LaRoche v. Billbe, et al, No. 2:2013cv01913 - Document 30 (W.D. Wash. 2014)
Court Description: ORDER granting in part and denying in part 17 Motion for Partial Summary Judgment by Judge Thomas S. Zilly.(RS)
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1 2 3 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 4 5 CAROLE LAROCHE, 6 Plaintiff, 7 C13-1913 TSZ v. 8 ORDER TED D. BILLBE, et al., 9 Defendants. 10 THIS MATTER comes before the Court on defendants’ motion for partial 11 12 summary judgment, docket no. 17. Having reviewed all papers filed in support of, and in 1 13 opposition to, defendants’ motion, the Court enters the following order. 14 Background Plaintiff Carole LaRoche brings this action against her former attorney, Ted D. 15 16 Billbe, who represented her in dissolution proceedings against Alan Hoffman. Hoffman 17 and LaRoche were wed in August 2000; their marriage was dissolved in October 2010. 18 LaRoche alleges that Billbe’s legal services were deficient in several regards, including a 19 failure to assert that a prenuptial agreement between LaRoche and Hoffman had been 20 21 Plaintiff’s motion to strike, docket no. 21, Paragraphs 10, 13, & 14 of the Declaration of Ted D. Billbe, docket no. 18, is DENIED. Defendants’ motion to strike, docket no. 26, the Declaration of Emmelyn 22 Hart, docket no. 23, is also DENIED. The Court has considered the declarations to the extent appropriate. 1 23 ORDER - 1 1 rescinded by their conduct during the marriage. See Compl. at ¶¶ 4.1(A) & (C) (docket 2 no. 1). Defendants’ motion for partial summary judgment is focused solely on this 3 allegation concerning the prenuptial agreement. 4 The prenuptial agreement provided that, in the event of a dissolution, each party 5 would receive his or her separate property, neither party would be entitled to payment for 6 support or other maintenance, personal service earnings during the marriage would be 7 treated as community property, except that LaRoche could accumulate up to $75,000 of 8 her earnings in a separate property account, and Hoffman would make contributions to an 9 individual retirement account that would be community property awarded to LaRoche 10 upon dissolution. See In re Marriage of Hoffman, 2012 WL 1699455 at *1 (Wash. Ct. 11 App. May 14, 2012). During trial before the King County Superior Court, Billbe argued, 12 on behalf of LaRoche, that the prenuptial agreement was not enforceable. 13 Under Washington law, a prenuptial agreement is first tested for substantive 14 fairness, i.e., whether the agreement makes “fair and reasonable provision for the party 15 not seeking enforcement of the agreement.” In re Marriage of Matson, 107 Wn.2d 479, 16 482, 730 P.2d 668 (1986). If the prenuptial agreement is substantively fair, then the 17 analysis ends and the agreement is deemed enforceable. Id. If the agreement fails the 18 substantive inquiry, then it must be evaluated for procedural fairness, pursuant to which a 19 court must assess (i) whether full disclosure was made concerning the amount, character, 20 and value of the property involved, and (ii) whether the parties entered into the agreement 21 voluntarily, on independent advice, and with full knowledge of their rights. Id. at 483. In 22 the underlying action, the King County Superior Court concluded that the prenuptial 23 ORDER - 2 1 agreement at issue was both substantively and procedurally fair. Ex. 9 to Billbe Decl. 2 (docket no. 18-1 at 59). 3 The King County Superior Court entered judgment in favor of LaRoche in the 4 amount of $568,000, together with attorney fees in the amount of $70,000. Ex. 10 to 5 Billbe Decl. (docket no. 18-1 at 68). The award consisted of fifty percent (50%) of the 6 stipulated value of a personal residence (the “Trilogy” home), reimbursement in the 7 amount of $75,000 for the increase in value of a residence sold during the marriage (the 8 “Woodinville” house), and compensation in the amount of $5,500 for LaRoche’s labor in 9 preparing the Woodinville house for sale. Id. (docket no. 18-1 at 70-71). Hoffman 10 unsuccessfully appealed, contending that both the Trilogy home and Woodinville house 11 were his separate property. On cross-appeal, LaRoche was represented by a different 12 attorney and argued that the trial court erred in concluding that the prenuptial agreement 13 was enforceable, adding to the substantive and procedural challenges an argument that 14 the agreement had been rescinded by the postnuptial conduct of the parties. In affirming 15 the King County Superior Court’s judgment, the Washington State Court of Appeals 16 declined to address the rescission issue because it had been raised for the first time on 17 appeal. 