James Schibel, et ux v. Richard Eymann

FILED
April 26, 2016
In the Office of the Clerk of Court
WA State Court of Appeals, Division Ill
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
JAMES SCHIBEL, an individual; and )
PATTI SCHIBEL, an individual; and the ) No. 32937-2-111
marital community thereof, )
)
Respondents, )
)
v. ) PUBLISHED OPINION
)
RICHARD EYMANN, an individual; )
EYMANN ALLISON HUNTER JONES, )
P.S., a Washington professional services )
corporation; MICHAEL WITHEY, an )
individual; LAW OFFICES OF )
MICHAEL WITHEY, PLLC, a )
Washington professional limited liability )
company, )
)
Petitioners. )
KORSMO, J. - This court granted interlocutory review of an order denying
summary judgment in order to determine whether this legal malpractice action was
foreclosed by the outcome of a previous appeal upholding the withdrawal of the
petitioner attorneys in the underlying case. We agree with the trial court that the issues
decided in the previous action were different, affirm its ruling, and remand for further
proceedings.
No. 32937-2-III
Schibel v. Eymann
FACTS
This malpractice action alleges that attorneys Richard Eymann and Michael
Withey, along with their respective law firms (collectively Attorneys), failed to protect
their clients' best interests when they withdrew on the eve of trial and were unable to
secure a continuance from the trial court. That original action had been brought by
respondents James and Patti Schibel against their former landlord, alleging breach of a
commercial lease and negligent infliction of injury due to mold exposure. The trial court
permitted the withdrawal over the objection of the Schibels. At the same hearing, the
court denied the continuance and indicated that the matter would remain set for trial.
The Schibels were represented by a different attorney when the commercial lease
action was filed in 2007. The Attorneys took over in early 2009 after the original counsel
withdrew due to a fee dispute. The Attorneys entered into a contingent fee agreement
with the Schibels. Clerk's Papers (CP) at 225-30. That agreement provided that the
Schibels controlled the decision to accept any settlement offers; the Attorneys were
authorized to front litigation costs subject to repayment by the Schibels. CP at 227-29.
When the Attorneys took over the case, the pending April 2009 trial date was
continued to April 2010. A conflict with the trial court's schedule then led to
rescheduling the trial date to August 2010. Two days before that trial, Ms. Schibel's
father passed away and the case was rescheduled to November 1, 2010. The trial judge
announced that there would be no more continuances.
2
No. 32937-2-111
Schibel v. Eymann
During this period of time the Schibels and the Attorneys disagreed over whether
to accept a settlement offer. The Attorneys stressed the weaknesses in the case, including
inconsistent deposition testimony from Mr. Schibel and a strongly adverse view of the
action by a focus group. The Attorneys also asked for an assurance that the extensive
costs incurred to that point and expected for trial would be paid. They likewise did not
reach an agreement on that topic. The Attorneys then wrote their clients on October 10
that they would need to withdraw in light of the breakdown of their relationship. CP at
244-4 7. A motion to withdraw and a motion to continue the trial date were filed the next
day. Both the Schibels and the landlord objected to the withdrawal. The matter went to
hearing on October 27 before the Honorable Annette Plese.
The Schibels represented themselves on the withdrawal motion. They requested to
make their argument in camera, but the trial court denied the request, viewing it as
improper ex parte contact. Finding compliance with CR 71, the trial court permitted the
Attorneys to withdraw, noting that it was consistent with the Attorneys' ethical
obligations. Judge Plese then denied the motion for a continuance. The Schibels were
expected to proceed prose on November 1 if they had not obtained counsel or settled by
that time. The Schibels reached an oral agreement to dismiss the case without costs.
However, they neither signed that agreement nor appeared for trial. The case was then
dismissed with prejudice.
3
No. 32937-2-111
Schibel v. Eymann
I
1
!
The Schibels retained counsel and appealed, challenging the withdrawal and i
!
continuance rulings. This court affirmed. See Schibel v. Johnson, noted at 168 Wash. App.
