# Petition — Molever v. Preiser > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_0726%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1979 - **Citation:** 444 U.S. 870 ## Text IN THE Supreme Court of the United States OcrosER TERM, 1979 No. 79-235 —_=> I. M. MoLever; Mopern Marts, Inc., a Pennsylvania corporation; PIrTsBURGH AND West VIRGINIA INVEST- MENT COMPANY, a Pennsylvania corporation; Brrry BERNSTEIN, SHIRLEY Z. WEINBERGER, as custodian; Don D. Brooks; and JEAN C. Paris Petitioners, V. STANLEY E. PREISER and JoHN F. Brown Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT B. Micuae,t Dann CHARLES D. RousH TREON, WARNICKE, Dann & Roush, P.A. 919 North First Street Phoenix, Arizona 85004 July 12, 1979 Press oF Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C. — BaMMa distance oe eT INDEX Page CITaTIONS To THE Oprnions BELow ...............545. 1 I IIS AS EOE 2 CoNSTITUTIONS AND STATUTES INVOLVED .............. 2 ee aca c des bs neceececcecce 2 Rau e sc aca ccccccccess 3 Reasons FoR GRANTING THE WRIT ..............-000:: 8 ew yis cnc ecevecccce 16 ee ee GETS fines ccccceseece la eG Ga gine kc enececceses 37a CITATIONS CasEs: Appleyard v. Transamerican Press, Inc., 539 F.2d 1026 tise Ge ececcscces 15 Baylis v. Travelers Ins. Co., 113 U.S. 320, 5 S. Ct. 494, Ne de ee cnc escccece 10, 11 Chambers v. State of Florida, 309 U.S. 227, 60 S. Ct. eee 9 Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S. Ct. eS 14 Dorn v. United States, 195 U.S. 138, 24 S. Ct. 808, 49 NE EE 15 Fountain v. Filson, 336 U.S. 681, 69, S. Ct. 754, 93 Nees ec cectcessces 10, 11 Gelman v. State of Maryland, 538 F.2d 603 (4th Cir. ER NEES EES eee 11 Johnson v. RAC Corporation, 491 F.2d 510 (4th Cir. EN SET 11 ii Citations Continued Page Mims v. Keys, 516 F.2d 21 (4th Cir. 1975) ........... 11 Molever v. Levenson, 539 F.2d 996 (4th Cir. 1976) .. 2,4, 14 Nave v. City of Seattle, 68 Wash. 2d 721, 415 P.2d 93 (1966) appeal dismissed, 385 U.S. 450, 87 S. Ct. 614, 17 L. Ed. 2d 513, rehearing denied, 386 U.S. 929, 87 S. Ct. 853, 17 L. Ed. 2d 808 .............. 11 Plante v. Shivar, 540 F.2d 1233 (4th Cir. 1976) ...... 11 Tot v. United States, 319 U.S. 463, 63 S. Ct. 1241, 87 St Gs SRS UME C45 0654 Coe bake as veka ee Utility Control Corp. v. Prince Williams Const. Co., GOO Wime FEO (GGR Ole, BOTT) oiais Sons cic cvcscs een 11 CONSTITUTIONAL Provisions AND RULEs: Seventh Amendment to the Constitution ............. 9,2 Fourteenth Amendment to the Constitution .......... 2 Federal Rules of Civil Procedure, Rule 12(b)(6) ..... 5, 2 Federal Rules of Civil Procedure, Rule 56 ........... 2 Federal Rules of Evidence, Rule 201 ................ 12, 2 Federal Rules of Evidence, Rule 605 ................ 12, 2 MISCELLANEOUS: Re CUE ON re tree ge 5 American Bar Association, A.B.A. Journal, Vol. 64, Fi BAP CERI OE bse ak Coie eR ees i 9 Securities and Exchange Act of 1934, 410(b) ........ 3 IN THE Supreme Court of the United States OcrosER TERM, 1979 No. I. M. Motever; Mopern Marts, Inc., a Pennsylvania corporation; PrrrsBuRGH AND WEsT VIRGINIA INVEST- MENT CoMPANY, a Pennsylvania corporation; Berry BERNSTEIN, SHIRLEY Z. WEINBERGER, as custodian; Don D. Brooxs; and JEAN C. Paris _ Petitioners, V. STaNLEY E. PREISER and JoHN F. Brown Respondents. ee PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT Petitioner prays that a Writ of Certiorari issue to review the judgment of the United States Court of Appeals for the Fourth Circuit entered in the above- entitled case on March 8, 1979. CITATIONS TO THE OPINIONS BELOW The opinion of Judge Robert E. Maxwell granting defendants’ motions to dismiss appears in Appendix 2 A, infra. It is unreported. The opinion of the Circuit Court of Appeals is unreported and appears in Ap- pendix A, infra, A related opinion is published sub nom Molever v. Levenson, 539 F.2d 996 (4th Cir. 1976). JURISDICTION The judgment of the Circuit Court of Appeals was entered on March 8, 1979. A petition for rehearing was timely filed and denied by the Circuit Court of Ap- peals apparently on April 13, 1979, though the order is undated. The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1). CONSTITUTIONS AND STATUTES INVOLVED The federal constitutional provisions and statutes involved include the Seventh and Fourteenth Amend- ments to the Constitution, the Federal Rules of Civil Procedure, Rules 12(b)(6) and 56, and the Federal Rules of Evidence, Rules 201 and 605. QUESTIONS PRESENTED 1) Whether a District Court may, in a legal mal- practice action, circumvent the Seventh Amendment right to jury trial, the Federal Rules of Evidence and the Federal Rules of Civil Procedure by simply re- viewing the record of prior proceedings in the same court, without request, notice or opportunity to be heard and then dismissing the malpractice action on the basis that, in the opinion of the District Court Judge, there was no malpractice. 2) Whether a District Court may properly use ju- dicial notice as a vehicle to dismiss a legal malpractice ee eee Ae A ae 3 ease where the matter noticed is the entire proceed- ings in a four week trial and appeal and where: a.) no request for notice was made; b.) the motions pending attacked only the suffi- ciency of the pleadings; c.) the pleadings disclosed that major portions of the neglect alleged occurred outside of the record before the court; d.) no reference was ever made as to what por- tions of the record were reviewed nor what portions demonstrated that no neglect existed ; and e.) the matter noticed was not a matter of fact, but of opinion. 3) Whether this Court will permit the creation of a ‘‘preferred”’ class of litigants—lawyers. STATEMENT In 1967, I. M. Molever and others (‘‘Molever’’) sued Robert and Donald Levenson (‘‘Levensons’’) for defa- mation.’ The defamations (there were several) occurred when bank examiners discovered serious irregularities regarding a “floor plan’ arrangement between the bank 1A total of three cases were actually filed by Molever and other stockholders of the Bank of Wheeling, W. Va.: an action under §10(b) of the Securities and Exchange Act of 1934; a share- holder’s derivative action; and a defamation action. For space and convenience, only the defamation action will be discussed, as representative of the issues; and only Molever will be referenced, as representative of the plaintiff petitioners. Other parties were joined as defendants, but dismissed prior to trial. These factual allegations are taken from the Circuit Court decisions, 539 F.2d 996 (4th Cir. 1976), which is found in Appendix A. + and the Levensons, and additional irregularities regard- ing certain loans authorized by an employee named Dennis. In essence, the Levensons (who were board members of the bank) accused Molever (who was the bank president) publicly and privately of criminal conduct in connection with these transactions though they knew that they, not Molever, had arranged and authorized the illegal floor plan arrangement, and knew that they, not Molever, were implicated in the Dennis loans and that Dennis had admitted fault in the loans and had absolved Mo'ever of any knowledge or complicity. After an interlocutory appeal and interminable de- lays, the matter was tried to a jury, resulting in ver- dicts in favor of Molever in excess of five million dol- lars. The jury held the Levensons liable on the fraudu- lent ‘‘floor plan’’ for over one million dollars. It held the Levensons liable on the ‘‘Dennis loans’’ for seven hundred thousand dollars. (These verdicts were based upon the derivative claims). The jury then awarded Molever over three million dollars in general and punitive damages against Levensons for the defama- tions. As the result of a post trial motion for judgment N.O.V., the trial court set aside the jury verdict on the defamation claims, stating that the charges of criminal conduct were ‘‘privileged;’’ but entered judg- ment on the remaining claims. The Fourth Circuit af- firmed the judgment N.O.V. and reversed the remain- ing judgments. Molever v. Levenson, 539 F.2d 996 (4th Cir. 1976). Certiorari was denied by this Court. 