because when he signed the
stipulation the representations were true. Cairns did not raise
or discuss the possibility of a malpractice suit against Douglas,
Garvey, or their firm, while he represented Feddersen.
Murphy filed a motion to set aside the divorce decree and
permanent stipulation on May 1 4 , 1999. Cairns, on behalf of
Feddersen, sent copies of the motion to Feddersen and Garvey.
Cairns’s cover letter to Garvey explained that Feddersen had
suggested contacting her to confirm his recollection that the
Nissei and Constar settlements were both discussed in reaching
the stipulation in December of 1994. Cairns also wrote that
Cannon’s divorce attorney, Ronna Wise, had told Cannon’s present
1 The meeting was recorded, at Feddersen’s request, and was later transcribed.
6 attorney, Patricia Murphy, that she, Wise, had no idea of the
magnitude of the value of the patent settlements at the time of
the divorce. Cairns filed an objection to the motion but also
submitted an offer to Murphy proposing to settle all of the
pending issues between Cannon and Feddersen by assigning twenty
percent of any settlement amount or judgment FMT received in its then pending patent litigation with another company, Aoki, less
attorneys’ fees and costs. Cairns and Feddersen believed the
offer was worth in the range of two million dollars. The offer
was eventually rejected. Cairns withdrew from the case in
December of 1999.
Feddersen then retained Attorney William Brennan to
represent him. The motion to set aside the divorce decree and
permanent stipulation was litigated separately from the child
support issues that had begun the proceedings in 1998. A hearing was held on the motion to set aside in June of 2001. Garvey
testified at the hearing that she had no obligation under
Superior Court Rule 158 or Shafmaster to disclose the Constar
settlement. Douglas’s deposition testimony was also used at the
hearing. The marital master issued his decision on September 5 ,
2001, finding that Cannon had been entitled to know about the
Constar settlement before the final divorce decree issued. The
master granted Cannon’s motion and set aside the property
7 division aspects of the final divorce stipulation. On March 1 9 ,
2003, the New Hampshire Supreme Court affirmed the decision of
the marital master.
The child support issues proceeded separately. The marital
master recommended a temporary modification of child support
which was approved in December of 2000. See In the Matter of Feddersen, 149 N.H. 1 9 4 , 196 (2003). A hearing was held on those
issues in March of 2002, following which the master issued a
final modification of the child support order. Id. The supreme
court affirmed the modification in February of 2003. Id. at 201.
Feddersen states in an affidavit that he learned in
February of 2002 that Cannon had filed a malpractice suit against
Wise who represented her during the divorce. He also states that
he called Douglas who told him that his firm had done nothing
wrong. Feddersen alleges in his complaint that after receiving the decision from the New Hampshire Supreme Court in February of
2003, he paid Cannon $1.3 million to settle all of the issues
between them. Feddersen contacted Attorney Steven M . Latici, and
on July 2 9 , 2003, Latici filed suit on Feddersen’s behalf against
Garvey and the law firm. Garvey notified her insurance carrier
of the lawsuit on August 1 3 , 2003.
8 Standard of Review
Summary judgment is appropriate when “the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). The party seeking summary judgment must first demonstrate
the absence of a genuine issue of material fact in the record.
See Celotex Corp. v . Catrett, 477 U.S. 3 1 7 , 323 (1986). A party
opposing a properly supported motion for summary judgment must
present competent evidence of record that shows a genuine issue
for trial. See Anderson v . Liberty Lobby, Inc., 477 U.S. 2 4 2 ,
256 (1986). All reasonable inferences and all credibility issues
are resolved in favor of the nonmoving party. See id. at 255.
Discussion
Feddersen alleges that Attorney Garvey and the law firm,
Douglas, Leonard & Garvey, P.C., were negligent in their
representation of him in his divorce proceeding. As a result, he
contends, he has incurred substantial legal fees in defending
Cannon’s motion to set aside their property settlement and has
had to pay Cannon an extra $1.3 million as part of the modified
property settlement. The defendants seek summary judgment on the
9 ground that Feddersen’s claims against them are time barred.
Under New Hampshire law, which applies in this diversity
case, a legal malpractice claim must be brought within three
years of the date of “the act or omission complained o f , except
that when the injury and its causal relationship to the act or
omission were not discovered and could not reasonably have been discovered at the time of the act or omission . . . .” N.H. Rev.
