Phillips v. Clancy, 1

Citation733 P.2d 300,152 Ariz. 415
Decision Date11 September 1986
Docket NumberCA-CIV,No. 1,1
PartiesWesley E. PHILLIPS and Marie R. Phillips, husband and wife, Plaintiffs- Appellants, v. Kenneth P. CLANCY and Jane Doe Clancy, husband and wife, Defendants-Appellees. 8690.
CourtCourt of Appeals of Arizona
OPINION

MEYERSON, Judge.

I. INTRODUCTION

This case involves a claim for legal malpractice. For the purpose of this appeal, the parties agree that the defendant attorney failed to make a timely request for a hearing before an administrative law judge. Summary judgment was granted in favor of the defendant. Attached to his motion for summary judgment, the defendant presented the affidavit of an administrative law judge who was familiar with the plaintiff's case. According to the judge, the plaintiff would have been unsuccessful even if the defendant had timely requested the hearing. The trial court found that this evidence proved conclusively that the plaintiff would have lost his claim on the merits and therefore the defendant was not guilty of legal malpractice because he did not "cause" plaintiff any injury. Plaintiff has filed this appeal to challenge the summary judgment ruling against him.

II. FACTS

On May 23, 1980, plaintiff-appellant Wesley E. Phillips, then 42 years old, filed an application for disability insurance benefits with the Social Security Administration claiming that he was unable to work due to stomach ailments. Phillips was employed as a mechanic with the United States Post Office where he had worked since 1975. Phillips was first diagnosed as having an ulcer condition in 1957. His condition grew worse over the years and in January, 1978, he underwent stomach surgery. Even after the surgery, Phillips continued to suffer from constant pain, uncontrollable diarrhea and vomiting. His condition required further surgery in January, 1979, and in February, 1980. Phillips found his condition to be worsening even after the surgery in 1980, and therefore he remained off work during the following months. In June, 1980, he informed the post office that his condition prevented him from ever returning to his job. Thereafter, he was approved for disability retirement.

Plaintiff's physician, Dr. Edward Alpar, M.D., reported that Phillips was suffering from (1) gastric retention secondary to vagotomy, (2) episodes of dumping syndrome and (3) alkaline gastritis. Dr. Alpar concluded that Phillips "should be considered totally disabled for his particular profession." Plaintiff's application for Social Security disability benefits was denied after the information he submitted was reviewed by an examiner and a physician. The "initial determination" issued on July 18, 1980, stated that his condition was not severe enough to establish disability status. The examiner noted that Phillips should have sufficient functional capacity to perform sedentary work requiring the ability to sit six to eight hours per day and to lift and occasionally carry up to ten pounds. Phillips filed a timely request for reconsideration which was denied.

After his request for reconsideration was denied, Phillips retained defendant-appellee Kenneth Clancy to present his claim at a hearing before an administrative law judge. Clancy, however, failed to file a timely request. When Clancy realized the time to file the request had run, he advised Phillips merely to file another application for benefits and to retain another attorney.

Despite repeated efforts, Phillips never succeeded in obtaining a hearing on his claim or an award of disability benefits. His second application for disability benefits was denied as was his request for reconsideration of the denial. In July, 1981, his new counsel filed a request for hearing to appeal the denial of the second application. At this point the claim was considered by an administrative law judge for the first time. Judge Harold E. Patterson denied the request for hearing on the grounds that a final determination had been made on the prior application and that no new evidence sufficient to justify reopening the case had been presented. Phillips' subsequent appeal to the Social Security Administration Appeals Council eventually caused Judge Patterson to review the record again along with additional medical reports. Judge Patterson ruled that the attorney's failure to request a hearing provided no basis for reopening the claim and that the additional medical reports were irrelevant. Phillips filed a third request for disability benefits in July, 1982, which met the same fate as the second request.

