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Keywords

contractbreach of contractattorneyappealsummary judgmentmalpracticelegal malpracticethird-party beneficiary
contractbreach of contractattorneyappealsummary judgmentmalpracticelegal malpracticethird-party beneficiary

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Franko v. Mitchell, 158 Ariz. 391, 762 P.2d 1345

Facts

Circie Franko and Carl Markoff formed a close relationship, during which Markoff expressed a desire to open a bar and requested a loan from Franko. Markoff recommended attorney James M. Mitchell to draft the promissory note for the loan. Although Franko was present during the drafting of the note, Mitchell did not explicitly state that he was representing her, leading to disputes about whether an attorney-client relationship existed. Franko later claimed that she never received repayment on the loan, prompting her to sue Mitchell for breach of contract and legal malpractice.

Circie Franko and Carl Markoff formed a close relationship, during which Markoff expressed a desire to open a bar and requested a loan from Franko. Markoff recommended attorney James M. Mitchell to draft the promissory note for the loan. Although Franko was present during the drafting of the note, Mitchell did not explicitly state that he was representing her, leading to disputes about whether an attorney-client relationship existed. Franko later claimed that she never received repayment on the loan, prompting her to sue Mitchell for breach of contract and legal malpractice.

Issue

The main legal issues were whether an attorney-client relationship existed between Franko and Mitchell, whether Franko was an intended third-party beneficiary of the contract, and whether Mitchell owed a duty to Franko that could give rise to a legal malpractice claim.

To resolve the appeal, we must determine the following issues: (1) whether there existed genuine issues of material fact concerning the alleged attorney-client relationship between Mitchell and Franko; (2) whether there existed genuine issues of material fact concerning Franko's contention that she was an intended third-party contract beneficiary; (3) whether Franko has a cause of action against Mitchell for legal malpractice; (4) whether Franko's action should be allowed to proceed on a theory of negligent misrepresentation; and (5) whether Franko is eligible for an award of attorney's fees on appeal pursuant to A.R.S. § 12–341.01(A).

Rule

An attorney-client relationship can be implied from the conduct of the parties, and a third party may have a cause of action against an attorney if the attorney owed a duty to that third party, even in the absence of a formal attorney-client relationship.

In general, the relationship of attorney and client is a matter of contract except where an attorney is appointed by the court. The employment contract of an attorney consists of an offer or request by the client and an acceptance or assent by the attorney, or an offer by the attorney and acceptance of the offer by the client. The contract may be express or implied from the conduct of the parties.

Analysis

The court analyzed the interactions between Franko and Mitchell, noting that while there was no explicit agreement, the circumstances suggested that Franko could reasonably believe that Mitchell was acting in her interest. The court found that genuine issues of material fact existed regarding the attorney-client relationship, which should be resolved by a jury. However, the court concluded that Franko could not proceed on a third-party beneficiary theory because there was no evidence that Mitchell intended to benefit her in the contract.

The court analyzed the interactions between Franko and Mitchell, noting that while there was no explicit agreement, the circumstances suggested that Franko could reasonably believe that Mitchell was acting in her interest. The court found that genuine issues of material fact existed regarding the attorney-client relationship, which should be resolved by a jury. However, the court concluded that Franko could not proceed on a third-party beneficiary theory because there was no evidence that Mitchell intended to benefit her in the contract.

Conclusion

The Court of Appeals affirmed the summary judgment in favor of Mitchell regarding the legal malpractice claim but reversed the decision concerning the breach of contract claim, remanding the case for further proceedings.

The Court of Appeals affirmed the summary judgment in favor of Mitchell regarding the legal malpractice claim but reversed the decision concerning the breach of contract claim, remanding the case for further proceedings.

Who won?

James M. Mitchell prevailed on the legal malpractice claim because the court found no duty owed to Franko in that context. However, the court allowed the breach of contract claim to proceed, indicating that there were unresolved factual issues.

James M. Mitchell prevailed on the legal malpractice claim because the court found no duty owed to Franko in that context. However, the court allowed the breach of contract claim to proceed, indicating that there were unresolved factual issues.

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