Bullard v. Bailey, 39607-2-I

• Decision Date: 26 May 1998
• Docket Number: No. 39607-2-I,39607-2-I
• Citation: 959 P.2d 1122,91 Wn.App. 750
• Court: Washington Court of Appeals
• Parties: James B. BULLARD, Respondent, v. James P. BAILEY, Appellant.

Page 750

91 Wn.App. 750

959 P.2d 1122

James B. BULLARD, Respondent, v. James P. BAILEY, Appellant.

No. 39607-2-I.

Court of Appeals of Washington Division 1.

May 26, 1998.

Publication Ordered and Amended on Reconsideration July 31, 1998.

Howard Mark Goodfriend, Edwards, Sieh, Smith & Goodfriend P.S., Seattle, G. Kenneth O'Mhuan, Clinton, for Appellant.

Gregory D. Lucas, Geoffrey Marc Davis, Bellevue, for Respondent.

WEBSTER, Judge.

James Bailey appeals a judgment entered against him that apportions twenty percent fault for James Bullard's damages in a fraudulently settled lawsuit. Bailey associated himself with Richard McClellan, who represented himself to Bullard as an attorney, then settled Bullard's personal injury claim for $40,000 and stole these funds. The trial court found Bailey committed legal malpractice in negligently supervising McClellan and negligently representing Bullard, and that Bailey's negligence was a proximate cause of Bullard's damages. Bailey appeals, arguing the independent business judgment rule negates proximate cause, proximate cause was not met as a matter of law, and Bullard is contributorily negligent for failing to mitigate his damages by seeking to vacate the illegal settlement.

We affirm. The independent business judgment rule has recently been rejected by both the Supreme Court and this court as a bar to proximate cause. Both elements of proximate cause, cause in fact and legal causation, are supported by the particular facts and circumstances here. We also decline to apportion fault to Bullard for failure to mitigate his damages; Bullard acted reasonably in deciding to sue his tortfeasors instead of seeking to have the fraudulent settlement vacated.

FACTS

In his brief, appellant Bailey states that he challenges only the trial court's legal conclusions. Consequently, the facts that follow are the trial court's undisputed findings.

On September 25, 1989, Morris Cave's vehicle collided with James Bullard's vehicle. Bullard suffered injuries as a proximate cause of this accident. Responding to an advertisement, Bullard contacted Accident & Medical Investigations, Inc. ("AMI") and Richard McClellan. McClellan told Bullard he was an attorney and AMI a law firm. Believing McClellan, Mr. Bullard entered a contingency fee agreement for AMI's representation in a suit against Cave. McClellan was not, in fact, an attorney. But he settled Bullard's claim for $40,000 without Bullard's knowledge or consent, forging both Bullard's and attorney Camille Jescavage's signatures on settlement documents. Cave gave the settlement checks to McClellan, who then forged Bullard's signature on the checks, cashed them, and converted them to his personal use.

James Bailey was a licensed Washington attorney and associate of McClellan's. Bailey's name appeared on AMI's letterhead. And Bailey held McClellan out to be his paralegal on at least one occasion.

At McClellan's request, Bailey agreed to represent Mr. Bullard at his deposition. Apparently, Jescavage had attempted to withdraw from representing Mr. Bullard, so Bullard believed Bailey was his attorney. During the deposition, Bailey became aware that McClellan had represented on the record that he was an attorney, yet Bailey did not attempt to correct this misstatement. Consequently, Bullard continued to believe that AMI was a law firm and Bailey and McClellan his lawyers.

Approximately one week after the deposition, Bailey wrote to Cave's attorney and proposed an $85,000 settlement of all claims. He copied Bullard on this letter, but did not first discuss this settlement figure with him before making the offer. And although Bullard continued to believe Bailey to be his lawyer, Bailey never advised Bullard otherwise. Bailey also knew Jescavage had severed her association with AMI, and knew McClellan would continue to handle Mr. Bullard's claim. McClellan's fraudulent settlement of Bullard's claim, however, was unknown to Bailey until months after it occurred.

After a thirteen-day trial, the trial court entered Findings of Fact, Conclusions of Law, Judgment, and an Order Awarding Attorneys Fees and Costs in Bullard's favor. On appeal, Bailey challenges the following findings of fact as conclusions of law: (1) that he did not properly supervise McClellan; (2) that he facilitated McClellan's unlawful practice of law; (3) that he failed to supervise McClellan, a non-lawyer; (4) that he actively encouraged McClellan's unlawful legal representation of Bullard; (5) that McClellan and AMI were 75% at fault, Bailey was 20% at fault, and Jescavage was 5%; and (6) that Bullard was not at fault in causing his own damages. He takes issue with nearly all of the court's legal conclusions pertaining specifically to him, as well as the court's conclusion that he is liable to Bullard for negligence, legal malpractice, and negligent supervision of non-lawyers.

