A Michigan appellate court has affirmed a summary judgment in favor of an attorney in a legal malpractice action. In Frasco, Caponigro, Wineman, & Scheible, PLLC v. IGC Management, Inc., a sub-contractor hired an attorney to recover funds from a general contractor. The general contractor later filed for bankruptcy, and a bank was found to have a priority security interest against the contractor’s assets.
The attorney, who also represented other unpaid sub-contractors, negotiated a mediated settlement with the financers of the project. However, the original sub-contractor did not assent to the terms of the settlement. The attorney informed the mediator and requested that the agreement contain a separate signature line for the sub-contractor, which the mediator failed to include. Nevertheless, the attorney executed the agreement and the bankruptcy court found that the sub-contractor was bound by its terms because the attorney signed on its behalf.
The sub-contractor then sued the attorney for legal malpractice. The attorney moved for summary judgment, which the trial court granted. The sub-contractor appealed.
The appellate court affirmed, finding that although the attorney’s conduct may have breached his ethical duties, it did not constitute malpractice. Under Michigan law, liability for settling a case without a client’s consent stems from a bad faith breach of contract rather than negligence. Here, the attorney did not intend to sign the agreement on behalf of the sub-contractor and had informed the mediator that he did not have such authority. Thus, the attorney acted in good faith and summary judgment was appropriate.