Badgley Mullins Turner, Pllc App./x-resp. v. Leslie Spencer & Tammy S., Blakey, Resp./x-app. , 432 P.3d 821 ( 2018 )

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IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON ta >'Um
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LESLIE BLAKEY SPENCER and TAMMY ) No. 76835-2-1
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S, BLAKEY ) Cfl
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) DIVISION ONE .r =•ic
Respondents/Cross Appellants, )
) UNPUBLISHED OPINION
v. )
)
BADGLEY MULLINS TURNER,PLLC and )
DUNCAN C. TURNER )
)
Appellants/Cross Respondents. )
) FILED: November 13, 2018
ANDRUS, J. — Leslie Blakey Spencer and Tammy S. Blakey sued their
former attorney, Duncan Turner, and his firm, Badgley Mullins Turner, PLLC,1 for
legal malpractice, breach of fiduciary duty, and a violation of Washington's
Consumer Protection Act. These claims arose out of a 2012 lawsuit and
subsequent appeal in which Leslie and Tammy sought to prevent the sale of
commercial property they owned with their siblings. Blakey v. Blakey, No.
71036-2-1 (Wash. Ct. App. Mar. 30,2015)(unpublished).2
I For clarity, Leslie and Tammy are referred to by their first names or as the sisters,*
while Turner and his firm are referred to as'Turner.'
2 httry//www courts.wa cloWooinionsiodf/710362.011.
No. 76835-2-1/2
Turner appeals from an adverse jury verdict, raising four main issues on
appeal. First, he contends the trial court, through erroneous summary judgment
rulings and evidentiary decisions, relieved the sisters of their burden to prove that
without Turner's negligence, the sisters would have won the underlying case.
Second, Turner argues that this court's unpublished opinion in the Blakey v.
Blakey appeal should not have been admitted in the malpractice trial. Third,
Turner challenges the propriety of the damages jury instruction. Finally, Turner
argues his motion for a new trial should have been granted based on the sisters'
counsel's misconduct.
Leslie and Tammy filed a cross appeal, raising two main issues. They
argue the trial court erred in allowing Turner to assert the affirmative defense of
contributory negligence. They also argue that the trial court applied an incorrect
legal standard in ruling on their breach of fiduciary duty claim and denying their
request for disgorgement of legal fees paid to Turner. We affirm.
FACTS
In late 2011 and early 2012,Turner represented Leslie and Tammy in their
attempt to buy out their siblings' interests in a property they co-owned and to
prevent the sale of the property to a third party.
Pursuant to a co-tenancy agreement (CTA), the four siblings—Leslie,
Tammy, Greg, and Glenda—owned equal shares of property located on the
Duwamish River on a site the Environmental Protection Agency had designated
as a contaminated Superfund site (Snopac Property). A fish processing
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No. 76835-2-1/3
company, SnoPac Products, Inc., also co-owned by the siblings, had operated on
the property for years.
The siblings have a lengthy history of litigation. They initially sued each
other to determine the value of SnoPac Products, Inc. This dispute resulted in
the entry of a monetary judgment in favor of Leslie and Tammy against SnoPac
Products, Inc.3
Leslie and Tammy then raised concerns about Greg's use of the Snopac
Property. In 2011, Greg and Glenda told the sisters they wanted to sell the
Snopac Property to Manson Construction Co.(Manson), the adjacent landowner.
Manson asked the siblings for permission to conduct an environmental
assessment of the property. Leslie and Tammy objected, but Greg and Glenda
gave Manson permission to conduct the study and park their vehicles on the
Snopac Property, despite the sisters' objection.
Leslie and Tammy initiated a lawsuit, claiming that Greg and Glenda's
management decisions violated the CTA. They alleged Greg and Glenda's
conduct constituted a "default" under Section 12 of the CTA, giving the sisters the
right to purchase Greg and Glenda's interest in the Snopac Property at a steeply
discounted price.
After filing suit, Leslie and Tammy fired their first attorney and retained
Turner. The day Turner began representing Leslie and Tammy, Manson
delivered its formal offer to purchase the Snopac Property. Manson offered $1
million payable as "[alll cash at closing with no financing contingency." Manson
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No. 76835-2-1/4
also offered an environmental liability indemnity initially capped at $1.5 million,
which it later made unlimited (the Indemnification Match). Greg and Glenda
contended that Leslie and Tammy could purchase their interests in the property
under Section 13 of the CTA4 only if they could match Manson's offer. Because
they each owned a 25 percent interest, the sisters needed $500,000 to buy out
Greg and Glenda's interest(the Cash Match).
The parties filed cross motions for summary judgment before then-Judge
Mary Yu. Leslie and Tammy claimed that because Greg and Glenda breached
the CTA, the sisters should be allowed to purchase the property under the default
provision, Section 12. Greg and Glenda sought dismissal of Leslie and Tammy's
claim for specific performance under Section 12 of the CTA and asked the court
to allow them to sell to Manson unless Leslie and Tammy could mirror Manson's
offer under Section 13 of the CTA.
On Friday, February 24, 2012, Judge Yu denied Leslie and Tammy's
motion and granted Greg and Glenda's, authorizing Greg and Glenda "to close
the proposed sale to Manson ... unless Leslie and Tammy elect to match the
offer and proceed to provide proof of actual ability to do so as one would be
required to do in any other bona fide offer." That same day, Greg and Glenda's
attorney, James Fowler, sent Turner a letter indicating that Greg and Glenda
would sign off on Manson's offer early on Monday, February 27, 2012, unless
3 Snopac Prods.. Inc. v. Spencer, noted at 169 Wn. App. 1010(2012).
This section provided that `the price to be paid to each Acceptor shall be equivalent In
amount and method of payment...[and] [alny such purchase of the Acceptors' Undivided
Interests by the Rejectors shall be upon the same terms and conditions.' (emphasis added).
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No. 76835-2-1/5
Leslie and Tammy provided adequate proof of their ability to match by Sunday,
February 26,2012.
Turner and his associate scrambled over the weekend to compile a list of
Leslie's and Tammy's assets. On the morning of February 27, 2012, Fowler told
Turner that he deemed Leslie's and Tammy's listed assets as inadequate to
match Manson's offer. To resolve the funding dispute, the parties went back
before Judge Yu on February 28, 2012. Manson's offer was set to expire that
same day.
The legal malpractice dispute centers on the evidence Turner submitted to
Judge Yu to establish his clients' ability to mirror Manson's purchase offer.
Turner represented that Leslie and Tammy had the ability to purchase the
Snopac Property and to mirror Manson's indemnification agreement word-for-
word. Turner prepared Exhibit A, a summary of Leslie's and Tammy's assets, to
explain that the sisters had sufficient assets available for the Cash Match and the
Indemnification Match. Exhibit A listed two conditionally approved bank loans
totaling $500,000 and—as an alternative—another $355,138.09 from brokerage
and retirement accounts belonging to Leslie's significant other, Paul Neir. Turner
estimated the net post-tax value of Neir's accounts to be at least $250,000. The
document also listed various other assets totaling over $2.4 million for the sisters
to use to meet the Indemnification Match.
Neir had signed a declaration, prepared by Turner, indicating his
willingness to pledge his assets to cover Leslie's portion of the purchase price.
Turner provided a copy of the declaration to Fowler, but he did not file the
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No. 76835-2-1/6
declaration with the court or provide a copy to Judge Yu. Instead, he included a
statement in Leslie's declaration to the effect that Neir was willing to pledge his
assets to help Leslie complete the purchase. Because Fowler had a copy of the
Neir declaration, he did not challenge the admissibility of Leslie's statement; he
understood that any evidentiary objection would be futile because Turner would
simply file the Neir declaration if he raised an ER 801 objection.