2012 WL 1699455 at *3. 18 Discussion 19 A. Summary Judgment Standard 20 The Court shall grant summary judgment if no genuine issue of material fact exists 21 and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). 22 The moving party bears the initial burden of demonstrating the absence of a genuine issue 23 ORDER - 3 1 of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is material if 2 it might affect the outcome of the suit under the governing law. Anderson v. Liberty 3 Lobby, Inc., 477 U.S. 242, 248 (1986). To survive a motion for summary judgment, the 4 adverse party must present affirmative evidence, which “is to be believed” and from 5 which all “justifiable inferences” are to be favorably drawn. Id. at 255, 257. When the 6 record, however, taken as a whole, could not lead a rational trier of fact to find for the 7 non-moving party, summary judgment is warranted. See Celotex, 477 U.S. at 322. 8 B. Legal Malpractice 9 To establish a claim for legal malpractice, a plaintiff must prove the following four 10 elements: (i) the existence of an attorney-client relationship giving rise to a duty of care 11 on the part of the attorney toward the client; (ii) an act or omission by the attorney in 12 breach of such duty of care; (iii) damage to the client; and (iv) a causal link between the 13 attorney’s breach of duty and the damage incurred. E.g., Hizey v. Carpenter, 119 Wn.2d 14 251, 260-61, 830 P.2d 646 (1992). Washington courts apply an “attorney judgment rule,” 15 pursuant to which “mere errors in judgment or in trial tactics do not subject an attorney to 16 liability for legal malpractice.” Halvorsen v. Ferguson, 46 Wn. App. 708, 717, 735 P.2d 17 675 (1986); see Clark County Fire Dist. No. 5 v. Bullivant Houser Bailey P.C., --- Wn. 18 App. ---, 324 P.3d 743 (2014). The “attorney judgment rule” has particular relevance 19 when the alleged error involves an “uncertain, unsettled, or debatable proposition of 20 law.” Halvorsen, 46 Wn. App. at 717. 21 To combat the “attorney judgment rule,” a malpractice plaintiff must show either 22 (a) the attorney’s judgment was “not within the range of reasonable choices from the 23 ORDER - 4 1 perspective of a reasonable, careful and prudent attorney in Washington,” or (b) even if 2 the decision was within the range of reasonable choices, the attorney breached the 3 standard of care in making the decision. Clark County, 324 P.3d at 752-53. To establish 4 that the attorney’s judgment was outside the range of reasonable choices, the plaintiff 5 must do more than present opinions from experts who disagree with the decision; the 6 plaintiff must submit evidence that “no reasonable Washington attorney would have 7 made the same decision as the defendant attorney.” Id. at 752. If the plaintiff proffers 8 sufficient evidence to demonstrate a factual issue as to whether the judgment was within 9 the range of reasonable choices and/or was the product of negligence, then the matter 10 must be decided by a jury. Id. at 753. In the legal malpractice arena, Washington courts strictly adhere to the “but for” 11 12 standard of causation.2 Daugert v. Pappas, 104 Wn.2d 254, 260-63, 704 P.2d 600 13 (1985); Nielson v. Eisenhower & Carlson, 100 Wn. App. 584, 591-94, 999 P.2d 42 14 (2000). In most instances, the question of “but for” causation is one of fact for a jury. 15 Daugert, 104 Wn.2d at 257. For example, when the alleged malpractice consists of an 16 error during trial, the cause-in-fact issue to be decided by the jury is whether the client 17 would have fared better “but for” the attorney’s mishandling. Id. at 257-58. The jury in 18 the malpractice action must evaluate what a reasonable trier of fact would have done “but 19 2 Washington law recognizes two components of proximate causation, namely cause in fact and legal 20 causation. Brust v. Newton, 70 Wn. App. 286, 292, 852 P.2d 1092 (1993) (citing Hartley v. Wash., 103 Wn.2d 768, 777, 698 P.2d 77 (1985)). Cause in fact refers to the consequences of an act or omission; or omission 21 legal causation involves the question of whether liability should attach to the act Hartley, 103in light of policy considerations, common sense, logic, precedent, and concepts of justice. Wn.2d at 778-79. The “but for” standard applies to the cause-in-fact side of the proximate cause equation. Id. at 22 778. 