Anderson v. Dorsch, No. S1390-02 CnC (Katz, J., Apr. 22, 2004)

[The text of this Vermont trial court opinion is unofficial. It has been
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STATE OF VERMONT
Chittenden County, ss.:

ANDERSON

v.

DORSCH

                                ENTRY
     (Motions for Partial Summary Judgment and to Amend Pleadings)

        Following a stipulated divorce agreement, plaintiff Anderson brings
an amended 135 paragraph, 27 page complaint against his attorney Dorsch
for attorney malpractice. Dorsch has filed for partial summary judgment on
those claims arising from a stock fund transfer stipulated between Anderson
and his wife. Anderson opposes summary judgment for any of the claims
and has produced an expert opinion for support.

       Despite the apparent contention between the parties, the material
facts of this case are not in question. Plaintiff and his wife entered divorce
negotiations following a period of separation. (Def. Mot. for Summ. J., at
1, Jun. 27, 2003.) This led the parties and their attorneys to negotiate a
stipulated agreement about the marital assets, which both husband and wife
signed on August 22, 2000. (Pl. Am. Compl., at ¶¶ 14, 15, Sept. 8, 2003.)
In particular, paragraph 2 of the agreement stated that Mrs. Anderson was
to receive the fixed amount of $475,000 from a Fidelity stock account.
(Def. Mot. for Summ. J., Ex. B, at ¶ 2, Jun. 27, 2003.) This withdrawal
required the parties to select which stocks would be transferred. Id. While
the agreement suggests that the Andersons would make this decision
together with a Fidelity representative, id., Mrs. Anderson sought
independent advice and generated her own list that, as of August 31, 2000,
satisfied the amount. (Def. Mot. for Summ. J., Ex. E, at 3, Jun. 27, 2003.)
Mrs. Anderson then sent the list to her attorney who mailed it to Dorsch on
Tuesday, September 8th. Id. at 2. This list reached Dorsch’s office on
Friday, September 11th. (Pl. Resp. to Def. Stmnt. of Undisp. Facts, ¶ 6, Jul.
28, 2003.) Dorsch had previously told Anderson that he would be out of
state on vacation for the first two weeks of September. (Def. Mot. for
Summ. J., at 2, Jun. 27, 2003.) When Dorsch returned to his office on
Monday, September 14th, he faxed the list of stocks to Anderson who made
the transfer the next day, September 15th. (Def. Mot. for Summ. J., Ex. G,
Jun. 27, 2003.) Anderson acknowledged the transfer in a letter to Pricilla
Dubé, his ex-wife’s attorney. Id. The letter did not acknowledge that by
this time, the value of the stocks had dropped and the transfer was $53,000
short of the agreed upon sum. (Def. Mot. for Summ. J., Exs. H, I, Jun. 27,
2003.) Anderson was ordered to pay the wife that remaining sum by the
Family Court and incurred further attorney fees and court costs. (Def. Mot.
for Summ. J., Ex. I, Jun. 27, 2003.)

      Notwithstanding Anderson’s amended complaint, which nominally
focuses on negligence and breach of contract, the claims against Dorsch for
the stock transaction divide neatly into two factual areas—formation of the
settlement agreement and its execution. These discrete areas divide
plaintiff’s claims against Dorsch for the stock transfer into two different
areas of liability. Plaintiff’s formation claims may be summarized as “what
Dorsch should have done” while the execution claims are “what Dorsch did
not do.” The difference is that the formation liability depends on Dorsch
having and failing in a duty to prepare and advise the plaintiff. 3 R. Mallen
& J. Smith, Legal Malpractice § 27.8 (5th ed. 2000) (detailing recurring
errors in family law for property division). Execution liability depends on
Dorsch’s diligence in fulfilling his duties enumerated in the settlement or
inherent in the scope of his representation. Id. at § 19.3 (diligence).

