Laethem Equipment Co. v. Currie Kendall, P.L.C., Court of Appeals of Michigan, January 13, 2011.
Facts: Plaintiffs settled an underlying family dispute and then sued Currie Kendall for legal malpractice and breach of fiduciary duty. Defendant moved for dismissal claiming the lawsuit was barred by the settlement agreement and release that resolved the underlying litigation.
The trial court agreed with Currie Kendall and Plaintiffs appealed.
Issue: Did a settlement in the underlying action bar Plaintiffs from bringing a suit for legal malpractice?
Ruling: No – at least, the terms of this settlement/release did not.
The Michigan Court of Appeals analyzed the issue solely from the perspective of contract law:
The ‘parties’ to the settlement agreement and release are clearly set forth in the opening paragraph and defendant, Currie Kendall, P.L.C., is not a named party. Defendant represented parties in the settled litigation, but was not itself a party in that underlying litigation. Defendant was not included by name in the excluded release and did not itself execute the release. Nevertheless, defendant claims a right to benefit from and enforce the terms of the release.
The Court went on to explain that the release’s reference to "claims by or against any persons in their individual or representative capacities " did not refer to a law firm that represented various parties in the settled litigation. This language, the court held, had to be read in the context of the remainder of the agreement. In other words, it was merely further describing the types of claims being released by the individuals named therein. It was not adding a different category of individuals being released, i.e. the attorneys involved in negotiating and drafting the settlement.
The Court distinguished this language from a release in a different matter wherein the language might bar subsequent suits against attorneys: "[that release] specifically included as being released [a police officer], [a municipal organization], [an insurer], together with all other persons, firms and corporations, from any and all claims…".
Lesson: In Michigan, an attorney should not have an expectation that he cannot be sued for malpractice after a settlement in the underlying litigation, unless the release specifically mentions third-parties, including attorneys, involved in a representative capacity.
Posted in: Michigan