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Oct. 20 — A husband has no cause of action against his ex-wife's divorce counsel for allegedly defrauding him through false evidence or over-litigating the case so as to maximize its legal fees, the Vermont Supreme Court held Oct. 16.
Justice John A. Dooley said the husband's fraud claim was doomed by lack of allegations that he justifiably relied on the law firm's alleged misrepresentations. As for the husband's breach of fiduciary duty claim, the court spurned the notion that the firm owed him any obligation in its role as the wife's agent not to diminish the marital estate through unnecessary fees.
After the divorce case, which involved a $9 million marital estate and spanned seven years with two trips to the Vermont Supreme Court, Kenneth Felis filed this action accusing his ex-wife's counsel, Downs Rachlin Martin PLLC, of committing fraud and over-litigating the case.
Felis alleged that DRM engaged in excessive discovery and filed unjustified motions to run up its fees and harass him. He claimed the firm knowingly presented inaccurate evidence at trial and requested a huge fee award to be paid from marital funds while secretly forgiving much of those fees.
The supreme court concluded the complaint had no viable claims against DRM. Felis's fraud claim was deficient, it found, because he did not allege any facts indicating that he justifiably relied on the law firm's alleged misrepresentations. In addition, Felis's vigorous litigation of the divorce case was at odds with any assertion that he relied on the law firm's statements, Dooley said.
The court also said Felis could not meet his burden to show the reliance element of fraud by painting himself as a third-party beneficiary of DRM's services or by arguing that the trial court relied on the allegedly false submissions.
“This argument essentially would emasculate the reliance element in the context of litigation, giving one side an opportunity to relitigate the substance of the adversary’s case in a suit against the adversary’s attorney,” Dooley said.
Although a judgment can be vacated due to fraud on the court, a litigant cannot bring a private tort action under this theory, he added.
Felis has no claim for breach of fiduciary duty against the wife's counsel because “an attorney owes no duty to an adverse party,” the court said.
Dooley rejected Felis's theory that the law firm, in its role as the wife's agent, had a fiduciary duty to the husband not to waste the marital estate by over-litigation that would engender high legal fees to be paid out of marital funds.
If DRM engaged in self-dealing and helped itself to marital funds as alleged in the complaint, that conduct was outside the scope of its representation of the ex-wife and did not involve her or any fiduciary duties she might have to the husband or the marital estate, Dooley said.
As for Felis's prima facie tort claim, the court said it has yet to recognize this cause of action, under which a harm intentionally inflicted on another without justification is prima facie actionable. Felis waived that theory of liability anyway by not raising it below, the court added.
Along with his claims against DRM, Felis lodged similar claims against Gallagher, Flynn & Co. LLP, an accounting and business consulting firm DRM hired to value Felis's business interests.
The trial court dismissed these claims on the merits. On appeal, Gallagher argued it was entitled to fees under the state anti-SLAPP act.
Addressing the act for the first time, the court construed it narrowly as protecting only against lawsuits “in connection with a public issue.” The claims here against Gallagher were not connected with a public issue and therefore the anti-SLAPP act does not apply to them, the court concluded.
Stackpole & French Law Offices represented Kenneth Felis. Sheehey Furlong & Behm P.C. represented Downs Rachlin Martin. Gravel & Shea P.C. represented Gallagher, Flynn & Co.
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