Legal Malpractice Claim Against a Law Firm For Mishandling a Divorce Case*

This is a review of a legal malpractice claim filed by a former client against the attorneys who represented her in a divorce action. The claim centered on the attorneys' handling of the transfer of a house the client had received as part of the divorce settlement. 

At the time of the settlement, the property had a large tax lien on it, and the settlement required the client's ex-husband to pay this lien in full after the transfer.

The ex-husband subsequently failed to pay the lien, and the house, though in the client's possession, was foreclosed upon. The client felt that it was her attorneys' failure to properly oversee the transfer and payment of the lien which led to the foreclosure, and she sought in her suit compensation for the unpaid lien in addition to punitive damages.

Statement of Facts...

Roberta and Arthur Guidde were married on April 16th, 1995, in Colorado Springs, Colorado. Arthur was a practicing cardiologist in Colorado Springs and during the marriage the couple accumulated substantial wealth. In particular, they owned their main residence in Colorado Springs, a summer residence in Palm Springs, a small villa in Italy, and various commercial properties.

Beginning in 2007, Roberta and Arthur started to experience marital difficulties. Among other issues, Roberta accused Arthur of philandering, and Arthur accused Roberta of alcoholic binges and of spending months at a time away from home, staying at their villa in Italy. Roberta and Arthur attempted two unsuccessful trial separations.

On November 1st, 2009, Roberta retained the law firm against which she would eventually file a legal malpractice claim, Mogle and Floran, Esq. On Roberta's behalf, Mogle and Floran filed a divorce action on December 15th, 2009.

Because of lengthy pre-trial discovery which included verification and evaluation of the marital property, the divorce action carried on through January 2010 when the attorneys for both sides finally arrived at a settlement. The agreement stated Roberta would be awarded the main residence in Colorado Springs and the villa in Italy. 

As part of the settlement agreement, Arthur agreed to pay the property taxes and penalties on the Colorado residence which had gone unpaid since the filing of the divorce and which now amounted to $88,000. Both sides agreed Arthur would have thirty days from the date of the final divorce decree to pay the lien.

The parties finally reached an agreed settlement on January 7th, 2010. Both sides were anxious to present the final divorce decree to the judge for her signature.

In their haste to finalize the decree, Roberta's attorneys failed to secure from Arthur some form of collateral to make sure Arthur followed through and paid the property tax lien on the residential property.

Immediately prior to the judge's signing the final divorce decree, Roberta voiced her concern to Mogle and Floran about the possibility of Arthur failing to pay the property taxes within the thirty day period. Mogle and Floran quelled her fears by telling her if he failed to pay, they could always file a motion to hold Arthur in contempt of court. 

Mogle and Floran told Roberta that the court could not only force Arthur to pay the $88,000, but it could also assess a substantial penalty if he failed to pay. With that understanding Roberta signed the final decree. It was presented to the court on January 15th, 2010, and signed by the judge on January 16th.

Thirty days elapsed and the property taxes on the Colorado Springs residence were still unpaid. Roberta contacted Mogle and Floran and expressed her concerns. She told them she just received a Final Notice of Intent to Foreclose on the property. Mogle and Floran told Roberta not to be concerned; they would contact Arthur's attorneys and ascertain what the problem was.

When Mogle and Floran contacted Arthur's attorneys they were told Arthur had suffered some large financial losses. As a result, Arthur was in bankruptcy and there wasn't any money left to pay the property taxes. Roberta, Arthur's attorneys said, could "get in line" with Arthur's other major creditors.

When Mogle and Floran relayed this information to Roberta, she became livid. She wanted to know why, prior to the divorce, Mogle and Floran did not secure some sort of collateral in the form of cash, or a bond, to be sure the taxes would be paid. They responded that because of Arthur's substantial wealth during the divorce negotiations, they didn't think collateral was an issue to be concerned with.

Roberta demanded one way or another Mogle and Floran come up with the money to pay off the taxes before the property was foreclosed on. Thirty more days elapsed and no payment was forthcoming. Mogle and Floran stopped returning Roberta's telephone calls. 

As a result her residence was foreclosed upon and Roberta was evicted.

The Lawsuit...

Roberta retained the law firm of Alan Keating, Esq., to represent her in a legal malpractice claim against Mogle and Floran. In her suit she contended Mogle and Floran failed to exercise due diligence and as a result her home was foreclosed upon. 

Roberta sued to recover the $88,000 in property taxes she was owed, and for $5,000,000 in additional punitive damages.

Mogle and Floran contended they exercised due diligence in their representation of Roberta and that they had a good faith reason to believe the property taxes would be paid. They went on to contend it would have been unreasonable at the time, especially because of Arthur's substantial wealth, to believe he would go bankrupt and be unable to pay the taxes.

Outcome...

After a review of the admitted evidence and after hearing the arguments of counsel the Court found:

The standard by which a legal malpractice claim can prevail is to prove the attorneys failed to exercise that degree of skill, care and diligence necessary to represent a client in a specific matter. If the attorney fails to do so and the client suffers actual damages the client has then met her burden of proof. 

In the case before us we find the attorneys clearly failed to exercise even the most basic of diligence in not securing collateral for the delinquent property taxes. A spouse's bankruptcy should not be a sufficient excuse for an attorney trained to represent clients in divorce actions. 

We therefore find for the plaintiff Roberta Guidde in the amount of $88,000 in actual damages and $250,000 in punitive damages.