Judge Yu ruled that Leslie and Tammy's offer was not a mirror offer. She
entered an order on February 28, 2012, authorizing Greg and Glenda to close
the sale with Manson. In early March 2012, Leslie and Tammy terminated their
relationship with Turner.
On January 28, 2015, Leslie and Tammy filed this lawsuit, alleging legal
malpractice, breach of fiduciary duty, and a violation of Washington's Consumer
Protection Act.5
Two months later, this court issued its unpublished opinion in the sisters'
appeal of the real estate lawsuit. The court affirmed Judge Vu's decision,
concluding that Leslie's and Tammy's declarations demonstrated that they
intended to fund the purchase with a combination of loan funds and personal
assets if they failed to secure sufficient financing. Blakey, No. 71036-2-1, slip op.
at 15. The court held the proffered financing was conditional and, thus, not
equivalent to Manson's cash offer. Id. The court also held that the sisters had
5 The trial court dismissed the Consumer Protection Act claim on summary Judgment.
That decision is not challenged on appeal.
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No. 76835-2-I/7
insufficient liquid assets available to match Manson's purchase price. Id. at 16.
It noted
[a]lthough Leslie and Tammy offered bank records establishing that
Neir's accounts held the amounts claimed, they presented no
affidavit or other admissible evidence in support of Neir's
willingness to pledge that money toward the purchase of the
property. Because Leslie's statement in her declaration that he
was "willing and able" to do so is inadmissible hearsay, it was
properly not considered on summary judgment. ER 801, 802;
Dunlap v. Wayne 105 Wn.2d 529, 535, 716 P.2d 842(1986). The
admissible evidence on summary judgment established only that
Leslie and Tammy had $387,996.83 in their combined accounts,
which fell short of the $500,000 cash they needed to match
Manson's offer.
Because there are no disputed facts regarding Leslie and
Tammy's inability to timely match Manson's offer to purchase,
Gregory and Glenda were entitled to summary judgment decreeing
that Leslie and Tammy failed to match the offer and authorizing
Gregory and Glenda to close the sale.
it The court did not reach the issue of whether Leslie and Tammy "matched the
indemnity portion of the offer [or whether Manson's] promise to indemnify was
illusory." Id. at 16 n.6.
On summary judgment in the legal malpractice action, Leslie and Tammy
claimed they had identified to Turner more assets than he had included in Exhibit
A, and they were unaware he had not filed Neir's declaration until this court
rejected their appeal in the real estate lawsuit. They claimed Turner breached
the applicable standard of care by failing to make a record of all their assets to
demonstrate their ability to match Manson's offer. They argued, based on the
appellate decision, that had Turner filed Neir's declaration pledging his brokerage
and retirement funds for Leslie's use, the outcome of the appeal would have
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No. 76835-2-1/8
been different because they would have presented admissible evidence they had
sufficient cash to match that portion of Manson's offer. They further maintained
Turner negligently prepared Exhibit A by making it appear that they planned to
match Manson's offer using only conditionally approved loans, when they
specifically told Turner they could come up with cash, if they needed to do so.
Leslie and Tammy also pointed to Turner's failure to list another $275,000 in
retirement funds Tammy had identified to Turner ahead of the hearing before
Judge Yu, as well as an additional $146,000 in Microsoft stock and assets in a
401(k) account that Neir indicated by e-mail he could make available if needed.°
Turner filed a cross motion, arguing that he provided all the information he
had regarding the sisters' assets to Judge Yu and opposing counsel during the
February 28, 2012 hearing. He argued Judge Vu's decision was based less on
the total amount of assets the sisters held and more on the type of assets,
namely contingent loans, on which Leslie and Tammy relied. Turner also argued
he did not breach the standard of care regarding the indemnification portion of
Manson's offer. He explicitly argued at the summary judgment hearing that the
Indemnification Match was not an issue for the trial court to consider.
The trial court denied the sisters' motion for summary judgment and
granted Turner's motion in part. It significantly narrowed the legal malpractice
claims by finding no genuine issues of material fact as to Turners representation,
6 This claim was based on the fact that during the weekend when Turner was compiling
Information on the sisters' assets, Leslie and Tammy disclosed these assets to Turner and asked
if they should Include them In the materials presented to Judge Yu. Turner did not include these
assets In his list of assets.
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No. 76835-2-1/9
except as to one issue—whether the failure to file Neir's declaration was
professional malpractice.
In the sisters' motion for reconsideration, they argued the trial court had
not addressed their claim that Turner had breached the standard of care in
presenting the evidence related to the Indemnification Match. In addition, they
maintained the trial court had not addressed Turner's failure to include Tammy's
retirement plans and Neir's Microsoft stock and 401(k) assets in Exhibit A.
The trial court rejected the first argument, but ruled that it would "also
allow as genuine issues of material fact whether [Turner's] failure to include
Tammy Blakey's other retirement plans and Paul Neir's Microsoft shares and
Avtech 401 K plan constituted professional negligence? It specifically stated that
there were no other genuine issues of material fact that the jury would hear.
The parties interpreted the trial court's order as a dismissal of the sisters'
legal malpractice claim relating to the Indemnification Match. They also
interpreted the ruling to mean that evidence regarding the sisters' ability or
inability to meet the Indemnification Match was Irrelevant. During a hearing on
pretrial motions, Leslie and Tammy stated that, as a result of the summary
judgment rulings, the "issues regarding indemnity" were "off the table," which
would shorten the trial. Turner did not challenge this statement. The trial court
granted the sisters' motion in limine to exclude evidence that Manson had
obtained environmental liability insurance coverage, without opposition by
Turner, finding the issue moot. Similarly, the court granted Turner's motion in
limine to exclude evidence of the sisters' ability to post an indemnification bond.
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No. 76835-2-1/10
This ruling was based on Turner's argument that the "underlying trial court's
order found that plaintiffs failed to match the cash portion of the offer because of
the financial contingencies involved in their offer and not because of a bonding
issue. Thus, evidence and testimony regarding the bonding issue are moot and
irrelevant in this legal malpractice litigation? Leslie and Tammy agreed the issue
was moot.
The parties agreed to bifurcate the trial and have the trial court decide the
breach of fiduciary duty claim. The jury found that Turner's failure to file the Weir
declaration, failure to present evidence of Tammy's retirement plans, and failure
to present evidence of Neir's Microsoft shares and Avtech 401(k) plan constituted
professional negligence. It further found that these acts were proximate causes
of damage to Leslie and Tammy. The jury found damages of $1,588,323.56 and
allocated 80 percent fault to Turner and 20 percent fault to Leslie and Tammy.
Following a post-verdict bench trial, the trial court concluded Turner did not
breach his fiduciary duty to Leslie and Tammy. Both parties appeal.
ANALYSIS
1.
Turner contends the trial court's summary judgment rulings and pretrial
evidentiary rulings relieved Leslie and Tammy of the requirement of proving "the
case-within-the-case?
A. Burden of Proof in a Case-Within-A-Case
To establish a claim for legal malpractice, a plaintiff must prove the
following elements: (1) The existence of an attorney-client
relationship which gives rise to a duty of care on the part of the
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No. 76835-2-1/11
attorney to the client; (2)an act or omission by the attorney in
breach of the duty of care; (3)damage to the client; and
(4) proximate causation between the attorney's breach of the duty
and the damage incurred.
