Gradowski v. Kulig

Gradowski v. Kulig, No. 854-12-07 Rdcv (Cohen, J., Feb. 25, 2010)
[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
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STATE OF VERMONT
RUTLAND COUNTY
)
RICHARD C. GRADOWSKI, ) Rutland Superior Court
) Docket No. 854-12-07 Rdcv
Plaintiff, )
)
v. )
)
PAUL S. KULIG, CHRISTOPHER P. )
SULLIVAN, and KULIG & SULLIVAN, P.C., )
)
Defendants )
DECISION ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT,
FILED AUGUST 14, 2009
This is a legal malpractice action brought by plaintiff Richard Gradowski against
defendant attorneys Paul Kulig and Christopher Sullivan arising out of their
representation of Mr. Gradowski while he served as executor of an estate in Vermont.
Defendants move for summary judgment. Plaintiff is represented by Alison J. Bell, Esq.
Defendants are represented by Robert Reis, Esq.
Summary Judgment Standard
Summary judgment is appropriate where there is no genuine issue of material fact
and the party is entitled to judgment as a matter of law. V.R.C.P. 56(c)(3). In response to
an appropriate motion, judgment must be rendered "if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, ... show that
there is no genuine issue as to any material fact and that any party is entitled to judgment
as a matter of law." V.R.C.P. 56(c)(3). In determining whether a genuine issue of
material fact exists, the court accepts as true allegations made in opposition to the motion
for summary judgment, provided they are supported by evidentiary material. Robertson v.
Mylan Labs, Inc., 2004 VT 15, ¶ 15, 176 Vt. 356. The nonmoving party then receives the
benefit of all reasonable doubts and inferences arising from those facts. Woolaver v.
State, 2003 VT 71, ¶ 2, 175 Vt. 397. Furthermore, where, as here, "the moving party does
not bear the burden of persuasion at trial, it may satisfy its burden of production by
showing the court that there is an absence of evidence in the record to support the
nonmoving party's case. The burden then shifts to the nonmoving party to persuade the
court that there is a triable issue of fact." Ross v. Times Mirror, Inc., 164 Vt. 13, 18
(1995) (internal citations omitted).
BACKGROUND
Richard Gradowski is an attorney licensed to practice in Connecticut. In 1983, he
prepared a will for one Robert H. Brown. In June 1998, Mr. Brown died. At the time of
his death, Mr. Brown was a resident of Vermont; thus, his estate had to be probated in
Vermont. Pursuant to the will, Mr. Gradowski was named executor of the estate.
Mr. Gradowski retained attorneys Paul Kulig and Christopher Sullivan to
represent him in connection with the probate of Mr. Brown’s estate in Vermont. Mr.
Kulig represented Mr. Gradowski in connection with the estate from June 1998 to
February 2004. Mr. Sullivan represented Mr. Gradowski from June 1998 to December
2006.
There was no written agreement among the parties as to the scope of
representation, nor were any limitations as to the scope of representation discussed. Mr.
Gradowski understood that he had retained Mr. Kulig and Mr. Sullivan to represent him
in all aspects of the probate of the estate.
Because of the size of the estate, a United States Estate Tax Return Form 706 was
required to be filed within nine months of the date of Mr. Brown’s death. This would
have been March 4, 1999.
On March 17, 1999, Mr. Gradowski wrote to Mr. Sullivan, stating:
I am not familiar with the Vermont death taxes, if any,
however there is a good likelihood that because of the size
of this estate we have to file a Federal 706, which is due
nine (9) months from the date of death. I assume that if
there are any penalties or interest due on any federal or
state death taxes we will be in a position to surcharge the
Guardian since it is his delay that has prevented us from
filing these returns in a timely manner.
On at least twenty occasions from October 1999 to November 2001, Mr.
Gradowski and Mr. Kulig wrote letters to each other regarding the Form 706. The Form
706 was not filed until on or about October 30, 2001.
As a result of the late filing of the Form 706 and related state tax return, the estate
was assessed penalties and interest by the IRS in the amount of $50,707.26 and by the
Vermont Department of Taxes in the amount of $6,417.48. Mr. Gradowski was ordered
to reimburse the beneficiaries of the estate the sum of $57,124.74, plus pre-judgment
interest and post-judgment interest on that amount, for a total of more than $100,000 in
damages arising out of the late filing of the Form 706 and related state tax return. Mr.
Gradowski settled with the beneficiaries in January 2008, agreeing to pay the estate
$160,000, which represented the full amount of damages against him, return of his
executor’s fee, plus pre-judgment and post-judgment interest. The beneficiaries did not
seek reimbursement for the penalties and interest from either Mr. Kulig or Mr. Sullivan.
In December 2007, Mr. Gradowski brought the instant action alleging
professional negligence against Mr. Kulig and Mr. Sullivan, for (Count 1) their failure to
timely file the Form 706, and (Count 2) their failure to file certain other motions and their
failure to advise him regarding certain aspects of his role as executor.