429 U.S. 1024, 97 S. Ct. 643, 50 L. Ed. 2d 625 (1976).? * One claim was returned to the District Court for re-trial—the derivative claim regarding the Dennis line loans. Although that 5 Molever then sued the respondents, his lawyers in the trial and appeal against Levensons for neglect in Pre trial, post-trial and appeal handling of that case. In essence, the complaint charged that the defendant lawyers, through neglect, failed to take action during trial, post-trial and appellate proceedings which would have prevented the loss of the jury verdicts. A copy of the complaint is attached in Appendix B. The com- plaint was filed in the United States District Court for the District of Arizona—Molever’s home and the lo- eale of the original contract to render legal services. The District Court in Arizona denied jurisdictional attack by the defendant lawyers; but transferred the ease to the Northern District of West Virginia pur- suant to 28 U.S.C. § 1404 (a). Appendix B. Upon transfer, the defendant lawyers filed new mo- tions to dismiss, this time pursuant to Rule 12(b) (6) of the Federal Rules of Civil Procedure for, among other things, ‘‘failure to state any factual basis for a cause of action.’’ Copies of the motions, which were filed without supporting memoranda, are attached in Appendix B. The motions were ultimately briefed and argued on September 19, 1977. The sole issues presented were claim had been tried to a successful conclusion and was reversed for technical reasons, not on its merits, upon remand the District Court, on application of the Levensons, ordered Molever to post a one hundred thousand dollar bond for costs. Although advised that the plaintiffs’ means did not permit of such a large bond, the District Court dismissed the cause upon failure to post the bond, and the Circuit Court affirmed. The decisions are unreported. All of the trial court decisions affecting this case were made by Judge Robert E. Maxwell, Chief Judge of the District Court for the Northern District of West Virginia. 6 whether the complaint stated a claim upon which relief could be granted and whether the second count of the complaint was barred by limitations. No affidavits were submitted. No depositions or other discovery were ref- erenced.* (Record on Appeal, pp. 37-106) Following argument, and without any notice or request, the Dis- trict Court advised covnsel that it would then take ju- dicial notice of the entire earlier trial proceedings and the appeal to the Fourth Circuit (which materials were not and could not have been before the court) and that it would consider all of that material in deciding wheth- er to grant the motions to dismiss. It then granted the motions,’ ruling as a matter of law that the record of the trial and appeal revealed no evidence of neglect which was a cause of losing the verdicts. (Appendix A). In essence, the Distriet Court, without request, of- fered its opinion that the trial and appeal were ade- quately handled, and disniissed the case, thus prevent- ing the introduction of any evidence, opinion or other- wise, that the case was not adequately handled. Even further, recognizing that a claim had been made that *In fact, the District Court had stayed discovery pending the outcome of these motions. (Record on Appeal, pp. 48-50). ‘It is unclear whether the court granted motions to dismiss, motions for summary judgment or both. It discussed, at length, the conversion of Rule 12 motions to Rule 56 motions for summary judgment, but then ruled that ‘‘for reasons of failure to state a claim upon which relief can be granted as we measure it under the more restricted rules as earlier indicated, and under the more expanded rules and the included material, the Court believes that the motions to dismiss the first count of the Complaint must be granted.’’ Additionally, the formal order submitted by the de- fendant lawyers, and from which appeal was taken, ordered that ‘“Count One of plaintiffs’ amended complaint be dismissed for failure to state a cause of action upon which relief may be granted. ...’”’ (See Appendix A). ea 7 evidence existed which was not in the record and which would have prevented loss of the verdicts, the court ruled that ‘‘it would be hard to imagine anything fur- ther being developed than was developed in the earlier ease.’’ (Appendix A). Plaintiffs requested the court to reconsider its ruling and to permit evidence on the issues of neglect, but the request was denied. (Appendix A). On appeal, the Circuit Court affirmed the decision, thus approving the procedure followed by the District Court. In fact, the Circuit Court, as well, indulged in ‘‘reviewing the record,’’*® saying: ‘‘The record of the proceedings in the district court and in the appeal in the previous case discloses to us no evidence of legal malpractice sufficient to entitle plaintiffs to a trial or a verdict.”’ (emphasis added.) (Appendix A). Thus, in virtual back-to-back cases, the Fourth Cir- cuit has taken all of Molever’s claims away. It has held that the Levensons’ criminal conduct, which it de- scribed as ‘‘inexcusable deception’’, was ‘‘forgiven’’ by the bank. It has held that the Levensons knowingly false statements were ‘‘privileged.’’ And finally it has held, without trial or factual presentation, that the lawyers were without neglect in causing the loss of ver- dicts, and that the lawyers could not have presented evidence or argument which would have changed that result. The case, thus, presents a very real public issue: the erosion of the Seventh Amendment jury right and the 5 It seems unlikely that both the District Court and the Circuit Court had the entire record of the prior case. It was not made 4 part of the record in the instant case, Thus, the previous record must have been in one court or the other. 8 preferential treatment of lawyers sued for malpractice. It also presents very real personal travesty and trag- edy: the loss of over five million dollars in verdiets and the total denial of justice to a family which placed its trust in the court system. REASONS FOR GRANTING THE WRIT 1) The decision of the Circuit Court is legally inde- fensible. It declares that none of the panel has any in- dependent knowledge of the competency of the legal representation in the prior cases,° yet affirms summary judgment on the basis that it was competent. It ap- proves judicial notice of the entire record in another case and al! of the facts therein in the face of four Fourth Circuit decisions to the contrary. It approves judicial notice of contestible opinion matter (negli- gence). It states that Plaintiffs were given “full oppor- tunity” to voice objection to the notice, when none was given. It affirms the granting of summary judgment without notice contrary to the decisions of this Court and four Fourth Circuit decisions. And it declares amazingly, that these ‘‘procedural irregularities’? were of no prejudice to the plaintiffs. But of most impor- tance, it condones the practice of pre-trial dismissal of legal malpractice cases upon the judge’s own perusal of the ‘‘record’’ of an earlier case and upon his per- sonal opinion that there was no negligence. 