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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
TAMMY BECK, as personal representative of the Estate of No. 67641-5-1 of Claud Goll, DIVISION ONE Appellant,
v.
DARREN E. GRAFE and JANE DOE UNPUBLISHED OPINION GRAFE, and the marital community composed thereof, FILED: April 8, 2013
Respondents.
Becker, J. — In this legal malpractice case that was dismissed on
summary judgment, Claud Goll's estate sued Darren Grafe, the attorney who
defended Goll in a breach of contract case. By the time Goll lost the appeal that
ended the suit, the statute of limitations had run on his claims against the realtors
who could have been named as third party defendants. The primary issue now is
whether Grafe is entitled to avoid liability because he turned the case over to a
successor attorney before the statute of limitations expired. We reverse the
dismissal because there are genuine issues of material fact precluding us from
holding as a matter of law that the successor attorney was a superseding cause
that absolves Grafe of any liability. No. 67641-5-1/2
We review an order of summary judgment de novo, engaging in the same
inquiry as the trial court. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d
301 (1998). Summary judgment is proper if, viewing the facts and reasonable
inferences most favorably to the nonmoving party, no genuine issues of material
fact exist and the moving party is entitled to judgment as a matter of law. CR
56(c); Versuslaw, Inc. v. Stoel Rives. LLP. 127 Wn. App. 309, 319-20, 111 P.3d
866 (2005). review denied. 156 Wn.2d 1008 (2006).
This action arose out of a real estate contract dispute that was resolved
against Goll on appeal in Chrisp v. Goll. 126 Wn. App. 18, 104 P.3d 25 (2005),
review denied, 156 Wn.2d 1004 (2006). On July 2, 2001, Goll agreed to
purchase Nancy Chrisp's home. A feature of the home that Goll found attractive
was a separate guest cottage. Goll withdrew from the purchase and sale
agreement when he discovered the separate structure did not meet code for a
guest house. Chrisp sued Goll for defaulting on the contract. Attorney Darren
Grafe, then an associate at David H. Middleton & Associates, undertook to
represent Goll in this suit.
Chrisp claimed damages of over $100,000. Due in part to a drop in
market prices, the price Chrisp received when she eventually found another
buyer was substantially less than what Goll had agreed to pay. Goll took the
position that his damages were limited to his earnest money deposit of $2,000.
A statute in effect at the time the parties entered into their contract
provided that a seller of residential property retained all rights and remedies upon No. 67641-5-1/3
the buyer's default and was not limited to forfeiture of earnest money unless the
contract so specified in the way mandated by the statute. Former RCW
64.04.005 (1991); Chrisp. 126 Wn. App. at 19. The form of agreement Chrisp
and Goll used addressed the statute's specific requirements by allowing the
parties to indicate, by checking boxes, whether "forfeiture of earnest money" or
"seller's election of remedies" would apply if the buyer defaulted. Chrisp, 126
Wn. App. at 20. The statute stated that the forfeiture remedy provision would be
effective only if both the purchaser and the seller initialed or signed it; if not, the
seller was to "have all rights and remedies otherwise available at law or in
equity." Former RCW64.04.005(1)(b)(ii), (2) (1991); Chrisp, 126 Wn. App. at 23.
Chrisp, on advice of her agent, did not initial or sign or otherwise indicate her
approval of the forfeiture remedy provision.
The case went to trial in August 2003. A few months before trial, Grafe
informed Goll he was leaving the Middleton firm. David Middleton assumed
representation of Goll.
At trial, the court ruled that the parties had substantially complied with the
statutory requirements for electing forfeiture of earnest money as a remedy. The
court ruled that Chrisp's damages were limited to Goll's earnest money deposit of
$2,000. Goll then stipulated to forfeiture of the earnest money, and the court
dismissed the jury and awarded attorney fees to Goll. No. 67641-5-1/4
Chrisp appealed. This court reversed in an opinion issued in January
2005. We held that the trial court erred by applying the substantial compliance
doctrine. Chrisp, 126 Wn. App. at 23.
