Law Offices of Lawrence J. Stockler, P.C. v. Rose

• Decision Date: 24 February 1989
• Docket Number: 98058,Docket Nos. 97839
• Citation: 436 N.W.2d 70,174 Mich.App. 14
• Parties: LAW OFFICES OF LAWRENCE J. STOCKLER, P.C., Plaintiff and Third Party Plaintiff-Appellant, Counter-defendant/Cross-Appellee, v. David S. ROSE and Sydney Rose, jointly and severally, Defendants-Appellees, Counter-plaintiffs/Cross-Appellants, and James H. Hudnut and Hudnut and Ravitz, P.C., Third Party Defendants-Appellees. 174 Mich.App. 14, 436 N.W.2d 70
• Court: Court of Appeal of Michigan — District of US

Page 70

436 N.W.2d 70

LAW OFFICES OF LAWRENCE J. STOCKLER, P.C., Plaintiff and Third Party Plaintiff-Appellant, Counter-defendant/Cross-Appellee, v. David S. ROSE and Sydney Rose, jointly and severally,

Defendants-Appellees,

Counter-plaintiffs/Cross-Appellants,

and

James H. Hudnut and Hudnut and Ravitz, P.C., Third Party

Defendants-Appellees.

Docket Nos. 97839, 98058.

174 Mich.App. 14, 436 N.W.2d 70

Court of Appeals of Michigan.

Submitted June 16, 1988.

Decided Jan. 3, 1989.

Released for Publication Feb. 24, 1989.

[174 MICHAPP 17] Lawrence J. Stockler & Associates, P.C. by Michael C. Crowley, Southfield, for plaintiff and third party plaintiff-appellant, counter-defendant/cross-appellee.

May, Gowing & Simpson by Delmer C. Gowing, III, and Allison D. Daniels, Bloomfield Hills, for defendants-appellees, counter-plaintiffs/cross-appellants.

Buesser, Buesser, Blank, Lynch, Fryhoff & Graham by William R. Buesser and Neil R. Disney, Bloomfield Hills, for James H. Hudnut and Hudnut & Ravitz, P.C.

Before SHEPHERD, P.J., and HOLBROOK and SULLIVAN, JJ.

SHEPHERD, Presiding Judge.

Plaintiff, Law Offices of Lawrence[174 MICHAPP 18] J. Stockler, P.C. (Stockler), appeals as of right from a judgment following a bench trial in the Oakland Circuit Court. Stockler sued defendants David and Sydney Rose his wife to recover legal fees. The Roses filed a counterclaim for legal malpractice in two matters: (1) Stockler's representation of the Roses in their suit against Touche Ross and Company (hereafter referred to as the Touche Ross case); and (2) Stockler's defense of Sydney Rose in a garnishment proceeding initiated by Hammond Organ Company (hereafter referred to as the Hammond Organ case). Stockler responded by amending the complaint to add a third-party complaint against James Hudnut and Hudnut and Ravitz, P.C. (hereafter collectively referred to as Hudnut) who also represented Sydney Rose in the Hammond Organ case. After an extensive trial, the court entered judgments awarding Stockler legal fees of $13,727.98 and granting Hudnut a judgment of no cause of action. The Roses were awarded $150,000 in the Hammond Organ case and $761,671.41 in the Touche Ross case plus statutory interest of $420,394.59 for a total judgment of $1,332,066.

On appeal, Stockler raises various issues pertaining to all three judgments, and the Roses cross-appeal from their judgment seeking an increase in the award for Stockler's legal malpractice. We affirm the judgments but reduce the damages awarded to the Roses in the Touche Ross case and remand for an evidentiary hearing and decision relating to the damages awarded to the Roses in the Hammond Organ case.

This was a long and complex case stemming from Stockler's representation of the Roses in various legal matters relating to David Rose's decision to purchase the assets of a publicly held company through his own corporation formed for [174 MICHAPP 19] the sole purpose of making the purchase. The corporation went bankrupt and the Roses were exposed to substantial financial losses as a result of their decision to personally guarantee millions of dollars loaned by various lending institutions to the corporation.

Stockler's services were retained by the Roses in their effort to recover their personal losses from various parties participating in the purchase transaction. Eventually, there was a breakdown in the attorney-client relationship between Stockler and the Roses which resulted in the instant lawsuit.

Because of the complexity of this case we summarize our holdings at this early stage of the opinion as follows:

Stockler claims that a new trial is required as a result of bias and judicial misconduct. We have rejected this claim for the reasons that plaintiff did not pursue the remedy provided for in MCR 2.003(C)(3)(a) and the trial judge did not improperly question witnesses during the course of the trial.

In the Touche Ross case, Stockler claims that reversal is required as a result of an evidentiary error. We have rejected this argument for the reason that the error was harmless.