                           Settlement Formation

        During formation, plaintiff argues, he relied on Dorsch’s knowledge
and skill as a divorce attorney to negotiate and draft an agreement that
would protect his assets. Reliance on an attorney, however, is grounded in
what the attorney was expected to do and how he performed and not what
the client expected as an outcome. See Hulstrand, Anderson, Larson &
Boyland v. Rogers, 386 N.W.2d 302, 304 (Minn. App. 1986) (“The mere
fact that appellant lost his case does not establish negligence.”). Attorneys,
like Dorsch, perform many services for clients during their representation
including: researching and advising regarding the law, filing appropriate
papers, preparing a strategy, negotiating, drafting documents, examining
witnesses, pursuing pre-trial discovery, and arguing before the judge. See
e.g. Ziegelheim v. Apollo, 607 A.2d 1298, 1303 (N.J. 1992) (setting out
various duties owed by attorneys to clients). Here, the usual claims of
attorney negligence are absent. All the assets were known, and the papers
were timely filed. Cf. Sutton v. Mytich, 555 N.E.2d 93, 95 (Ill. App. 1990)
(charging that plaintiff’s attorney failed to discover all of spouse’s assets
prior to the stipulation). Instead, the focus is on the deal finally negotiated
with the adverse spouse and her attorney.

        Specifically, the deal which was negotiated, committed to paper, and
executed was one which, in retrospect, worked to the husband’s
disadvantage. In the face of a bear market, he absorbed the risk that the
stocks’ value would decline, because the agreement, as it was structured,
permitted the parties to engage in consultation before transferring, which in
theory and practice took some time. Yet regardless of this time, the wife
was guaranteed a set value. When the market declined, the husband was
left with something less than what he expected—something less than half.

       This unfortunate outcome was not the result of law overlooked, not
the result of deadlines missed, and not the result of assets not found. It was,
instead, the result of a declining market and the negotiated agreement,
which put the risk of such a decline onto the husband. Surely, the attorney
was not responsible for predicting either the course of the market or the
possibility that it might decline. See, e.g., In re U.S. Airways Group, Inc..,
303 B.R. 784, 795–96 (Bkrtcy. E.D. Va. 2003) (“The stock market,
however, is highly volatile and far from certain . . . . While it is easy to run
computer simulations, the simple fact is that no one can predict with
certainty what returns the stock market will produce over the next 50
years.”). The fact that risk of such a decline inhered in husband, by the
terms of the agreement, is one which was obvious from the document. It
was not a legal issue understood only after the translation of arcane terms.
Berman v. Rubin, 227 S.E.2d 802, 807 (Ga. App. 1976) (no liability where
the terms of the agreement were unambiguous and free of “legal jargon”).
That risk, of course, also meant that the wife might take her agreed value
and then leave the husband with a greater amount should the market have
gone the other way.
        It is not the fault of Attorney Dorsch that the wife did not agree to
different terms. “To be sure, lawyers generally cannot be held liable for
their failure to persuade opposing parties to agree to terms.” Zigelheim,
607 A.2d at 1306. The terms were not inherently unfair. They merely
saved the wife from risk by putting that risk instead upon the husband. He
accepted those terms, which, in the end, was a business judgment not a
legal one. This is, for example, wholly different from the advice in
Zigelheim that “wives generally get no more than twenty percent of the
marital estate.” That was legal advice. Here, even the absence of advice by
Dorsch was no more than business advice, but it would have been a
retelling of the obvious—the clear meaning of plain words. Berman, 227
S.E.2d at 807.

        Unlike the settlement in Zigelheim, plaintiff’s divorce settlement
was not a bad deal. Cf. Zigelheim, 607 A.2d at 1300–01 (plaintiff on the
advice and misestimation of her attorney settled for only 14% of the marital
assets). It is transparently the result of a negotiation process which placed
some premium on a level of security for the wife. Hence, she was
guaranteed the $475,000 while plaintiff was not. The ramifications of this
arrangement are not some recondite legal construct. One need not juggle
the Rule in Shelley’s Case against the Internal Revenue Code to
comprehend it. We have in mind that plaintiff was not only an attorney, but
he apparently participated in first earning the not insubstantial capital and
then choosing the investments. Whether and to what extent a client will be
charged with knowledge of the contents of a settlement provision, its
accuracy, and omissions will depend on the particular circumstances. 3
Mallen, § 27.8. To the extent a certain level of understanding and
intelligence can be presumed in a party, we will. The difference between a
triable issue of understanding and the failure of a client to fully appreciate
the inherent risks of a settlement is made in Lowry v. Lowry, 393 S.E.2d
141, 145–46 (N.C.App. 1990). In Lowry, a North Carolina Court of
Appeals granted summary judgment when:
       The plaintiff was given ample opportunity to read and
       evaluate the Separation Agreement she signed. She is an
       educated woman and at one time was a licensed realtor. We
       find it important to note that the error she alleges required no
       legal explanation and could easily have been discovered by
       adding four numbers contained in the Appendix to the
       Separation Agreement (80,402.00 sub total + $40,000
       Promissory Note + 179,148.00 Cash + 225,000 Pension and
       profit sharing plans = $524,550).