2) The decision of the Circuit Court necessarily re- sults in the creation of a favored class of litigants: lawyers charged with neglect in the handling of trials and appeals. The whole idea of a favored class of liti- * An apparent acknowledgement of the conflict which occurs when one is asked to judge the correctness of his own judgment. In fact, one judge, Russell, was on both panels. ee ern eer 9 gants—a class treated differently before the bar of jus- tice—is abhorrent to the Fourteenth Amendment’s command of equal protection of the laws and the deci- sions of this Court in respect thereto. Chambers v. State of Florida, 309 U.S. 227, 60 8. Ct. 472, 84 L. Ed. 716 (1940). No other class of defendants charged with neglect receives this benefit. No doctor may even re- quest the court to review his surgery and opine whether there was neglect. No architect may have his drawings so reviewed. No engineer his calculations. At a time when the Chief Justice of this Court has publicly de- eried the level of competence of lawyers in trial and appeal matters,’ the Circuit Court has approved a pro- cedure which will further insulate lawyers’ conduct from public scrutiny. Unlike medical review panels, which have sprung into some favor recently,” the proce- dure approved by the Circuit Court removes the law- yer’s conduct from any public scrutiny, leaving it solely to the judge (another lawyer) to say that ‘‘there was no negligence.’? And unlike medical review panels, which serve to generate access to courts and which never prevent access, even when all of the panel mem- bers feel there is no neglect, the procedure approved by th Circuit Court totally defeats access to fact finding and a jury’s determination. 3) The decision of the Circuit Court violates the Sev- enth Amendment’s guarantee of the right to jury trial and this Court’s rulings thereon. For one hundred and ninety years the supreme law of our land has compelled that: In Suits at common law, where the value in con- troversy shall exceed twenty dollars, the right of ™See, Comments of Chief Justice Warren Burger before the American Bar Association, A.B.A. Journal, Vol. 64, P. 313 (1978). ® See, e.g., Arizona Revised Statutes § 12-567. 10 trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law. (Amendment VII) With the stroke of a wide brush, and without citation of authority, the Circuit Court has held this mandate of our Constitution not to apply to lawsuits against law- yers. This Court has held that a court errs whenever, without consent, it passes upon evidence, finds facts and renders judgment, thereby substituting itself for the jury. Baylis v. Travelers Ins. Co., 113 U.S. 320, 5 S. Ct. 494, 28 L.Ed. 989 (1885). The decision of the Circuit Court not only permits such substitution as to facts, but as to matters of opinion: whether the lawyers’ conduct fell below acceptable levels of practice. The Cireuit Court opinion, in stating that there was no evi- dence of neglect ‘sufficient to entitle plaintiffs to a trial or a verdict,’’ implies there was evidence of neglect. Thus, both the Distriet Court and the Cireuit Court passed upon that evidence, weighed it, and found the issue in favor of the respondent lawyers. 4) The decision of the Circuit Court violates the letter and intent of Rule 56 of the Federal Rules of Civil Procedure. Summary judgment can be entered only if there is no dispute as to any material fact. Fountain v. Filson, 336 U.S. 681, 69, S. Ct. 754, 93 L. Ed. 971 (1949). Since both the District Court and the Circuit Court ‘‘reviewed the record”’ in the blind—that is, with- out any indication, before or after as to what was being considered—it is impossible to determine what facts are in issue. That is precisely why Rule 56 requires the motion to contain reference to the facts that are claimed to be undisputed, whether by affidavit or other- wise, and requires notice and opportunity to demon- oan tlie a sae er neti 11 strate that the facts are in dispute. Rule 56(c). The District Court gave no notice that it intended to con- sider or judicially notice the underlying ‘‘record”’. It gave no notice that it intended, if it did, to treat the motions to dismiss as motions for summary judgment. It afforded no opportunity to present evidence, by affi- davit or otherwise, showing a disputed material fact before entering its order dismissing the case. In the face of numerous of its own decisions, the Circuit Court affirmed that procedure. Utility Control Corp. v. Prince Williams Const. Co., 558 F.2d 716 (4th Cir. 1977); Plante v. Shivar, 540 F.2d 1233 (4th Cir. 1976) ; Gel- man V. State of Maryland, 538 F.2d 603 (4th Cir. 1976) ; Mims v. Keys, 516 F.2d 21(4th Cir. 1975) ; Johnson v. RAC Corporation, 491 F.2d 510 (4th Cir. 1974). While this Court has affirmed that the summary judgment procedure does not violate the Seventh Amendment, Nave v. City of Seattle, 68 Wash. 2d 721, 415 P.2d 93 (1966), appeal dismissed, 385 U.S. 450, 87 S. Ct. 614, 17 L. Ed. 2d 513, rehearing denied, 386 U.S. 929, 87 S. Ct. 853, 17 L. Ed. 2d 803, the decisions in Baylis v. Travelers’ Ins. Co., and Fountain v. Filson, supra, make it abundantly clear that the safeguards which prevents violation of the jury trial right in sum- mary judgment procedures are notice and the oppor- tunity to present contrary evidence. [f one can present such evidence, no matter how insignificant, summary judgment will yield to trial by jury. Here, those safe- guards were eliminated; and the District Court substi- tuted itself for the jury—substituted its opinion for those of properly qualified experts—thus effectively denying the jury trial right. 12 2) The Cireuit Court decision approves the violation of Rules 201 and 605 of the Federal Rules of Evidence. Those rules provide: Rule 201. Judicial Notice of Adjudicative Fucts _(a) Scope of rule. This rule governs only judi- cial notice of adjudicative facts. (b) Kinds of facts. A judicially noticed fact must be one net subject to reasonable dispute in that it is either (1) generally known within the territoriai Jurisdiction of the trial court or (2) capable of ae- curate and ready determination by resort to Ppexe whose accuracy cannot reasonably be ques- ioned. _(c) When discretionary. A court may take judi- cial notice, whether requested or not. _(d) When mandatory. A court shall take judi- cial notice if requested by a party and supplied with the necessary information. (ec) Opportunity to be heard. A party is entitled upon timely request to an opportunity to be heard as to the propriety of taking judicial notice and the tenor of the matter noticed. In the absence of prior notification, the request may be made after judicial notice has been taken. Rule 605. Competency of Judge as Witness _ The judge presiding at the trial may not testify in that trial as a witness. No objection need be made in order to preserve the point. These rules also safeguard the Seventh Amendment jury trial right. They assure that the judge will con- sider, as fact, only such matters as are beyond reason- able dispute. Key to the rule on judicial notice is that only facts may be noticed—not opinions. Here, the Dis- 13 trict Court violated the rule and the Circuit Court ap- proved that violation in four regards: First by attempt- ing to notice an entire record, including the conflicting evidence, conflicting inferences and conflicting opinions stated therein and possible to be drawn therefrom ; sec- ond, by failing to give notice of its intent to take notice; third, by failing to give notice concerning what facts were ‘noticed’? and thereby finding; and finally, by failing to give opportunity to be heard as to the pro- priety of taking judicial notice and the tenor of the matter noticed. Congress undoubtedly has authority to prescribe what evidence will be received in courts of the United States. Tot v. United States, 319 U.S. 463, 63 S. Ct. 