ABLEMAN, J.Page 2

I. Introduction

This case is the third lawsuit stemming from a real estate sale that never got off the proverbial ground. Plaintiff Vanguard Group, LLC ("Vanguard"), the prospective buyer in that transaction, alleges that its former attorney, Defendant Jay Katz, committed legal malpractice in an unsuccessful professional malpractice action against its former real estate broker.

Through its principal, Robert Villare ("Villare"), Vanguard signed an agreement to purchase unimproved property. Vanguard planned to develop the property into a residential subdivision that required at least 39 acres of land to complete. Real estate broker Kathleen Engel ("Engel") acted as a dual agent in negotiating the purchase and sale agreement. The transaction fell apart when a survey revealed that the property to be conveyed consisted of far less acreage than either Vanguard or the sellers expected. Vanguard filed an action for specific performance in Chancery Court, seeking the conveyance of 39 acres of the sellers' property, which extended beyond the parcels described in the agreement. The Chancery Court denied specific performance and rescinded the contract.

Subsequently, Vanguard retained Katz to represent it in a Superior Court action against Engel and her employer for breach of the dual agency agreement, breach of fiduciary duty, and misrepresentation. According to Vanguard, during the course of the representation, Katz failed to consult with his client before dismissing Engel's employer from the case, failed to file the action within the statute of limitations even though he was aware of the potential suit before the limitations period ran, and failed to obtain an expert to establish damages. Summary judgment was granted in Engel's favor.

Following this defeat, Vanguard and Villare filed the instant legal malpractice suit against Katz and his practice, Jay Katz LL.M. Taxation, LLC (hereinafter, Defendants are referred to in the singular as "Katz"). Katz has moved for summary judgment, arguing that neither Villare nor Vanguard are proper parties and that the underlying cause of action against Engel was meritless, such that Vanguard would not have been successful even in the absence of his alleged misconduct.

For the reasons discussed herein, the Court concludes that Plaintiffs cannot meet their burden of proving that but for Katz's alleged malpractice, Vanguard would have obtained a more favorable result in its action against Engel. Moreover, the Court finds that Villare is not a proper plaintiff to this action. Accordingly, Katz's Motion for Summary Judgment must be GRANTED.

II. Factual and Procedural History A. The Oyster Rock Road Deal

Negotiations between Vanguard and the Richardses were handled by Kathleen Engel, a real estate agent for RE/MAX Realty Group ("RE/MAX"). Pursuant to a written agreement, Engel acted as a dual agent.

Vanguard submitted an initial offer in April 2002. The contract included a description of the parcels as "property located in TAX DISTRICT 2-35; MAP 16.00." Vanguard's development plans required at least 39 acres, and in an apparent reference to its needs, additional language was inserted into the proposal that further identified the property as "Approx. 39 acres on Oyster Rocks Rd. . . . Acreage of at least 39 acres, to be determined by a survey." In addition, the offer was accompanied by a tax map, which provided an inexact depiction of the borders of the property to be sold.

The Richardses rejected Vanguard's first offer. In May 2002, Vanguard tendered a second offer at a higher price. Vanguard's second offer employed identical language to describe the property and included the requirement that the property's acreage be determined by survey, but did not append the tax map. The Richardses accepted the second offer, and a survey commenced shortly thereafter. The Richardses instructed the surveyor as to the parcels' boundaries, which were not entirely consistent with the shape depicted in the tax map that accompanied Vanguard's original offer. When the surveyor's final report was submitted, it showed that the surveyed property contained only 32.09 acres.