Both Stockler and the Roses contest the $761,671.41 award for damages in favor of the Roses in the Touche Ross case, which was determined by the court pursuant to the "suit within a suit" concept. Stockler claims that the award should be reversed in toto or, alternatively, reduced by $588,000. The Roses claim that the award should be increased by about $2.6 million.

We have rejected the Roses' claim for the reasons that: (1) the Roses cannot recover statutory prejudgment interest under the "suit within a suit" concept where they had no money judgment [174 MICHAPP 20] against Touche Ross; and (2) the equities do not justify piercing the corporate veil so as to allow the Roses to stand in the shoes of the corporation and, in any event, the corporation could not recover benefit-of-the-bargain damages from Touche Ross based on its negligent misrepresentations.

We have also rejected Stockler's claim that the award should be reversed in toto for the reason that the Roses' lawsuit against Touche Ross was not barred by the passage of time. However, we have reduced the amount of the award by $593,471.41 for the reasons that: (1) Touche Ross could not be held legally responsible for speculative and remote damages; (2) losses incurred by the Roses without the requisite act of justified reliance on Touche Ross' negligent misrepresentation are not recoverable; (3) in one instance, the claim was withdrawn during the trial; and (4) certain of the trial court's factual findings were clearly erroneous.

In both the Touche Ross and Hammond Organ cases, the Roses seek a remand for a determination of exemplary damages caused by Stockler's legal malpractice. We have rejected this claim for the reason that there was no finding of recklessness and, in any event, the court correctly ruled not to admit proofs of exemplary damages because the pleadings were inadequate.

In the Hammond Organ case, Stockler claims that the award of $150,000 in favor of the Roses should be reversed in toto because the Roses did not present expert testimony to establish his professional negligence in representing Sydney Rose. We have rejected this claim for the reason the expert testimony was not necessary for the Roses to establish their case. However, we have found merit in the point raised by Stockler pertaining to his legal responsibility for the damages and have [174 MICHAPP 21] concluded that the trial court clearly erred in awarding the full obligation of $150,000 that the Roses agreed to pay to Hammond Organ. Stockler was not responsible for David Rose's individual liability or any payments made by David Rose that did not require joint assets or Sydney Rose's individual assets. We have remanded this case to the trial court for a determination of damages.

In the Hammond Organ case, Stockler also claims that he should have been awarded indemnification or contribution from Hudnut. We have rejected this claim for the reason that the trial court did not clearly err in finding that Stockler failed to prove Hudnut's legal malpractice in his representation of Sydney Rose.

Stockler also claims that he should have been awarded $122,823.06 in attorney fees for his representation of the Roses in various matters. The trial court allowed $13,727.98. We affirm the award for the reasons Finally, we have declined to address Stockler's claim that the Roses' counterclaim for legal malpractice should be dismissed for the reason that Stockler did not raise this issue in the trial court.

that: (1) Stockler's claim that a pretrial motion for summary judgment should have been granted is not properly before this Court inasmuch as there is no signed order; (2) the trial court did not abuse its discretion in ruling not to enter a default judgment against the Roses inasmuch as there was no default; and (3) the trial court did not clearly err by giving effect to the contingency fee agreements underlying two elements of Stockler's claim for damages.

I. TRIAL COURT'S CONDUCT

A. Judicial

Disqualification

Stockler raises three issues relating to the trial [174 MICHAPP 22] judge's alleged lack of impartiality to hear and decide this case: (1) whether the trial judge erred in refusing to disqualify himself prior to trial on the basis of personal bias or prejudice; (2) whether the trial record reveals actual bias or prejudice against Stockler; and (3) whether the trial judge erred in refusing to grant his motion for a new trial before a different judge made on the basis of bias or prejudice during the course of the trial and an anonymous phone call Stockler received wherein the caller allegedly told Stockler that the trial judge discussed the case with his brother-in-law.

The record reveals that the trial judge informed Stockler prior to trial that David Rose was a personal friend of the judge's brother-in-law, but was not a social acquaintance of the judge. The trial judge also informed Stockler that he had, at one time, consented to allowing his brother-in-law to lend David Rose $5,000 out of a deceased relative's estate and that this money was repaid. Stockler's motion for disqualification was denied and the case proceeded to trial a few days later. During the course of trial, Stockler represented himself as an advocate and also testified as a witness. The trial judge's remarks did reflect some irritation with Stockler's behavior as an advocate, but also reflected the trial judge's efforts to keep the trial proceeding in an orderly manner. At the December 16, 1986, post-trial hearing on Stockler's motion for a new trial, the trial judge denied the motion, stating that his decision was unbiased and that he did not discuss the merits of the case with his brother-in-law or anyone else. The trial judge indicated only that his brother-in-law told him that he had not seen the Roses lately.

MCR 2.003 governs the procedure for disqualifying a judge due to a lack of...