Zimmerman v. Brown
306 P.3d 306
Kan. Ct. App.2013Background
- Daniel and Sara Zimmerman (long-time Quixtar distributors) executed a sham written sale of their Quixtar distributorship to their neighbor/attorney Richard Brown and his wife to enable participation in XanGo while avoiding Quixtar’s noncompete/solicitation rules.
- Richard prepared corporate documents (including GreenTree) and the sale agreement; parties orally agreed Browns would forward earnings to the Zimmermans "forever." Payments stopped in July 2008.
- Plaintiffs sued Richard and his firm for breach of fiduciary duty, fraud, and negligence/legal malpractice; most claims were later dismissed and the remaining malpractice claim proceeded.
- Defendants moved for summary judgment asserting in pari delicto and illegality barred recovery; district court granted summary judgment on those defenses without reaching malpractice merits.
- On appeal the court held summary judgment was improper because material factual disputes exist about (1) whether the Zimmermans’ conduct qualified as wrongful for in pari delicto and (2) whether their culpability equaled Richard’s; the court also found illegality was not established as a matter of law.
- The appellate court further found plaintiffs had produced sufficient expert evidence to raise triable issues on duty, breach, causation, and damages for legal malpractice and remanded for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether in pari delicto bars malpractice recovery | Zimmermans contend factual disputes (belief they acted lawfully on attorney advice; relative culpability) preclude summary judgment | Brown argues both parties engaged in equal wrongdoing to evade Quixtar rules so in pari delicto blocks recovery | Reversed: factual disputes about wrongdoing and relative culpability require jury resolution; summary judgment on in pari delicto improper |
| Whether illegality doctrine bars recovery | Zimmermans: sale was not shown to violate law or public policy; malpractice claim may survive even if sale was improper | Brown: deceptive scheme violates public policy and any damages flow from illegal transaction, so malpractice barred | Reversed: defendants failed to prove illegality and proximate causation as matter of law; illegality defense unavailable on summary judgment |
| Whether plaintiffs established elements of malpractice (duty, breach) | Zimmermans: Brown was long-time counsel and breached fiduciary duty by failing to advise independent counsel, obtain informed consent, and by engaging as adverse party | Brown: ethical rule violations alone do not create tort duty; no independent legal duty shown | Held for plaintiffs as to triability: court assumes attorney-client relationship; expert evidence suffices to raise genuine issues on duty and breach |
| Causation and damages: did Brown’s conduct cause plaintiffs’ losses? | Zimmerman experts say they would not have entered the sham sale if properly counseled; economist provided lost-earnings damages | Brown: plaintiffs’ own decision to sell is the real cause; damages stem from illegal sale, not attorney conduct | Held: plaintiffs produced expert causation and damages evidence creating triable issues; summary judgment improper |
Key Cases Cited
- Goben v. Barry, 234 Kan. 721 (discusses in pari delicto—wrong of one party must equal the other)
- Ford v. Guarantee Abstract & Title Co., 220 Kan. 244 (recognizes fiduciary duty of attorney to client)
- Rhoten v. Dickson, 290 Kan. 92 (proximate cause defined as natural and probable consequence)
- Yount v. Deibert, 282 Kan. 619 (standard for causation proof in negligence)
- Shamberg, Johnson & Bergman, Chtd. v. Oliver, 289 Kan. 891 (ethical rule breach alone does not automatically create tort duty)
- Leeper v. Schroer, Rice, Bryan & Lykins, P.A., 241 Kan. 241 (expert testimony generally required to establish malpractice standard and breach)