Siu v. Cavanagh

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

WILLIAM MOLIM SIU, Plaintiff/Appellant,

v.

THE CAVANAGH LAW FIRM, PA, Defendant/Appellee.

No. 1 CA-CV 17-0601
FILED 10-2-2018

Appeal from the Superior Court in Maricopa County
No. CV2015-012851
The Honorable Daniel J. Kiley, Judge

AFFIRMED

COUNSEL

Miller Pitt Feldman & McAnally PC, Tucson
By Gerald Maltz, Stanley G. Feldman
Counsel for Plaintiff/Appellant

Jones, Skelton & Hochuli PLC, Phoenix
By Donald L. Myles, Jr., Eileen Dennis GilBride, J. Gary Linder, Patrick C.
Gorman
Counsel for Defendant/Appellee
 SIU v. CAVANAGH
Decision of the Court

MEMORANDUM DECISION

Presiding Judge Randall M. Howe delivered the decision of the Court, in
which Judge Jennifer M. Perkins and Judge Peter B. Swann joined.

H O W E, Judge:

¶1 William Molim Siu appeals from the trial court’s grant of
partial summary judgment in favor of The Cavanagh Law Firm, P.A.
(“Cavanagh”) on his claims for legal malpractice. For the following reasons,
we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 This legal malpractice action arises from divorce proceedings
involving Siu and his former wife, Helen Yu-Wen Chang. Cavanagh
represented Siu in those proceedings. As part of the divorce proceedings,
Siu and Chang stipulated to submit their property division to private
arbitration under the Arizona Revised Uniform Arbitration Act. See A.R.S.
§§ 12–3001 to –3029. The parties’ agreement to arbitrate purportedly
preserved their right “to appeal a final Arbitration Award to the Arizona
Court of Appeals[.]” Chang v. Siu, 234 Ariz. 442, 444 ¶ 3 (App. 2014).

¶3 The parties participated in a nine-day arbitration hearing
before a retired trial court judge (“Arbitrator”), which centered on the
division of separate and community property. More specifically, the parties
asked the Arbitrator to determine whether Siu’s separate property that he
had deposited into certain Merrill Lynch accounts containing community
funds could be traced. The record showed that Siu had closed his sole and
separate accounts after the marriage and transferred his separate funds into
a Merrill Lynch account established during the marriage, which contained
community funds. Thereafter, funds were transferred from that community
account to more than ten Merrill Lynch subaccounts. The parties’
jointly-retained accounting expert, Craig Reinmuth, was unable to trace the
funds to their original source. Chang’s separately-retained accounting
expert, Laura Leopardi, concluded that “extensive commingling”
prevented “specific identification and tracing” of the Merrill Lynch account
funding sources. In his deposition, Siu himself admitted that he had seen
no reason to “segregate income and expenses” in the accounts.

2
 SIU v. CAVANAGH
Decision of the Court

¶4 After the hearing, the Arbitrator issued a lengthy ruling
concluding that “[w]ithout question, [Siu] voluntarily and without
compulsion deposited his sole and separate funds and the parties’ funds
into the same accounts and thereafter voluntarily mixed the two together
when he (or others he chose) made transactions both within and between
the numerous accounts.” After determining that Siu had failed to present
clear and convincing evidence tracing his separate property, the Arbitrator
concluded that the “entirety of the funds in the Merrill Lynch accounts have
become community property,” and therefore, the accounts should be
divided equally.

¶5 The trial court entered a judgment and decree of dissolution
incorporating the Arbitrator’s findings and conclusions. Siu appealed from
that judgment to this Court, and we issued an opinion holding that despite
the language in the parties’ agreement preserving their appellate rights, this
Court lacked jurisdiction to review the merits of the Arbitrator’s ruling. See
Chang, 234 Ariz. at 446–48 ¶¶ 14–23 (App. 2014). Having determined that
the Arbitrator had not exceeded the bounds of his authority, this Court
affirmed the trial court’s confirmation of the arbitration ruling. See id. at 448
¶¶ 23–24.

¶6 Siu then filed a complaint against Cavanagh asserting claims
for professional negligence and breach of fiduciary duty. Specifically, Siu
argued that Cavanagh had (1) “contracted away Mr. Siu’s right[s]” to a
merits-based appeal and (2) failed to “engage a separate forensic
accounting expert[.]” Cavanagh moved for summary judgment arguing
that the record was “devoid of causation evidence” necessary to
demonstrate that Siu would have won his divorce case had Cavanagh done
what Siu alleged it should have done. The trial court granted partial
summary judgment in favor of Cavanagh on all claims, with the exception
of Siu’s pending claim that Cavanagh had failed to retain an independent
accounting expert. After Siu unsuccessfully moved for reconsideration, he
timely appealed.

