Horn v. Moberg

• Decision Date: 01 February 1993
• Docket Number: No. 28495-9-I,28495-9-I
• Citation: 844 P.2d 452,68 Wn.App. 551
• Parties: George HORN, aka Pete Horn, and Alva Horn, individually and as a marital community, Respondents, v. Gerald J. MOBERG and Ries and Kenison, Appellants.
• Court: Washington Court of Appeals

Page 551

68 Wn.App. 551

844 P.2d 452

George HORN, aka Pete Horn, and Alva Horn, individually and as a marital community, Respondents, v. Gerald J. MOBERG and Ries and Kenison, Appellants.

No. 28495-9-I.

Court of Appeals of Washington Division 1.

Feb. 1, 1993.

John P. Erlick and Cozen & O'Connor, Seattle, for appellants.

Mark A. Johnson, Seattle, for respondents.

SCHOLFIELD, Judge.

Gerald Moberg and the law firm of Ries and Kenison (Ries & Kenison) appeal a judgment against them in a legal malpractice action brought by George and Alva Horn (the Horns). Moberg and Ries & Kenison also appeal denial of their motion for judgment notwithstanding the verdict and a new trial, and seek a reduction in the verdict by the amount of insurance proceeds received by the Horns. We reverse.

STATEMENT OF FACTS

In 1978, the Horns purchased a Maytag clothes dryer from Western Auto. An employee of Western Auto installed the dryer in the mobile home in which the Horns were living. Subsequently, Mr. Horn installed the dryer in a log house the Horns built and had recently moved into.

On March 17, 1982, a fire began in the utility room of the log house. When they discovered the fire, the Horns tried to telephone the fire department, but their telephone did not work. The fire department eventually arrived, but the fire destroyed the house. After an investigation, the fire marshal officially concluded that the cause of the fire was unknown. At the time, the Horns described their log home as being 95 percent complete. Korach & Canfield, the Horns' insurance broker, paid the Horns $66,000 under a construction materials policy for real and personal property losses.

In June 1982, the Horns retained Moberg. Moberg brought an unsuccessful action against Korach & Canfield for failure to provide sufficient insurance coverage. In December 1984 Moberg filed suit against three parties: Maytag, the manufacturer; Furman, the distributor of the dryer; and Western Auto, the retailer. In May 1985, the defendants noted the depositions of the Horns' two expert witnesses, Lloyd Scott and Frank Roberts. During meetings shortly prior to their depositions, each expert informed Moberg he was unable to testify that the fire originated in the dryer. Roberts advised Moberg that " 'no honest expert witness could say because of the conditions that this fire started in [the] dryer' ". Moberg testified that he canceled both experts' depositions at that time because he believed it was in the Horns' best interest to do so.

After canceling the depositions, Moberg met in June 1985 with the Horns to discuss his doubts concerning the viability of their case. Moberg suggested the Horns seek other counsel to represent them. By letter dated July 22, 1985, Moberg notified the Horns that he intended to withdraw as their attorney and urged them to employ other counsel. By letter dated August 23, 1985, Moberg formally notified the Horns that he was no longer their attorney, stating in part:

This letter is to let you know that I am not your attorney in this case any more and I do not expect to do any further work on the case. I do not expect to attend any hearings or anything else. I suggest you find an attorney to represent you on this case immediately.

Exhibit 17. In the July 22 letter, he also provided the names of attorneys in Spokane who specialized in product liability actions and offered to cooperate with any substitute counsel the Horns might retain. On July 24, 1985, Mr. Horn picked up his entire file from Moberg's law firm, Ries & Kenison. Moberg filed and served a Notice of Intent to Withdraw effective August 5, 1985.

The Horns met with Spokane attorney Dan McKelvey three times between July 25 and September 17, 1985 to discuss their product liability action against Maytag. McKelvey later became the Horns' co-counsel in the malpractice action against Moberg.

The defendants in the Maytag action filed motions for summary judgment, to which Moberg did not respond, although Moberg sent copies of the defendants' summary judgment pleadings to the Horns. A hearing on the motions was held on September 19, 1985, which Moberg did not attend. The judge conditionally granted the summary judgment motions of Furman and Western Auto, giving the Horns until October 15 to provide opposing affidavits. As to Maytag, however, the judge concluded that the claims were not ripe for summary judgment. The summary judgment hearing concerning Maytag was continued until October 15.

