1. Ch. 7 Defenses & Obstacles to Recovery A.Contributory Negligence, Comparative Negligence & Comparative Fault

2. Flyover Review of Evolving Tort Law pp. 205-07 1.Contributory Negligence: bars recovery, but limited application to negligence cases. Reforms since 1970s: abandoned everywhere but Ala., N.C., Va., Md. 2.Comparative Negligence (‘70s) a. Pure regimes: reduced recovery corresponds exactly to P’s % of total negligence b.Modified regimes, local variations: i. Bar recovery if P’s negligence ≥ (“greater than or equal to) to D’s, or ii. Bar recovery if P’s negligence > (“more at fault than”) D’s. c. 23 O.S. §§13-14 combined: interpreted as modified comparative; recovery allowed if D more at fault than P; any recovery reduced by amount of P fault. (Professor Meazell) Relation to Legal Malprac.? 3.Comparative Fault (‘80s-90s): broadened reach of defense to include negligence, recklessness, strict-liability, failure to mitigate, but not intentional torts.

3. FDIC v. Ferguson, 982 F.2d 404 (10 th Cir. 1992) Held, Contributory negligence principles applied in legal malpractice action, citing Erwin v. Frazier, 786 P.2d 61 (Okla. 1989). Affirmed defense verdict where Home S&L (for which FDIC was guarantor) was 70% negligent. Lawyer, who was 15% negligent, hired to draft closing documents and file after closing; closing agent 15% negligent.

4. 1. Own Conduct Contributing to π’s Harm pp. 208-09 Arnov Indus., Inc. Retirement Trust v. Brown, Raysman, et. al. (NY 2001)(client’s failure to read carefully document before signing did not bar recovery, where L erroneously stated final document only changed to correct one typo; dicta, client’s “culpable conduct” is affirmative defense that must be pled and proven by D L) N.B. 2 serious errors by L: misstatement on extent of changes from prior draft ($$$$M loss); jurisdictional filing error ($100K loss, §547 Bank’y Code avoidable preference)

5. Problem 7-1 The Lawyer as Client p. 209 ·What issues must be resolved to predict success of LM action? ­What liability regime? (C.N., Comparative or modified comparative negligence? Comparative fault?) ·­What impact that Cortez “knew or should have known” that his malprac. defense L d/n raise “complete defense”? s/ actual knowledge? ·Is sophistication of Cortez, as L in LM action, relevant in assessing comparative fault? (“reasonable care under the circumstances”?)

6. 2. Avoidable Consequences & Failure to Mitigate pp. 209-13 Mitigation principle: recovery reduced by losses that could have been avoided by exercise of reasonable care after the breach Borley Storage & Transfer v. Whitted (Neb. 2006) Facts: Installment contract to sell business included both perfected security interest (lapsed after 5 years) and personal liability of buyers. B’s defaulted; in bankruptcy junior lienholder prevailed b/c no timely filing of continuation statement) Holding: affirmed defense verdict; no tr. ct. error (B’s personally liable on promissory note; S’s failure to mitigate; admission of financial statements showing B’s ability to pay judgment)

7. Borley Storage & Transfer, Inc. v. Whitted When did L/Cl relationship end? Whose responsibility was it to address need for filing of continuation statement before end of 5 yrs? – Significance of payments extending over 10 yrs? – If C informed before closing of sale, does L have duty to remind former C as 5 yr deadline approached? – Preventive: termination letter from L w/ clear notice Why did S’s NOT seek to enforce B’s personal liability on promissory note?

8. Other Mitigation Issues Possibility of appeal of loss below in underlying matter? (not if futile gesture) Settle vs. appeal of underlying matter? (settlement d/n preclude malpractice claim; reasonable to settle?) Maj.: d/n reduce malpractice claim by amount of % fee π would have paid to L in underlying matter, had it been successful

9. Problem 7-2 The Flawed Trust Joint estate plan (A&B Trusts). Drafting error precluded widow Claire from accessing Trust B (life estate, remainder interests) Mitigation principle & possible reformation: Time frame: 6 months after Chase died? Vs. later, when C replaced L with Newly? LM burden of proof on failure to mitigate? Relevant evidence? Malpractice prevention lessons at time of drafting? Loss prevention lessons when realize mistake?

10. B. Unlawful Conduct Defense 1. In General p. 215 Rstmt of Torts (2d, 1979) §889: one is not barred from recovery for an interference with his legally protected interests merely because at the time of the interference he was committing a tort or a crime. [Rejects so-called “Outlaw Rule”] Barker v. Kallash (NY 1984): recovery barred if P injury is 1) direct result 2) of knowing participation 3) in a serious criminal act 4) involving prohibited (not merely regulated) conduct.

