Opinion
Civil No. 96-CV-0660E(Sc)
August 21, 2001
Andrew Feldman, Esq., Ann W. Herman, Esq., c/o Feldman, Kieffer Herman, Buffalo, NY, for Plantiff Ronald S. Kopp, Esq., Alisa Labut Wright, Esq., Mar C. Terzola, Esq., c/o Roetzel Andress, Akron, OH, for Plantiff
James P. Ulwick, Esq., Kevin F. Arthur, Esq., John A. Bourgeois, Esq., c/o Kramon Graham, Baltimore, MD, for Defendant Robert B. Conklin, Esq., c/o Hodgson Buffalo, NY, for Defendant
MEMORANDUM and ORDER
Familiarity with the facts as set forth in this Court's February 11, 1999 Memorandum and Order is presumed. Trial was had in this case from July 5, 2000 through July 20, 2000 resulting in a jury verdict in favor of defendant, Piper Marbury, L.L.P. Plaintiff filed a motion pursuant to Rule 59 of the Federal Rules of Civil Procedure ("FRCvP") July 31, 2000 seeking a new trial on the basis that this Court had improperly merged its separate causes of action for legal malpractice and breach of fiduciary duty into a single liability question on the verdict sheet. This Court had separately instructed the jury on each of plaintiff's three causes of action — viz., (1) legal malpractice, (2) breach of contract and (3) breach of fiduciary duty during the jury charge as follows.
"Keywell's first claim is for legal malpractice. There is no question but that Keywell had an attorney-client relationship with Piper and Marbury. Keywell was Piper and Marbury's client. Thus, to prevail on its legal malpractice claim, Keywell must prove three elements.
"One, that one or more of Piper and Marbury's lawyers failed to exercise that degree of care, skill and diligence reasonably expected to be possessed by a member of the legal community, a lawyer or a law firm. And to the extent that Piper and Marbury held itself out as having special knowledge in the field of environmental law, that Piper and Marbury, working in this case for Keywell, failed to use the degree of care and skill and diligence possessed by such a specialist. And, that the attorney's conduct was a proximate cause of the loss or actual damages suffered by Keywell. And that Keywell's actual loss or damages resulted from such failure.
"Now Piper and Marbury is a group of attorneys. It in this case was Keywell's attorney. An attorney's obligations to his or its client go beyond those of the normal tradesman. An attorney who undertakes to represent a client impliedly represents that he possesses a reasonable degree of skill, that he is familiar with the rules regulating practice in matters of the type in which he undertakes to represent the client, and that such principles of law in relation to such matters are well settled for the practitioners of such law, and that he will exercise due and reasonable care.
"Now, such care means that degree of skill commonly used by an ordinary member of the legal community who holds himself or herself out as a capable practitioner in that particular field of law. However, an attorney is liable only upon failure to perform as employed, according to the terms of his or her employment. That the performance did not achieve the result desired by the client, is not a basis for malpractice.
"Similarly in the course of legal representations, the mere fact that a bad result occurred, does not by itself permit you to draw the inference that the bad result is necessarily attributable to the lawyer or his law firm's negligence.
"If you decide that Piper and Marbury's representation of Keywell failed to meet the required standard of care, you must next consider whether such failure was a proximate cause of Keywell's damages.
"Damages are said to be proximately caused by an act or failure to act, whenever it appears from that evidence that the act or omission played a substantial part in bringing about or actually causing the injury or damage. And that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission.
"To satisfy its burden of proof, Keywell must have established that it would not have proceeded with the transaction, the acquisition of Vac Air, and its business and properties, in the way it ultimately did, were it not for the negligent advice and nonadvice of its attorneys.
"Keywell must prove that, if it had not been for the alleged acts of malpractice by Piper and Marbury's lawyers, it would have — it would have not — not have proceeded in the manner it did, and would have protected itself from what actually occurred.
"Now, If you find by the preponderance of the evidence that Keywell has proven that it would have renegotiated the transaction with Vac Air, or not proceeded with it, but for Piper and Marbury's violation of the applicable standards of care, you must determine what, If any, transaction would have been completed.
"If you determine that Keywell, in such a situation, would not have tried to reach a new agreement with Vac Air, or revised or voided the transaction, or would have walked away from the deal, then you must find in favor of Piper and Marbury for the reasons I have already discussed with you.
