Issue preclusion does not bar attorney’s claims for
attorney’s fees against former client
The court assumed but did not decide that an attorney was
professionally negligent when it concluded that his client damaged
evidence. But that assumption did not bar the attorney’s
cross-claim for attorney’s fees because the negligence issue was
not actually litigated.
By org jforward wisbar Joe Forward, Legal Writer,
State Bar of Wisconsin
June 21, 2011
– A corporate client sued its attorney for professional negligence
after the court dismissed the client’s construction defect
lawsuit. Recently, the District II Wisconsin Court of Appeals ruled that
issue preclusion did not apply to bar the attorney’s cross-claim
for attorney’s fees.
Construction of Harborview Office Center LLC (Harborview) was completed
in 1997. Efforts to remedy a water infiltration problem prompted
Harborview to file suit against construction entities.
But the circuit court dismissed the case after finding that Harborview
authorized remediation work during litigation without notifying the
construction defendants and thus acted egregiously in the spoliation of
evidence. An appeals court affirmed.
Harborview then brought professional negligence claims against the
remediation engineer/architect and its attorney, Randall Nash, arguing
that it depended on them to “further [its] lawsuit and preserve
[evidence] in accordance with the rules of engineering and law”
during the course of the case.
Nash counter-claimed for attorney’s fees. The circuit court
dismissed Harborview’s professional negligence claims based on the
doctrine of in pari delicto.
That is, the court concluded Harborview could not recover damages, even
assuming Nash and Fischer were negligent, because it was an
“active participant” in the destruction of evidence. The
court did not determine whether Nash was negligent, but assumed that he
was for purposes of summary judgment.
Harborview then moved for summary judgment on Nash’s cross-claim
for attorney’s fees, asserting that “issue preclusion barred
Nash from arguing that he was not in pari delicto with
Harborview.” The circuit court agreed and dismissed Nash’s
But in Harborview
Office Center LLC v. Nash, 2010AP1802 (June 15, 2011), the
appeals court reversed the circuit court’s summary judgment,
concluding that Nash’s alleged negligence was never actually
litigated, not determined in a prior proceeding, and not essential to
the prior judgment.
“Nash’s motion for summary judgment against Harborview [in
the professional negligence action] did not concede negligence, nor did
this court make any factual or legal determination as to Nash’s
negligence in the underlying litigation,” Judge Lisa Neubauer
wrote in the opinion.
The appeals court reversed the circuit court and remanded the case to
determine “whether Nash’s conduct in the underlying
litigation and spoliation precludes him from now recovering attorney