Legal Malpractice Law Review : Professional Responsibility Case Summaries & Commentary : Bennett J. Wasserman : LegalMalpractice.com : Lawyer Malpractice & Legal Ethics

Gilman v. Hohman, 725 N.E.2d 425 (Ind. Ct. App. 2000)

IN: Underlying divorce action

Student Contributor: Jeff Cain

Facts: Husband and wife divorce. Husband is a doctor who is a staff member at a local clinic. Since the husband has no ownership interest in the clinic, and his employment contract with the clinic had a non-compete clause, the wife’s lawyers conclude that the husband has no goodwill in the clinic. The property settlement agreement that the lawyers prepare for the divorce did not include a valuation for the goodwill of the husband’s medical practice. Two years later, the wife sues her lawyers for malpractice, alleging that they should have valued her husband’s goodwill in his medical practice as part of the property settlement.

Issue: Is a lawyer who does not value a husband’s goodwill in his medical practice as a part of a property settlement negligent if the husband’s goodwill is not divisible?

Ruling: There are two types of goodwill. Enterprise goodwill is the established relations that a business has with employees, customers, and suppliers, and it may be divisible in a divorce. Personal goodwill is a value attached to a business as a result of the continued presence of an individual. Personal goodwill is not divisible in a divorce, since the value only represents future earning capacity.

In this case, the wife could not have received any value from the goodwill of the husband’s medical practice as part of the property settlement. Since the husband had no ownership interest in the clinic, there was no business to which the goodwill could attach.

Lesson: To prevail on a claim of legal malpractice, a client must prove that they would prevail at trial if not for the lawyer’s breach of duty. The lawyers in this case were not negligent for failing to value something that was not divisible. Moreover, the damages claimed by the Ex-wife were not proximately caused by her lawyers since the ex-husband did not own the clinic and thus any of its good will. 
 

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Rodgers v. Weatherspoon, 141 SW 3d 342 (Tex. App. 2004)

TX: Underlying criminal defense

Student Contributor: Megan Diodato

Facts:  The client was charged with aggravated assault and the attorney was appointed to represent him. The client filed motions to act on his own behalf and to dismiss attorney as his counsel. The attorney filed a motion to withdraw. The motion was granted that day. The client personally contacted the court multiple times and on one of his visits the client was arrested because the judge determined his bail was not sufficient. The client claims the clerk told him that if his attorney had been present in court he would have been released to his attorney and would not have to go to jail. The client filed a suit, claiming the attorney committed legal malpractice because he did not communicate with him and did not appear in court in time to allow client to avoid arrest. The client claims damages resulting from spending six days in jail and having to pay additional money for the increased bond. The attorney contends that he had no duty to the client and was not the cause of his arrest and damages. The client appeals attorney’s summary judgment that dismissed his legal malpractice claim.

Issue: Whether attorney’s breach of duty was the proximate cause of the client’s injuries.

Ruling: No.   Attorneys have a fiduciary relationship with their clients as a matter of law and summary judgment may be proper if it is shown that the attorney’s act or omission was not the cause of any damages to the client. The two components of proximate cause are cause-in-fact and foreseeability. Cause-in fact is where the defendant’s acts or omissions were a substantial factor in bringing about the injury that would not otherwise have occurred. Foreseeability does not require that the actor anticipate the particular injury that eventually occurs. In a legal malpractice case, where a lay person would ordinarily be competent to make a determination on causation, expert testimony is unnecessary. The attorney offered evidence through the trial judge’s testimony that the attorney had nothing to do with the client’s bond being held insufficient, as it was insufficient on his own. After the attorney presented this evidence, the client then had the burden of introducing his own evidence to raise an issue of material fact about causation. The client failed to meet this burden and offered no evidence that the attorney ever received word that he needed to appear at the court before the client was taken to jail. Only the county clerk said she had called the attorney’s office and left a message, but had not spoken to the attorney. There is no evidence that the client’s claimed harm would have been diminished or would not have occurred if the attorney had acted the way client contends. The attorney disproved the causation element of client’s malpractice claim as a matter of law.

Lesson: In order to win on a malpractice claim the plaintiff must prove that their harm would have been less or would not have occurred at all  if defendant acted in accordance with the standards of care. 

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Rodgers v. Weatherspoon, 141 SW 3d 342 (Tex. App. 2004)

TX: Underlying criminal defense

Student Contributor: Megan Diodato

Facts:  The client was charged with aggravated assault and the attorney was appointed to represent him. The client filed motions to act on his own behalf and to dismiss attorney as his counsel. The attorney filed a motion to withdraw. The motion was granted that day. The client personally contacted the court multiple times and on one of his visits the client was arrested because the judge determined his bail was not sufficient. The client claims the clerk told him that if his attorney had been present in court he would have been released to his attorney and would not have to go to jail. The client filed a suit, claiming the attorney committed legal malpractice because he did not communicate with him and did not appear in court in time to allow client to avoid arrest. The client claims damages resulting from spending six days in jail and having to pay additional money for the increased bond. The attorney contends that he had no duty to the client and was not the cause of his arrest and damages. The client appeals attorney’s summary judgment that dismissed his legal malpractice claim.

Issue: Whether attorney’s breach of duty was the proximate cause of the client’s injuries.

Ruling: No.   Attorneys have a fiduciary relationship with their clients as a matter of law and summary judgment may be proper if it is shown that the attorney’s act or omission was not the cause of any damages to the client. The two components of proximate cause are cause-in-fact and foreseeability. Cause-in fact is where the defendant’s acts or omissions were a substantial factor in bringing about the injury that would not otherwise have occurred. Foreseeability does not require that the actor anticipate the particular injury that eventually occurs. In a legal malpractice case, where a lay person would ordinarily be competent to make a determination on causation, expert testimony is unnecessary. The attorney offered evidence through the trial judge’s testimony that the attorney had nothing to do with the client’s bond being held insufficient, as it was insufficient on his own. After the attorney presented this evidence, the client then had the burden of introducing his own evidence to raise an issue of material fact about causation. The client failed to meet this burden and offered no evidence that the attorney ever received word that he needed to appear at the court before the client was taken to jail. Only the county clerk said she had called the attorney’s office and left a message, but had not spoken to the attorney. There is no evidence that the client’s claimed harm would have been diminished or would not have occurred if the attorney had acted the way client contends. The attorney disproved the causation element of client’s malpractice claim as a matter of law.

Lesson: In order to win on a malpractice claim the plaintiff must prove that their harm would have been less or would not have occurred at all  if defendant acted in accordance with the standards of care. 

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Keister v. Talbott, 182 W.Va. 745, 391 S.E.2d 895 (W.Va. 1990)

WV: Underlying real estate conveyance (mineral rights)

Student Contributor: Karen Dindayal

Facts: Keister retained Webster County attorney, William Talbott, to examine title to two tracts of land, specifically the ownership of the surface and coal and mining rights. Talbot drafted a general warranty deed on June 24, 2986, wherein Mrs. Brown conveyed the two tracts of land, including the coal, oil, gas and minerals, along with the mining rights.  Talbott later discovered that a third party claimed mining rights to the coal underlying the property, further discovered that the rights were in fact conveyed in 1946 by the prior owners and notified the Keisters of this fact. Thereafter, in November 1986, the Keisters filed suit against Talbott, as well as Charles Herold, Webster County Clerk for negligence resulting in the deprivation of ownership of the coal underlying the property. The Talbotts sought compensatory damages of $10,000,000.00. The trial court excluded evidence offered by the Keisters regarding the value of the coal under the land and the jury assessed damages in the amount of $0.

Issue: Was Talbott’s negligence a proximate cause of the damages incurred by the Keisters?

Ruling: No. Talbott’s negligence did not cause the loss of mineral rights.

Lesson: In an action for legal malpractice, against an attorney who has overlooked a conveyance of property which leads to the plaintiff receiving less than he contracted to purchase, damages are typically calculated by subtracting the value of the property actually received from the purchase price paid. 

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Dennis v. Northcutt, 923 So.2d 275 (2005).

AL: #1 Underlying employment discrimination action; #2 underlying legal malpractice action regarding #1.

Student Contributor: Farah Shahidpour

Facts: Client retained Attorney #1 to represent him in an employment discrimination action in federal district court, however, that action was dismissed. Client subsequently retained Attorney #2 to pursue a legal malpractice action against Attorney #1 (“the first malpractice action”). Attorney moved to withdraw himself as Client’s counsel in the first malpractice case. Client pursued the malpractice action against Attorney #1 pro se. The first malpractice action was dismissed. Client then filed another malpractice action against Attorney #2. Attorney #2 filed a motion for summary judgment. The trial court granted Attorney #2’s motion for summary judgment. The appellate court reversed, holding that the discovery exception applied and that Client had filed the legal malpractice claim against Attorney #2 within the six-month window provided by that exception. Attorney #2 filed another motion for summary judgment, which was granted.