23 ORDER - 5 1 for” the attorney’s negligence. Id. at 258. This methodology applies even if the fact 2 finder in the underlying case was a judge rather than a jury. Brust, 70 Wn. App. at 287, 3 291-94. 4 In Brust, the malpractice plaintiff, William Brust, had been a party to a prenuptial 5 agreement drafted by the defendant attorney, Henry T. Newton. When Brust was in the 6 midst of a dissolution proceeding, he was advised by other lawyers that the prenuptial 7 agreement was probably not enforceable because of both substantive and procedural 8 unfairness. Id. at 287-88 & n.1. As a result, Brust abandoned attempts to enforce the 9 prenuptial agreement and settled the dissolution proceeding. Id. at 288. He then sought 10 damages against Newton. The trial court concluded that the issue of negligence was for 11 the jury and the issues of proximate cause and damages were for the judge, but the trial 12 court submitted the latter two issues to the jury so that a retrial would not be required if 13 the bifurcation of decision-making responsibilities was reversed on appeal. Id. at 288-89. 14 The jury found Newton negligent and awarded $46,364.47 in damages to Brust; the trial 15 court calculated a different amount and entered judgment for $439,084. Id. at 289. 16 On appeal, in an effort to preserve the judgment, Brust argued that, because 17 dissolution actions must be tried to a judge, see RCW 26.09.010(1), the questions of 18 proximate cause and damages in a malpractice action must likewise be decided by a 19 judge. 70 Wn. App. at 290. The Washington State Court of Appeals disagreed, 20 reasoning that a case of malpractice, even though it involves the drafting of a prenuptial 21 agreement, is not a dissolution action, but rather an action in tort, as to which the right to 22 jury trial remains inviolate. Id. at 289-91 (citing Wash. Const. Art. 1, § 21). The Brust 23 ORDER - 6 1 Court explained that, in computing the amount of spousal support or dividing assets in a 2 dissolution proceeding, the judge is deciding questions of fact, not law. Id. at 294. The 3 jury in a subsequent malpractice action may determine what the result should have been 4 in the dissolution proceeding “but for” the alleged negligence even though the original 5 trier of fact was a judge. Id. at 293 (“there is no reason why a jury cannot replicate the 6 judgment of another fact-finder, whatever its composition”). 7 In contrast, when the proximate cause issue in a malpractice action involves legal 8 expertise, the question whether, “but for” the attorney’s negligence, the client would have 9 achieved a better result must be answered by a judge. For example, in Daugert, the client 10 prevailed in the trial court, but received an unfavorable ruling from the appellate court, 11 and despite the client’s immediately issued instructions, the attorney delayed in filing a 12 petition for discretionary review by the Washington State Supreme Court and missed the 13 deadline for doing so by one day. 104 Wn.2d at 255-56. In the subsequent malpractice 14 action, the trial court submitted the issue of proximate cause to the jury, which found a 15 twenty percent (20%) probability that the Supreme Court would have granted review and 16 reversed the unfavorable ruling. Id. at 256. Judgment was entered against the attorney 17 for $71,341.84, which was twenty percent (20%) of the damages incurred by the client 18 plus the $5,000 retainer paid to the attorney to handle the underlying appeal; the attorney 19 did not dispute that the retainer should have been refunded. Id. at 257 & n.1. On appeal, 20 transferred pursuant to Washington Rule of Appellate Procedure 4.4, the Supreme Court 21 reversed, concluding that the cause-in-fact inquiry, which required “an analysis of the law 22 and the rules of appellate procedure,” was “within the exclusive province of the court, not 23 ORDER - 7 1 the jury, to decide.” Id. at 258. The Daugert Court also clarified that the “but for” test 2 does not require certainty, but merely a showing that the alleged malpractice “more likely 3 than not” caused the damage. Id. at 263. 