"To be entitled to an award of damages, Keywell must show, must have shown by the preponderance of the evidence that its damages were caused by its lawyers' action or inactions, that the resulting loss is capable of proof with reasonable certainty, and you are to consider this in light of the unique circumstances of the bargaining table.
"Keywell's burden of proof is met if it has demonstrated that it suffered harm as a result of the alleged acts of malpractice, and that is has quantified, shown the amount of that harm to a reasonable and not a high degree of precision.
"Keywell has also brought a claim for breach of contract to render services. An attorney who agrees to produce a particular result and fails to do so, is liable for the return of any fee paid to him, and for other damages which naturally result from his failure to carry out promise.
"In this case, Keywell claims that Piper and Marbury agreed to provide it with sound environmental advice, including the provision of appropriate preacquisition environmental due diligence and advice, and that Piper and Marbury failed to provide such. It is for you to determine from the evidence you've heard, what, in fact, was the agreement between Keywell and Piper and Marbury.
"If you find that Piper and Marbury did not provide the legal services it agreed to provide, your verdict then would be for Keywell.
"Keywell also brings a claim for breach of fiduciary duty. You are instructed that Piper and Marbury owed Keywell such a duty. The law imposes on the attorney [the duty] to represent the client with undivided loyalty, to preserve the client's confidences, and to disclose any material obligations infringing upon either of those obligations.
"As a fiduciary, a lawyer is obliged to exercise the highest degree of good faith, honesty, integrity, fairness, and fidelity.
"And one standing in a fiduciary relationship with another is subject to liability to the other, for harm resulting from a breach of the duty imposed by the relationship.
"Now as part of its fiduciary duty to Keywell, Piper and Marbury had an obligation to provide Keywell with any and all information in its possession that was important to the decisions Keywell was making. Information may be said to be important when it is such that, if known to the client, might reasonably have caused the client to alter an earlier chosen course of action.
"If Piper and Marbury negligently or willfully failed to convey such information to Keywell, then Piper and Marbury is liable for the damages suffered by Keywell as a result of the action it took, without the benefit of the undisclosed information.
"Now, negligence is the doing of some act which a reasonably prudent person would not do, or the failure to do something which a reasonably prudent person would do, when prompted by considerations which ordinarily regulate the conduct of human affairs. It is, in other words, the failure to use ordinary care under the circumstances." Tr. at 2138-2145.
Keywell Corporation and Keywell, L.L.C. will be referred to collectively as "Keywell" or "plaintiff."
Plaintiff does not address or object to the merger of its breach of contract claim.
At the conclusion of the jury charge, the undersigned posed, inter alia, the following question to the jury: "Did Piper Marbury breach its fiduciary duty to Keywell or otherwise commit legal malpractice in connection with the 1987 purchase of the steel-recycling facility in Frewsburg, N.Y?", to which the jury responded in the negative. Plaintiff's counsel had duly objected to the use of such question on the basis that its claims for legal malpractice and breach of fiduciary duty were separate claims which should not be combined in the same question. Tr. at 1928-1929.
While plaintiff does not mention such in its motion for a new trial, this Court's understanding of its reason for arguing against the merger of its claims for breach of fiduciary duty and legal malpractice — which is borne out by the record — was that it believed contributory negligence to be a bar to recovery under its legal malpractice claim but not under its breach of fiduciary duty claim. Tr. at 1825-1832, 1929-1930. This concern was course negated when the jury answered the liability question in the negative and accordingly did not answer the second question which queried as to any contributory negligence by asking "Did Keywell's conduct fall below a reasonable standard of care so as to contribute to the injury, if any, that Keywell suffered as a result of Piper and Marbury's malpractice?" In addition, plaintiff's argument in support of its motion for a new trial heavily emphasizes this Court's use of the phrase "or otherwise" in the jury question; however, while plaintiff objected to this Court's merging of its claims for breach of fiduciary duty and legal malpractice on the verdict sheet in general, it did not object specifically to this Court's use of the phrase "or otherwise." Had plaintiff entered an objection to this Court's use of the phrase "or otherwise" at trial, this Court may have been amenable to changing it to simply "or."