Goll settled with Chrisp before he died in June 2009.
On August 6, 2010, Goll's daughter Tammy Beck filed this malpractice suit
against Grafe on behalf of Goll's estate. The estate alleges that Grafe
mishandled the defense of Chrisp's suit by failing to preserve Goll's claims
against the realtors involved in the transaction between Goll and Chrisp. The
trial court granted Grafe's motion for summary judgment. The estate appeals.
To establish a case of legal malpractice, the estate must prove (1) the
existence of an attorney-client relationship which gives rise to a duty of care, (2)
an act or omission by Grafe that breaches his duty of care, (3) damage to Goll,
and (4) proximate causation between Grafe's breach of duty and the damages
incurred. Hizev v. Carpenter, 119 Wn.2d 251, 260-61, 830 P.2d 646 (1992). To
avoid dismissal, Beck must show an issue of material fact as to each element.
Craig v. Wash. Trust Bank. 94 Wn. App. 820, 824, 976 P.2d 126 (1999).
ATTORNEY-CLIENT RELATIONSHIP
Grafe first contends that the estate cannot meet the threshold element of
an attorney-client relationship.
This element is met. It is undisputed that Goll and Grafe had an attorney-
client relationship from 2001 until June 2003, when Grafe filed a notice of
withdrawal and attorney Middleton took over Goll's case. Grafe is arguing that No. 67641-5-1/5
Goll's damages from legal malpractice, if any, were incurred after Grafe
withdrew. This argument is more properly addressed in connection with the
element of causation.
BREACH OF DUTY
The estate alleges that Grafe was negligent in failing to bring a third party
negligence suit against Prudential Northwest Realty before the statute of
limitations expired. Prudential's agent assisted Goll in the ill-fated transaction
with Chrisp in July 2001. Prudential failed to inform Goll that without Chrisp's
initials accepting earnest money forfeiture as the remedy for a buyer's default,
Goll would not be able to limit his damages in case of default.
An attorney must exercise "the degree of care, skill, diligence, and
knowledge commonly possessed and exercised by a reasonable, careful, and
prudent lawyer in the practice of law" in Washington. Hizev, 119 Wn.2d at 261.
To establish breach of duty, it is often necessary to provide expert testimony
stating what the standard of care is and how the standard was allegedly
breached. Geer v. Tonnon, 137 Wn. App. 838, 851, 155 P.3d 163 (2007), review
denied. 162 Wn.2d 1018 (2008). The estate submitted a declaration from
attorney Randolph I. Gordon that was considered by the trial court in connection
with Grafe's motion for summary judgment.1
1Clerk's Papers at 219-47. No. 67641-5-1/6
Gordon reviewed the relevant facts of the underlying litigation and
provided his expert opinion that Grafe breached the standard of care by
negligently failing to sue Prudential, by failing to ascertain the date when the
statute of limitations would expire on such a suit, and by failing to ensure that
Goll knew he had to sue Prudential before that date.
According to Gordon, the suit against Prudential would be an "ABC" claim
as exemplified by Manning v. Loidhamer, 13 Wn. App. 766, 538 P.2d 136, review
denied, 86 Wn.2d 1001 (1975). "When the natural and proximate consequences
of a wrongful act of defendant involve plaintiff in litigation with others, there may
as a general rule be a recovery of damages for reasonable expenses incurred in
the litigation, including attorney's fees." Manning, 13 Wn. App. at 769. While
attorney fees ordinarily are not damages in a tort suit, they are damages under
the litigation theory discussed in Manning. Thus, if the negligence of Prudential
("A") caused Goll ("B") to become involved in litigation with Chrisp ("C") and as a
result to have to pay attorney fees to Grafe, the attorney fees would be damages
for which Prudential would be liable to Goll.