4 A similar result was reached in Nielson. In Nielson, the clients secured a favorable 5 judgment against Madigan Army Medical Center, but settled the matter while it was on 6 appeal for 85.5% of the award to avoid the risk of losing on a statute of limitations issue. 7 100 Wn. App. at 588. In the subsequent malpractice action, the clients sought the 8 difference between the judgment and the settlement amount, asserting that the attorney 9 was negligent in advising them about the applicable limitation period. The trial court 10 granted summary judgment in favor of the attorney and the Washington State Court of 11 Appeals affirmed, reasoning that the proximate cause question constituted an issue of law 12 requiring “special expertise,” and that the attorney’s negligence was not a “but for” cause 13 of the clients’ loss. Id. at 594-99. 14 C. Rescission of Prenuptial Agreement 15 In this case, LaRoche contends that Billbe committed malpractice by failing to 16 advance the theory of rescission by conduct as a means of avoiding the effect of the 17 prenuptial agreement. Under Washington law, the party seeking to enforce a prenuptial 18 agreement bears the burden of establishing that it has been “strictly observed in good 19 faith.” In re Marriage of Fox, 58 Wn. App. 935, 938, 795 P.2d 1170 (1990); In re 20 Marriage of Sanchez, 33 Wn. App. 215, 218, 654 P.2d 702 (1982). In both Fox and 21 Sanchez, the prenuptial agreement was deemed rescinded by the parties’ postnuptial 22 conduct. In Fox, the wife transferred all of her separate funds to a community account, 23 ORDER - 8 1 and the funds were spent on inter alia improvements to the family home and the parties’ 2 living expenses; the husband inherited money during the course of the marriage and 3 deposited it into the community account from which it was used by both parties for living 4 expenses. 58 Wn. App. at 936-37. Because neither party observed the terms of the 5 prenuptial agreement, evidencing the parties’ mutual intent to abandon it, the Fox Court 6 affirmed the trial court’s decision that the agreement had been rescinded. Id. at 939-40. 7 Likewise, in Sanchez, the parties “did not mutually observe” the terms of the 8 prenuptial agreement. 33 Wn. App. at 217. The agreement provided that each party’s 9 property acquired before marriage would remain separate, and it waived all rights arising 10 “by virtue of the marital relation,” including community property rights. Id. at 216. 11 Approximately two years after the parties were wed, the wife pawned, among other 12 items, a gold coin purchased before the marriage and then used the proceeds to make 13 payment on the parties’ home. Id. at 217. The husband subsequently redeemed the 14 wife’s pawned belongings and paid the premiums on a life insurance policy awarded to 15 the wife prior to the marriage. Id. Moreover, both parties deposited funds, including the 16 husband’s personal income, into a joint account. Id. The Sanchez Court concluded that 17 the wife, who sought to enforce the prenuptial agreement, was precluded from doing so 18 by her own failure to observe the agreement in good faith. Id. at 218. 19 In moving for partial summary judgment, Billbe explains that he did not raise the 20 issue of rescission in the dissolution proceeding because (i) it was unsupported by the 21 evidence, LaRoche having testified in her deposition that she had adhered to all of the 22 terms of the prenuptial agreement, and (ii) it would have undermined his credibility and 23 ORDER - 9 1 diverted attention away from the stronger arguments aimed at invalidating the prenuptial 2 agreement. Billbe Decl. at ¶¶ 10-14 & Ex. 3 at 188:15-17 (docket no. 18). Under the 3 “attorney judgment rule,” to hold Billbe liable for any error in forming these judgments, 4 LaRoche must show that either (a) no reasonable Washington attorney would have made 5 the same decision, or (b) Billbe breached the standard of care in reaching this decision. 