In an action for legal malpractice, plaintiffs attempted to apprise the jury of the former Code of Professional Responsibility (CPR) and the Rules of Professional Conduct (RPC) through expert testimony and jury instructions. The trial court excluded reference to the CPR and the RPC, through either an expert's mention of them or their use as jury instructions. The jury returned a verdict in favor of the defendants.
Plaintiffs appealed the trial court's ruling disallowing reference to the CPR and RPC, and the Court of Appeals certified the issue to this court for resolution. We accepted certification and transferred the case to this court for disposition. See RCW 2.06.030; RAP 4.3. We now affirm the trial court, holding an expert witness may neither explicitly refer to the CPR or RPC nor may their existence be revealed to the jury via instructions.
Gordon and Jessie Hizey, Baryldean Jo Carlson, Guy and Doris Fenimore, and Jeri Pickering sought legal advice from Timothy Carpenter regarding the sale of an 11.5-acre parcel of commercially zoned property in Mount Vernon, Washington. Plaintiffs had purchased the property in 1968 for
In 1978, plaintiffs borrowed a $249,000 development loan from Mount Baker Bank and made interest-only payments on the loan. By 1983, plaintiffs were behind in interest payments and delinquent in tax payments. Additionally, there were liens against the property as a result of lawsuits against the Fenimores. Mount Baker Bank, which was considering foreclosure, would not make a new loan to plaintiffs alone.
In late 1982 or early 1983, plaintiffs were approached by the Four Star Group — of which James and May Finnegan were members — which wished to purchase the subject property for $950,000. Plaintiffs intended to give the purchasers a $270,000 "credit" against the price for paying off the underlying obligation to Mount Baker Bank. Plaintiffs signed a purchase and sale agreement with the buyers on June 18, 1983. Shortly thereafter, they met with Mount Baker Bank's Lynn Carpenter (wife of the defendant attorney herein), to discuss ways to restructure their loan based on the purchase and sale agreement. The bank would not agree to a straight sale without a substantial cash payment. In addition, the bank considered all members of the Four Star Group less than credit worthy except for the Finnegans, who planned to incorporate as Finnco. Given Mr. Finnegan's financial strength, the bank was willing to consider another loan provided all the original parties remained obligated under it. At this juncture, plaintiffs believed their negotiations with the buyers should be put in writing; they needed a document drafted to replace the original, unacceptable purchase and sale agreement, and they contacted Mr. Carpenter.
Plaintiffs brought the rejected purchase and sale agreement to their meeting with Mr. Carpenter, asking him to prepare a joint venture agreement (JVA) using the terms they gave him. They were anxious to have the documents prepared quickly so the loan would be extended and fore
As a result of the JVA, a $425,000 loan was approved, which was used to pay off the $249,000 existing loan, back taxes, and hens. Mr. Finnegan then worked on obtaining construction financing to build a hotel. As a prerequisite to obtaining construction financing, it was necessary to have title in the Finnegans' name. To achieve this, plaintiffs asked Mr. Carpenter to draft an agreement converting the JVA to a limited partnership. The limited partnership necessarily converted plaintiffs from creditors to investors or, as Mr. Carpenter admitted, from a debt to an equity situation.
In early 1986, although they had begun building the hotel, the Finnegans/Finnco were nearing bankruptcy. Around July 1986, Mr. Carpenter drafted a proposed furniture, fixtures, and equipment agreement (FF&E) in the hopes of saving the hotel project. The FF&E would have further subordinated plaintiffs' interest in the property, and Mr. Carpenter therefore advised them, for the first time, to seek independent counsel.
The Finnegans ultimately went bankrupt. Plaintiffs filed a claim, but the Finnegans' bankruptcy attorney took the position plaintiffs were owed nothing, since they were investors, not creditors. Plaintiffs eventually settled for $300,000, were awarded $150,000, and netted around $99,000.