DISCUSSION

¶7 A trial court should grant summary judgment “if the facts
produced in support of the claim or defense have so little probative value,
given the quantum of evidence required, that reasonable people could not
agree with the conclusion advanced by the proponent of the claim or
defense.” Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990); see Ariz. R. Civ. P.
56(a). On appeal, this Court’s “task is to determine de novo whether any
genuine issues of material fact exist and whether the trial court incorrectly

3
 SIU v. CAVANAGH
Decision of the Court

applied the law.” Parkway Bank & Tr. Co. v. Zivkovic, 232 Ariz. 286, 289 ¶ 10
(App. 2013).

1. Causation as an Issue of Law

¶8 Siu first argues that the trial court “erred in treating causation
as a pure issue of law to be decided on summary judgment.” He contends
that because Cavanagh’s alleged malpractice fell on the trial-level side of
the continuum, the case presented factual issues that a jury should decide.

¶9 As with all negligence cases, a legal malpractice plaintiff must
prove duty, breach of duty, causation, and damages. See Glaze v. Larsen, 207
Ariz. 26, 29 ¶ 12 (2004). In what is commonly referred to as the “case within
the case” doctrine, the plaintiff bears the burden of proving that “but for
the attorney’s negligence, he would have been successful in the prosecution
or defense of the original suit.” Phillips v. Clancy, 152 Ariz. 415, 418 (App.
1986).

¶10 In Phillips v. Clancy, this Court explained that “appellate level
malpractice” should be resolved by the judge as a question of law, while
“trial level malpractice” should go to the jury:

Appellate level malpractice commonly occurs when the
original trial has ended and the attorney fails to timely file an
appeal. The plaintiff must prove that an appellate court
would have (1) granted review, and (2) rendered a favorable
judgment. Courts have consistently found that these
determinations are questions of law for the trial judge, rather
than questions of fact for the jury. . . . [W]here issues of causation
in a legal malpractice action hinge upon the possible outcome of an
appeal, such issues are to be resolved by the trial judge as questions
of law.

152 Ariz. at 421 (emphasis added). The Restatement adopts this same
approach: “What would have been the result of an appeal in the previous
action is . . . an issue of law to be decided by the judge in the negligence or
fiduciary-breach action.” Restatement (Third) of the Law Governing
Lawyers § 53 cmt. b (2000). Conversely, the Phillips court defined “trial level
malpractice” as occurring in cases in which “the attorney’s negligence
either precluded a trial on the merits, or prevented the client’s case from
being presented according to professional standards[,]” and explained that,
in such cases, a jury “should decide the disputed factual issues pertaining
to the original suit.” Phillips, 152 Ariz. at 421.

4
 SIU v. CAVANAGH
Decision of the Court

¶11 In responding to Cavanagh’s motion for summary judgment,
Siu argued that Cavanagh breached its duty by contracting away his rights
to a merits-based review of the Arbitrator’s ruling. To succeed on his case
within a case, Siu had to prove that but for Cavanagh’s alleged negligence,
he should have won a merits-based appeal. Because the issue of causation
hinges upon the possible outcome of an appeal, the court properly
determined causation as a matter of law. See id. Thus, we affirm the trial
court’s decision to treat Siu’s claims relating to the possible outcome of a
merits-based appeal as a question of law.

¶12 Siu also argued that Cavanagh failed to “engage a separate
forensic accounting expert[.]” The trial court determined that this allegation
involved “trial level malpractice,” and presented factual issues that should
be determined by a trier of fact. Accordingly, the court correctly denied
summary judgment on this claim.

2. Standard of Review

¶13 Siu next argues that even if his malpractice claim presented
an issue of law, “sufficient evidence of record to raise a triable issue of
causation” prevented summary judgment. Siu argues that the trial court
should have applied de novo review to the Arbitrator’s decision because
that standard of review “applies to the classification of property as
separate/community.” He contends that if the record contained “any
evidence which would permit reasonable jurors” to find the likelihood of
his prevailing in the case within the case, then the court was required to
submit the issue of causation to the jury.

¶14 As explained above, to establish causation on his claim that
Cavanagh was negligent in “misinforming him” that the Arbitrator was
bound to follow the law and that the Arbitrator’s award would be “subject
to judicial review as if the case were tried in the superior court[,]” Siu had
to prove (1) that he “should have” prevailed had he been afforded the
opportunity for a merits-based appeal or (2) that he would have prevailed
if he had appeared before a trial court instead of an arbitrator. See Phillips,
152 Ariz. at 421 (explaining that the case-within-a-case methodology
requires a determination of what the outcome “should have been”). In other
words, Siu must prove that this Court would have reversed the Arbitrator’s

5
 SIU v. CAVANAGH
Decision of the Court

decision in whole or in part or that he would have won his case before a
trial court.1

