Kappes v. Rhodes

547 P.3d 298

2024 WY 43

Patricia KAPPES, Individually and as Personal Representative of the Estate of Lula M. Tanner, Appellant (Plaintiff/Counter-Defendant),

v.Diana RHODES and Rhodes Law Firm, LLC, Appellees (Defendants/Counter-Plaintiffs).

S-23-0146

Supreme Court of Wyoming.

April 22, 2024

W.R.A.P.11 Certified Questions from the District Court of Laramie County, The Honorable Thomas T.C. Campbell, Judge

Representing Appellant: William R. Fix, Fix Law Office, Kealakekua, Hawaii.

Representing Appellees: Anna Reeves Olson, Long Reimer Winegar, LLP, Casper, Wyoming.

Before FOX, C.J., and KAUTZ, BOOMGAARDEN, GRAY, and FENN, JJ.^*

KAUTZ, Justice.

[¶1] In legal malpractice cases, the client claims an attorney’s negligence caused her damages. In some cases, like this one, the client alleges her damages are the loss of a legal action against a defendant (hereinafter referred to as the "underlying action"). In such cases, the client must show a "case within a case," that is, that she would have obtained a favorable judgment in the underlying action but for the attorney’s negligence. The First Judicial District Court in Laramie County, Wyoming, certified four questions to this Court concerning what role, if any, the collectibility of the judgment in the underlying action plays in legal malpractice cases in Wyoming. We conclude the collectibility of the judgment is an essential part of the causation/damages element of a legal malpractice action which, like all elements of a civil cause of action, the client has the burden to prove by a preponderance of the evidence.

CERTIFIED QUESTIONS

[¶2] We agreed to answer the following questions:

1. Is the issue of collect[i]bility ("Collectibility Doctrine") o[f] a judgment relevant for a jury to consider in a legal malpractice case in Wyoming? That is, is collectib[i]lity a recognizable and proper element of damages in legal malpractice cases in Wyoming?

2. If [the answer to the first question is] yes, which party bears the burden of pro[ving] the underlying judgment would have been collectible?

3. If the defendant bears the ultimate burden of proof as to collect[i]bility, must it be pled as an affirmative defense?

4. If recognized, is the Collectibility Doctrine available as a defense to an attorney who has admitted liability?

FACTS

[¶3] Although the certified questions present questions of law, we provide a brief background of the facts for context. We take the facts primarily from the district court’s certification order which, in turn, took the facts largely from our previous decision in this matter concerning an unrelated issue. See Kappes v. Rhodes, 2022 WY 82, 512 P.3d 31 (Wyo. 2022).

[¶4] Lula M. Tanner, age 90, resided at Deseret Health and Rehab at Rock Springs, LLC (Deseret). Deseret provided health care services. On January 30, 2015, Ms. Tanner began taking a new medication prescribed by her primary care physician. Her condition worsened and, about a week later, on February 5, 2015, an ambulance was called to take Ms. Tanner to the hospital. Ms. Tanner died a few hours later in the hospital’s emergency department. In January 2016, Ms. Tanner’s daughter, Patricia Kappes, contacted Diana Rhodes at the Diana Rhodes Law Firm, LLC, for a legal opinion concerning whether she had any legal recourse for her mother’s death against any of her mother’s health care providers. Ms. Rhodes agreed to "investigate" the matter. On February 9, 2017, Ms. Kappes called Ms. Rhodes for an update and noted her concern about the statute of limitations, which she believed was three years. Ms. Rhodes stated they had two years from Ms. Tanner’s death on February 15, 2015, to file suit. Ms. Kappes corrected Ms. Rhodes, stating Ms. Tanner died on February 5, 2015. Thereafter, Ms. Rhodes discovered she had mis-calendared the end of the limitations period as February 15, 2017, rather than February 5, 2017.

[¶5] Ms. Kappes retained new counsel and successfully petitioned the probate court to be named as the personal representative of her mother’s estate. She then filed a legal malpractice complaint against Ms. Rhodes and her law firm (hereinafter collectively referred to as Ms. Rhodes) on behalf of herself and as personal representative of her mother’s estate. She alleged Ms. Rhodes was negligent by failing to timely file an application with the Wyoming Medical Review Panel and a wrongful death complaint against Ms. Tanner’s healthcare providers on behalf of Ms. Tanner’s estate. She claimed she was entitled to "any and all damages resulting from the wrongful death of [Ms.] Tanner which could and should have been recovered by [Ms. Rhodes] on behalf of [Ms.] Kappes, the Estate of Lula M. Tanner, as well as each and every heir of [Ms.] Tanner." In her answer, Ms. Rhodes admitted she had failed to timely file an application with the Medical Review Panel and a wrongful death complaint, but claimed Ms. Kappes "will be unable to establish the case-within-a-case standard required for professional malpractice actions."