Plaintiffs sued Mr. Carpenter in 1987, claiming they were unaware he "represented" both them and the Finnegans/ Finnco in drafting documents. At trial, defendants moved to exclude the testimony of Professor David Boemer — one of plaintiffs' expert witnesses — on grounds he was not an expert in real estate law, but would testify to the ethical obligations of an attorney. Such testimony was inadmissible, they argued, because the CPR and RPC do not create stan
The jury returned a verdict in favor of defendant Carpenter, finding he had not been negligent. Plaintiffs moved for judgment notwithstanding the verdict (judgment n.o.v.) or, in the alternative, new trial. Both were denied. This appeal followed.
In addition to the issue certified to this court, plaintiffs claim the trial court erred in refusing to instruct the jury on the standard of care required of a "real estate specialist", and in prohibiting Professor Boemer from testifying about Mr. Carpenter's actions and alleged continued representation of the Finnegans after 1987, when this lawsuit was filed. Plaintiffs also challenge the trial court's instructions on damages and contributory negligence. Finally, plaintiffs contend the trial judge commented on the evidence, prejudicing their case, and erroneously failed to grant their motions for judgment n.o.v. and new trial. We address the issues seriatim.
(1) In a legal malpractice action, may the jury he informed of the Code of Professional Responsibility or the Rules of Professional Conduct either directly through jury instructions or by the testimony of experts who refer to the CPR or RPC?
During the period in which Mr. Carpenter was representing plaintiffs, his actions were governed by the CPR and the
Neither the CPR nor the RPC purports to set the standard for civil liability. Quite to the contrary, the preliminary statement to the RPC states:
The rules make no attempt to prescribe either disciplinary procedures or penalties for violation of a rule, nor do they undertake to define standards for civil liability of lawyers for professional conduct.
The CPR contained a similar disclaimer:
The code makes no attempt to prescribe either disciplinary procedures or penalties for violation of a Disciplinary Rule, nor does it undertake to define standards for civil liability of lawyers for professional conduct.
Former CPR Preliminary Statement.
The result of such holdings, with which we concur, has been that breach of an ethics rule provides only a public,
e.g.,
disciplinary, remedy and not a private remedy. 1 R. Mallen & J. Smith,
Legal Malpractice
§ 6.27 (3d ed. 1989) (hereinafter 1 Mallen & Smith) (breach of a disciplinary rule provides only a public, and not a private, remedy);
State v. Lord,
Plaintiffs argue even if a violation of the CPR or RPC does not
create
a cause of action, such violation nonetheless provides evidence of malpractice. We are aware several commentators adhere to plaintiffs' view.
See, e.g.,
Ambrosio &
We disagree with plaintiffs' — and the aforementioned courts' and commentators' — position that violation of the CPR or RPC may be used as evidence of malpractice. Again, we find the disclaimer language in both the CPR and RPC to be clear and unambiguous. In addition, there are significant policy reasons for barring the use of a violation of the CPR or RPC as evidence of attorney malpractice.
The CPR and RPC are ill suited for use in the malpractice arena.
lb establish a claim for legal malpractice, a plaintiff must prove the following elements: (1) The existence of an attorney-client relationship which gives rise to a duty of care on the part of the attorney to the client; (2) an act or omission by the attorney in breach of the duty of care; (3) damage to the client; and (4) proximate causation between
To comply with the duty of care, an attorney must exercise the degree of care, skill, diligence, and knowledge commonly possessed and exercised by a reasonable, careful, and prudent lawyer in the practice of law in this jurisdiction.
Hansen v. Wightman, supra
at 90 (citing
Cook, Flanagan & Berst v. Clausing,
Plaintiffs would have the factfinder in a legal malpractice action rely, at least in part, on an alleged ethical violation to find a breach of the legal standard of care. In furtherance of their argument, plaintiffs analogize the CPR and RPC to statutes or administrative regulations, the violation of which produces evidence of negligence or, in some jurisdictions, negligence per se. This analogy is flawed. The CPR and RPC are not statutes or administrative regulations. This court, not the Legislature, adopted the Code of Professional Responsibility and the Rules of Professional Conduct by court order, pursuant to its power to regulate the practice of law within the state.