I
I
1046 (2012). Specifically, this court concluded that the trial judge did not abuse her
I
f
discretion in granting the withdrawal. Schibel, slip op. at 5-10. While ethical duties
l
define when an attorney can withdraw from a case, the trial court's discretion to permit
the withdrawal is governed by case authority rather than the ethical rules. Id. at 6-8. We
also rejected the Schibels' argument that an attorney could not withdraw if the client
would be harmed by the action. Id. at 9. Instead, we agreed with the trial judge's
findings that counsel's ethical obligations required the withdrawal. Id. at 9-10. We also
concluded that the trial judge had not abused her discretion in denying the continuance.
Id. at 10-12.
Represented by another new attorney, the Schibels then filed the current
malpractice action against the Attorneys. Discovery ensued and eventually the Attorneys
filed a motion for summary judgment, arguing that the Schibels were collaterally
estopped by the previous appeal from challenging their withdrawal from the lease case. 1
The trial court, the Honorable James Triplet, disagreed with the argument in a lengthy
1
The Attorneys also contended that the Schibels lacked expert testimony to
support their legal malpractice claim. The Schibels responded with an affidavit from
retired Judge Roger A. Bennett explaining in his view that the Attorneys did breach the
standard of care in withdrawing on the eve of trial. The trial court ruled that material
questions of fact existed. CP at 297. This aspect of the summary judgment ruling is not
at issue in this appeal.
4
No. 32937-2-111
Schibel v. Eymann
letter opinion. The trial court concluded that there was no Washington precedent
governing the interplay between a judicially-approved withdrawal from representation
under CR 71 and legal malpractice. It also noted that the issues resolved in the original
case were different from those in the malpractice case and that the Schibels had not had a
fair opportunity to contest the ethical problems because they could not present their
argument ex parte.
This court granted the Attorneys' motion for discretionary review. The case was
submitted to a panel without oral argument.
ANALYSIS
The sole issue presented is whether the trial court correctly determined that
collateral estoppel did not apply to bar the malpractice action. We agree with the trial
court that the issues decided in the previous action are not the same as those presented by
this case. Although this matter comes to us as an issue of collateral estoppel, at its heart
the question here involves an attorney's duty to his client.
Several well-settled principles oflaw govern our review of this action. Summary
judgment is proper when the moving party bears its initial burden of establishing that it is
entitled to judgment because there are no disputed issues of material fact. Young v. Key
Pharm., Inc., 112 Wash. 2d 216, 225, 770 P.2d 182 (1989). "A material fact is one that
affects the outcome of the litigation." Owen v. Burlington N. Santa Fe R.R. Co., 153
Wash. 2d 780, 789, 108 P.3d 1220 (2005). If that initial showing is made, then the burden :
!
J
5 II
t
\
No. 32937-2-111
Schibel v. Eymann
shifts to the other party to establish there is a genuine issue for the trier of fact. Young,
112 Wash. 2d at 225-26. The responding party may not rely on speculation or having its
own affidavits accepted at face value. Seven Gables Corp. v. MGM/UA Entm't Co., 106
Wash. 2d 1, 13, 721 P.2d 1 (1986). Instead, it must put forth evidence showing the
existence of a triable issue. Id. This court applies de novo review to an order granting
summary judgment on the basis of collateral estoppel. Barr v. Day, 124 Wash. 2d 318, 324,
879 P.2d 912 (1994).
The plaintiff in a legal malpractice action must establish four elements: (1) the
existence of an attorney-client relationship that gives rise to a duty of care, (2) an act or
omission by the attorney in breach of that duty, (3) damage to the client, and (4)
proximate causation between the breach of duty and the damage incurred. Hizey v.
Carpenter, 119 Wash. 2d 251, 260-61, 830 P .2d 646 ( 1992). The standard of care is
uniform throughout the state of Washington: "that 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." Cook, Flanagan & Berst v. Clausing,
73 Wash. 2d 393, 395, 438 P.2d 865 (1968).
Collateral estoppel precludes relitigation of the same issue in a subsequent action
involving the parties. Christensen v. Grant County Hosp. Dist. No. 1, 152 Wash. 2d 299,
306, 96 P.3d 957 (2004). In order to prevail on a claim of collateral estoppel, the party
seeking application of the doctrine bears the burden of showing that (1) the identical issue
6
No. 32937-2-111
Schibel v. Eymann
I
I
!