6 The evidence LaRoche has proffered indicates merely that her expert, Emmelyn Hart, a 7 partner at Lewis Brisbois Bisgaard & Smith, LLP who leads the firm’s appellate practice, 8 believes Billbe “should have made the argument” that, because Hoffman did not observe 9 the terms of the prenuptial agreement, it was not enforceable. See Hart Decl. at ¶¶ 2 & 10 5(A) (docket no. 23). Such testimony does not negate the “attorney judgment rule.” See 11 Clark County, 324 P.3d at 752 (“Merely providing an expert opinion that the judgment 12 decision was erroneous or that the attorney should have made a different decision is not 13 enough; the expert must do more than simply disagree with the attorney’s decision. The 14 plaintiff must submit evidence that no reasonable Washington attorney would have made 15 the same decision as the defendant attorney.” (citations omitted)). The Court HOLDS as 16 a matter of law that, pursuant to the “attorney judgment rule,” LaRoche’s malpractice 17 claim against Billbe may not be premised on the decision not to pursue rescission of the 18 prenuptial agreement. 19 Moreover, even if Billbe had argued for rescission, the result of the dissolution 20 proceeding would have been the same, and LaRoche has not demonstrated a triable issue 21 concerning proximate cause. The cause-in-fact analysis required in this case is similar to 22 the evaluations necessary in Daugert and Nielsen, namely an assessment of how the 23 ORDER - 10 1 tribunal in the underlying matter would have decided an issue of law. This inquiry is for 2 the Court, not a jury. Daugert, 104 Wn.2d at 258. With regard to the equitable remedy 3 of rescission by conduct,3 the ways in which Hoffman is alleged to have disregarded the 4 prenuptial agreement are: (i) depositing community income into separate accounts; 5 (ii) discontinuing required contributions to a retirement account in LaRoche’s name; and 6 (iii) using community property to improve the Woodinville house, which Hoffman owed 7 before, and sold during, the marriage. See Respondent/Cross-Appellant Brief at 48-49, 8 Ex. 13 to Billbe Decl. (docket no. 18-1). The Court is satisfied that the King County 9 Superior Court would not have found these grounds for rescission persuasive. 10 Indeed, the King County Superior Court rejected the first accusation concerning 11 the commingling of community and separate property. During trial on the dissolution 12 matter, Billbe offered, on behalf of LaRoche, the expert testimony of Christien L. 13 Drakeley, J.D., Ph.D, who traced how certain funds, including Hoffman’s wages from the 14 University of Washington (“UW”), flowed through the complex portfolio of assets owned 15 by Hoffman and LaRoche. See Exs. B & C to Waid Decl. (docket nos. 22-2 & 22-3). In 16 connection with the pending motion, neither party has provided a complete transcript of 17 the King County Superior Court’s oral ruling, but according to Billbe, the state court 18 found the opinion of Hoffman’s expert, Steven J. Kessler, CPA, more convincing, and 19 20 Although the published authorities of Fox and Sanchez place the burden of proving “strict observance” of the prenuptial agreement on the party trying to enforce it, 58 Wn. App. at 938; 33 Wn. App. at 218, an 21 unpublished decision suggests that the burden of establishing rescission by conduct is on the party seeking to invalidate the agreement. In re Estate of Elvidge, 2007 WL 4239791 at *5 (Wash. Ct. App. 22 Dec. 4, 2007). 3 23 ORDER - 11 1 concluded that “the community benefitted from all of the community income” as well as 2 from separate funds used to subsidize Hoffman’s wages to “maintain the standard of 3 living during the marriage.” Billbe Dep. at 34:21-35:15, Ex. A to Waid Decl. (docket 4 no. 22-1). Moreover, the judge did not believe any commingling was relevant to the final 5 division of assets. See id. at 35:11-15 (“the fact that some community income, be them 6 UW wages, for example, went through an account where also trust monies went was the 7 tail wagging the dog, and . . . the court wasn’t persuaded that that commingling was 8 important to her final decision”). LaRoche does not dispute that the King County 9 Superior Court discounted the allegation of commingling, and she makes no contention 10 that she has any evidence of commingling other than what was considered during the 11 dissolution proceeding. 