Russo v. Griffin

• Decision Date: 28 March 1986
• Docket Number: No. 83-462,83-462
• Citation: 510 A.2d 436,147 Vt. 20
• Court: Vermont Supreme Court
• Parties: Anthony J. RUSSO and J.A. Russo Paving, Inc. v. H. Vaughn GRIFFIN, Jr. and Griffin & Griffin, Ltd.

Page 436

510 A.2d 436

147 Vt. 20

Anthony J. RUSSO and J.A. Russo Paving, Inc. v. H. Vaughn GRIFFIN, Jr. and Griffin & Griffin, Ltd.

No. 83-462.

Supreme Court of Vermont.

March 28, 1986.

Plante, Richards, Terino & Hanley, P.C., White River Junction, for plaintiffs-appellants.

Lisa Chalidze of Dick, Hackel & Hull, Rutland, for defendants-appellees.

Before ALLEN, C.J., and HILL, PECK, GIBSON and HAYES, JJ.

HILL, Justice.

This is a legal malpractice action. The trial court found for defendants, H. Vaughn Griffin, Jr. and Griffin & Griffin, Ltd., and entered judgment on their behalf. Plaintiff, J.A. Russo Paving, Inc., appealed. We reverse.

Sometime during the 1930's Joseph Russo established a paving business in Rutland, Vermont. In 1975, Mr. Russo decided to turn the business over to his two sons, Anthony (Tony) and Francis (Frank). They approached defendant Griffin, a lawyer in the Rutland area, to help them with the process of incorporation. As their attorney, defendant Griffin drew up the corporate charter, filed it with the Secretary of State and arranged the necessary transfer of assets. Between 1975 and 1978 the corporation held its annual meetings at Mr. Griffin's office.

In early 1978, Frank entertained thoughts of purchasing a laundromat in Rutland, and he entered into discussions with his brother concerning the sale of his interest in the corporation. The father, who was not happy with the proposed arrangements, eventually got involved in the negotiations, which culminated in a meeting at Mr. Griffin's office.

According to defendant Griffin, the main purpose of the meeting, and the documents he prepared pursuant thereto, was to protect Frank. In this regard, a $6,000 promissory note from the corporation to Frank Russo was personally guaranteed by Tony Russo and his wife, and it was secured by a chattel mortgage. In return, Frank resigned as president and transferred his stock to the corporation.

At no time during the meeting did defendant Griffin inform the corporation or Tony Russo, the sole remaining shareholder, of the desirability of obtaining a covenant not to compete or explain the implications thereof. Three months after the stock transfer, Frank went back into the paving business in Rutland in direct competition with the plaintiff corporation. A properly drafted noncompetition covenant would have prevented this from occurring.

At trial, plaintiff introduced two expert witnesses, both well-respected practicing attorneys from the Burlington area, who testified that defendant Griffin's failure to advise the corporation to exact a covenant not to compete deviated from the standard of care required of attorneys practicing in Vermont at that time. Defendants introduced two similarly qualified Rutland attorneys who testified that defendant Griffin's conduct comported with the standard of care then expected of Rutland attorneys.

The question for determination was clearly whether defendant Griffin's conduct violated the attorney standard of care as it existed at the time of the alleged breach. In answering this question, the trial court focused on the longstanding professional relationship between defendant Griffin and the Russo family and the fact that this was not an arms-length transaction. It did not, however, find these facts to be dispositive. The court ultimately chose to accept the testimony of defendants', rather than plaintiff's, expert witnesses on the premise that "those attorneys whose practice primarily was conducted in the Rutland area prior to and during 1978 are more familiar with the standard of care then required of lawyers."

Defendants claim that the trial court was more concerned with the time frame of the alleged act of malpractice than the locale in which it occurred. We cannot agree. In ruling for the defendants, the court found the relevant standard of care to be limited to what a careful and prudent practitioner in the Rutland area would do under the circumstances. The court concluded:

The standard of care in the Rutland area in 1978 required of an attorney did not require him to suggest or recommend to a purchasing client that a noncompete agreement be obtained from a seller who is a relative and who has been a business associate for several years, the transaction not being one at arms length. (Emphasis added).

In Hughes v. Klein, 139 Vt. 232, 233, 427 A.2d 353, 354 (1981), this Court held that the standard of care within the legal profession required lawyers to exercise "the customary skill and knowledge which normally prevails at the time and place." We are now asked to reexamine the underlying rationale and continued vitality of the so-called locality rule.

The locality rule is an exclusive product of the United States. See Shilkret v. Annapolis Emergency Hospital Association, 276 Md. 187, 193, 349 A.2d 245, 248 (1975). It was first applied to the medical profession approximately a century ago when there existed a great disparity between standards of practice in large urban centers and remote rural areas. Id. at 193, 349 A.2d at 249. "The rule was unquestionably developed to protect the rural and small town practitioner, who was presumed to be less adequately informed and equipped than his big city brother." Id. at 193, 349 A.2d at 248.

The shortcomings of the locality rule are well recognized. It immunizes persons who are sole practitioners in their community from malpractice liability and it promotes a "conspiracy of silence" in the plaintiffs' locality which, in many cases, effectively precludes plaintiffs from retaining qualified experts to testify on their behalf. Id. at 193-94, 349 A.2d at 249 (citing Waltz, The Rise and Gradual Fall of the Locality Rule In Medical Malpractice Litigation, 18 De Paul L. Rev. 408, 411 (1969); Note, Medical Malpractice--Michigan Abandons "Locality Rule" with Regard to Specialists, 40 Fordham L. Rev. 435, 438 (1971)). Recent developments in technology and the trend toward standardization have further undermined support for the rule. See Shilkret, supra, 276 Md. at 197, 349 A.2d at 250.

According to defendants, the reasoning of the courts which have rejected the locality rule in medical malpractice decisions is inapposite to legal malpractice. We disagree.

The ability of the practitioner and the minimum knowledge required should not vary with geography. The rural practitioner should not be less careful, less able or less skillful than the urban attorney. The fact that a lower degree of care or less able practice may be prevalent in a particular local community should not dictate the standard of care.

Mallen & Levit, Legal Malpractice § 254, at 334 (2d ed.1981). Defendants correctly note that "knowledge of local practices, rules, or customs may be determinative of, and essential to, the exercise of adequate care and skill." Id. To argue this fact in support of continued application of the locality rule, however, is to confuse "the degree of 'skill and knowledge' and the relevance of local factors which constitute the knowledge required by the standard of care." Id. at 337. Although attorneys throughout this state may be required to familiarize themselves with...