Crestwood Cove Apartments v. Turner

Citation164 P.3d 1247,2007 UT 48
Decision Date22 June 2007
Docket NumberNo. 20050896.,20050896.
PartiesCRESTWOOD COVE APARTMENTS BUSINESS TRUST dba Cottonwood Creek Apartments and Shangri-La UBO, Plaintiffs and Appellants, v. Shawn TURNER and Larsen, Kirkham & Turner, Defendants and Appellees.
CourtSupreme Court of Utah

D. Kendall Perkins, Sandy, for plaintiffs.

Michael F. Skolnick, J. Kevin Murphy, Salt Lake City, for defendants.

PARRISH, Justice:

¶ 1 This appeal arises from a claim that Shawn Turner and his law firm, Larsen, Kirkham & Turner (collectively, "Turner"), committed malpractice when representing Shangri-La, U.B.O., in a redemption lawsuit. Shangri-La and its successor, Crestwood Cove Apartments Business Trust (collectively, "Shangri-La"), allege that Turner committed malpractice by failing to timely contest the application of Utah's unlawful detainer statute1 and its treble damage provisions2 and by failing to raise Utah Rule of Civil Procedure 69(j)3 as the appropriate measure of damages. The district court granted Turner's motion for summary judgment, reasoning that Turner did not commit malpractice and that, in any event, Shangri-La had forfeited its right to pursue Turner for malpractice when it settled the underlying redemption lawsuit before it could be decided on appeal. Shangri-La appeals the district court's decision. We affirm the dismissal entered by the district court on different grounds.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 In March 1995, Shangri-La, the owner of an apartment complex (the "apartments" or the "property"), sued its former apartment managers for fraud. The court dismissed Shangri-La's claim and awarded the former managers court costs and attorney fees in the amount of $4,767. Shangri-La failed to pay the judgment. As a result, the former managers caused the property to be sold at a sheriff's sale to Kasey Enterprises ("Kasey") in August of 1996 for the purpose of satisfying their judgment. Kasey purchased the property, valued at $4,000,000, for a mere $8,000. Kasey subsequently sold it to UAW Properties ("UAW") and DLM Investments ("DLM") for $11,197.

¶ 3 Although Shangri-La made no attempt to redeem the property within the six-month statutory redemption period, it remained in possession and continued to collect and receive rent from its tenants. On April 16, 1997, UAW and DLM served Shangri-La with notice to quit the property. Two days later, Shangri-La filed an action to quiet title to the property, asking the court to invalidate the sheriff's sale or, in the alternative, to extend the time to redeem the property from that sale. UAW and DLM counterclaimed for unlawful detainer and conversion. Several months later, Shangri-La retained Turner to represent it in connection with the lawsuit.

¶ 4 In May 1998, the trial court issued a memorandum decision in which it ruled that the sheriff's sale was valid. Nevertheless, it equitably extended the redemption period after finding that Kasey's purchase of a $4,000,000 property for a mere $8,000 shocked the conscience. The trial court also determined that UAW and DLM were entitled to the return of their purchase price, attorney fees, and taxes paid on the property, as well as $304,333 for rents that Shangri-La had collected after the sheriff's sale.

¶ 5 The trial court asked for supplementary briefing on the issue of whether UAW and DLM were entitled to treble damages for the rents under Utah Code section 76-36-10, the statutory provision specifying damages for unlawful detainer. Turner filed a supplementary brief in which he argued that the treble damages provision of the unlawful detainer statute was not applicable. Nevertheless, the trial court ruled that the treble damages provision applied, trebling the amount in rent due UAW and DLM to $912,999. That amount, plus UAW and DLM's purchase price, attorney fees, and property taxes brought Shangri-La's total redemption price to nearly $1,000,000.

¶ 6 Turner filed a motion for a new trial or an amended judgment in which he again argued that the unlawful detainer statute did not apply to UAW and DLM's claims against Shangri-La. In his reply to UAW and DLM's memorandum in opposition to the motion, Turner also noted that Utah Rule of Civil Procedure 69(j)(3) "governs the amount that must be paid in order to redeem a property" and that Utah Rule of Civil Procedure 69(j)(7) governs "the treatment of rents during the period of redemption." Despite these assertions, the district court denied the motion, indicating that "the arguments made by [Shangri-La] in this case are in substance the same arguments that have previously been made."

