NO. COA06-1131
Appeal by plaintiff from judgment entered 26 May 2006 by Judge
Gary E. Trawick in Buncombe County Superior Court. Heard in the
Court of Appeals 21 March 2007.
William E. Loose for plaintiff-appellant.
Long, Parker, Warren, & Jones, P.A., by Robert B. Long, Jr.,
and William A. Parker, for defendant-appellee.
STROUD, Judge.
Plaintiff appeals from the trial court's entry of summary
judgment in favor of defendants in an action for legal malpractice.
We conclude that plaintiff failed to provide legal authority to
support her claim that defendants were negligent in advising her to
retain another attorney. She also failed to show that her attorney
was negligent when he did not advise her that the underlying
consent judgment could be set aside. Finally, plaintiff failed toshow that any alleged negligence on the part of defendants
proximately caused damage to her. Accordingly, we affirm the order
of the trial court granting summary judgment to defendants.
I. Background
On 2 May 2000, plaintiff filed a complaint against her
husband, Paul M. Young, seeking equitable distribution of their
marital estate. Plaintiff reached a settlement with her husband
on 8 May 2000. In the settlement, plaintiff agreed to receive
assets worth approximately four and one-half million dollars as a
“full and final settlement of all issues between [the] parties
arising from their marriage.” The settlement agreement was read
into the record of the trial court as a consent judgment. The
agreement was reduced to writing, signed by plaintiff and her
husband, and entered by the trial court as a Consent Judgment on 24
May 2000. On 12 March 2001, plaintiff and her husband amended the
Consent Judgment to transfer interest in a timeshare in Mexico to
him. The amendment to the Consent Judgment stated that “except as
amended [herein], all other provisions of the Consent Judgment
dated May 24, 2000, shall remain in full force and effect.”
Plaintiff subsequently received the assets which the Consent
Judgment specified to be transferred to her.
On 8 February 2002, plaintiff moved, pursuant to Rule 60, to
set aside the Consent Judgment on the grounds
that the consent judgment (1) was void because
it “recites materials and events that never
occurred” in that “[t]he terms of the document
were never reviewed by the court with the
parties,” and that it (2) included terms “thatwere never discussed between the parties at
the time they all met at the courthouse.”
Young v. Young, 161 N.C. App. 541, 589 S.E.2d 750 (2003)
(unpublished),
cert. denied, 358 N.C. 242, 594 S.E.2d 195 (2004).
After a hearing on 16 May 2002, the trial court entered an order on
6 June 2002 denying plaintiff's motion to set aside the Consent
Judgment. Plaintiff appealed to this Court. The 6 June 2002 order
of the trial court was affirmed by this Court. 161 N.C. App. 541,
589 S.E.2d 750.
Plaintiff subsequently filed this malpractice claim against
her attorney, Howard L. Gum, and the firm that represented her
during the equitable distribution proceedings, Gum & Hillier, P.A.
(See footnote 1)
Plaintiff alleged that but for defendants' negligence, she would
have received at least eight million dollars from the marital
estate. Defendants moved for summary judgment on 2 May 2006. The
trial court granted defendants' motion for summary judgment on 26
May 2006. Plaintiff appeals.
II. Standard of Review
The trial court must grant summary judgment upon a party's
motion when “there is no genuine issue as to any material fact and
. . . any party is entitled to a judgment as a matter of law.”
N.C. Gen. Stat. § 1A-1, Rule 56(c). On appeal, this Court reviews
an order granting summary judgment
de novo.
Howerton v. AraiHelmet, Ltd., 358 N.C. 440, 470, 597 S.E.2d 674, 693 (2004). A
defendant may show he is entitled to summary judgment “by (1)
proving that an essential element of the plaintiff's case is
nonexistent, or (2) showing through discovery that the plaintiff
cannot produce evidence to support an essential element of his or
her claim, or (3) showing that the plaintiff cannot surmount an
affirmative defense which would bar the claim.”
James v. Clark,
118 N.C. App. 178, 181, 454 S.E.2d 826, 828 (citation omitted),
disc. review denied, 340 N.C. 359, 458 S.E.2d 187 (1995).