Under this legal theory, Prudential's conduct began to cause damages to
Goll in 2001, as soon as he incurred attorney fees to defend against Chrisp's
lawsuit. Gordon testified that the three-year statute of limitation on the claim
against Prudential would have expired between July and October 2004, with the
exact date being a fact question dependent upon when Goll first incurred such
fees.
6 No. 67641-5-1/7
The facts of the underlying litigation, seen in the light most favorable to the
estate, support Gordon's opinion that Grafe did not act as a reasonably prudent
lawyer. Grafe failed to realize that the element of damages, a necessary
prerequisite to a negligence suit, is satisfied in an ABC scenario by the payment
of attorney fees. He persisted in the erroneous view that Goll would not incur
damages that Prudential could be liable for unless a court ordered him to pay
Chrisp more than the earnest money. This view led him to the erroneous
conclusion that the statute of limitations on Goll's claim against Prudential would
not begin to run unless and until Chrisp prevailed with finality on her underlying
lawsuit against Goll.
Beck declares that she and Goll raised the topic of suing the realtors at
every meeting and conversation they had with Grafe. "Each time it came up, Mr.
Grafe told my father and I that suit could not be filed against the real estate
brokerage firms until my father had been harmed and could show damages."
She says Grafe "made it clear that the statute of limitations would not start until
the current lawsuit was finished because that was the time in which we would
know that my father had, in fact, suffered damages as a result of their role in the
transaction." At one point, Beck pointed out that her father had already spent
$15,000 in attorney fees as evidence of damages. Grafe responded that he
thought a motion to dismiss would resolve the case and allow Goll to recover his
attorney fees. No. 67641-5-1/8
In responding to the allegation that he breached his duty of care by failing
to timely sue Prudential, Grafe does not dispute the estate's claim that an ABC
suit against Prudential would have been the vehicle for recovering Goll's attorney
fees iftimely brought. Rather, Grafe claims that he made a reasonable decision
that the best strategy for protecting Goll was to defeat Chrisp's lawsuit by arguing
substantial compliance with the statute on seller's remedies. Grafe claims this
strategy was reasonable, even though in hindsight it was unsuccessful, because
the statute was relatively new and there was no authority to the contrary. He
relies on the rule that mere errors in judgment or in trial tactics do not subject an
attorney to liability for legal malpractice, particularly "when the error involves an
uncertain, unsettled, or debatable proposition of law." Halvorsen v. Ferguson. 46
Wn. App. 708. 717. 735 P.2d 675 (1986). review denied, 108Wn.2d 1008
(1987).
Grafe does not identify any evidence in the record supporting his claim
that he made a deliberate tactical choice to pursue one strategy over the other.
And in any event, this is not a case involving an uncertain, unsettled, or
debatable proposition. As we held in Chrisp, the statute in question is
unambiguous:
We do not see how a plain reading of this statute allows applications of the substantial compliance doctrine. The statute itself clearly states the consequences of failure to comply: the seller retains all remedies. Excusing a party's failure to meet the requirements of subsection (1) would render meaningless the clear language of subsection (2). No. 67641-5-1/9
Chrisp. 126 Wn. App. at 23. A reasonably prudent attorney recognizes that a
statute itself is authority. The absence of an appellate opinion construing the
statute does not mean the law is unsettled. Under these circumstances, Grafe
cannot be excused from liability on the basis that he made a reasonable strategic
decision in an uncertain area of the law.
This is not to say that pursuing the theory of substantial compliance was
malpractice in itself. If Grafe breached the standard of care, it was by failing to
recognize the prudence of suing Prudential as a backup plan to protect Goll in
case the substantial compliance strategy ultimately failed.
