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Summary judgment for law firm in legal malpractice case reversed

November 1, 2018

The Indiana Court of Appeals has reversed and remanded summary judgment for an Indianapolis law firm in a legal malpractice case after finding a question of fact as to whether an auto company had a reasonable belief that its attorney was acting as an agent for the law firm.

Yevgeniy Gorin, a principal member of Indy Auto Man, LLC, was the named defendant in two lawsuits and attempted to retain friend and long-time attorney Mario Massillamany to represent him. Massillamany declined, but referred Gorin to Dustin Stohler, whom he knew to be affiliated with the Indianapolis law firm Keown & Kratz, LLC.

The firm and Stohler agreed to a partnership in which Stohler would work on some cases for Keown & Kratz. Stohler was given rent-free office space, Keown & Kratz business cards and letterhead, and a Keown & Kratz email address, among other things.

At some point, the relationship between Stohler and the firm began to sour. Kratz and Keown found that Stohler was tardy, provided pleadings rife with errors, missed deadlines, failed to return calls to clients and often failed to apprise anyone of his whereabouts. They found him to be unprofessional and became concerned that he was abusing alcohol and eventually learned Stohler had accepted an in-house position at a collections firm.

Meanwhile, Stohler failed to respond to discovery within the appropriate timeframe on each of the two IAM cases. In one of those cases, a default judgment and damages award of $60,000 were entered against IAM. Gorin was unsuccessful in making contact with Stohler about the damages and filed a legal malpractice complaint against the attorney and the firm in July 2015. Stohler never appeared, and Keown & Kratz filed for summary judgement claiming it owed IAM no duty of care. Judgment was granted in the firm’s favor in March 2017.

On appeal, IAM argued Keown & Kratz assumed a duty of care to it because Stohler was acting as the firm’s agent and because Stohler had apparent authority to act as the firm’s agent. Similarly, the appellate court found that although Keown & Kratz argued IAM was not familiar with it or its arrangement with Stohler when IAM retained him, Gorin’s testimony contradicted that he did in fact know of the affiliation, but couldn’t remember when he found out about it.

“In other words, Massillamany believed Stohler worked for the Firm, Wabash College published an advertisement announcing that Stohler worked for the Firm, and the court system was sending mail to the Firm on behalf of Stohler— all third parties who relied on manifestations made by the Firm…,” Judge John Baker wrote.  

“At the very least, there is a question of fact as to whether IAM had a reasonable belief that Stohler was acting as the Firm’s agent based on the Firm’s manifestations,” Baker continued. “It is clear that this evidence must be weighed and evaluated by a trier of fact.”

Thus, the grant of summary judgment to Keown & Kratz in the case of Indy Auto Man, LLC v. Keown & Kratz, LLC, and Dustin Stohler, 18A-PL-1154, was reversed and remand for further proceedings.

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