Hizev V. Carpenter, 119 Wn.2d 251, 260-61, 830 P.2d 646 (1992). When an
attorney makes an error during litigation, the plaintiff must prove "the trial-within-
the-trial." Aubin v. Barton, 123 Wn. App. 592, 608, 98 P.3d 126(2004). The first
step is to determine whether the client's case was lost or compromised by the
attorney's alleged negligence. Shepard Ambulance. Inc. v. Helsel!. Fetterman,
Martin, Todd & Hokanson, 95 Wn. App. 231, 235, 974 P.2d 1275 (1999). The
second question is whether the client would have fared better "but for the
attorney's mishandling of the claim. Id. at 236. Accordingly, a plaintiff in such a
malpractice suit must produce evidence to support each element of the
underlying case. See Schmidt v. Coogan, 162 Wn.2d 488, 492, 173 P.3d 273(2007). In this case, Leslie and Tammy would have to show their ability to meet
both the Cash Match and the Indemnification Match to mirror Manson's offer.
Generally, if the error occurs during trial, the causation issue is relatively
straightforward, and the trier of fact tries the action the client claims was
mishandled and decides whether the client would have prevailed but for the
mishandling. Daugert v. Pappas, 104 Wn.2d 254, 257, 704 P.2d 600 (1985).
There is no direct precedent, however, for how to evaluate causation when the
error allegedly occurred at the summary judgment stage of a proceeding.7 In
7 The parties dispute whether Judge Vu's decision that Leslie and Tammy did not match
Manson's purchase offer was made in the course of a summary judgment proceeding. It Is clear
from Blakey v. Blakey however, that the parties presented the Issue to Judge Yu on summary
No. 76835-2-1/12
Damen, our Supreme Court evaluated how a claimant would establish
malpractice when the claim arose from the attorney's failure to file a motion for
discretionary review. Id. at 255. The Supreme Court held that when the question
of the client's likelihood of prevailing on appeal requires an analysis of the law
and the rules of appellate procedure, a judge, and not a jury, should make the
cause in fact decision. Id. at 258-59. By analogy, it seems logical that when
evaluating whether a lawyer has presented sufficient admissible evidence on
summary judgment to warrant specific performance at either the trial court or
appellate level, the cause in fact determination is most appropriately decided by
a judge.
Turner argues that even if the sisters could have met the Cash Match,
they still would have lost the Snopac Property because they would not have
convinced a reasonable trial court that they could match Manson's unlimited
environmental indemnification. He contends the trial court erred in not requiring
Leslie and Tammy to prove the latter proposition to the jury as a part of their
proof of proximate cause. Leslie and Tammy counter that assuming Turner is
correct and they would have lost their bid to purchase the property because they
could not meet the Indemnification Match, losing the Snopac Property was the
result of Turners malpractice. With the dismissal of any malpractice claim
associated with the Indemnification Match, they argue, Turner was properly
foreclosed from making this proximate cause argument.
Judgment, and this court reviewed her decision under the de novo summary judgment standard.
No. 71036-2-1, slip op. at 10.
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No. 76835-2-1/13
This court struggles to discern where Turner framed the issue on appeal
for the trial court to address in the first instance. At the beginning of trial, his
counsel asserted it was important for the jury to learn about the Indemnification
Match so it could "understand the whole story," but counsel then agreed there
was no dispute that the sisters met that portion of Manson's offer. Turners
counsel also suggested at one point that the indemnification issue was relevant
to proximate cause but then never articulated why this was so. It is
understandable, given counsel's argument below, why the trial court did not
directly rule one way or the other on the issue before.
Nevertheless, the trial court excluded evidence of the sisters' ability to
match Manson's indemnification, necessarily focusing the legal malpractice
lawsuit on only the Cash Match. Although we generally review the trial court's
evidentiary rulings for an abuse of discretion, Hollins v. Zbaraschuk, 200 Wn.
App. 578, 582, 402 P.3d 907(2017), when, as here, the rulings are predicated on
a ruling as to the applicable law, the standard of review is de novo, State v.
DeVincentis, 150 Wn.2d 11, 17,74 P.3d 119(2003).
The question, properly framed, is whether the sisters had admissible
evidence of sufficient assets to convince a reasonable court on summary
judgment that they had matched Manson's indemnification offer.8 We conclude
8 Turner argues that Judge Yu appeared so focused on the financial backing Manson had
that the sisters simply could never convince her they had the ability to provide as much security
from environmental liability as Manson could. But the purpose of the 'trial-within-a-friar In a legal
malpractice action is not to recreate what a particular judge would have done. Brust v. Newton
70 Wn. App. 286, 293, 852 P.2d 1092 (1993). Rather, the court's task Is to determine what a
reasonable judge would have done, Id., or In the case of an appeal, what the reasonable
appellate court would have done, Dauaert, 104 Wn.2d at 258.
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No. 76835-2-1/14
as a matter of law that they did. Greg and Glenda asked Leslie and Tammy to
agree to indemnify them for up to $1,695,000, the projected environmental
cleanup costs. It is undisputed the sisters demonstrated they possessed over
$2.4 million in assets, not counting the Snopac Property itself or the judgment
from the SnoPac Products, Inc. litigation, to support any environmental
indemnification.
Our conclusion is supported by Turner's concession that the evidence of
the sisters' ability to meet the Indemnification Match was immaterial. In Turner's
motion for summary judgment, he argued Leslie and Tammy lost the Snopac
Property—not because they could not meet the indemnification demand of their
siblings—but because they made a strategic decision to fund the purchase with
conditionally approved bank-financed loans or with funds locked in brokerage
and retirement accounts. Turner explicitly argued that the Indemnification Match
was not an issue in the case:
[Leslie and Tammy] had to match the Manson offer, and the
Manson offer for them to match would have been their
half.... which is $500,000 cash, without any financial contingences,
and then ... Indemnification, which really, at this point... is not the
issue.
So really, the question boils down to is did [Turner] meet
[the] standard of care in presenting the evidence that demonstrates
to the court what the plaintiffs had to offer in terms of matching that
[cash]offer.
(emphasis added).
In opposing the sisters' motion for reconsideration, Turner again stated the
Indemnification Match "was not the issue in the case," and that the only issue
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No. 76835-2-1/15
remaining was whether Turner met the standard of care in presenting evidence
of the sisters' ability to meet the Cash Match. He pointed out the court had
addressed the Indemnification Match by determining on the record that "plaintiffs'
failure to match the Manson offer was not based on the indemnification portion,
but the cash portion of the Manson offer." (emphasis added).
Turner subsequently conceded during trial that the sisters had, in fact,
presented evidence of their financial ability to meet the indemnification:
Judge Vu's concern that this indemnity was not going to be — it
wasn't that they didn't come in with showing that they had that
much assets jointly. Clearly they did. There's no question about it.
They showed that they had 2.4 million dollars of assets.
(emphasis added). Based on this record, we conclude that a reasonable court
would have determined the sisters had matched Manson's indemnity offer.
B. Evidentiary Rulings
We also find no abuse of discretion in the trial court's evidentiary rulings
excluding evidence of the Indemnification Match. Turner argued below that the
evidence relating to the Indemnification Match was immaterial because of events
that occurred in the real estate lawsuit and appeal after Turners representation
of the sisters ended:
The court of appeals in its unpublished decision stated in
footnote 6: "Because Leslie and Tammy failed to match the cash
portion of the purchase offer, we do not consider their claims that
they matched the indemnity portion of the offer and that the
promise to indemnify was illusory. Accordingly, we do not address
the parties' cross-motions for additional evidence on review, which
ask us to consider evidence not before the trial court regarding
the purported value of the indemnity."