In August, 1982, plaintiff and his wife filed suit for legal malpractice. Clancy filed a motion for summary judgment and submitted the affidavit of Judge Patterson. Judge Patterson stated that he had been an administrative law judge with the Social Security Administration for ten years. He stated that he had reviewed the entire file containing all documents, medical records and Phillips' deposition testimony. He then stated, based on his review of the case, that even if the request for hearing had been timely filed and he had heard the case, he would not have reversed the district examiner's decision because it was his opinion that Phillips did not qualify for disability benefits.

In response to the motion for summary judgment, Phillips submitted the affidavit of Dale D. Tretschok, an attorney experienced in representing applicants for Social Security disability benefits. Tretschok stated that based on his review of the case, and his experience in handling similar matters, there was an excellent chance for success before an administrative law judge. He further stated that even if the claim had been denied at all agency levels, he believed that the decision would have been reversed should an appeal be taken to a United States district court.

Phillips also submitted the affidavit of Ronald W. Baker, a certified rehabilitation counselor, who had evaluated several hundred similar cases. Baker stated that he had reviewed all the written information in this case and had met with the plaintiff. He stated that based upon Phillips' medical history, age, education, previous work experience, and lack of transferable skills, Phillips was totally unemployable.

The trial court granted summary judgment in favor of Clancy, finding no disputed issues of material fact. The trial court stated that it would be difficult to refute Judge Patterson's opinion that the claim would not have been successful even if a hearing had been held. The trial court also concluded that the Social Security Administration's determination could not have been overturned at the district court level because it believed the record would contain substantial evidence to support the agency's decision.

III. OBJECTIVE STANDARD

As in any negligence action, a plaintiff in a legal malpractice action must show the following basic elements: duty, breach of duty, causation, and damages. See generally R. Mallen & V. Levit, Legal Malpractice § 111 (2d ed. 1981) (Legal Malpractice ). One claiming legal malpractice must therefore establish (1) the existence of an attorney-client relationship which imposes a duty on the attorney to exercise that degree of skill, care, and knowledge commonly exercised by members of the profession, (2) breach of that duty, (3) that such negligence was a proximate cause of resulting injury, and (4) the fact and extent of the injury.

The trial court granted summary judgment in favor of Clancy based upon its determination that Judge Patterson's affidavit established that even if Clancy had timely requested a hearing, Phillips would have been unsuccessful in his claim for disability benefits. We conclude that this ruling was in error.

In legal malpractice cases, the impact of the lawyer's negligence in the underlying action is judged against an objective standard rather than a subjective one, such as was applied by the trial court. In a legal malpractice action, the plaintiff must prove that but for the attorney's negligence, he would have been successful in the prosecution or defense of the original suit. Molever v. Roush, 152 Ariz. 367, 374, 732 P.2d 1105, 1112 (Ariz.App.1986). This is commonly called a "case within the case." Frey v. Stoneman, 150 Ariz. 106, 111, 722 P.2d 274, 279 (Ariz.Sup.Ct.1986). Under a subjective standard, such as was applied by the trial court, the arbiter from the first suit would be asked to testify concerning the effect, if any, of the attorney's actions on the outcome of the underlying case. Under an objective standard, the trier in the malpractice suit views the first suit from the standpoint of what a reasonable judge or jury would have decided, but for the attorney's negligence. We hold that the objective standard is most appropriate.

The subjective standard has substantial shortcomings which make its use unworkable. To apply a subjective standard would require the arbiter in the first trial to testify in the malpractice case and to answer the question of whether, but for the attorney's malpractice, the result would have been different. Where, for example, a judge sat as the trier of fact in the first suit, the judge could be called to testify in the malpractice action and venture an opinion on the effect of the attorney's negligence in the first suit. For the following reasons, we conclude that this approach is unacceptable.

The circumstances involving testimony by judges 1 fall into two broad categories: (1) those in which judicial testimony is elicited as to factual matters brought out in the former proceeding, and (2) those in which the impressions of the judge are sought on issues such as the reputation or credibility of a witness at the earlier trial....

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