¶15 Siu is correct that if he had been able to appeal the merits of
his property division to this Court, we would have reviewed the
characterization of the property as separate or community de novo. See In
re Marriage of Pownall, 197 Ariz. 577, 581 ¶ 15 (App. 2000) (“The
characterization of the property . . . is a conclusion of law which this court
reviews de novo.”). In doing so, however, we would have viewed “all
evidence and reasonable conclusions therefrom in the light most favorable
to supporting” the Arbitrator’s decision regarding the nature of the
property. See Sommerfield v. Sommerfield, 121 Ariz. 575, 577 (1979) (“On
appeal we view all evidence and reasonable conclusions therefrom in the
light most favorable to supporting the decision of the trial court regarding
the nature of property as community or separate.”); see also Hatcher v.
Hatcher, 188 Ariz. 154, 157 (App. 1996) (“We view all the evidence and
reasonable conclusions therefrom in the light most favorable to supporting
the trial court’s decision regarding the nature of the property as either
community or separate.”).

¶16 Our review of the arbitration record reveals substantial
evidence to support the Arbitrator’s decision. As the trial court noted, the
Arbitrator’s ruling includes numerous findings of fact regarding the
commingling of property in the Merrill Lynch accounts, which are
supported by the arbitration record. Under Arizona law, if “community
property and separate property are commingled, the entire fund is
presumed to be community property unless the separate property can be
explicitly traced.” Cooper v. Cooper, 130 Ariz. 257, 259 (1981) (citations and
quotations omitted). The party claiming that commingled funds contain
separate property has the burden of proving that all or a portion of the
funds are separate property by clear and convincing evidence. See id. at
259–60.

¶17 Viewing the evidence and all reasonable conclusions
therefrom in the light most favorable to supporting the Arbitrator’s
decision, and applying de novo review to the characterization of the
property, we conclude that a reasonable appellate court would have
affirmed the Arbitrator’s decision to characterize the Merrill Lynch

1 We recognize that analysis of an appeal of the legal merit of an
arbitrator’s decision is an artificial exercise because such decisions are not
subject to traditional review in a court. The unique circumstances of this
case, however, require us to engage in this hypothetical inquiry.

6
 SIU v. CAVANAGH
Decision of the Court

accounts as community property and to divide them equally. Because the
alleged malpractice arises from Cavanagh’s failure to preserve Siu’s right
to a merits-based appeal, the trial court properly placed itself in the shoes
of an appellate court. Siu also claims that he would have prevailed had the
case been held before a trial court. Siu argues that the Arbitrator was not
bound to follow the law; thus, his chances of success before the Arbitrator
were less favorable. But he has not presented this Court with any
supporting authority for this assertion nor are we aware of any that exists.
Thus, this argument is not persuasive. We find no error in the standard of
review applied by the trial court and affirm the grant of partial summary
judgment.

3. Other Issues

¶18 Siu further argues that the trial court “erroneously
disregarded expert testimony in granting summary judgment.”
Specifically, he contends that the court disregarded the testimony of
(1) Reinmuth, the jointly retained forensic accounting expert who testified
at the Arbitration hearing; (2) Eric Lee, certified fraud examiner retained by
Siu for the malpractice action; and (3) Judge J. William Brammer, Jr., a
retired appellate court judge, also retained by Siu for the malpractice action.

¶19 The trial court did not disregard these experts’ testimony.
Rather, the court’s ruling specifically referred to Reinmuth’s testimony
multiple times. The ruling also referred to Lee’s testimony in denying
summary judgment on Siu’s claim that Cavanagh failed to retain a separate
accounting expert. The ruling likewise referred to Judge Brammer’s
testimony and explained that because Judge Brammer did not review the
entire arbitration record, he was unable to ascertain whether sufficient
evidence supported the Arbitrator’s ruling.

¶20 Siu finally argues that the trial court “disregarded Chang’s
concessions that Siu had separate property” and Cavanagh’s “prior
conflicting judicial representations.” We have no reason to believe that the
court failed to consider this evidence before issuing its decision. See Fuentes
v. Fuentes, 209 Ariz. 51, 55 ¶ 18 (App. 2004) (noting that although the trial
court’s minute entry did not specifically reference certain evidence, the
evidence is “presumed to have been fully considered by the court prior to
issuing its decision”). Chang’s concession that Siu had separate property
does not alter the conclusion that Siu commingled his separate property
with the community property to the extent that the separate property was
no longer traceable. Cavanagh’s prior statements made while representing

7
 SIU v. CAVANAGH
Decision of the Court

Siu did not preclude the determination that a reasonable appellate court
would not have reversed the Arbitrator’s property division.

¶21 The trial court’s detailed ruling reflects that it carefully
considered all relevant testimony and evidence in reaching its conclusion
that Siu failed to show that, absent Cavanagh’s alleged negligence, he
would have prevailed on a merits-based appeal or before a trial court rather
than an arbitrator.

CONCLUSION

¶22 For the foregoing reasons, we affirm. We award costs to
Cavanagh upon compliance with Arizona Rule of Civil Appellate
Procedure 21.

AMY M. WOOD • Clerk of the Court
FILED: AA

8