I
I
was decided, (2) there was a final judgment on the merits, (3) the party against whom the iI
doctrine is asserted must have been a party (or in privity with a party) to the earlier
proceeding, and (4) application of collateral estoppel will not work an injustice against 'I'
I
I
!
the estopped party. Id. at 307. The estopped party must have had a "full and fair t
t
opportunity to litigate the issue in the earlier proceeding." Id. f
r
Also relevant to our discussion, as they were in the first appeal, are CR 71 and t
i
RPC 1.16. In general, CR 71 describes the manner in which an attorney can withdraw [
from representing a client, with the process varying depending on if the client objected to
the withdrawal and whether counsel was appointed by the court. When a client objects to
I
i
the request, "withdrawal may be obtained only by order of the court." CR 71 (c)(4). I
Particularly relevant in both the former case and this one is the final sentence of CR f
i
I
7l(a): "Nothing in this rule defines the circumstances under which a withdrawal might be J
denied by the court."
i
t
i
An attorney shall not represent a client if "the representation will result in violation I
I
r
of the Rules of Professional Conduct or other law." RPC l.16(a)(l). The following i'
i
t
I
subsection of the rule states circumstances when permissive withdrawal is ethically I
allowed.
... a lawyer may withdraw from representing a client if:
I
t
I
(I) withdrawal can be accomplished without material adverse effect on the
interests of the client;
7
No. 32937-2-111
Schibel v. Eymann
(2) the client persists in a course of action involving the lawyer's services
that the lawyer reasonably believes is criminal or fraudulent;
(3) the client has used the lawyer's services to perpetrate a crime or fraud;
(4) the client insists upon taking action that the lawyer considers repugnant
or with which the lawyer has a fundamental disagreement;
(5) the client fails substantially to fulfill an obligation to the lawyer
regarding the lawyer's services and has been given reasonable warning that
the lawyer will withdraw unless the obligation is fulfilled;
(6) the representation will result in an unreasonable financial burden on the
lawyer or has been rendered unreasonably difficult by the client; or
(7) other good cause for withdrawal exists.
RPC l.16(b).
The Attorneys argue that Judge Plese necessarily decided that their withdrawal
from the lease case complied with their ethical obligations, thus precluding the Schibels
from maintaining a malpractice action on the same theory. The Schibels contend that the
previous appeal merely resolved the issue of whether the trial court erred in permitting
the Attorneys to withdraw, but did not resolve the issue of whether the attorneys ethically
withdrew. Washington courts have not yet decided whether a court-sanctioned
withdrawal by counsel prevents a malpractice action predicated on counsel's allegedly
improper withdrawal from a case, but other states have addressed the issue.
The Attorneys rely heavily on decisions from Arkansas and Michigan. The
Arkansas action involved a malpractice claim against an attorney who had been permitted
8
No. 32937-2-III
Schibel v. Eymann
to withdraw from a federal case by a federal district judge. The Arkansas court I
I
understandably stated: "We are reluctant to hold that an authorized withdrawal from i
l
representing a client by a federal district judge constituted malpractice." Bright v. Zega, I
l
358 Ark. 82, 186 S.W.3d 201, 205 (2004). 2 The court reasoned that it would be a l
'
I
I
"perverse state of affairs" to allow an attorney's court-authorized withdrawal to l
i
!
l
effectively act as an insurance policy for a client to settle and then sue for malpractice
due to the withdrawal. Id. In the course of its analysis, the Arkansas court also relied on
I
!
I'
the decisions in Washington v. Rucker, 202 Ga. App. 888, 415 S.E.2d 919 (1992), and I
Lifschultz Fast Freight, Inc. v. Haynesworth, Marion, McKay & Guerard, 334 S.C. 244,
I
II
!
i
I
513 S.E.2d 96 (1999), where courts similarly had stated that court-sanctioned
II
withdrawals serve as bars to malpractice actions. Id. at 205. 3 II
The Schibels, in tum, rely on the decisions in Fisher v. State, 248 So. 2d 4 79 (Fla. II!
1971), Allen v. Rivera, 125 A.D.2d 278, 509 N.Y.S.2d 48 (1986), and Greening v. 'I
i
I
I
2
t
Respondents correctly note that Bright does not apply to actions for malpractice
committed before withdrawal or to situations where the proper procedures for withdrawal
under Rule 71 were not followed. See Vang Lee v. Mansour, 2008 Ark. App. 91, 289
S.W.3d 170, 174.
