Phillips v. Carson

240 Kan. 462, 731 P.2d 820 (1987)

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Nature of the Case

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Facts

This is an action for professional negligence filed by P against an attorney, D; the individual partners of his law firm; and the partnership Carson, Fields, Boal, Jeserich & Asner, a Kansas professional partnership. P and her husband, Robert L. Phillips, and D and Mrs. Carson had been friends for several years prior to Mr. Phillips' death in 1978. P retained D and his law firm to handle the estate of her deceased husband. The probate proceedings commenced in 1978, and the estate had not been closed in May of 1982 when P secured other counsel. P paid fees totaling $80,000 to the firm. D told her that this fee was to take care of all of her legal business until the estate was closed. Mr. Asner prepared P's individual tax return for at least 1980 through 1982. D represented P in a conflict she was having with a builder, handled negotiations for her relating to a sulfur lease in Pecos County, Texas, and when P inappropriately loaned her niece money from the estate, P made the necessary arrangements to have the money returned to the estate. The firm did not bill P for any of this additional work, which was performed for her personally. In August 1980, D told Ps that he was having financial problems, and P loaned him $200,000. D told her that she would be fully secured, and he gave her a note and a second mortgage on some Arizona property. The mortgage was filed of record. In 1981, P loaned D an additional $70,000. Because of his representations, P believed that this loan would get him over his current financial difficulties. She was concerned that he might harm himself, and she thought this loan would increase the chances that her first loan would be repaid. D asked P to release her mortgage on the Arizona property so that he could refinance and sell that or another property. D offered her a mortgage on 90 acres he owned in Wyandotte County and told P that this would put her in a better position. P trusted his advice as her attorney. P released her mortgage and D gave her a new promissory note for $274,933.70, which included past-due interest as principal. D prepared and executed a mortgage on the Wyandotte County property but failed to file that mortgage with the Register of Deeds. D never advised P to seek independent counsel and she did not discuss the loans with other partners of the D firm or with other counsel. P called D's office and learned that her mortgage had not been filed of record. She sought independent counsel, who secured the mortgage and filed it for record on July 23, 1982. P demanded payment in full. D filed a Chapter 11 petition in the United States Bankruptcy Court. The bankruptcy court granted P relief from the automatic stay to pursue her claim against Ds. The bankruptcy court voided P's mortgage on the Wyandotte County land as a preferential transfer pursuant to 11 U.S.C. § 547(b) (1982), rendering it an unsecured claim. Eventually, it did not matter as the land had been transferred rendering preference issues moot. After discovery and motions, everyone filed motions for summary judgment. The court entered judgment in favor of P and against D for 'breach of duty in the negligent performance of legal services and advice' in the total sum of $ 378,107.45 plus interest from May 9, 1985, at the statutory rate. It then entered judgment in favor of the partnership, Carson, Fields, Boal, Jeserich & Asner, and the partners individually (except Carson), finding that they were not vicariously liable for the breach of duty and negligence of D. The court made extensive findings about the operation of the law partnership where there were no working relationships, all partners were given full power of authority to contract to perform legal services on behalf of a client and to set the fee arrangement, there were no review procedures to check each other’s work, there were no rules, guidelines, or policies laid down to uphold standards related to work, and there were no restrictions on the use of partnership letterhead for personal matters. P appealed contending there were issues as to whether the partnership and other partners were liable for D’s negligence.