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No. 76835-2-I/16
Plaintiffs continued to litigate their underlying case with
replacement counsel after termination of defendants. They secured
replacement counsel and submitted appellate briefs concerning
their right to "match" the Manson offer. It is undisputed that
defendants submitted plaintiffs' signed environmental indemnity
agreements for the courtris consideration. It is also undisputed
that defendants submitted plaintiffs' financial statements for
covering the ... estimate[d] range of cleanup of the property. It is
also undisputed that defendant Turner presented argument
concerning plaintiffs' assets for covering the environmental
indemnity. What happened after defendants were terminated by
plaintiffs concerning the value of the indemnity agreement Is not
material for purposes of plaintiffs' present summary judgment
motion.
Turner further argued that the sisters' ability to obtain an indemnification
bond was similarly immaterial because "Manson's offer did not have a bonding
component to it and the underlying iudgment arose and fell on the $500,000 cash
match portion of the offer." (emphasis added). The sisters replied, "So be it,"
and reiterated their argument that Turner breached the applicable standard of
care by failing to show their ability to meet the Cash Match. If the underlying
judgment rose and fell on the sisters' ability to meet the Cash Match, there was
no need to present evidence relating to the Indemnification Match. By Turners
own concession, the underlying case was narrowed to a single issue: whether
the sisters could have matched Manson's cash offer. Accordingly, we conclude
the trial court did not abuse its discretion in concluding that evidence of the
sisters' ability to fund the Indemnification Match was irrelevant.
II.
Next, Turner argues the trial court erred in admitting excerpts of the Court
of Appeals decision in Blakey v. Blakey. He contends the trial court erred in
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No. 76835-2-1/17
ruling that the decision was "law of the case," and in overruling his hearsay and
ER 403 objections. We disagree.
A. Law of the Case
The law of the case doctrine "involves the effect of a previous ruling within
one action on a similar issue of law raised subsequently within the same action?
Lodis v. Corbis Holdings, Inc. 192 Wn. App. 30, 54, 366 P.3d 1246 (2015)
(internal quotations omitted) review denied, 185 Wn.2d 1038, 377 P.3d 744(2016). It is intended to "afford a measure of finality to litigated issues." Id. at 55
(internal quotations omitted).
Turner is correct that the law of the case doctrine does not apply. The
Blakey v. Blakey holding was binding between the Blakey siblings; in a case-
within-a-case context, however, the prior ruling is not legally binding on Turner.
But the trial court did not hold that Blakey v. Blakey was law of the case and
never instructed the jury to consider it as such. Nor did the trial court rule that
the Court of Appeals decision was legally binding on Turner. Rather, the trial
court allowed Robert Adolph, Turner's standard of care expert, to testify that the
decision was incorrectly decided.9
Turner had the opportunity to present evidence and argue to the jury that
the Court of Appeals decision simply got the facts wrong. Turners expert also
9 Although Turner maintains the Court of Appeals decision was Incorrectly decided
because the February 28, 2012 hearing was not a summary judgment hearing, he does not ask
this court to revisit the Blakey V. Blakey decision. Therefore, we decline to readdress our
previous opinion. See RAP 2.5(c)(2)("The appellate court may at the Instance of a party review
the propriety of an earlier decision of the appellate court In the same case and, where justice
would best be served, decide the case on the basis of the appellate court's opinion of the law at
the time of the later review.").
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No. 76835-2-1/18
testified that this court was wrong in ruling that Leslie's declaration contained
inadmissible hearsay. The trial court did not conclude that the Court of Appeals
ruling was law of the case or binding on Turner. Thus, we reject this argument.
B. Hearsay
Citing to In re the Detention of Pouncy, Turner also argues that the Court
of Appeals decision is inadmissible hearsay. Hearsay is an out-of-court oral or
written assertion offered in evidence to prove the truth of the matter asserted.
ER 801. Trial courts' evidentiary rulings are reviewed for abuse of discretion.
Hernandez v. Stender, 182 Wn. App. 52, 58, 358 P.3d 1169 (2014). A trial court
abuses its discretion when its decision is manifestly unreasonable or is based on
untenable grounds or reasons. Chose v. Commercial Driver Servs.. Inc., 189
Wn. App. 776, 787, 358 P.3d 464 (2015). A decision is manifestly unreasonable
if the trial court takes a view that no reasonable person would take. Id.In Pouncy, a sexually violent predator commitment case, the trial court
permitted the State to introduce evidence of a trial judge's findings from a
different proceeding in which Pouncy's expert had testified. In re the Det. of
Pouncy, 144 Wn. App. 609, 613-16, 184 P.3d 651 (2008). Those findings stated
that Pouncy's expert's methodologies were not generally accepted in the mental
health professional community. Id. at 616. This court concluded that the trial
court erred in allowing the State to introduce judicial findings about a defense
expert from a different, unrelated trial. Id. at 622-26. Our Supreme Court
affirmed the Court of Appeals decision, holding that the findings should not have
been admitted because they "were out-of-court statements used to prove the
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No. 76835-2-1/19
truth of the matter asserted—that [the expert's] methodologies lacked
acceptance by his peers." In re the Det. of Pouncv, 168 Wn.2d 382, 393, 229
P.3d 678(2010).
But judicial decisions are not hearsay if not offered to prove the truth of the
matter asserted. In a legal malpractice trial, the court may admit the transcript
from the underlying case because the evidence is not being offered for the truth
of the matter asserted but, rather, to demonstrate what evidence was presented
In the underlying case proceedings. See Walker v. Bangs, 92 Wn.2d 854, 861-
62, 601 P.2d 1279 (1979) (transcript of original trial is the most trustworthy
evidence of events that transpired in the underlying lawsuit). A claimant must
establish that her case was lost or compromised by the attorney's alleged
malpractice. Shepard Ambulance, 95 Wn. App. at 235. Thus, the trial court
correctly ruled that somehow the jury needed to be informed about what actually
transpired in the Blakey v. Blakey lawsuit and appea1.1°
Although the trial court did not explicitly explain the basis for overruling
Turners hearsay objection, this court can affirm an evidentiary ruling on any
ground supported by the record. State v. Powell, 126 Wn.2d 244, 259, 893 P.2d
615 (1995). The record supports the admission of the Blakey v. Blakey decision
as a record of what happened in the real estate appeal, consistent with Walker.
As a result, the trial court did not abuse its discretion in admitting the Court of
Appeals decision over Turner's hearsay objection.
10 Turner argues that only the trial court proceedings were relevant We disagree. The
sisters lost their case ultimately on appeal. Why they lost the appeal was Just as relevant to the
malpractice claim as were Judge Vu's rulings on summary judgment.
-19-
No. 76835-2-1/20
C. Undue Prejudice
Turner contends that the excerpt of the Court of Appeals opinion, even if
relevant, was unduly prejudicial under ER 403. Relevant evidence may be
excluded if its probative value is substantially outweighed by the danger of unfair
prejudice. Lodis 192 Wn.App. at 48. If the evidence is "undeniably probative of
a central issue in the case," there is a slim chance the danger of unfair prejudice
will substantially outweigh the probative value. it (quoting Carson v. Fine 123
Wn.2d 206, 224,867 P.2d 610(1994)). "Because of the trial court's considerable
discretion in administering ER 403, reversible error is found only in the
exceptional circumstance of a manifest abuse of discretion." it(quoting Carson,
123 Wn.2d at 226).
In Walker, the Supreme Court rejected a similar ER 403 challenge. 92
Wn.2d at 862. While recognizing that a trial court has the discretion to exclude
this evidence, the Court concluded that "[b]ecause the alleged negligence of[the
plaintiffs] counsel in the conduct of the ... trial is the very issue litigated in the
malpractice action, the circumstances do not appear compelling for the exercise
of such discretion? it
We similarly find no abuse of discretion here. The trial court reasoned that
at least a portion of the unpublished opinion should be admitted as an exhibit
because Judge Vu's two summary judgment February 2012 rulings were
Included as exhibits. In addition, the trial court considered that admitting an
excerpt of the decision downplayed its importance, and if it was presented
differently than Judge Vu's rulings, the jury might think it should place more
- 20 -
No. 76835-2-1/21
emphasis on it. Given the importance and relevance of all three rulings, this
decision is not manifestly unreasonable.
