Butler v. Thomsen ex rel. Marital Cmty. Comprised of Randall Thomsen

TERENCE BUTLER, Respondent/Cross-Petitioner, v. RANDALL T. THOMSEN, individually and on behalf of themarital community comprised of RANDALL THOMSENand JANE DOE THOMSEN, and CALFO HARRIGAN LEYH & EAKES,LLP, a Washington Professional Limited Liability Partnership,f/k/a/ DANIELSON HARRIGAN LEYH & TOLLEFSON, LLP, Petitioners/Cross-Respondents.

No. 76536-1-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

December 31, 2018

UNPUBLISHED OPINION

DWYER, J. — Terence Butler sued his former attorney, Randall Thomsen, and his former attorney's firm, Calfo Harrigan Leyh & Eakes, LLP (collectively Thomsen), for legal malpractice. Following hearings on cross motions for summary judgment, the trial court ruled that Thomsen breached the standard of care as a matter of law, but declined to dismiss Thomsen's affirmative defense of third party fault or to rule that collateral estoppel barred certain of Butler's alleged theories of causation. We granted discretionary review and now reverse the trial court's rulings that Thomsen breached the standard of care and that collateral estoppel did not bar Butler's alleged theories of causation arising from breach of fiduciary duty and statutory wage claims.

I

In 2010, ImageSource, a document imaging company, had four equal shareholders: Shadrach White, Victor Zvirzdys, Terry Sutherland, and Terence Butler. Butler discovered that his co-owners had received substantially greater personal payments from the company than he had received. In 2011, the co-owners all agreed to "level out" Butler by having ImageSource pay him amounts to match the expenditures the company had made to the other owners. Butler agreed to wait to receive the payments until the company was performing well.

Shortly thereafter, White left the company and filed a lawsuit (White) against ImageSource and his three former co-owners. Butler, Sutherland, and Zvirzdys retained Thomsen to jointly represent them in defense of the White lawsuit. In mediation, the parties successfully reached an agreement to settle the lawsuit. They memorialized their settlement in a written CR 2A agreement. In pertinent part, this agreement stated that "Mr. White agrees to release all defendants from any claims that he may possess against them. Defendants agree to release Mr. White from any claims that they may possess against him."

White's attorney offered to draft a more detailed agreement that would "be consistent with the CR 2A, but include the more detailed language and items we did not include in the summary agreement." The final release and settlement agreement (White Release) stated:

In consideration of the promises set forth herein, the Parties agree to release one another, their spouses, their respective heirs,agents, attorneys, employees, directors, heirs, assigns and personal representatives from any and all charges, claims and actions, whether known or unknown, arising prior to the date of this Agreement and arising directly or indirectly out of the Lawsuit or their previous dealings.

Butler, Sutherland, White, and Zvirzdys all signed the White Release.

After the settlement of the White lawsuit. Butler believed that ImageSource was performing sufficiently well to commence paying him pursuant to the "level out" agreement he had reached with his co-owners. Sutherland and Zvirzdys objected. Butler hired an attorney, Mario Bianchi, who filed a lawsuit (Butler) against Sutherland, Zvirzdys, and ImageSource. In this suit, Butler demanded payment pursuant to the level out agreement and advanced several other claims, including breach of fiduciary duty and statutory wage claims.

Butler brought a motion seeking summary judgment against his co-owners on his breach of fiduciary duty and his statutory wage claims. In response, Sutherland and Zvirzdys argued that the trial court should grant summary judgment against Butler on his breach of fiduciary duty and statutory wage claims and should also dismiss all of Butler's claims that arose prior to the White lawsuit. According to Sutherland and Zvirzdys, Butler voluntarily released all such claims by signing the White Release.

In reply, Butler argued that Sutherland and Zvirzdys were misinterpreting the release and that the White Release did not release his claims against them. Butler contended that there was no consideration for the release of claims amongst Butler, Sutherland, Zvirzdys, and ImageSource in the White Release. However, Butler did not assert that Washington law, as explained in Berg v.Hudesman, 115 Wn.2d 657, 801 P.2d 222 (1990), permitted him to introduce extrinsic evidence of the intent of the signatories to the White Release.

The Butler court rejected Butler's arguments and granted partial summary judgment against him. The court granted summary judgment against Butler as to his breach of fiduciary duty and statutory wage claims and also held that Butler released any claims related to the "level out" agreement when he signed the White Release. Butler neither sought discretionary review of the rulings nor chose to litigate the case to final judgment and appeal the adverse rulings. Rather, 11 months later, he settled the case.

