Steeves v. Berstein, Shur, Sawyer & Nelson, P.C.

• Decision Date: 14 August 1998
• Citation: 718 A.2d 186
• Parties: Joan STEEVES v. BERNSTEIN, SHUR, SAWYER & NELSON, P.C. et al. 1
• Court: Maine Supreme Court

Page 186

718 A.2d 186

1998 ME 210

Joan STEEVES v. BERNSTEIN, SHUR, SAWYER & NELSON, P.C. et al. ¹

Supreme Judicial Court of Maine.

Argued May 4, 1998.

Decided Aug. 14, 1998.

John S. Campbell (orally), Campbell & McArdle, P.A., Portland, for plaintiff.

Christopher C. Taintor (orally), Robert F. Hanson, Norman, Hanson & DeTroy, Portland, for defendants.

Before WATHEN, C.J., and ROBERTS, CLIFFORD, RUDMAN and DANA, JJ.

CLIFFORD, Justice.

¶1 Joan Steeves appeals from a summary judgment entered in the Superior Court (Cumberland County, Mills, J.) in favor of Bernstein, Shur, Sawyer & Nelson, P.C., and two of the firm's attorneys, in Steeves's legal malpractice action. Steeves contends that the court erred in entering a summary judgment based on the court's conclusion that her damages were conjectural. ² Although Steeves has generated material issues of fact regarding an alleged breach of a professional duty owed to her, we affirm the summary judgment because Steeves has failed to show more than the mere possibility that any such breach has caused her any loss.

¶2 Joan Steeves and her then-fiance, James Swartz, bought land in Cumberland Foreside in 1986, and built a house partially financed by a loan made to them by Maine Savings Bank (MSB). Steeves and Swartz married in October of 1986, but Swartz left Steeves in 1989, releasing his interest in the property to her. At that time, Steeves was left without any ostensible source of income. ³ She stopped making mortgage payments in 1989, and MSB began a foreclosure action in February 1990, alleging $430,918.34 was owed in unpaid principal and accrued interest. Steeves listed the home for sale. Initially she asked for $1,050,000. She received one offer to purchase the property, for $290,000. In 1991 she reduced the asking price to $975,000, and in 1992 she reduced the price to $850,000 and then to $680,000, but received no written offers. The 1991 divorce judgment obligated Swartz to make monthly payments of $4,000 to Steeves. Steeves, however, did not receive any payment except during a five-month period beginning in August 1992 when she received partial payments totalling $19,000.

¶3 Bernstein represented Steeves in defending the foreclosure action and asserting a counterclaim against MSB alleging that MSB breached a provision of a 1987 construction loan agreement by failing to withhold from the contractor 10% of the construction costs ⁴ (approximately $33,200) pending the completion of the project, to cover negligent construction work. ⁵ The foreclosure action was removed to federal district court. MSB moved for a summary judgment on the claim and counterclaim in 1991. While the motion was pending MSB was declared insolvent, the FDIC was appointed receiver, Fleet Bank acquired MSB's assets, and RECOLL Management Corp. (a wholly-owned subsidiary of Fleet Financial Group) was placed in charge of liquidating Steeves's mortgage.

¶4 The Bernstein office represented both Fleet Bank and Steeves and consulted with Fleet to determine if a conflict of interest existed. Based on that discussion, Bernstein concluded that RECOLL, not Fleet was the real party in interest, and that there would be no conflict in representing Steeves in the foreclosure action. ⁶

¶5 In February of 1992 the district court granted a summary judgment to Fleet and entered a judgment of foreclosure and sale, holding that the D'Oench, Duhme doctrine ⁷ applied to assignees of the FDIC including private parties such as Fleet. See Fleet Bank of Maine v. Steeves, 785 F.Supp. 209, 215 (D.Me.1992). Because the construction loan agreement was not incorporated into the mortgage notes, and because there was no written agreement stating that the mortgage loans could not be enforced if a breach of the construction agreement occurred, Steeves's defense and counterclaim based on an alleged breach of the construction loan agreement were barred. The amount of the judgment entered in favor of Fleet against Steeves was $495,854.84. The amount of interest accruing on the two notes was $91.47 per day, or $33,386.55 annually.

¶6 Bernstein informed Steeves that she had 90 days to redeem the property, after which the bank would own it. Neither an appeal nor a bankruptcy filing were pursued on behalf of Steeves. RECOLL and Steeves, and Bernstein on Steeves's behalf, exchanged proposals between April and September of 1992, in which Steeves sought alternatives to a foreclosure sale whereby she might live in the house for a longer period and aggressively market it at a price that would satisfy her mortgage debt and leave her with some equity. No definite proposal was agreed to.