12 With regard to the other two allegations relating to rescission, i.e., that Hoffman 13 ceased making required contributions to a retirement account for LaRoche’s benefit, and 14 used community assets, including LaRoche’s labor, to improve his Woodinville house, 15 the Court is persuaded that the King County Superior Court would not have viewed these 16 breaches of the prenuptial agreement as evidence of mutual intent to abandon it. In this 17 case, at least one party, namely LaRoche, abided by the terms of the prenuptial agreement 18 and never took steps to modify it. LaRoche Dep. at 188:15-19, 188:25-189:1, 190:4-24, 19 Ex. 3 to Billbe Decl. (docket no. 18). The Court therefore concludes that, even if the 20 rescission theory had been raised during the dissolution proceedings, the King County 21 Superior Court would have done exactly what it did, namely calculate the damages 22 resulting from the breaches of the prenuptial agreement and require Hoffman to 23 ORDER - 12 1 compensate LaRoche in such amount. See Exs. 9 and 10 to Billbe Decl. (docket 2 no. 18-1) (awarding LaRoche $75,000 for the increase in value of the Woodinville house, 3 $5,500 as reimbursement for her labor in preparing the Woodinville house for sale, 60% 4 of the community portion of Hoffman’s UW TIAA/CREF retirement account (roughly 5 $228,860), a Smith Barney IRA valued at $13,518, which had been Hoffman’s separate 6 property, and a Smith Barney IRA valued at $9,643). 7 Given the extensive nature of Hoffman’s separate property, consisting of a 8 residence in Sun Valley worth over $1.5 million, investment and trust accounts with an 9 aggregate balance exceeding $12 million, retirement accounts containing $1.58 million, 10 certain stock, share of a sailboat, and a timeshare interest, see Ex. 9 to Billbe Decl. 11 (docket no. 18-1 at 60-61), the Court concludes that the minor ways in which Hoffman 12 deviated from the provisions of the prenuptial agreement would not have convinced the 13 King County Superior Court to grant LaRoche the equitable remedy of rescission. This 14 case is entirely different from Fox and Sanchez, in which the failures to comply with the 15 terms of the prenuptial agreement were mutual and involved virtually all of the parties’ 16 assets. To invalidate the prenuptial agreement in this matter on the minimal showing that 17 LaRoche could have made, i.e., unilateral as opposed to mutual departures from the 18 agreement involving relatively small sums, and thereby permit LaRoche to seek an equal 19 share of Hoffman’s extensive assets, would have been inconsistent with the notions of 20 21 22 23 ORDER - 13 1 equity underlying the theory of rescission.4 The Court therefore HOLDS as a matter of 2 law that Billbe’s decision not to advance the theory of rescission was appropriate and did 3 not fall below the applicable standard of care, and that it was not the proximate “but for” 4 cause of any damages sustained by LaRoche. 5 Conclusion For the foregoing reasons, defendants’ motion for partial summary judgment, 6 7 docket no. 17, is GRANTED. Plaintiff’s claim pleaded as Paragraph 4.1(A) of the 8 Complaint, docket no. 1, is DISMISSED with prejudice. Plaintiff’s claim pleaded as 9 Paragraph 4.1(C) of the Complaint, to the extent it is based on the allegations in 10 Paragraphs 3.15, 3.16, and 3.17 of the Complaint, is DISMISSED in part with prejudice. 11 Defendants’ motion does not address the additional contentions in the Complaint 12 regarding alleged malpractice on the part of Billbe, and those issues must await further 13 proceedings in this case. 14 IT IS SO ORDERED. 15 Dated this 17th day of July, 2014. 16 A 17 THOMAS S. ZILLY United States District Judge 18 19 4 As noted by the Washington State Court of Appeals, the ways in which the prenuptial agreement was intended to protect LaRoche’s interests did not “play[ ] out as well as she might have hoped at the time 20 she signed the agreement.” 2012 WL 1699455 at *3. The lawsuit that had been pending before the marriage settled without a financial award to LaRoche, she chose not to work for most of the marriage separate and as a result of legal 21 and therefore did not acquireretirementearnings, for LaRoche’s benefit. restrictions, Hoffman could not continue contributing to the account Id. These developments, which were not anticipated at the time the prenuptial agreement was executed, and are only apparent with the 22 benefit of hindsight, do not constitute a basis in equity for rescission. 23 ORDER - 14
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