Issue: Whether the lower court correctly granted Attorney #2’s second motion to dismiss?

Ruling: Yes, because plaintiff was unable to provide sufficient proof to overcome summary judgment. Client had failed to produce substantial evidence indicating that, but for Attorney #2’s alleged breach of the standard of care, he would have prevailed in either his first malpractice action against Attorney #1 or the employment discrimination action itself.

Lesson: In a legal malpractice case, the plaintiff must show that but for the defendant’s negligence he would have recovered on the underlying cause of action. McDuffie v. Brinkley, Ford, Chesnut & Aldridge, 576 So.2d 198, 199 (1991). To overcome a summary judgment motion in a legal services liability action, a plaintiff must introduce evidence that in the absence of the alleged negligence, the outcome for the underlying case would have been different.
If the liability to damages of a legal services provider is dependent upon the resolution of an underlying action, the court shall upon the motion of the legal services provider, order the severance of the underlying action for separate trial. Ala. Code §6-5-579(a). 

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Bourke v. Conger, US Ct. of Appels, 7th Circ., April 19, 2011. 

Facts: Bourke was convicted of murder in Illinois state court, and after the conviction was turned over on appeal, filed malpractice claims against his defense attorneys. Bourker alleged that defense counsel's voire dire of the jury fell below acceptable standards of care.

Bourke's former attorney's argued that even if they breached their duty to Bourke, he could not establish proximate cause. 

Issue: Did Bourke set forth a valid cause of action for legal malpractice? 

Ruling: No. 

First, the Court stated the elements of a cause of action for legal malpractice: 

A plaintiff asserting a legal malpractice claim based on Illinois law must prove: (1) the defendant attorney owed the plaintiff client a duty of due care arising from an attorney-client relationship, (2) the attorney breached that duty, (3) the client suffered an injury in the form of actual damages, and (4) the actual damages resulted as a proximate cause of the breach.

The Court then explained why Bourke failed to establish proximate cause: 

Bourke depended exclusively on Thomas's expert report to establish the causation element of his claim. While expert testimony is one of the types of evidence that a plaintiff like Bourke could normally rely on to ward off summary judgment, it is well established that an expert report that lacks foundation and depth will be given little consideration by courts. In order for an expert report to create a genuine issue of fact, it must provide not merely ... conclusions, but the basis for the conclusions. As the district court noted, the Thomas report does not support its conclusion that the Appellees' performance during voir dire caused the jury to find Bourke guilty with analysis, facts or reasoning. While the report discusses various ways in which the Appellees could have better represented Bourke's interests (e.g., by using their peremptory challenges, by questioning jurors for their opinions regarding the use of alcohol), this discussion only goes towards establishing that the Appellees breached their duty to Bourke, not causation. The Thomas report fails to identify facts that support its conclusion that the Appellees' alleged errors had any role in causing the jury to find Bourke guilty. This shortcoming prevents the Thomas report from creating a genuine, disputed issue of fact concerning causation.

Lesson: Plaintiff must establish proximate, in Illinois, by showing that "but for" his attorney's negligence, he would not have sustained the actual damages complained of. One way to do it is by expert opinion. However, the opinion must be supported by the "whys and wherefores" of the causal connection between the attorney's breach and the injury or damage complained of. 

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Williams v. Joynes, 278 Va. 57, 677 S.E.2d 261 (2009)

VA: Underlying Personal Injury Claim

Student Contributor: Vanessa L. Wachira

Facts: In 2003, Leo Williams (Client) retained Louis Joynes, II and David Dildy (Attorneys) to represent him in a personal injury claim that stemmed from an automobile accident involving two other vehicles—one driven and owned by a Virginia resident (Brown) and one driven by a Maryland resident (Kiker) and owned by a Maryland corporation (Millstone Enterprises, Inc. (Millstone)). On June 1, 2005, Attorneys filed a motion for judgment against Kiker, Millstone, and Brown; the motion was denied for failure to comply with the state’s two-year statute of limitations. Attorneys advised Client that he might maintain an action against Kiker and Millstone under Maryland’s three-year statutory period, but that the action would not apply to Brown. Attorneys suggested Client hire a Maryland attorney. After allegedly receiving advice from numerous Maryland attorneys that litigating the case in Maryland posed “too many problems,” Client decided not to file the action in Maryland. In January 2006, Client brought a malpractice action against Attorneys in Virginia based upon their failure to timely file the initial personal injury action. Client alleged that “but for” Attorneys’ negligence, he would have been able to recover damages against Kiker, Millstone and Brown. In their motion for summary judgment, Attorneys denied that they were the proximate cause of Client’s lost personal injury action and asserted that Client’s own failure to file in Maryland was a superseding event, which severed their liability.

Issue: Is a client’s failure to file a personal injury action in a foreign jurisdiction a superseding event, which severs the link of proximate causation between the attorney’s failure to timely file the initial action and the client’s loss of his personal injury claim?

Ruling: No. In Virginia, a superseding act that severs causation arises only when that act “entirely supplants the operation of the initial tortfeasor's negligence [so that] that the intervening act alone, without any contributing negligence by the initial tortfeasor… causes the injury.” An intervening act will not be deemed “superseding” when it is “set in motion by the initial tortfeasor’s negligence.” Here, Attorneys’ failure to file the Virginia action set in motion the need for Client to consider filing a Maryland lawsuit. As a matter of law, Client’s failure to file the action in Maryland could not be deemed “superseding.” Moreover, since Brown was not subject to Maryland’s jurisdiction, Attorneys’ failure to file the Virginia action provided sole cause for the permanent exclusion of Brown from the suit. Client’s decision not to file suit in Maryland had no bearing on the loss of personal injury claim against Brown and thus, could not have severed the link of proximate causation between Attorneys' negligence and his loss of claim.

Lesson: Lawyers cannot circumvent liability by claiming that clients have a duty to correct their mistakes. 

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Beese-Munoz v. Barbone, Esq., N.J. App. Div.  (per curiam) Decided May 20, 2011).

NJ Underlying Work Place Discrimination Claim

Facts: In this legal malpractice case, plaintiff appeals from the order granting defendant's summary judgment motion and dismissing her case. Plaintiff retained defendant to pursue her discrimination claims against the Lakehurst Naval Station and others. Her lawyer drafted and filed a complaint on plaintiff's behalf. The Department of the Navy moved to dismiss on three grounds; two procedural--failure to effect proper service of process and one substantive--failure to state a cause of action. The Judge  granted the motion to dismiss  without prejudice on the basis of improper service of process. Defendant lawyer forgot to notify his client of the dismissal for 13 months.  Plaintiff  alleges defendant's failure to notify her of the  Court's decision in a timely fashion deprived her of the opportunity to cure the procedural deficiency, and thus precluded her from prosecuting her cause of action against the Navy. Now, the defendant lawyer moves for summary judgment dismissing the malpractice complaint for claiming that the client would have been unable to establish proximate cause--that she had no meritorious underlying claim.

Issue: If the client's underlying claim was dismissed without prejudice because of the lawyer's negligence, can the lawyer move to dismiss the malpractice complaint on other grounds?  

Ruling:  Yes

Notwithstanding  the  negligent failure to notify plaintiff of the dismissal, plaintiff cannot prevail in this legal malpractice case because her complaint against the Navy was substantively without merit and procedurally barred by her failure to exhaust administrative remedies in that she failed to cooperate with the administrative processing of her discrimination claim. 

Lesson:

The trial court correctly found that defendant's negligence was not a proximate cause of plaintiff's inability to successfully prosecute [the underlying case]. Rather, it was plaintiff's failure to cooperate...This lack of cooperation amounted to failure to exhaust administrative remedies, thus creating an independent procedural bar to the prosecution of her [underlying] claim. The fact that [the Judge in the underlying action] based his decision on a different discrete issue does not preclude the trial court [in the malpractice action] from determining a different and independent basis for dismissing plaintiff's case [in the underlying action]. 

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Cleveland v. Rotman, 297 F. 3d 569 (7th Cir. 2002)

IL: Underlying tax advice

Student Contributor: Clem Durham

Facts: In 1996 Cleveland retained Rotman for advice in resolving the tax dispute. At the time, Cleveland's therapist informed Rotman of Cleveland's poor financial status, his severe depression, and his suicidal tendencies. Rotman advised Cleveland that he needed to file tax returns for a 10-year period, but Cleveland claimed that he was unable to calculate his income and expenses for this period because his financial records had been lost during office moves and discarded by others during divorce proceedings. As a result, it is alleged that Rotman told Cleveland to estimate his income and expenses for the relevant years. Apparently, Cleveland's estimates did not agree with IRS figures and the IRS decided to audit him again. On January 26, 1998, shortly before the audit was scheduled to take place, Cleveland shot himself in the head. Cleveland's estate alleges that Rotman committed malpractice, which triggered the IRS's proposed 1998 audit, which in turn triggered Cleveland's suicide. The estate argues that the district court erred in ruling that, as a matter of law, a plaintiff's allegations were insufficient under Rule 12(b)(6).