¶7 By September of 1992, RECOLL had obtained a writ of possession of the property and published notice of a foreclosure sale of the property to take place on October 15, 1992. In the meantime, Steeves had begun discussions with an acquaintance, Hal O'Brien, counsel for French Broad Acquisitions (FBA), a North Carolina corporation that expressed interest in bidding on the property and allowing Steeves to live in the property temporarily, with proceeds of an eventual sale to be divided between FBA and Steeves.

¶8 On September 24, 1992, FBA contracted with Steeves to either bid for the property at auction or purchase it from RECOLL or Fleet at a price of $425,000, with the understanding that after the expenses and principal were paid, any future surplus sale proceeds would be split between Steeves and FBA. The agreement provided:

French Broad shall bid on said real estate up to a price of $425,000 plus expenses at the auction scheduled October 15, 1992, or in the event that Fleet ... or its agent, RECOLL ..., acquires title to the real estate ... the parties shall offer $425,000 plus expenses for the purchase of the subject property.

The agreement did not condition FBA's obligations to secure financing and make its bid on the existence of a specified amount of time before the closing.

¶9 Shortly before the auction, Steeves heard from her daughter-in-law's sister's husband, who had spoken with a friend who was a vice-president at Fleet, that the bidding at the auction of the property was going to start at $600,000. Based on this, she called O'Brien and told him not to attend the auction. O'Brien "offered to come up" anyway despite being told not to. She later testified that she told him not to come because he needed 60 days to arrange financing and close, and that the terms of the auction provided for only 45 days before closing. The property sold at auction for $395,000. The total of the judgment, costs, and attorney fees documented in Fleet's report of sale totalled $563,721.05, resulting in a deficiency judgment against Steeves.

¶10 In filing this professional malpractice action against Bernstein, Steeves alleges Bernstein committed legal malpractice by: (1) failing to disclose a conflict of interest, (2) not advising her to appeal the judgment of foreclosure, (3) not advising her as to the benefits of a Chapter 11 bankruptcy filing, and (4) failing to respond adequately to RECOLL offers during workout discussions that would have become enforceable agreements. ⁸ Steeves contends that Bernstein's failure to advise her of her options caused her a loss when she was unable to defer the auction of her home to a time when she would have realized a greater sale price. The Superior Court granted Bernstein's motion for a summary judgment, ⁹ and Steeves filed this appeal.

¶11 We review the Superior Court's entry of summary judgment "for errors of law, viewing the evidence in the light most favorable to the party against whom the judgment was entered." Denman v. Peoples Heritage Bank, Inc., 1998 ME 12, p 3, 704 A.2d 411, 413. A summary judgment will be upheld "if the evidence demonstrates that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Id. The "plaintiff must establish a prima facie case for each element of his cause of action." Barnes v. Zappia, 658 A.2d 1086, 1089 (Me.1995). "The function of a summary judgment is to permit a court, prior to trial, to determine whether there exists a triable issue of fact or whether the question before the court is solely one of law." Bouchard v. American Orthodontics, 661 A.2d 1143, 1144 (Me.1995).

¶12 In a professional negligence action, "the plaintiff must establish that the defendant had a duty to the plaintiff to conform to a certain standard of conduct and that a breach of that duty proximately caused injury to the plaintiff." Fisherman's Wharf Associates II v. Verrill & Dana, 645 A.2d 1133, 1136 (Me.1994) (attorney malpractice). In Spickler v. York, 566 A.2d 1385, 1390 (Me.1989), we noted that "more than a mere possibility that [the defendant attorney's] negligence, if any, might have caused [the plaintiff's] loss of the ... action is necessary to establish that [the] conduct was the proximate cause of [the plaintiff's] loss."

¶13 In general, "judgment as a matter of law in a defendant's favor is appropriate when any jury verdict for the plaintiff would be based on conjecture or speculation." Fleming v. Gardner, 658 A.2d 1074, 1076 (Me.1995). It is appropriate for a trial court to keep highly speculative causation issues from the jury in a legal malpractice case. See id. at 1077 (reversing denial of attorney's motion for summary judgment in malpractice action on the basis that record was "bare of evidence" that injury to client was caused by improper representation). Because "a mere possibility" of success, Spickler v. York, 566 A.2d at 1390, is insufficient to establish legal malpractice, a summary judgment in favor of the defendant is appropriate when the link between the attorney's act or omission and the alleged damage is overly speculative.

I.

¶14 Steeves contends that Bernstein's failure to advise her to appeal the foreclosure judgment constitutes malpractice. Although Steeves has generated a factual issue as to...