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Gates v. O'Connor

Court of Appeals of Indiana

September 13, 2018

Whitney A. Gates, Jonathan W. Gates, and Jacob A. Gates, Appellants-Plaintiffs,
v.
Joseph D. O'Connor and Bunger & Robertson, LLP, Appellees-Defendants.

          Appeal from the Monroe Circuit Court The Honorable Heather A. Welch, Special Judge Trial Court Cause No. 53C01-1405-CT-877

          ATTORNEYS FOR APPELLANTS Kevin W. Betz Sandra L. Blevins Betz Blevins Indianapolis, Indiana

          ATTORNEYS FOR APPELLEES Michael E. O'Neill Marian C. Drenth O'Neill McFadden & Willett, LLP Schererville, Indiana

          CRONE, JUDGE.

         Case Summary

         [¶1] Whitney A. Gates, Jonathan W. Gates, and Jacob A. Gates (hereinafter "Whitney")[1] appeal the trial court's entry of summary judgment in favor of attorney Joseph D. O'Connor and Bunger & Robertson, LLP ("the law firm")[2]on Whitney's claim for legal malpractice. Whitney's complaint against O'Connor alleged that O'Connor negligently failed to pursue and obtain a dissolution of marriage between his father, Jerry Gates, and Jerry's wife, Susan, prior to Jerry's death, which allegedly resulted in a substantial loss of inheritance to Whitney. We note that while this case is nominally about lawyer malpractice, namely, whether O'Connor's purported breach of his duty of care proximately caused Whitney's loss of inheritance, it is really about the "trial within a trial," that is, the law that applied to the underlying dissolution of marriage proceedings. After a thorough review of such law as well as the designated evidence, we conclude that, as counsel for Jerry while Whitney was acting as Jerry's guardian, there was nothing O'Connor could have done to compel a dissolution of Jerry's marriage. Thus, as did the trial court, we conclude that O'Connor has negated the element of proximate cause in the legal malpractice action and is entitled to summary judgment. Accordingly, we affirm.[3]

         Facts and Procedural History

         [¶2] Jerry was a successful Bloomington real estate developer and businessman with an interest in various closely held corporations and limited liability companies. Most of his assets were acquired after he married Susan in March 1986. Before the marriage, Jerry and Susan executed a prenuptial agreement. Among other things, the agreement provided that, in the event of a dissolution of the marriage, Susan would receive her separate property, one-half of all jointly held property, and a cash payment based upon the duration of the marriage prior to the commencement of a dissolution. The agreement also contained provisions limiting Susan's inheritance from Jerry's estate based on the duration of the marriage provided that they were married at the time of his death. Jerry executed a will with corresponding provisions.

         [¶3] In March 2007 Jerry suffered an ischemic stroke, which deprived his brain of an adequate blood supply. This was the first of three strokes that eventually led to Jerry's death six years later in March 2013. Jerry had a good physical recovery from his first stroke, but the stroke resulted in cognitive and personality changes and negatively affected his attitude, demeanor, short-term memory, and judgment.

         [¶4] Notwithstanding the first stroke, Jerry remained competent and retained his testamentary capacity, and, in October 2007, he executed another will and established a revocable trust. This second will and the trust provided Susan with a larger inheritance than under Jerry's 1986 will and the prenuptial agreement as long as Jerry and Susan were still married at the time of Jerry's death. Jerry also named Susan as his attorney-in-fact under a general durable power of attorney over all his personal, intangible, and real property. The power of attorney was a stand-by instrument; it would take effect only if Jerry were declared incapacitated by two licensed physicians unrelated to Jerry or his family. The instrument named Jerry's son, Whitney, and others as successor attorneys-in-fact in the event Susan was unable or unwilling to serve.

         [¶5] In August 2008, after Jerry was diagnosed with hypomania, one of his physicians signed an affidavit stating that Jerry was incapacitated and unable to effectively manage his property or financial affairs. On August 15, 2008, Whitney filed his petition for the appointment of a guardian over Jerry's person and estate under cause number 53C07-0808-GU-98 (the "guardianship"). On that same date, Susan filed a verified petition for dissolution of marriage under cause number 53C07-0808-DR-491 (the "dissolution") after more than twenty-two years of marriage.

         [¶6] Jerry resisted the appointment of a guardian, and in January 2009 the parties entered into a private settlement agreement, which was approved by the guardianship court. The guardianship was then dismissed without prejudice. However, six months later, in June 2009, Whitney filed a motion to set aside the dismissal and to reinstate the cause of action, to which Jerry objected. In July 2009, the guardianship court set aside its prior dismissal and reinstated Whitney's guardianship petition.