Plaintiff claims that a new trial is warranted due to three legal errors — viz., (1) the "Court improperly and effectively granted a directed verdict in favor of Piper on Keywell's claim for breach of fiduciary duty", (2) the "Court improperly failed to question the jury on its verdict sheet as to Keywell's separate claim for breach of fiduciary duty" and (3) the "verdict sheet did not conform with the jury instructions concerning breach of fiduciary duty and improperly characterized New York law concerning breach of fiduciary duty." P1.'s Mot. for New Trial at 5-6. Specifically, plaintiff argues that this Court effectively granted a directed verdict against it on its breach of fiduciary duty claim by merging its claims for breach of fiduciary duty and legal malpractice into a single liability question, thereby making breach of fiduciary duty a type of legal malpractice and preventing the jury from finding in its favor solely on its breach of fiduciary duty claim, even though it was entitled to do so pursuant to the Court's jury instructions. P1.'s Supplemental Br. in Supp. of Mot. for New Trial at 3-5. Plaintiff states that legal "malpractice occurs where an attorney acts below the standard of care for attorney conduct" and that "a breach of fiduciary duty exists where the attorney fails to disclose all relevant information to the client." P1.'s Supplemental Br. in Supp. of Mot. for New Trial at 3-4. Plaintiff states that, although as "charged, the jury could have found that a breach of fiduciary duty occurred separate from malpractice" — ibid — the use of "the phrase "or otherwise committed legal malpractice' modified the phrase "breach of fiduciary duty' thus making the latter merely a subset of a legal malpractice claim" — Id.. at 6 — with the result that on the verdict sheet "the jury was only asked whether Piper committed legal malpractice, albeit in any one of a number of ways." P1.'s Reply Br. In Supp. of Mot. for New Trial at 2 (emphasis in original). Defendant opposes plaintiff's motion on three grounds — viz., (1)the verdict sheet allowed the jury to find in plaintiff's favor if it found that Piper and Marbury had either breached its fiduciary duty or committed malpractice, (2) that the conduct that was alleged to be a breach of fiduciary duty was the same conduct that was alleged to constitute legal malpractice and (3) that plaintiff never had a cognizable claim for breach of fiduciary duty. Def.'s Opp'n to Pl.'s Mot. for New Trial at 1-2.
Plaintiff claims that in its February 11, 1999 Order this Court ruled that New York law applied to the breach of fiduciary duty claim. This Court made no such "ruling." Rather, this Court simply stated: "There being no dispute between the parties on the choice-of-law question, New York's legal malpractice law will be applied." February 11, 1999 Order at 11 n. 7. Furthermore, plaintiff impliedly admits in its Motion for New Trial that defendant had only agreed to the application of New York law for purposes of deciding its Motion for Summary Judgment — viz., "For purposes of this motion, Piper and Marbury assumes,arguendo. that * * * the court should apply New York law * * *. Piper and Marbury makes this assumption because New York law does not appear to differ from the law of other potentially applicable states, such as that of Maryland." P1.'5 Mot. for New Trial at 4-5 n.S quoting Def.'s Mot. for Summ. J. at 10-11 n. 10.
Plaintiff states that it knows the above to be true and that its motion for a new trial should be granted because it was informed by members of the jury in post-trial discussions that they would have found in plaintiff's favor on its breach of fiduciary duty claim — but not on the legal malpractice claim — but that they were precluded from doing so due to the merger of such claims on the verdict sheet. "[un post-trial discussions, the jury indicated that it had made findings consistent with the above-described scenario — that Piper had adequately performed its environmental due diligence but improperly withheld material information from Keywell. Nonetheless, based upon the merger of these claims on the verdict form, the jury concluded that it was not permitted to find in favor of Keywell based solely on a breach of fiduciary duty. Had the jury been properly instructed on these separate claims, it would have found in favor of Keywell on it breach of fiduciary duty claim." P1. "s Mot. for New Trial at 4 n. 4; see also P1.'5 Supplemental Br. in Supp. of Mot. for New Trial at 6 (the jury states that it "was not able to consider a breach of fiduciary duty as a separate tort. Rather, it was bound by the verdict form to consider whether such a breach constituted a form of legal malpractice."). Such an argument is barred by Rule 606(b) of the Federal Rules of Evidence and should not have been made by plaintiff; accordingly, it will not be considered by this Court. See generally, U.S. v. Thomas, 116 F.3d 606, 623 (2d Cir. 1997); Ohanian v. Avis Rent a Car System, Inc., 779 F.2d 101, 110 (2d Cir. 1985); United States v. Hockridge, 573 F.2d 752-760 (2d Cir. 1978).