Stat. Ann. (“RSA”) § 508:4; Draper v . Brennan, 142 N.H. 7 8 0 , 783
(1998). If the basis for the claim was not and could not
reasonably have been discovered at the time of the defendants’
act or omission, then “the action shall be commenced within 3
years of the time the plaintiff discovers, or in the exercise of
reasonable diligence should have discovered, the injury and its
causal relationship to the act or omission complained of.” RSA
508:4; see also Furbush v . McKittrick, 149 N.H. 426, 430 (2003). The plaintiff bears the burden of showing that the discovery rule
or another exception to the statute of limitations applies to his
case. Id.
“To establish legal malpractice, a plaintiff must prove:
(1) that an attorney-client relationship existed, which placed a
duty upon the attorney to exercise reasonable professional care,
skill and knowledge in providing legal services to that client;
(2) a breach of that duty; and (3) resultant harm legally caused
10 by that breach.” Carbone v . Tierney, 2004 WL 2827247, at *4
(N.H. Dec. 1 0 , 2004). In this case, if Attorney Garvey and her
firm were negligent in their representation of Feddersen as
Feddersen alleges, it appears to be undisputed that their
malpractice occurred between December of 1994 and July of 1995.
Because Feddersen did not file suit against them until July of 2003, his claims are time barred unless, as he contends, the
discovery rule applies.
Feddersen does not address the harm element of the discovery
rule. Harm, for purposes of the discovery rule, occurs when the
plaintiff incurs legal fees to address problems created by the
defendant’s alleged negligence. See Pichowicz v . Watson Ins.
Agency, Inc., 146 N.H. 166, 167 (2001); see also Rosen Constr.
Ventures v . Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.,
364 F.3d 399, 405 (1st Cir. 2004). Therefore, Feddersen was harmed when he began paying legal fees to address the
“Shafmaster” issue which he began to d o , at the latest, when his
attorneys responded to Cannon’s motion to set aside the divorce
decree and permanent stipulation, filed in May of 1999.
With respect to the knowledge element of the rule, Feddersen
contends that he did not know and could not reasonably have known
of his former attorneys’ possible malpractice until he received
the marital master’s decision in September of 2001, setting aside
11 the property settlement portion of the divorce decree. Garvey
and the law firm argue that Feddersen knew of their alleged
negligence long before that decision issued because Attorney
Grill had warned Feddersen of the problem, that the problem was
caused by his former attorneys, and of the possibility of
malpractice, and, after those warnings, Murphy filed the motion to set aside the divorce and permanent stipulation, as Grill had
predicted.
In support of his position that a reasonable person would
not have known of the defendants’ possible malpractice until he
received the marital master’s decision, Feddersen points to the
New Hampshire Supreme Court’s decision in Shaheen, Cappiello,
Stein, & Gordon v . Home Ins. Co., 143 N.H. 3 5 , 41-42 (1998),
holding that the firm provided timely notice to its insurer of a
potential malpractice claim after receiving the court’s decision against its client. There, however, the question was not when a
reasonable person would know that he had been injured by his
attorney’s malpractice, for purposes of the discovery rule, but
when the policy required an attorney to report a potential claim
for purposes of insurance coverage. Id. at 3 9 . The court found
that the policy terms required insureds to use their professional
judgment as to when a claim against them was reasonably expected
and that, in the circumstances of the case, the firm properly
12 reported the possibility of a claim after receiving the court’s
decision against the firm’s client. Id. at 41-42.
Because the decision in Shaheen involved the interpretation
of an insurance policy for purposes of determining coverage, the
analysis is not consonant with the discovery rule. The question
in Shaheen was when the firm, in its professional judgment, would reasonably have expected a claim to be brought against i t . In
contrast, for the purposes of the discovery rule, the question is
when the plaintiff knew or reasonably should have known that he
was injured because of his former lawyers’ actions. Therefore,
Shaheen does not establish a rule, as Feddersen urges, that a
reasonable client would not know he had been injured by his
attorney’s misfeasance until a court decision informed him of the
problem.
Feddersen argues that in Draper, 142 N.H. at 786-87, the New Hampshire Supreme Court adopted a rule that the date of an
adverse decision triggers the statute of limitations for a legal
malpractice case. Feddersen is mistaken. In Draper, the court
noted that the client could have been on notice of his attorney’s
negligence sooner, but that he was certainly notified by the
trial court’s decision against him, which was issued more than
three years before his malpractice suit began. Id. at 786.