Grafe contends that it would have "necessarily undermined" the defense
of substantial compliance in the Chrisp lawsuit if, at the same time, he had
pursued a negligence claim against Prudential. Grafe deposed the Prudential
agents as witnesses to support the position that Goll could not be held liable
beyond the $2,000 in earnest money, and he implies that he did not want to
alienate these witnesses by suing Prudential. This is not an argument that can
sustain dismissal on summary judgment. Whether Chrisp could hold Goll liable
for more than the earnest money was going to turn on an interpretation of the
statute, not on the testimony of witnesses. And even if Grafe reasonably thought
the Prudential employees would be helpful witnesses, he does not explain why
their testimony would necessarily have been less available if he had made
Prudential a third party defendant in the suit. No. 67641-5-1/10
According to Grafe, Goll always knew Grafe had made a decision not to
sue Prudential while the litigation against Chrisp was still going on. Grafe also
points out that he wrote Goll a letter in November 2001 explaining that if Goll
were to bring a claim against Prudential in the future, it would have to be within
the statute of limitations. But Grafe does not show how Goll's knowledge of
these facts would prevent a jury from finding that Grafe breached his duty.
Grafe's alleged breach of duty consists of his failing to recognize that the statute
of limitations on a suit against Prudential was already running, failing to identify
the date when it would expire, and failing to inform Goll of these facts. A client
depends on the lawyer to provide that type of information.
A jury could find, based on Gordon's expert testimony, that Grafe
breached the standard of care of a reasonable attorney.
PROXIMATE CAUSE
The estate claims that Grafe's negligence caused damages to Goll
consisting of Goll's attorney fees and costs in the Chrisp lawsuit, the money he
paid to settle with Chrisp, and any lost proceeds from a lawsuit against
Prudential. Grafe maintains that even if a jury could find that he handled Goll's
case negligently, there could be no finding of proximate cause because when he
turned the case over to Middleton shortly before trial in 2003, there was at least a
year to go before the statute of limitations would expire on Goll's claim against
Prudential.
10 No. 67641-5-1/11
To establish proximate cause, the estate must demonstrate that "but for"
Grafe's alleged negligence, Goll would have obtained a better result in the Chrisp
lawsuit. Smith v. Preston Gates Ellis. LLP. 135 Wn. App. 859, 864, 147 P.3d 600
(2006), review denied, 161 Wn.2d 1011 (2007). The trial court can decide
proximate cause as a matter of law if reasonable minds could not differ, but
proximate cause is usually a question for the jury. Smith, 135 Wn. App. at 864.
The jury acts as the second trier of fact. Daugert v. Pappas, 104 Wn.2d 254,
257-58, 704 P.2d 600 (1985), citing Cline v. Watkins. 66 Cal. App. 3d 174, 179,
135 Cal. Rptr. 838 (1977). As such, a jury in this malpractice case would have to
decide what a reasonable jury would have done, but for Grafe's negligence, in a
timely claim by Goll against Prudential.
Grafe contends that the chain of causation between his alleged
negligence and Goll's damages was broken when Middleton took over the case
in 2003. Grafe characterizes Middleton as an independent intervening cause,
citing Maltman v. Sauer. 84 Wn.2d 975, 982, 530 P.2d 254 (1975). Under
Maltman, proximate cause is not proved if the injury is the result of an intervening
cause which came into active operation after the negligence of the defendant
ceased. If the intervening act is not foreseeable, it will break the causal
connection between the defendant's negligence and the plaintiffs injury.
Maltman, 84 Wn.2d at 982. Grafe cites a case that translates this rule of
causation into the following general statement applicable to legal malpractice
cases: "A withdrawn attorney is absolved of continuing liability where there
11 No. 67641-5-1/12
remains time for successor counsel to remedy his negligence." Diamond v.
Sokol, 468 F. Supp. 2d 626, 642 (S.D.N.Y. 2006). Grafe contends he must be
absolved of liability because there was enough time for Middleton to remedy
Grafe's alleged negligence after Grafe withdrew.
According to Gordon's expert testimony on behalf of the estate, Grafe was
negligent in failing to add Prudential to the Chrisp lawsuit as a third party
defendant and Middleton did not have time to cure that negligence because he
inherited the case from Grafe two and a half months before trial when the
"architecture of the case" had already been established. A joint pretrial order had
already been entered, stating that all essential parties had been named. In
Gordon's opinion, a trial judge would have been unlikely to grant Middleton's
motion to amend to bring in a new party with so little time remaining before trial.
