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Media Alerts - Zee v. Mullen - Fourth Circuit
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November 13, 2013
  Zee v. Mullen - Fourth Circuit
Headline: N.C. Attorney Not Liable for Failure to Inform Client about Possibility of Settlement

Area of Law: Legal Malpractice

Issue Presented: Whether an attorney who fails to inform his client about an opposing party's proposal to discuss a settlement can be liable for malpractice and constructive fraud under North Carolina law.

Brief Summary: Williams, Mullen, Clark, & Dobbins, P.C. ("Williams Mullen") represented Zee Company, Inc. ("Zee Company") in a North Carolina state court action against a business competitor, GE Betz, Inc. (Betz). In the first year of litigation, Betz's general counsel approached Williams Mullen to discuss the possibility of a settlement. Williams Mullen did not notify Zee Company of this discussion. Two years later, after accruing over one million dollars in attorneys' fees, Zee Company heard a rumor about the discussion, which it characterized as a "walk-away settlement offer." Zee Company ended their representation agreement with Williams Mullen and sued the firm for legal malpractice and constructive fraud. Williams Mullen countersued for unpaid legal fees. The district court granted Williams Mullen summary judgment on Zee Company's claims and a verdict granted the firm the full amount of its counterclaim.

The United States Court of Appeals for the Fourth Circuit affirmed, holding that Zee Company could not show that failing to communicate the conversation caused their damages. Under North Carolina law, Zee Company needed to prove an offer had been made and that Zee Company would not have suffered a loss "but for" Williams Mullen's failure to communicate that offer in a timely manner. The court reasoned that Betz made no cognizable offer under North Carolina law because Betz's counsel's statement was only "an offer to open negotiations that eventually may result in a contract" and was too indefinite on "essential terms" to be considered a settlement offer. The court reasoned that even if the offer was communicated, Williams Mullen would not have been in any better position, since they already knew Betz was willing to discuss an alternative to litigation. This statement alone therefore could not provide a jury sufficient evidence to conclude that, but for Williams Mullen's omission, "a settlement would have actually resulted." Instead, the jury would have had to speculate about each parties' subsequent conduct in pursuing settlement.

Panel: Judges Niemeyer, King, and Agee

Date of Issued Opinion: 10/18/2013

Docket Number: No. 12-2010

Case Alert Author: Caleb Karpay

Counsel: Mark Andrew Dombroff, MCKENNA LONG & ALDRIDGE, LLP, McLean, Virginia, for Appellants. William Delaney Bayliss, WILLIAMS MULLEN, Richmond, Virginia, for Appellee. ON BRIEF: Thomas Barton Almy, Donald Weinberg, DOMBROFF, GILMORE, JAQUES & FRENCH, McLean, Virginia, for Appellants. Brendan D. O'Toole, Joseph E. Blackburn, III, WILLIAMS MULLEN, Richmond, Virginia, for Appellee.

Author of Opinion: Per curiam

Case Alert Circuit Supervisor: Professor Renée Hutchins

    Posted By: Renee Hutchins @ 11/13/2013 11:10 AM     4th Circuit  

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