III. Issues
Plaintiff alleged in her complaint that defendants were
negligent in the following respects: (1) advising her to enter into
a retainer agreement with another attorney, Mr. Graham, in addition
to defendants; (2) failing to advise her that she had the right to
set aside the consent judgment under
Tevepaugh v. Tevepaugh, 135
N.C. App. 489, 521 S.E.2d 117 (1999); (3) failing to properly
investigate the value of her marital estate; (4) failing to advise
her that she would be entitled to at least fifty percent of all
marital property in an equitable distribution action. Plaintiff
claims that but for defendants' negligence, she would not have
entered into the settlement and would have received at least eight
million dollars from the marital estate based upon her equitable
distribution claim. She also claims that she paid “more than
$21,000” in attorney fees to Mr. Graham.
IV. Analysis
Plaintiff did not argue in her brief regarding the allegation
of defendants' negligence as to advising her to enter into a
retainer agreement with Mr. Graham. She has not cited any
authority to support a claim that simply advising her to enter into
an attorney-client retainer agreement with another attorney is
negligent, and we are not aware of any such authority. Summary
judgment was therefore proper as to this alleged ground for
negligence.
Plaintiff's contentions regarding the entry of the consent
judgment and her claim that defendants were negligent by failing to
advise her that the consent judgment could have been set aside
pursuant to
Tevepaugh were fully addressed in this court's prior
opinion in plaintiff's first appeal. 161 N.C. App. 541, 589 S.E.2d
750. It has already been established as the law of the case that
the consent order was in fact entered properly under
Tevepaugh, and
therefore it could not have been negligent of defendants to fail to
advise plaintiff that it was not.
See N.C.N.B. v. Virginia Carolina
Builders, 307 N.C. 563, 567, 299 S.E.2d 629, 631 (1983)([“W]e
conclude that once a panel of the Court of Appeals has decided a
question in a given case that decision becomes the law of the case
and governs other panels which may thereafter consider the case.”).
Plaintiff's remaining contentions regarding defendants'
negligence fail because plaintiff has failed to forecast evidence
as to damages proximately caused by the alleged negligence. Even
if we assume, for purposes of summary judgment, that defendants
negligently failed to investigate the value of the plaintiff'smarital estate
(See footnote 2)
and/or to advise her regarding her rights, “[i]n a
legal malpractice case, a plaintiff is required to prove that [s]he
would not have suffered the harm alleged absent the negligence of
[her] attorney.”
Hummer v. Pulley, Watson, King & Lischer, P.A.,
157 N.C. App. 60, 66, 577 S.E.2d 918, 923,
disc. review denied, 357
N.C. 459, 585 S.E.2d 758 (2003). It is well-settled that if a
party loses a suit as a result of her attorney's negligence, the
party proves this causation element by showing that: “(1) the
original claim was valid; (2) [the claim] would have resulted in a
judgment in [the plaintiff's] favor; and (3) the judgment would
have been collectible.”
Rorrer v. Cooke, 313 N.C. 338, 361, 329
S.E.2d 355, 369 (1985) (citation omitted). This rule has been
referred to as having to prove a “case within a case.”
Kearns v.
Horsley, 144 N.C. App. 200, 211, 552 S.E.2d 1, 8,
disc. review
denied, 354 N.C. 573, 559 S.E.2d 179 (2001).
The “case within a case” rule applies in cases considering the
propriety of an order granting summary judgment in favor of the
defendant in a legal malpractice action.
See Bamberger v.
Bernholz, 326 N.C. 589, 391 S.E.2d 192 (1990) (adopting dissenting
opinion of Lewis, J., in the Court of Appeals, 96 N.C. App. 555,
386 S.E.2d 450 (1989)). The rule applies even if the negligentactions of the attorney resulted in a total foreclosure of the
underlying case being heard on its merits.
See id. at 211-12, 552
S.E.2d at 8-9;
Hummer, 157 N.C. App. at 60, 577 S.E.2d at 918. The
same rule would therefore apply when a plaintiff alleges that her
attorney's negligence in handling her equitable distribution claim
caused her to settle the claim to her detriment.
See Harris v.
Maready, 84 N.C. App. 607, 612, 353 S.E.2d 656, 660,
disc. review
denied, 320 N.C. 168, 358 S.E.2d 50 (1987);
accord Thomas v.
