Parler & Wobber v. Miles & Stockbridge

• Decision Date: 25 July 2000
• Docket Number: Misc. No. 20
• Citation: 359 Md. 671,756 A.2d 526
• Parties: PARLER & WOBBER, et al. v. MILES & STOCKBRIDGE, P.C., et al.
• Court: Maryland Court of Appeals

756 A.2d 526

359 Md. 671

PARLER & WOBBER, et al. v. MILES & STOCKBRIDGE, P.C., et al.

Misc. No. 20, Sept. Term, 1999.

Court of Appeals of Maryland.

July 25, 2000.

Alvin I. Frederick (James E. Dickerman of Eccleston & Wolf, on brief), Baltimore, for appellants.

William J. Murphy (Robert T. Shaffer, III, John J. Connolly of Murphy & Shaffer, on brief), Baltimore, for appellees.

Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, RAKER, WILNER, CATHELL and HARRELL, JJ HARRELL, Judge.

Pursuant to Maryland Code (1974, 1998 Repl.Vol.), Courts & Judicial Proceedings Article (CJP), §§ 12-601, et seq.¹, the Maryland Uniform Certification of Questions of Law Act, and Maryland Rule 8-305², the United States District Court for the District of Maryland (Smalkin, J.) certified the following questions for our consideration:

I. May a lawyer, who is being sued by a former client for malpractice, obtain contribution or indemnification from a successor lawyer stemming from the successor's malpractice or negligent representation of the same client in the same matter?

II. May the first lawyer referred to above maintain such an action against the second lawyer when the former claims that the second lawyer negligently advised the client to settle the underlying case?

We respond in the affirmative to both questions.

STATEMENT OF FACTS

Our response to the certified questions begins with the following factual background supplied by the U.S. District Court:

Introduction

This case stems from the tortured morass which asbestos litigation has become.[] The Plaintiff in this case [before the District Court] is Royal Insurance Company of America ("Royal"). Royal insured Salomon, Inc. Royal, as Salomon's insurer, hired Miles [ & Stockbridge, P.C.] to defend Salomon in a lawsuit filed by Corinne Jerome in Baltimore City Circuit Court (the "Jerome litigation"). (Jerome had previously filed suit against Salomon in New York.) Jerome initiated the Maryland suit to recover damages stemming from her husband's alleged exposure to asbestosis. Miles represented Salomon for a short time in the initial stages of the Jerome litigation. As will be discussed in more detail below, Royal eventually discharged Miles and retained Parler [ & Wobber] to represent Salomon. By that point, a default had been lodged against Salomon in the Jerome litigation. Eventually, Royal, on the advice of Parler, decided to settle the Jerome litigation for approximately $1.6 million.

Royal is now suing Miles for malpractice, seeking over $1.6 million in damages (the "Royal litigation"). Royal claims that it was forced to settle the Jerome litigation due to Miles' negligence in allowing a default judgment to be entered against it. Miles has answered and denies liability. In addition, Miles has filed a third-party complaint against Parler, in essence seeking a contribution from it in case Miles is held to be liable to Parler [Royal]. Miles claims that Parler also acted negligently in its representation of Royal and either was the proximate cause of, or added to the extent of, the damages Royal suffered. Parler now argues in its motion to dismiss Miles' Third Party Complaint that it cannot be held liable, as a matter of law, to Miles in this situation.

The Jerome Litigation

This case started with a run-of-the-mill asbestosis lawsuit. Apparently, Jerome originally initiated suit in New York. According to Parler, she decided also to file in Maryland because she was worried that she would have statute of limitations problems in New York. Accordingly, she filed suit in Baltimore City Circuit Court in the fall of 1997, naming Salomon as defendant. According to Parler, service was affected on Salomon through its resident agent. No answer was originally filed and an initial Default Order and Notice of Default was issued in December, 1997.

Salomon then notified Royal of the lawsuit. Royal in turn hired Miles to defend the case on behalf of Salomon. Miles filed a motion to vacate the Default Order, which was granted by the Baltimore City Circuit Court in January, 1998. Rather than responding to the Complaint at that point, Miles removed the case to the United States District Court for the District of Maryland. (It is at this point that Miles' actions become the subject of the Royal litigation). Judge Blake, of this Court, remanded the case to the Baltimore City Circuit Court.

Apparently, Miles assumed that the removal proceeding would stay the Circuit Court's timely filing deadline for Salomon's Answer. It did not. Upon remand to the Circuit Court, Jerome filed a Motion to Enter a Default Judgment. Miles answered the Jerome Complaint the next day (well past the original date it was due following the vacation of the first Default Order). On May 8, 1998, the Baltimore City Circuit Court, Angelletti, J., granted Jerome's motion for Default Judgment. Miles unsuccessfully attempted to have that order reconsidered by Judge Angelletti, but he denied Salomon's motion to vacate his order in August, 1998.