Issue: Whether under Illinois law a plaintiff may recover for a decedent's suicide following a breach of contract?

Ruling: No. It is well-established under Illinois law that a plaintiff may not recover for a decedent's suicide following a tortious act because suicide is an independent intervening event that the tortfeasor cannot be expected to foresee. The 7th circuit agreed with the district court and found this rationale equally applicable in the contract context and therefore dismissed the estate's claims arising from Cleveland's suicide. Cleveland's suicide was an independent intervening event that broke the chain of causation from Rotman's alleged malpractice to Cleveland's death. Cleveland was an adult, and the estate has not alleged that he was mentally unstable. Essentially, Cleveland's estate seeks to impose on Rotman a duty to foresee and avoid a client's suicide. Although an Illinois court imposed such a duty on a psychiatrist who knew of his patient's history of suicidal depression and yet failed to protect the patient from self-harm, the estate here points to no case law extending such a duty to the attorney-client context. Because of the differences between the psychiatrist-patient relationship and the attorney-client relationship, we see no justification for extending such a duty to attorneys. Psychiatrists are health care professionals trained to care for their patients' mental and emotional health. By contrast, attorneys are medical laypeople who cannot be reasonably expected to anticipate the mental health consequences of their legal advice.

Lesson: Lawyer’s cannot be liable for a client’s suicide as a result of their giving of poor legal advice. A client’s suicide is unforeseeable because attorneys are not trained medical practitioners; and therefore, should not be responsible for foreseeing a client’s likelihood of committing suicide.

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Alvarez v. Casita Maria Inc., 269 F. Supp. 2d 834 (N.D. Tex. 2003)

TX: Underlying conviction for illegal reentry into the U.S.

Student Contributor: Megan Diodato

Facts:  The clients, illegal aliens, contacted Casita Maria, Inc. to arrange for immigration counseling services. In the course of that counseling, the clients met with multiple Casita employees, who counseled them to file certain forms and fees with the Immigration and Naturalization Service (INS). An employee of Casita filled out these forms for the clients and afterward an attorney reviewed the forms and opined that they were complete and ready to be filed. Upon advice of another Casita employee, the clients mailed the documents to their local district’s INS. Once the INS became aware of the client’s whereabouts, the INS scheduled an interview with them, which a Casita employee attended. At the interview, the clients were notified that his application to register for permanent residence would likely be denied. The client was later arrested, charged with illegally reentering the U.S., and sentenced to prison. The client alleged that the attorney is liable for legal malpractice in failing to counsel him to submit the correct INS forms and but for this negligence he would not have been imprisoned.

Issue: Whether claims of legal malpractice may be brought where the conviction has not been overturned?

Ruling: No  Under Texas law, claims of malpractice and negligence based on a criminal conviction may not be brought unless that conviction has been overturned. Peeler v. Huges & Luce, 909 S.W.2d 494 (Tex. 1995). In Peeler, the Court held that “as a matter of law, it is the illegal conduct rather than the negligence of a convict’s counsel that is the cause in fact of any injuries flowing from the conviction, unless the conviction has been overturned.” Id. at 498. Although the client’s claims of negligence and malpractice arise from representation in an administrative law setting rather than criminal, the harm to him is the same. Client seeks damages for his incarceration. Convicts may not shift the consequences of their crime to a third party. The client was incarcerated here because he plead guilty to a charge of illegal re-entry, not because of any action or inaction on part of attorney. Attorney’s motion to dismiss granted.

Lesson: Claims of legal malpractice seeking damages due to incarceration, including administrative law settings, may not be brought unless the conviction has been overturned. 

Editors Note: See our post on Padilla v. Kentucky for an update on the US Supreme Court's view of ineffective assistance of counsel. 

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Rivers v. Moore, Myers & Garland, LLC, Supreme Court of Wyoming, Appellate Division, July 28, 2010.

Facts: Rivers alleged that the Defendants committed malpractice by failing to adequately warn him of the subject property's development restrictions, and by delaying in taking action on his behalf to address those development issues.

The trial court granted summary judgment due to RIvers' inability to establish that his alleged damages were proximately caused by the Firm's negligence.  Rivers appealed.  

Issue: How does a plaintiff successfully bear its burden of establishing causation between his damages and his former attorney's negligent conduct? 

Ruling: 

With regard to proximate cause, the Appellate Division noted: 

As observed by both Rivers' own expert and the real estate attorney from which Rivers sought a second opinion, the restrictive covenants governing Lot 7 limit the size of any building on Lot 7 to 4,200 square feet. There is simply no indication in the record that if the Firm had performed its duties differently or more expeditiously that Smith's would have agreed to construction of a building that is over twice the size of the building permitted by the covenants.

Moreover, the Appellate Division noted that Rivers' expert's opinion lacked foundation, and therefore, was not admissible:

It would be helpful to the trier of fact if the expert opinion could explain how the Defendant's breach of the standard of care caused the Plaintiff to not be able to build a larger building. The regulations prohibiting a 10,000 square foot building were a known limitation when the Plaintiff purchased the lot...The expert has not explained how the Defendants' efforts would have made the desired change of heart happen. As a result, his bald assertion that the Defendants' negligence caused the Plaintiff's damages is a conclusion unsupported by foundational facts and is inadmissible...Further [] Rivers has not designated an expert to testify as to the basis for quantifying the percentage chance that may have been lost by the Firm's alleged malpractice.

Accordingly, the Appellate Division affirmed the trial court's summary judgment.

Lesson: It is a plaintiff's burden to establish proximate cause by way of credible evidence, through pleadings, depositions, answers to interrogatories, affidavits, and/or expert opinion based upon admissible facts.

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Gorjuice Wrap, Inc. v. Okin, Hollander & De Luca, LLP, N.J. App. Div., January 12, 2011 (Unpub.)

Facts:  Kang retained Attorney Watkins to assist her in negotiating a commercial lease with the Talmos.  Unbeknownst to Kang, Watkins had been a longtime attorney for the Talmos.  In fact, he had represented them in their purchase of the property Kang now wanted to lease.  Kang relied on Watkins' advice that the property was suitable for her business purposes.  Further, Kang asked Watkins to petition the Planning Board to allow Plaintiff to commence its business operations. Watkins, however, failed to take action and Kang retained another attorney. 

Several months later, the Talmos, with the assistance of Watkins, sold a contiguous parking lot to another business.  As a result of this sale, the Planning Board determined that the available parking was insufficient to support Plaintiff's business.  

Moreover, Plaintiff learned of leaks and structural issues which the Talmos never fixed.  Apparently, Watkins had been aware of these concerns but never brought them to Kang's attention.  

After serious flooding damaged Plaintiff's property, Kang filed a claim with the insurance carrier for loss of business revenue and property damage.  Indeed, Kang later testified that the day of the flood was the last day Plaintiff was in business.  

In the meantime, Plaintiff had defaulted on its rent obligation and was locked out of the premises. Kang alleged that she was never provided the opportunity to remove valuable computer equipment, disks, books, and records.  At that point, Kang retained De Luca to secure the return of the personal property, and another firm to commence a malpractice action against Watkins.

According to De Luca, the Talmos notified him that they would allow Kang to enter the premises and gather her belongings in or around June 13, 2001.  Kang disputes that De Luca ever forwarded the message to her.  According to Kang, the new owners of the building allowed her to enter in or around November, 2001.  By that time, however, all of her property had allegedly been removed.  

In the meantime, Kang settled with the insurance carrier for $152,000 for "the whole loss and damage" caused by the flood.  She acknowledged that a portion of the payment was for "business loss."  

Plaintiff's action against Watkins alleged conflict of interest, failure to file an appropriate and timely site plan approval, failure to advise Plaintiff of its right and remedies against the Talmos, and other violations of the Rules of Professional Conduct.  Watkins' carrier settled the matter for $250,000.

Plaintiff then filed suit against De Luca for his failure to secure the removal of its property after the lockout.  In this regard, Plaintiff served damage reports claiming lost profits of approximately $8,000,000.

The trial court granted De Luca's motion for summary judgment and Plaintiff appealed.

Issue:  Did De Luca violate the applicable standard of care.  If so, could Plaintiff establish proximate cause and damages? 

