Brennan v. Ruffner

In 1976, Dr. Robert Brennan (plaintiff) and Dr. Martell hired Charles Ruffner (defendant), an attorney, to incorporate their medical practice as a professional association. Thereafter, Ruffner served as the medical practice’s corporate counsel. In 1982, Dr. Mirmelli joined the medical practice as an equal one-third shareholder. Accordingly, the doctors requested that Ruffner prepare a new shareholders’ agreement for the medical practice. After several months of negotiation, the doctors executed a new shareholders’ agreement, which included a provision permitting the shareholders to involuntarily terminate another shareholder by a majority vote. Brennan knew about the provision but decided to sign the shareholders’ agreement anyway because Mirmelli assured Brennan that he would not join with Martell to oust Brennan from the medical practice. Nevertheless, Mirmelli and Martell subsequently involuntarily terminated Brennan as a shareholder and employee of the medical practice by a majority vote. Consequently, Brennan sued Martell and Mirmelli for breach of contract and fraud in the inducement. In the complaint, Brennan alleged that he was not represented by counsel in the negotiation of the shareholders’ agreement. Brennan ultimately settled the lawsuit with Martell and Mirmelli. Notwithstanding, Brennan sued Ruffner for legal malpractice, among other claims. Brennan argued that an attorney-client relationship existed between him and Ruffner as a shareholder in the closely held corporation or as a third-party beneficiary to the medical malpractice’s employment contract with Ruffner. Brennan testified at his deposition that he could not recall any conversations with Ruffner. At trial, the medical malpractice’s accountant testified that Ruffner told all the doctors that he represented only the corporation in the drafting of the shareholders’ agreement. The trial court granted summary judgment for Ruffner. Brennan appealed.