1225 - Legal Negligence - Case turns on whether attorney advised divorce client she could seek an independent appraisal of her husband’s businesses

Faris v. Stone, 97 CI 6464

Plaintiff: Matthew Troutman & Dee Pregliasco, Louisville

Defense: Roy Snell, Croley Moore & Snell, LaGrange

Verdict: $162,100 for plaintiff

Circuit: Jefferson (5), J. Potter,

3-16-00

After twenty years of marriage in 1993, Donna Faris and her attorney husband, William, underwent a divorce. Seeking an amicable and quick resolution, Faris saw attorney Thomas Stone for advice. They discussed the matter and a settlement agreement was drafted. The parties signed it and the deal was finalized.

Key provisions of the settlement agreement provided that Donna was to receive ongoing maintenance and child support. The second key provision was that Donna would receive $1,500, representing ½ of the value of her husband’s interest in several medical bill processing firms. This valuation was determined even though those businesses earned income of approximately $238,000 in 1992. Still at the time in 1993, the deal seemed fair to the parties.

In 1995, Donna thought the settlement agreement seemed less fair and visited attorney Dee Pregliasco in an attempt to modify it by method of CR 60.02. The basis of this motion was that Donna was not advised by Stone of her right to a independent appraisal. Had she known of such a right in 1993, she would have exercised it and identified the true value of her husband’s interests. Her proof in this matter valued these interests at between $265,000 & $380,000, leaving at best, her uncompensated interest at ½ those sums or $190,000 minus the $1,500 received. The family court rejected the CR 60.02 motion and this lawsuit followed.

In it she alleged negligence by attorney Stone in the 1993 representation, predicated on his failure to advise of the right to appraise her husband’s business. James Gravitt, CPA, Louisville, provided the valuations described above and the instructions limited her verdict to $190,000

Her liability expert was Steven Kriegshaber, Louisville, who indicated the standard of care required that the plaintiff be advised of her right to appraise her husband’s business interests. As this case progressed, attorney Stone would also agree that this standard prevailed.

His proof and memory was that he had advised Donna of her right to an appraisal and that she had rejected it. She wanted a quick and amiable divorce, seeking to avoid protracted or expensive litigation. Stone provided just that, absent a costly appraisal. Accordingly, it was not a case of what the standard of care was, but instead a fact dispute about whether Donna was advised of the appraisal option.

On liability for Stone was Richard Revell, Louisville. Revell discussed among other things that plaintiff was not causally damaged as her marital interests were compensated by extensive maintenance. Plaintiff countered that notion, arguing that at no time in 1993 was the maintenance discussed as alternative compensation for the business interests.

Also for the defendant on valuation issues was Alan Dries, CPA, Louisville, who placed the value of husband’s businesses at closer to $35,000. Accordingly, as Donna had received $142,000 in maintenance since the divorce, she was already appropriately compensated by her husband and no additional sum was due from attorney Stone. An additional statute of limitations claim was raised, defeating the claim if Donna knew or should have known of the potential malpractice before seeing Pregliasco in 1995.

Snell, in his closing argument, focused on the settlement agreement as reflecting the agreement of the parties and the fact that for nine years, William and Donna complied with it. Also important according to Snell, was that Donna had already received $142,000, and she still wanted to ask for another $190,000 from the defendant. On that note, even if plaintiff was entitled to damages, she’s already received enough compensation via maintenance to account for her marital interests. On to liability, he described the fact dispute and he called it most believable that Stone advised her of the right to an appraisal and that she rejected it because of the expense. Finishing, Snell called this suit an attempt at unfair double dipping, plaintiff having already been fairly compensated in the settlement agreement.

Troutman framed the issue for the jury, namely that all agree there is a deviation if Donna was not advised of the right to appraisal. In suggesting she should be believed, he noted, (1) there was no notation of such advice in the file, (2) her ex-husband had no recollection of a discussion of appraisal, and (3) while Stone has handled hundreds of divorces and likely doesn’t remember all about this one, this was Donna’s only divorce and she does recall it. He finished explaining to the jury how to complete the instructions to find for his client.

The first instruction concerned the statute of limitations matter and the panel resolved it for plaintiff. On to liability, Stone was held to the reasonably competent lawyer standard. He was found at fault and on to damages, the jury was to award the difference in what she received minus what she should have received if properly advised. Capped at $190,000, the jury awarded Donna $162,100. A judgment in that sum has been entered on her behalf.