Butler then filed suit against Thomsen, claiming that he committed malpractice in reviewing and approving the White Release by failing to notice that its language released Butler's claims against Sutherland, Zvirzdys, and ImageSource.¹ In the trial court, Butler moved for summary judgment dismissal of various affirmative defenses raised by Thomsen, including third party fault,² and for summary judgment that Thomsen breached the standard of care as a matter of law when reviewing the White Release. Thomsen filed his own motion for summary judgment on the issue of causation, asserting that Butler should be collaterally estopped from relitigating his breach of fiduciary duty and statutory wage claims. Both parties provided declarations from experts in support of their motions and in opposition to those of their opponents.

The trial court granted partial summary judgment, holding that Thomsen breached the standard of care as a matter of law, but refused to strike Thomsen's affirmative defense of third party fault. The trial court denied Thomsen's motion for summary judgment based on collateral estoppel. We granted discretionary review.

II

Thomsen contends that the trial court erred by denying his motion for summary judgment on certain issues of causation. This is so, Thomsen asserts, because collateral estoppel barred Butler from relitigating his underlying breach of fiduciary duty and statutory wage claims from the Butler litigation. In response, Butler avers that application of the doctrine of collateral estoppel is inappropriate herein because there was no final judgment in the Butler litigation and because the application of the doctrine would work an injustice. We disagree.

We "review a summary judgment ruling de novo and consider the same evidence heard by the trial court, viewing that evidence in a light most favorable to the party responding to the summary judgment [motion]." Slack v. Luke, 192 Wn. App. 909, 915, 370 P.3d 49 (2016) (citing Lybbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000)). "A court may grant summary judgment if the pleadings, affidavits, and depositions establish that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Lybbert, 141 Wn.2d at 34. "A material fact is one that affects the outcome of the litigation." Owen v. Burlington N. & Santa Fe R.R., 153 Wn.2d 780, 789, 108 P.3d 1220 (2005). "While questions of fact typically are left to the trialprocess, they may be treated as a matter of law if 'reasonable minds could reach but one conclusion' from the facts." Slack, 192 Wn. App. at 916 (quoting Hartley v. State, 103 Wn.2d 768, 775, 698 P.2d 77 (1985)).

In a professional negligence action alleging legal malpractice, "the plaintiff must show (1) the existence of an attorney-client relationship that gives rise to a duty of care, (2) an act or omission by the attorney in breach of that duty, (3) damage to the client, and (4) proximate causation between the breach of duty and the damage incurred." Slack, 192 Wn. App. at 916 (citing Hizey v. Carpenter, 119 Wn.2d 251, 260-61, 830 P.2d 646 (1992)). "General principles of causation are no different in a legal malpractice action than in an ordinary negligence case." Halvorsen v. Ferguson, 46 Wn. App. 708, 719, 735 P.2d 675 (1986). Proximate cause is shown through proof that, but for the attorney's negligence, the plaintiff would have prevailed or at least achieved a better result. Halvorsen, 46 Wn. App. at 719.

The doctrine of collateral estoppel applies when the following four elements are met: "(1) identical issues; (2) a final judgment on the merits; (3) the party against whom the plea is asserted must have been a party to or in privity with a party to the prior adjudication; and (4) application of the doctrine must not work an injustice on the party against whom the doctrine is to be applied." Malland v. Dep't of Ret. Sys., 103 Wn.2d 484, 489, 694 P.2d 16 (1985). "Whether collateral estoppel applies to preclude relitigation of an issue is a question of law that we review de novo." LeMond v. Dep't of Licensing, 143 Wn.App. 797, 803, 180 P.3d 829 (2008) (citing State v. Vasquez, 109 Wn. App. 310, 314, 34 P.3d 1255 (2001)).

The finality required for a judgment to be appealed is not the same as the finality required for purposes of applying collateral estoppel. Cunningham v. State, 61 Wn. App. 562, 566, 811 P.2d 225 (1991). To determine whether a judgment is sufficiently final to invoke collateral estoppel, we consider whether the decision was adequately deliberated, whether it was firm rather than tentative, whether the parties were fully heard, whether the court supported its decision with a reasoned opinion, and whether the decision was subject to appeal or was reviewed on appeal. Cunningham, 61 Wn. App. at 567 (...