Friday, November 27, 2015

A Divorce to be Reckoned With

Felis v. Downs Rachlin Martin, PLLC, 2015 VT 129

By Ember S. Tilton

Divorces are not fun.

But like many things, they can get worse. Mr. Felis sued his ex-wife's lawyers and an appraisal company after his divorce. Mr. Felis claimed that they racked up unnecessary bills and dragged things on just to take more of his money. There're so many lawyer jokes here, but I'm going to try to show some restraint.

The trial court in the divorce found the in-excess-of-one-million-dollars-in-fees incurred unreasonable, but still awarded some money from the marital estate to pay Mrs. Felis's legal fees and expenses for the appraisal work Gallagher Flynn & Company (GFC) did. Mr. Felis also claimed that Downs Rachlin Martin (DRM) submitted false sworn statements to the court to show Mrs. Felis's debt. Mr. Felis filed suit against DRM.

DRM filed a motion to dismiss. It asked the court to throw out the lawsuit because it was positively ridiculous. GFC went one step further and asked the court to "strike" portions of it pursuant to a Vermont law designed to protect people from vexatious litigation. This would involve removing certain allegations from the record. The trial court granted the motions to dismiss filed by both defendants but denied the motion to strike.

For DRM, the claim was dismissed because there is no duty for a lawyer to protect the money in a marital estate from attorney's fees and there was no evidence of fraud. For, GFC the claim was dismissed under a theory of witness immunity (witnesses can't be civilly liable for their testimony). Mr. Felis was not content. He appeals to our beloved SCOV.

Mr. Felis raises four issues in his appeal to SCOV. He alleges that: (1) his complaint alleged sufficient facts to support a valid fraud claim;  (2) his complaint supports a valid claim for breach of fiduciary duty; (3) his complaint states a cause of action for prima facie tort; and (4) his claims are not barred by either witness immunity or litigation privilege.

You might notice that claim number three wasn't mentioned before. You also might be thinking, What the hell is a prima facie tort? You might also be wondering, How do you pronounce, 'prima facie'?

Well, good question. I didn't have two law professors who pronounced it the same and no judges I've argued before say it the way any professor did. So let's go with YouTube on this:



Yeah, that's close enough. A prima facie case is just meeting all the essential elements of a claim in a case—that's enough evidence, that if it was all proved at trial a party could win. A prima facie tort, is a little different. A prima facie tort is a civil wrong (like all torts), which has not been previously defined in our common law. It's the allegation that someone wanted to do harm to you, did some harmful act, and you suffered some harm as a result. It is a newer theory of tort liability as torts go and SCOV has recognized the possibility that it may recognize this type of lawsuit in the future but it
has not done so yet . . . and does not do so in this case. Why? Well, because he never argued it in the trial court and you just don't get to bring up new claims on appeal. You just don't. So SCOV don't have to hear it and they ain't listening to any of it.

As for the "meat and potatoes" of Mr. Felis's appeal, SCOV doesn't care much for that either. SCOV spells out the exact legal reasons why each of his claims fail.

First, Fraud—Fraud is “(1) intentional misrepresentation of a material fact; (2) that was known to be false when made; (3) that was not open to the defrauded party’s knowledge; (4) that the defrauded party acted in reliance on that fact; and (5) that thereby harmed.”

Mr. Felis had to allege this claim properly to survive the motion to dismiss in the trial court. However, the SCOV concludes he did it wrong. He alleged that DRM tricked the court by lying, i.e. fraud, into getting more money for themselves. But, let's look back again at what fraud is. Number 3 says that it has to be without the party's knowledge. But, he always claimed they were lying. He claimed it during the divorce. Then in the fourth element of the claim, an aggrieved party must have "relied" on that false information. Uh oh. Not one, but two missing elements in that claim, SCOV says the trial court did it right and Mr. Felis did it wrong. Ouch.

On to fiduciary duty—Mr. Felis claimed that DRM breached a fiduciary duty. What is a fiduciary duty? How do you pronounce it, you ask? Ah, Google it yourself this time (after all, this is the internet).

Well, okay, a fiduciary is one who owes a duty of trust to another, like a lawyer to a client or a bank to the account holder. However, SCOV says "It is well established that an attorney owes no duty to an adverse party." And that kinda makes sense—usually an attorney is trying to sue the other guy's pants off right?

Now Mr. Felis wants attorneys to be looking out for the other side? SCOV can imagine a situation where an attorney might actually be required to do this. In a case named Hedges, an attorney drafted a document for the sale of property where the proceeds were to go to both the husband and the wife in a divorce. In that situation, the adverse party was the beneficiary of the attorney. But, that isn't what was going on here. There was no agreement here and this was entirely an adversarial context. SCOV therefore finds DRM owed no duty to Mr. Felis or his former joint-marital estate.

Finally, SCOV addresses the denial of GFC's motion to strike. GFC did win their motion to dismiss but the motion to strike was denied. GFC filed this motion under Vermont's anti-SLAPP law. SLAPP is an acronym that stands for "strategic lawsuit against public participation." The anti-SLAPP law is intended to prevent people from using lawsuits to prevent people from exercising their First Amendment rights. That's why Donald Trump can't (or rather, shouldn't) sue us for saying it looks as though he's sporting a squirrel pelt on his head. It's also why he can't sue Fake Donald Trump on Twitter who's totally awesome.

Anyway, the trial court had denied the motion because it was "moot." (Moot means it no longer needs to be address because something has changed. For example, an eviction claim would become "moot" if the tenant vacated the residence). GFC didn't like that ruling because they wanted to get attorney's fees from Mr. Felis. The anti-SLAPP law allows the victim of a SLAPP-suit to get attorney's fees.

SCOV agrees. So will the case be sent back to the trial court for the judge to determine if GFC is entitled to attorney's fees? NO! In an unusual, but not unprecedented, turn of events SCOV decided to decide the issue themselves even though it was not addressed on the merits in the trial court.

SCOV might be excited because this is the first time they get to rule on a case involving this ten-year-old law. The anti-SLAPP law allows a defendant to file a motion to strike which will immediately stop all litigation. The court must then grant the motion unless the plaintiff can show that defendant's action was devoid of reasonable basis and intended only to harm plaintiff. The purpose of the law (other than the fun examples above) is to make sure that people don't get sued for making statements to the press, at town meeting, or otherwise petition the government for action.

It's intended to protect freedom of speech. GFC contends that they were involved in speech when they testified in the divorce case. However, SCOV pulls out the magnifying glass and spots a line in the law that says, the defendant's speech must be "in connection with a public issue" in order to claim SLAPP. SCOV says that testifying in the divorce case was not of any public significance and the trial court's error in denying the motion was harmless because it should have been denied for this reason anyway.

And so that's that.

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