See Short v. Demopolis,
Furthermore, because they were never intended as a basis for civil liability, the CPR and RPC contain standards and phrases which, when relied upon to establish a breach of the legal standard of care, provide only vague guidelines.
See
Dahlquist,
The Code of Professional Responsibility and Civil
[I]n a civil action charging malpractice, the standard of care is the particular duty owed the client under the circumstances of the representation, which may or may not be the standard contemplated by the Code.
(Italics ours.)
Lazy Seven Coal Sales, Inc. v. Stone & Hinds, P.C., 813
S.W.2d 400, 405 (Tenn. 1991);
see also Carlson v. Morton,
We are not persuaded that either standard should be abandoned in favor of the other. On the contrary, both should continue to operate in their relative, separate spheres. As two noted commentators in the area of legal malpractice explain:
There are several significant differences between a civil malpractice action and a disciplinary proceeding. First, a lawyer may be disciplined even if the misconduct does not cause any damage. The rationale is the need for protection of the public and the integrity of the profession. Second, although the severity of the breach may affect the nature of the discipline, the prophylactic purpose of the ethical rules may result in a sanction even if the conduct would not otherwise constitute a civil wrong. Third, even if the injured party initiates a disciplinary complaint, that individual is not a party to the proceeding. These differences often mean that a rule promulgated for discipline is inappropriate as a principle of law or standard for defining proper civil conduct.
(Footnotes omitted. Italics ours.) 1 Mallen & Smith § 1.9, at 33.
As Mallen and Smith point out, ethics rules protect both the public and the integrity of the profession. They do so by establishing and regulating a balance among the court, attorneys, and clients. Faure & Strong, The Model Rules of Professional Conduct: No Standard for Malpractice, 47 Mont. L. Rev. 363, 365, 367-68 (1985-1986) (hereinafter Faure & Strong). Adoption of plaintiffs' position would upset that balance.
In evaluating the usefulness of the model rules as a standard of civil liability, two Montana commentators recognized their State Supreme Court adopted the rules to aid the legal system:
The Model Rules exist to ensure the integrity of the legal system as a whole by forcefully reminding attorneys that their first loyalty is to the court. Talcing the Model Rules out of this context removes the motivating force behind them. A legal malpractice suit neglects the party most involved in and affected by the professional standards of the Model Rules — the legal system itself. In a legal malpractice suit, however, the court reverts to its accustomed role as arbiter. The suit focuses on the relationship between the attorney and the client. Using the Model Rules in this context renders two harms. First, their use would emphasize only one aspect of the Model Rules — the attomey/elient — to the exclusion of the Model Rules' impact on the legal system. Second, their use would encourage attorneys to elevate those Model Rules which relate to the attorney-client relationship. Attorneys would thereby distance themselves from the court system and consider more important their relationship with clients than their relationship with the legal system.
Faure & Strong, at 375. We concur with these observations.
Underlying our decision not to extend the CPR and RPC into the malpractice arena is the conviction that plaintiffs already have available adequate and recognized common law theories under which to bring malpractice actions.
See, e.g., Stangland v. Brock,
Courts of this state have historically not been hostile or unreceptive to the common law theories of malpractice, and, in fact, where the common law has been inadequate, we have allowed recovery under additional theories. See Short v. Demopdlis, supra (applying Consumer Protection Act to entrepreneurial aspects of law practice). In this case, plaintiffs sued Mr. Carpenter under well-established theories of malpractice liability — negligence and violation of the Consumer Protection Act — and were never deprived of arguing either of those theories to the jury. The only "theory" they were not allowed to argue is that the CPR and RPC are equal to and coexistent with the legal standard of care. The trial court correctly excluded such testimony as a makeweight capable only of misdirecting the jury.
We realize courts have relied on the CPR and RPC for reasons other than to find malpractice liability and our holding today does not alter or affect such use.