Despite Turner's arguments to the contrary, this court's opinion was not
offered by Leslie and Tammy solely for its prejudicial effect. Rather, it showed
why Leslie and Tammy lost the real estate appeal—because of trial counsel's
failure to introduce admissible evidence, a necessary fact for the case-within-the-
case proof in this legal malpractice case.
Any prejudice to Turner was ameliorated by the fact that the trial court
allowed Turner to argue that the Court of Appeals decision was factually
Inaccurate and wrongly decided. The trial court allowed Turner's standard of
care expert, Robert Adolph, to testify that Judge Yu had considered Paul Neir's
assets even without having Neir's declaration in hand and that the February 28,
2012 hearing was not a summary judgment hearing subject to the evidence
standards cited by the Court of Appeals. Fowler, Greg and Glenda's attorney,
and Turner both testified that, despite the Court of Appeals opinion, Judge Yu did
consider all of Leslie's declaration—even those portions the Court of Appeals
held were inadmissible hearsay.
Lastly, ER 105 provides that "[w]hen evidence which is admissible ...for
one purpose but not admissible ...for another purpose is admitted, the court,
upon request, shall restrict the evidence to its proper scope and instruct the jury
accordingly."1 Generally, it Is the objecting party's burden to request such an
II See also 6 WASHINGTON PaAcTicE: WASHINGTON PATTERN JURY INSTRUCTIONS: CIVIL
1.06 (6th ed. 2017)(VVPIC).
- 21 -
No. 76835-2-1/22
Instruction. Turner could have requested an ER 105 instruction advising the jury
that the Court of Appeals opinion could be considered only to show the outcome
of the real estate lawsuit and not for the truth of anything stated in the opinion;
this type of instruction would have corrected any prejudice to Turner. See State
v. Barber, 38 Wn. App. 758, 771, 689 P.2d 1099 (1984) ("Failure to request a
limiting instruction waives any error that an instruction could have corrected.").
Because Turner did not propose a limiting instruction under ER 105, he did not
preserve this issue for appeal. Lamborn v. Phillips Pac. Chem. Co., 89 Wn.2d
701, 707,575 P.2d 215(1978).
Therefore, we conclude the trial court did not abuse its discretion in
admitting as an exhibit excerpts from the Court of Appeals decision in Blakey_v.
Blakey.
Next, Turner argues the jury instruction for damages was improper and
awarded a double recovery to the sisters. This court reviews jury Instructions de
novo for errors of law. Anfinson v. FedEx Ground Package Sys., Inc., 174 Wn.2d
851, 860, 281 P.3d 289 (2012). Jury instructions (1)cannot be misleading,
(2) must allow counsel to argue their theory of the case, and (3) must properly
inform the jury of the applicable law, when read as a whole. Id. The instruction
is erroneous if it does not contain all of these elements. Id. Even if an instruction
is erroneous, it is only reversible if it prejudices a party. Id. "Prejudice is
presumed if the instruction contains a clear misstatement of law; prejudice must
be demonstrated if the instruction is merely misleading." Id.-22 -
No. 76835-2-1/23
In addition, trial court decisions addressing the proper components of
damage awards are reviewed de novo. Shoemake v. Ferrer, 143 Wn. App. 819,
825, 182 P.3d 992 (2008), affd, 168 Wn.2d 193, 225 P.3d 990 (2010). "The
general rule is that the measure of damages for legal malpractice is the amount
of loss actually sustained as a proximate result of the attorney's conduct." Id.(quoting Matson v. Weidenkoof, 101 Wn. App. 472, 484, 3 P.3d 805 (2000)).
"The aim of any legal malpractice damage award must thus be to place
successful plaintiffs, as nearly as possible, in the position they would have
occupied had their attorneys capably and honestly represented them." it
Turner argues Jury Instruction 12, the damages instruction, was
misleading and a misstatement of the law. We disagree. Instruction 12 provided
that the jury should consider the following types of damages:
(1) the difference between the $500,000 Leslie Spencer and
Tammy Blakey would have been required to pay to acquire the
Snopac [P]roperty, and the amount that you determine would be
the lost appreciation of the Snopac [P]roperty if Duncan Turner had
not been negligent in handling the original case;
(2) the lost rental income that Leslie Spencer and Tammy Blakey
would have received from the Snopac [P]roperty if Duncan Turner
had not been negligent in handling the original case; and
(3) the reasonable attorney fees and costs Leslie Spencer and
Tammy Blakey Incurred by appealing Judge Vu's ruling ordering
the sale to Manson [of] the Snopac[P]roperty if Duncan Turner had
not been negligent in handling the original case.
Turner contends Leslie and Tammy recovered more than they were
entitled to because lost rental income is "innate to the value" of the property.
None of the cases on which Turner relies stands for this proposition. In McCurdv
v. Union Pac. R.R., the Supreme Court identified the proper measure of
-23-
No. 76835-2-1/24
damages for negligent damage to personal property. 68 Wn.2d 457, 467, 413
P.2d 617(1966). In that case, the plaintiffs private railroad car was damaged by
the railroad company. Id. at 460-61. The court held that the measure of
damages depends on whether the property is a total loss or just damaged and
not destroyed. Id. at 467. We do not find this case supportive of the proper
measure of damages in a malpractice case when the damages lost relate to the
lost opportunity to acquire a piece of real property.
Nor is Olympic Pipe Line Co. v. Thoenv applicable here. 124 Wn. APP.
381, 101 P.3d 430 (2004). That case involved the plaintiffs eminent domain
petition for a pipeline easement across the defendant's land. Id. at 384-87. The
court held there that the measure of damages in a condemnation action is the
diminution of fair market value of the property caused by the taking. Id. at 393.
The case does not address whether a plaintiff in a malpractice lawsuit can
recover both the lost appreciation of the real estate she was foreclosed from
purchasing and lost rental income she would have earned had she become the
owner of that property.
The measure of damages in a legal malpractice case is the amount of loss
actually sustained as a proximate result of the attorney's conduct. Shoemake,
143 Wn. App. at 828-29. As set out in Holmquist v. Kinq County, the right of
exclusive use of property is a property right separate and apart from ownership of
the land itself. 192 Wn. App. 551, 561-62, 368 P.3d 234 (2016). Washington
courts compensate the loss of this exclusive possession through an award of fair
and reasonable rent. Id. at 562-63. We have found no case in which a
-24 -
No. 76835-2-1/25
Washington court held that a claimant may not recover both lost appreciation and
lost rental income when that claimant lost both permanent ownership and loss of
the right to rent that property to third parties. Accordingly, we find no instructional
error.
IV.
Lastly, Turner contends his motion for a new trial based on the sisters'
counsel's misconduct—by attempting to inject testimony about the Court of
Appeals opinion before the court had admitted the evidence—should have been
granted.