B. The Chancery Court Action

Based upon the survey report, Vanguard filed an action for specific performance in the Chancery Court, seeking to force the Richardses to convey 39 acres of property. Upon motions for summary judgment filed by both parties, Chancellor Chandler held that the sale agreement was not specifically enforceable because the property description was ambiguous regarding the size and shape of the portion of the Richardses' property to be conveyed, such that no meeting of the minds had occurred between the Richardses and Vanguard. The descriptive language referring to "39 acres" was "facially ambiguous as to whether approximately 39 acres or at least 39 acres were to be conveyed," and the surveyed property of 32.09 acres was "not the parcel [Vanguard] contracted to purchase, nor . . . the parcel that [the Richardses] agreed to sell." Moreover, although the surveyed property did not precisely match the boundaries indicated on the tax map that accompanied Vanguard's initial offer, there was "no way that any amount of land reasonably approaching 39 acres" could be found in a parcel matching the mapped shape.

The Chancery Court denied a motion for reargument filed by Vanguard, which asserted, inter alia, that a material factual dispute arose from discussions between Villare and Engel regarding the boundary of the litigated property. Because the agreement contained a merger clause, Chancellor Chandler found that such oral discussions were "legally irrelevant" to the agreement. Moreover, even assuming a meeting of the minds had occurred such that both Vanguard and the Richardses intended a conveyance of the same piece of property, the chancellor concluded that the contracting parties would have been mutually mistaken as to the size of that property.

Vanguard appealed to the Delaware Supreme Court. In February 2005, during the pendency of the appeal, Vanguard replaced its previous attorney with Katz. When he assumed the representation, Katz prepared and filed briefing in the appeal, and allegedly agreed to initiate a professional negligence action against Engel and RE/MAX.

According to Vanguard and Villare, communication breakdowns occurred almost from the outset of the representation. During the appeal of the Chancery Court action, Katz allegedly filed briefing without consulting with Vanguard regarding its content. The Delaware Supreme Court upheld the Chancery Court's decisions on July 21, 2005 — a result that Katz apparently never relayed. Villare claims he only learned of the disposition of the case in September 2005, when he spoke with Engel.

C. The Engel Action

Despite these problems, Vanguard and Villare entered into a contingency agreement for Katz to provide representation in a suit against Engel and RE/MAX. On January 20, 2007, Katz instituted an action in Superior Court on behalf of Vanguard against Engel and RE/MAX, alleging breach of contract and breach of fiduciary duty, as well as intentional and negligent misrepresentation. The gist of Vanguard's claims was that Engel caused various losses — including future profits from its proposed Oyster Rock Road development project — by miscommunicating Vanguard's intentions to the Richardses during the drafting process, providing false deposition testimony regarding the contracting parties' intentions during Vangaurd's action for specific performance, and failing to draft the sale agreement to include unambiguous language that ensured a conveyance of at least 39 acres.

RE/MAX filed a motion to dismiss for failure to state a claim upon which relief could be granted. According to Plaintiffs, Katz acceded to the motion without consulting Vanguard.

Engel moved for summary judgment on Vanguard's claims against her on the basis that they were time-barred by the three-year statute of limitations set forth in 11 Del. C. § 8106. In the alternative, Engel argued that Vanguard could not establish the element of damages because it did not offer an expert opinion within the Court's expert disclosure deadline and offered no other evidence proving the extent of Vanguard's alleged loss.

On April 15, 2008, Judge Graves granted summary judgment in Engel's favor, finding that Vanguard's cause of action began to run, at the latest, in July 2003:

The parties agree that the applicable Statute of Limitations is three (3) years. . . . Plaintiff knew in 2002 that the wheels had fallen off his efforts to purchase the desired 39 acres. Plaintiff was at that time on notice that problems existed and Plaintiff was responsible for pursuing any and all courses of action against any responsible party. The latest date that Plaintiff knew or should have known he might have a cause of action would be the date Plaintiff deposed Engel which was July 2, 2003. At that time he would have known or could have known what Engel did or did not communicate to the Sellers.

As the Complaint in the Engel case was filed in January 2007, more than six months after the expiration of the limitations period, the Court concluded that it was time-barred.

