Drake v. Wickwire
795 P.2d 195 (1990)
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Rule of Law:
An attorney commits malpractice as a matter of law when advising a client to treat an ambiguous statement from an opposing party as an anticipatory repudiation of a contract, rather than first seeking adequate assurance of performance.
Facts:
- Paul Drake signed an exclusive listing agreement with realtor Charles Hosley to sell a parcel of land.
- On March 23, 1984, Drake entered into an earnest money agreement to sell the land to a group of buyers, with the closing to occur 'within 10 days of clear title'.
- On April 3, 1984, a title report was issued, setting the closing deadline for no later than April 13, 1984.
- Drake's attorney, Tom Wickwire, informed Hosley that Drake wished to close by April 11 to settle a personal financial matter.
- On April 11, Hosley told Wickwire that the buyers could not close that day and would need until May 1 to get the money.
- In the same conversation, Hosley also stated that the buyers actually had the money but were 'resisting the pressure to close' on the earlier, non-contractual date of April 11.
- Based on this conversation, Wickwire advised Drake that the buyers had anticipatorily repudiated the contract and that Drake was free to sell the property to someone else.
- On April 12, Drake, acting on Wickwire's advice, sold the property to a different buyer.
- Later on April 12, the original buyers tendered checks for the down payment, which Wickwire refused on behalf of Drake.
Procedural Posture:
- In a prior lawsuit, realtor Charles Hosley sued seller Paul Drake for his commission after the property sale fell through.
- The trial court in that case granted summary judgment in favor of Hosley.
- The Alaska Supreme Court affirmed that judgment, finding Drake had improperly breached the sale agreement.
- In the current case, Drake sued his attorney, Tom Wickwire, for legal malpractice in the superior court (Alaska's trial court).
- Wickwire moved for summary judgment, supported by expert affidavits stating his advice met the standard of care.
- Drake opposed the motion but did not provide his own expert testimony.
- The superior court granted summary judgment to Wickwire, ruling that expert testimony was necessary to establish malpractice and Drake had failed to provide any.
- Drake, as appellant, appealed the grant of summary judgment against him to the Alaska Supreme Court, with Wickwire as appellee.
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Issue:
Does an attorney commit malpractice as a matter of law by advising a client to treat an ambiguous statement from the other party's agent as an anticipatory repudiation of a contract and sell the subject property to a third party?
Opinions:
Majority - Matthews, Chief Justice
Yes. An attorney is negligent as a matter of law for advising precipitate conduct based on an ambiguous statement that is insufficient to constitute an anticipatory repudiation. Under the Restatement (Second) of Contracts § 250, a repudiation must be a statement sufficiently positive to be reasonably interpreted to mean the party will not or cannot perform. Hosley's statements were facially ambiguous, first suggesting inability to pay and then suggesting mere resistance to a premature closing. This ambiguity did not meet the high standard for repudiation. At most, it provided reasonable grounds to fear a breach, for which the proper remedy under Restatement § 251 is to demand adequate assurance of performance, not to immediately treat the contract as terminated. Wickwire's failure to recognize this distinction and his advice to proceed with a sale to a third party fell below the standard of care and constituted negligence as a matter of law.
Dissenting - Rabinowitz, Justice
No. The attorney's conduct did not constitute malpractice as a matter of law because genuine issues of material fact exist as to whether his advice was reasonable. Hosley's initial statement that the buyers 'did not have the money but would need until May 1' was an unambiguous expression of intent not to comply with the contract's terms, which was sufficient to constitute an anticipatory repudiation. The subsequent, more ambiguous statement about 'resisting pressure' did not retract the initial, clear repudiation. A trier of fact could reasonably find that an attorney would be justified in believing the buyers intended to breach. Therefore, the issue of Wickwire's negligence should be determined by a fact-finder, not decided as a matter of law.
Analysis:
This decision establishes that an attorney's professional judgment in interpreting contract law is not immune from being deemed negligent as a matter of law. By holding that misinterpreting the clear legal standard for anticipatory repudiation constitutes obvious negligence, the court removes the need for a plaintiff in a similar malpractice case to present expert testimony. This precedent heightens the standard for attorneys advising clients on contract termination, requiring them to act cautiously in the face of ambiguity and pursue remedies like demanding assurances before advising clients to take irreversible steps like selling property to another party.
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