Bethea, 718 A.2d 1187, 1196-97 (Md. 1998).
In this case, plaintiff claims that her attorney negligently
failed to properly advise regarding her legal rights if the claim
had been fully litigated. Therefore, plaintiff must make a
forecast of evidence sufficient to demonstrate that (1) her
original equitable distribution claim was valid; (2) the equitable
distribution claim would have resulted in a judgment in her favor
(i.e., in an amount in excess of the 4.5 million dollars she
received in the settlement); and (3) the equitable distribution
judgment would have been collectible.
Plaintiff has met the first part of this test by her
allegations that she filed a complaint for equitable distribution
and her allegations that she and her husband accumulated marital
property during their marriage. For purposes of summary judgment,
viewing the evidence in the light most favorable to plaintiff, we
assume that she and Mr. Young did in fact have marital property.
Plaintiff is also entitled to the benefit of the presumption that
marital and divisible property will be distributed half to eachspouse. N.C. Gen. Stat. § 50-20(c)(2005). In fact, defendants do
not dispute that plaintiff had a valid equitable distribution
claim. However, having a valid equitable distribution claim alone
is not enough to survive summary judgment; plaintiff must also
forecast evidence sufficient to demonstrate that her equitable
distribution claim would have resulted in judgment in her favor in
excess of 4.5 million dollars and that it would have been
collectible.
As noted above, a legal malpractice claim is considered as a
“case within a case.” Therefore, to determine the facts which
plaintiff must forecast regarding her equitable distribution claim,
we look to the substantive law defining an equitable distribution
claim. In an action for equitable distribution of marital
property,
[t]he burden of proof is upon the party
claiming that property is marital property to
show by a preponderance of the evidence that
the property: (1) was acquired by either
spouse or both spouses; (2) during the
marriage; (3) before the date of the
separation of the parties; and (4) is
presently owned.
Caudill v. Caudill, 131 N.C. App. 854, 857, 509 S.E.2d 246, 248
(1998) (citing N.C. Gen. Stat. 50-20(b)(1)). The party claiming
that property is marital property must also provide evidence by
which that property is to be valued by the trial court.
Miller v.
Miller, 97 N.C. App. 77, 80, 387 S.E.2d 181, 184 (1990).
The requirements that the trial court (1)
classify and value all property of the
parties, both separate and marital, (2)
consider the separate property in making a
distribution of the marital property, and (3)distribute the marital property, necessarily
exist only when evidence is presented to the
trial court which supports the claimed
classification, valuation and distribution.
Id.
N.C. Gen. Stat. § 50-21(b) requires that marital property be
valued “as of the date of the separation of the parties” while
divisible property and divisible debt are “valued as of the date of
distribution.” The plaintiff is required in an equitable
distribution action to provide detailed information regarding her
allegations as to the identification, classification, and value of
marital and separate property as of the date of separation by
filing an equitable distribution inventory affidavit within 90 days
after service of the equitable distribution claim. N.C. Gen. Stat.
§ 50-21(a).
(See footnote 3)
A party who fails to file the required equitable
distribution inventory affidavit can be subject to sanctions
pursuant to N.C. Gen. Stat. § 1A-1, Rule 37, up to and including
dismissal of the claim. N.C. Gen. Stat. § 50-21(a); N.C. Gen.
Stat. § 1A-1, Rule 37(b)(2). In addition, N.C. Gen. Stat. § 50-20(e) (2005) establishes a
presumption in all equitable distribution actions that an “in-kind
distribution of marital or divisible property is equitable.” In
order to obtain a distributive award, this presumption must be
“rebutted by the greater weight of the evidence” or by evidence
that a property is a “closely held business entity or is otherwise
not susceptible of division in-kind.” N.C. Gen. Stat. § 50-20(e).
Therefore, plaintiff was required to forecast evidence that
would be sufficient to demonstrate not only that defendants were
negligent in advising her, but also evidence which would support
plaintiff's underlying equitable distribution claim and her
allegation that an equitable distribution judgment in her favor
would have exceeded the 4.5 million dollars she received by the
settlement and that this judgment would have been collectible.
As stated above, plaintiff has not forecast any evidence which
would permit the court to identify, value or classify marital and
separate property of the parties, and in the absence of this
evidence, the court could not value or classify the property.