Draper argued that the limitations period should be tolled until
13 the appellate process was complete, but the court declined to so
rule. Id. at 787. Therefore, the court did not establish a
triggering rule in Draper, but instead applied the usual
discovery rule principles, affirming the lower court’s decision
that the claims affected by the discovery rule were nevertheless
untimely. Feddersen also relies on the analysis in Rosen Constr.
Ventures, 364 F.3d at 402-14. In that case, Rosen hired the law
firm, Mintz, Levin, in April of 1995 to draft a contract to
memorialize its agreement with a company, O’Donnell Sand and
Gravel, for fill to be used at a construction site in Everett,
Massachusetts, and for certain interests in a piece of property
O’Donnell owned that was close to Rosen’s site. Id. at 402.
Almost a year after the contract was signed, O’Donnell claimed
that it had extinguished Rosen’s opportunity for any permanent interest in O’Donnell’s neighboring property. Id. at 403. Rosen
disagreed with that interpretation of the agreement. Id.
A new law firm brought suit on Rosen’s behalf in
Massachusetts state court in November of 1996. In April of 1998,
the court granted O’Donnell’s motion for summary judgment, and
the judgment was affirmed two months later. Id. Rosen then
claimed that Mintz, Levin had been negligent in drafting the
contract and in advising it on obtaining an easement from
14 O’Donnell. Id. The parties agreed that if the malpractice claim
accrued before September of 1996 it was time barred, but if it
accrued afterward it was timely. Id. at 404.
The First Circuit framed the standard under Massachusetts
law a s : “the limitation period begins to run once a client or
former client knows or reasonably should know that he or she had sustained appreciable harm as a result of the lawyer’s conduct.”
Id. at 405 (internal quotation marks omitted). The court found
that Rosen was harmed when it began to pay legal fees to
challenge O’Donnell’s position on the contract, leaving only the
question of when it knew or reasonably should have known of the
cause of the harm. Id. Relying on the doctrine of continuing
relationship, under Massachusetts law, the First Circuit
concluded that because Mintz, Levin continued to assure Rosen
that its position was correct and Rosen did not acquire actual knowledge of the cause of the harm from another source, it did
not know the cause of its harm until the state court issued its
decision. Id. at 407-14.
Even if this court were to apply the doctrine of continuing
representation, which the New Hampshire Supreme Court has not yet
adopted, the doctrine tolls the limitation period only while the
defendant attorney continues to represent the plaintiff client or
remains actively involved in his case. Id. at 406. Garvey and
15 her law firm did not represent Feddersen after July of 1995. To
the contrary, in 1998 and 1999, Feddersen was represented by
Grill who made it clear that Feddersen should not have contacted
Garvey or her firm while being represented by him and his firm.
Grill also made it clear to Feddersen that his interests were in
conflict with those of his former attorneys. After that, Feddersen was represented by the Ransmeier & Spellman firm, and
then Brennan, before he contacted Latici about the malpractice
case.
More importantly, however, the record in this case
demonstrates that Feddersen knew or should have known that
Garvey’s preparation of the financial affidavit and
representations about the permanent stipulation had caused him
harm because he was paying additional attorneys’ fees to address
those issues after the marital master suspended the trial in March of 1999. Grill told Feddersen on several occasions that he
had a serious problem because of the Shafmaster issue arising
from the affidavit prepared by Garvey and her firm. Feddersen
demonstrated his understanding of the problem in his explanation
of his case to Attorneys Cairns and Lane in April of 1999. Their
efforts to settle the case, offering a significant amount of
money, reinforced Feddersen’s understanding of the seriousness of
the problem.
16 Under these circumstances, it is undisputed that Feddersen
knew by the spring or summer of 1999 that he had been harmed by
the alleged negligence of Garvey and Douglas, Leonard, and
Garvey, P.A. Since he did not bring his malpractice action
against them until July of 2003, at least four years later, his
claim is barred by the statute of limitations. The defendants are entitled to summary judgment on both claims in the complaint.
Conclusion
For the foregoing reasons, the defendants’ motion for
summary judgment (document n o . 29) is granted on both of the
plaintiff’s claims.
The clerk of court shall enter judgment accordingly and
close the case.
SO ORDERED.
Joseph A . DiClerico, J r . United States District Judge January 2 4 , 2005
cc: Peter F. Kearns, Esquire Benjamin T . King, Esquire Steven M . Latici, Esquire