Smith v. Mehaffy

• Decision Date: 09 November 2000
• Docket Number: No. 99CA1485.,99CA1485.
• Citation: 30 P.3d 727
• Parties: W. Dean SMITH, Plaintiff-Appellee and Cross-Appellant, v. John R. MEHAFFY and Martin & Mehaffy, LLC, Defendants-Appellants and Cross-Appellees.
• Court: Colorado Court of Appeals

30 P.3d 727

W. Dean SMITH, Plaintiff-Appellee and Cross-Appellant, v. John R. MEHAFFY and Martin & Mehaffy, LLC, Defendants-Appellants and Cross-Appellees.

No. 99CA1485.

Colorado Court of Appeals, Div. I.

November 9, 2000.

As Modified on Denial of Rehearing December 21, 2000.

Certiorari Denied August 20, 2001.¹

Law Offices of Gary S. Cohen, Gary S. Cohen, Christine Van Coney, Denver, Colorado, for Plaintiff-Appellee and Cross-Appellant.

White & Steele, P.C., John Lebsack, Thomas B. Quinn, Denver, Colorado, for Defendants-Appellants and Cross-Appellees.

Opinion by Judge ROTHENBERG.

In this legal malpractice action, defendants, John R. Mehaffy and Martin & Mehaffy, LLC, appeal from a judgment entered on a jury verdict in favor of plaintiff, W. Dean Smith. Smith cross-appeals the trial court's order denying his request for attorney fees. We affirm in part, reverse in part, and remand with directions.

Smith and his partner terminated their business relationship in early 1996. Because they had signed personal guaranties for the benefit of various creditors of the business, Smith mailed notices by first class mail to the creditors stating that he no longer intended to be bound by his personal guaranties.

Smith and his partner also retained defendants to represent them in connection with the severance of their business relationship, and they met with Mehaffy on August 20, 1996. At this meeting, Smith discussed the personal guaranties with Mehaffy but the nature of the discussion was disputed.

Smith maintains that he told Mehaffy the notices of revocation had been sent by first class mail, and that he had asked if certified mail was necessary. According to Smith, Mehaffy said certified mail was unnecessary because "notice is notice." Mehaffy does not recall giving Smith advice about the legal sufficiency of the notices to the creditors.

Smith's former partner later defaulted on three of the business debts and filed for bankruptcy. The creditors sought payment from Smith, and all three denied that they had received Smith's notice. Smith retained an attorney other than defendants to defend against the creditors' claims, but apart from his recollection, Smith had no evidence to prove that he had sent the notices.

After settling the three claims for $42,100, including interest, Smith filed this legal malpractice action against defendants. Smith maintained that defendants were negligent in failing to protect him from exposure for his personal guaranties. Smith's position was that defendants should have advised Smith to send adequate notice to the creditors, so that if the creditors denied receiving notice — as they did here — Smith would have been able to prove it was sent.

Following a two-day jury trial, the jury found in favor of Smith. Defendants do not appeal from the jury verdict finding them negligent. They appeal only from the order granting partial summary judgment in favor of Smith, the directed verdict against defendants on comparative negligence, and the award of prejudgment interest.

I.

Defendants contend the trial court erred in concluding Smith's settlement of the creditors' claims was reasonable and necessary, and in granting summary judgment in favor of Smith on that issue. Defendants claim that the affidavit submitted by Smith's expert was conclusory and that the affidavit, combined with Smith's own affidavit, created a genuine issue of material fact. We disagree.

Review of a summary judgment is de novo. See Aspen Wilderness Workshop v. Colorado Water Conservation Board, 901 P.2d 1251 (Colo.1995)

.

Summary judgment may be granted if there is no genuine issue as to any material fact. The burden to so demonstrate is on the moving party, see Polk v. Hergert Land & Cattle Co., 5 P.3d 402 (Colo.App.2000),

and the nonmoving party is entitled to all favorable inferences that may be drawn from the undisputed facts. All doubts must be resolved against the party seeking summary judgment. See Van Alstyne v. Housing Authority, 985 P.2d 97 (Colo.App.1999).

The moving party satisfies his or her burden by demonstrating a lack of evidence in the record to support the nonmoving party's case. See Civil Service Commission v. Pinder, 812 P.2d 645 (Colo.1991)

(summary judgment properly granted based on affidavit presented by moving party).

