Lipton v. Boesky

• Decision Date: 20 October 1981
• Docket Number: Docket No. 52016
• Citation: 110 Mich.App. 589,313 N.W.2d 163
• Parties: Leo LIPTON and Luce Lipton, Plaintiffs, Counter Defendants-Appellants, v. Roger BOESKY, Defendant, Counter Plaintiff-Appellee. 110 Mich.App. 589, 313 N.W.2d 163
• Court: Court of Appeal of Michigan — District of US

Page 163

313 N.W.2d 163

Leo LIPTON and Luce Lipton, Plaintiffs, Counter Defendants-Appellants, v. Roger BOESKY, Defendant, Counter Plaintiff-Appellee.

Docket No. 52016.

110 Mich.App. 589, 313 N.W.2d 163

Court of Appeals of Michigan.

Oct. 20, 1981.

Rehearing Denied Dec. 11, 1981.

Released for Publication Dec. 22, 1981.

[110 MICHAPP 591] Tucker, Barbour & Mack, P. C., Detroit, for plaintiffs, counter defendants-appellants.

Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, P. C., Detroit (by James W. Bodary and Christine D. Oldani), Detroit, for defendant, counter plaintiff-appellee.

Before V. J. BRENNAN, P. J., and KAUFMAN and BORRADAILE ^*, JJ.

BORRADAILE, Judge.

This case involves allegations of legal malpractice arising from defendant's legal representation of plaintiffs in connection with their construction of an office building in Troy. Leave to appeal was granted following the circuit court's order granting summary judgment to defendant.

In 1973, plaintiffs formed a partnership and retained defendant to represent them in the construction of an office building. Problems arose during construction and the general contractor refused to complete the project for the original contract price. Negotiations between defendant, as legal counsel for plaintiffs, and the general contractor resulted in a new partnership and a new financing arrangement in which plaintiffs executed a promissory note payable to the general contractor. The building was completed and the general contractor sued on the promissory note in 1975. On July 28, 1975, defendant filed a motion to [110 MICHAPP 592] withdraw as counsel for plaintiffs. Plaintiff Luce Lipton was served with a copy of the motion sometime prior to July 30, 1975. She further conferred with and engaged other counsel prior to the hearing on the motion to withdraw.

The general contractor moved for summary judgment. The motion for summary judgment and defendant's motion to withdraw as counsel were heard by the trial court on July 30, 1975. At that hearing, the trial judge first granted the general contractor's motion for summary judgment against plaintiff Luce Lipton. He then granted defendant's motion to withdraw as counsel. At that time, defendant made no attempt to proffer any substantive defense in favor of the Liptons, relying instead on the motion to withdraw and the fact that the Liptons were present in court with newly retained attorneys.

On August 20, 1975, plaintiffs, represented by new counsel, moved to set aside the summary judgment, which motion was denied as was a later motion for rehearing. No appeal was taken.

On July 29, 1976, plaintiffs filed this action against defendant alleging seven separate instances of malpractice. Defendant filed an answer and counter-complaint for legal fees. He then filed a motion for summary judgment, alleging that his motion to withdraw as counsel in the earlier case effectively terminated the attorney-client relationship on July 30, 1975, and that he owed no duty on which a claim of malpractice could be based.

The trial judge first granted summary judgment only as to paragraph five of the complaint, then by amended order, dismissed all seven allegations of malpractice. Apparently, the order for summary judgment was based on both GCR 1963, 117.2(1) and 117.2(3), although the order does not specify either subrule.

[110 MICHAPP 593] Plaintiffs' complaint charged that defendant:

1. Refused in open court, through his agent, while being the attorney of record in a civil action, to oppose a motion for summary judgment against Luce Lipton, and allowed summary judgment to enter in violation of Disciplinary Rule 2-110 of the Code of Professional Responsibility;

2. Allowed in that same action default to enter against plaintiff Leo Lipton in violation of Disciplinary Rule 6-101;

3. Failed to file a breach of contract lawsuit against the firm of Andries-Butler, Inc. contrary to his representation that he was preparing to file a lawsuit for breach of contract, while at great expense to plaintiffs claiming to be documenting the facts necessary to pursue such lawsuit, all in violation of Disciplinary Rules 7-101, and 6-101(A)(3), and 1-102(A)(4);

4. Failed to properly advise plaintiff Luce Lipton as to the feasibility and propriety of engaging in the construction project known as 363 East Big Beaver, Troy 5. Misrepresented to plaintiffs that their execution of a particular assumption agreement would relieve them of any liability for the cost of construction or mortgage financing related to the project known as 363 East Big Beaver, Troy, in violation of Disciplinary Rules 6-101 and 1-102(A)(4);

6. Advised plaintiffs that it was in their best interest in dealing with the property known as 363 East Big Beaver, Troy, to assign any and all right, title, and interest in said property in violation of the Canon of Ethics, the Code of Professional Responsibility and the standard of care for lawyers in the State of Michigan engaged in these kinds of transactions;

[110 MICHAPP 594] 7. Converted to his own use $12,000 worth of valuable oil paintings owned by plaintiff Luce Lipton under the guise of reducing the amount of the fee payable to the defendant for services rendered to the plaintiffs, illegally deducting 30% of the value of the paintings from his credit to the legal fees of plaintiffs, titling the same his commission.