Grafe attacks Gordon's expert opinion as irrelevant and admissible. He
contends that whether the trial judge would have allowed an amendment to bring
in Prudential is a question of law for the court. It is true that under some
circumstances, the proximate cause determination in a malpractice case is a
question of law for the court. See, e.g., Nielson v. Eisenhower & Carlson, 100
Wn. App. 584, 594, 999 P.2d 42, review denied, 141 Wn.2d 1016 (2000). In this
case, however, whether Middleton could have successfully moved to amend to
bring in Prudential is properly treated as a question of fact. See Diamond, 468 F.
Supp. 2d at 642-43. The disposition of motions to amend the pleadings is
discretionary with the trial court, and its refusal to permit such an amendment will
12 No. 67641-5-1/13
not be overturned except for a manifest abuse of discretion. Lincoln v.
Transamerica Inv. Corp., 89 Wn.2d 571, 577. 573 P.2d 1316(1978). As in
Diamond, it remains an issue for trial whether the factors courts typically consider
in deciding a motion to amend would have played out in favor of imposing liability
on Grafe as well as on Middleton. Gordon's expert opinion on this issue is
relevant and admissible. A jury could find that by the time Middleton took over, it
was already too late to bring Prudential in by amendment.
But, Grafe argues, even if he did not leave Middleton enough time to move
to amend to bring in Prudential as a third party defendant in the Chrisp lawsuit,
Middleton still had enough time to bring a separate lawsuit against Prudential.
The trial of the Chrisp lawsuit ended in August 2003. The estate asserts that the
statute of limitations on such a claim expired as early as July 2004. Grafe argues
that because Middleton had approximately a year to bring a separate suit,
Middleton's negligence in failing to cure Grafe's negligence was, as a matter of
law, an independent intervening cause. For this proposition, he relies not only on
Diamond but also on a trio of Illinois cases, Land v. Greenwood, 133 III. App. 3d
537, 478 N.E.2d 1203 (III. App. Ct. 1985); Mitchell v. Schain. Fursel & Burnev,
Ltd.. 332 III. App. 3d 618, 773 N.E.2d 1192 (III. App. Ct. 2002); and Cedeno v.
Gumbiner, 347 III. App. 3d 169, 806 N.E.2d 1188, 1192 (III. App. Ct. 2004). In
Land, the court states that the "successor counsel had the duty to preserve his
client's cause of action. It was viable when he received it; it was not when he got
through with it." Land, 478 N.E.2d at 1205. Following Land, Mitchell holds that
13 No. 67641-5-1/14
the first attorney is excused from liability unless there is a factual issue "whether
a viable cause of action still remained after the first attorney was discharged."
Mitchell, 773 N.E.2d at 1196. Cedeno summarizes Land and Mitchell by stating,
"If the underlying cause remained actionable upon the discharge of the former
attorney, plaintiff can prove no set of facts which connect defendant's conduct
with any damage plaintiff sustained." Cedeno, 806 N.E.2d at 1192.
Neither Grafe nor the estate has briefed the issue whether a separate suit
by Goll against Prudential was still viable when Middleton took over the case.
We will assume for purposes of analysis that a separate suit was viable and that
Middleton, to the same extent as Grafe, was negligent in failing to file it before
the statute of limitations expired. We are not, however, persuaded that the cases
Grafe cites set forth an absolute rule requiring the conclusion that Middleton was
an independent intervening cause as a matter of law. Mitchell, for example,
recognizes that as a general proposition "it is for the jury to determine whether
successor counsel's failure to cure the negligence of the first counsel represents
a superseding cause of the plaintiffs injury." Mitchell, 773 N.E.2d at 1195.
