Malfabon v. Garcia, 22846

• Decision Date: 27 June 1995
• Docket Number: No. 22846,22846
• Citation: 898 P.2d 107,111 Nev. 793
• Parties: Rose M. MALFABON, Individually and as Special Administrator for the Estate of Edelmira Acosta, Appellant, v. Eva GARCIA, Esq., Respondent.
• Court: Nevada Supreme Court

Page 107

898 P.2d 107

111 Nev. 793

Rose M. MALFABON, Individually and as Special Administrator for the Estate of Edelmira Acosta, Appellant, v. Eva GARCIA, Esq., Respondent.

No. 22846.

Supreme Court of Nevada.

June 27, 1995.

Burke & Christopherson, Las Vegas, for appellant.

Rawlings, Olson & Cannon, Las Vegas, for respondent.

OPINION

PER CURIAM:

Appellant Rose Malfabon (Malfabon) was involved in an accident while driving her Toyota Tercel. As a result of the accident, a fire ensued and Malfabon's daughter died. Malfabon consulted with respondent Eva Garcia (Garcia), an attorney licensed to practice law in Nevada, to assist her in collecting insurance benefits and in pursuing a products liability suit against Toyota. Upon Garcia's recommendation, Malfabon accepted Toyota's proffered $200,000 settlement. Malfabon subsequently sued Garcia, alleging breach of fiduciary duty and legal malpractice. The district court dismissed Malfabon's complaint with prejudice, finding that Malfabon had entered into a settlement agreement, and therefore, she was precluded from bringing a malpractice action against Garcia. We disagree with the district court and reverse and remand this case.

FACTS

On May 16, 1988, Malfabon was driving with her twelve-year-old daughter, Edelmira Acosta (Edelmira), from Los Angeles to her home in Las Vegas. Soon after they passed the Halloran Summit in California on Interstate 15, Malfabon's car hit the left hand rumble strip. Believing that she had a ruptured tire, Malfabon overcorrected her car. The car skidded off the highway and hit a culvert, causing the car to flip end over end. After futile rescue attempts, Malfabon watched as her daughter died in the fire. Malfabon also suffered injuries as a result of the accident. Malfabon asserts that the fire resulted from design defects in her Toyota car.

To explore the possibility of recovering damages for her injuries and the death of her daughter, Malfabon's stepfather, Mr. Mendoza, contacted Garcia in Nevada. Garcia was to represent Malfabon with respect to collecting any insurance benefits available and also with respect to a products liability case against Toyota Motors. Garcia hired respondent John Shoosmith, an attorney licensed to practice in California, to file a complaint in California before the statute of limitations expired. Malfabon did not enter into any retainer agreement with Garcia or Shoosmith.

Garcia commenced an investigation and contacted Toyota regarding a products liability action. Garcia hired a private investigator to assist in the investigation and negotiation of the claim against Toyota. The investigator sent a demand letter to Toyota. In response to the demand letter, Toyota, while denying liability, offered $200,000 as a settlement. After investigating the claim and consulting with another attorney, Garcia advised Malfabon to accept the settlement agreement. Malfabon executed the settlement agreement on June 28, 1989. ¹ The settlement agreement included a claim for the estate of Edelmira, over which Malfabon had been named special administrator. Garcia retained her costs and fees, and the settlement agreement provided that she would receive one-third of all future annuities paid to Malfabon.

Edelmira's natural father, Alfredo Acosta (Acosta), was incarcerated in Los Angeles at the time of the accident. After his release from jail, Acosta renewed his relationship with Malfabon. He subsequently filed a lawsuit in federal district court against Toyota, claiming his own damages resulting from his daughter's death. Malfabon contends that Garcia made no attempts to give notice of the settlement to Acosta.

On June 28, 1991, Malfabon initiated this suit against Garcia for malpractice. Malfabon alleged that Garcia committed legal malpractice by failing to adequately investigate her claims against Toyota and properly ascertain the value of the case in negotiating the settlement. Malfabon claimed that Garcia overlooked any potential road design defects in the car and waived the same by recommending that Malfabon consummate the offer of settlement.

Malfabon also alleged that Garcia owed her a contractual duty to effectively and competently represent her against Toyota, and by recommending the low settlement amount, Garcia breached this contract. Finally, Malfabon claimed that Garcia owed her a fiduciary duty, which she breached. She based this on Garcia's failure to notify Acosta and on Garcia's knowledge that Malfabon was not competent to make proper decisions about the settlement agreement.

Garcia filed a motion to dismiss Malfabon's malpractice suit for failure to state a claim on which relief can be granted. The district court granted Garcia's motion dismissing Malfabon's action with prejudice. This appeal ensued.

DISCUSSION

In reviewing a motion to dismiss, this court is bound to accept all of the factual allegations in the complaint as true. Edgar v. Wagner, 101 Nev. 226, 699 P.2d 110 (1985). Next, this court determines whether the appellant asserts specific allegations sufficient to constitute the elements of a claim on which this court can grant relief. Marcoz v. Summa Corporation, 106 Nev. 737, 801 P.2d 1346 (1990). On a motion to dismiss for failure to state a claim, the court must construe the pleadings liberally and draw every fair inference in favor of the plaintiff. Capital Mortgage Holding v. Hahn, 101 Nev. 314, 705 P.2d 126 (1985).

Malfabon contends that respondent's motion to dismiss effectively constitutes a motion for summary judgment. See, e.g., Bernard v. Rockhill Dev. Co., 103 Nev. 132, 135-36, 734 P.2d 1238, 1240 (1987); Stevens v. McGimsey, 99 Nev. 840, 673 P.2d 499 (1983); Paso Builders, Inc. v. Hebard, 83 Nev. 165, 426 P.2d 731 (1967). Under NRCP 12(c), "[i]f, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." In the instant case, it appears that the district court may have considered such materials as Garcia's deposition and medical reports, and therefore, this court should treat the motion to dismiss as a motion for summary judgment. See Bernard, 103 Nev. at 135-36, 734 P.2d at 1241 (citations omitted).

Malfabon contends that a factual dispute exists with respect to: (1) the competence and effectiveness of Garcia's representation of Malfabon, and (2) Malfabon's competence when she entered the settlement agreement. Malfabon also asserts that the district court improperly concluded that an attorney cannot be liable for malpractice following settlement.

We have traditionally held that a client may bring an action against an attorney based on either a negligence or contractual theory. Warmbrodt v. Blanchard, 100 Nev. 703, 706-07, 692 P.2d 1282, 1285 (1984); see also Collins v. Reynard, 154 Ill.2d 48, 180 Ill.Dec. 672, 607 N.E.2d 1185 (1992). The district court concluded that an attorney cannot be held liable for legal malpractice once a settlement is reached that has been approved and signed by the client. We disagree.

One court has questioned whether it is good public policy to permit a client to file suit claiming negligent advice or assistance after the consummation of the settlement agreement by the...