11. Equitable defense: in pari delicto & unclean hands Mosier v. Callister, Nebeker & McCullough PC, 546 F.3d 1271 (10 th Cir. 2008)(Ponzi scheme left many victims; wrongdoer’s bankruptcy trustee sued law firm & attorneys who facilitated; doctrine barred recovery because of client’s fraud or misconduct) Actions of corp. officers & directors imputed to corporation. See also, Kirschner v. KPMG, et al., 590 F.3d 186 (2d Cir. 2009)

12. In pari delicto Evaluate whether wrongdoing primarily benefitted or harmed the corp. Is there argument that corp. wrongdoer was alter ego of corp. or were there other uninvolved decision makers who could have prevented? Imputed knowledge of wrongdoing to corp. (cts split on adverse int. exception) Public policy ramifications of using to bar claim? Stay tuned….

13. B. Unlawful Conduct Defense 1.Recovery of unpaid fees may be barred by state law on Unauthorized Practice of Law (UPL) a.N.B. Lawyer/firm action to collect unpaid fee often prompts LM counterclaim. i.Birbrower (CA 1994) BROADLY interpreted UPL (NY L’s who participated in arbitration engaged in UPL; barred from recovering unpaid fees). ii.Caused shockwaves throughout U.S., prompting nationwide reforms. See ABA RPC 5.3 (multijurisdictional practice) iii.Globalization of LP: pending Ethics 20:20 considering international crossborder practices & UPL

14. Problem 7-3 Client Fraud on Investors p. 221 (a)LM defense arguments that C’s unlawful conduct bars recovery? -Does any state law (statutory or common law) bar recovery on facts? E.g., Saks v. Sawtelle (Tex. App.—San Antonio 1994) p. 215 **See, Heyman v. Gable Gotwals, et al., 994 P.2d 92 (Okla. Civ. App. 1999) cert. den’d (as matter of law, clients’ fraud independent of alleged negligence in underlying transaction barred their malpractice claim) -Is C’s conduct criminal under securities law (fed. or state?) -Policy: should unlawful conduct rule extend to cases where C engaged in civil fraud (not crime)? - Did L recommend or actively participate in fraudulent conduct serving basis for C’s liability to investors?

15. Problem 7-3 (cont’d) (b) Impact of C’s settlement of underlying c.l. fraud claim w/ investors? Pp. 212-13, on mitigation Duty to appeal rather than settle? Likelihood of success? Hewitt v. Allen (Nev. 2002)(not if appeal would be futile gesture; failure to appeal as affirmative Defense, BOP on D L; likelihood of success Q of law for ct) American Reliable Ins. Co. v. Navratil (5 th Cir. 2006)(no per se bar from settlement)

16. Problem 7-3 (cont’d) (c) Importance of whether C’s LM complaint alleges L recommended or participated in underlying fraudulent conduct on which jury verdict based? - in pari delicto? Were C & L equally at fault? -Cf. Rstmt LGL §51(2), Vanguard Production v. Martin (10 th Cir. 1990)(under Okla. Law, L risks liability to non-client investors who foreseeably rely on L’s opinion letter). Q: does L’s risk of liability to nonclients affect L’s LM liability to C?

17. 2. Exoneration or Innocence Reqt in Criminal Defense LM pp. 216-18 Caanan v. Barte (Kan. 2003) follows strong Maj. Rule: successful postconviction relief as prerequisite to recovery; some juris. also require showing of actual innocence. Rstmt LGL §53 Cmt. d. rejects need for actual innocence. – Policy justifications: equitable; practical difficulties re causation & damages; judicial economy; chilling effect on defense counsel (defensive lawyering) Stat. of limitations: – One track: first set aside conviction, then file LM – Two track: simultaneously pursue postconviction relief & LM · Min. View does not require exoneration (Ala., Ind., Mich., N.M., Oh., N.J.) ·Criticisms, basis for current challenges to exoneration rule?

18. Inroads on Exoneration or Innocence Requirement Drollinger v. Mallon (Oregon S.Ct. 9/1/11) (not applicable to malpractice claim v. lawyers handling state post-conviction petitions; took $, did little & withdrew at 11 th hour; π dropped PCR petitions rather than go pro se; sued lawyers) Held, exoneration requirement n/a when alleged negligence is in post-conviction proceedings.

