Stone v. Satriana

• Decision Date: 25 February 2002
• Docket Number: No. 01SA177.,01SA177.
• Citation: 41 P.3d 705
• Parties: In re Diane STONE, Plaintiff, v. Daniel R. SATRIANA, Jr; Hall & Evans, a Colorado partnership and Hall and Evans, L.L.C.; Sean R. Gallagher; Jane B. Garrow; Banta, Hoyt, Everall & Farrington, L.L.C. f/k/a Banta, Hoyt, Greene & Everall, P.C.; Coregis Insurance Company, f/k/a International Surplus Lines Insurance Company; Crum and Forster Insurance Companies; Safeco Insurance Company; and City of Greenwood Village, Defendants.
• Court: Colorado Supreme Court

41 P.3d 705

In re Diane STONE, Plaintiff, v. Daniel R. SATRIANA, Jr; Hall & Evans, a Colorado partnership and Hall and Evans, L.L.C.; Sean R. Gallagher; Jane B. Garrow; Banta, Hoyt, Everall & Farrington, L.L.C. f/k/a Banta, Hoyt, Greene & Everall, P.C.; Coregis Insurance Company, f/k/a International Surplus Lines Insurance Company; Crum and Forster Insurance Companies; Safeco Insurance Company; and City of Greenwood Village, Defendants.

No. 01SA177.

Supreme Court of Colorado, En Banc.

February 25, 2002.

Jean E. Dubofsky, Jean E. Dubofsky, P.C., Boulder, Colorado, W. Randolph Barnhart, Angela L. Ekker, Hillyard, Barnhart, Ekker & McNally, L.L.P., Englewood, Colorado, Attorneys for Plaintiff.

K. Preston Oade, Michael J. Hofmann, Holme Roberts & Owen LLP, Denver, Colorado, Attorneys for Defendants, Satriana, Jr., Hall & Evans, LLC and Sean R. Gallegher.

Geri O'Brien Williams, Denver, Colorado, Attorney for Defendant, Coregis Insurance Company. Chief Justice MULLARKEY delivered the Opinion of the Court.

In this original proceeding, we examine whether attorney defendants in a legal malpractice action can designate the opposing party's current counsel as a nonparty at fault and subsequently disqualify that counsel.

Diane Stone was a defendant in a federal case that arose out of the City of Greenwood Village's investigation of Lawrence Ocrant's death. In state district court, Stone filed a legal malpractice action against her former attorneys, claiming that their malpractice caused the judgment against her in the federal suit. The former attorneys claim that Stone's current counsel contributed to her loss because, acting on the current counsel's advice, Stone did not appeal the underlying case. Accordingly, the former attorneys sought to designate Stone's current counsel as nonparties at fault pursuant to section 13-21-111.5, 5 C.R.S. (2001). The trial judge granted the motion to designate the current attorneys as nonparties at fault and subsequently granted a motion to disqualify them. Stone petitioned this court to overturn the two trial court orders. We issued a rule to show cause and now make that rule absolute.

Strong public policy considerations warrant subjecting a nonparty-at-fault designation of opposing counsel to heightened scrutiny. Because the defendant attorneys did not allege a cognizable malpractice claim, the nonparty designation of the current attorneys was in error as was their disqualification.

I.

In 1984, Lawrence Ocrant was found dead in his home. Diane Stone (Stone) was a Greenwood Village police officer involved in the investigation of this death. In 1991, Lawrence Ocrant's children (Ocrant children) brought a suit in federal district court against Stone as well as the Greenwood Village Police Chief and the City of Greenwood Village (Greenwood Village). The case involved 42 U.S.C. § 1983 claims as well as state-law claims of conspiracy and outrageous conduct regarding the investigation of Ocrant's death. Daniel L. Satriana, Jr., Sean Gallagher, and Hall and Evans LLP (collectively, Hall and Evans) represented Stone and her co-defendants in the federal case. The lawsuit resulted in a verdict against Stone and her co-defendants.

Stone filed a notice of appeal. However, neither Greenwood Village nor its insurance company would indemnify Stone.¹ Moreover, both refused to post her appeal bond for $698,738. Thus, in October 1998, the Ocrant children began to garnish Stone's wages in order to collect the judgment. Stone obtained new counsel, Christina Habas (Habas), through whom she negotiated a Bashor agreement² with the Ocrant children. Pursuant to this arrangement, the Ocrant children agreed not to pursue their judgment against Stone in exchange for her agreement to pursue claims against Hall and Evans, Greenwood Village, and both Greenwood Village's attorney and insurance company (collectively, state court defendants)-sharing any recovery with the Ocrant children-and to dismiss her appeal of the underlying judgment.³ The chief of police also settled with the Ocrant children. Only Greenwood Village pursued an appeal. On appeal, the Tenth Circuit reversed the judgment based on an error in the admission of evidence, and remanded for a new trial. Stump v. City of Greenwood Vill., 211 F.3d 527 (10th Cir. 2000).

Stone retained Randolph Barnhart and Angela Ekker of the law firm Branney, Hillyard & Barnhart (collectively, Barnhart and Ekker) to represent her in her case against the state court defendants. In March 1999, Stone filed her complaint in Denver District Court. Trial was originally set for July 2001.