Ruling:  De Luca violated the standard of care, but Plaintiff could not establish proximate cause and damages for lost profits.

In granting De Luca's motion for summary judgment, the trial court relied on Puder v. Buechel for the proposition that Plaintiff could not settle its case and then sue its attorney for an additional recovery. The Appellate Division held that the trial court's application of Puder was erroneous.  First, the Appellate Division noted that Plaintiff had not indicated that the settlements in the underlying matters were "fair" or "acceptable."  Moreover, De Luca was not involved in the underlying settlements.  The Appellate Division noted that "[n]othing in Puder prevents [Plaintiff] from asserting a malpractice action against De Luca that does not arise out of legal services provided in connection with the settlement of those prior matters."

The trial court also relied on "judicial estoppel" in granting De Luca's motion for summary judgment. The Appellate Division held that to be erroneous as well:

[T]he doctrine of judicial estoppel only applies when a court has accepted a party's position, a party ordinarily is not barred from taking an inconsistent position in successive litigation if the first action was concluded by a settlement.

Nevertheless, the Appellate Division granted De Luca's motion in part because Plaintiff could not establish proximate cause and damages.  The Appellate Division found that De Luca's failure to secure the return of the property had nothing to do with Plaintiffs' lost profits, since the business had been shut down even before the lockout.  Moreover, lost profits were not available as "damages" under the new business rule:

[A]lleged lost profits that are dependent on entry into unknown markets, or the success of a new and unproved enterprise, cannot be recovered because the business venture is so risky as to preclude recovery of lost profits in retrospect.

The Appellate Division reversed the trial court in part to allow a jury to determine when De Luca advised Kang that she could reenter the premises to retrieve any property left behind, and if he did not timely advise her, for a determination as to the value of the property lost.

Lesson: Puder's holding is not applicable to a malpractice suit commenced against an attorney where the attorney did not provide legal advise in related underlying settlements.  Further, showing a violation of the standard of care is not enough to win in a legal malpractice action.  Establishing proximate cause and damages are essential to recovery.  

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Viola v. O’Dell, 108 Conn. App. 760, 950 A.2d 539 (Conn. App. 2008)

CT: Underlying zoning action

Student Contributor: Laura Binski

Facts: The client operated a landscaping business in the downtown business district zone. The client’s business involved the sale of landscaping equipment, but no retail sales occurred on site. Instead, customers would place orders over the phone and the equipment would be delivered directly to the customer. Zoning enforcement officials ordered the client to cease and desist the business. The client then hired the lawyer to represent him in challenging the zoning order. The zoning board held a meeting and denied the clients appeal of the zoning order. The client then filed in Superior Court to appeal the board’s decision. However, the lawyer failed to timely file the appellate brief and the client’s appeal was dismissed. The client then filed a legal malpractice action. The court granted summary judgment in favor of the lawyer on the basis that there was no genuine issue that the lawyer’s negligence had caused any harm to the plaintiffs.

Issue: Was there a genuine issue that the lawyer’s negligence had caused harm to the clients?

Ruling: No. To prevail in this case, the clients would need to show that there was no substantial evidence to support the zoning board’s determination. Analysis of the zoning regulation indicated that the client’s business was similar to that of a greenhouse or nursery, both of which are prohibited in a downtown business area. In addition, the business did not meet the downtown business district purpose to “encourage high density, pedestrian-oriented commercial development” because all sales were conducted by telephone. Thus, substantial evidence existed to support the board’s determination that the client’s business was engaging in non-permitted use. The case would have lost on the merits, so the lawyer’s failure to file a timely appeal does not amount to causation of the harm.

Lesson: Evidence that the client would have won their underlying case is required in legal malpractice actions. In order for the client to show that the trial court improperly decided that there was no genuine issue of fact as to the element of causation, he needed to persuade the court that he could have likely prevailed in their underlying appeal. Since the client would have lost the underlying case, the lawyer’s negligence in timely filing the appeal does not amount to a genuine issue on causation. 

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Suder v. Whiteford, Taylor & Peston, LLP, Court of Appeals of Maryland, April 9, 2010. 

Facts:  Suder filed an action for legal malpractice against her former attorneys, alleging failure to timely file a request for a fifth extension which, ostensibly, caused her to receive approximately $270,000 less under a will than she otherwise would have.  The defendant attorneys admitted that they failed to timely request an extension, but argued that that omission was not the cause of Suder's alleged damages.  

The defendant attorneys argued that even if they had timely filed a request for a fifth extension, Suder would not have collected her statutory share because of the invalidity of her original request for extension at which time she was not represented by the defendant attorneys.  Accordingly, the attorneys contended that their "mistake" did not place Suder in a worse position, and that Suder could not prove proximate cause under the "case within a case" doctrine. 

Suder argued that the "case within a case" doctrine constitutes a "hypothetical...rewrite of history," and even if it is to be used, the defendant attorneys must be limited by the underlying defendants' waiver of their right to challenge a previous extension. 

Issue:  Must Plaintiff establish proximate cause by proving the underlying case in the malpractice case?  If so, are the former attorneys limited to only those defenses previously raised by the underlying adversary?

Ruling:  Suder must show proximate cause under the "case within a case" doctrine.  The defendant attorneys were not limited to only those defenses raised previously by Suder's adversary in the underlying action. 

The trial-within-a-trial doctrine is "the accepted and traditional means of resolving issues involved in the underlying proceeding in a legal malpractice action. It should be applied where there is no bright line malpractice... The trial-within-a-trial doctrine exposes "what the result `should have been' or what the result `would have been'" had the lawyer's negligence not occurred.

Accordingly, the Court held that the "case within a case" method was the appropriate way to determine whether Suder's adversary in the underlying litigation would have successfully challenged her requests for extensions, had the defendant attorney timely requested a fifth extension.  In that regard, the Court noted that Suder's adversary in the underlying litigation was permitted to challenge the validity of any extension throughout the appellate process, up until close of the estate administration.  

Moreover, the Court noted that the defendant attorneys were limited to those defenses Suder's adversary "would have" raised in the underlying action upon the filing of a fifth extension, rather than only those defense that had been raised previously:

Here, [the defendant attorneys are] given the chance to present the defense as merely the knife that severs the causal link between its own negligence and Suder's damages in this malpractice action. Relitigating the underlying action for the purposes of a malpractice suit is simply a tool by which the litigants are able to wind back the clock to determine whether the attorney proximately caused the injury.

To ascertain what defenses Suder's adversary would have raised with regard to a fifth extension, "the trier of fact should examine the record of the underlying controversy and hear testimony from the parties and counsel."

Lesson:  The "case within a case" method continues to be the golden test for proximate cause in legal malpractice matters.  In defending against malpractice actions, attorneys will be limited to those defenses the underlying adversary "would have" raised -- a fact sensitive determination. 

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Brock v. Owens, 532 A2d 1168 ( PA. 1987).

PA: Underlying employment discrimination case

Student Contributor: Laura Binski

Facts: Brock (client) was a professor at Lincoln University. She believed she was the victim of race and gender discrimination, so she hired a lawyer. She first hired Kalemjian, but he withdrew from the case. Next, the client hired Wusinich. She replaced Wusinich with Owens. The client sued all three of the lawyers for legal malpractice after the court dismissed her case for lack of subject matter jurisdiction. The client represented herself in the lawsuit against the lawyers, and asserted that all three handled her case negligently. At a jury trial, the lawyers filed a motion for non-suit. The motion was granted and the client now appeals.

Issue: Did the trial court properly grant the motion for non-suit in favor of the lawyers?

Ruling: Yes. To avoid non-suit in the case, the client had to show (1) the employment of the lawyers as a basis for their duty to her, (2) the lawyer’s failure to exercise ordinary skill and knowledge in handling the case, and (3) that the lawyer’s failure to handle the case diligently was a cause of the damage to the client. Here, the client presented no evidence to show that the lawyers failed to exercise ordinary skill or knowledge in handling the case, or that she would likely have prevailed in her suit against Lincoln, or that the lawyers handling of her case was a proximate cause of her failure to win the lawsuit against Lincoln. Thus, the client did not meet the requirements to establish her malpractice claim.

Lesson: The client here failed to prove malpractice because she did not show that the lawyers handled her case with less than the requisite ordinary skill and care or that their handling of the case was a proximate cause of her failed claim against Lincoln. She also did not present any evidence to show that it is more likely than not that she would have won her underlying lawsuit if not for the lawyers’ negligence. If the client does not present any evidence that the lawyers failed to exercise ordinary skill and knowledge or evidence that she would likely have won her case against Lincoln University, the client cannot prevail in the legal malpractice claim.
 