CR 59(a)(2) provides that a verdict may be vacated and a new trial
granted if misconduct of the prevailing party materially affects the substantial
rights of the other party. We review a trial court's denial of a motion for a new
trial under CR 59(a)(2) for abuse of discretion. Aluminum Co. of Am. v. Aetna
Cas. & Sur. Co., 140 Wn.2d 517, 537,998 P.2d 856(2000). In reviewing the trial
court's decision, we consider whether "such a feeling of prejudice [has] been
engendered or located in the minds of the jury as to prevent a litigant from having
a fair trial." Id. (quoting Moore v. Smith, 89 Wn.2d 932, 942, 578 P.2d 26(1978)). The trial court is in the best position "to most effectively determine if
counsel's misconduct prejudiced a party's right to a fair trial." Miller v. Kenny,
180 Wn. App. 772, 815, 325 P.3d 278(2014).
A party seeking a new trial based on counsel's conduct must establish that
(1)the conduct was misconduct, (2)the misconduct was prejudicial, (3)the
misconduct was objected to at trial, and (4)the misconduct was not cured by the
-25-
No. 76835-2-1/26
trial court's instructions. Teter V. Deck, 174 Wn.2d 207, 226, 274 P.3d 336(2012). In Teter the Washington Supreme Court upheld then-Judge Gonzalez's
grant of a new trial based on counsel's misconduct. Id at 222. In that case,
defense counsel repeatedly violated the rules of evidence by trying to elicit
testimony about subjects the court ruled inadmissible or irrelevant and to put
exhibits before the jury that had not been admitted. Id. at 223. Defense counsel
also violated Judge Gonzalez's prohibition on speaking objections and two
orders limiting admissible evidence. Id. at 224.
In this case, the trial court found that at least some of the sisters' counsel's
conduct was misconduct because he elicited testimony about the Court of
Appeals decision before the trial court had admitted the exhibit. But the court
concluded the misconduct did not prejudice Turner. Leslie and Tammy's counsel
did ask some questions about the Court of Appeals decision that "were not
allowed pursuant to the court's rulings."12 Turner objected, however, and the trial
court sustained most of these objections. Counsel's misconduct did not rise to
the level found in Teter. We conclude the trial court did not abuse its discretion
in denying Turners motion for a new trial.
V.
Leslie and Tammy argue Turner should not have been allowed to present
evidence of and argue contributory negligence, an affirmative defense Turner did
12 The sisters claim the trial court's misconduct finding Is not supported by substantial
evidence. Based on the record before us, in which their counsel questioned witnesses about the
Court of Appeals opinion before the trial court had determined how it would be admitted, we
conclude the misconduct finding is supported by substantial evidence.
- 26 -
No. 76835-2-1/27
not plead. Alternatively, they argue the jury's verdict finding them contributorily
negligent is not supported by substantial evidence.13
A. Contributory Negligence
Leslie and Tammy claim that the trial court abused its discretion in
allowing Turner to present evidence of their contributory negligence because
Turner did not plead this affirmative defense in his answer and first gave notice of
his intent to present this defense in his proposed jury instructions, one week
before trial.
CR 8(c) requires parties to plead the affirmative defense of contributory
negligence. Our Supreme Court has recognized, however, that the requirement
is not absolute. Mahoney v. Tingley, 85 Wn.2d 95, 100, 529 P.2d 1068 (1975);
see also Henderson v. Tyrrell, 80 Wn. App. 592, 624, 910 P.2d 522 (1996).
"When issues not raised by the pleadings are tried by express or implied consent
of the parties, they shall be treated in all respects as if they had been raised in
the pleadings." CR 15(c); see also Bernsen v. Big Bend Elec. Coop.. Inc., 68
Wn. App. 427, 433-34, 842 P.2d 1047 (1993). We review a trial court's decision
to permit a party to amend pleadings to conform to evidence at trial under the
abuse of discretion standard. Micro Enhancement Intl Inc. v. Coopers &
Lybrand, LLP, 110 Wn.App. 412,433,40 P.3d 1206(2002).
We find no abuse of discretion here. Leslie and Tammy were on notice of
this defense, even though it was not pleaded. Turner argued on summary
13 Leslie and Tammy also maintain that contributory negligence Is not available as a
defense because Turner committed an intentional tort by deciding not to file Neir's declaration.
- 27 -
No. 76835-2-1/28
judgment that Leslie and Tammy had caused their own loss because of decisions
they made to rely on loans to fund the purchase. Turner also argued below that
whether the sisters had delayed unreasonably in seeking cash for the deal had
implicitly been tried by both parties. The sisters were prepared to address, and
did address, Turner's factual arguments at trial. The trial court's decision to
permit this affirmative defense was not unreasonable or untenable.
B. Substantial Evidence
Leslie and Tammy argue the jury's contributory fault finding is not
supported by substantial evidence. A jury's verdict may only be overturned
"when it is clearly unsupported by substantial evidence." Burnside v. Simpson
Paper Co. 123 Wn.2d 93, 1008, 864 P.2d 937(1994). [T]he reviewing court will
not substitute its judgment for that of the jury, so long as there was evidence
which, if believed, would support the verdict rendered." it at 108 (quoting State
v. O'Connell, 83 Wn.2d 797, 839, 523 P.2d 872(1974)).
Turner presented evidence that Leslie, a real estate agent, learned of
Manson's offer on December 1, 2011. Leslie understood she needed either cash
or an unconditional loan to be able to fund the purchase. She testified that she
and Tammy wanted to finance the Cash Match with loans because it would be
easier than liquidating stock. Tammy, like Leslie, testified that she preferred to
finance the offer with loans. Leslie did not apply for a loan until January 20,
2012; Tammy applied for her loan just 10 days earlier, on January 10, 2012.
This argument lacks any merit. Leslie and Tammy sued Turner for negligence. Contributory
negligence is available as an affirmative defense against any claim based on fault.
-28-
No. 76835-2-1/29
Leslie thought she could get the loan approved within 15 to 30 days, but neither
of the sisters' loans had been approved by the end of February 2012, when they
knew they needed to have cash on hand. As Turner argued at trial, this delay in
seeking loan funding contributed to the need for Turner, Leslie and Tammy to
scramble over the weekend of February 25-26, 2012 to document how the sisters
would fund the Cash Match. Based on this testimony, we conclude there was
substantial evidence for the jury to find that Leslie and Tammy were contributorily
negligent.
VI.
Finally, Leslie and Tammy ask this court to reverse the trial court's order
dismissing their breach of fiduciary duty claim. They based their claim on alleged
violations of several Rules of Professional Conduct (RPCs) and sought, as the
sole remedy, disgorgement of fees paid to Tumer.14
To prevail on their fiduciary duty claim, Leslie and Tammy had to prove
that Turner violated one or more RPCs. A finding of causation and damages Is
not required to support an order of disgorgement. See Eriks v. Denver, 118
Wn.2d 451, 462, 824 P.2d 1207 (1992). Whether an attorney's conduct violates
the RPCs is a question of law. Id. at 457-58. Similarly, whether an attorney has
breached his fiduciary duty to a client is a question law. Id. at 457; see also
14 As a preliminary matter, Leslie and Tammy claim the trial court erred by limiting the
breach of fiduciary duty claim to Turner's failure to file the Neir declaration. This limitation
appears to be based on an e-mail the sisters' counsel sent the trial court and Turner's counsel In
late 2016 or early 2017. The referenced e-mail, however, is not part of the Cleric's Papers.