Affidavits by experts may be used to support a motion for summary judgment. See Conrad v. Imatani, 724 P.2d 89 (Colo. App.1986)

. But, affidavits containing mere conclusions do not satisfy the moving party's initial burden. See Ginter v. Palmer, 196 Colo. 203, 585 P.2d 583 (1978). Once the movant has shown the absence of a genuine issue of material fact, the non-moving party may not rest upon the mere allegations or denials of his or her pleading, but must demonstrate by admissible evidence that a real controversy exists. C.R.C.P. 56(e).

Here, Smith submitted evidence showing the demands of the creditors and the resulting settlement. The record discloses that Smith faced potential liability exceeding $100,000, and he submitted his own affidavit asserting that a loss at trial would have ruined him financially. Smith also submitted an affidavit from a licensed attorney who had analyzed the merits of the creditors' claims and the risks inherent in proceeding to trial, and who expressed the opinion that: (1) the settlement was a prudent course of action for Smith; (2) the settlement of $42,100 was reasonable and necessary.

Contrary to defendants' contention, we conclude the attorney's affidavit was not merely conclusory. As an expert, the attorney was qualified to set forth a basis for his opinion that the amount of settlement was reasonable and did so. That opinion was unrebutted. Nor do we agree that Smith's own affidavit conflicted with the attorney's affidavit such as to create a genuine issue of material fact, as occurred in Westerman v. Rogers, 1 P.3d 228 (Colo.App.1999) (documents provided by moving party were in conflict so as to create a genuine issue of fact by themselves).

Once Smith provided evidence that no genuine issue of fact existed, under C.R.C.P. 56(e) the burden shifted to defendants to show that a genuine issue of material fact remained, see Civil Service Commission v. Pinder, supra, and defendants submitted no affidavits or other evidence refuting Smith's statements of fact.

Given this record, we conclude the trial court did not err in determining that there was no genuine issue of material fact regarding the reasonableness and necessity of Smith's settlement of the underlying claims. See Polk v. Hergert Land & Cattle Co., supra; Westerman v. Rogers, supra. Hence, summary judgment on that issue was proper.

II.

We also reject defendants' contention that the trial court erred in directing a verdict for Smith on the defense of comparative negligence, thereby striking that defense, and in refusing to instruct the jury on the defense of comparative negligence.

A directed verdict is proper if the facts are not in conflict, are susceptible of one reasonable interpretation, and if no reasonable jury could decide the issue against the moving party. See Evans v. Webster, 832 P.2d 951 (Colo.App.1991)

. In reviewing the granting of a directed verdict in a jury trial, all legitimate inferences must be made in favor of the non-moving party. See Ferguson v. Gardner, 191 Colo. 527, 554 P.2d 293 (1976).

Colorado has recognized the defense of comparative negligence in legal malpractice claims. See Scognamillo v. Olsen, 795 P.2d 1357 (Colo.App.1990)

. But, for such a defense to apply, the client's alleged negligence must have related both to the injury alleged to have been caused by the attorney's negligence and to the attorney's representation. See McLister v. Epstein & Lawrence, 934 P.2d 844 (Colo.App.1996).

For example, a comparative negligence instruction is proper in legal malpractice actions involving negligence when there is evidence that the client: (1) failed to supervise, review, or inquire as to the representation; (2) refused to follow the attorney's advice or instructions; (3) failed to provide the attorney with essential information; (4) failed to mitigate damages caused by the attorney's negligence; or (5) interfered with the attorney's representation. McLister v. Epstein & Lawrence, supra.

The issue here was whether Mehaffy's advisement concerning Smith's previous notice met the standard of care of a reasonable attorney. According to defendants, a comparative negligence instruction was proper because Smith himself had been negligent in sending the notices by regular rather than certified or registered mail, and in keeping poor records which contributed to his loss. Defendants also claim that Smith had failed to provide them with the essential information that Smith's business partner had financial difficulties. We are not persuaded.

In McLister v. Epstein & Lawrence, supra,

a division of this court upheld the trial court's refusal to allow the comparative negligence defense where the defendant-attorney knew of the client's alleged negligent conduct at the time the attorney agreed to represent the client. Thus, under McLister, a client's mistake made before the attorney was hired cannot be considered to be comparative negligence and raised as a defense by the attorney in a legal malpractice action.

Defendants concede that McLister supports the trial court's ruling here, but urges that the case was wrongly decided. We disagree and similarly conclude that because any negligence by Smith preceded his consultation with Mehaffy, it did not relate to the defendants' representation as a matter of law.

Contrary to defendants' contention, we also conclude that whether defendants knew Smith's former business partner had financial difficulties was not essential information in this case, nor was it relevant in determining the sufficiency of defendants' advisement to Smith regarding the notice to creditors.

Therefore, we reject defendants' assertion that ...