Haitham Joudeh v. Pfau Cochran Vertetis Amala, Pllc

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
HAITHAM JOUDEH, No. 72533-5-
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COCHRAN and JANE DOE COCHRAN, FILED: August 24, 2015
Respondents.
Verellen, J. — Haitham Joudeh and his son were injured in a car accident
resulting from a botched repossession. Joudeh hired attorney Darrell Cochran to
pursue a personal injury action against multiple tortfeasors, alleging both direct and
vicarious liability claims. With Cochran's urging, Joudeh settled for $350,000 with four
of the six tortfeasors. Cochran then withdrew. Joudeh was unable to retain new
counsel, and he did not appear or oppose the two remaining tortfeasors' motions for
summary judgment. The court granted the remaining tortfeasors summary judgment
and dismissed Joudeh's counterclaims for failure to prosecute. Joudeh did not appeal
those adverse rulings.
No. 72533-5-1/2
Joudeh sued Cochran and his law firm, Pfau Cochran Vertetis Amala (Cochran),
for legal malpractice and other claims. The trial court granted summary judgment
dismissing all of Joudeh's claims.
Joudeh contends genuine issues of material fact remain for trial. But his failure
to appear or oppose the motions for summary judgment in his underlying personal injury
action cuts off any causal link between Cochran's alleged misconduct and the loss of
his direct liability claims. And Joudeh fails to demonstrate that he would have recovered
more than the $350,000 partial settlement for his vicarious liability claims. We conclude
no genuine issues of material fact remain regarding proximate cause for any of his
claims on appeal.
Joudeh also contends a trial court may order disgorgement of fees as a remedy
for an attorney's breach of fiduciary duty, even absent proof of proximate cause. We
agree.
We affirm in part, reverse in part, and remand to consider the potential equitable
remedy of disgorgement of fees upon proof of a breach of fiduciary duty.
FACTS1
Joudeh entered into a loan agreement with Spokane Firefighters Credit Union
(SFCU) to buy a truck. Joudeh defaulted on the loan. SFCU hired Auto Trackers to
repossess the truck. Auto Trackers then hired Strickland Recovery LLC to assist in the
repossession.
1 Cochran vigorously denies any malpractice, breach of fiduciary duty, breach of
contract, or Consumer Protection Act violation. Because this is an appeal from
summary judgment, we set forth the facts in a light most favorable to Joudeh.
No. 72533-5-1/3
Auto Trackers employees Matthew Mayo and Trisha Matthews and Strickland
Recovery's owner Joshua Strickland found Joudeh driving the truck with his son.
Strickland drove a tow truck. Mayo and Matthews followed in another vehicle. Joudeh
and his son were injured when, following a high speed chase, Strickland's tow truck
rear-ended Joudeh's truck, pushing it into Mayo's and Matthews's vehicle.
Joudeh hired Cochran and signed a contingent fee agreement. Regarding costs,
the agreement states:
Client agrees to reimburse Attorneys ... for all Costs incurred by the
same in pursuit of this matter. At theirsole discretion, Attorneys will
advance payment of Costs .... Attorneys may require Client to pay for all
such advanced Costs before additional Costs are incurred by Attorneys.[2]
Joudeh sued SFCU, Auto Trackers, Mayo, Matthews, Strickland Recovery, and
Strickland. The claims against SFCU and Auto Trackers included theories of vicarious
liability for the acts of their purported agents and direct liability for negligent hiring,
training, and supervision and breach of the peace.
Joudeh consistently told Cochran that he "very much wanted to take [his] case to
trial."3 During mediation, Joudeh said that "he didn't want to settle with anyone at
various points or that he wanted a million dollars,"4 and that he believed his "damages
were between 2.5 to 3 million [dollars]."5 Cochran advanced the litigation costs, but
because he believed Joudeh was taking positions "against his best interest" and "his
2 Clerk's Papers (CP) at 375 (emphasis added).
3 CP at 531.
4 CP at 410.
5 CP at 531.
No. 72533-5-1/4
child's best interests," Cochran requested that Joudeh deposit $10,000 for ongoing
litigation expenses.6
Cochran urged Joudeh to accept a settlement for $350,000 to release Mayo,
Matthews, Strickland, and Strickland Recovery from all liability. Strickland Recovery
and Auto Trackers each had $1,000,000 of liability coverage. Mayo and Matthews each
had $100,000 of liability coverage.