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Kituskie v. Corbman, 452 Pa.Super. 467, 682 A.2d 378 (Pa. Super. Ct. 1996)

PA Underlying Representation: Personal Injury Lawsuit

Student Contributor: John Anzalone

Facts: Plaintiff sued Defendant Attorney and his law firm for failing to file a personal injury action within the statute of limitations. Plaintiff prevailed below after the judge excluded evidence of the potential collectibility of the underlying judgment.

Issues: 1) May Attorneys raise collectibility as a defense in a legal malpractice case?
2) Whose burden is it to prove that the collectibility of the underlying judgment?

Ruling: In reversing the lower court's ruling, the Superior Court held that it's the Defendant's Burden to raise and prove the collectibility of the underlying judgment, based on the following considerations:
1) Attorneys may invoke "collectibility" as a defense in a legal malpractice case.
2) Here, the jury was not allowed to hear evidence that the underlying judgment would be uncollectible, so its decision must be vacated.
3) This limitation was permitted because the court held that legal malpractice Plaintiffs should only be able to recover against the Attorney for the actual damages they suffered from the Attorney's malpractice.
4) It was the defendant's burden to prove because the plaintiff should not have an additional burden added because the plaintiff was allegedly wronged by the attorney as well as the underlying defendant.

Lesson: In Pennsylvania, the defendant attorney has the burden of raising and proving the defense of the lack of "collectibility" of the underlying judgment.

Editor's Note: The case was affirmed by the PA Supreme Court,  Kitsuskie v. Corbman, 552 Pa. 275 (1998). 

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Williams v. Bashman, 457 F. Supp. 322 (E.D. Pa. 1978)

 PA: Underlying  tort action.

Student Contributor: Colleen Gaedcke

Facts: The plaintiff retained the defendant, a partner at the defendant law firm, to represent her in her personal injury case against the a homeowner and the city of Philadelphia. A year passed without any communication between the plaintiff and the defendant, until the plaintiff sent the defendant a letter inquiring about the status of her case. The plaintiff received a letter from another attorney at the defendant law firm stating that he was representing her in her case against the City. Plaintiff did have one conversation with the defendant partner where he assured her that the case was in court. Another year passed and the defendant partner left the defendant law firm. The defendant law firm never filed the plaintiff’s case. The plaintiff claimed that the “defendant firm failed to exercise within the scope of their employment reasonable professional care and diligence in their representation of the plaintiff.” As a result of this failure the plaintiff claims that she was unable to recover compensation for her injuries and that her claim was barred by the statute of limitations.

Issue: Whether the plaintiff defendant law firm was liable for legal malpractice?

Ruling:  Yes.

1.) “When a plaintiff alleges that the defendant lawyer negligently provided services to him or her as a plaintiff in the underlying action, he or she must establish by the preponderance of the evidence that he or she would have recovered a judgment in the underlying action in order to be awarded damages in the malpractice action, which are measured by the lost judgment.”

2.) Here, the court found that the defendant law firm was responsible for her case, including conducting discovery to determine the merits of her case and proving the elements if necessary at trial.

3.) The defendant law firm owed the plaintiff a duty to exercise reasonable profession in the prosecution of her claim and they negligently breached that duty which was the proximate cause of the plaintiff’s loss of damages.

Lesson: An attorney who signs a retainer agreement with a client has a duty to exercise reasonable care in representing that client. A breach of this duty may be the proximate cause of the client’s damages and thus the attorney will be liable for legal malpractice.

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Chimento v. Parsons, Powell & Lane, LLC, Superior Court of New Jersey, Appellate Division, January 5, 2010

Facts:  Plaintiff brought suit against a casino after his chair collapsed and, allegedly, caused him to sustain back and shoulder injuries.  Although Plaintiff's attorney in the underlying matter sued the casino for negligent maintenance, he failed to assert a claim against the manufacturer of the chair.  After the statute of limitations expired, Plaintiff's attorney learned of the identity of the manufacturer. 

Eventually, Plaintiff retained another attorney in the underlying matter who successfully filed an amended complaint naming the manufacturer and obtained default judgment for approximately $300,000.  Upon learning of the judgment, Plaintiff's former attorney asserted his right to compensation.  Plaintiff, however, elected to bring the instant action in light of his former attorney's failure to name the chair manufacturer in the initial complaint. 

Plaintiff's former attorney moved to dismiss arguing that the chair manufacturer had ceased to exist as a legal entity before Plaintiff's accident.

Issue:  Can a former client successfully pursue a legal malpractice action based on his attorney's failure to pursue claims against a defunct entity? 

Ruling: No. 

The Court noted that the chair manufacturer and its successor in interest had ceased to exist as financially viable entities before Plaintiff's accident.  The assets of both entities had been sold by a court appointed receiver for the benefit of the manufacturers' creditors. 

[E]ven assuming that [the former attorney] deviated from the standard of professional competence expected of attorneys in this State by failing to name [the manufacturer] as a defendant in Plaintiff's underlying cause of action, such a deviation was legally inconsequential because [the manufacturer] was not a legally or commercially viable entity at the time of Plaintiff's accident.

Lesson: Plaintiff cannot pursue a malpractice action for his attorney's failure to name a defendant, unless he can first prove that he had a possibility of collecting on a recovery against that defendant.  Otherwise, as a matter of law, the attorney's alleged negligence is not a proximate cause of any damages sustained by his client.

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Pechko v. Gendelman,  20 A.D.3d 404; 799 N.Y.S.2d 80 (2nd Dept. 2005)

NY Underlying Medical Malpractice Action

Student Contributor: Natalie Resto

Facts: The plaintiff underwent a mammogram while a patient with Doctor #1, who, she claimed, told her that the mammogram was normal. Later that year she underwent a mammogram with Doctor #2 and was diagnosed with cancer. The surgeon recalled seeing in the first mammogram certain “micro-calcifications” that were “suspicious of cancer.” The plaintiff sued Doctor #1 for medical malpractice. During the course of representation, the attorney who was representing her forwarded the mammogram films to a radiologist for evaluation, who before the evaluation misplaced them. The plaintiff then retained an appellate law firm to represent her in the medical malpractice action. Doctor  #1 moved for summary judgment arguing that the films constituted key evidence, and that the loss of that evidence irreparably prejudiced his ability to defend the action. The lower court granted the doctor’s summary judgment because the plaintiff failed to counter the motion with expert affidavits sufficient to create issues of fact. The plaintiff then brought this action against the law firm to recover damages for legal malpractice for failing to properly defend her against the summary judgment motion in the medical malpractice action.  The law firm argued that because it was not responsible for the loss of the mammogram film, which occurred before it was retained, its negligence was not the proximate cause of the plaintiff’s damages. The law firm moved for a motion to dismiss for failure to state a claim. The lower court denied it and the law firm appealed.

Issue: Was the law firm negligent in its representation of the plaintiffs in a medical malpractice action?

Ruling: Yes. The court found that the motion was properly denied because the absence of the mammogram films did not require the conclusion that the plaintiff would be unable to establish the law firm’s negligence. Here the firm did not rebut the plaintiff’s claim that they were negligent in failing to obtain secondary evidence concerning the films.

Lesson: Even when a court’s determination in an underlying medical malpractice action may be read as holding that the plaintiff will be unable to establish the merits of the medical malpractice action, that determination should not be given collateral estoppel effect against the plaintiff when he or she has alleged that the determination in the underlying action was the result of his or her attorney’s negligence.

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Boone v. Bender, Supreme Court of New York, Appellate Division, June 22, 2010

Facts:  Defendant attorneys represented the plaintiff in a matrimonial action which ended in a settlement.  Subsequently, the plaintiff commenced this malpractice action alleging that defendants compromised their level of advocacy and coerced her into entering into the settlement.  The defendants moved for summary judgment dismissing the complaint, and the Supreme Court denied the motion.  Defendants appealed.

Issue:  Can Plaintiff pursue a malpractice action after consenting to a settlement in the underlying matter? 

Ruling:  No. 

A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel. 

Applying that standard to the instant case, however, the Court found that:

[T]he plaintiff was satisfied with the defendants' representation of her, that she had discussed the terms of the settlement with the defendants, that she understood that she would have the right to a trial if she did not wish to enter into the stipulation, that she had not been threatened or forced into entering into the stipulation, that she was entering into the stipulation voluntarily and of her own free will, that she had not taken any medications that would hamper her ability to understand the court proceedings, and that she had no additional questions for the defendants.

Accordingly, the Court concluded that plaintiff's subsequent "unhappiness" with the settlement did not rise to the level of legal malpractice.  Further, the Court found that the attorneys' reasonable exercise of judgment in pursuing settlement did not constitute malpractice, and the plaintiff's allegation that defendants did not pursue her claims "zealously" was mere speculation.

