Professional Negligence Law Reporter

The Delaware Supreme Court held that the “but for” test for proximate causation applied to the legal negligence claims of a matrimonial client whose former wife challenged the enforceability of their prenuptial agreement.

Before he married Michelle Silverman, Dean Sherman—who had assets of approximately $4 million—retained attorney Stephen Ellis to draft a prenuptial agreement. Among other things, the agreement provided that property acquired by Silverman or Sherman during the marriage would remain separate property. Before signing the agreement, Silverman consulted her own attorney, who negotiated changes to the agreement. Sherman also provided a summary of his assets and liabilities; however, Silverman’s attorney later advised her that the agreement was not in her best interests and that she should not sign it. Nevertheless, Silverman signed the agreement, and the couple married.

Years later, Silverman filed for divorce and contested the enforceability of the prenuptial agreement. The family court determined the agreement was unenforceable and unconscionable and certified an interlocutory appeal to the state high court. While the appeal was pending, Sherman filed a legal malpractice suit against Ellis, alleging he negligently prepared the agreement by, among other things, failing to include a waiver of disclosure of assets. The state high court reversed the family court’s finding that the agreement was not enforceable, but Sherman continued to pursue his legal malpractice action. The trial court granted Ellis’s motion for summary judgment.

Reversing, the state high court first considered the plaintiff’s claim that the trial court had erred in concluding that the traditional “but for” test, rather than an increased-risk-of-harm test, applied here. Citing case law, the court found that in the context of litigation, a plaintiff alleging legal negligence must show that the underlying action would have been successful but for the attorney’s negligence. Under this standard, the court said, the plaintiff here is required to prove he would not have suffered damages in the form of increased litigation expenses but for the defendant’s alleged negligence. The increased-risk-of-harm standard would allow the plaintiff to establish a prima facie case by showing the defendant’s alleged negligence created an increased risk that he would incur additional legal expenses. Practically speaking, the court added, under the but for test, the plaintiff must show that Silverman would have signed the agreement had the defendant included the waiver of disclosure clause.

The court found that no evidence exists that any court has adopted the increased-risk-of-harm test for proximate cause, noting that, instead, courts have applied the but for test for causation in legal malpractice cases involving litigation negligence. Declining to follow cases from other jurisdictions applying the risk-of-harm standard, the court held that to prevail on his claims, the plaintiff must show that Silverman would have agreed to the omitted disclosure terms.

The court nonetheless found that the trial court had erred in granting summary judgment for the defense. Considering the many waivers contained in the prenuptial agreement, including Silverman’s rights to alimony and to certain marital property, as well as her attorney’s advice not to sign the agreement, a question of fact exists as to whether Silverman would have signed the agreement if it contained a clause waiving the disclosure of assets beyond what Sherman had already disclosed during the negotiations, the court said. Accordingly, the court remanded the case for further proceedings.

Citation: Sherman v. Ellis, 2021 WL 405841 (Del. Feb. 11, 2021)

Plaintiff counsel: Patrick K. Gibson, Wilmington, Del.