In May 2000, Hall and Evans moved for permission to designate Barnhart and Ekker as nonparties at fault for Stone's damages pursuant to section 13-21-111.5, 5 C.R.S. (2001). As justification for this designation, Hall and Evans alleged that Stone failed to mitigate any damages from the underlying federal suit because she settled with the Ocrant children rather than pursue an appeal. Hall and Evans further argued that this failure to appeal can be attributable to Barnhart and Ekker's malpractice because, although they did not represent Stone at the time when she entered into the agreement with the Ocrant children, Stone's lawyer, Habas, consulted them. Therefore, Hall and Evans concluded, Barnhart and Ekker are partly responsible for Stone's damages and should be joined as nonparties at fault.

Hall and Evans asked the trial judge to allow this designation even though the motion was brought outside of the statutorily provided timeframe.⁴ They argued that since the Tenth Circuit reversal did not occur until May 2000, they could not have known that a failure to appeal amounted to a failure to mitigate until then. The trial judge allowed the designation and subsequently granted a motion to disqualify Barnhart and Ekker. The district court denied Stone's motion for reconsideration of the order of disqualification.

Stone petitioned this court to exercise its original jurisdiction and issue a rule to show cause pursuant to C.A.R. 21. She asserts that the trial court erred in designating Barnhart and Ekker as nonparties at fault and in granting the motion to disqualify them. She further asserts that the injury of being denied the lawyers of her choice-who have already worked extensively on her case⁵-cannot adequately be remedied on appeal. Stone asks this court to set aside both the trial court's designation of Barnhart and Ekker as nonparties at fault and the court's disqualification of Barnhart and Ekker.

II.

In civil liability cases, section 13-21-111.5 allows defendants to designate as a nonparty at fault an individual or entity who is either "wholly or partially at fault" for the damages alleged by the plaintiff. § 13-21-111.5, 5 C.R.S. (2001). This provision ensures that a party that is found liable will not be responsible for more than its fair share of the damages. See B.G.'s, Inc. v. Gross, 23 P.3d 691, 693-94 (Colo.2001)

. We recently addressed the requirements for a nonparty designation in Redden v. SCI, 38 P.3d 75 (Colo.2002). In Redden, we held that a nonparty-at-fault designation is improper when the moving defendant fails to establish a prima facie case that the potential nonparty breached a legal duty to the plaintiff. Id. at 80 (holding that it is proper to deny a nonparty-at-fault designation of a treating chiropractor in a car accident case when the defendant failed to make out a prima facie case that the chiropractor breached a legal duty to the plaintiff).

Hall and Evans claim that it is appropriate to designate Barnhart and Ekker as nonparties at fault because, through their own malpractice, they perpetuated Stone's damages. They claim that by failing to advise Stone to appeal the adverse judgment, Barnhart and Ekker did not adequately mitigate Stone's damages. We disagree. As in Redden, we conclude that the defendants in this case have failed to make out a prima facie claim that Barnhart and Ekker breached a legal duty to Stone.

We first discuss how other jurisdictions have handled the problem at issue here, highlighting the public policy concerns that have led courts to closely scrutinize a legal malpractice defendant's attempt to designate successor counsel as a nonparty at fault. Second, we explain that because Hall and Evans have failed both to establish that Barnhart and Ekker's conduct fell below the standard of care and that a failure to appeal perpetuated any damages, they have failed to allege a cognizable malpractice claim under which Barnhart and Ekker could be joined as nonparties at fault. Thus, we conclude that the trial court erred in designating Barnhart and Ekker as nonparties at fault and in granting the motion to disqualify them.

A.

Because there is no Colorado precedent directly on point, we have turned to other jurisdictions for guidance. The majority of courts that have addressed this issue have not allowed legal malpractice defendants to designate opposing parties' current attorneys as nonparties at fault or otherwise assert legal malpractice claims against them. See Austin v. Superior Court, 72 Cal.App.4th 1126, 85 Cal.Rptr.2d 644 (1999)

; Cal. State Auto. Ass'n v. Bales, 221 Cal.App.3d 227, 270 Cal.Rptr. 421 (1990); Holland v. Thacher, 199 Cal.App.3d 924, 245 Cal.Rptr. 247 (1988); Gauthier v. Kearns, 47 Conn.Supp. 166, 780 A.2d 1016 (2000); Waldman v. Levine, 544 A.2d 683 (D.C.1988); Melrose Floor Co., Inc. v. Lechner, 435 N.W.2d 90 (Minn.Ct.App. 1989); Eustis v. The David Agency, 417 N.W.2d 295 (Minn.Ct.App.1987); Hughes v. Housley, 599 P.2d 1250 (Utah 1979). But see Maddocks v. Ricker, 403 Mass. 592, 531 N.E.2d 583 (1988)(allowing a defendant in a legal malpractice action to bring a third-party complaint against successor attorney when successor attorney may have caused the original injury for which predecessor counsel was allegedly responsible); Parler v. Miles, 359 Md. 671, 756 A.2d 526 (2000)(refusing to exempt a potential...