Office-Sharing Lawyers May Be Vicariously Liable for Malpractice

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By Samson Habte

March 11 — Although an unincorporated association of office-sharing lawyers isn't a partnership it may still be vicariously accountable for the alleged malpractice of one of its members, the U.S. District Court for the Western District of Tennessee held March 11 ( Wildasin v. Mathes, 2016 BL 75520, W.D. Tenn., No. 3:14-cv-2036, 3/11/16).

Chief Judge Kevin H. Sharp acknowledged that “Tennessee courts have not confronted” whether “an unincorporated association may be held vicariously liable when one of its members commits a tort.”

But Sharp said he didn't need to answer that question yet to conclude that Hiland, Mathes & Urqhart—an association of office-sharing lawyers—failed to show that it was entitled to summary judgment in this case.

Sharp said the association's argument hinged on an unsupported proposition: “that only a partnership—and no other business organization—may be held vicariously liable for a member's tortious conduct.”

How an Office-Sharing Arrangement Can Expose Lawyers to Liability Through Partnership by Estoppel

In her  opposition to summary judgment plaintiff Joan Ross Wildasin took issue with HUM's assertion that it isn't a law firm and thus can't be held vicariously liable for any malpractice by Mathes.

Wildasin's opposition appears to posit that HUM's liability could be established through partnership by estoppel, although she didn't use that term.

One treatise states that partnership by estoppel “commonly arise[s] out of office sharing arrangements in which the separate identities of the individual lawyers are not apparent to the public.” Thomas L. Browne & Thomas P. Sukowicz, Attorneys' Legal Liability §16.67 (IICLE 2012).

The authors cite  Gosselin v. Webb, 242 F.3d 412,  17 Law. Man. Prof. Conduct 182 (1st Cir. 2001), a case in which partnership by estoppel was cited as grounds for denying summary judgment to office-sharing lawyers who were sued for malpractice under a vicarious liability theory.

Begging the Question.

On its letterhead Hiland, Urqhart, and Mathes, or HUM, calls itself “an association of attorneys,” Sharp said. According to the opinion HUM is an unincorporated association of three lawyers who work together in an office where they split rent and share a receptionist.

The lawyers said they formed a limited-liability company to share office expenses but are not a law firm. The LLC, they  said, “is a distinctly separate entity unrelated to any one of the three attorneys' law practices.”

In 2014, Joan Ross Wildasin  sued HUM member Peggy D. Mathes for negligence and alleged that HUM was vicariously liable. HUM  moved for summary judgment.

Sharp said HUM's argument boiled down to: “(1) HUM is not a partnership; (2) partnerships may be held vicariously liable for the torts of individual partners; therefore (3) HUM cannot be held vicariously liable for the tortious conduct of one of its members.”

“This logic is not exactly drum-tight,” Sharp said.

“HUM's conclusion hinges on its unspoken proposition that only a partnership—and no other business organization—may be held vicariously liable for a member's tortious conduct,” Sharp wrote.

“Unfortunately, HUM does not provide any legal authority to support that proposition,” he said.

Contract v. Tort.

“After a closer look, Tennessee law seems unhelpful for HUM's case, too,” Sharp said.

He pointed to statutes, civil procedure rules and case law indicating that unincorporated associations “are legal entities capable of being sued.”

Those authorities, Sharp said, include decisions holding that an unincorporated association “is not exempt from liability when a member violates a state statute or regulation” and “is effectively a partnership for purposes of finding liability for breach of contract.”

“If vicarious liability can attach when a member of an unincorporated association violates a statute or breaches a contract, can it also attach when a member commits a tort?” Sharp wrote. “HUM argues that it cannot, but offers nothing to support that argument.”

Accordingly, Sharp said, “even if the Court were to assume that HUM is not a partnership, HUM has not shown why it is entitled to judgment as a matter of law. This is not enough to prevail on summary judgment.”

To contact the reporter on this story: Samson Habte in Washington at  shabte@bna.com

To contact the editor responsible for this story: Kirk Swanson at  kswanson@bna.com

For More Information

Full text at  http://www.bloomberglaw.com/public/document/Wildasin_v_Mathes_No_314cv2036_2016_BL_75520_MD_Tenn_Mar_11_2016_.

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