The Court further concluded that Vanguard's failure to provide proof of damages provided an alternative basis for summary judgment. Vanguard's bare claim that it "lost the property . . . and all of the damages in respect with such loss" was insufficient at the summary judgment stage, given that Vanguard had not identified any economic damages expert and offered no other evidence regarding damages. Because proof of damages was an essential element of Vanguard's claims, summary judgment would have been appropriate even if the action was not time-barred.

Following Vanguard's loss in the Engel case, Vanguard and Villare filed the instant legal malpractice suit against Katz. Plaintiffs' Complaint alleges that Katz was negligent in failing to file the Engel case prior to the expiration of the limitations period and in failing to obtain an expert in that case to opine as to Vanguard's damages, despite being instructed by Villare to do so. Plaintiffs assert a separate claim for breach of fiduciary duty based upon these omissions, as well as Katz's alleged failures to keep Vanguard informed about significant events that occurred during the representation. Plaintiffs further claim that Katz's practice is liable for Katz's conduct by the principle of respondeat superior.

III. Parties' Contentions

Next, Katz challenges Plaintiffs' ability to prove that Vanguard would have succeeded in the Engel action but for his alleged malpractice. Because this Court found in the underlying action that the property description language which rendered the contract fatally ambiguous was inserted at Vanguard's insistence, Katz argues that Engel could not be found responsible for the contract's failure. Furthermore, the contract included a provision disclaiming either party's reliance upon any representations made by Engel, and Villare stated in sworn testimony that the property description used in the offer expressed Vanguard's intentions. Katz therefore urges that Vanguard's claim against Engel was devoid of legal merit.

Finally, Katz argues that Vanguard could not have succeeded in "prov[ing] Engel's conduct resulted in substantial lost profits because the Richardses would not have agreed to enter into any contract on a per acre basis." Katz states that Vanguard's expert in the current action "only states that Engel's alleged negligence `led to unnecessary litigation' and the inability to enforce the contract," which does not "provide the causal link between enforcement of the agreement in question and a guaranteed return of any substantial prospects." Katz therefore contends that he is entitled to partial summary judgment as to Plaintiffs' lost profits claim.

In response, Plaintiffs explain that Vanguard has undergone a name change since the litigated events. Thus, Vanguard Group, LLC, does not appear in the Delaware Division of Corporation's records of active business entities because it is currently known as Global Medical Informatics, LLC.

Plaintiffs counter Katz's remaining arguments by suggesting that because Katz's actions have made it difficult for them to prove the "but for" outcome of the underlying case, Katz should bear the burden "to demonstrate [that] the realtor would have prevailed at trial." Plaintiffs further emphasize that Katz testified at his deposition that he believed the Engel case had merit while it was pending, thereby undermining his current position that he is entitled to summary judgment because his actions, at worst, hastened Vanguard's inevitable loss in that action.

IV. Standard of Review

When considering a motion for summary judgment, the Court examines the record to ascertain whether genuine issues of material fact exist and to determine whether the moving party is entitled to judgment as a matter of law. Initially, the burden is placed upon the moving party to demonstrate that his legal claims are supported by the undisputed facts. If the proponent properly supports his claims, the burden "shifts to the non-moving party to demonstrate that there are material issues of fact for resolution by the ultimate fact-finder." Summary judgment will only be granted if, after viewing the evidence in the light most favorable to the non-moving party, there are no material facts in dispute and judgment as a matter of law is appropriate.

VI. Analysis

As Katz correctly points out, Villare was not a party to the failed deal with the Richardses, nor to the subsequent professional malpractice claim against Engel. Plaintiffs' response to the instant motion presents no basis for permitting Villare to proceed in his individual capacity with a legal malpractice claim against Katz. Villare could not have suffered the "loss" of a case to which he was never a party. Accordingly, Katz is entitled to summary judgment as to Villare's claims.

By contrast, the entity formerly known as the Vanguard Group, LLC, is the proper plaintiff. Vanguard has submitted documentation, including an authenticated copy of the relevant certificate of amendment, establishing that it changed its name to Global Medical Informatics, LLC, in 2006. Although a motion or stipulation to correct Vanguard's name in the caption of this case would have been desirable, contrary to Katz's assertions, it appears Vanguard was a properly-incorporated entity at the time of the litigated events.

