Gates v. O'Connor

• Court: Indiana Appellate Court
• Writing for the Court: Crone, Judge.
• Citation: Gates v. O'Connor, 111 N.E.3d 215 (Ind. App. 2018)
• Decision Date: 13 September 2018
• Docket Number: Court of Appeals Case No. 18A-CT-58
• Parties: Whitney A. GATES, Jonathan W. Gates, and Jacob A. Gates, Appellants-Plaintiffs, v. Joseph D. O'CONNOR and Bunger & Robertson, LLP, Appellees-Defendants.

111 N.E.3d 215

Whitney A. GATES, Jonathan W. Gates, and Jacob A. Gates, Appellants-Plaintiffs,

v.Joseph D. O'CONNOR and Bunger & Robertson, LLP, Appellees-Defendants.

Court of Appeals Case No. 18A-CT-58

Court of Appeals of Indiana.

FILED September 13, 2018

Attorneys for Appellants: Kevin W. Betz, Sandra L. Blevins, Betz + Blevins, Indianapolis, Indiana

Attorneys for Appellees: Michael E. O'Neill, Marian C. Drenth, O'Neill McFadden & Willett, LLP, Schererville, Indiana

Crone, Judge.

Case Summary

[1] Whitney A. Gates, Jonathan W. Gates, and Jacob A. Gates (hereinafter "Whitney")¹ appeal the trial court's entry of summary judgment in favor of attorney Joseph D. O'Connor and Bunger & Robertson, LLP ("the law firm")² on Whitney's claim for legal malpractice. Whitney's complaint against O'Connor alleged that O'Connor negligently failed to pursue and obtain a dissolution of marriage between his father, Jerry Gates, and Jerry's wife, Susan, prior to Jerry's death, which allegedly resulted in a substantial loss of inheritance to Whitney. We note that while this case is nominally about lawyer malpractice, namely, whether O'Connor's purported breach of his duty of care proximately caused Whitney's loss of inheritance, it is really about the "trial within a trial," that is, the law that applied to the underlying dissolution of marriage proceedings. After a thorough review of such law as well as the designated evidence, we conclude that, as counsel for Jerry while Whitney was acting as Jerry's guardian, there was nothing O'Connor could have done to compel a dissolution of Jerry's marriage. Thus, as did the trial court, we conclude that O'Connor has negated the element of proximate cause in the legal malpractice action and is entitled to summary judgment. Accordingly, we affirm.³

Facts and Procedural History

[2] Jerry was a successful Bloomington real estate developer and businessman with an interest in various closely held corporations and limited liability companies. Most of his assets were acquired after he married Susan in March 1986. Before the marriage, Jerry and Susan executed a prenuptial agreement. Among other things, the agreement provided that, in the event of a dissolution of the marriage, Susan would receive her separate property, one-half of all jointly held property, and a cash payment based upon the duration of the marriage prior to the commencement of a dissolution. The agreement also contained provisions limiting Susan's inheritance from Jerry's estate based on the duration of the marriage provided that they were married at the time of his death. Jerry executed a will with corresponding provisions.

[3] In March 2007 Jerry suffered an ischemic stroke, which deprived his brain of an adequate blood supply. This was the first of three strokes that eventually led to Jerry's death six years later in March 2013. Jerry had a good physical recovery from his first stroke, but the stroke resulted in cognitive and personality changes and negatively affected his attitude, demeanor, short-term memory, and judgment.

[4] Notwithstanding the first stroke, Jerry remained competent and retained his testamentary capacity, and, in October 2007, he executed another will and established a revocable trust. This second will and the trust provided Susan with a larger inheritance than under Jerry's 1986 will and the prenuptial agreement as long as Jerry and Susan were still married at the time of Jerry's death. Jerry also named Susan as his attorney-in-fact under a general durable power of attorney over all his personal, intangible, and real property. The power of attorney was a stand-by instrument; it would take effect only if Jerry were declared incapacitated by two licensed physicians unrelated to Jerry or his family. The instrument named Jerry's son, Whitney, and others as successor attorneys-in-fact in the event Susan was unable or unwilling to serve.

[5] In August 2008, after Jerry was diagnosed with hypomania, one of his physicians signed an affidavit stating that Jerry was incapacitated and unable to effectively manage his property or financial affairs. On August 15, 2008, Whitney filed his petition for the appointment of a guardian over Jerry's person and estate under cause number 53C07-0808-GU-98 (the "guardianship"). On that same date, Susan filed a verified petition for dissolution of marriage under cause number 53C07-0808-DR-491 (the "dissolution") after more than twenty-two years of marriage.