1241, 87 L. Ed. 1519 (1943). Both Congress’ rule, and the Seventh Amendment’s jury trial guarantee are violated when courts are permitted to ‘‘notice’’ matters which are neither generally known nor capable of accu- rate and ready determination. When this is done to benefit a lawyer, Congress’ concern seems all the more warranted. Congress also made it abundantly clear that it did not want judges testifying in the cases coming before them (Rule 605). While at first blush the rule may not seem applicable, on closer analysis it clearly is. What happened in this case, and what the Circuit Court ap- proved, was the submission of the trial judge’s (albeit unsworn) opinion regarding the conduct of the lawyers based upon his review of the record of the trial they conducted. The judge offered, as witness, and thus ac- cepted as judge, his own opinion that what he reviewed did not show actionable neglect. He then entered judg- ment based upon his opinion. The evil therein is potent —so potent that Congress provided that no objection 14 need even be made thereto. Again, the jury trial right has been sacrificed to the opinion of one man, one judg e one lawyer, about the eonduct of his fellow lawyer Add to that the apparent conflict whereby the judge to find neglect, must admit the possibility of an erroneous de- cision on his own part in the earlier proceeding, and the seales of justice are heavily wei the lawyers. y weighted—in favor of 6) The Cireuit Court decision is wrong regardin the underlying neglect. The Circuit Court affirmed the District Court ruling that nowhere in the record of that four week trial and appeal—nowhere in those thousands of pages of testimony—nowhere in those hundreds of pages of briefs, memoranda and exhibits is there even one inference of neglect which might have affected the outeome. There was. The Court - referred to eight trial exhibits (in the Levenson trial) and many pages of testimony which showed that Mo- lever had denied the false charges prior to publication and that others had admitted the charges and excul- pated Molever prior to publication of the defamation ( Appellants’ brief, pp. 43-45). Petitioners pointed out to the Circuit Court that such evidence would su ort the Jury verdict on the basis that Levensons Ga sas lished the defamation in ‘‘reckless disregard’”’ of ier evidence (including the denials and exculpations) or with “Known falsity,’’ thereby overcoming any priv- ilege which may have attended the publication Cur tis Publishing Co. v. Butts, 388 U.S. 130, 87 8 Ct. 1975, 18 L. Ed. 2d 1094 (1967).° Petitioners also pointed ‘ , Dah i ray as — Pointed out to the Cireuit Court (Petition for eee Pe. ), it had decided almost simultaneously with the Paige - Levenson appeal that testimony from a plaintiff suin efamation that he had denied the defamatory charges ae 15 out that the respondent lawyers had totally failed to brief this issue to either the District Court or the Cir- euit Court in the prior case or to refer either of those courts to the evidence in the record establishing the ‘reckless disregard’? or ‘‘known falsity.”’ Similarly, it was pointed out that the respondent lawyers failed to brief, argue or refer to evidence which showed that that the Levensons ‘embellished’? upon the report which they relied upon in making the defamatory statements, thus, again defeating any privilege. Dorn +. United States, 195 U.S. 138, 24 8. Ct. 808, 49 L. Kd. 128 (1904). (Appellants’ brief, pp. 44-49). Additional evidence of neglect was pointed out. Finally, Molever’s affidavit was submitted to the District Court in a last-minute effort to change the result. That affidavit, which may be found in the joint abstract at page 130, affirmed, under oath, that the re- spondent lawyers admitted to Molever, that they never read the trial transcript in preparing the appeal. Thus, the Circuit Court has held, as law, that absolutely no inference of neglect arises from uncontroverted evi- dence that a lawyer has not read any of the trial tran- script in preparing an appeal, concerning contested issues of fact, to a Cireuit Court of Appeals. There were inferences of neglect—in the record noticed, and supplemental to it. to publication was alone sufficient to support a jury verdict of ‘‘known falsity’’ or ‘‘reckless disregard.’’ See Appleyard v. Trans- american Press, Inc., 539 F.2d 1026 (4th Cir. 1976) It is virtually inconceivable that the court which made that decision would have sustained the judgment N.O.V. on the basis of privilege if the lawyers had briefed the issue and pointed out the evidence of denial and exculpation. 16 CONCLUSION Petitioners recognize that this Court does not exist to correct errors. However the Circuit Court decision does not represent mere error. It is a flagrant, inde- fensible departure from the decisions of this Court and the supreme law of our land. It marks a singular de- parture from the Constitutional, Statutory and Fed- eral Rule provisions guaranteeing all citizens a jury trial in Federal Courts. It also marks, for the first time in this country, the creation of a favored class of litigants—lawyers. For both reasons, it is respectfully submitted that the Petition for a Writ of Certiorari should be granted. Respectfully submitted, B. Micuart DANN CHARLES D. RousH TREON, WARNICKE, Dann & Rovusu, P.A. 919 North First Street Phoenix, Arizona 85004 July 12, 1979 APPENDIX A pve la [159] IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA Civil Action No. 77-183-E Movern Marts, Inc., a Pennsylvania Corporation; Pitts- puRGH & West Virainia INvestMENT Co., a Pennsylvania Corporation; Berry Bernstein: Suirtey L. WEINBERGER, as custodian; Don D. Brooxs; I. M. Motever; and JEAN B. Paris, Plaintiffs, v. Sran.ey E. Preiser and Joun F. Brown, Jr., Defendants September 18, 1977 Elkins, WV Berore: The Honorable Ropert EK. Maxwett, Chief Judge APPEARANCES: For the Plaintiffs: Charles D. Roush, Esq., Phoenix, AZ For the Defendants: Mr. Herbert G. Underwood, Esq., Clarksburg, WV Mr. Edward W. Eardley, Esq., Charleston, WV Whereupon, the above styled matter came on for a hearing on motions on the 19th day of September, 1977 2a in the United States District Court, and the following findings and conclusions were given by the Court, to-wit: [160] PROCEEDINGS ‘THe Court: The litigation before the Court overlaps with several claims and to reach the issues that are ap- parent in this litigation today on the motions that are here and now, it perhaps would suffice us and be profitable to us to go into a brief overview of what we are dealing with. .This would certainly keep our record straight and would tend to our bookkeeping in this matter because of the sev- eral motions that are pending, such as the motions to dis- miss that have been cast as we might say in the second priority position. The amended complaint, which we are dealing with here was filed in the United States District Court for the District of Arizona and this was on April 13th of 1977. And this yep back, of course, to the original complaint of April , 1977. : | Count 1 of that Complaint is representative of all the plaintiffs in the case and it is directed against both of the named defendants. In essence, Count 1 charges the mis- handling of the litigation as was called in the Fourth Cir- cuit, ‘*Molever v. Levenson’’, and which have been referred to in the pleadings of this case and which has been carried on our Court file as Civil Action No. 74-2W. This was a consolidation of three separate and distinct causes of action. [161] Count number 2, while it incorporates certain ini- tial paragraphs of Count number 1, and which by reference would incorporate both of the defendants, is by virtue of its more particularized