         [¶7] Also in June 2009, Jerry's then-attorney Andrew Z. Soshnick informed Whitney that Jerry was revoking Whitney's authority as a successor attorney-in-fact under the "alleged General Durable Power of Attorney," Appellees' App. Vol. 4 at 92, and, two days later, pursuant to Indiana Code Section 30-5-3-5, [4] Whitney filed an action entitled "Verified Petition for Judicial Interpretation of a Power of Attorney Document and for Instructions to Attorney-in-Fact" under cause number 53C07-0906-MI-1464. Among other things, Whitney requested that the court find that Jerry lacked capacity to control or revoke the power of attorney, find that Whitney is a successor attorney-in-fact, and instruct Whitney as to the powers he may exercise under the power of attorney.[5] All three actions-the guardianship, the dissolution, and the petition for judicial interpretation of the power of attorney-were then pending simultaneously before Special Judge Nardi in the Monroe Circuit Court.

         [¶8] After multiple and lengthy guardianship hearings, almost three years after Whitney had first filed his petition for appointment of guardian, in June 2011 the guardianship court entered its twenty-seven-page order with detailed findings of facts, conclusions, and judgment, which adjudicated Jerry to be incapacitated and determined that a guardian for his person and estate should be appointed. The court concluded that Whitney was a "good candidate" to be appointed guardian of Jerry's person and estate, recognized that in his power of attorney Jerry had requested that Whitney be appointed as his guardian, and stated that "the Court is obligated to honor that request if at all possible." Appellants' App. Vol. 3 at 84.

         [¶9] At the same time, the court appointed attorney Robert Ralston to serve as co- guardian with Whitney over Jerry's estate "until the dissolution matter is completed." Id. The court had previously appointed Ralston as receiver of Jerry's personal financial affairs. Finding that Whitney "obviously has a close relationship with his stepmother," Susan, the order further provided that "Attorney Ralston … shall have the discretion to make all decisions regarding the dissolution matter and shall act in [Jerry's] best fiduciary interest." Id. at 85.

         [¶10] Some ten months later, in March 2012, the co-guardians filed their "Petition to Retain Legal Counsel for Pending Dissolution Matter," and the guardianship court issued its order authorizing the co-guardians to retain O'Connor to represent Jerry in the dissolution of marriage proceeding.[6] The order further stated that "[c]o-guardian Robert Ralston shall have the authority to give direction to attorney Joseph O'Connor and to make decisions concerning the dissolution matter, including strategies for resolution or trial." Id. at 164.

         [¶11] On March 29, 2012, Whitney and Ralston retained O'Connor to represent Jerry in the dissolution. Shortly thereafter, on May 7, one of O'Connor's associates at the law firm prepared a memorandum for him that evaluated "the division of Jerry Gates' estate in the event he died before or after a [dissolution] could be finalized. The [m]emorandum concluded that Susan Gates would likely receive a larger inheritance as Jerry's spouse than she would receive as his former spouse." Id. at 169. O'Connor forwarded the memorandum to Whitney.

         [¶12] Thereafter, O'Connor met with Whitney and Ralston "to discuss the [dissolution] and potential property settlement." Id. at 168. Pursuant to those meetings, O'Connor conveyed a proposed settlement to Susan's counsel, Ryan Cassman, on May 29. That proposed settlement offer was "limited by the 1986 Prenuptial Agreement," in accordance with "the Guardians' requests." Id. at 170. O'Connor followed up with Cassman on June 20 and requested a response. O'Connor further requested that the two sides schedule mediation.

         [¶13] O'Connor and Cassman spoke by phone in early July. Cassman informed O'Connor that Susan "was desirous of completing the dissolution process" and agreed "to proceed with mediation." Id. at 168. O'Connor and Cassman continued to be in contact throughout July. On August 15, O'Connor asked Cassman for a response to the proposed settlement offer and to proposed mediation details, among other things. Susan did not respond to the proposals.

         [¶14] Instead, on September 20, 2012, Susan moved to dismiss her petition for dissolution of marriage after it had been pending for more than four years. On September 24, the dissolution court issued its order dismissing Susan's petition for dissolution. On that same date, at Whitney's direction, O'Connor filed a counter petition for dissolution of marriage for Whitney, as Jerry's guardian. Cassman immediately emailed O'Connor stating that he did not believe that Whitney had authority to seek a dissolution on Jerry's behalf, that Susan wished to remain married to Jerry, and that Susan believed Whitney was using his position as guardian to push to dissolve the marriage in order to increase his own inheritance. Two days later, O'Connor advised Whitney that there was no specific legal authority allowing a guardian to pursue dissolution of marriage on behalf of his ward. Nonetheless, Whitney desired to proceed. Accordingly, on October 1, O'Connor filed a motion to set aside the court's order granting Susan's motion to dismiss on the grounds that the dissolution statute provided a five-day grace period for the opposing party, in this case, Jerry, by his duly appointed guardian Whitney, to file a counter petition for dissolution before an action could be dismissed. See Ind. Code § 31-15-2-12. Susan responded with an Indiana Trial Rule 12(B)(6) motion to dismiss Whitney's counter petition. However, the trial court granted Whitney's motion to set aside and issued an order setting aside its prior order granting Susan's motion to dismiss her petition. Then, after a hearing on November 28, the court issued its order denying Susan's motion to dismiss Whitney's counter petition.

