Faber v. Herman

Douglas Herman (defendant) represented Steven Faber (plaintiff) in Steven’s divorce from Karen Faber. One marital asset was Steven’s Iowa Public Employer’s Retirement System (IPERS) account, a defined-benefit plan.. The court approved Steven and Karen’s agreement to assign a value of about $38,000 to the account, the amount the account would have paid Steven if he retired on the day of the valuation, and to divide the account equally, payable in a lump sum of $19,100 to Karen upon divorce. Karen’s attorney then drafted a qualified domestic-relations order (QDRO) that required IPERS to immediately pay Karen $19,100, but IPERS rejected the QDRO because Karen could not receive benefits from the account until Steven’s death or retirement. Karen’s attorney drafted a new QDRO that provided for IPERS to distribute benefits to Steven and Karen upon Steven’s retirement, calculated by taking 50 percent of the gross monthly or lump-sum benefit adjusted by the length of marriage and years of service. Herman agreed to the new QDRO, and the trial court entered the order. Herman explained in a letter to Steven that the QDRO had been finalized and divided the IPERS account consistent with the settlement agreement. Herman did not inform Steven that the lump-sum arrangement had been rejected and the approved QDRO provided that IPERS would pay monthly benefits to Karen and Steven. Steven began receiving benefits and was surprised to learn he would receive a monthly benefit of about $1,200 and Karen about $960. Steven sued Herman for legal malpractice, alleging Herman negligently represented Steven in the preparation and approval of the QDRO and negligently advised Steven concerning the IPERS account. Steven claimed his damages were the amount of benefits Karen would receive in excess of $19,100. The jury found Herman was 70 percent negligent and that damages were about $100,000. The trial court denied Herman’s motion for judgment notwithstanding the verdict, and the appellate court found for Steven on all issues. Herman appealed, arguing that any negligence was not the cause of Steven’s damages because the QDRO fulfilled Steven and Karen’s agreement to evenly divide the IPERS account.