19. Inroads on Exoneration or Innocence Requirement Marrero v. Feintuch (N.J. Super. 1/25/11) (π’s robbery conviction reversed on appeal b/c trial ct errors, then sued defense counsel for alleged negligence at trial) Ct interpreted N.J. S.Ct. precedent (s. of l. starts when exonerated) to find π needn’t prove actual innocence as prerequisite to LM claim, BUT LM Δs entitled to depose to find evidence of guilt, to show no breach of duty, or that any negligence was not proximate cause of conviction.

20. C. Malpractice Statutes of Limitations 1.Matter of state substantive law. Time bar depends on nature of claim. See, e.g., 12 O.S. § 95: ·action on written K: 5 years ·action on unwritten K, or statutory liability o/than forfeiture or penalty: 3 years ·most tort actions: 2 years after accrual (but fraud d/n accrue until discovery) ·libel, slander, assault, batter or malicious prosecution: 1 year N.B. Must research caselaw interpretations of statute

21. C. Statutes of Limitations 1. In General pp. 221-23 Accrual: C/a accrues and s. of l. begins to run when litigant first could have maintained action to successful conclusion (i.e., fact of injury becomes certain). Distinction between occurrence & discovery. (Maj. View) See, Marshall v. Fenton, Fenton, Smith, et al., 899 P.2d 621 (OK. 1995)(same); Stephens v. GMC, 905 P.2d 797 (Ok. 1995)(inj. complete after final appeal of underlying case); Smith v. Layton, 170 P.3d 1046 (Ok. Civ. App. 1046 2007)(date of settlement & release in underlying action)

22. C. Statutes of Limitations 3. Tolling pp. 225-36 Discovery Rule: When did client know or reasonably should have known/been aware of facts sufficient to put reasonable person on notice of injury? Humphreys v. Argabrite (6 th Cir. 2006)(1 yr. s. of l. began to run when divorce granted)

23. C. Statutes of Limitations 3. Tolling: Recent Cases Reverse trial court dismissal for failure to state claim as time-barred, where complaint d/n not reveal when π, as reasonably prudent person, was on notice of potentially actionable injury. Joyce v. Armstrong Teasdale, LLP, 635 F.3d 364 (8 th Cir. 3/29/11) Or reversal of tr. ct summary jdgmt where genuine issues mat’l fact re when π shd have known of inj., per state’s discovery rule. Knopick v. Connelly, 639 F.3d 600 (3d Cir. 4/13/11)

24. C. Statutes of Limitations 3. Tolling: Recent Cases Cf., Wing v. Lorton, M.D., ___P.3d___, 2011 WL 1878353, 2011 OK 42 (5/15/11)(medical malpractice, OK discovery rule recognizes that sometimes injury manifested after occurrence of wrongful act or omission; s. of l. starts to run when π knew/shd have known, thru exercise of rsnble diligence, sufficient information which, if pursued, would lead to true condition of [injury caused by alleged malpractice]).

25. C. Statutes of Limitations 2. Tolling b.Continuous Representation Rule (to soften harsh effects of occurrence rule) i.DeLeo v. Nusbaum (Ct. 2003)(tolled if P shows 1) continued representation on same matter AND 2) either P d/n know of facts > alleged LM or L could still mitigate harm) ii.General relationship v. specific matters (courts vary; reasonable C expectations?)

26. C. Statutes of Limitations 2. Tolling pp. 233-36 b.Continuous Representation Rule: hidden danger of attempting mitigation: lawyer’s ongoing efforts to cure may trigger continuous representation rule, extend running of limitations period. c.Fraudulent concealment: where P presents some evidence of “positive acts of fraud that were furtively planned & secretly executed, & statements concealed or perpetrated in a manner that concealed itself.” i. (e.g., cut & paste court date-stamp onto document never filed; L engaged in cover-up). Subj. to discipline + LM claim + tolling.

27. Ranier v. Stuart & Freida, 887 P.2d 339 (Ok. Civ. App. 1994)(matter of 1 st impression, applying continuous representation rule; under particular facts, C had no knowledge of any harm suffered until underlying judgment dismissing on s. of l. grounds was affirmed on appeal; 2 year limitations period then began to run) (D. D.C. 2008)(long representation from creation of off-shore trusts through extended litigation about validity) C. Statutes of Limitations 2. Tolling

28. Cline v. Geary, Case No. 105,430 (Ok. Civ. App. 2008), cert. granted, after oral arguments, ~ 11/1/10, dismissed as improvidently granted) Facts: Underlying claim voluntarily dismissed w/o prejudice 10/12/99; 12 O.S. 2001, §100 allowed 1 year to re-file. Change in counsel; Geary retained 9/8/2000, re-filed suit 10/13/2000 (1 day late). Tr. Ct. dismissed 2/4/03, Ok. S.Ct. denied cert., mandate issued 2/23/04. LM filed 4/22/05. C. Statutes of Limitations 2. Tolling

29. Cline v. Geary (cont’d) Civ. App.: S. of L. began to run when C 1 st knew, or should have known, it had been damaged by L’s actions (3/21/03). LM filed 4/22/05 filed more than 2 years after that date, and is time barred. No basis to toll running of limitations period when C KNEW tr. ct dismissed underlying claim. Takeaway: open issue, Okla. S.Ct. perhaps awaiting “right case” to consider breadth of continuous representation rule.