Katz's remaining arguments concern whether Vanguard can meet the third element of its legal malpractice claim by proving a "resulting loss" traceable to his alleged misconduct. In its response, Vanguard notes that the trier of fact in a legal malpractice action may "consider whether the defendant lawyer's misconduct has made it more difficult" to project how the underlying case would have proceeded but for the defendant's actions. Vanguard uses this proposition, expressed in the Restatement (Third) of the Law Governing Lawyers, to argue that the defendant in a legal malpractice claim may be made to bear the burden of proving that the plaintiff would not have been successful in the underlying action in the absence of the alleged malpractice.

Vanguard misconstrues the proper burden of proof for a legal malpractice claim. The portion of the Restatement to which Vanguard cites does not shift or lessen the plaintiff's burden to "prove by a preponderance of the evidence that, but for the defendant lawyer's misconduct, the plaintiff would have obtained a more favorable judgment in the previous action." Rather, the Restatement merely notes that in deciding whether this burden is met, it is proper for the trier of fact to consider the potentially distorting effects of the defendant's actions on the plaintiff's ability to prove the hypothetical outcome of the underlying case as it would have unfolded in the absence of the misconduct.

With the proper burden of proof in mind, the Court concludes that summary judgment is appropriate because the undisputed facts and applicable law do not support a conclusion that Vanguard would have enjoyed a better outcome in the Engel case but for Katz's misconduct. Although the outcome of the "case within the case" in a legal malpractice claim is often a question of fact, the claims brought in the Engel case did not provide a legal or factual basis for Vanguard to recover damages from Engel.

In the underlying case, Vanguard brought claims against Engel for breach of the dual agency agreement, intentional and negligent misrepresentation, and breach of fiduciary duty. Because Engel received no benefit as a result of the alleged breach of fiduciary duty, each of these claims required Vanguard to prove that Engel's actions resulted in quantifiable damages that were non-speculative and subject to reasonable estimation. Vanguard has not offered a legal or factual basis for a rational assessment of damages in either the underlying Engel case or its current action against Katz.

The central flaw in Vanguard's theories in both the Engel case and the instant action is that the contract for the Oyster Rock Road property was rescinded because of a failure of the "meeting of the minds" or an innocent mutual mistake of fact, and full restitution was provided to Vanguard. The Chancery Court did not find that fraud, intentional or negligent misrepresentation, or breach had occurred with regard to the failed sale agreement. Engel earned no fee or commission on the contract and accordingly was not enriched, unjustly or otherwise, by the failed deal. The Richardses were required to return Vanguard's earnest money and to bear the costs of the survey. Thus, this is not a situation in which a buyer has been saddled with property that is materially different from what it reasonably expected. Rescission and restitution may not have been Vanguard's preferred remedy, but it was an appropriate and complete remedy under the circumstances. By rescinding the contract and ordering restitution of all moneys paid by Vanguard to the Richardses, the Chancery Court's decision restored Vanguard to its status quo ante.

Vanguard has not advanced any theory, nor can the Court perceive one, upon which it is entitled to further recovery. Having received rescission of any obligation to purchase the too-small Oyster Rock Road property and restitution of all monies paid, Vanguard cannot also recover the unspecified amount of lost profits that it projects it would have earned on its planned subdivision. Moreover, Vanguard has offered no evidence of a causal link between Engel's actions and the claimed loss of prospective profits. Rescission of the contract for the Oyster Rock Road property did not prevent Vanguard from directing the funds it raised for the failed transaction with the Richardses towards developing a subdivision on other property and reaping its prospective profits. Rather, the Chancery Court's decision rescinding the contract merely prevented Vanguard from purchasing property inadequate to its plans.

