Clark v. Rowe

• Decision Date: 06 November 1998
• Citation: 701 N.E.2d 624,428 Mass. 339
• Parties: Jean P. CLARK v. Harvey F. ROWE, Junior, & another. 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 624

701 N.E.2d 624

428 Mass. 339

Jean P. CLARK v. Harvey F. ROWE, Junior, & another. ¹

Supreme Judicial Court of Massachusetts Essex.

Argued Sept. 3, 1998.

Decided Nov. 6, 1998.

Lawrence D. Shubow (David L. Kelston with him), Boston, for plaintiff.

Allen N. David (Moujan M. Walkow with him), Boston, for Harvey F. Rowe, Jr.

William F. Looney, Jr., Boston, for Shawn Potter.

Before WILKINS, C.J., and ABRAMS, LYNCH, GREANEY, FRIED, MARSHALL and IRELAND, JJ.

WILKINS, Chief Justice.

The plaintiff sustained losses in real estate investments that she attributed to the fault of the defendant Harvey Rowe, who was her lawyer, and to the fault of the defendant Shawn Potter, who was her banker.

After a trial of her various claims, judgment was entered for each defendant. The trial judge directed a verdict for Potter. In a special verdict, the jury decided certain claims in favor of Rowe, but also answered that Rowe, as lawyer for the plaintiff, was negligent in representing her in connection with the refinancing of a loan secured by property in Haverhill. That negligence, the jury found, was a substantial contributing cause of certain of the plaintiff's substantial losses. The jury also found, however, that the plaintiff was negligent in connection with that refinancing and that seventy per cent of all the negligence was hers and thirty per cent was Rowe's. The judge ordered the entry of judgment for Rowe, applying principles of comparative negligence to deny the plaintiff recovery for Rowe's malpractice in the refinancing of the Haverhill property. The plaintiff's principal contention in her appeal, which we transferred here on our own motion, is that comparative fault is inapplicable to her claim against Rowe. We affirm the judgments for Rowe and Potter.

1. We turn first to the question of the appropriateness of the entry of judgment in favor of Rowe notwithstanding the jury's special verdict in favor of the plaintiff. In her appeal, the plaintiff does not argue, as she did below, that the evidence was insufficient to submit the question of her contributory fault to the jury. There was evidence that she had substantial experience in real estate matters and was a sophisticated business person.

In her challenge to the judge's application of comparative fault principles to her claim against Rowe, the plaintiff runs into an insurmountable barrier. She did not preserve the issue for appellate review. The plaintiff did not object appropriately to the judge's jury instruction on the application of comparative negligence in this case. Counsel only objected to "all instructions on contributory negligence on the basis of our claim that there is insufficient evidence that Mrs. Clark was negligent." There was no objection to the jury instruction insofar as it announced that the plaintiff's fault was an element to be considered.

"No party may assign as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection." Mass. R. Civ. P. 51(b), 365 Mass. 816 (1974). The plaintiff did not present an appropriate objection to the comparative negligence instruction. See Lysak v. Seiler Corp., 415 Mass. 625, 629-630, 614 N.E.2d 991 (1993); Coupounas v. Madden, 401 Mass. 125, 130, 514 N.E.2d 1316 (1987); Simmons v. Yurchak, 28 Mass.App.Ct. 371, 379, 551 N.E.2d 539 (1990).

The plaintiff moved to expand the record to include her counsels' recollections of an unrecorded charge conference. See Mass. R.A.P. 8(e), as amended, 378 Mass. 932 (1979). The trial judge denied the motion. If we were to consider the plaintiff's proffer, it would not support the conclusion that the purpose of rule 51(b), to put the judge on notice of the objection, was fairly met or that the objection was conclusively rejected in the charge conference. See Flood v. Southland Corp., 416 Mass. 62, 67, 616 N.E.2d 1068 (1993).

2. Although the issue was not preserved for appellate review, the question whether comparative fault can properly be considered in a malpractice action against a lawyer is unanswered in this Commonwealth. ² The issue is fully briefed and likely to arise in other cases. We choose in our discretion to discuss the issue. Moreover, the question of comparative fault comes up in dealing with the judge's ruling against the plaintiff on her G.L. c. 93A claim against Rowe, a matter we discuss briefly later in this opinion. See note 6 below.

The fact that a malpractice claim against a lawyer may be viewed as an action in contract does not make contributory fault automatically irrelevant. The standard of care normally applied is whether the lawyer failed to exercise reasonable care and skill in handling the client's matter, a classical tort negligence standard. See Ryan v. Ryan, 419 Mass. 86, 89, 642 N.E.2d 1028 (1994); Colucci v. Rosen, Goldberg, Slavet, Levenson & Wekstein, P.C., 25 Mass.App.Ct. 107, 111, 515 N.E.2d 891 (1987). A malpractice claim does not sound exclusively in either contract or tort. See McStowe v. Bornstein, 377 Mass. 804, 807-808, 388 N.E.2d 674 (1979); Hendrickson v. Sears, 365 Mass. 83, 85, 310 N.E.2d 131 (1974); 1 R. Mallen & J. Smith, Legal Malpractice § 8.12, at 601-602 (4th ed.1996); W.L. Prosser & W.E. Keeton, Torts § 92, at 660-661 (5th ed.1984). A lawyer's negligence may constitute a violation of an implied condition of the contractual relationship between lawyer and client but that does not foreclose the application of contributory fault principles to the client's claim.