3
The Attorneys also rely on Keywell & Rosenfeld v. Bithell, 254 Mich. App. 300,
657 N.W.2d 759, 782-90 (2002). There the Michigan Court of Appeals ruled that the
trial court erred in permitting the validity of a court-sanctioned withdrawal to be
reconsidered by the jury hearing an action for unpaid attorney fees.
9
No. 32937-2-111
Schibel v. Eymann
Klamen, 719 S.W.2d 904 (Mo. Ct. App. 1986), as well as two Washington decisions
applying related principles. The primary case is Fisher.
There the Florida Supreme Court outlined Florida's rule for allowing an attorney
to withdraw after entering an appearance. See Fisher, 248 So. 2d at 484-86. In holding
that a trial court should rarely withhold approval for an attorney to withdraw, the court
also noted that the court's approval will not eliminate civil liability to the attorney:
We hold that in a civil case any attorney of record has the right to terminate
the attorney-client relationship and to withdraw as an attorney of record
upon due notice to his client and approval by the court. Approval by the
court should be rarely withheld and then only upon a determination that to
grant said request would interfere with the efficient and proper functioning
of the court. The approval of the court of such withdrawal will not relieve
the attorney of any civil liability for breach of duty or negligence to his
client nor from appropriate disciplinary procedures for such act, if it is
wrongfully done.
Id. at 486 (emphasis added). Significantly, Division Two of this court adopted the Fisher
rationale for withdrawals in Kingdom v. Jackson, 78 Wash. App. 154, 160, 896 P.2d 101
(1995), the same case this court relied on in deciding Schibel v. Johnson. In so doing,
Kingdom quoted the entire quoted passage from Fisher with approval. Id. Because
Washington has adopted Florida's rule for withdrawal, respondents argue that it is logical
that Washington also should adopt Florida's rule for whether the granting of an attorney's
request to withdraw relieves the attorney of liability. 4
4The Attorneys argue that the italicized line in the Fisher case is mere dicta and
should not be followed. While that particular line may be obiter dictum in the strictest
10
No. 32937-2-III
Schibel v. Eymann
In Kingdom, the court noted that case law, rather than court rule, governs whether
an attorney is permitted to withdraw, making it a matter left to the discretion of the trial
court. Id. at 158. It is not necessary for a trial court to decide whether an attorney would
violate the ethical rules by withdrawing; the trial court needs only to "consider all
pertinent factors," which includes various ethical rules under RPC 1.16. 5 Id. at 15 8
(emphasis added). In fact, when "withdrawal is sought by a retained attorney in a civil
case, it generally should be allowed." Id. at 160. In addition, the comments to the rule
expressly note that because an attorney oftentimes cannot specifically state the reasons
for wanting to withdraw without compromising client confidences, "[t]he lawyer's
statement that professional considerations require termination of the representation
ordinarily should be accepted as sufficient." RPC 1.16, cmt. 3. Effectively, an attorney
who perceives an ethical problem with continued representation, communicates that fact
sense because it was not necessary for the court's holding, the Florida court appeared to
have been anticipating a logical consequence of its holding and addressing it as part of its
reasoning for the holding. Such reasoning is still persuasive. Further, Missouri has
specifically adopted the Fisher analysis in the context of summary judgment for a legal
malpractice lawsuit. Greening, 719 S.W.2d at 905, 907. To the extent it is dicta in
Fisher, it is not dicta in Greening.
5 At the time of Kingdom, this rule was listed as RPC 1.15. It was renumbered
RPC 1.16 and amended effective September 1, 2006. The amendment moved current
RPC 1. l 6(b )( 1) from the prefatory section of the rule to be listed as a separate reason
permitting withdrawal. See Rule 1.16, 157 Wash. 2d 1241-44 (2006).
11
No. 32937-2-111
Schibel v. Eymann
to the trial judge, and complies with the procedural requirements of CR 71, is entitled to
withdraw from representation.