Miller, 97 N.C. App. at 80, 387 S.E.2d at 184.
It is not clear from plaintiff's pleadings or affidavits
whether plaintiff claimed she was entitled to a distributive award
in excess of 8 million dollars or an in-kind distribution of
property valued in excess of 8 million dollars. If she was seeking
a distributive award, plaintiff has failed to forecast any evidence
to rebut the presumption of an in-kind distribution, or to
demonstrate why she would have been entitled to a distributiveaward in excess of 4.5 million dollars. N.C. Gen. Stat. §
50-20(e). If plaintiff was seeking an in-kind distribution, she
has failed to forecast any evidence of what property she claims
should have been distributed to her. She has failed to forecast any
evidence regarding whether a judgment in excess of 4.5 million
dollars would be collectible.
For purposes of equitable distribution, marital property must
be valued as of the date of separation. N.C. Gen. Stat. § 50-
21(b). We note that plaintiff has not even mentioned any date of
valuation of marital property in the record. The record contains
only bare assertions as to the total value of plaintiff's property,
without any allegation of the date of valuation or what portion of
the property is marital or separate or divisible. Plaintiff's only
statements regarding value of the marital estate in her affidavit
are as follows:
In my initial meeting with Mr. Gum, I informed
him about the extent of my estate. While I
had some idea of what assets Mr. Young and I
had and I gave some estimate with respect to
their value no valuation of my estate was
completed. . . . At the time of my meeting
with Mr. Gum in March 2000 I had estimated my
assets to be worth between $15 million to $20
million.
There is no mention of the date of separation in the record except
as a finding of fact in the Consent Judgment, which states that the
parties separated on 31 March 2000. The only other evidence in the
record as to the alleged value of the marital estate is contained
in the affidavit of Michael E. Casterline, an attorney, submitted
in opposition to the summary judgment motion. Mr. Casterlinestates that “I am also aware that the marital estate has been
valued at approximately $20 million.” We note first that this
statement does not give any date for this valuation. Furthermore,
“[s]upporting and opposing affidavits shall be made on personal
knowledge, shall set forth such facts as would be admissible in
evidence, and shall show affirmatively that the affiant is
competent to testify to the matters stated therein.” N.C. Gen.
Stat. § 1A-1, Rule 56(e);
see also Talbert v. Choplin, 40 N.C. App.
360, 364, 253 S.E.2d 37, 40 (1979) (applying Rule 56(e)). Mr.
Casterline's affidavit addresses the legal standard of care, not
valuation. There is no indication that Mr. Casterline is competent
to testify as to the value of the marital estate or that he has
personally determined the value of the estate. In fact, the
statement in his affidavit that the estate “has been valued at
approximately $20 million” indicates that someone else has valued
the estate, so this is hearsay and not admissible evidence as to
value.
We are aware that equitable distribution cases can be very
complex and require extensive and detailed evidence regarding
marital property, debts, separate property, divisible property and
many other issues. We are not holding that plaintiff would have
had to forecast every detail of her entire equitable distribution
case to survive summary judgment or even that she would have had to
file an equitable distribution inventory affidavit detailing the
property for which she sought equitable distribution. However, she
must present some forecast of evidence regarding theidentification, classification, and value of marital property as of
the date of separation which would permit the court to understand
how and why she might have been able to prevail on an equitable
distribution claim and in particular, to obtain a judgment in
excess of 4.5 million dollars. Here, even assuming that defendants
negligently failed to advise plaintiff or to value her estate
properly, she has made no such forecast at all of the value of the
marital estate as of the date of separation and therefore as to the
value of her equitable distribution claim, and thus has failed to
show that any alleged negligence on the part of defendants
proximately caused damage to her.
V. Conclusion
Plaintiff failed to provide legal authority to support her
claim that defendants were negligent in advising her to retain
another attorney. She also failed to show that her attorney was
negligent when he did not advise her that the underlying consent
judgment could be set aside under
Tevepaugh. Finally, plaintiff
failed to show that any other alleged negligence on the part of
defendants proximately caused damage to her. Accordingly, the
order of the trial court granting summary judgment to defendants is
affirmed.
AFFIRMED.
Judges McCULLOUGH and CALABRIA concur.
Footnote: 1