Lesson:  Conjecture, conclusory allegations of malpractice, and mere dissatisfaction concerning a settlement that was entered into voluntarily, do not constitute the necessary factual or legal basis upon which to pursue a subsequent action for professional negligence.

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Hall v. Cohen, Michigan Court of Appeals, February 18, 2010

Facts:  The defendant attorney represented plaintiff in a matrimonial matter, and after settlement of the matrimonial action, plaintiff brought suit against her attorney for malpractice.  The trial court granted summary judgment in favor of the defendant attorney, and granted the attorney's counterclaim for unpaid legal fees.  Plaintiff appeals.

Issue:  Can Plaintiff sue for malpractice after consenting to a settlement in the underlying matrimonial action? 

Ruling:  No.  The Court first set forth the standard for pursuing a malpractice action after settlement in the underlying matter:

When a settlement is compelled by the mistakes of the plaintiff's attorney, the attorney may be held liable for causing the client to settle for less than a properly represented client would have accepted...Additionally, a cause of action for legal malpractice may be raised when it can be shown that the client's consent to the settlement was compelled because prior misfeasance or nonfeasance by the attorney left no other recourse.

In applying that standard to the facts of this case, the Court noted that Plaintiff's statements under oath at the settlement hearing indicate that she "knowingly and voluntarily" entered into the agreement.  Further, Plaintiff was unable to demonstrate that her attorney's alleged failure to enforce prejudgment orders, or her alleged threat to withdraw from the action, caused her to settle.  Accordingly, the Appellate Division affirmed the trial court's decision to dismiss Plaintiff's complaint and award payment of outstanding legal fees.

Lesson:  Where Plaintiff knowingly and voluntarily settles her action, and cannot present any factual basis upon which the Court can conclude that her decision to settle was the result of her attorney's professional negligence, Plaintiff may not "settle and sue."

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Middleton v. Kenny,286 A.D.2d 957;731 N.Y.S.2d 425 (4th Dept.2001)

NY:Underlying Personal Injury Action

Student Contributor: Natalie Resto

Facts: The plaintiff in the underlying action sued the architects, engineers and HVAC contractors for the alleged exposure to fumes and chemicals at their workplace. The appellate division dismissed the underlying action holding that the lower court abused its discretion in granting the plaintiff’s motion for an extension of time to file a note of issue after having been served with a 90-day demand pursuant to CPLR 3216. The defendant attorneys argued that the court erred in denying their cross motion seeking summary judgment because the plaintiff’s employer, not them, was the one responsible for the ventilation problem.

Issue: Did the attorneys submit evidence establishing as a matter of law that plaintiff would have been successful in the underlying action?

Ruling: No. The court found that the conflicting opinions of the experts presented issues of credibility to be determined by a trier of fact. The court held that the defendants were negligent in failing to respond to the 90-day demand and ordered a trial on the issues of proximate cause and damages.

Lesson: Even if the attorney can substantiate that someone else, here the employer, was liable for the plaintiff’s injuries, the attorneys still need to establish as a matter of law that the plaintiff would have been unsuccessful in the underlying action. 

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Primis Corp. v. Milledge, Court of Appeals of Texas, Fourteenth District, Houston, May 27, 2010

Facts:  Defendants agreed to represent the plaintiffs in a certain lawsuit and plaintiffs paid the defendants a $5,000 retainer.  Plaintiffs contend the retainer was a "general retainer", while Defendants contend the retainer was specifically for the work to be performed on the particular lawsuit. 

Several weeks after plaintiffs paid the retainer, they were served with another suit wherein plaintiff sought confirmation of an arbitration award rendered against Primis Corporation.  Plaintiffs delivered the citation to the Milledge law office when no attorneys were present.  Soon thereafter, Samuel Milledge sent plaintiffs a letter noting the deadline to file an answer and requesting a retainer.  Plaintiffs never furnished the retainer and, eventually, a default judgment was entered. 

Primis then filed suit against Milledge asserting claims for negligence, breach of contract, and violations of the Texas Deceptive Practices Act.  The trial court found that Milledge owed Primis a duty to clearly and unambiguously advise Primis that Milledge would not be filing an answer for Primis.  Although the court noted that Milledge failed to give advice when legally obligated to do so and delayed handling a matter entrusted to his care, no damages were assessed against Milledge since Primis did not present expert testimony to establish that Milledge's negligence was the proximate cause of its injuries. 

Issue:  Whether expert testimony was necessary to establish proximate cause? 

Ruling:  Yes.

In a legal malpractice case predicated on professional negligence during litigation, expert testimony generally is required to determine whether the result of the underlying litigation would have been different but for the attorney's alleged negligence.

***

[Here] the trier of fact would have to assess whether, with reasonably prudent counsel, the trial court would have vacated or modified the arbitration award against Primis Corporation...The causation inquiry was beyond the trier of fact's common understanding, therefore, expert testimony was necessary for Primis to prove causation.

Lesson: To prevail in a legal malpractice action, Plaintiff must present expert testimony to establish that "but for" his attorney's negligence he would have prevailed in the underlying litigation. 

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Erdman v. Dell 50 A.D.3d 627, 854 N.Y.S.2d 755 N.Y.A.D. 2 Dept., 2008.

NY Undelrying personal injury; worksite accident; scaffolding

Student Contributor: Ryan O'Donnell

Facts: Client filed a legal malpractice suit against attorney arising out of the attorney’s representation of client in an underlying NY Labor Law  § 240 (1) action. Plaintiff was injured while working on a scaffold doing pipe work in a building at 100 Broadway. Defendant’s mistaken brought an action against the owners of the building at 100 Pine street. By the time the mistake was realized, the statute of limitations had already expired. There was some questions as to whether the plaintiff had followed certain safety precautions that may have helped avoid the accident, and whether plaintiff had secured safety locks on the wheels of the scaffolding that may have prevented the accident.

Issue: Is an attorney liable for malpractice if he is not the proximate cause of the plaintiff’s damages, even if the attorney negligently allowed for the statute of limitations to expire?

Ruling: No. "In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney 'failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession' and that the attorney's breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages" An attorney is not liable for damages to his client if he was not the proximate cause of those damages. Since there were questionable issues of fact as to what the proximate cause of the accident was, the defendant’s conduct was not a proximate cause of plaintiff’s damages.

Lesson: Summary judgment for legal malpractice liability is precluded if there is a genuine issue of material facts of proximate cause in the underlying action. But  even if an attorney fails to name a proper party as a defendant and the  statute of limitations expires, the  attorney is not liable for malpractice if a plaintiff can not prove that but for the attorney’s failure to file a timely suit the client would have succeeded in the underlying cause of action.

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Ryan v. Powers & Santola, LLP, 2010 NY Slip Op 03827 (3^rd Dept. May 6, 2010)

Underlying Personal Injury Action

Facts:  Plaintiff Ryan was struck on the head by highchair while dining at a restaurant.  He then retained Powers & Santola to represent him in a negligence action against the restaurant. 

In response to the defendants’ motion to compel production of a verified bill of particulars and responses to outstanding discovery demands, the trial court issued an order in the underlying action providing that the matter would be dismissed if Ryan failed to provide the outstanding discovery.  Although Ryan eventually served discovery responses, a number of responses required more specific answers.  The trial court, thereafter, extended the discovery schedule twice with a conditional order that the action would be dismissed if plaintiff continued to fail to provide responses.  Ryan failed to comply and the matter was in fact dismissed. 

Subsequently, Ryan commenced a legal malpractice action against Powers & Santola for “failing to follow court orders…consenting to conditional orders…and failing to move to vacate the dismissal order”.  Ryan moved for partial summary judgment on the issue of liability. 

Issue:  Is Ryan’s alleged failure to cooperate with counsel in preparing discovery responses a viable defense to his action for legal malpractice?

Ruling:  Yes.  The Court held that:

A claim of legal malpractice will be sustained if the plaintiff establishes…that [he] would have succeeded on the merits of the underlying action but for the attorney’s negligence…We agree…that the plaintiff’s conclusory assertions – that ‘but for’ defendants’ alleged negligence, they ‘would have been able to prosecute all causes of action to a successful outcome’ – failed to establish their prima facie entitlement to summary judgment…There are questions of fact as to whether plaintiff failed to cooperate with defendants in providing them with information and documents necessary for motion practice after the underlying action was dismissed.

Lesson: A former client’s failure to cooperate is a question of fact in assessing the liability of the attorney in a malpractice action.  Failure to cooperate, more likely than not, would prevent plaintiff from establishing that “but for” his former counsel’s malpractice, he would have prevailed in the underlying action.   