Mr. Kulig and Mr. Sullivan move for summary judgment. As to Count 1, they
argue that Mr. Gradowski is precluded from bringing the claim because of issue
preclusion and because he is seeking indemnity from alleged joint tortfeasors. As to
Count 2, they argue that there are no genuine issues of material fact as to any of the
alleged bases for legal malpractice.
DISCUSSION
Issue Preclusion
Defendants argue that Plaintiff is collaterally estopped from bringing this legal
malpractice action because he was found negligent in his duties as executor by both the
Rutland Probate Court and Superior Court. The issue of Plaintiff’s negligence was the
central focus of the Court’s findings and he may not relitigate the issue.
“The doctrine of collateral estoppel or issue preclusion bars the subsequent
relitigation of an issue which was actually litigated and decided in a prior case between
the parties resulting in a final judgment on the merits, where that issue was necessary to
the resolution of the action.” Stevens v. Stearns, 2003 VT 74, ¶ 12, 175 Vt. 428. The
doctrine is designed to “protect the courts and the parties against the burden of
relitigation, encourage reliance on judicial decisions, prevent vexatious litigation and
decrease the chances of inconsistent adjudication.” Id.
Under Vermont law, issue preclusion is appropriate when the following elements
are met: (1) preclusion is asserted against one who was a party or in privity with a party
in the earlier action; (2) the issue was resolved by a final judgment on the merits; (3) the
issue is the same as that raised in the later action; (4) there was a full and fair opportunity
to litigate the issue in the earlier action; and (5) applying preclusion in the later action is
fair. Id. at ¶ 13.
Here, the argument for issue preclusion fails regarding every element except the
first. As to the second element, the issue in the instant action is whether Defendants’
alleged professional negligence was the proximate cause of Plaintiff’s injury. This issue
was not resolved by a final judgment on the merits in the prior action. Thus the
defendants do not meet the third element, as it is not the same issue raised in the later
action. As to the fourth element, there was not a full and fair opportunity by the Plaintiff
to litigate the legal malpractice issue in the earlier action. Finally, applying preclusion in
the instant action would not be fair. Under the defendants’ theory of issue preclusion, any
client who relied upon their advice in performing a negligent act for which he or she was
found liable, would be estopped from asserting a legal malpractice claim against them.
Thus, Defendants’ claim for issue preclusion fails.
Indemnity from Joint Tortfeasor
In Vermont there is a rule against contribution among joint tortfeasors. Howard v.
Spafford, 132 Vt. 434, 435 (1974). The primary purpose of labeling an action as a “joint
tort,” or parties as “joint tortfeasors,” is to trigger joint and several liability among
individuals whose actions together produced the plaintiff’s injury. State v. Therrien, 2003
VT 44, ¶ 24, 175 Vt. 342. Generally, the label of “joint tortfeasor” also means that a
plaintiff can join all tortious actors in one action, and determine which tortfeasor to
pursue for recovery. Id. To be a joint tortfeasor, one must be a tortfeasor in relation to the
injured party. Id. at ¶ 25. Where there is no joint liability, there is no basis to apply the
rules of contribution among joint tortfeasors. Therrien, 2003 VT 44, ¶ 25 (citing Hiltz v.
John Deere Indus. Esquip. Co., 146 Vt. 12, 15 (1985)).
In this case, for Defendants to have been joint tortfeasors, they must have been
tortfeasors in relation to the beneficiaries of the estate. A lawsuit against an attorney for
negligence generally requires: (1) the existence of an attorney-client relationship which
establishes a duty of care; (2) the negligence of the attorney measured by his or her
failure to perform in accordance with established standards of skill and care; and (3) that
the negligence was the proximate cause of harm to plaintiff. Hedges v. Durrance, 2003
VT 63, ¶ 6, 175 Vt. 588 (mem.) (citing Brown v. Kelly, 140 Vt. 336, 338 (1981); Bresette
v. Knapp, 121 Vt. 376, 380 (1960)).
Thus, for the defendants to have been joint tortfeasors the crucial determination is
whether an attorney-client relationship existed between the defendants, as attorneys for
the executor, and the beneficiaries of the estate such that Defendants owed the
beneficiaries a duty. “The longstanding common law rule is that an attorney owes a duty
of care only to the client, not to third parties who claim to have been damaged by the
attorney’s negligent representation.” Bovee v. Gravel, 174 Vt. 486, 487 (2002).
“The requirement of attorney-client privity to maintain a malpractice action
ensures that attorneys may in all cases zealously represent their clients without the threat
of suit from third parties compromising that representation.” Id. at 488. The Vermont
Supreme Court has recognized that other courts have relaxed the privity rule in limited
circumstances—most often in the estate-planning and will-drafting context—where it can
be shown that the client’s purpose in retaining the attorney was to directly benefit a third
party. Id.; Hedges, 2003 VT 63, ¶ 7.