Failure to designate relevant portions of the record precludes appellate review. Olmsted v
Mulder, 72 Wn. App. 169, 182-83, 863 P.2d 1355 (1993). Because the e-mail referenced at the
beginning of the fiduciary duty hearing, which purported to limit the hearing to that one issue, is
not part of the record on appeal, we cannot evaluate the merits of the sisters' assigned error.
-29-
No. 76835-2-1/30
Arden v. Forsberg & Umlaut P.S., 193 Wn. App. 731, 746, 373 P.3d 320 (2016).
As a result, we review the breach of fiduciary duty claim de novo. See Stone v.
Sw. Suburban Sewer Dist., 116 Wn. App. 434, 438, 65 P.3d 1230 (2003)
(questions of law are reviewed de novo).
Leslie and Tammy argue the trial court made findings of fact not supported
by substantial evidence, erred in applying the attorney judgment rule to a claim of
RPC violations, erred in finding Turner was not negligent In withholding the Neir
declaration, and abused its discretion in denying their request for disgorgement
of legal fees. We address each argument in turn.
A. Substantial Evidence
Leslie and Tammy assign error to two of the trial court's findings of fact
First, they claim substantial evidence does not support the finding that 10 no
time did Judge Yu exclude from consideration on grounds of hearsay (or any
other grounds)the statement In Leslie Spencer's declaration regarding Mr. Neir's
pledge." Second, they assign error to the court's finding that Turner's standard-
of-care expert opined that "RCW 6.15.020 prevents anyone from pledging an
Interest in a retirement account or an IRA or a pension as collateral for loans."
We review the trial court's findings of fact to determine if they are supported by
substantial evidence. Lang Pham v. Corbett, 187 Wn. App. 816, 825, 351 P.3d
214 (2015). Substantial evidence exists when there is a sufficient quantity of
evidence to persuade a fair-minded, rational person that a finding is true. Id.(quoting Heqwine V. Longview Fibre Co., 32 Wn. App 546, 555-56, 132 P.3d 789(2006)). Unchallenged findings of fact are accepted as true on appeal. Id.-30-
No. 76835-2-1/31
Both findings challenged by Leslie and Tammy are supported by
substantial evidence. Turner testified that Leslie's declaration, which was signed
and dated on February 28, 2012, included a statement that Neir was "willing to
and able to pledge his brokerage and retirement accounts, with a combined
value of $355,138.09" to secure the Snopac Property. He confirmed Leslie's
declaration was filed with the court, and, according to the February 28, 2012
order, Judge Yu reviewed Leslie's declaration. Turner further testified he
referenced Neir's "near liquid" assets during the February 28, 2012 hearing
before Judge Yu, and Greg and Glenda's attorney, Fowler, did not object to the
admissibility of any part of Leslie's declaration. The trial court had a transcript of
the hearing, as do we, and there is no evidentiary ruling by Judge Yu. Based on
this testimony, we conclude there is substantial evidence supporting the finding
that Judge Yu did not exclude the statement in Leslie's declaration regarding
Neir's funds.
Likewise, Adolph testified during the jury trial that "IRAs are not valid
collateral in the state of Washington. RCW 6.15.020 prevents anyone from
pledging an interest in a retirement account or an IRA or a pension as collateral
for loans." He clarified that a person could pledge the assets in these accounts,
but no creditor could foreclose on such collateral, and thus, "[n]o lender would
ever accept a piece of... collateral that you can't ever use." Adolph further
testified that because Neir's assets were held In retirement accounts, they would
have been inadequate and insufficient collateral for any bank loan Leslie sought
The record shows substantial evidence supporting the court's finding of fact
- 31 -
No. 76835-2-1/32
regarding Adolph's opinion about his understanding of the law as it relates to use
of retirement accounts as collateral for loans.
Because substantial evidence supports these two findings and the
remaining findings are not challenged, we rely on all of the trial court's findings of
fact to determine if Leslie and Tammy proved violations of RPC 1.1, 1.2, 1.4, 1.7,
and 1.8. In addition, because the written findings do not specifically address
Leslie and Tammy's conflict of interest or duty of loyalty and communication
allegations, we supplement the written findings with the trial court's oral ruling.
See Lawrence v. Lawrence, 105 Wn. App. 683, 686, 20 P.3d 972 (2001)
("Inadequate written findings may be supplemented by the trial court's oral
decision or statements In the record.").
B. Attorney Judgment Rule
Leslie and Tammy contend the trial court erred in applying the attorney
judgment rule to their breach of fiduciary duty claim. Washington courts
recognize the attorney judgment rule as an affirmative defense to a legal
malpractice claim. "Under the attorney judgment rule, the question is whether an
attorney's particular judgment decision is within the range of reasonable
alternatives or whether the attorney was negligent during the decision-making
process." Arden, 193 Wn.App. at 760.
No Washington court has decided whether or when the attorney judgment
rule may be invoked as a defense to an alleged RPC violation. We have
reviewed the briefing submitted by the parties and find it inadequate to address
on appeal. We decline to do so here. See State v. Thomas, 150 Wn.2d 821,
-32-
No. 76835-2-1/33
868-69, 83 P.3d 970(2004)(courts decline to review for inadequate argument in
briefs).
We conclude, however, that any error in applying the attorney judgment
rule is harmless, because the evidence does not demonstrate any breach of the
duty of loyalty or the conflict of Interest rules by Turner.
C. Alleged RPC Violations
Leslie and Tammy argue that Turner violated RPC 1.1, the duty to provide
competent representation, when he decided not to file Neir's declaration. Leslie
and Tammy contend that the jury concluded Turner was negligent in failing to file
the Neir declaration and, thus, the trial court abused its discretion in finding
otherwise. We disagree.
Generally, a trial court may not substitute its judgment for the jury's.
Teutscher v. Woodson 835 F.3d 936,944(2016)("[I]n a case where legal claims
are tried by a jury and equitable claims are tried by a judge, and those claims are
based on the same facts, the trial judge must follow the jury's implicit or explicit
factual determinations in deciding the equitable claims.")(internal quotations and
alteration omitted); Peralta v, State 191 Wn. App. 931, 950, 366 P.3d 45 (2015)
(when construing jury verdict, court must not substitute its judgment for that of
the jury), overruled on other wounds, 187 Wn.2d 888, 389 P.3d 596 (2017).
However, when several theories supporting a claim have been litigated and the
jury may have supported its verdict by finding in a plaintiffs favor on any one of
the theories, the trial court is free to Interpret the verdict in any manner supported
by the evidence. Teutscher, 835 F.3d at 952.
- 33 -
No. 76835-2-1/34
Before the jury, the sisters' standard-of-care expert, Chris Brain, testified
that Turner breached the standard of care in two ways. First, Brain opined
Turner erred in deciding the Neir declaration was not necessary to prove that his
clients' offer mirrored Manson's offer. Second, Brain testified Turner breached
the standard of care by not discussing his tax concerns with his clients before
deciding to withhold the declaration. He opined that this action denied the sisters
the opportunity to correct Turner's mistaken impression regarding the Neir
"pledge," or the ability to choose to assume any tax risks Turner foresaw. The
jury found that "the failure to file and serve the Paul Neir declaration" constituted
professional negligence. It was not asked to specify whether its verdict was
based on the first, second, or both theories advanced by Brain.
During the bench trial, Brain opined that Turner violated his ethical duties
to Leslie and Tammy by failing to discuss his tax concerns with them before
deciding to withhold the Neir declaration. He testified that Turner's conduct was
not reasonable because he made the call without advising his clients of the range
of alternatives available and the risks each alternative presented. The trial court
found:
5. The evidence shows Mr. Turner made a judgment
decision about the best way to handle the Paul Neir declaration in
light of the very limited time available in which to act, unanswered
questions, and tax liabilities, which included reduction of the IRA
amount pledged due to foreseeable tax penalties.