Joudeh authorized Cochran to settle with Strickland Recovery and Strickland for
$250,000 and with Matthews and Mayo for $100,000. But he alleges Cochran coerced
him into the partial settlement by invoking the cost provision of the fee agreement and
requiring him to advance $10,000 if he did not agree to the $350,000 settlement offer.
Joudeh also alleges Cochran assured him the partial settlement would not impact his
vicarious liability claims.
Cochran obtained continuances for Joudeh's case against Auto Trackers and
SFCU and then withdrew. Four months later, Auto Trackers and SFCU moved for
summary judgment. Joudeh obtained an extension to respond. Later, attorney Steven
Bobman made a limited appearance on behalf of Joudeh to seek additional time to
oppose the summary judgment motions. The trial court denied the request. Neither
Bobman nor Joudeh filed any materials in opposition to or appeared for argument of the
summary judgment motions. The trial court granted SFCU and Auto Trackers summary
judgment and dismissed Joudeh's counterclaims against SFCU for failure to prosecute.
Joudeh did not appeal any of the adverse rulings.
6 CP at 234.
No. 72533-5-1/5
Joudeh sued Cochran for legal malpractice, breach of fiduciary duty, breach of
contract, and violation of the Consumer Protection Act, chapter 19.86 RCW. Cochran
moved for summary judgment, arguing that Joudeh could not establish proximate cause
for any of his claims. The trial court granted Cochran summary judgment, concluding all
of Joudeh's claims failed for lack of proximate cause. The trial court's oral ruling stated:
[Pjlaintiff failed to challenge or appeal the adverse ruling[s] in the
underlying personal injury action. As a matter of law[,] that failure defeats
the plaintiff's proof of proximate cause here, period. . . .
. . . [I]t applies equally across the board to each and every legal
theory they now posit.[7]
Joudeh appeals.
ANALYSIS
Standard of Review
We review a summary judgment order de novo, performing the same inquiry as
the trial court.8 We view the facts and all reasonable inferences in the light most
favorable to the nonmoving party.9 Summary judgment is proper if there are no genuine
issues of material fact.10 "A material fact is one that affects the outcome of the
litigation."11
7 CP at 972-73.
8 McDevitt v. Harborview Med. Ctr., 179 Wn.2d 59, 64, 316 P.3d 469 (2013).
9 Fulton v. State. Dep't of Soc. & Health Servs., 169 Wn. App. 137, 147, 279 P.3d
500 (2012).
10 CR 56(c); Lowman v. Wilbur, 178 Wn.2d 165, 168-69, 309 P.3d 387 (2013)
(quoting Michak v. Transnation Title Ins. Co., 148 Wn.2d 788, 794-95, 64 P.3d 22(2003)).
11 Owen v. Burlington N. & Santa Fe R.R. Co.. 153 Wn.2d 780, 789, 108 P.3d
1220(2005).
No. 72533-5-1/6
The parties vigorously dispute the application of the burden-shifting scheme for
summary judgment. The moving party initially bears the burden of showing the absence
of any genuine issue as to any material fact.12 A defendant moving for summary
judgment "has the initial burden to show the absence of an issue of material fact, or that
the plaintiff lacks competent evidence to support an essential element of [his] case."13 If
the defendant meets this initial showing, then the inquiry shifts to the plaintiff to set forth
evidence to support his case.14 The evidence set forth must be specific and detailed.15
The responding plaintiff may not rely on conclusory statements, mere allegations, or
argumentative assertions.16 If the plaintiff fails to establish the existence of an essential
element that he bears the burden of proving at trial, then summary judgment is
warranted.17
Summary Judgment "Showing"
Joudeh first contends the trial court erred by permitting Cochran to raise
proximate cause in his rebuttal materials and failing to limit Cochran to issues raised in
his initial motion for summary judgment. We disagree.
The moving party in its motion for summary judgment must raise "all of the issues
on which it believes it is entitled to summary judgment."18 "Allowing the moving party to
12 Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59,
70, 170P.3d 10(2007).