allegations, directed toward and against the defendant Preiser alone. Number 4 of Count 2 particularizes the defendant Preiser and the Court does not recall other than the referenced ) — whee ee 3a paragraphs, the involvement of the defendant Brown in that matter. The second Count charges that the defendant Preiser failed to prosecute a cause of action that the plaintiff Mol- ever had. It also charges him with improperly advising and causing Molever, the plaintiff Molever, to dismiss a cause of action that he had instituted. It also accuses the defendant Preiser of failing to amend Civil Action 74-2-W so as to inelude a cause of action on a letter which was written by—allegedly written by—Abraham Pinsky, an At- torney in March of 1971. The point of reference we have on the litigation in Count No. 2 is March of 1971. There was no particular date assigned but the entirety of Count 2 goes to March of 1971, that month and that year. The defendants have responded with a counter claim and first of all, defendant Preiser secks attorney fees in the sum of $298,066. He also alleges malicious prosecution [162] and abuse of civil process arising out of the allega- tions that are set forth in the complaint and in the Amended Complaint that is now before this Court; this matter having been transferred here by the District Court of Arizona to the Northern District of West Virginia. The third count of the Preiser counter claim is one of libel, slander, and defamation arising out of the allega- tions of the Complaint and Amended Complaint now be- fore the Court first and secondly; two other persons. A conversation apparently was carried on which has not been otherwise particularized. The defendant Preiser seeks the sum of $298,066 in the first cause of action and $1,000,000 plus fees and costs in the malicious prosecution cause of action, and $1,000,000 compensatory damages and $1,000,000 punitive damages in the dafamation counterclaim, the third cause of action. Og E ES FEES apnea 4a We have the counter claim of the defendant Brown. He seeks Attorney fees in the first cause of action in the counter claim in the total sum of $51,114.47. Ile, too, alleges malicious prosecution and abuse of civil process, and he seeks compensatory damages in the sum of $1,151,114 and punitive damages in the sum of $1,000,- 000. Presumably, although this is not expressly stated, on the four corners of the pleadings he is seeking damages in the amount of $1,000,000 on the malicious prosecution compensa- [163] tory damages. Now, this is the structure of the litigation to which we must address ourselves. There have been formal motions to dismiss by the de- fendants. In the plaintiffs’ reply, there have not been in so many words, a formal motion to dismiss, but the lan- guage of the plaintiffs’ reply seeks a dismissal of the counter claims. It seems fair and logical and efficient that we should, at this juncture of our proceedings, read the pleadings in a sense that would give effect and cause to their filing. So it would seem that we have before us mo- tions to dismiss with regard to both the complaint and to the counter claim. The language of the formal motions of the defendants and the implied language, at least, of the plaintiffs in the reply to the counter claims leaves little doubt that the parties were thinking in terms of, and directing the nature of this proceedings, toward a Rule 12(b)(6) motion for dismissal on the failure to state a claim upon which relief can be granted. The 12(b)(6) motion is a very limited opportunity to dis- miss a case as we look at it in the general purport of the language of the Rule itself, study the history and so forth, and the evolution of it. 7 (isan fiotaes elude 5a There are, of course, some exceptions with regard [164] to the law of libel litigation, the law of libel and slander and malicious prosecution. The test for a Rule 12(b)(6) motion is pretty fairly stated in Federal Practice and Procedures by Wright and Miller, Volume V and particularly Section 1357 which con- tains the subheading of ‘‘Practice under 12(b)(6)”’. Now, at page 600, Professors Miller and Wright say as follows. ‘““The test most often applied to determine the suf- ficiency of the complaint was set out in the leading case of Conley v. Gibson, in which the Supreme Court stated that in appraising the sufficiency of their com- plaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plain- tiff can prove no set of facts in support of his claim which would entitle him to relief.’’ Now, continuing on with the text, Professor Wright says, ‘‘The question, therefore, is whether in the light most favorable to plaintiff, and with every doubt resolved in his behalf, the complaint states any valid claim for re- lief. The complaint should not be dismissed merely because plaintiff’s allegations do not support the legal theory he intends to proceed on, since the Court is under a duty to examine the Complaini to determine if the allegations pro- vide for relief [165] on any possible theory. Similarly, it need not appear that plaintiff can obtain the particular relief prayed for, as long as the Court can ascertain that some relief may be granted. Nonetheless, as is discussed more fully elsewhere,.the pleader must set forth sufficient information to outline the elements of his claim, or to per- mit inferences to be drawn that these elements exist. Nor should the complaint be dismissed merely because the Court doubts plaintiff will prevail in the action. 6a Whether plaintiff can prevail is a matter properly deter- mined on the basis of proof and not merely on the plead- ings. The Court should be especially reluctant to dismiss on the basis of the pleadings when the asserted theory of liability is novel or extreme, since it is important that new legal theories be explored and assayed in the light of actual facts rather than a pleader’s suppositions. In any event, the motion for summary judgment provides a more expeditious and effective procedure for quickly terminat- ing an action that does not appear to merit relief on its substantive merits. As a practical matter, a dismissal under Rule 12(b)(6) is likely to be granted only in the unusual case in which plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief. In other words, dismissal is justified only when the allega- tions of the complaint itself clearly demonstrate that [166] plaintiff does not have a claim. For example, in Case v. State Farm Mutual Automobile Insurance Company, plain- tiff claimed damages for defendant’s wrongful lornine tion of a contract. However, the terms of the contract which was attached to the complaint as an exhibit iow that defendant has the right to terminate with or without cause. Since it was clear that plaintiff had not stated an actionable claim, the Court dismissed the claim under Rule 12(b) (6). Similarly, when the complaint in an action for negligence contained allegations indicating that the sole proximate cause of the injury was the aegligence of the plaintiff and not of defendant, the complaint was dismissed for insufficieney.’’ There are some other examples, but I think that gives us a fairly good cross-section of the limited opportunities that do arise under Rule 12(b)(6) motions. Now, continuing on with this, I would refer to Section 1397 at page 610, where Professor Wright notes as follows. dt tenella : : 7 7a “There is one significant exception to the general rule that the complaint will be construed liberally on a Rule 12(b)(6) motion. When the claim alleged is a traditionally disfavored cause of action, such as malicious prosecution, libel and slander, the Courts tend to construe the com- plaint by somewhat stricter standard and are more inciined [167] to grant a Rule 12(b)(6) motion to dismiss. For ex- ample, in Ne ‘onal Bowl-O-Mat Corporation v. Brunswick Corporation, the Court dismissed the third count of the defendant’s counter claim for failing to state a claim for Gefamation. Two of the pleading deficiencies noted by the Court were defendant’s failure to set out the alleged de- famatory statements with sufficient particularity to allow the Court to determine if they would support the action, and defendant’s failure to plead dates indicating that the action was not barred by the Statute of Limitations. If the Court had applied the usual liberal standards for constru- ing a complaint, it probably would have assumed, for pur- poses of the motion, that the statements were dafamatory and that the action was timely.”’ There is another reference that might be made just in passing, and that is the contents of Section 1245 of the same Volume of Wright and Miller and this having to do with the question of libel and slander and Section 1246, that has to do with malicious prosecution. The latter two sections in looking at the cause of action in light and from the view point of a Rule 8 aliegation. Mr. Roush mentioned to us in his comments and, of course, it is referred to here in the matter just mentioned where I read from Professor Wright, and that is the test of a claim ean be best arrived at through the motion for summary judgment process and whether it stands the test of time [168] and is a claim that relief can be granted upon is usually raised in that particular. So, it is another avenue that is available. Sa Now, in looking at Rule 12, the last sentence thereof and sub-paragraph B, we find, ‘‘If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to, and not ex- cluded by the Court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable oppor- tunity to present all materi»! made pertinent to such a motion by Rule 56.’’ And this goes right to the suggestion that Mr. Roush has made here this morning. Now, Wright and Miller have some commentaries on the conversion of a Rule 12(b)(6) motion to a summary judg- ment motion. Section 1356 of the same Volume of Wright and Miller which I have earlier referred to, this refers to the last sentence of the Rule that I just mentioned here. Now, on page 676, Professor Miller speaks as follows: ‘Technically, of course, the Rule 12(b)(6) motion does not attack the merits of the case; it merely challenges the pleader’s failure to state a claim properly. As noted above, however, since the promulgation of the Federal Rules [169] most Courts have allowed the parties to go beyond the question of the complaint’s formal sufficiency and to introduce affidavits and other matters in conjunction with the Rule 12(b)(6) motion, to ascertain whether there is any merit to the claim. In that sense, the Rule 12(b) (6) motion is closely related to the summary judgment motion and the addition of the last sentence in Rule 12(b) (6) merely acknowledges that fact. Although the conversion provision in Rule 12(b) ex- pressly applies only to the defense described in 12(b) (6), it is not necessary that the moving party actually label his motion as one under that provision in order for it to be converted into a motion for summary judgment. The ele- Oat att a OM Ni! as ee ot Dh ttn vetlel teed Bengt te at dtdatnns® cpg. aA Ot ts Sn te sa OT Ges 6 ee ww 9a ment that triggers the conversion is a challenge to the sufficiency of the pleader’s claim supported by extra-plead- ing material. It is not relevant how the defense actually is denominated.’’ Now, over on page 679 of that same Section, Section 1366, the text continues as follows. ‘‘When the extra-pleading material is comprehensive and will enable a rational determination of the summary judgment motion, the Court is likely to accept it; when it is scanty, incomplete or inconclusive, the Court probably will reject it.’’ Now, going on further down it says, ‘‘Once the Court [170] decides to accept matters outside the pleading, it must convert the motion to dismiss into one for summary judgment, and several Courts have held that it is revers- ible error for the District Court to consider outside matter without converting the motion to dismiss into a motion for summary judgment. A few Courts have limited this compulsory aspect of the last sentence in Rule 12(b) by holding that only items specifically enumerated in Rule 56(c) constitute matters outside the pleading. Under this interpretation, only depositions, answers to interrogator- ies, admissions on file, and affidavits are sufficient to con- vert a Rule 12(b)(6) motion. Most Courts, however, view matters outside the pleading as including any written or oral evidence in support of, or in opposition to the plead- ing that provides some substantiation for, and does not merely reiterate what is said in the pleadings.’’ Now, going over to page 683, the text continues as fol- lows. ‘‘As soon as a motion to dismiss under Rule 12(b) (6) is converted into a motion for summary judgment, the requirements of Rule 56 become operable. It is important that the Court give the parties notice of the changed status of the motion and a reasonable opportunity to present all material made pertinent to such a motion by Rule 56. In 10a this way, no one will be taken by surprise by the conver- sion. Once the proceeding becomes one for summary judg- ment, the moving [171] party’s burden changes and he is obliged to dc.aonstrate that there exists no genuine issue as to any material fact and that he is entitled to a judg- ment as a matter of law.”’ Just one more reference that I would bring to our at- tention in this matter and that is on page 664 and is Sec- tion 1364. ‘*The use of extra-pleading material on a motion under Rule 12(b)(6) has caused considerably more difficulty however. Soon after the Federal Rules went into effect a controversy as to whether Rule 12(b)(6) permitted the use of affidavits and other materials arose among the com- mentators and the Courts. The majority view was to the effect that Rule 12(b)(6) overturned the common law bar against the speaking demurrer and permitted a speaking motion to dismiss for failure to state a claim for relief.’’ Now, turning over to page 668 of this text, in pertinent part it goes on to say, *‘The 1948 amendment to Rule 12(b), which added the last sentence to the sub-division and the parallel amendment to Rule 12(c), leaves no doubt that materials outside the pleading can be presented in support of a motion to dismiss. The purpose of the amend- ment Was to resolve the split of authority concerning speaking motion by providing a definite base in the Rules for the treatment of Rule 12(b)(6) motions supported by matters extraneous to the pleading. [172] It should be noted that no distinction is made in the amended Rule between a motion that simply negates the allegations in the pleading, and one that raises affirma- tive defenses. The Courts, however, have had little diffi- culty in concluding that the 1948 amendment applies to affirmative defenses as well as to denials and that these defenses may be made on a motion to dismiss even though they do not appear on the face of the Complaint. lla A wide range of material may be introduced in conjune- tion with a Rule 12(b) motion, subject, of course, to the Court’s discretion to reject the evidence if it feels it is not substantial or comprehensive enough to facilitate the disposition of the action. The illustration of the type of evidence that has been used on a Rule 12(b)(6) motion are the following: admissions of counsel, affidavits, answers to interrogatories, collective bargaining agreements, con- tracts, copyrighted material, depositions, exhibits, hearsay, issues of a magazine, Court judgments and orders, judi- cial notice of prior pleadings, leases, letters, oral argu- ments, prior pleadings, and transcripts of prior court pro- ceedings. Memoranda and briefs also may be submitted to support or oppose a 12(b) motion, although their con- tents probably does not qualify as evidence.”’ So there we have a very interesting procedural under- taking in this case where both parties have resorted to [173] a base case, we will call it, our Civil Action No. 74- 2-W. That record, of course, is before the Court with all of the pleadings and with all of the exhibits and with all of the rulings and the 4500 pages of transcript. We have that entire record here and indeed, it seems that it is in- cumbent upon the Court in a matter of this nature, to judicially notice such a record since it is so intimately in- volved with the litigation that we have at hand. . Also, the Court must at least take judicial notice of the appellate record of the base case which was the entire record at the Court of Appeals for the Fourth Circuit. The Court with or without judicial notice is bound as is the law of the land, to obey that decision that came down from that appeal. Let me now make a reference to that at this time and this is Molever v. Levenson and it is reported in 539 Fed- eral Reporter, 2nd, 996. So, we have those matters and they are in this case. . 12a In this case we have the early wave of discovery that has been presented to us and admitted, to a limited degree. The Court must also take this into account. Now, whether malpractice litigation falls into the same category as libel and slander with regard to the extent of the allegations that we eall disfavored or vexatious that certainly is not an issue here. [174] Certainly, some appellate court on some day will discuss this issue and in the appropriate case with the proper factual underpinnings very likely will say that this is a disfavored area of litigation if its principal purpose is harrassment and something in the nature of vexatious litigation. Going on now to this matter. We have to determine if this is one upon which relief can be granted. There has been referred to this Court and independent research has disclosed that we have an expanding area of litigation in attorney malpractice cases. There have been general ex- pressions of expanding the law in this area by some Courts and expanding legal malpractice. Those expressions and those rulings and those findings, it seems, must be weighed in light of the factual premises of the particular case, so as to properly distinguish actionable misconduct from practi- cal conduct of a client’s affairs. We must, of course, know that these are measured in hindsight and of retrospect and 80, it seems that this observation is pointed and is appro- priate at this time regardless of what standard or duty or error of negligence or standard of performance might be ultimately adopted in this area. Now, going to the conversion of 12(b)(6) motions that are before the Court by both sides to a summary judgment motion under Rule 56. It would seem that we have just about [175] everything that is the basis of this case in this Court. This has been retained in the District of Arizona, of course if that was so, this Court would not have had immediate access to the file of 74-2-W. And it is important that the rv etie athn, BS nil Ace all TID ee ME! ah AS + He ES wit AR DS th PMR A ANN APS a SAN Rar al ila) oN RA ae bilan es der Neat pba ti : : : 13a file be available to us to know the reasons and the grounds and the rationale of the litigation that is here. So, in looking at this as both a 12(b)(6) motion, limited as it is, and looking at it also from the broader expanse of the Rule 56 summary judgment plateau, let’s measure here the defendants’ motion to dismiss the Complaint in Count 1. It would seem that the motion to dismiss as filed by the defendants as to Count 1 go basically to the adverse ruling 1o the plaintiffs in 74-2-W. And that it is the result of a rule of law, if we listen to the defendants, rather than to a malpractice matter determined from the facts as contended here by the plaintiff. We must break this down. We must break this down into the several claims that were raised in the basic litigation. We must look to the law that controls this Court, namely; the Fourth Circuit decision of May 3, of 1976. Let’s turn first to the 10(B) (5) litigation where the ver- dict was for the sum of $59,496 in the original cause of action. The Fourth Circuit in page 1000 of their opinion [176] said that, “No breach of the Act by this Appellant is per- ceived. There was no device, scheme, or artifice to defraud . in connection with the purchase or sale of the (the stock). Although not demandable, Molever had been given due notice of the intended sale. Moreover, he had been sent a financial statement of the Bank showing the addition to the Bank’s assets. In Law, on these facts, he had no ground of complaint. Therefore, the verdict and the judg- ment in this action must be reversed and vacated.” So, it would appear that t’ » law of the land with regard to the 10(B)(5) claim is thoroughly established. The law is pretty well stated on that. Now turning next to the floor plan, the so-called floor plan claim. This is a part of the derivative action, the l4a ci negoamspel derivative action. We have the Reichart’s floor pian and this was an organization, or a business, which was owned by the Levensons. It was . 3 s claimed had misused their position. ee eet AE eg record in this Court on this claim seems to be rather = and rather complete. As a matter of fact, the Fourth ireult’s opinion on page 1000 commented and said “Despite the inexecusible deception by the defendants ? subsequent arrangements for release and indemnification negate plaintiff's right of recovery.” Here there was a finding by the Court, and this is [177] on page L001 of the opinion. “Assuming that the West Vir ginia statute required the defendants to substantiate the ju tice and bona fides of the agreement, to us they did o “t clear and convincing evidence. It is overwhelming in their favor on the issue.” Now, going on over to page 1002 if the opinion. ‘‘On this uncontrovertable evidence we u hold the agreement. In short, plaintiffs’ proof just did er the test exacted by the State’s Jurisprudence ;” ce Now, going on further with the text of the opinion, the say. “In view of the grounds of our decision, there is i need further to ponder these points. Upon defendant ‘ a tions, the Distriet Court’s final order on this cause on tion must be reversed, with judgments for the defendants.” So there, both on the facts and on the effect of the ec tract of idemnification, what have you or whatever va want to call that, the Fourth Circuit, as a matter of he has pretty well wiped out that floor plan contention. aut Now, turning to the Dennis Li se nnis Line of automobile loans There was some almost $900,000 worth of those loans ind apparently about half of them were bad. They have re- manded that one for another tri al. So, : that is premature. we have a claim here eee ee ee ee ees RDS Dra sereteten Se ite KP at LE 15a We also have another aspect of this that we must think about. In an earlier preliminary proceedings that was be- fore the Court on the question of jurisdictional amount, [178] the Fourth Circuit in Bernstein v. Levenson at 437 Fed 2nd, 756 which was a 1971 case, spoke of this stock- holder’s derivative action as being in favor of the Bank. Page 1003, the Court said. “We previously held in earlier proceedings that the real party in interest in this derivative action is the Bank. The award of damages to the stock- holders, instead