[6] Jerry resisted the appointment of a guardian, and in January 2009 the parties entered into a private settlement agreement, which was approved by the guardianship court. The guardianship was then dismissed without prejudice. However, six months later, in June 2009, Whitney filed a motion to set aside the dismissal and to reinstate the cause of action, to which Jerry objected. In July 2009, the guardianship court set aside its prior dismissal and reinstated Whitney's guardianship petition.

[7] Also in June 2009, Jerry's then-attorney Andrew Z. Soshnick informed Whitney that Jerry was revoking Whitney's authority as a successor attorney-in-fact under the "alleged General Durable Power of Attorney," Appellees' App. Vol. 4 at 92, and, two days later, pursuant to Indiana Code Section 30-5-3-5,⁴ Whitney filed an action entitled "Verified Petition for Judicial Interpretation of a Power of Attorney Document and for Instructions to Attorney-in-Fact" under cause number 53C07-0906-MI-1464. Among other things, Whitney requested that the court find that Jerry lacked capacity to control or revoke the power of attorney, find that Whitney is a successor attorney-in-fact, and instruct Whitney as to the powers he may exercise under the power of attorney.⁵ All three actions—the guardianship, the dissolution, and the petition for judicial interpretation of the power of attorney—were then pending simultaneously before Special Judge Nardi in the Monroe Circuit Court.

[8] After multiple and lengthy guardianship hearings, almost three years after Whitney had first filed his petition for appointment of guardian, in June 2011 the guardianship court entered its twenty-seven-page order with detailed findings of facts, conclusions, and judgment, which adjudicated Jerry to be incapacitated and determined that a guardian for his person and estate should be appointed. The court concluded that Whitney was a "good candidate" to be appointed guardian of Jerry's person and estate, recognized that in his power of attorney Jerry had requested that Whitney be appointed as his guardian, and stated that "the Court is obligated to honor that request if at all possible." Appellants' App. Vol. 3 at 84.

[9] At the same time, the court appointed attorney Robert Ralston to serve as co-guardian with Whitney over Jerry's estate "until the dissolution matter is completed." Id. The court had previously appointed Ralston as receiver of Jerry's personal financial affairs. Finding that Whitney "obviously has a close relationship with his stepmother," Susan, the order further provided that "Attorney Ralston ... shall have the discretion to make all decisions regarding the dissolution matter and shall act in [Jerry's] best fiduciary interest." Id. at 85.

[10] Some ten months later, in March 2012, the co-guardians filed their "Petition to Retain Legal Counsel for Pending Dissolution Matter," and the guardianship court issued its order authorizing the co-guardians to retain O'Connor to represent Jerry in the dissolution of marriage proceeding.⁶ The order further stated that "[c]o-guardian Robert Ralston shall have the authority to give direction to attorney Joseph O'Connor and to make decisions concerning the dissolution matter, including strategies for resolution or trial." Id. at 164.

[11] On March 29, 2012, Whitney and Ralston retained O'Connor to represent Jerry in the dissolution. Shortly thereafter, on May 7, one of O'Connor's associates at the law firm prepared a memorandum for him that evaluated "the division of Jerry Gates' estate in the event he died before or after a [dissolution] could be finalized. The [m]emorandum concluded that Susan Gates would likely receive a larger inheritance as Jerry's spouse than she would receive as his former spouse." Id. at 169. O'Connor forwarded the memorandum to Whitney.

[12] Thereafter, O'Connor met with Whitney and Ralston "to discuss the [dissolution] and potential property settlement." Id. at 168. Pursuant to those meetings, O'Connor conveyed a proposed settlement to Susan's counsel, Ryan Cassman, on May 29. That proposed settlement offer was "limited by the 1986 Prenuptial Agreement," in accordance with "the Guardians' requests." Id. at 170. O'Connor followed up with Cassman on June 20 and requested a response. O'Connor further requested that the two sides schedule mediation.

[13] O'Connor and Cassman spoke by phone in early July. Cassman informed O'Connor that Susan "was desirous of completing the dissolution process" and agreed "to proceed with mediation." Id at 168. O'Connor and Cassman continued to be in contact throughout July. On August 15, O'Connor asked Cassman for a response to the proposed settlement offer and to proposed mediation details, among other things. Susan did not respond to the proposals.

[14] Instead, on September 20, 2012, Susan moved to dismiss her petition for dissolution of marriage after it had been pending for more than four years. On September 24, the dissolution court issued its order dismissing Susan's petition for dissolution. On that same date, at Whitney's direction, O'Connor filed a counter petition for dissolution of marriage for Whitney, as Jerry's guardian. Cassman immediately emailed O'Connor stating that he did not believe that Whitney had authority to seek a dissolution on Jerry's behalf, that Susan wished to remain married to Jerry, and that Susan believed Whitney was using his position as guardian to push to dissolve the marriage in order to increase his own inheritance. Two days later, O'Connor advised...