13 Sevbold v. Neu, 105 Wn. App. 666, 676, 19 P.3d 1068 (2001).
14 Young v. Key Pharmaceuticals, Inc., 112 Wn.2d 216, 225 n.1, 770 P.2d 182(1989).
15 Sanders v. Woods, 121 Wn. App. 593, 600, 89 P.3d 312 (2004).
16 CR 56(e); Vacova Co. v. Farrell. 62 Wn. App. 386, 395, 814 P.2d 255 (1991).
17 Young, 112 Wn.2d at 225.
18 White v. Kent Med. Ctr.. Inc., 61 Wn. App. 163, 168, 810 P.2d 4 (1991).
No. 72533-5-1/7
raise new issues in its rebuttal materials is improper because the nonmoving party has
no opportunity to respond."19 The moving party must therefore determine what issues
may be resolved by summary judgment and "clearly state in its opening papers those
issues upon which summary judgment is sought."20 The moving party cannot prevail on
the original motion based on issues first raised in rebuttal materials.21
In White v. Kent Medical Center, Inc., for example, the defendant moved for
summary judgment on the basis that White lacked expert testimony establishing the
standard of care.22 The defendant argued for the first time in its rebuttal materials that
the plaintiff lacked evidence of causation. This court reversed the summary judgment
order because it had been granted on proximate cause, an issue not raised until the
defendant's rebuttal materials and to which the plaintiff had no opportunity to respond.23
Unlike White, Cochran's motion for summary judgment here clearly requested
that the trial court dismiss all of Joudeh's claims for lack of proximate cause, claiming
that
• Joudeh "failed to challenge or appeal the adverse ruling[s] in the underlying
personal-injury action."24
• "Even assuming that plaintiff violated the standard of care, plaintiff cannot prove
proximate cause."25
19 \±
20 id, at 169.
21 jd at 168-69.
22 61 Wn. App. 163, 810 P.2d 4 (1991).
23 jd at 168-169.
24 CP at 82-83.
25 CP at 92.
7
No. 72533-5-1/8
• The "but for" test is used to determine proximate cause in a legal malpractice
claim: "'but for' the attorney's negligence, the client would have obtained a better
result."26
• Joudeh "must show that his underlying action was lost or compromised by Mr.
Cochran's alleged breach of duty" and that "he would have fared better in the
absence of Mr. Cochran's alleged breach—that is, that he would have prevailed
and obtained a better recovery."27
• "[T]he loss of [Joudeh's] claims against SFCU and Auto Trackers was not caused
by Mr. Cochran's conduct but, rather, by plaintiffs own failure to oppose those
defendants' summary judgment motions."28
• For his CPA claim, Joudeh "cannot show that he would have obtained more [than
the $350,000 settlement]" but for Cochran's misconduct in coercing Joudeh "into
accepting a settlement recommendation."29
• "To the extent [Joudeh] alleges that these settlements compromised his other
claims, such a claim would be defeated by lack of proximate cause."30
• Joudeh "must show that Mr. Cochran's breach [of contract] caused plaintiff to
lose his claims."31 "Had plaintiff opposed those summary judgment motions, the
claims would not have been dismissed. Plaintiff cannot prove that, even if Mr.
Cochran did breach the fee agreement, that breach proximately caused a
dismissal of the remaining claims."32
Cochran here made more than a "passing mention" of proximate cause in its
motion for summary judgment, and Joudeh responded to Cochran's proximate cause
arguments. We conclude Cochran adequately raised proximate cause as a basis to
dismiss all of Joudeh's claims.
26 CP at 92.
27 CP at 93.
28 CP at 93.
29 CP at 104.
30 CP at 104.
31 CP at 99.
32 CP at 98.
8
No. 72533-5-1/9
Proximate Cause
Generally, Joudeh contends there are genuine issues of material fact regarding
proximate cause for all of his claims that warrant a trial. We disagree.
A. Legal Malpractice Claim
(1) Vicarious Liability Claims Against Auto Trackers and SFCU
Both parties agree that partial settlement with the purported agents of Auto
Trackers and SFCU precluded any recovery from Auto Trackers and SFCU under a
vicarious liability theory. Joudeh specifically contends that if Cochran had properly
advised him about the risks of partial settlement, he would not have agreed to settle.