Id. at 145. The court distinguished this kind of understanding from another
case where a genuine issue existed when the client was unaware of the legal
consequence of language removed from a consent judgment. Id.
(discussing Cheek v. Poole, 390 S.E.2d 455 (N.C. App.1990).

      Here the dispute is not over the language in the contract and
      its legal effect. It is over a simple mathematical addition. Her
      attorney owed her a duty to review and explain to her the
      legal import and consequences which would result from her
      executing the Separation Agreement. However, this duty does
      not relieve her from her own duty to ascertain for herself the
      contents of the contract she was signing.

Lowry, 393 S.E.2d at 145–46.

        The circumstances in this case, particularly when measured against
the alleged fault of the attorney, cause us to conclude that no issues of
disputed facts are necessary to proper resolution of this case. The asserted
inadequacies of the negotiated settlement agreement are such that they were
not legal so much as negotiated; its full comprehension is not so much legal
as quotidian common sense. Plaintiff’s circumstances as a successful
attorney would preclude a jury finding of legal malpractice causing harm.
Berman, 227 S.E.2d at 807 (affirming summary judgment against client, a
well education person, who had not only read the agreement but had
participated in its drafting).

        The other argument inherent in plaintiff’s claim against Dorsch in
the settlement formation is for his advice or lack thereof. We begin with
the principle that in any negligence action, the plaintiff is obliged to take
reasonable precautions for his own safety. See, e.g., Shea v. Peter Glenn
Shops, 132 Vt. 317, 319 (1974) (noting that against defendant’s liability
plaintiff’s conduct and concern for his own safety must be balanced).
Negligent advice in negotiating and advising Anderson to sign the divorce
agreement is therefore premised in part on the need for advice. Liability for
advice is not for errors in judgment but a failure to exercise ordinary skill
and knowledge in giving advice. 3 Mallen, § 23.5, at 511. This duty does
not include a duty to inform the client of “all possible alternatives no matter
how remote or tenuous.” First Interstate Bank of Arizona, N.A. v. Murphy,
210 F.3d 983, 986 (9th Cir. 2000). It depends on the nature of the
undertaking and the foreseeability of the results. See, e.g., Hangman Ridge
Training Stable, Inc. v. Safeco Title Ins. Co., 652 P.2d 962, 965 (Wash.
1982). The proper advice depends on the extent of the risk and the needs
and sophistication of the client. Conklin v. Hannoch Wiseman, 678 A.2d
1060, 1069 (N.J. 1996).

        In this case, plaintiff is a sophisticated business actor who had
substantial knowledge of the stock market and the risks involved with stock
transfers. He is also a lawyer who was aware that the execution of any
transaction involves time and process. Indeed, his anxiety over the stock
selection and its execution proves his contemporaneous understanding of
the risk he has assumed by the settlement structure. It is unclear what, if
any, additional advice Dorsch could have offered plaintiff. More
importantly, plaintiff makes no showing that owing solely to better advice
from Dorsch, he would have gotten a better deal. Plaintiff husband’s
awareness that he needed to conclude the transfer quickly was not lacking.
Nor was the wife’s position unexplored. She wanted 1) no risk and 2) time
to make an independent selection. Plaintiff’s argument pushes this
determination into the realm of “what if” speculation, but it does not
change the information that was on the table at the settlement or the
plaintiff’s awareness of what he was signing. While we need not go as far,
other jurisdictions have refused to re-examine negotiations for public policy
reasons. Muhammad v. Strassburger, McKenna, Messer, Shilobod and
Gutnick, 587 A.2d 1346, 1348–49 (Pa. 1991) (holding that public policy
encouraging settlements barred, short of fraud, a dissatisfied client from
recovering for a settlement that the client approved). Here, plaintiff was
aware of the nature of the settlement and the mechanics involved. He has
not shown that with different advice from Dorsch he would have received a
better settlement.