See, e.g., Singleton v. Frost,
Moreover, even in malpractice cases, Washington courts have at times
assumed,
without squarely addressing, the
To avoid confusion in practice, we point out experts on an attorney's duty of care may still properly base then-opinion, as Professor Boerner did in this case, on an attorney's failure to conform to an ethics rule. In so testifying, however, the expert must address the breach of the
legal
duty of care, and not simply the supposed breach of the ethics rules.
Carlson,
Jury instructions, moreover, may not refer to the CPR or RPC. An expert's mention of them or their use as the basis of jury instructions could mislead the jury into believing the CPR and RPC conclusively establish the standard of care — precisely the result we wish to avoid. A balance must be maintained between legally enforceable standards
We therefore hold in a legal malpractice action that the jury may not be informed of the CPR or RPC, either directly through jury instructions or through the testimony of an expert who refers to the CPR or RPC.
(2) Did the trial court err in refusing to instruct the jury on the standard of care required of a "real estate specialist"?
Plaintiffs' proposed jury instruction 14, which the trial court declined to give, provided:
A lawyer who holds himself out as a specialist in real estate related legal matters has a duty to exercise the degree of skill, care and learning reasonably expected of a reasonably prudent lawyer in the State of Washington acting in the same or similar circumstances at the time in question. Failure to exercise such skill, care and learning is negligence.
Clerk's Papers, at 165.
The trial court's instruction 11A addressed the standard of care as follows:
A lawyer has a duty to exercise the degree of skill, care and learning expected of a reasonably prudent lawyer in the State of Washington acting in the same or similar circumstances at the time such services are provided. Failure to exercise such skill, care and learning is negligence.
Clerk's Papers, at 189.
Each party to a lawsuit is entitled to have its theories presented to the jury if such theories are supported by the evidence.
Gammon v. Clark Equip. Co.,
The courts of this state have frequently held the general "reasonably prudent lawyer" standard applies in legal malpractice cases.
See, e.g., Hansen v. Wightman,
Generally, one who holds himself out as specializing and as possessing greater than ordinary knowledge and skill in a particular field, will be held to the standard of performance of those who hold themselves out as specialists in that area.
Walker v. Bangs,
That language was not essential to the holding in Walker, the question we faced in that case was whether an expert witness not licensed to practice law in Washington, but knowledgeable about the handling of maritime claims in the federal courts, was qualified to testify on the standard of care. We held the expert's testimony admissible, but declined to address plaintiff's suggestion that there should be a national standard of practice for trial specialists. Therefore, the "specialist" language in Walker is dictum, and the trial court in this case was not bound to alter the standard of care instruction to reflect the nature of Mr. Carpenter's practice.
There is support for the notion that the standard of care should be different for those who hold themselves out as specialists in a particular area of law.
See, eg.,
1 Mallen & Smith § 15.4. In Washington, however, there is no "real estate specialist" standard of care.
See Hansen,
The trial court has considerable discretion in deciding how jury instructions will be worded.
Gammon,
(3) Where there was evidence the defendants continued to represent the Finnegans after plaintiffs filed this lawsuit, did the trial court err in excluding such evidence?
Plaintiffs contend the trial court's exclusion of a portion of Professor Boemer's testimony was erroneous. Specifically, they argue Professor Boemer should have been allowed to testify Mr. Carpenter breached fiduciary duties owed the plaintiffs by continuing to represent the Finnegans even after this lawsuit arose. Plaintiffs conclude the court's ruling invaded the province of the factfinder because the jury should have been allowed to determine whether Mr. Carpenter's later actions were a proximate cause of plaintiffs' damages.
The granting or denial of a motion to exclude certain evidence is addressed to the discretion of the trial court and should be reversed only in the event of abuse of discretion.
Fenimore v. Donald M. Drake Constr. Co.,
(4) Did the trial court err in its instructions regarding damages and contributory negligence?