To be regarded as a superseding cause negating the claim of proximate
or legal cause, the intervening act must be one that is not reasonably
foreseeable. Maltman, 84 Wn.2d at 982. Applying this principle in a malpractice
case involving successive attorneys, the California Court of Appeals defined the
question in this way: "Is the substitution of another lawyer for one whose prior
representation of the client in the matter has been negligent such an exceptional
14 No. 67641-5-1/15
circumstance that all duty and responsibility for the prevention of harm normally
flowing from the negligence passes to substituted counsel?" Cline, 66 Cal. App.
3d 179. The court answered in the negative. The issue is to be resolved by a
trier of fact on the question of foreseeability, not as a matter of law. Cline, 66
Cal. App. 3d at 179-80.
Where the first attorney has explicitly advised the client and successor
counsel of the necessity of timely action, there may be no genuine issue of
material fact as to foreseeability. An example is Meiners v. Fortson & White, 210
Ga. App. 612, 436 S.E.2d 780 (1993), holding that where the second attorney is
"specifically advised by the first attorney" that a party needs to be served and the
second attorney has more than six months to accomplish that service, as a
matter of law "it is not reasonably foreseeable that the second attorney will fail to
cure the first attorney's error and perfect service." Meiners. 436 S.E.2d at 781.
Meiners dealt with "an obvious statute of limitation problem of which the second
attorney was specifically advised," and distinguished Cline on the basis that it
"involved a less noticeable problem of which the second attorney was not aware."
Meiners, 436 S.E.2d at 781. Another example is Lockhart v. Grieve. 66 Wn. App.
735, 741, 834 P.2d 64 (1992). In Lockhart. successor attorneys took over the
case from Murphy, the original attorney, 90 days before the statute of limitations
expired. The successor attorneys failed to make timely service on the
defendants. This court affirmed an order dismissing Murphy from the plaintiff's
malpractice suit. Pivotal to the analysis in Lockhart was the undisputed fact that
15 No. 67641-5-1/16
Murphy took care to advise both the plaintiff and the new attorneys of the
necessity of timely service within the brief window of time remaining before the
statute of limitations expired. Lockhart, 66 Wn. App. at 742.
The present case resembles Cline more than Meiners and Lockhart.
Because Grafe did not recognize that Goll's potential claim against Prudential
was based on the ABC theory in which attorney fees are damages, he did not
realize the statute of limitations on a suit against Prudential was already running.
Thus, he did not advise Goll or Middleton that action needed to be taken soon to
preserve that claim. Middleton adopted Grafe's conclusion that Goll had not as
yet sustained damages as a result of Prudential's negligence. A jury could find
that Grafe should reasonably have foreseen that Middleton would adopt Grafe's
erroneous conclusion and carry on with the case along the path Grafe had laid
out.
Our analysis is consistent with Gordon's expert opinion that Grafe and
Middleton committed malpractice as a single continuous course of inaction,
making Middleton's negligence a concurrent cause of the damage rather than an
independent intervening cause.2 Gordon opined that Grafe's misunderstanding of the law "not only gave up the most cost-effective, logical opportunity" to toll the
statute of limitations by bringing in Prudential as a third party defendant, but also
"deterred and burdened" Goll and Middleton from taking corrective action in the
year after Goll succeeded in the trial court. A trier of fact could find on this record
Clerk's Papers at 238-43. 16 No. 67641-5-1/17
that either Grafe or Middleton or both were proximate causes of Goll's damage; if
both, the apportioning of liability is also a question of fact.
In assessing the case within this case, the reasonable fact finder must
determine whether the estate's projected better result—a successful third party
suit against Prudential achieving indemnification of Goll's expenses in the Chrisp
suit—would more likely than not have occurred if Grafe had either initiated the
suit before he withdrew or specifically advised Goll and Middleton that initiating
the suit by a specific date was necessary to avoid expiration of the statute of
limitations.
We conclude that Grafe has failed to extinguish issues of fact and
establish as a matter of law that the successor attorney was an intervening,
independent cause.
Reversed.
"i^&>£? WE CONCUR:
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