Why People Hire Lawyers

The Nebraska Supreme Court has held that a legal malpractice case may go forward

In 2011, the district court dissolved the marriage of Brenda R. Rice and Dale E. Rice. Attorney Terrance A. Poppe represented Brenda in the dissolution action. Later, Dale died and Brenda made a claim for the death benefits under life insurance policies owned by Dale. The court determined that Brenda was not entitled to the benefits, because she waived her beneficiary interest under the property settlement agreement. Brenda sued Poppe for legal malpractice, alleging that he had failed to advise her that the property settlement agreement waived her beneficiary interest in Dale’s life insurance policies. The trial court sustained Poppe’s motion for summary judgment, reasoning that Poppe had no duty to advise Brenda of the legal effect of an unambiguous agreement. We conclude that Poppe, the summary judgment movant, did not establish a prima facie case entitling him to judgment as a matter of law. We therefore reverse the judgment and remand for further proceedings.

The story

In August 2011, the district court dissolved Brenda and Dale’s marriage. The court approved the property settlement agreement and incorporated it into the decree.

Dale died a week later. Brenda tried to claim the death benefit for two term life insurance policies owned by Dale, only one of which, with a death benefit of $250,000, concerns this appeal. The personal representative of Dale’s estate argued that Brenda had waived her right to the death benefits in the property settlement agreement. The trial court agreed and ordered Brenda to withdraw her claim. Brenda appealed.

We affirmed the determination that Brenda had waived her interest as a beneficiary of Dale’s life insurance policies in Rice v. Webb.  There, we explained that divorce does not affect a beneficiary designation in a life insurance policy. But a spouse may waive a beneficiary interest in the divorce decree. Synthesizing paragraphs VI, IX, and X of the property settlement agreement, we concluded that Brenda unambiguously gave up her right to claim the death benefits…

As to potential malpractice

Brenda argues that Poppe committed malpractice by not asking what her and Dale’s intentions were concerning their life insurance beneficiary designations and failing to explain the effect that the property settlement agreement would have on those designations. She contends that the “intricate rules of construction which may render a written settlement agreement that has been incorporated into a decree ‘unambiguous’ to members of the Nebraska Supreme Court do not apply equally to the uninitiated layperson.”  Poppe responds that he had no duty to inform Brenda that she was waiving her beneficiary status, because the “fact she was doing so was readily apparent from the clear language of the Agreement.” 

 Poppe owed Brenda a duty to reasonably advise her about the property settlement agreement’s effect on her interests. And, as the summary judgment movant, he had the burden to produce evidence that he did not breach that duty. The general standard of an attorney’s conduct is established by law, but whether an attorney’s conduct fell below the standard in a particular case is a question of fact. Expert testimony is generally required to show whether an attorney’s performance conformed to the standard of conduct. An attorney moving for summary judgment must generally make a prima facie case by producing expert testimony that his or her conduct did not fall below the standard of care.

The court surveyed cases from other jurisdictions

These cases show that attorneys are not always insulated from malpractice liability because their clients read or ought to have read the documents themselves. Instead, they “stand only for the proposition that for purposes of determining when an action for alleged legal malpractice begins to run, a client must know what lay persons of ordinary intelligence are deemed to know.” We would not have discussed the statute of limitations at all in Interholzinger and Nichols if the fact that the plaintiffs signed the documents was an absolute bar to recovery. A rule that insulates attorneys from liability as a matter of law on the theory that clients ought to know what they are signing ignores the fact that laypersons often hire attorneys because they lack the knowledge and skills needed to understand the transaction.

We conclude that reasonable minds could disagree concerning whether Poppe’s failure to advise Brenda about the effect of the property settlement agreement on beneficiary designations was the proximate cause of Brenda’s loss.

(Mike Frisch)