Shriner v. Friedman Law Offices, P.C.

• Citation: 23 Neb.App. 869,877 N.W.2d 272
• Decision Date: 12 April 2016
• Docket Number: No. A–15–051,A–15–051
• Parties: Debra A. Shriner, appellant v. Friedman Law Offices, P.C., L.L.O., and Daniel H. Friedman, appellees.
• Court: Court of Appeals of Nebraska

23 Neb.App. 869

877 N.W.2d 272

Debra A. Shriner, appellant

v.Friedman Law Offices, P.C., L.L.O., and Daniel H. Friedman, appellees.

No. A–15–051

Court of Appeals of Nebraska.

Filed April 12, 2016

James D. Sherrets and Jared C. Olson, of Sherrets, Bruno & Vogt, L.L.C., Omaha, for appellant.

Shawn D. Renner and Susan K. Sapp, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., Lincoln, for appellees.

Moore, Chief Judge, and Inbody and Bishop, Judges.

Bishop

, Judge.

I. INTRODUCTION

Debra A. Shriner filed a legal malpractice action in the district court for Lancaster County, Nebraska, against attorney Daniel H. Friedman and his law firm, Friedman Law Offices, P.C., L.L.O., arising out of Friedman's representation of Shriner in an underlying personal injury action filed in Hall County, Nebraska. The name "Friedman" is used herein to refer to Friedman and to Friedman Law Offices collectively as well as to Friedman individually. In Shriner's legal malpractice action, she alleged that Friedman coerced her into accepting a settlement offer of $45,000 in the underlying action and that he breached the standard of care for an attorney by, among other things, failing to properly value and prosecute her claim and advising her to accept the settlement offer.

After Shriner and Friedman filed motions for summary judgment in the legal malpractice action, the district court entered summary judgment in Friedman's favor. The court determined that Shriner voluntarily agreed to settle the underlying action and, furthermore, that she ratified the settlement agreement by accepting the settlement proceeds. According to the district court, Shriner could not then "claim to have been forced, pressured and/or coerced" into settling the underlying claim. Shriner timely appealed to this court.

As we explain below, we reverse the district court's judgment insofar as it granted Friedman's motion for summary judgment, but we affirm the district court's judgment insofar as it denied Shriner's cross-motion for summary judgment. Because it is likely to arise on remand, we also address Shriner's argument that testimony from the mediator of the settlement in the underlying action was privileged. We determine the testimony fell within an exception to the privilege and was admissible.

II. BACKGROUND

On December 29, 2006, in Grand Island, Nebraska, a truck driven by Randall Svoboda, an employee of Cloudburst Underground Sprinkler Systems, Inc. (Cloudburst), struck the passenger-side rear quarter panel of Shriner's vehicle as she passed through an intersection. As a result of the collision, Shriner's vehicle spun around, coming to rest facing the opposite direction of travel. According to Shriner, the collision resulted in injuries to her person, damage to her vehicle, ongoing medical expenses, and lost wages.

Following her accident, Shriner had contact with two law firms, Sokolove Law, LLC (Sokolove), and Underhill & Underhill, P.C. (Underhill), before ultimately being referred to Friedman for representation. In April 2010, Shriner retained Friedman to represent her pursuant to a contingent fee arrangement in which Friedman would receive 33 ? percent of any recovery from Svoboda and Cloudburst. Allegedly unknown to Shriner was a fee-splitting arrangement among Friedman, Sokolove, and Underhill in which the three law firms agreed to share any attorney fees.

On June 14, 2010, Friedman filed suit on Shriner's behalf against Svoboda and Cloudburst in the district court for Hall County, seeking damages arising out of the collision. On July 12, 2012, the parties to the personal injury action attended a mediation with mediator Matthew Miller. During the mediation, Svoboda and Cloudburst's insurer authorized a settlement offer of $45,000, which Friedman allegedly advised Shriner to accept.

According to Shriner's amended complaint in her legal malpractice action, Friedman told her that if she did not accept the settlement offer, Friedman would no longer advance litigation costs for her case. Specifically, to proceed to trial, Shriner would be required to pay for deposing up to four medical professionals, anticipated to cost $3,000 to $5,000 per witness. According to Shriner, although she was indigent and informed Friedman she desired to take the case to trial, Friedman persisted. As described in her amended complaint, Shriner "relented under the pressure and duress and ‘told ... Friedman, in anger, that if that's all [she] had to get, that's what [she]'d have to get.’ " Friedman then accepted the $45,000 settlement offer on Shriner's behalf.