Soon after this failure of reconsideration, Royal discharged Miles and retained Parler, which entered its appearance in the Circuit Court on September 28, 1998. Previously, Miles had failed to identify third party defendants (the list was due on September 21, 1998). Parler in turn failed to file any third party complaints before the deadline of October 5, 1998. The parties dispute whether Miles' failure to identify third party defendants would act as a bar to Parler actually filing third party complaints. Over the next several months, Parler attempted to have Jerome's suit dismissed, relying primarily on arguments that the dismissal of Jerome's New York suit on statute of limitations grounds should have res judicata effect in Maryland and that a release Jerome had previously signed absolved Salomon of any liability. These efforts, including a denied request for a writ of mandamus from the Court of Appeals of Maryland, were unsuccessful. According to Miles, Parler never specifically requested the Circuit Court to vacate its default order. Instead, Miles alleges, Parler erroneously conceded the binding effect of the Court's default judgement [sic]. While Salomon's motion for summary judgment on the basis of Jerome's release was pending, Royal, allegedly on the advice of Parler, settled with Jerome for $1.6 million.

Malpractice Claims

Royal initiated this lawsuit by alleging malpractice by Miles. Specifically, it claims that Miles committed malpractice when it: 1) allowed a default judgment to be entered against Salomon in the Jerome litigation; and 2) failed to identify third party defendants before the September 21, 1998 deadline issued by the Baltimore City Circuit Court. Royal asserts that Miles' negligence proximately caused Royal to settle with Jerome for $1.6 million, despite Parler's efforts to avoid the effect of the default order. Royal has not sued Parler for malpractice.

Miles filed a third-party complaint against Parler. Miles alleges three specific acts of negligence in Parler's representation of Salomon: 1) it failed to argue either to the Circuit Court or on appeal (via the writ of mandamus) the appropriate liberal standard for the vacation of an entry of a default order before it becomes a final default judgment[³] 2) that Parler could have filed third-party complaints, but failed to do so, before October 5, 1998; and 3) that Parler negligently advised Royal to settle the Jerome litigation far in excess of any reasonable settlement value. As a result of this negligent representation, Miles claims that it is entitled to contribution and/or indemnification from Parler for any liability it has towards Royal. (Miles also raises these issues as a defense to Royal's claim.) ⁴

I.

Under the Certified Questions of Law Act, this Court's statutorily prescribed role is to determine only questions of Maryland law, not questions of fact. See Reed v. Campagnolo, 332 Md. 226, 228, 630 A.2d 1145, 1146 (1993); Food Fair Stores, Inc. v. Joy, 283 Md. 205, 219, n. 7, 389 A.2d 874, 882 (1978); Mercantile-Safe Deposit and Trust Co. v. Purifoy, 280 Md. 46, 55, 371 A.2d 650, 655 (1977). For purposes of our analysis, we accept the facts as submitted by the certifying court. See Reed, 332 Md. at 228, 630 A.2d at 1146; Food Fair Stores, Inc., 283 Md. at 219, n. 7, 389 A.2d at 882. Furthermore, we confine our legal analysis and final determinations of Maryland law to the questions certified. See Reed, 332 Md. at 228-29, 630 A.2d at 1146; Toll v. Moreno, 284 Md. 425, 437, 397 A.2d 1009, 1015 (1979).

We are presented with an issue of first impression in Maryland: when a client sues former counsel for professional malpractice, may that former counsel implead the client's successor counsel for contribution and indemnification where it alleges that successor counsel's professional negligence in the same matter contributed to the injury suffered by the client? We hold that such a claim may be maintained. In so holding, we must resolve two competing interests: the right for a joint tortfeasor to seek contribution or indemnification from an assertedly common liable party and the need to protect the attorney-client privilege.

Miles argues that it has a statutory right to implead Parler for contribution or indemnification under the Maryland Uniform Contribution Among Tort-Feasors Act ("UCATA"), Maryland Code Annotated (1974, 1998 Repl.Vol.), Courts & Judicial Proceedings Article, §§ 3-1401, et seq.⁵, which contains no express recognition of or exception for the attorney-client privilege issue, and attendant ethical implications, presented here. It asserts that the very purpose of UCATA is served by its impleader action because the statute "ensures that the costs of injuries is distributed fairly among joint tort-feasors by allowing defendants an opportunity to assert a claim that the plaintiff for whatever reason has not asserted on his own. The plaintiff still may choose whom to name as a defendant,...