The critical question here is what evidence Joudeh must put forth—beyond conclusory
statements, mere allegations, or argumentative assertions—to create a question of
material fact that he would have fared better than $350,000 on these claims had he not
entered into the partial settlement.
"Liability for legal malpractice, as for other torts, requires proof of duty, breach of
duty, causation, and damage."33 The only issue here is causation. "General principles
of causation are no different in a legal malpractice action than in an ordinary negligence
case."34 "[P]roximate cause is determined by the 'but for' test."35 The plaintiff must
show that the attorney's alleged breach proximately caused the injury,36 such that his
33 Griswold v. Kilpatrick, 107 Wn. App. 757, 760, 27 P.3d 246 (2001).
34 Versuslaw, Inc. v. Stoel Rives, LLP, 127 Wn. App. 309, 328, 111 P.3d 866(2005).
35 Griswold, 107 Wn. App. at 760.
36 Smith v. Preston Gates Ellis, LLP, 135 Wn. App. 859, 864, 147 P.3d 600(2006).
No. 72533-5-1/10
claims were lost or compromised by the attorney's misconduct and he would have fared
better but for the attorney's misconduct.37
Joudeh argues proximate cause "is usually the province of the jury."38 But in
some circumstances, as here, proximate cause may be decided as a matter of law
when "'reasonable minds could not differ.'"39 Mere speculation and conjecture cannot
raise a genuine issue of material fact.40
Griswold v. Kilpatrick is instructive.41 Griswold settled a medical malpractice
claim but then sued her attorney, asserting that "the settlement figure would have been
higher but for the attorney's delay in initiating settlement negotiations."42 Griswold's
expert testified that the case would have settled for a greater amount absent the
attorney's breach. This court affirmed summary judgment in favor of the attorney,
holding that Griswold's evidence was "speculative and conclusory" and was
"inadmissible to create an issue of material fact."43
Similar to Griswold, Joudeh provided no evidence that he could have recovered
more for his vicarious liability claims either through settlement or trial. Expert testimony
37 Daugert v. Pappas. 104 Wn.2d 254, 258, 704 P.2d 600 (1985); Shepard
Ambulance, Inc. v. Helsell. Fetterman. Martin, Todd & Hokanson, 95 Wn. App. 231,
235-36, 974 P.2d 1275 (1999).
38 Smith, 135 Wn. App. at 864.
39 Moore v. Hagge, 158 Wn. App. 137, 148, 241 P.3d 787 (2010) (quoting
Dohertv v. Mun. of Metro. Seattle, 83 Wn. App. 464, 469, 921 P.2d 1098 (1996)).
40 See Griswold, 107 Wn. App. at 761; Halvorsen v. Ferguson, 46 Wn. App. 708,
721, 735 P.2d 675 (1986).
41 107 Wn. App. 757, 27 P.3d 246 (2001).
42 ]d, at 758.
43 Id. at 762.
10
No. 72533-5-1/11
is not always required to demonstrate proximate cause.44 But Joudeh's belief that he
could have done better absent Cochran's alleged negligence is insufficient to create an
issue of material fact for proximate cause. Joudeh offered no expert testimony or any
other evidence that, had he been advised of the risks of partial settlement, he would
have fared better than the $350,000 partial settlement.
Joudeh fails to demonstrate a genuine issue of material fact that Cochran's
alleged misconduct proximately caused Joudeh any damages for his vicarious liability
claims.
(2) Direct Liability Claims against SFCU and Auto Trackers
For Joudeh's direct liability claims, either there was a question of material fact in
the underlying personal injury action or there was not. Ifthere was no question of
material fact to be raised, then the trial court correctly granted SFCU and Auto Trackers
summary judgment; nothing Cochran did or failed to do could have proximately caused
Joudeh any damages. And if there was a question of material fact, then it was Joudeh's
failure to oppose the motions for summary judgment (or to appeal the adverse rulings)
that broke any chain of causation based upon Cochran's alleged misconduct. A
defendant may break the chain of causation by showing that "a person's own conduct
may be the sole cause of injuries."45 Here, Joudeh's own conduct in failing to appear or
oppose the motions for summary judgment caused any loss he sustained.46
44 E.g., Geer v. Tonnon, 137 Wn. App. 838, 851, 155 P.3d 163 (2007) (requiring
a plaintiff to produce "expert testimony or other evidence" in order to demonstrate
proximate cause (emphasis added)).
