Sargent v. Buckley, Docket No. P

• Decision Date: 21 July 1997
• Docket Number: Docket No. P
• Citation: 697 A.2d 1272
• Parties: J. Carolyn SARGENT v. Philip BUCKLEY, et al. en-96-338.
• Court: Maine Supreme Court

Page 1272

697 A.2d 1272

1997 ME 159

J. Carolyn SARGENT v. Philip BUCKLEY, et al.

Docket No. Pen-96-338.

Supreme Judicial Court of Maine.

Submitted on Briefs March 14, 1997.

Decided July 21, 1997.

Timothy Murphy, Gardner, Gardner & Murphy, Saco, for plaintiff.

Michael G. Messerschmidt, Kevin J. Beal, Preti, Flaherty, Beliveau & Pacios, LLC, Portland, for plaintiff.

Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, and LIPEZ, JJ.

WATHEN, Chief Justice.

¶1 Plaintiff, J. Carolyn Sargent, appeals from the judgment entered in the Superior Court (Penobscot County, Marsano, J.) granting defendants' motion to dismiss plaintiff's amended complaint pursuant to M.R. Civ. P.12(b)(6). The complaint was brought against an individual attorney, Philip Buckley, and his law firm, Rudman & Winchell. It alleges claims of fraud and breach of a fiduciary duty arising from defendants' representation of plaintiff's husband in her action for divorce. With respect to count I of the complaint, plaintiff argues that the court erred by ruling that she has failed to state a claim for fraud and erred by ruling that defendants had no duty to file a marital property list with the divorce court pursuant to M.R. Civ. P.80(n). With respect to count II, plaintiff argues that the court erred in ruling that an attorney's breach of the fiduciary duty of loyalty to a former client is not actionable. We determine that count I is barred by the final judgment in Sargent v. Sargent, 677 A.2d 528 (Me.1996) (Sargent II), ¹ and that the court erred by dismissing count II. Thus, we vacate the judgment on count II.

¶2 The factual background and procedural history may be summarized as follows: Plaintiff and James Sargent were married in 1978. Before the marriage they entered into an ante-nuptial agreement providing that, in the event of a divorce, plaintiff would receive $5,000 in lieu of alimony, support and property settlement rights. For the purposes of this agreement, plaintiff was represented by attorney Albert Winchell, now deceased, a partner of defendant Rudman & Winchell. The firm also represented plaintiff in other legal matters before and during the marriage to James.

¶3 The complaint alleges that in early 1989, plaintiff and James Sargent began the process of separation. James sought legal advice from defendant Philip Buckley, a partner of Rudman & Winchell, and plaintiff sought advice from a Lewiston attorney. Buckley knew that his partner Albert Winchell had represented plaintiff in negotiating the ante-nuptial agreement and that the firm had represented her in other matters. In April 1989, Buckley was advised by an associate in the firm that he should obtain written consent from plaintiff before representing James Sargent on the separation and divorce, because the firm represented plaintiff on the antenuptial agreement. Buckley never obtained such consent. A separation agreement was entered into in April, 1989. The agreement provided that plaintiff was to receive approximately one million dollars in cash and property and that the terms of the agreement were to be incorporated into the divorce decree. Neither plaintiff nor her attorney attended the subsequent divorce hearing. Buckley presented the separation agreement to the District Court at the hearing and the court issued a decree incorporating the terms of the agreement.

¶4 In 1992, plaintiff filed suit against James alleging that he fraudulently induced her to enter into the separation agreement by misrepresenting the value of the marital estate. While her appeal from summary judgment was pending, plaintiff brought the present action alleging that Buckley conspired with James in concealing and misrepresenting the value of the marital estate, and that Buckley breached the fiduciary duty of loyalty owed to plaintiff as a former client. Defendants' answer asserted that the complaint fails to state a claim on which relief can be granted, and that it is barred by res judicata, collateral estoppel, and the statute of limitations. Defendant filed a motion to dismiss for failure to state a claim pursuant to M.R. Civ. P. 12(b)(6), for failure to file within the statute of limitations and for failure to plead fraud with sufficient particularity pursuant to M.R. Civ. P. 9(b). Plaintiff filed a motion to amend her complaint to more particularly allege fraud and to include count II for the breach of a professional duty. After granting plaintiff's motion to amend, the court dismissed the complaint basing its order solely on M.R. Civ. P. 12(b)(6).

Count I

¶5 While this appeal was pending, we issued our decision in Sargent II, 677 A.2d 528 (Me.1996) affirming a summary judgment in favor of James Sargent on plaintiff's claims of civil fraud and misrepresentation. She alleged in that action that James led her to believe that the marital estate totalled $2 million dollars when he knew it totalled $17 million dollars. We held that plaintiff failed to establish justifiable reliance on the alleged misrepresentations, a necessary element of fraud. The record established that plaintiff did not believe her husband's misrepresentations about his wealth at the time of the settlement agreement, and that during the divorce negotiations she believed "her husband was worth something more than 14 million dollars." Id. at 530. It was also established that plaintiff's attorney advised her not to sign the settlement agreement, and that she chose not to engage in discovery or to contest the divorce. Based on this evidence we concluded that "there was no reliance" by her on her husband's misrepresentations. Id.

¶6 It necessarily follows from the decision in Sargent II that plaintiff is collaterally estopped from asserting justifiable reliance on the same misrepresentations and concealments allegedly made by attorney Buckley. Based on the findings made in Sargent II, she cannot have relied on misrepresentations asserting the marital estate to be $2 million dollars regardless of the source of the misrepresentations. Collateral estoppel bars plaintiff from asserting an issue of fact or law that was actually litigated on the merits and determined by a valid final judgment in a prior action if the issue was essential to the judgment. Morton v. Schneider, 612 A.2d 1285, 1286 (Me.1992). Plaintiff's awareness of the general extent of James Sargent's wealth is an issue of fact that was actually litigated on the merits, determined by a final judgment, and was essential to that judgment. She is now barred from asserting her ignorance of the extent of Sargent's wealth, a fact that is necessary for proving her reliance on Buckley's alleged misrepresentations. The fact that defendants were not parties to the prior action is immaterial in this non-mutual defensive application of collateral estoppel. Hossler v. Barry, 403 A.2d 762, 768 (Me.1979).

¶7 Because plaintiff's allegations of fraud are barred by collateral estoppel, we need not address her argument that defendants had a duty to file a marital property list with the divorce court.

Count II

¶8 Plaintiff alleges that defendants Buckley and Rudman & Winchell owed her a fiduciary duty of loyalty as a former client, and that their breach resulted in harm to her. She specifically alleges that defendants breached the duty of loyalty by representing James Sargent in the divorce and by using confidential information in their representation of James. She also alleges that attorney Buckley violated the Maine Bar Rules that provide:

A lawyer shall not accept employment adverse to a former client without that client's informed written consent if such new employment involves the subject matter of the...