DISCUSSION

To prove legal malpractice, four elements must be met: (1) there is an attorney-client relationship giving rise to a duty of care owed by the lawyer; (2) there is an act or omission breaching that duty of care; (3) this breach damages the client; and (4) the breach is the proximate cause of the client's damages. See 16 David K. DeWolf & Keller W. Allen, Washington Practice, Tort Law and Practice § 7.21, at 191 (1993) (citing Hizey v. Carpenter, 119 Wash.2d 251, 830 P.2d 646 (1992); Bush v. O'Connor, 58 Wash.App. 138, 791 P.2d 915 (1990)). Once the attorney-client relationship is established, ¹ the remaining elements are the same as for other negligence actions. Id. (citing Stangland v. Brock, 109 Wash.2d 675, 747 P.2d 464 (1987)). ²

I. Proximate Cause

There are two elements to proximate cause: cause in fact and legal causation. See City of Seattle v. Blume, 134 Wash.2d 243, 251, 947 P.2d 223, (1997) (citing Hartley v. State, 103 Wash.2d 768, 777, 698 P.2d 77 (1985)). Cause in fact is the "but for" consequence of an act; it connects the act to its injury. Id. at 251-52, 947 P.2d 223. " 'It is a matter of what has in fact occurred.' " Hartley, 103 Wash.2d at 778, 698 P.2d 77 (quoting William L. Prosser, Handbook of the Law of Torts 237 (4th ed.1971)). Cause in fact is generally for the trier of fact to decide. See Daugert v. Pappas, 104 Wash.2d 254, 257-58, 704 P.2d 600 (1985); Hartley, 103 Wash.2d at 778, 698 P.2d 77 (generally a jury decision). Given the existence of cause in fact, whether there is also legal causation turns on the policy question, "How far should the consequences of a defendant's act extend?" Blume, 134 Wash.2d at 252, 947 P.2d 223. Determining whether legal liability adheres depends on " 'mixed considerations of logic, common sense, justice, policy, and precedent.' " Hartley, 103 Wash.2d at 779, 698 P.2d 77 (quoting King v. City of Seattle, 84 Wash.2d 239, 249, 525 P.2d 228 (1974)). A proximate cause determination is reviewed on appeal as a question of law if all evidentiary inferences are incapable of reasonable doubt. Id. (citing Bernethy v. Walt Failor's Inc., 97 Wash.2d 929, 935, 653 P.2d 280 (1982) (quoting Mathers v. Stephens, 22 Wash.2d 364, 370, 156 P.2d 227 (1945))).

Independent Business Judgment Rule

The "independent business judgment rule" negates the proximate cause element of negligence. See City of Seattle v. Blume, 134 Wash.2d 243, 251, 947 P.2d 223 (1997). This rule was first articulated in King v. City of Seattle, 84 Wash.2d 239, 525 P.2d 228 (1974); if a plaintiff, exercising independent business judgment, elects not to pursue available legal remedies, then the defendant's wrongful acts are not a proximate cause of the plaintiff's damages. Id.; see also Blume, 134 Wash.2d at 251, 947 P.2d 223 (citing Marsh v. Commonwealth Land Title Ins. Co., 57 Wash.App. 610, 789 P.2d 792 (1990); Hillis Homes, Inc. v. Snohomish County, 32 Wash.App. 279, 647 P.2d 43 (1982); Grader v. City of Lynnwood, 53 Wash.App. 431, 767 P.2d 952 (1989)).

But in City of Seattle v. Blume, our Supreme Court recently rejected the "independent business judgment rule," finding it can no longer bar the proximate cause element of legal claims. 134 Wash.2d at 260, 947 P.2d 223. Among its policy reasons for doing so, the Court noted the rule's "potential to operate as an absolution to tortfeasors." Id. at 259, 947 P.2d 223. "The danger is that persons who have a valid legal injury are barred from the courtroom for a decision that was necessitated by the tortfeasor. Thus, the rule works as a potential shield from liability for tortfeasors favoring those that have unlimited financial capability to extend the legal process." Id.; see also Mastro v. Kumakichi Corp., 90 Wash.App. 157, 167, 951 P.2d 817, (1998).

Bailey argued in his opening brief that this rule applies because Bullard did not vacate the Cave suit's dismissal under CR 60(b). At oral argument, however, he conceded that these recent decisions abrogate this argument. Thus, we conclude the independent business judgment rule does not bar Bullard's action against Bailey; the proximate cause element of legal malpractice is not negated on these grounds. But Bailey also argues that his alleged negligence was neither the cause in fact nor the legal cause of Bullard's damages.

Cause in Fact

Bailey contends his actions were not the cause in fact of Bullard's injury because: (1) the trial court's conclusion that he could have prevented McClellan's fraud "rests entirely on speculation and conjecture;" and (2) the court's conclusion that McClellan's acts were foreseeable, necessitating closer supervision by Bailey, are "entirely unsupported." We reject this contention.

First, Bailey raises no factual challenge on appeal. Because cause in fact is generally a determination for the trier of fact, see Daugert v. Pappas, 104 Wash.2d 254, 257-58, 704 P.2d 600 (1985), and Hartley v. State, 103 Wash.2d 768, 778, 698 P.2d 77 (1985), we deny Bailey's challenge on this ground alone. Even were we to consider this challenge, however,...