45 Nielson v. Eisenhower & Carlson, 100 Wn. App. 584, 593, 999 P.2d 42 (2000).
46 See generally Paradise Orchards Gen. P'ship v. Fearing, 122 Wn. App. 507,
94 P.3d 372 (2004) (an aggrieved party must first challenge an erroneous ruling before
bringing a legal malpractice claim).
11
No. 72533-5-1/12
Joudeh relies on cases discussing the reasonableness of efforts to mitigate
damages. But whether Joudeh had a duty to mitigate presupposes that Cochran was
legally liable for Joudeh's damages.47 No mitigation requirement arises before "a
determination that a legal wrong ha[s] been committed."48
Joudeh contends Cochran failed to meet his initial burden of proving the trial
court was right. But under the well-established standards for summary judgment,
Cochran met his initial burden. Joudeh was then obliged to put forth evidence
demonstrating a question of material fact that Cochran's alleged breach proximately
caused the loss of his vicarious or direct liability claims. Because a "plaintiff's showing
of proximate cause must be based on more than mere conjecture or speculation," we
conclude Joudeh fails to show a genuine issue of material fact that Cochran proximately
caused any loss.49
B. Breach of Fiduciary Duty Claim
The elements for a breach of fiduciary duty damage claim mirror those of a legal
malpractice claim. The plaintiff must prove proximate cause. As discussed above,
Joudeh fails to show a genuine issue of material fact that Cochran's alleged breach of
his fiduciary duties proximately caused Joudeh's injury and damages.50
47 See Flint v. Hart. 82 Wn. App. 209, 215, 917 P.2d 590 (1996).
48 City of Seattle v. Blume, 134 Wn.2d 243, 258, 947 P.2d 223 (1997); see
generally Bullard v. Bailey, 91 Wn. App. 750, 759-60, 959 P.2d 1122 (1998) (analyzing
the mitigation of damages doctrine only after determining that a client's former attorney
caused him damages).
49 Miller v. Likins, 109 Wn. App. 140, 145, 34 P.3d 835 (2001). This reasoning
applies equally to Joudeh's intentional tort claims in the underlying personal injury
action.
50 To the extent Joudeh alleges Cochran made settlement offers that he did not
authorize or that he was coerced into the partial settlement, Joudeh fails to raise a
12
No. 72533-5-1/13
C. CPA Violation Claim
Joudeh contends genuine issues of material fact remain for his CPA claim. We
disagree.
"The Consumer Protection Act declares unlawful unfair methods of competition
and unfair or deceptive acts or practices in the conduct of any trade or commerce."51 To
establish a CPA claim, "the plaintiff must prove '(1) [an] unfair or deceptive act or
practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury to
plaintiff in his or her business or property; (5) causation.'"52 All elements must be
present.53
Proximate cause is critical here. A CPA claim requires proof that the claimant
suffered a specific injury to his business or property and that the defendant's unfair or
deceptive act proximately caused the plaintiff's injury.54
Joudeh contends that Cochran coerced him into accepting Cochran's settlement
recommendations. But he does not allege how he was "injured" within the meaning of
the CPA. Cochran never enforced his request that Joudeh pay $10,000 to cover
litigation expenses. Joudeh admits in his declaration that he "would have rejected Mr.
Cochran's settlement recommendations despite his demands that [he] pay future
genuine issue of material fact that Cochran's alleged breach proximately caused
Joudeh any harm.
51 Behnke v. Ahrens, 172 Wn. App. 281, 290, 294 P.3d 729 (2012).
52 Klem v. Wash. Mut. Bank, 176 Wn.2d 771, 782, 295 P.3d 1179 (2013)
(alteration in original) (quoting Hangman Ridge Training Stables. Inc. v. Safeco Title Ins.
Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986)).