Even if Vanguard could articulate a rational basis for assessing damages beyond rescission and restitution, no causal connection exists between Engel's conduct and the collapse of the real estate transaction or Vanguard's loss of its action for specific performance. Both Vanguard and the Richardses knew that the size of the parcels to be conveyed was uncertain at the time the sale agreement was signed. Consistent with this mutual awareness, the contract stated that the exact acreage was "to be determined by a survey." The contract provided that Vanguard would hold the Richardses harmless for "all loss or liability" resulting from the survey and that "[i]n the event the results of the survey . . . are not to satisfaction of the Buyer, in Buyer[']s sole discretion, the Buyer may void this contract with written notice." The contract also contained both a merger clause and an anti-reliance clause, which stated as follows:

Buyer(s) and Seller(s) understand(s) and acknowledge(s) that Broker(s) and any Agents, Subagents or employees of Broker(s) are not at any time authorized to make any representations about this Contract or the property other than those written in this Contract. Broker(s), Agents, Subagents and employees of Broker(s) do not assume any responsibility for the condition of the property or for the performance of this Contract by any or all parties hereto. By signing this Contract, Buyer(s) and Seller(s) acknowledge(s) they have not relied on any representations made by Broker(s) or any Agents, Subagents or employees of Broker(s) except those representations written in this Contract.

In view of the merger and anti-reliance provisions, as well as language in the agreement confirming that the exact acreage of the parcels to be conveyed was unknown, Vanguard could not reasonably expect Engel or the Richardses to understand that it intended the contract to be for a sale by the acre, rather than in gross. As Chancellor Chandler explained in his denial of reargument in the Chancery Court action:

Though the existence and outcome of [alleged discussions between Villare and Engel regarding the property boundary] could be disputed facts, they are not material facts because if the discussions came about before the contract was entered into, they would have been rendered legally irrelevant by virtue of the merger clause. . . . [E]ven assuming that [Vanguard] and [the Richardses] thought they had agreed to buy and sell the same piece of property (that there was a meeting of the minds), which I still do not believe occurred, the parties were mutually mistaken as to the size of the portion of the property to be conveyed.

Thus, any failure by Engel to relay Villare's extracontractual expressions of intent to the Richardses could not have caused the rescission of the agreement. Vanguard was not entitled to rely upon any representation by Engel about the Richardses' intent, nor could it justifiably expect the Richardses to consider any expressions of its intent that were contrary to the written contract.

Engel's role under the dual agency agreement was to facilitate the transaction between Vanguard and the Richardses, not to guarantee the formation or success of the contract. Neither Engel nor the Richardses misrepresented to Vanguard that they knew for certain that the property to be conveyed consisted of 39 acres or more. Engel's statements before and during the Chancery Court action regarding the intent underlying the agreement's language did not cause Vanguard to lose its action for specific performance, because Chancellor Chandler considered any discussions with Engel to be legally irrelevant to his determination that the contract was void ab initio or voidable for mutual mistake. Vanguard has not presented evidence in either its underlying suit against Engel or the current action to support the existence of a causal nexus between Engel's conduct and any form of recoverable damages. Vanguard's breach of fiduciary duty claim is similarly bereft of any evidence that Katz's alleged neglect of his duties resulted in Vanguard's loss of either the appeal of its action for specific performance or the Engel case. Thus, despite Katz's deposition testimony that he believed the case against Engel had merit when he accepted the representation, the Court concludes that Vanguard would not have prevailed even in the absence of Katz's alleged misconduct.

On a final note, it is incumbent on the Court to emphasize that Plaintiffs raise numerous allegations which, if true, represent violations of the Delaware Lawyers' Rules of Professional Responsibility, even though they do not support an action for legal malpractice or breach of fiduciary duty. An attorney is bound by Delaware's Rules regardless of the objective merits of a case. Accordingly, the Court considers it appropriate to refer this matter to the Office of Disciplinary Counsel.

V. Conclusion

IT IS SO ORDERED.