"District courts have broad discretion under Rule 49 (a) to formulate special interrogatories for submission to the jury. Whenever a court chooses to use them, however, it must give to the jury such explanation and instruction concerning the matter thus submitted as may be necessary to enable the jury to make its findings upon each issue. Accordingly, special interrogatories must be read in conjunction with the district court's charge." Romano v. Howarth, 998 F.2d 101, 104 (2d Cir. 1993).
Internal citations and punctuation omitted.
The court must assume that the jury followed not only the law as explained to it in the jury charge but also the literal, grammatical meaning of the special interrogatories posed. Manufacturers Hanover Trust v. Drysdale Sec. Corp., 801 F.2d 13, 27 (2d Cir. 1986), cert. denied sub nom., Arthur Anderson Co. v. Manufacturers Hanover Trust Co., 479 U.S. 1066 (1987); Cann v. Ford Motor Company, 658 F.2d 54, 59 (2d Cir. 1981), cert. denied, 456 U.S. 960 (1982). When considering a motion for a new trial based on an alleged error in the special interrogations posed to the jury, the court must determine if the interrogatories submitted to the jury, when read in conjunction with the jury charge, fairly and accurately framed the issues to be decided. Romano, at 105. A new trial should only be granted if the special interrogatories used served to mislead and confuse the jury or inaccurately framed the issues to be resolved. Cann, at 58.
In the case of Vichare v. AMBAC, Inc., the Second Circuit Court of Appeals denied plaintiff's appeal wherein he alleged that, by combining his discrimination and retaliation claims into a single special interrogatory — "Did plaintiff prove by a preponderance of the evidence that defendants discriminated or retaliated against him?" —, the court caused the jury to believe "that he had to prevail on all of his claims in order to recover." 106 F.3d 457, 460-461, 465-466 (2d Cir. 1996). The court reasoned that, because the jury "charge made clear that [plaintiff] could recover on any of his claims" and the charge "indicated that each of [plaintiff's] allegations if proven was itself sufficient to support liability", combining the discrimination and retaliation claims into a single special interrogatory did not warrant reversal. Id.. at 466-467.
This Court's use of the term "or otherwise" instead of simply using the term "or — which appears to be plaintiff's main objection — does not warrant the granting of a new trial. This Court combined plaintiff's breach of fiduciary duty and legal malpractice claims into a single jury question to avoid the risk of an inconsistent verdict because, based on the jury charge — to which plaintiff does not object — and the facts at issue, the jury could not find that Piper and Marbury had breached its fiduciary duty without necessarily finding that it had also committed legal malpractice. This Court had instructed the jury that, in order to find that Piper and Marbury had breached its fiduciary duty to Keywell, it had to find that Piper and Marbury had negligently or willfully failed to convey information in its possession that was important to the decisions Keywell was making, thereby causing Keywell to suffer damages. Tr. at 2143-2145. This Court had further instructed the jury that, in order to find that Piper and Marbury had committed legal malpractice, it had to find that it "failed to exercise that degree of care, skill and diligence reasonably expected to be possessed by a member of the legal community, a lawyer or a law firm," thereby causing plaintiff to suffer damages. Id.. at 2138-2142. Accordingly, were the jury to find that Piper and Marbury had breached its fiduciary duty by failing to turn over important information to Keywell that Keywell needed to make its decision, it would necessarily have had to have also found that Piper and Marbury had committed legal malpractice by failing to turn over such documents because such would certainly fall below that degree of care, skill and diligence reasonably expected to be possessed by a member of the legal community.
Furthermore, in the present case — as in Vichare —, it is clear that, when read in conjunction with the jury charge, the question posed to the jury clearly allowed it to find for plaintiff on either its legal malpractice or its breach of fiduciary duty claim — i.e., the verdict form allowed the jury to conclude that defendant had breached its fiduciary duty but did not commit legal malpractice, and there is no reason to believe that the jury did not separately consider plaintiff's claims for breach of fiduciary duty and legal malpractice as it was instructed to do in the jury charge. See Manufacturers Hanover, at 27.
Nothwithstanding this Court's belief that a finding in favor of plaintiff on its breach of fiduciary duty claim would necessarily result in a finding in its favor on its legal malpractice claim as well. Tr. at 1824-1829, 1926-1931.
Accordingly, it is hereby ORDERED that plaintiff's motion for a new trial is denied.