Halvorsen v. Ferguson, 13498-1-I

CourtCourt of Appeals of Washington
Citation46 Wn.App. 708,735 P.2d 675
Decision Date06 October 1986
Docket NumberNo. 13498-1-I,13498-1-I
PartiesMary Catherine HALVORSEN, Appellant, v. William H. FERGUSON, William Wesselhoeft, Donald McL. Davidson, Edward Hilpert, Jr., Thomas J. Greenan, Henry W. Dean, William B. Moore, C. David Sheppard, W.J. Thomas Ferguson, James E. Hurt, William D. Stites, Bruce P. Babbit, E.P. Swain, Jr., Christopher Kane and Henry C. Jameson, d.b.a. Ferguson & Burdell and William Wesselhoeft and Jane Doe Wesselhoeft and their marital community, Respondents.

Page 708

46 Wn.App. 708
735 P.2d 675
Mary Catherine HALVORSEN, Appellant,
William H. FERGUSON, William Wesselhoeft, Donald McL.
Davidson, Edward Hilpert, Jr., Thomas J. Greenan, Henry W.
Dean, William B. Moore, C. David Sheppard, W.J. Thomas
Ferguson, James E. Hurt, William D. Stites, Bruce P. Babbit,
E.P. Swain, Jr., Christopher Kane and Henry C. Jameson,
d.b.a. Ferguson & Burdell and William Wesselhoeft and Jane
Doe Wesselhoeft and their marital community, Respondents.
No. 13498-1-I.
Court of Appeals of Washington,
Division 1.
Oct. 6, 1986.
Reconsideration Denied Feb. 3, 1987.

Page 709

[735 P.2d 677] Jerry Schumm, Beckland & Schumm, Bellingham, for appellant Mary Catherine Halvorsen.

Frederick M. Meyers, Karr, Tuttle, Koch, Campbell, Mawer & Morrow, P.S., Seattle, for respondent William H. Ferguson.


Mary Catherine Halvorsen, plaintiff below, appeals a summary judgment in favor of William Wesselhoeft, et al., d/b/a Ferguson & Burdell (referred to collectively as Ferguson), defendants below, and dismissal of her action for legal malpractice. She contends that factual issues remain regarding duty, breach of duty, and proximate cause that should have been submitted to the jury. Halvorsen also assigns error to a judgment on Ferguson's

Page 710

counterclaim for attorney's fees.

This appeal arose out of a dissolution action (hereinafter referred to as the Halvorsen action). Mary Catherine Halvorsen married Boyer Halvorsen on May 15, 1965. The couple separated in 1976, and in May 1977 the appellant retained the law firm of Ferguson & Burdell to represent her in a separation action. William Wesselhoeft was the primary attorney.

In response to appellant's separation action, her husband brought a counterclaim for dissolution. The Halvorsen action went to trial in December 1977 and January 1978. Although the dissolution trial encompassed numerous property and custody issues, the focus of the instant appeal is the disposition of what was the bulk of the Halvorsen property: two corporations owned by the husband at the time of his marriage to Mary Catherine and two wholly owned subsidiaries of those corporations.

Appellant's husband had been engaged in the towing of logs and the transportation of freight since the 1920s. In the 1950s the business expanded into Southeast Alaska. The Puget Sound portion was incorporated as Halvorsen Towing, Inc. in 1959; the Alaska portion was incorporated on the same date as Boyer Towing, Inc. Mr. Halvorsen was president and a director of each corporation.

In order to obtain an ICC permit, Boyer Towing negotiated the purchase of all outstanding stock of the Olson Tug Boat Company. The purchase was authorized and negotiated prior to the marriage, but was not consummated until after the marriage in 1965. In 1976 all shares of Olson Tug were transferred to Halvorsen Towing. In the 1960s Boyer Towing also developed a barge division, which was incorporated as Boyer Alaska Barge Line, a wholly owned subsidiary, in 1975.

The value of the husband's stock in these corporations increased from approximately $400,000 at the time of the marriage to approximately $2,500,000--$3,350,000 at the time of separation. At trial, various theories were argued to permit the wife to assert a community interest in these

Page 711

corporations, in particular in the substantial growth in value that occurred after the marriage. The trial court, however, rejected appellant's claim and concluded the husband's stock in Boyer Towing and Halvorsen Towing was his separate property. This decision constitutes the basis of the instant malpractice claim. 1

[735 P.2d 678] Following a dispute with Ferguson & Burdell, appellant employed attorney Philip Malone to appeal the Halvorsen decision. By unpublished opinion filed July 14, 1980, this court affirmed the trial court's decision with only a slight modification. Subsequent petitions for review in the Washington Supreme Court and for mandamus in the United States Supreme Court were denied.

Appellant, acting pro se, commenced an action for breach of contract and legal malpractice against Ferguson & Burdell in 1980. Ferguson counterclaimed for its attorney's fees in the Halvorsen action. The various claims of legal malpractice were ultimately reduced to one: an alleged failure to pursue adequately a community property interest in the husband's corporations.