                           Settlement Execution

        The remaining issue for summary judgment is Anderson’s claim that
Dorsch was negligent during the execution of the stipulation. While expert
witness testimony is sometimes helpful in determining the standard of care
in a professional malpractice case, Tetreault v. Greenwood, 165 Vt. 577,
578 (1996) (mem.), it is not necessary where the facts of the professional’s
actions and the standard of care are apparent. See Estate of Fleming v.
Nichlson, 168 Vt. 495, 497–98 (1998) (noting that expert witnesses are not
necessary where the professional’s lack of care is clear). While expert
witnesses are helpful and sometimes necessary, the standard of professional
care is ultimately the province of the court to determine. Fleming, 168 Vt.
at 499; see also Brown v. Kelly, 140 Vt. 336, 338 (1981) (stating that the
trial court “concluded” negligence but “found” no damages because the
negligence was not the actual cause). In the present case, the stipulation as
it was drafted, gave the attorneys no further role in the stock transfer. The
pertinent language states, “The parties shall work with the Fidelity account
representative to divide the Fidelity account . . . . Both parties shall sign
any documentation necessary to complete these distributions and
[Anderson] shall be responsible for preparing and providing to [Mrs.
Anderson] any documentation necessary for her to execute . . . .” (Def.
Mot. for Summ. J., Ex. B, at ¶ 2, Jun. 27, 2003.)

       The uncontested evidence concerning the parties’ understanding at
the time of the stipulation supports this interpretation. The parties at the
time of the stipulation agreed that Anderson would be handling the stock
transfer. He was in contact with his ex-wife and her attorney. Both Mrs.
Anderson and her attorney knew from the stipulation and discussion that
Anderson, alone, would be doing the transfer. Anderson, on the other hand,
knew that Dorsch was going to be out of his office for two weeks. As
Anderson was handling the transfer, there was no reason for Dorsch to
conclude or anticipate that the other parties would send the stock list to him
and not to Anderson. During the first two weeks of September, Anderson
was not prevented from calling either Mrs. Anderson or her attorney to
follow up on the stock list. Instead, he chose not to act. When Dorsch did
receive the list, he passed it along immediately.

        Liability for omissions or inaction in such situations, will often stem
from an attorney’s failure to perform a necessary task in a timely manner.
See, e.g., Kessler v. Loftus, 994 F. Supp. 240, 241 (D.Vt. 1997) (attorney
delay in recording divorce agreement left client as an unsecured creditor);
Perry v. Ossick, 467 S.E.2d 604, 606 (Ga. 1996) (attorney failed to better
secure note from divorce agreement). In the present case, Dorsch had no
task or role in the transfer. The stipulation clearly limited responsibility to
the parties themselves. When Anderson and his expert witness discuss this
issue, they are really talking about the earlier issue of advice that might
have required Dorsch to demand a provision requiring under penalties that
Mrs. Anderson to make and deliver her stock list within a set time. That is
not the agreement that parties drafted here and that was not the role Dorsch
was assigned.

       Any role Dorsch could have played was negated when Anderson
accepted the list and made the transfer. By not informing Dorsch that the
stock prices had dropped or that Anderson was only going to transfer the
stocks listed, which would be $53,000 short of the agreed sum, Anderson
ended any possibility for Dorsch to negotiate with Mrs. Anderson and her
attorney. As to the risk of fluctuating stock prices, it was inherent in the
stipulation. Dorsch did nothing to further Anderson’s risk in that respect.
Therefore any duty that would charge Dorsch with monitoring the
compilation and communication of the list would be a retroactive
imposition and outside the facts of the stipulation and the understanding of
the parties. We are not prepared to assign such a duty.

       The only remaining issue to discuss is Anderson’s motion to amend
his pleadings. Pleadings may be amended by motion after the time for
responsive pleadings by leave of the court or the written consent of the
adverse party. V.R.C.P. 15(a). While Dorsch has not exactly opposed this
motion to amend, he has not explicitly consented to it either. We will,
however, grant this motion because of the liberal standard of Rule 15,
which permits motions to amend for the purpose of allowing parties to
move to trial on the merits rather than to defend a faulty pleading. 6 C.
Wright et al., Federal Practice & Procedure § 1471, at 505–06 (1990). This
amended complaint must, however, reflect the foregoing discussion of the
stock transfer, which eliminates counts five and six and count seven to the
extent that it touches upon the stock transfer.

      Based on the foregoing, defendant’s motion for partial summary
judgment is granted, and plaintiff’s claims concerning the stock transfer are
dismissed. Plaintiff’s motion to amend his remaining complaint is granted.


       Dated at Burlington, Vermont________________, 2004.


                                          ________________________
                                          Judge