         [¶15] Susan did not seek an interlocutory appeal of the dissolution court's orders at this point. O'Connor and Cassman re-engaged in settlement discussions, and, in January 2013, the parties agreed to attend mediation in April. Although the parties had agreed to mediation, Cassman made clear to O'Connor "his intention to file a summary judgment motion and/or appeal if necessary" on the trial court's rulings and the legitimacy of Whitney's counter petition for dissolution of marriage. Appellants' App. Vol. 2 at 189, 233-34. The parties then designated a mediator and scheduled mediation for April 12.

         [¶16] On March 12, one month before the scheduled mediation, Jerry suffered his second stroke. The next day, O'Connor moved for an emergency bifurcation of the dissolution proceedings requesting the court to immediately issue a decree of dissolution with distribution of the marital estate to occur on a later date. The dissolution court held an emergency hearing on the motion the following day, at which Cassman objected to O'Connor's bifurcation proposal. Rather than rule on the emergency petition, the trial court set another hearing on the request to bifurcate for April 9. However, on March 18, 2013, Jerry died at age seventy-eight. Consequently, O'Connor moved to dismiss the dissolution as moot, which the court granted.

         [¶17] On May 3, 2014, Whitney filed his complaint for damages against O'Connor and the law firm, asserting claims of legal malpractice, gross negligence, breach of contract, and breach of fiduciary duty. In particular, Whitney alleged that O'Connor had committed legal malpractice when O'Connor did not secure a decree of marriage dissolution prior to Jerry's death, which resulted in Whitney and his heirs receiving a lesser share of Jerry's estate than they would have received had the marriage been dissolved.

         [¶18] O'Connor moved for summary judgment and designated the affidavit of Evansville family law attorney Kelly Lonnberg, who stated that "O'Connor … diligently pursued a resolution and final divorce settlement" of the marital estate, which involved "the division of multiple complex assets, including properties"; that "O'Connor … complied with the standard of care applicable to attorneys engaged in the practice of Family Law during [his] representation of Jerry Gates at all times"; and that nothing that O'Connor "did or allegedly failed to do in the course of [his] representation of Jerry Gates, through the Guardianship, caused monetary damage to [Whitney], or caused [Whitney's] inheritance in Jerry Gates' estate to be drastically reduced as claimed …." Appellants' App. Vol. 3 at 20-21. Lonnberg further stated that, "[h]ad [Cassman] filed a motion for summary judgment on the [validity of the] counter petition for dissolution filed by Whitney Gates, as Guardian of Jerry Gates, . . . Susan Gates would have succeeded" because "[i]n 2012 and 2013, Indiana law did not provide a Guardian legal authority to file a dissolution action on behalf of [his] Ward." Id. at 23. In light of that assessment, Lonnberg stated that "[t]he dissolution … could not have been finalized after Susan Gates dismissed her claim for dissolution due to the Guardianship that had already been established before [O'Connor's] involvement as counsel." Id. at 24.

         [¶19] In response to O'Connor's motion for summary judgment, Whitney designated the deposition and supplemental affidavit of Indianapolis family law attorney M. Kent Newton. In his deposition, Newton testified that, in 2012 and 2013, there was "ambiguity" in Indiana's case law on the authority, or lack thereof, of a guardian to file a counter petition for dissolution on behalf of his ward. Appellants' App. Vol. 7 at 9. He further testified that he was "unaware of any prohibition" against such a filing under Indiana's guardianship statutes in effect at the time of O'Connor's representation. Id. at 10. And he stated that "family law practitioners" had a "mixed" assessment of the law such that it was an "open question" among them whether such a procedure might be valid. Id. at 16. However, when pressed to identify or produce case law authority in support of his position, Newton was unable to do so.

         [¶20] In any event, Newton further averred that a reasonably competent family law attorney in Indiana in a dissolution action that involved such a large estate and a guardianship over the attorney's client would have acted "expeditiously" upon retention to put "motivation … [on the] opposing party to come to settlement either through mediation or negotiations …." Id. at 35. In this respect, Newton identified a number of procedures-any one of which might or might not have ultimately been successful-that he thought O'Connor should have immediately implemented, which included filing a counter petition for dissolution, filing an emergency motion to bifurcate the proceedings, filing an emergency motion to be excused from the local mediation requirement, and immediately requesting that a trial date be set.

         [¶21] As Newton explained:

In a family law matter an element and a major element in many cases is motivating the other side to take action that should be taken expeditiously, i.e. get ready for trial or settle ….
….
…. [O'Connor] failed to go along two tracks of preparing for litigation … [and] at the same time ...

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