30. D. Non-Assignability of Legal Malpractice Claims pp. 236-38 Strong majority of state cts find LM claims non-assignable. – Risk: Client/Δ (maybe judgment proof, or other reason to “rollover”) in underlying matter wd assign LM claim to π. Create L/C conflict of interest L, as LM Δ has right to reveal otherwise protected confidences in self-defense, and former C (assignor) has lost all control to limit disclosures. – Contra, Kommavongsa dissent: unduly insulates lawyers from assigned claims

31. Prob. 7-6 A Deal With one of Defendants p. 239 Suggested π strategy? Evaluate?

32. E. Joint Liability & Reimbursement pp. 239-44 If joint & several liability: joint tortfeasors can be sued & held liable for same harm, π can collect all from one (deep pocket), who then can seek contribution from others. Traditionally, under agency theory, employer is vicariously liable under respondeat superior for negligence of one acting w/in scope of employment. General partnership law: each partner has joint & several liability for debts & claims against firm.

33. 2011 Oklahoma Tort Reform (applicable to actions accruing on or after Nov. 1, 2011) 23 O.S. 2001 Section 15. A.In any civil action based on fault and not arising out of contract, the liability for damages caused by two or more persons shall be several only and a joint tortfeasor shall be liable only for the amount of damages allocated to that tortfeasor. (n/a to actions brought by or on behalf of the state) Ch. 8: consider implications for LLPs, LLCs, traditional partnership law. Constitutional challenge?

34. G. Immunities & Privileges pp. 247-49 Public Defenders Harris v. Champion, 51 F.3d 901, 908 (10 th Cir. 1998)(held, as state agency, OIDS entitled to 11 th Am. Immunity on damage claims) McDonald v. Langley (E.D. Ok. 2009), 2009 WL 884569 Ct-appointed lawyers not state actors for purposes of §1983, but may risk liability for conspiracy w/ state actors to deprive crim. Δ of C’l rts (rare). 2 yr s. of l. runs from date of sentencing (infer no exoneration reqt?)

35. G. Immunities & Privileges pp. 247-49 Prosecutors: Absolute immunity for core prosecutorial functions; other activities: only qualified immunity

36. Challenges to Prosecutors’ Qualified Immunity McGhee v. Pottawattamie County, Iowa, 547 F.3d 922 (8th Cir. 2008), cert. granted (Apr. 20, 2009); cert. dismissed (Jan. 4, 2010)(U.S. S.Ct. No. 08-1065)(several states contributed to huge settlement) Connick v. Thompson, 131 S.Ct. 1350 (March 29, 2011)(5-4)Thomas op. for maj.: trial ct erred in not dismissing on summary judgment; as matter of law π could not prove DA deliberately indifferent to need for more or different Brady training absent showing of similar pattern of violations.

37. G. Immunities & Privileges pp. 247-49 Prosecutors: challenges to qualified immunity Schneyder v. Smith (3d Cir. 7/29/11)(allowing suit to go forward; state prosecutor not entitled to claim immunity from §1983 claim brought by material witness detained 7 weeks after case in which she was to testify was continued)

38. Prosecutors: challenges to qualified immunity Paris Lapriest Powell v. Robert Bradley Miller, in official capacity and individually, State of Oklahoma, Oklahoma County & [law firm], Civ.-2010-01294-D, W.D. Okla., DiGuisti (mo. to dismiss pending) §1893 Malicious Pros’n, Unreliable & Fraud’t Investigatory Techniques, Procurement of Unreliable & Fabricated Ev., Suppression of Exculpatory Ev., Wrongful Conviction & Imprisonment; II Negligence/wrongful imprisonment; III OK Govt’l Tort claim (malicious pros’n & negl.) [IV & V omitted here]

39. Future possibilities? h/c already granted; ruling on “actual innocence” requirement to sue prosecutor & state? Wrongful prosecution, incarceration, death penalty sentence? Stay tuned.