We first review the trial court's order under GCR 1963, 117.2(1), failure to state a claim upon which relief can be granted. In reviewing a motion granted under this subrule, we use the following standard:

"In reviewing a grant of summary judgment under GCR 1963, 117.2(1), the motion is tested by the pleadings alone. Todd v. Biglow, 51 Mich.App. 346, 349, 214 N.W.2d 733 (1974). Because the motion tests only the legal and not the factual sufficiency of the pleadings, Grasser v. Fleming, 74 Mich.App. 338, 342, 253 N.W.2d 757 (1977), all well-pleaded allegations must be taken as true. Tash v. Houston, 74 Mich.App. 566, 254 N.W.2d 579 (1977), lv. den. 401 Mich. 822 (1978). The motion should be denied unless the alleged claims are so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recover. Koenig v. Van Reken, 89 Mich.App. 102, 104, 279 N.W.2d 590 (1979); Merit Electric Co. v. J Boyle, Inc., 77 Mich.App. 503, 258 N.W.2d 539 (1977)." Allinger v. Kell, 102 Mich.App. 798, 806-807, 302 N.W.2d 576 (1981).

An attorney is obligated to use reasonable skill, care, discretion and judgment in representing a client. Eggleston v. Boardman, 37 Mich. 14, 16 (1877); Joos v. Auto-Owners Ins. Co., 94 Mich.App. 419, 422, 288 N.W.2d 443 (1979), lv. den. 408 Mich. 946 (1980). The attorney must also conduct himself in a spirit of loyalty to his client, assuming a position of the highest trust and confidence. Kukla [110 MICHAPP 595] v. Perry, 361 Mich. 311, 316, 105 N.W.2d 176 (1960). This Court has stated:

" 'Once an attorney accepts a retainer to represent a client, he is obligated to exert his best efforts wholeheartedly to advance his client's legitimate interests with fidelity and diligence until he is relieved of that obligation either by his client or by a court. State Bar of Michigan v. Daggs, 384 Mich. 729 (187 N.W.2d 227) (1971).' Hammond v. Weiss, 46 Mich.App. 717, 721, 208 N.W.2d 578 (1973). (Emphasis added.)" Basic Food Industries, Inc. v. Travis, Warren, Nayer & Burgoyne, 60 Mich.App. 492, 496, 231 N.W.2d 466 (1975).

Each of the alleged acts of malpractice were committed before the court granted defendant's motion to withdraw as counsel. Plaintiffs have stated legally sufficient claims of malpractice and it is up to the trier of fact to determine if these claims are valid. Corley v. Logan, 35 Mich.App. 199, 203-204, 192 N.W.2d 319 (1971). The trial court erred in granting the motion under GCR 1963, 117.2(1).

Although plaintiffs have alleged breach of the common law duty of care, they also posit their claims on alleged violations of the Code of Professional Responsibility. Defendant argues that such violations are not actionable in a civil suit for damages. Plaintiffs not only alleged that a violation of the Code is actionable but also that proof of a breach should be evidence of malpractice per se.

Under the previous Canons of Ethics, it was said that discipline is administered as a measure for the protection of the bench, bar and public. In Re Block, 9 Mich.App. 698, 707, 158 N.W.2d 49 (1968), citing In re Mains, 121 Mich. 603, 80 N.W. 714 (1899). Citing Attorney General v. Lane, 259 Mich. 283, 243 N.W. 6 (1932), the Block Court held:

[110 MICHAPP 596] "Discipline, it goes without saying, must be such as is necessary in preserving the integrity of the bar and the orderly and effective administration of justice in this State. Discipline under the internal rules of the State Bar is not concerned necessarily with harm to the client, but rather with the professional conduct and ethics of the attorney in dealing with the client." Block, supra, 9 Mich.App. at p. 707, 158 N.W.2d 49.

The Court in In re Mains, supra, 121 Mich. at p. 609, 80 N.W. 714, quoting from Weeks, Attorneys, § 80, held:

" 'As an attorney-at-law is an officer of the court, the latter may exercise its summary jurisdiction over him to the extent of depriving him of his office and striking his name from the rolls. This the court may do in cases of malpractice, though the offense be not indictable. Attorneys may forfeit their professionable franchise by abusing it, and a power to exact the forfeiture must be lodged somewhere. Such a power is indispensable, to protect the court, the administration of justice, and themselves. Abuses must necessarily creep in, and attorneys themselves are vitally concerned in preventing the vocation from being sullied by the misconduct of unworthy members. The court, too, has this power on the ground of self-protection, outside of the common law, and outside of the...