In a case contrary to the weight of authority, the Minnesota Supreme Court ruled on January 5, 2011 that a lawyer was not in privity with his client and therefore the res judicata doctrine did not bar the adverse party’s suit against the lawyer after she obtained a judgment against his client for fraud. In Rucker v. Schmidt, 2011 WL 13760 (Minn., January 5, 2011) the husband in a dissolution action falsified the value of his corporation. The parties agreed to a property split and the divorce was finalized. Later the ex-wife discovered the fraud and sued the ex-husband. The case settled. Then the ex-wife sued the ex-husband’s counsel for fraud. The trial court dismissed the claim on grounds counsel was in privity with the client and thus res judicata barred the claim. In a 2-1 decision the appeals court reversed, and then the supreme court affirmed. Relying upon the Restatement (First) of Judgments (1942) and American Jurisprudence (1958) the court held that counsel was not so identified in interest with his client that the relationship represented the same legal right. Therefore privity was not established and the case was remanded for trial.
Professional Liability Defense Federation