6. Given the totality of the circumstances, which
included a weekend rush to produce the requested proof, the court
finds that Mr. Turner's judgment was within the range of reasonable
-34-
No. 76835-2-1/35
alternatives, and not negligent and thus, there was no breach of
fiduciary duty by defendants.115]
The jury's verdict and the trial court's findings can be harmonized if the jury's
decision was based on Turners assessment of the need for this additional item
of evidence to prove the sisters could mirror Manson's offer, rather than on his
failure to consult his clients regarding the tax issues before deciding to withhold
the declaration. We will not reverse the trial court's findings under these
circumstances. Accordingly, we proceed to evaluate the sisters' claimed RPC
violations in light of this finding.
On appeal, Leslie and Tammy argue that Turner violated RPC 1.1, his
duty to provide competent representation, by concluding that filing Neir's
declaration would be a taxable event under federal tax laws. They argue that
"[n]o competent lawyer could reasonably believe such a proposition." But there
Is nothing in the record to support this argument. During the bench trial, Brain
refused to address whether Turners legal analysis of the adverse tax
consequences was correct:
And so therefore, the reasonable thing to do if you were
going to make that argument would have been to go to the client
and say, we have two alternatives here. One alternative is we can
try to use it in [Leslie's] declaration and get the evidence before the
court and there won't be any adverse consequences, because I'm
concerned about filing [Neirs]declaration.
Whether those concerns are legitimate or not I'm not going
to get into, but if that's what you are going to do, then you have a
15 The trial court labeled these findings as 'conclusions of law.rather than "findings of
fact' The label attached is Immaterial. Findings of fact that are erroneously called conclusions of
law shall be reviewed as findings of fact Willener v. Sweetinq, 107 Wn.2d 388, 394, 730 P.2d 45(1986).
-35-
No. 76835-2-1/36
duty to go to the client and say, these are your alternative courses
of action.
There is no evidence that Turners legal analysis was incorrect. While the
jury may have found Turner negligent in failing to discuss his misgivings about
Neir's declaration with his clients, the jury had no basis for concluding that Turner
negligently analyzed the potential adverse tax consequences of filing the
declaration. Neither the trial court nor this court is bound by the jury's negligence
finding as to this alleged RPC violation because the RPC 1.1 argument differs
from the standard of care evidence presented to the jury.
Moreover, Leslie and Tammy have not established that Turner violated
RPC 1.1 in his assessment of the tax consequences of Neir pledging his
retirement assets. Under Internal Revenue Code 26 U.S.C. § 72(e)(4)(A) and 26
U.S.C. § 408(e)(4), pledging an annuity or an IRA is equivalent to a withdrawal
from the annuity or IRA and subjects the amount of the pledge to the same tax
consequences as if it had been withdrawn. In re Cassell, 443 B.R. 200, 210
(Bankr. N.D. Ga. 2010), aff'd, 713 F.3d 81 (11th Cir. 2013). Turners legal
analysis appears supported by this case law. Although Leslie and Tammy argue
that the act of filing the declaration itself would not constitute a "pledge" and not
trigger tax consequences, they provide no support for this proposition. Thus,
they presented insufficient evidence to establish that Turner violated RPC 1.1.
Next, Leslie and Tammy argue that Turner violated RPC 1.4(a)(2) and (3)
by failing to consult them regarding his decision to withhold the Neir declaration.
RPC 1.4(a)(2) provides that a lawyer shall "reasonably consult with the client
- 36-
No. 76835-2-1/37
about the means by which the client's objectives are to be accomplished," while
RPC 1.4(a)(3) provides that a lawyer shall "keep the client reasonably Informed
about the status of the matter." But breaching the standard of care in
communicating litigation strategy to one's client is not the same as a violation of
RPC 1.4(a). As Comment 5 to RPC 1.4 states:
In litigation a lawyer should explain the general strategy and
prospects of success and ordinarily should consult the client on
tactics that are likely to result in significant expense or to injure or
coerce others. On the other hand, a lawyer ordinarily will not be
expected to describe trial or negotiation strategy in detail.
We see no conflict between the jury's special verdict finding of negligence
and the trial court's conclusion that Turner did not violate any RPC. There was
sufficient evidence that Turner reasonably consulted with Leslie and Tammy
about the preparations for the February 28, 2012 hearing and reasonably
informed them of the status of the matter. In light of the rush Turner was in to
compile and present evidence to the trial judge, Turner did not violate RPC
1.4(a)(2) or (3) by not discussing his reservations about the Neir declaration with
his clients before deciding not to file it.
Finally, Leslie and Tammy further contend that Turner violated RPC 1.2,
1.7, and 1.8 by making his decision based on possible tax risks to Neir, a non-
client, thereby breaching his duty of loyalty to Leslie and Tammy and creating a
conflict of interest between Neir and Turner's clients. However, Leslie and
Tammy must still establish that a breach of the duty of loyalty occurred or that a
conflict of interest existed. Whether circumstances demonstrate a breach of duty
of loyalty or create a conflict of interest under the ethical rules is a question of law
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No. 76835-2-1/38
reviewed de novo. State v. Regan, 143 Wn. App. 419, 428, 177 P.3d 783(2008); see also Arden, 193 Wn.App. at 743.
RPC 1.2(a) provides that "a lawyer shall abide by a client's decisions
concerning the objectives of representation." RPC 1.7 prohibits an attorney from
representing a current client if there is a conflict of interest with another client.
RPC 1.8(b) provides that a lawyer shall not use information relating to the
representation of a client to that client's disadvantage without that client's
informed consent.
The trial court made no express written findings on the alleged duty of
loyalty or conflict of interest claims. If no findings are entered as to a material
issue, it is deemed to have been found against the party having the burden of
proof. Pacesetter Real Estate, Inc. v. Fasules, 53 Wn. App. 463, 475, 767 P.2d
961 (1989). Additionally, a trial court's oral ruling may be used to complement
and explain written findings. Ferree v. Doric Co., 62 Wn.2d 561, 567, 383 P.2d
900 (1963). In the trial court's oral ruling, it acknowledged that its decision was
not based on the same negligence standard as considered by the jury. It found
that Turner's decision not to file the Neir declaration was based, not on a desire
to advance Neir's legal interests, but to avoid negative consequences to his own
clients. This finding supports the trial court's conclusion that Turner did not
violate any duty of loyalty owed to the sisters. The trial court also found Turner
did nothing to create a conflict of interest. We agree with this decision and,
therefore, affirm the trial court's determination that Turner did not violate RPC
1.2,1.7, or 1.8.
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No. 76835-2-1/39
D. Disooroement of Fees
A breach of ethical duties may warrant a disgorgement of attorney fees.
Eriks, 118 Wn.2d at 462. While attorney misconduct can be so egregious as to
constitute a complete defense to a claim for fees, not every act of misconduct will
justify such a serious penalty. Kelly v. Foster, 62 Wn. App. 150, 156, 813 P.2d
598 (1991). It is ultimately within the trial court's discretion to decide whether
such a remedy is necessary to discipline specific breaches of professional
responsibility and to deter future misconduct Id.; see also Eriks, 118 Wn.2d at
463. We review a trial court's decision to deny disgorgement of fees for abuse of
this discretion.
Based on our conclusion that Turner did not violate any of the RPCs
invoked by Leslie and Tammy, we conclude the trial court did not abuse its
discretion In denying the request for disgorgement of attorney fees.
We affirm.
WE CONCUR:
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