Plaintiffs assign error to jury instruction 24A, which provided:
The value of a lost security interest is the value of the security interest, not the value of the property involved.
Clerk's Papers, at 203. Plaintiffs claim the instruction unduly emphasized defendants' damages theory. They argue the jury was entitled to find Mr. Carpenter was negligent from the beginning of his representation of plaintiffs, but instruction 24A led the jury to believe damages could only have flowed from the time of plaintiffs' lost security interest in the property.
In answer to the question on the special verdict form, "Was there negligence by the defendant Timothy Carpenter which was a proximate cause of injury or damage to the plaintiffs?", the jury answered "No". Clerk's Papers, at 211. It was instructed not to calculate plaintiffs' damages if it answered "no" to the question of negligence. The jury is
Plaintiffs also claim the trial court erred in instructing the jury on contributory negligence because the defense presented no evidence of contributory negligence. As with damages, the jury did not address the issue of contributory negligence. The jury was instructed, on the special verdict form, not to answer the question of whether plaintiffs were contributorially negligent if they found Mr. Carpenter was not negligent. Again, we presume the jury obeys the court's instructions.
Bordynoski,
(5) Did the trial court comment on the evidence, prejudicing plaintiffs?
Plaintiffs contend the trial judge erroneously commented on the evidence following plaintiffs' closing rebuttal and prior to discharging the jury to commence deliberations by saying, "proximate cause as Ms. McCoid [counsel for the defendant] said, is a difficult area of the law, it's an independent and intervening cause and there it is." Report of Proceedings, at 119-20 (Jan. 22, 1990).
The law does not permit me to comment on the evidence in any way and I have not intentionally done so. If it appears to you that I have so commented, during either the trial or the giving of these instructions, you must disregard the comment.
Clerk's Papers, at 177.
Because we presume the jury obeys the instructions of the court,
Bordynoski,
(6) Did the trial court err in denying plaintiffs' motion for judgment n.o.v. or for a new trial?
We recently reiterated the standard of review for denial of such motions:
In reviewing a trial court's decision to deny a motion for directed verdict or judgment n.o.v., we apply the same standard as the trial court. A directed verdict or judgment n.o.v. is appropriate if, when viewing the material evidence most favorable to the nonmoving party, the court can say, as a matter of law, that there is no substantial evidence orreasonable inferences to sustain a verdict for the nonmoving party. The requirement of substantial evidence necessitates that the evidence be such that it would convince "an unprejudiced, thinking mind".
The inquiry on appeal is limited to whether the evidence presented was sufficient to sustain the jury's verdict. Denial of a motion for directed verdict or judgment n.o.v. is inappropriate only when it is clear that the evidence and reasonable inferences are insufficient to support the jury's verdict.
(Footnotes and citations omitted.)
Industrial Indem. Co. of Northwest, Inc. v. Kallevig,
The question, then, is whether there was sufficient evidence to support the jury's verdict. The jury found Mr. Carpenter was not negligent in his dealings with plaintiffs. Although some of the evidence was disputed, when viewed in the light most favorable to defendants, it is clear the jury rejected plaintiffs' testimony that they were unaware Mr. Carpenter was representing all parties, or that they would have proceeded with the transaction differently had they received independent advice, or that they were not under extreme financial pressure to sell the properly. There was evidence, and the jury was entitled to infer, that the proximate cause of plaintiffs' damages was the Finnegan/Finnco bankruptcy, rather than Mr. Carpenter's action or inaction, and that the plaintiffs would have lost the property via foreclosure proceedings in 1983 had the Finnegans not become involved.
Giving the defendants the benefit of every favorable inference which reasonably may have been drawn from the
available
evidence, the denial of plaintiffs' motion for judgment n.o.v. or for a new trial was appropriate.
See Mason v. Turner,
Dore, C.J., and Utter, Brachtenbach, Andersen, Durham, Smith, Guy, and Johnson, JJ., concur.
Reconsideration denied August 5, 1992.
