Paxman v. King , 2019 UT 37 ( 2019 )

This opinion is subject to revision before final
publication in the Pacific Reporter
2019 UT 37
IN THE
SUPREME COURT OF THE STATE OF UTAH
PAUL PAXMAN,
Appellee,
v.
BRIAN S. KING,
Appellant.
No. 20170067
Filed July 26, 2019
On Appeal of Interlocutory Order
Third District, Salt Lake
The Honorable Elizabeth A. Hruby-Mills
No. 160903568
Attorneys:
Michael F. Skolnick, Salt Lake City, for appellant
ASSOCIATE CHIEF JUSTICE LEE authored the opinion of the Court, in
which CHIEF JUSTICE DURRANT, JUSTICE HIMONAS, JUSTICE PEARCE,
and JUSTICE PETERSEN joined.
ASSOCIATE CHIEF JUSTICE LEE, opinion of the Court:
¶1 This is a legal malpractice case that is before us on
interlocutory appeal. The malpractice claim was asserted by plaintiff
Paul Paxman against his former attorney Brian King. King
represented Paxman, an optometrist, in a criminal case arising out of
Paxman’s Medicaid billing for his services. On advice from King,
Paxman pled guilty to charges under the Fraudulent Insurance Act,
UTAH CODE § 76-6-521, and the False Claims Act, id. § 26-20-7. And
Paxman was then placed on a federal exclusion list, which prevented
him from participating in federal health care programs and billing a
number of insurance companies.
PAXMAN v. KING
Opinion of the Court
¶2 On successful completion of probation, Paxman’s charges
were reduced from third-degree felonies to Class A misdemeanors
under Utah Code section 76-3-402. Shortly thereafter Paxman sued
King for legal malpractice. He alleged that King failed to inform him
of the consequences of pleading guilty or to advise him of the
likelihood of success at trial.
¶3 King moved for summary judgment. He asked the district
court to conclude that Paxman’s claims failed as a matter of law
under either of two distinct but related rules embraced in some other
jurisdictions—the “exoneration rule” and the “actual innocence”
requirement. The exoneration rule requires exoneration in a
postconviction action as a precondition to a legal malpractice action
arising out of a criminal proceeding. And the actual innocence
requirement bars criminal defendants from maintaining a legal
malpractice action unless they first prove their factual innocence.
Both of these rules, in King’s view, are “natural extension[s] of the
elements required to establish legal malpractice under Utah law.”
¶4 The district court declined to adopt either rule—though not
necessarily because it believed they lacked merit. Instead the court
noted “the absence of direction from Utah appellate courts” on the
matter. And it “decline[d] to adopt” either rule given the lack of such
direction.
¶5 King petitioned for leave to challenge this decision on
interlocutory appeal. We granted that petition in light of the
significant issues raised in King’s motion. Paxman failed to appear—
he filed no brief defending the district court’s decision and made no
attempt to participate in oral argument.
¶6 Around the time we heard King’s appeal, another case came
before us presenting the same issues—Thomas v. Hillyard, 2019 UT 29,
--- P.3d ---. We received full briefing and heard argument in that
case. And we decided that neither the exoneration rule nor the actual
innocence requirement have a place in our malpractice law. Id.
¶¶ 13–14. We reinforce that decision here. In doing so, we address a
few arguments presented by King not considered in Thomas.
¶7 This disposition should in no way be viewed as rewarding
an appellee for his default on appeal. In an ordinary case we could
reverse, even absent any argument from an appellee, upon a
determination that the appellant had made a prima facie showing of a
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Opinion of the Court
plausible basis for reversal. See Broderick v. Apartment Mgmt.
Consultants, L.L.C., 2012 UT 17, ¶ 19, 279 P.3d 391. But we have an
obligation to get the law right. And this case did not come before us
in a vacuum. Thomas v. Hillyard squarely addresses the issues
presented here. We rely on that decision to resolve this case, and as a
basis for our decision to affirm the decision of the district court.
I
¶8 Prior to our decision in Thomas v. Hillyard, “we ha[d] never
explicitly articulated the elements for legal malpractice . . . when the
underlying case is criminal.” 2019 UT 29, ¶ 13, --- P.3d ---. Nor had
we ever opined on the propriety of the exoneration rule or the actual
innocence requirement. Thomas addressed each of these issues. In
Thomas we decided that the elements of a legal malpractice claim
based on an underlying criminal case are identical to the elements of
a legal malpractice claim based on an underlying civil case. See id.
¶ 14.1 And we rejected the argument King presents here—that to
prove causation in a legal malpractice action, a criminal defendant
must be exonerated, establish actual innocence, or both.
¶9 As we put it in Thomas, “[s]uccess in a postconviction
proceeding or evidence of actual innocence certainly may aid
plaintiffs in proving causation or harm.” Id. ¶ 14. “But neither will
always be necessary.” Id. “There may be scenarios in which a
plaintiff would not be entitled to postconviction relief but could still
demonstrate proximate cause in a legal malpractice action.” Id.; see
also id. ¶ 14 n.15 (providing an example of when a defendant could
successfully demonstrate prejudice without first proving legal or
factual innocence). For these reasons our Thomas opinion rejected the
proposition that “additional burdens should be imposed on criminal
defendants who assert malpractice”—those “burdens” being
exoneration or proof of actual innocence. Id. ¶ 14.
1 Those elements are proof of “(i) an attorney-client relationship;
(ii) a duty of the attorney to the client arising from their relationship;
(iii) a breach of that duty; (iv) a causal connection between the
breach of duty and the resulting injury to the client; and (v) actual
damages.” Christensen & Jensen, P.C. v. Barrett & Daines, 2008 UT 64,
¶ 22, 194 P.3d 931 (citation omitted).