[¶6] Ms. Rhodes filed a motion for summary judgment. Relevant here, she argued that to succeed on her legal malpractice claim, Ms. Kappes had to show that had Ms. Rhodes timely filed a wrongful death complaint, Ms. Kappes would have received a Judgment in her favor, and the judgment would have been collectible. According to Ms. Rhodes, Ms. Kappes could not show any judgment she obtained against Deseret would have been collectible because Deseret’s parent company abandoned its nursing homes, including Deseret, in May 2015; Deseret was administratively dissolved in Wyoming on March 10, 2016; and Deseret’s insurance policy, which only covered claims made during the policy’s term, was cancelled on April 27, 2015. Ms. Rhodes also relied on the opinion of her legal expert, who opined that based on his experience litigating against Deseret, it was not reasonably probable that even if Ms. Rhodes had timely filed suit against Deseret and obtained a favorable judgment, the judgment would have been collectible. Similarly, with respect to the paramedics who transported Ms. Tanner to the hospital on the day of her death, Ms. Rhodes argued Ms. Kappes failed to provide any expert testimony that had Ms. Rhodes timely filed suit against them, any favorable judgment obtained would have been collectible.

[¶7] Ms. Kappes opposed summary judgment, claiming Wyoming law did not require her to prove any judgment she would have obtained against Ms. Tanner’s medical providers in the underlying action would have been collectible. Even if collectibility was relevant in a legal malpractice case, Ms. Kappes argued it was an affirmative defense which had to be pled and proved by Ms. Rhodes. Ms. Kappes followed up her response with a motion in limine to preclude Ms. Rhodes or any of her trial witnesses from mentioning or referring to the collectibility of the underlying judgment because collectibility was not an element of a legal malpractice claim in Wyoming. She again claimed that if collectibility was relevant, it was an affirmative defense which Ms, Rhodes failed to plead in her answer and argued Ms. Rhodes’ admission of liability precluded her from raising the collectibility issue.

[¶8] The district court ultimately issued an order certifying the four questions above to this Court pursuant to Rule 11.01 of the Wyoming Rules of Appellate Procedure, which allows us to answer questions of law that "may be determinative of the cause then pending in the certifying court … and concerning which it appears there is no controlling precedent in the decisions of the supreme court." We agreed to answer the certified questions and the parties briefed them.

DISCUSSION

[¶9] This Court has not had an occasion to address what role, if any, the Collectibility Doctrine plays in legal malpractice actions in Wyoming. However, other jurisdictions have addressed the issue. We begin our discussion with a review of the decisions from these jurisdictions. We will then review our legal malpractice jurisprudence and answer the certified questions.

Collectibility Doctrine—Other Jurisdictions

[¶10] With one exception, the jurisdictions which have addressed the applicability of the Collectibility Doctrine in legal malpractice cases have determined the collectibility of the judgment in the underlying action is a relevant consideration. See, e.g., Power Constructors, Inc. v. Taylor & Hintze, 960 P.2d 20, 31-32 (Alaska 1998); DiPalma v. Seldman, 27 Cal.App.4th 1499, 33 Cal.Rptr.2d 219, 222-23 (1994); LeHouillier v. Gallegos, 434 P.3d 156, 160 (Colo. 2019); Smith v. Haden, 868 F.Supp. 1, 2 (D.D.C. 1994); McDow v. Dixon, 138 Ga.App. 338, 226 S.E.2d 145, 147 (1976); Klump v. Duffus, 71 F.3d 1368, 1374 (7th Cir. 1995) (applying Illinois law); Clary v. Lite Machines Corp., 850 N.E.2d 423, 439 (Ind. Ct. App. 2006); Whiteaker v. State, 382 N.W.2d 112, 114-15 (Iowa 1986); Jernigan v. Giard, 398 Mass. 721, 500 N.E.2d 806, 807 (1986); Jourdain v. Dineen, 527 A.2d 1304, 1306 (Me. 1987); Teodorescu v. Bushnell, Gage, Reizen & Byington, 201 Mich.App. 260, 506 N.W.2d 275, 278 (1993); Rorrer v. Cooke, 313 N.C. 338, 329 S.E.2d 355, 369 (1985); Eno v. Watkins, 229 Neb. 855, 429 N.W.2d 371, 372-73 (1988); Carbone v. Tierney, 151 N.H. 521, 864 A.2d 308, 317-18 (2004); Lindenman v. Kreitzer, 7 A.D.3d 30, 775 N.Y.S.2d 4, 8 (N.Y. 2004); Paterek v. Petersen & Ibold, 118 Ohio St.3d 503, 890 N.E.2d 316, 320-21 (2008); Kituskie v. Corbman, 552 Pa. 275, 714 A.2d 1027, 1030 (1998); Haberer v. Rice, 511 N.W.2d 279, 285 (S.D. 1994); Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Rsch. Corp., 299 S.W.3d 106, 112 (Tex. 2009); Smith v. McLaughlin, 289 Va. 241, 769 S.E.2d 7, 17-18 (2015); Schmidt v. Coogan, 181 Wash.2d 661, 335 P.3d 424, 427-28 (2014). The primary rationale provided by these courts for why the collectibility of the underlying judgment is relevant in a legal malpractice action is that limiting a client to the amount that is collectible accurately reflects what...