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 In re Segerstrom 247 F. 3d 218 (5th Cir. 2001)

TX: Underlying personal injury then bankruptcy, post judgment

Student Contributor: Brad Kvinta (J.D. (2010), Texas Tech University School of Law, B.S. (2006)Texas A & M University)

FACTS: In 1995, a vehicle driven by Kayla Segerstrom (Segerstrom) was involved in a collision with a vehicle driven by the Colvins. The collision caused one death and other serious injuries. The Colvins sued Segerstrom, her parents, and her parents’ sole proprietorship (“defendants”). The defendants’ insurance company hired Touchstone as defense counsel. A judgment was then entered solely against Segerstrom. Shortly thereafter, “the Colvins filed an involuntary bankruptcy petition against Segerstrom.” The bankruptcy estate (“estate”) then filed a complaint against Touchstone and the insurance company. “The complaint alleged that Touchstone had an inherent conflict of interest in representing Segerstrom, her parents, and her parents’ sole proprietorship as defendants in the same litigation.” “In October 1998, Segerstrom’s personal liability to the Colvins was discharged.” Summary judgment was entered against the estate, and the trustee appealed.

ISSUE: Whether Segerstrom’s bankruptcy estate included a legal malpractice claim against Touchstone and, if so, whether Touchstone, and the insurance company, are liable under that claim?

RULING: On appeal, the court indicated that Segerstrom’s bankruptcy estate included a legal malpractice claim against Touchstone. “As of the commencement of Segerstrom’s bankruptcy case, a legal malpractice claim against Touchstone had accrued to Segerstrom according to Texas law.” See In re Swift, 129 F.3d 792, 795-96 (5th Cir. 1997). “Segerstrom never denied or waived that malpractice action prior to the commencement of her bankruptcy.” Thus, the court indicated that the estate could maintain a legal malpractice claim against Touchstone.

Although the court indicated that a legal malpractice action could be filed on behalf of the estate, the estate did not prove that “but for the manner in which Touchstone conducted her defense, Segerstrom would have obtained a better result in the prior litigation.” In other words, the estate failed to prove the Segerstrom suffered any injury as a result of the alleged malpractice.

The court based this conclusion on Segerstrom’s post-petition affidavit, which denied the existence of a legal malpractice claim. The court noted that although this affidavit is irrelevant to the existence of a legal malpractice claim, it “carries considerable weight in determining whether the estate has met its burden of establishing injury and causation in accordance with Texas law.” Therefore, summary judgment in favor of Touchstone was proper.

Further, “Texas requires that insurance companies act with reasonable care in fulfilling their duty to defend under insurance contracts.” See Meridian Oil Production, Inc. v. Hartford Accident, 27 F.3d 150, 153 (5th Cir. 1994). The court indicated that the estate pointed to no authority in Texas that shows this duty requires the insurance company to identify conflicts and take steps to address them prior to hiring legal counsel for its insured. The court also indicated that even if this duty existed, there is insufficient evidence presented to support a breach of that duty. Therefore, summary judgment in favor of the insurance company was proper.

LESSON: Lawyers may be liable for legal malpractice to a plaintiff’s successor in interest. A successor in interest is a person entitled to the same legal rights as the plaintiff. In other words, a successor in interest is free to pursue any claim that the plaintiff was entitled to pursue. Thus, a lawyer must defend a legal malpractice claim against a successor in interest so long as the successor in interest is legally entitled to pursue such a claim and meets all requirements to successfully prosecute the claim.

In this case, legal malpractice claims survive the initiation of bankruptcy proceedings, even if personal liability in the underlying lawsuit has been discharged. Trustees (the successor in interest in this case) are free to pursue any claims which the debtor could have pursued prior to the initiation of a bankruptcy proceeding. Further, there is no duty under Texas law for an insurance company to identify conflicts and take steps to rectify said conflicts prior to the commencement of any legal proceeding.

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Boyer v. Walker, 714 A.2d 458 (Pa. Super. Ct. 1998)

PA Underlying Commercial Action

Student Contributor: John Anzalone

Facts: Plaintiffs became junior lien holders when they issued a mortgage to property owners who had outstanding prior mortgages, including two held by a bank. Upon default by the property owners, the bank foreclosed on its mortgages. Plaintiffs were aware of the foreclosure. Notice of judgment for the bank, and of the attendant sheriff's sale of the property, was sent to the defendant attorney who represented the plaintiffs when they issued the mortgage. Plaintiffs discovered this after the sale occurred, and subsequently sued the attorney for professional negligence as a result of his failure to forward the notice of the sheriff's sale. More specifically, plaintiffs alleged that had they received notice of the foreclosure sale, they would have appeared at the sale and would have attempted to purchase the property, inasmuch as they believed that the property was worth far in excess of the bank’s liens.

Issue: Was the attorney liable for plaintiffs’ damages as a result of his failure to forward the notice of the sheriff's sale?

Ruling: The Court ruled that the attorney was not liable based on the following considerations:
1) Attorneys can only be held liable for professional malpractice where (1) an attorney-client relationship is established between the plaintiffs and the defendant attorney; (2) the attorney failed to exercise ordinary knowledge and skill; and (3) that failure proximately caused the plaintiffs’ damages.
2) As junior lien holders, plaintiffs lost all interest in the property when it was sold at the sheriff's sale, but plaintiffs failed to show that this harm would have been prevented if the attorney had forwarded them notice of the sale, since they failed to present evidence concerning the purchase price at the sheriff's sale, the bids made at the sheriff's sale, the amount of money they were prepared to bid at the sheriff's sale, and whether other bidders were ready and able to bid.
3) Thus, plaintiffs failed to establish that they suffered damages proximately caused by the attorney’s alleged negligence.

Lesson: Proximate cause requires establishing the identity of the damages suffered with reasonable certainty.

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Johnson v. Schragger, Lavine, Nagy & Krasny, 340 N.J. Super. 84 (App. Div. 2001)

NJ Underlying Commercial Action

Student Contributor:  Natalie Resto

Facts: Johnson hired the Defendant law firm to represent him in a dispute concerning the sale of a horse. The matter was settled, but the buyer refused to comply with the settlement. Shortly thereafter, the attorney handling the case left the Defendant law firm, but continued to represent the client in a motion to enforce the settlement. His motion was granted and an “Order Enforcing Terms of Settlement” was signed entering judgment in favor of the client against the buyer. Months later, the buyer sold a condominium and the judgment was deducted from the gross amount of the sale. One year later, the buyer filed for bankruptcy and the client’s judgment against him was discharged and the judgment was never actually satisfied from the proceeds of the sale.

The client sued the Defendant law firm and the attorney who was handling the case for malpractice, alleging that they were negligent in the conduct of the litigation between him and the buyer. More specifically, the client alleged that the attorney and the firm had failed to properly and promptly obtain and docket the judgment against the buyer. The client’s claim against the law firm was dismissed on summary judgment, and the client subsequently appealed on the grounds that the firm’s conduct was the proximate cause of his loss.

Issue: Was the law firm’s negligence the proximate cause of the damages sustained by the client?

Ruling: The Appellate Division affirmed the summary judgment and held that the law firm’s failure in obtaining the judgment earlier was not a substantial factor in the discharge of the judgment against the buyer, and therefore, was not the proximate cause of the client’s damages. The Court found that, because the law firm had only represented the client for 83 days before the attorney left the firm and continued to represent the client long after he left, nothing the firm did was a substantial factor in bringing about the loss to the client, and therefore, the firm was not a proximate cause of any damages sustained by the client.

Lesson: The Court held that the traditional jury charge on proximate cause as a continuous sequence is not appropriate for legal malpractice cases in which there are concurrent independent causes of action. In such cases, a jury must be instructed to determine whether the negligence was a substantial factor in bringing about the ultimate harm. In making that determination, the duration of the representation is a valid consideration.

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Milbank, Tweed, Hadley & McCloy v. Boon, 13 F.3d 537 (2nd Cir. 1994)

NY Underlying Representation: Prospective Purchase of Bankrupt Company's Assets

Student Contributor: John Anzalone

Facts: Defendant Law firm represented Plaintiff through an agent in her attempt to purchase the assets of a bankrupt company. Problems occurred with the deal and the Agent was dismissed by the Plaintiff. Agent then told Firm that he wanted to buy the assets of the bankrupt company. Despite knowing that Plaintiff still sought to purchase the assets, Firm told Plaintiff that it would represent Agent in his attempt to purchase the assets. Plaintiff objected to this subsequent representation of Agent. Agent outbid Plaintiff with Firm's assistance. The jury found that Firm's representation of Plaintiff's Agent breached its fiduciary duties to her and was a "substantial factor in preventing her from obtaining assets she sought in the transaction."

Issue: Was the determination that Firm breached its duty to its former client by representing Plaintiff's agent in the same transaction incorrect?