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PAXMAN v. KING
Opinion of the Court
¶10 The causation argument rejected in Thomas lies at the heart of
King’s appeal. Yet King also presents a few other arguments in favor
of either the exoneration rule or the actual innocence requirement.
He first cites concerns about inconsistent judgments and the need to
promote judicial economy. He argues that if Paxman is allowed to
pursue his legal malpractice claim, the question of his innocence will
be relitigated and a resulting judgment may be inconsistent with his
guilty plea. And he asserts that this would undermine the doctrine of
collateral estoppel and waste judicial resources.
¶11 We decline to endorse the blanket rules that King advocates
on the basis of these policy concerns. The inconsistent judgment
concern assumes that a judgment against an attorney in a legal
malpractice action equates to a determination that the client is
innocent of the underlying crime. But that does not necessarily
follow. A judgment in the legal malpractice action simply reflects the
fact that a breach of the duty of care resulted in an injury to the
attorney’s client. It says nothing definitive about the client’s guilt or
innocence in the underlying criminal matter. Even if a client
determines that postconviction relief is appropriate, moreover, or
helpful in establishing causation, that will not necessarily open the
door to inconsistent judgments. District courts retain the inherent
power to stay civil malpractice suits until postconviction
proceedings are completed, in a manner avoiding the risk of
inconsistent judgments. See Lewis v. Moultree, 627 P.2d 94, 96 (Utah
1981).
¶12 King’s judicial economy justification cuts both ways. A rule
requiring plaintiffs to obtain postconviction relief will conserve
judicial resources if the postconviction judgment establishes a
collateral estoppel bar on proof of causation in a later malpractice
action. See Buckner v. Kennard, 2004 UT 78, ¶¶ 13–14, 99 P.3d 842
(establishing the elements of collateral estoppel and discussing its
value). But the failure of a postconviction claim may not always have
preclusive effects in a legal malpractice action. And where the
postconviction claim is unsuccessful the result will be to compound
litigation. An exoneration rule will thus at least sometimes result in
duplicative litigation—a postconviction claim followed by a legal
malpractice action. And the exoneration rule could thus be rejected
on judicial economy grounds.
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Opinion of the Court
¶13 King also contends that the exoneration rule and actual
innocence requirements are needed to prevent criminals from
profiting from their criminal conduct. But this rests on a faulty
premise. Criminal defendants who prevail in a malpractice action do
not profit from their criminal conduct. They are receiving
compensation for an injury suffered at the hands of their attorney.
¶14 For all these reasons, we reaffirm what we said in Thomas—
neither the exoneration rule nor the actual innocence requirement
are elements of a criminal defendant’s legal malpractice claim.2 And
we affirm the decision of the district court.
II
¶15 In affirming the decision of the district court we are by no
means endorsing the strategy of non-appearance by an appellee. By
failing to appear, an appellee subjects itself to a serious risk of
reversal. Without any opposition to the appellant’s arguments, the
appellate court will be left with only one side of the case. And that
may often lead to reversal.
¶16 Our decision should likewise not be taken as an
endorsement of the district court’s analytical path. The district court
surveyed the legal landscape, noted the implications of adopting the
exoneration rule and actual innocence requirement, and explicitly
stated that it was “not unsympathetic to the public policy supporting
the exoneration rule.” But “in the absence of direction from Utah
appellate courts,” it declined to adopt either rule.
¶17 We discourage this type of decision making. We recognize
that the district court was confronting difficult questions that
implicate competing policy considerations. But trial judges possess
the same common-law power that appellate courts do. See UTAH
CONST. art. VIII, § 1. When faced with questions of first-impression,
trial judges should address them head-on. They should not reserve
judgment in a manner that leaves the issues for resolution on appeal
in the first instance. Doing so not only deprives the parties of their
2 This does not mean that a criminal defendant’s inability to
prove innocence could not come into play in the course of a legal
malpractice case. King is free to argue this point in challenging
Paxman’s ability to prove causation as an element of his claim. And
in a case like this one it may be difficult for a client who cannot
prove his innocence to establish causation.
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PAXMAN v. KING
Opinion of the Court
right to a disposition in accordance with law in the trial court; it also
deprives the appellate court of the benefit of the lower court’s
analysis of the matter.3
3 We may not defer to our lower courts’ decisions on pure
questions of law. See Cope v. Utah Valley State Coll., 2014 UT 53, ¶ 10,
342 P.3d 243. But that does not mean that we ignore them. We often
find them insightful and informative. See State v. Ogden, 2018 UT 8,
¶ 49 n.14, 416 P.3d 1132 (“[A] district court robs this court, and our
judicial system, of valuable insight when it shrinks from its
constitutional responsibility to answer the questions put before it.
District courts see far more cases with many more variations than
our appellate courts. This provides them with unique insights into
the questions presented.”). And even when we disagree with them
we find them useful in our analysis. A lower court decision is the
first, core step in our justice system—and it is an essential element of
even a case that is destined for resolution on appeal. No trial judge
should decline to resolve a question of law—even a matter of first-
impression that seems certain to be presented for resolution on
appeal—just because there is as yet no controlling authority on the
matter. See Vega v. Jordan Valley Med. Ctr., 2019 UT 35, ¶ 8 n.5, ---
P.3d --- (“While this court has the final say . . . the judicial function of
the lower courts is not optional; it is the duty of the courts to reason
through each case and issue decisions based on sound and thorough
legal analysis . . . .”).
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