53 Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc., 86 Wn. App. 732, 743,
935 P.2d 628 (1997).
54 Hangman Ridge. 105 Wn.2d at 792-93.
13
No. 72533-5-1/14
litigation expenses."55 Joudeh offers no evidence that Cochran's request for costs
caused him to accept Cochran's settlement recommendations. On this record, it is
unclear how invoking the cost provision of the fee agreement caused or "coerced"
Joudeh to accept Cochran's settlement recommendations. Moreover, as discussed
above, Joudeh does not establish how the partial settlement proximately caused him
any injury. Therefore, we conclude Joudeh fails to demonstrate a genuine issue of
material fact regarding proximate cause for his CPA claim.
D. Breach of Contract Claim
Joudeh contends genuine issues of material fact remain for his breach of
contract claim. We disagree.
A breach of contract claim requires duty, breach, proximate cause, and
damages.56 Joudeh fails to cite any contractual provision in the fee agreement that
Cochran allegedly breached. Instead, Joudeh claims Cochran disregarded Joudeh's
express settlement instructions and did not explain the implications of partial settlement.
But even if there is a genuine issue of material fact whether Cochran breached their
agreement, there is no genuine issue of material fact for proximate cause warranting a
trial. As discussed above, Joudeh fails to show how the partial settlement adversely
affected his claims against Auto Trackers and SFCU. Therefore, we conclude Joudeh's
breach of contract claim fails for lack of proximate cause.
55 CP at 533.
56 Nw. Independent Forest Mfrs. v. Dep't of Labor and Indus., 78 Wn. App. 707,
712, 899P.2d6(1995).
14
No. 72533-5-1/15
Fee Disgorgement as Remedy for Breach of Fiduciary Duty
Joudeh contends a trial court may order fee disgorgement as an equitable
remedy for a breach of fiduciary duty claim even absent proof of proximate cause. We
agree.
"The general principle that a breach of ethical duties may result in denial or
disgorgement of fees is well recognized."57 It is within a trial court's "inherent power" to
"'discipline specific breaches of professional responsibility, and to deter future
misconduct of a similar type.'"58 The remedy in such a case is fee disgorgement.59 A
trial court has the discretion to order a fee disgorgement as a remedy for an attorney's
breach of fiduciary duty.60 "A finding of causation and damages is not required to
support an order of disgorgement."61
First, Cochran argues the record does not support that he ever received a fee.
But the parties do not dispute that Joudeh recovered $350,000 in settlement and that
the contingent-fee agreement applies to that settlement. Thus, there is a reasonable
inference that Cochran received significant fees from the $350,000 recovery.
Second, Cochran relies upon Kellv v. Foster for the proposition that
disgorgement of fees is available only for fraudulent acts or gross misconduct by an
attorney.62 Kellv holds only that a trial court is not compelled but has discretion to order
57 Eriks v. Denver. 118 Wn.2d 451, 462, 824 P.2d 1207 (1992).
58 id, at 463 (quoting In re Eastern Sugar Antitrust Litiq.. 697 F.2d 524, 533 (3d
Cir. 1982)).
59 Id, at 462.
60 Cotton v. Kronenberq, 111 Wn. App. 258, 275, 44 P.3d 878 (2002).
61 Behnke, 172 Wn. App. at 298.
62 62 Wn. App. 150, 813 P.2d 598 (1991).
15
No. 72533-5-1/16
disgorgement for attorney misconduct.63 Recent case law recognizing that there is no
requirement for proximate cause or damages is compelling.64
Finally, it is clear that a question of material fact exists as to the alleged breach of
fiduciary duty. Joudeh's expert opined that Cochran breached their fiduciary duty in
several respects. If Cochran is found to have breached their fiduciary duty, then the trial
court must exercise its discretion to determine whether the specific circumstances
warrant disgorgement of fees as an equitable remedy.
Therefore, we reverse and remand only for consideration of disgorgement of fees
as a remedy if Cochran breached their fiduciary duty to Joudeh. In all other respects,
we affirm the trial court's summary judgment order.
WE CONCUR:
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63 id, at 157.
64 Eriks, 118 Wn.2d at 462-63; Behnke, 172 Wn. App. at 298. Contrary to
Cochran's suggestion at oral argument, Taylor v. Bell, 185 Wn. App. 270, 340 P.3d 951(2014), does not hold that there is a causation requirement for a party seeking the
equitable remedy of disgorgement of fees after a finding that an attorney breached his
or her fiduciary duty.
16