By letter dated October 7, 1985, McKelvey informed the Horns that he would not represent them in place of Moberg. McKelvey stated that their case had been inadequately prepared against the named defendants and was "fatally flawed" because the telephone company and the fire department had not been named. Exhibit 270. On October 9, during a telephone conference call with the Horns and all parties, the trial judge permitted Moberg to withdraw as counsel for the Horns effective October 11, 1985. The court continued the summary judgment hearings and stated that it would grant additional time if the Horns needed it to secure new counsel.

Western Auto filed a motion for terms of $2,500 based on RCW 4.84.185, which provides for terms in respect to the filing of frivolous complaints. Defendant Furman filed a motion for terms of $300 based upon the Horns' failure to serve their objection to their counsel's withdrawal and failure to appear at the September 1985 summary judgment hearing. The court never awarded terms to Western Auto or Furman. Maytag never sought an award of terms, sanctions, attorney's fees, or costs against the Horns.

Pete Horn testified that he made efforts to find another attorney to take his case. He said he was unsuccessful. In late October 1985, he consulted with attorney Edison Gimple, and after discussions with Mr. Gimple, chose to dismiss the Maytag litigation if Maytag would agree to not pursue any claim for terms or sanctions against the Horns. On October 29, 1985, an order of dismissal with prejudice was signed by Judge Sperline, which dismissed the Horns' complaint against the Maytag company with prejudice and, in addition, provided

2. Plaintiffs shall not be required to make any payments to The Maytag Company for statutory attorney's fees or costs of any nature.

Exhibit 39. The order was presented by an attorney for the Maytag company and was approved for entry by Pete Horn, appearing pro se.

On July 14, 1986, attorney Dan McKelvey and another attorney filed a professional negligence action against Moberg and Ries & Kenison (hereafter Moberg) on behalf of the Horns. Prior to trial, the court ruled that McKelvey's letter of October 7, 1985 to the Horns would be admitted with McKelvey's name blacked out, and that McKelvey could not be identified as the attorney with whom the Horns consulted after Moberg expressed an intent to withdraw. The trial judge stated the view that confusion of the jury, waste of time, and prejudice to the Horns outweighed the probative value of an identification of McKelvey. Moberg assigns error to this ruling.

During trial, after the court ruled that an expert called by the Horns on the value of their log house was not qualified to testify, the court allowed the Horns to substitute Kenneth Palmquist as an expert on value. The court permitted Moberg to interview Palmquist by telephone the evening before he testified.

At the close of the Horns' case, the court dismissed all claims arising out of Moberg's failure to name the fire department and the telephone company as defendants in the product liability action. The jury returned a special verdict in favor of the Horns on both the product liability claim and the malpractice claim, finding no comparative negligence on the part of the Horns, and awarding damages of $355,043.

Moberg's motions for judgment notwithstanding the verdict or, in the alternative, for a new trial were denied. The court did not allow a setoff of the $66,000 in insurance proceeds received by the Horns. This appeal followed.

PROXIMATE CAUSE

The Horns pursued the theory at trial that Moberg was negligent in not properly preparing the Horns' case for trial. Expert testimony was presented to support this theory.

One of Moberg's primary defenses was that the dismissal of the case against Maytag was the result of the exercise of independent business judgment by the Horns. Moberg argues that even if he was negligent, his negligence was not the proximate cause of the loss of the Horns' case against Maytag. He argues that after he withdrew as attorney for the Horns, they had ample time to pursue Maytag through other counsel and that nothing he (Moberg) did or failed to do prevented the Horns from doing so.

The Horns countered the defense of voluntary exercise of business judgment by contending that the decision to dismiss Maytag was not voluntary, but was a result of the stressful situation the Horns were placed in by Moberg's negligence. The Horns also pursued the theory that, at best, the voluntary dismissal of Maytag by the Horns could only operate as an intervening cause between Moberg's negligence and the loss of the suit against Maytag. The trial court accepted this approach and instructed the jury that if the Horns' voluntary dismissal of Maytag was reasonably foreseeable by Moberg, then it was not an intervening cause, and Moberg's negligence, if any, was the proximate cause of the loss.

Proximate cause consists of two elements: cause in fact and legal causation. Hartley v. State, 103 Wash.2d 768, 777, 698 P.2d 77 (1985). Cause in fact refers to the "but for" consequences of an act, that is, the immediate connection between an act and an injury. Legal causation rests on policy considerations determining how far the consequences of a defendant's act should extend. It involves the question of whether liability should attach as a matter of law, even if the proof establishes cause in fact. King v. Seattle, 84 Wash.2d 239, 250,...