¶ 7 In November 1998, Shangri-La hired new legal counsel and appealed the trial court's ruling. By the end of March 2000, the appeal and cross-appeal were fully briefed. During this time, UAW and DLM took possession of the property and allegedly began to mismanage it, resulting in the property's devaluation and a decrease in rental income. In order to stop the diminution of the property value and retake possession, Shangri-La decided to enter into a settlement agreement with UAW and DLM. Under the terms of this settlement agreement, Shangri-La agreed to the dismissal of its appeal with prejudice.

¶ 8 Shangri-La subsequently filed this malpractice action against Turner, contending that Turner had "failed to interpose such legal defenses and theories on behalf of [Shangri-La] as would adequately protect [Shangri-La's] interest in" the apartment complex. Turner moved for summary judgment. The district court granted his motion, reasoning that Turner had not committed malpractice because the judge in the underlying case had Turner's supplemental brief before him when he issued his final decision. The district court also ruled that Shangri-La had "forfeited [its] right to pursue any malpractice action against" Turner by settling the underlying action instead of pursuing the appeal.

¶ 9 Shangri-La appeals the district court's grant of summary judgment in favor of Turner. We have jurisdiction pursuant to Utah Code section 78-2-2(3)(j) (2002).

STANDARD OF REVIEW

¶ 10 We review the district court's decision to grant summary judgment for correctness, affording the trial court no deference.4 In reviewing the grant of summary judgment, "we recognize that summary judgment is appropriate only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law."5

ANALYSIS

¶ 11 We begin by reviewing the district court's conclusion that Shangri-La abandoned its malpractice claim against Turner when it settled the redemption lawsuit, thereby preventing the court of appeals from correcting what both parties now concede to be judicial error by the trial judge in that lawsuit. Although we hold that the settlement did not constitute abandonment of Shangri-La's malpractice claim, we nevertheless affirm the summary judgment entered by the district court on alternative grounds. Specifically, we hold that judicial error, rather than Turner's alleged malpractice, proximately caused Shangri-La's injury.

I. SHANGRI-LA DID NOT ABANDON ITS CLAIM THROUGH SETTLEMENT

¶ 12 Shangri-La challenges the district court's holding that it abandoned its malpractice action against Turner when it settled the underlying redemption lawsuit (the "abandonment doctrine"). Shangri-La's challenge to the abandonment doctrine presents an issue of first impression in Utah. We accordingly begin by considering the cases from other jurisdictions on which the district court relied.6 We conclude that these cases cannot be read to support as broad an application of the abandonment doctrine as the district court suggested and, in fact, were effectively decided on causation principles. We therefore decline to adopt the abandonment doctrine.

A. The Abandonment Doctrine

¶ 13 Broadly stated, the abandonment doctrine provides that a client forfeits any legal malpractice claims arising from an attorney's alleged mishandling of litigation when the client settles the underlying litigation before final judicial review "[i]f the compromise prevented the judicial resolution of issues that would have established that the attorney was not negligent or a cause of the client's loss."7

¶ 14 The Florida Court of Appeals articulated the abandonment doctrine in the seminal case of Pennsylvania Insurance Guaranty Ass'n v. Sikes.8 Sikes arose from an attorney's failure to deny certain allegations in an underlying civil case. Although the attorney had later moved to amend his answer, the trial judge denied his motion.9 The attorney recommended that his client appeal the decision, but the client decided to settle the case.10 The client then sued the attorney for malpractice.11 The court of appeals affirmed the trial court's grant of summary judgment, holding that "on the facts of this case, . . . the settlement of the underlying personal injury case, while the appeal was pending, constituted an abandonment of any claim that [the client's] loss resulted from legal malpractice rather than judicial error."12

¶ 15 Subsequently, in Segall v. Segall,13 the Florida Court of Appeals rearticulated its apparent commitment to the abandonment doctrine, citing Sikes and stating that "[w]here a party's loss results from judicial error occasioned by the attorney's curable, nonprejudicial mistake in the conduct of the litigation, and the error would most likely have been corrected on appeal, the cause of action for legal malpractice is abandoned if a final appellate decision is not obtained."14

¶ 16 Other state appellate courts have also adopted the abandonment doctrine in some form. For example, in the Ohio case of E.B.P., Inc. v. Cozza & Steuer,15 a client decided to settle a case in lieu of pursuing an appeal and then sued its law firm for malpractice. The court ruled that the client had abandoned its claim, noting that "[a] settlement entered into as a result of an attorney's exercise of reasonable judgment in handling a case ...

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