Here, the primary purpose of the attorney-client relationship between the
defendant-attorneys and client Gradowski was the representation of Gradowski in his role
as executor of the estate. “In our law an executor is a person, or corporation empowered
to discharge the duties of a fiduciary, appointed as such by the testator in his will.” In re
Watkins’ Estate, 113 Vt. 126, 133 (1943). The executor has the duties of collecting the
assets of the estate, paying its debts, and distributing the residue to the beneficiaries of
the estate. In re Wright, 131 Vt. 473, 491 (1973).
Recognizing a lack of privity between the beneficiaries and themselves, the
defendants encourage this Court to apply the “balancing of factors” analysis first applied
in California, and then noted by the Vermont Supreme Court in Hedges. See Hedges,
2003 VT 63, ¶ 9. However, this Court declines to apply the California analysis for the
same reason the Hedges Court declined—such a model is not appropriate where the
beneficiaries and the executor (whom the defendant-attorneys represented) were adverse
parties. See Id.
The executor’s duty is to “serve the interests of the estate, not to promote the
objectives of one claimant over another.” Ferguson v. Cramer, 695 A.2d 603, 607 (Md.
Ct. Spec. App. 1997). There is a “potentially adversarial relationship that exists between
an executor's interest in administering the estate and the interests of the beneficiaries of
the estate.” Hopkins v. Akins, 637 A.2d 424, 428 (D.C. 1993). Thus, the circumstances of
the defendant-attorneys representation of Mr. Gradowski in his role as executor of the
estate “cannot be separated from the broader adversarial context.” See Hedges, 2003 VT
63, ¶ 9.
As the Supreme Court reasoned in Hedges, “[a] dramatic expansion of the
requirements regarding privity and duty of care would have profound consequences. For
example, a risk of divided loyalties could negatively affect an attorney’s ability to
exercise independent judgment in achieving an advantageous outcome for the client.”
Hedges, 2003 VT 63, ¶ 9.
In step with this reasoning, other states have observed that allowing a beneficiary
to sue the personal representative’s attorney could subject the attorney to an
impermissible conflict of interest when the interests of the personal representative, acting
on behalf of the estate, conflict with the interests of the beneficiary. Ferguson v. Cramer,
695 A.2d 603, 607 (Md. Ct. Spec. App. 1997); Goldberg v. Frye, 266 Cal. Rptr. 483, 489
(Cal. Ct. App. 1990); Hopkins v. Akins, 637 A.2d 424, 428 (D.C. 1993); Spinner v. Nutt,
631 N.E.2d 542, 544-45 (Mass. 1994); Trask v. Butler, 872 P.2d 1080, 1085 (Wash.
1994) (en banc).
In Goldberger v. Kaplan, Strangis & Kaplan, P.A., 534 N.W.2d 734, 739 (Minn.
Ct. App. 1995), the Minnesota Court of Appeals opined: “It is the potential for conflict
that makes direct suit by the beneficiary unacceptable; the fact that the interests of the
personal representative and the beneficiary may be aligned in a particular case does not
render the suit acceptable.” In regards to how a beneficiary who had been harmed by
legal malpractice could proceed with a claim, the Goldberger court explained that the
beneficiaries can bring an action against the personal representative for breach of
fiduciary duties. If the representative’s attorney negligently advised him, the attorney
may be liable to the personal representative for any legal malpractice. Id. (citing Trask,
872 P.2d at 1085). This is exactly the scenario which occurred in the instant case.
Thus, the beneficiaries could not have brought a legal malpractice claim against
the defendants because the defendants did not owe them a duty in their role as the
executor’s attorneys. As such, plaintiff Gradowski and defendants Kulig and Sullivan
were not joint tortfeasors. Plaintiff’s claim for legal malpractice is not barred by the rule
against contribution among joint tortfeasors.
Count 2
Defendants argue that no genuine issue of material fact exists as to each of the
five bases for alleged legal malpractice that compose Count 2. These bases include
Defendants’ failure to dispute the amount of penalties assessed by the IRS; failure to
oppose a motion for pre-judgment interest; failure to advise Plaintiff to itemize his time
as executor; failure to advise Plaintiff to notify his malpractice carrier; and failure to
advise Plaintiff to hire different counsel.
There are disputed questions of material fact as to each of these bases for legal
malpractice. Each bases will require expert testimony at trial to establish the appropriate
standard of care. Thus, there are genuine issues of material fact and Defendants are not
entitled to judgment as a matter of law.
ORDER
Defendants’ Motion for Summary Judgment, filed August 14, 2009, is DENIED.
Dated at Rutland, Vermont this _____ day of ________________, 2010.
____________________
Hon. William Cohen
Superior Court Judge