We agree that because Washington applies Florida's construction of CR 71, it also
is appropriate to apply its understanding of the implications of that construction to
attorney malpractice allegations based on counsel's withdrawal from representation. CR
71 essentially is divorced from an attorney's ethical obligations to his client. While the
ethical considerations found in RPC 1.16 may inform a trial court's decision on a
contested motion to withdraw, those considerations do not dictate the trial court's CR 71
ruling. As comment 3 to RPC 1.16 suggests, an attorney's statement that professional
considerations require withdrawal permits a trial court to accept that rationale without
determining that it is a correct statement of the factual circumstances. In other words, the
court is permitted to accept counsel's assertion without actually determining that
withdrawal is required by the rule.
An attorney discipline ruling provides analogous support for our position. In re
Discipline o/Cohen, 150 Wash. 2d 744, 82 P.3d 224 (2004). The contested issue in that
action was whether the attorney could be sanctioned for withdrawing from representation
one month before a trial de novo. The attorney does not appear to have raised CR 71 as a
defense to the disciplinary action, but did contend that withdrawal was mandated by his
health problems. Id. at 755-57. Rejecting that argument, the court turned to the
permissive withdrawal factors of former RPC 1.15. Id. at 757. Concluding that leaving
12
No. 32937-2-III
Schibel v. Eymann
the client without counsel shortly before trial was a material adverse effect on the client
that cost him money and denied him his day in court, the court determined that Cohen
had violated former RPC l.15(b). Id.
While Cohen did not analyze CR 71, we believe that it still informs on that
application of that rule in this circumstance. When an attorney withdraws from a case, he
still can be disciplined when there is an adverse effect on the client. The propriety or
impropriety of withdrawal under CR 71 is a separate issue from the impact of the
withdrawal on the client.
With that understanding of Washington law, we now, finally, tum to the collateral
estoppel questions presented by this appeal. The trial court found that the first and fourth
factors of collateral estoppel-identity of issues and injustice to a party-were not
satisfied. We again agree with the trial court.
The first consideration of collateral estoppel is whether the previous action
necessarily decided the same issue presented in the current case. Christensen, 152 Wash. 2d
at 307. As suggested by our previous discussion, the answer in this case is "no." At
issue in the first case, as with most contested cases of withdrawal, was whether or not the
Attorneys complied with CR 71. The court did not answer the questions of whether the
Attorneys correctly perceived that ethical considerations required them to withdraw or
that the Attorneys actually were motivated by that reason. Judge Plese's comments
concerning the Attorneys' ethical obligations, affirmed by this court's acceptance of that
13
No. 32937-2-III
Schibel v. Eymann
rationale in the first appeal, merely confirmed that the Attorneys properly stated their
ethical concerns in conformity with comment 3 to RPC 1.16. Neither Judge Plese nor
this court determined that there actually was an ethical problem with continued
representation. 6
Accordingly, the first factor of collateral estoppel is not present. While the failure
to establish any of the court prongs of the collateral estoppel standard is fatal to the
petitioners' argument, we briefly will discuss the fourth factor because the trial court also
relied on it and the parties have argued it.
The fourth factor is whether applying collateral estoppel would work an injustice
to a party. We agree that it would in this circumstance. The Schibels asked to address
the court in chambers so that Mr. Johnson and his attorney would not hear the details of
their disagreement with the Attorneys. When Judge Plese correctly determined that the
issue could not be heard ex parte, the Schibels were left with the dilemma of either not
raising the issue or having Johnson's attorney listen to the Attorneys discuss the
weakness of their pending case. Under those circumstances, we cannot conclude that it
would be fair to bind them to a decision where not all evidence and argument were
6 While this state's construction of CR 71 would permit the argument that a
contested withdrawal hearing will never necessarily resolve the ethical propriety of a
withdrawal, we can foresee instances in which the ethical problem would properly be
before the trial court and necessarily decided. This case is not one of those instances.
14
No. 32937-2-III
Schibel v. Eymann
presented. The trial court correctly determined that it would work an injustice to
collaterally estop the Schibels despite the prior extended litigation of the CR 71 issue.
We therefore affirm Judge Triplet's decision to deny summary judgment. An
attorney properly permitted to withdraw in accordance with CR 71 does not also earn an
endorsement of his view of any ethical concerns that might be presented by the
withdrawal. RPC 1.16.
The case is remanded for further proceedings.
WE CONCUR:
(
~-""
~(,:
• . ,. .. / /\I
\
~ '\
'y u
}
Pennell, J.
15