To further her claim that legal malpractice should only be viewed as an action in contract, thereby rendering the application of comparative negligence irrelevant, the plaintiff argues that the economic loss rule precludes viewing malpractice as a tort. We have not applied the economic loss rule to claims of negligence by a fiduciary, such as a lawyer. The rule, which precludes recovery in negligence for purely economic loss, has been applied in very different circumstances. See FMR Corp. v. Boston Edison Co., 415 Mass. 393, 395, 613 N.E.2d 902 (1993) (no recovery in tort for purely economic losses in the absence of harm to plaintiff's person or property); Bay State-Spray & Provincetown S.S., Inc. v. Caterpillar Tractor Co., 404 Mass. 103, 107, 533 N.E.2d 1350 (1989) (no recovery in tort for losses caused by engine malfunction); Stop & Shop Cos. v. Fisher, 387 Mass. 889, 893, 444 N.E.2d 368 (1983) (no recovery for loss of business revenue caused by defendant's negligent collision with bridge causing obstruction of access to plaintiff's business); New England Power Co. v. Riley Stoker Corp., 20 Mass.App.Ct. 25, 35, 477 N.E.2d 1054 (1985); Marcil v. John Deere Indus. Equip. Co., 9 Mass.App.Ct. 625, 631, 403 N.E.2d 430 (1980). When the economic loss rule has been applied, the parties usually were in a position to bargain freely concerning the allocation of risk, and, more importantly, there was no fiduciary relationship. See Berman v. Coakley, 243 Mass. 348, 354-355, 137 N.E. 667 (1923) ("The attorney and client do not deal with each other at arms' length. The client often is in many respects powerless to resist the influence of his attorney"); R. Anderson & W. Steele, Jr., Fiduciary Duty, Tort and Contract: A Primer on the Legal Malpractice Puzzle, 47 S.M.U. L.Rev. 235, 242 (1994) ("[I]n the eyes of the law, fiduciary relationships are never arms length"). The general rule in this country is that the economic loss rule is inapplicable to claims of legal malpractice. See Collins v. Reynard, 154 Ill.2d 48, 50, 180 Ill.Dec. 672, 607 N.E.2d 1185 (1992); 154 Ill.2d at 56, 180 Ill.Dec. 672, 607 N.E.2d 1185 (Miller, C.J., concurring); Resolution Trust Corp. v. Holland & Knight, 832 F.Supp. 1528, 1532 (S.D.Fla.1993) (Florida law). Cf. People Express Airlines, Inc. v. Consolidated Rail Corp., 100 N.J. 246, 263, 495 A.2d 107 (1985) ("a defendant owes a duty of care to take reasonable measures to avoid the risk of causing economic damages, aside from physical injury, to particular plaintiffs or plaintiffs comprising an identifiable class [who] defendant knows or has reason to know are likely to suffer such damages from its conduct. A defendant failing to adhere to this duty of care may be found liable for such economic damages proximately caused by its breach of duty").

The plaintiff makes a persuasive argument that our comparative negligence statute does not apply to an action based on a claim of financial loss caused by a lawyer's negligence. That statute, G.L. c. 231, § 85, which is set forth in part in the margin, ³ concerns recovery of damages for negligence "resulting in death or in injury to person or property." The quoted language is a limitation on the word "damages." If the injury to "property" included economic loss, little would be left of the limitation in § 85 that concerns property. Moreover, cases have suggested that pecuniary loss is not injury or damage to property. See Rockwell v. Furness, 215 Mass. 557, 558, 102 N.E. 914 (1913); Dhanda v. Tri M, Ltd., 24 Mass.App.Ct. 700, 703, 512 N.E.2d 1141 (1987) ("[t]hat language [in § 85] suggests physical harm, rather than economic loss from negligent misrepresentation").

The inapplicability of § 85 to claims of legal malpractice does not dispose of the matter. The question remains whether we would apply the public policy considerations underlying § 85 to support a common law rule of comparative negligence in a case such as this. See Uniform Comparative Fault Act, 12 U.L.A. § 1 Comment (1996) ("failure to include these [economic loss] harms specifically in the Act is not intended to preclude application of the general principle to them if a court determines that the common law of the state would make the application"). Many courts in jurisdictions having a comparative negligence statute similar to ours ("damages ... resulting in ... injury...