of the Bank, was therefore erroneous.” The judgment order as corrected on the 2ist of May, 1974. “That the plaintiffs and all other stockholders of the Bank of Wheeling similarly situated recever of and from Robert Levenson, Donald Levenson, and Reichart Furni- ture Company, the sum of $1,230,520,” and then the rest of that is self-explanatory. Now, going on after the semi-colon there, it says, “And. said plaintiffs and all other stockholders of said Bank sim- ilarly situated recover from and of Robert Levenson and Donald Levenson the sum of $700,000 as a result of the Dennis Line loans,” and then the rest of it is explanatory also. So, apparently when this was before the Fourth Cir- cuit, these were ascertained and determined as to who should prevail and who is the real party in interest. And of course, that did not preclude anybody with standing to come forward and to prosecute the case. But the real party in interest is what it says. But this is something that as of - et has not been determined and we are now in the early stages of the re- [179] structuring of the basic case for disposition here and now. Now, going on. We are faced there with those problems and in other words, we are dealing here with the complaint of $5,330,016, I believe that is the total amount of the amended complaint and the addendum clause and eliminat- ing the Dennis Line of auto loans because it is a pending matter and thus is premature here, that would be $700,000. l6a So eliminating the Reichart’s floor plan of $1,230,520 and eliminating the 10(B)(5) cause of action of $59,496, we are then left with the defamation claim which the jury verdict was on all counts, came out to Three and a-quarter Million Dollars. It was this claim that the Court, this Court, set aside the jury verdict on and this was then affirmed by the Fourth Cireuit Court of Appeals. Now, let’s look to the malpractice issue here as measured against the defamation. We have the defamation occurring on September, September 29th of 1966, and that being at a Board of Directors meeting. That was the first cause of action and that was against Robert Levenson alone. The second basic cause of action under defamation was against Robert Levenson, Donald Levenson, and Joseph Gomphers, their Attorney. Now, this allegedly occurred at the Board of Directors meeting in February of 1967. Now, going on to the third defamation as alleged, that occurred on November 25, 1966 and [182] an area that could be further developed that the defendants here failed to introduce evidence that would lead this matter further along the road to an affirmative accomplishment, but for their negligence. But the evidence in this case is rather striking. It would be hard tod imagine anything further being developed than was developed in the earlier case. So we have here these causes of action which to the Court seem to be causes of action that are governed by very well defined rules of law set down by the Circuit Court of Appeals for the Fourth Circuit. Because they are matters of law, and because the claim must be a claim upon which relief can be granted, the Court believes that as to these aspects of the matter the motions to dismiss must be granted. N ow, there is another area that is raised by the motions to dismiss and that is, namely, there can be no malpractice no MOKED Ske a te le Te ad ~ oe Se ee A ne 7 ve 17a cause of action if there are errors of judgment and/or trial tactics, or secondly, in the Appellate practice, as long as the rules of practice are observed and appeals are handled in a timely fashion and properly presented. That perhaps does not articulate the matter as fully as the defendants have done in their motions. Looking at that, it seems important to us to turn to this Woodruff case that has been mentioned by both sides. This is found in 423 Federal Supplement at 1284 and is a 1976 [183] case and comes to us from the United States District Court for the Western District of Tennessee. We have Chief Judge Bailey Brown writing the opinion for the Court. Now this was a case which was based upon legal malpractice. and the cause of action was a personal injury suit, and this had more added to it perhaps, than what we have in the ease before the Court. The matter had been dismissed by the District Court and then it was sent back by the Sixth Circuit Court of Appeals for trial. The trial was had, the jury failed to reach a ver- dict. Judge Brown took the case away from further sub- mission to the jury. In this case, they presented a summary of injuries and damages and the entire transcript, except the part dealing with the injuries, the personal injuries in the personal in- jury case, was read to the jury as well as the lengthy charge and so forth. In other words, the whole personal injury case upon which this legal malpractice was based was read to the jury insofar as it was really pertinent to the issues. Then the Court said, at page 1287, “This Court had con- cluded that questions of law with respect to the personal injury trial became, with the aid of expert testimony, ques- tions of fact for the malpractice jury and were so treated, leaving for the Court questions of malpractice law.” 18a [184] And then an expert testified as to the accident re- construction and how the claims were not investigat erly and so forth. esi’ Then as I recall it, the Court took the question of Appel- late negligence from the jury in this case, but that is not important to our issue here. 7 Going now over to page 1288, the Court said as follows “Tt seems to this Court that there are two main problems in maintaining such a case as this. The first is that the preparation for and the trial of a law suit toa jury requires the exercise of a kind of judgment that is quite different from the kind of judgment exercised by other professions This is so because in dealing with human beings as the trial lawyer must, be they witnesses, judges, clients, adversary counsel, and jurors, the factors that come into play are in- tangible and numerous, so that the trial lawyer has to rely on his education, practical experience, rationale analysis and sheer instinct in making decisions. This being true it was difficult for this Court to believe it would be proper to submit to a jury, based upon the expert testimony of a sec- ond-guessing lawyer who has the benefit of hindsight the question of whether the trial lawyer was negligent. ; The second reason why this Court had serious doubt as to whether this action could be maintained has to do with causation; the malpractice jury is called upon to determine [ 185} whether, if something that was done by the defend- ant’s trial lawyer had not been done, or something that was not done had been done, the j nia ae jury verdict in th injury case would have been different.’ © personal And then going over to page 1289, the C additional matters in that case, namely, he conflict of interest claims. Of course, we don’t have an of that in this. The up-shot of the Woodruff opinion was that judgment was entered for the defendant. In other words the Court, with the benefit of the total record and with the RS SCA He Sos te ce tates nig ithe Sle Sea 19a benefit of the evidence and the witnesses, with the benefit of the charge to the jury and the whole record before him as developed, let the matter go to the jury, and upon reflection and upon deliberation, determined that under those circum- stances, under those issues whicli were so very closely paral- lel to our case here, thought it was not a matter that should be disposed of on the facts, but it should be disposed upon the law. Another area that is enlightening to us are the comments in Amjur 2nd, Attorneys at Law, Section 170. ‘