Schlumm v. Terrence J. O'Hagan, P.C.

• Decision Date: 13 January 1989
• Docket Number: Docket No. 89587
• Citation: 173 Mich.App. 345,433 N.W.2d 839
• Parties: Steven SCHLUMM, Ruby Schlumm, Leo Schlumm, Plaintiffs-Appellees/Cross- Appellants, v. TERRENCE J. O'HAGAN, P.C., and Terrence J. O'Hagan, individually, Defendants- Appellants/Cross-Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 839

433 N.W.2d 839

173 Mich.App. 345

Steven SCHLUMM, Ruby Schlumm, Leo Schlumm Plaintiffs-Appellees/Cross- Appellants, v. TERRENCE J. O'HAGAN, P.C., and Terrence J. O'Hagan individually, Defendants- Appellants/Cross-Appellees.

Docket No. 89587.

Court of Appeals of Michigan.

Submitted March 5, 1987.

Decided Dec. 5, 1988.

Released for Publication Jan. 13, 1989.

Willingham, Cote, Hanslovsky, Griffith & Foresman, P.C. by John L. Cote and Curtis R. Hadley, East Lansing, for plaintiffs-appellees/cross-appellants.

Sullivan, Ward, Bone, Tyler, Fiott & Asher by Michelle A. Thomas, Detroit, for defendants-appellants/cross-appellees.

Before HOOD, P.J., and HOLBROOK and STEMPIEN, ^* JJ.

STEMPIEN, Judge.

Steven, Ruby and Leo Schlumm sued Terrence J. O'Hagan, P.C., and Terrence J. O'Hagan (hereafter referred to in the singular as defendant) alleging professional malpractice in defendant's representation of Steven Schlumm (hereafter referred to as plaintiff) in a prior criminal action. The court denied defendant's motion for accelerated judgment and summary judgment. Defendant has been granted leave to appeal on remand from the Supreme Court. 424 Mich. 380, 385 N.W.2d 761 (1985). Plaintiffs respond by bringing a cross-appeal.

On May 9, 1980, plaintiff and David LaFear were arrested and charged with first-degree criminal sexual conduct, M.C.L. Sec. 750.520b; M.S.A. Sec. 28.788(2). On May 12, 1980, Ruby Schlumm contacted defendant to discuss retaining him as defense counsel. After defendant visited plaintiff at the Washtenaw County Jail, the parties agreed that defendant would represent plaintiff. A retainer of $2,500 was paid on May 13, 1980, with the mutual understanding that additional money would be paid to defendant at a later date for further services. Defendant told the Schlumms that the total fee for his services would not exceed $6,500 unless a mistrial occurred. Defendant also allegedly made representations that since plaintiff and LaFear would be tried together, he and LaFear's attorney would work together in preparing the case.

The preliminary examination took place on May 21, 1980. At the conclusion, the magistrate bound plaintiff and LaFear over for trial.

A pretrial conference was held on August 8, 1980. Subsequent to the pretrial conference, defendant told plaintiff that he would need an additional $5,000 by the end of the week or he would be forced to drop plaintiff's defense. On August 15, 1980, Ruby Schlumm and plaintiff paid $5,000 to defendant.

At no time prior to the date of trial did defendant recommend the possibility of a plea agreement. It was defendant's professional opinion that a successful defense could be mounted at trial or that any sentence resulting from a conviction would be mitigated by the planned defense of consent. Consequently, plaintiff appeared in court on October 20, 1980, prepared to go to trial.

However, LaFear decided to plead guilty. Defendant told plaintiff that his whole defense had been based upon plaintiff and LaFear being tried together. Defendant advised plaintiff to plead guilty, allegedly telling plaintiff that if he pled, the sentence recommendation would be "kept" at 1 1/2 to 3 years. Defendant allegedly told plaintiff that if he did not plead guilty and went to trial alone, he would receive a twenty-year sentence. In response to plaintiff's suggestion about an adjournment, defendant told plaintiff that the judge would not grant such a request. Plaintiff agreed to plead guilty.

Plaintiff pled guilty on October 20, 1980. The trial court indicated that it would follow the probation department's recommendation in the presentence report, although it reserved the right to set aside the agreement if it could not follow the probation department's recommendations. In this event, the court would let plaintiff and codefendant LaFear withdraw their pleas and go to trial. On November 22, 1980, the trial court sentenced plaintiff to ten to twenty years in prison, following the recommendation in the presentence report.

