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Phillips v. Carson - 240 Kan. 462, 731 P.2d 820 (1987)

Rule:

Kan. Stat. Ann. § 60-256 provides for the entry of summary judgment if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Facts:

Plaintiff Thelma Phillips retained Defendant David Carson and his law firm, Carson, Fields, Boal, Jeserich & Asner to handle the estate of her deceased husband. While the estate was pending, Phillips paid fees totaling $80,000 to the firm. Carson told her that this fee was to take care of all of her legal business until the estate was closed. In August 1980, Carson told Phillips that he was having financial problems, and Phillips loaned him $200,000. Carson told her that she would be fully secured, and he gave her a note and a second mortgage on some Arizona property. These documents were properly executed and the mortgage was filed of record. In 1981, Phillips loaned Carson an additional $70,000. Later, Carson asked Phillips to release her mortgage on the Arizona property so that he could refinance and sell that or another property. He offered her a mortgage on 90 acres he owned in Wyandotte County, and told Phillips that this would put her in a better position. She relied upon Carson's statement that she would be better secured and she trusted his advice as her attorney. On March 29, 1982, Phillips released her mortgage on the Arizona property, and Carson gave her a new promissory note for $274,933.70, which included past due interest as principal. Carson filed for bankruptcy, and Phillips was not able to recover the amount she loaned.

Phillips then filed an action, alleging that Carson, while acting as attorney for her and within the scope and course of the law partnership business and authority, and while acting in a fiduciary relationship towards her, negligently performed or failed to perform those legal duties entrusted to him to be performed on behalf of Phillip. The trial court entered judgment in favor of Phillips and against Carson for “breach of duty in the negligent performance of legal services and advice.” The trial court also entered judgment in favor of the partnership, finding that the partnership and the partners of the law firm were not vicariously liable to Phillips for the breach of duty and negligence of Carson, as Carson’s actions were not within the scope of his authority and were not engaged in to carry on the partnership business. Carson appeals from the summary judgment entered against him. His principal claim of error is that the trial court erred in entering summary judgment on the issue of negligence. Phillips cross-appeals from the order of summary judgment entered against her claims against the other partners of the law firm and the partnership. Her principal claim of error is that the trial court erred in finding that the partners and the firm were not vicariously liable and in finding that Carson was not acting within the ordinary course of business of the partnership or with the authority of his partners at the time of the transactions.

Issue:

  1. Did the trial court err in granting summary judgment in favor of Phillips on the issue of Carson’s negligence?
  2. Did the trial court err in granting summary judgment in favor of the partnership on the issue of the partnership’s vicarious liability?

Answer:

1) No. 2) Yes.

Conclusion:

The Court affirmed in part and reversed in part. The Court held that Carson negligently performed legal services and negligently advised his client; as a result, Phillips was injured. Therefore, summary judgment was proper. However, whether Carson, in advising Phillips about the loan, was apparently carrying on law firm business or whether his actions were in the usual course of business or with the consent of his partners, were material issues of fact, precluding summary judgment as to the law firm's liability to client.

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