On June 30, 1983, Superior Court Judge Peterson granted Ferguson's motion for summary judgment. In its oral decision, the trial court indicated that the evidence submitted in opposition to Ferguson's motion failed to raise material factual issues regarding both negligence and proximate cause. In addition, the court, sitting without a jury, entered a judgment on the counterclaim for attorney's fees. Appellant's motion for reconsideration was denied and this appeal ensued.

In order to sustain a claim of legal malpractice, the plaintiff must show:

(a) the existence of an attorney-client relationship; (b) the existence of a duty on the part of the lawyer; (c) failure to perform the duty; and (d) the negligence of the lawyer must have been a proximate cause of the damage to the client.

Page 712

Sherry v. Diercks, 29 Wash.App. 433, 437, 628 P.2d 1336, rev. denied, 96 Wash.2d 1003 (1981). An attorney has a duty to exercise "that degree of care, skill, diligence and knowledge commonly possessed and exercised by a reasonable, careful and prudent lawyer in the practice of law in this jurisdiction." Cook, Flanagan & Berst v. Clausing, 73 Wash.2d 393, 395, 438 P.2d 865 (1968).

We observe initially that both appellant and her expert witnesses have great difficulty in articulating the precise nature of respondent's alleged negligence. The primary thrust of the argument appears to be that Ferguson breached its duty by failing adequately to research and advance appropriate legal theories in the underlying dissolution action, in particular an "apportionment" theory, that would have caused the trial judge to characterize the husband's subsidiary corporations as community property. Had these corporations been so characterized, it is asserted, the appellant would have received a greater property award. Such allegations potentially involve several distinct bases of liability for legal malpractice. See generally, R. Mallen & V. Levit, Legal Malpractice §§ 206-13 (2d ed. 1981).

Because the trial court reached its decision on a motion for summary judgment, we must view the material evidence and all reasonable inferences therefrom in the light most favorable to the appellant. Klinke v. Famous Recipe Fried Chicken, Inc., 94 Wash.2d 255, 256, 616 P.2d 644 (1980). The purpose of a motion for summary judgment is to avoid useless trials when no genuine issue of material fact exists. Zobrist v. Culp, 18 Wash.App. 622, 637, 570 P.2d 147 (1977). When material issues of fact exist, they may not be resolved by the trial court and summary judgment is inappropriate. The appellant vigorously contends that because she had three expert witnesses willing to state that Ferguson's actions were negligent and that such negligence proximately caused her damages, the trial court erroneously granted respondent's summary judgment motion.

Although questions of negligence and proximate causation are usually for the jury, the unique characteristics

Page 713

of a legal malpractice action may render the general rule inapposite in certain instances. As one commentator has observed, some confusion has resulted from a failure to recognize that the issue of professional negligence is usually a mixed question of law and fact:

If the attorney is charged with an error regarding a legal question there are two [735 P.2d 679] issues to be determined. First, did the attorney err? Second, if so, was the error caused by the attorney's negligence? The first issue is one of law; the second is one of fact.

The initial determination, reserved solely for the court, is whether the attorney erred. For example, only a judge can determine whether an affidavit required for an appeal was defective or if the appeal would have been successful....

Since the determination of whether an attorney erred raises a question of law, the opinions of expert witnesses on the issue are irrelevant.

(Footnotes omitted.) R. Mallen & V. Levit, supra § 659, at 820-21; see also Chocktoot v. Smith, 280 Or. 567, 571 P.2d 1255 (1977). Our Supreme Court has recently held that although in most legal malpractice actions the jury is to decide causation, the determination of what decision would have followed if an attorney had timely filed a petition for review "is a question of law for the judge, irrespective of whether the facts are undisputed." Daugert v. Pappas, 104 Wash.2d 254, 259, 704 P.2d 600 (1985). 2 In Daugert, the Court found that the trial court had erred in instructing the jury on the issue of proximate cause.

Appellant's attempts to define the nature of Ferguson's alleged negligence reflect considerable confusion. Appellant and her expert witnesses allege that Ferguson erred by

Page 714

asserting "the" salary theory rather than "the" apportionment theory in an attempt to obtain a community interest in the great increase in value of the husband's corporations. However, "apportionment" is not a single theory, but a spectrum of techniques that courts have adopted to deal with a particular problem: the conflict between the well settled concept that the labor and skills of a spouse during marriage are a community asset and the concept that the rents, issues, profits, and increasing value of separate property remain separate property. See generally, King, The Challenge of Apportionment, 37 Wash.L.Rev. 483 (1962). The problem arises, as it did in the Halvorsen action, as to how to deal with community labor, i.e., the work performed by both Mr. and Mrs. Halvorsen in connection with the corporations that were Mr. Halvorsen's separate property prior to marriage. Courts...

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