Six days after the mediation, Shriner informed Friedman she would not sign a release or accept the proceeds of the settlement reached during the mediation. Thereafter, Friedman filed a motion to withdraw as Shriner's counsel of record in the personal injury action, and Svoboda and Cloudburst filed a motion to enforce the settlement agreement.

On August 9, 2012, the district court for Hall County heard both motions. At the hearing, Shriner appeared with a new attorney, John Sellers, and testified in opposition to Friedman's motion to withdraw. After hearing Shriner's testimony, the court granted the motion to withdraw; it then turned to the issue of the motion to enforce the settlement agreement. Sellers requested an opportunity either to recall Shriner as a witness or to obtain her written affidavit. The court questioned whether Shriner's testimony was necessary if her prior attorney had apparent authority to accept the settlement offer at the mediation. The court indicated that Sellers could present evidence but cautioned, "I think you're kind of climbing a hill." Sellers submitted no evidence, and the court granted the motion to enforce the settlement agreement.

On October 15, 2012, Svoboda and Cloudburst's insurer filed a complaint for interpleader and declaratory judgment in the district court for Hall County. Named as defendants were Shriner, "Herbert J. Friedman d/b/a Friedman Law Offices," and two companies with alleged claims to portions of the settlement proceeds. The insurer sought to deposit the settlement funds of $45,000 with the court clerk for distribution among the defendants in exchange for an order releasing it and its insureds from liability in connection with Shriner's personal injury claim. The insurer set forth the grounds for the various defendants' claims to the settlement proceeds; in particular, the insurer alleged that Friedman asserted an attorney's lien pursuant to Neb.Rev.Stat. § 7–108 (Reissue 2012)

.

The district court for Hall County directed the insurer to deposit the settlement proceeds with the court clerk and released Svoboda, Cloudburst, and their insurer from liability. Shortly thereafter, Shriner, who was represented by Sellers in the interpleader action, filed a "Motion to Approve Settlement and Final Order," in which she alleged that the remaining parties to the interpleader action had reached an agreement regarding their claims to the settlement proceeds, which claims the defendants wished to resolve without further litigation. Shriner asked the court to approve disbursement of the settlement proceeds in the following amounts: (1) $6,666.66 to the State of Nebraska, (2) $3,333 to one company with an alleged claim, (3) $10,000 to the other such company, (4) $12,159.49 to Friedman, (5) $1,500 to Sellers, and (6) $11,340.85 to Shriner.

On March 6, 2013, the district court for Hall County entered an order approving the agreement and ordering the settlement proceeds disbursed in the manner Shriner proposed. The court found the agreement was not unconscionable.

On December 31, 2013, Shriner commenced her legal malpractice action in the district court for Lancaster County. In an amended complaint filed on September 2, 2014, Shriner set forth much of the background outlined above and further alleged that at the time of the mediation in the underlying personal injury action, Cloudburst's liability was "established by the facts." Shriner further alleged that at the time of the mediation, she had incurred medical expenses in excess of $67,000, with more than $100,000 in future medical expenses anticipated, and that two of her treating physicians had opined that her medical treatment was necessary as a result of the collision, her injuries were permanent, and she would require future medical treatment. Shriner alleged that despite these facts, Friedman coerced her into accepting the "grossly inadequate" settlement offer of $45,000.

Shriner's amended complaint contained four counts: (1) professional negligence, (2) breach of contract, (3) breach of implied contract, and (4) fraud. In the professional negligence count, Shriner alleged Friedman breached the standard of care for an attorney by (i) entering into a "multi-stage fee-sharing agreement" with multiple law firms, (ii) failing to properly value and prosecute her claim, (iii) demanding payment of litigation costs as a prerequisite to continued representation, and (iv) advising her to accept the $45,000 settlement offer.

In the counts for breach of contract and breach of implied contract, Shriner alleged she had either an express contract or an implied contract for representation in the underlying personal injury action. She alleged Friedman breached the express or implied contract by (i) failing to competently represent her, (ii) providing her with unreasonable legal advice at the time of the mediation, (iii) refusing to advance the costs necessary to proceed to trial, and (iv) demanding that Shriner advance litigation costs.

In the fraud count, Shriner alleged that Friedman, in order to secure a contract for her representation, told Shriner she would be responsible for costs of litigation only after a settlement or judgment was obtained even though Friedman knew he would demand that Shriner "pay costs of the litigation up front if [Friedman] could not achieve an easy settlement agreement."

Shriner alleged that she relied on Friedman's "false statement"...