Subsequent to his sentencing, plaintiff retained new counsel and moved to have his guilty plea set aside and his sentence vacated. The circuit court denied the motions. The court found that plaintiff had pled guilty because his codefendant had decided to plead guilty and was going to testify against him. The court found that it was in plaintiff's best interest to accept the sentencing agreement and plead guilty, due to the "benign" sentence that he received. In regard to defendant's assumption that plaintiff would only receive 1 1/2 to 3 years, the court assumed that plaintiff had not told defendant all the facts of the case. The court noted that plaintiff knew the legal range of sentences for the charge. Finally, the court stated that plaintiff had presented no evidence that he had been coerced into pleading guilty or that he had been promised anything in exchange for pleading guilty.

On appeal, in an unpublished opinion per curiam, decided May 14, 1982 (Docket No. 58631), this Court affirmed plaintiff's sentence. Noting that plaintiff received precisely the sentence that was recommended in the presentence report, this Court emphasized that, absent the sentencing agreement, plaintiff could have received a life sentence. Further, by pleading guilty, plaintiff avoided having the sentencing judge see and hear the victim and the examining physician testify about the severity of the crime. In the same appeal, plaintiff also argued that he was deprived of effective assistance of counsel because defendant misled him by stating that if he pled guilty, his sentence would be 1 1/2 to 3 years. This Court rejected this claim, finding that the complained-of errors did not support a claim of ineffective assistance of counsel.

On February 4, 1983, the Michigan Supreme Court denied plaintiff leave to appeal. 417 Mich. 883.

Plaintiff filed a four-count complaint of malpractice against defendant on May 17, 1982. Plaintiff later amended his complaint by adding allegations to Count I concerning defendant's negligence in representation, including defendant's negligence in representing plaintiff during the postplea, presentencing phase.

Count II of the complaint alleged that defendant was negligent in his representation of plaintiff. Plaintiff alleged that defendant breached duties he owed to plaintiff, and as a result plaintiff suffered damages. Count II further alleged that plaintiffs Ruby and Leo Schlumm also suffered damages.

Count III of the complaint alleged a breach of contract by defendant. The complaint alleged that defendant represented to plaintiffs that the trial preparation was included in his services and that he was ready and prepared for trial. The complaint further alleged that defendant breached his contract with plaintiffs by forcing plaintiffs to make a payment in excess of the previously agreed maximum contract amount. Because of defendant's breach of contract, the three plaintiffs allegedly were forced to spend money on services not rendered and suffered monetary losses.

Count IV of the complaint alleged fraud and misrepresentation. The complaint alleged that defendant misrepresented to plaintiffs his progress on the case and his ability to go to trial. The complaint further alleged that plaintiffs were induced to enter into a contract with defendant based on his fraudulent misrepresentation of what he could do for plaintiff. The complaint finally alleged that because of defendant's fraudulent misrepresentations, plaintiffs believed they were receiving competent legal advice.

Defendant moved for summary and accelerated judgment on March 19, 1984, with the accelerated judgment motion premised on a claim of collateral estoppel, GCR 1963, 116.1(5), now MCR 2.116(C)(7), and the summary judgment motion premised on the ground that plaintiffs had failed to state a cause of action because plaintiffs' injuries were proximately caused not by defendant's negligent representation of plaintiff in the criminal proceedings, but rather were proximately caused by plaintiff's guilt, GCR 1963, 117.2(1), now MCR 2.116(C)(8).

The circuit court denied both of defendant's motions. In ruling on the collateral estoppel issue, the circuit court concluded that reversal of a criminal conviction due to ineffective assistance of counsel was not an absolute prerequisite to a party's ability to bring a civil malpractice suit. The court also denied defendant's motion for summary judgment, since plaintiffs Ruby and Leo Schlumm had alleged acute mental anguish and emotional trauma as a result of defendant's breach of their contract and his handling of the case. The court also found that plaintiff had sufficiently alleged failures on the part of his attorney with respect to his representation. The court noted that plaintiff had alleged damages arising from the long incarceration mandated by his sentence.

Meanwhile, codefendant LaFear brought a similar professional malpractice suit against his attorney, and that attorney responded with similar motions for accelerated judgment and summary judgment. The court granted partial summary judgment on the ground that LaFear had failed to allege his innocence. The court also said that it gave the wrong relief in the Schlumm case, and ruled that defendant O'Hagan was entitled to partial summary judgment on the issue of Steven Schlumm's guilt or innocence.

On September 14, 1984, the circuit court granted a motion by plaintiffs to amend their complaint to allege innocence. The court also reaffirmed denial of defendant's motion for accelerated judgment based on collateral estoppel, and denied summary judgment to defendant because the amended complaint alleged innocence. The court found ample precedent in Michigan for the proposition that one need not have his conviction reversed before filing a civil suit. The court ruled that if plaintiff alleged his innocence, he may prove it even though his conviction was affirmed.

But ...