Ruling: In affirming the lower court, the Second Circuit held that the Firm breached its fiduciary duty to Plaintiff, based on the following considerations:
1) Firm committed a serious breach of its fiduciary duties to Plaintiff as a former client by representing a party with interests adverse to the Plaintiff in the same transaction.
2) The nature of this breach triggers the prophylactic rule so plaintiff has to prove that Firms' actions were a substantial factor in its damages instead of the normal requirement of proximate cause.
3) The jury could have found that Firm's action were a substantial factor in Agent purchasing the assets rather than Plaintiff because their presence could have given Agent more credibility. The jury could have found that the deal moved forward because Agent and Firm agreed to use Plaintiff's money in an escrow account for Agent's purchase too. This potential usage also could have been held as interfering with Plaintiff's negotiations because she had to take action to protect her funds from usage by her former agent.
4) There was factual evidence supporting that Firm used confidential information gained from Plaintiff in its representation of Agent because it knew that Plaintiff was not willing to bid higher than she had previously stated to them. 

Lesson: If an attorney or a law firm is alleged to have breached their fiduciary duty to the client they are subject to the prophylactic rule that will make it easier for a plaintiff to prove the proximate cause element of the legal malpractice cause of action. The burden will be reduced from “but for” to “substantial factor”.

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Contel Global Marketing, Inc. v. Dreifuss, 2010 WL 374946 (App. Div. Feb. 4, 2010)
 

NJ Underlying Commercial Action

Facts: Contel, a New Jersey business venture that imported fruit from Chile, believed that participants in its joint venture in Chile were overcharging it by $10 million. Contel, therefore, hired counsel to bring an action in federal court against Aldo Cotera, Clear River Corporation, Nova Agencia DeCarga, and Agricola Punta Arenas Lida. The Complaint was filed on January 17, 2001 and defendants were to be served pursuant to the Inter-American Convention of Letters Rogatory.

DeCarga and Agricola were served in July and September 2002, respectively. Neither submitted responsive pleadings.  In December 2002, the magistrate judge directed Contel to move for entry of default. Two days later, however, counsel for the Cotera defendants entered an appearance and filed a Motion to Dismiss. Contel filed a Cross-Motion for Entry of Default. In denying both motions, the judge remarked that, had Contel filed its motion in a timely fashion, and had the Court granted it, Contel could have carried a federal court judgment to Chile for enforcement. Contel, thereafter, retained new counsel and brought a suit for professional malpractice against its former counsel, Dreifuss & Nagel.

Issue: Can the possibility of a default judgment establish the requisite proximate cause to sustain an action for legal malpractice?

Ruling: No. Contel could not sustain the proximate cause element of a cause of action for legal malpractice, since it could plead no facts to establish how defendant’s failure to seek default directly resulted in additional damages and attorney’s fees:

 How can any Court really assume that if default has been enetered and even assuming arguendo that a default judgment had been entered, which I think is another leap that the Court would have to take in order to accept plaintiff’s damage argument in this case, that the outcome would have been any different. I just can’t believe that…the Chilean defendants…who ultimately did defend the case vigorously would have just rolled over and accepted a default judgment against them.

 

Furthermore, the Court noted, Contel could point to nothing that discovery might offer, other than further speculation, to maintain the “necessary causal nexus element” of its legal malpractice claim. The Appellate Division, thus, affirmed the lower court and dismissed Contel’s claims against defendant law firm.

Lesson:  Courts will not assume facts on the part of the plaintiff in a professional malpractice suit where he or she cannot show, that more likley than not, a favorable result would have been achieved but for the negligence of the attorney.

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Milbank, Tweed, Hadley & McCloy v. Boon, 13 F.3d 537 (2nd Cir. 1994)

NY Underlying Commercial Action/Conflict of Interest

Student Contributor: John Anzalone

Facts: Defendant law firm represented Plaintiff, through an agent, in her attempt to purchase the assets of a bankrupt company. Eventually, however, Plaintiff dismissed the agent. The agent, thereafter, advised Defendant law firm of his interest in purchasing the assets of the same bankrupt company.

Despite being fully aware that Plaintiff still sought to purchase the assets, Defendant law firm informed the Plaintiff that it would represent the agent in his attempt to purchase the assets, and despite Plaintiff’s objections, proceeded with the representation. Ultimately, the agent outbid Plaintiff with the firm's assistance.

The jury found that the firm's representation of Plaintiff's agent breached its fiduciary duties to her and was a "substantial factor in preventing her from obtaining assets she sought in the transaction."

Issue: Did the firm breach its duty to Plaintiff by representing her former agent in the same transaction?

Ruling: In affirming the lower court, the Second Circuit held that the firm had breached its fiduciary duty to Plaintiff, and reasoned as follows:

1. The firm committed a serious breach of its fiduciary duties to Plaintiff by representing a party with interests adverse to the Plaintiff in the same transaction.
2. The nature of this breach triggers the prophylactic rule so that, instead of establishing proximate cause, plaintiff has to prove only that the firm’s actions were a substantial factor in the resulting damages.
3. Here, the substantial factor test was satisfied given the likelihood that (a) the agent and the firm conspired to use Plaintiff’s escrow funds for the agent’s purchase of the bankrupt entity’s assets; (b) this conspiracy interfered with Plaintiff’s negotiations to purchase the same assets; and (c) the firm and the agent conspired to use confidential information regarding Plaintiff’s bid.

Lesson: If an attorney or a law firm terminates its relationship with one client and commences an engagement with another party with directly adverse interests in the same transaction, they will be subject to the “prophylactic rule” which makes it easier for a plaintiff to prove malpractice by substituting the usual "but for" causation in fact  requirement with the “substantial factor” test.

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Katz v. Herzfeld & Rubin, P.C., 853 N.Y.S.2d 104 (2 Dept. 2008)

NY Underlying Personal Injury Action

Student Contributor:  Jason Klein

Facts: Plaintiffs retained Defendant attorneys as counsel for a personal injury action which was eventually settled. Subsequently, Plaintiffs commenced an action for legal malpractice alleging that Defendants refused to pursue a claim for loss of income, and as a result, Plaintiffs were forced to settle their personal injury action for an amount far below what they could have recovered. Defendants filed a motion to dismiss arguing that because Plaintiffs dismissed Defendants and hired new counsel five months prior to settling, the Defendants’ actions did not proximately cause the alleged damages. The trial court granted the Defendants’ motion to dismiss and Plaintiffs appealed

Issue: Did the trial court properly grant Defendants’ Motion to Dismiss in light of Plaintiff’s decision to terminate their representation five months in advance of the settlement of which they now complained?

Ruling: Yes. Successor counsel had been retained in a timely fashion and had every opportunity to protect the Plaintiff’s rights in advance of the time of their decision to enter into a settlement.

Lesson: Plaintiffs had sufficient time in which to pursue its claims with successor counsel, and therefore, could not establish that any alleged damages resulting from their decision to settle were proximately caused by the acts or omissions of their former counsel.

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Schenkel v. Monheit, 226 Pa. Super. 396 (Pa. Super. Ct. 1979)

Student Contributor: Melissa Goldberg

PA Underlying personal injury action.

Facts: Plaintiff was injured in an automobile accident when his vehicle was struck from behind by a car driven by Charles Salem. Plaintiff thereafter retained Defendant as his attorney to prosecute Plaintiff's civil action against Salem. When Defendant filed this action, he did not join Salem's employer, as Defendants in the underlying action. Plaintiff claims that at the time of the accident, Salem was "on the job" and was within the scope of his employment and that the employer should have been joined as Defendants. Plaintiff’s dissatisfaction with Defendant handling of the personal injury action led appellant to dismiss Defendant before trial and retain other counsel to complete the case. Plaintiff was awarded 10,000 dollars in the personal injury case, which he collected in full. Plaintiffs alleged that the jury would have awarded him a larger verdict in the personal injury action if the corporate employer had been joined as a Defendant.

Issue: Was Defendant’s alleged negligence the proximate cause of damages to Plaintiff? 

The Result:  The failure to join the corporate employer should not have affected appellant's damages. The tort was the same in this case, whether or not the corporate employer was a party to the action.

1) The actual tortfeasor, was made a Defendant; the corporate employer would only arguably be liable under agency principles, not as an independent tortfeasor.

2) Joinder of the corporate employer would simply have increased the number of parties against whom Plaintiff could enforce any judgment he received.

3) He received the full judgment.

Lesson: Failure to name a necessary party, when full recovery from the main tortfeasor was had,  did not proximately cause any injury to the plaintiff. If, on the other hand, the named tortfeasor did not have adequate insurance coverage to pay the judgment and if the unnamed party would have been vicariously liable, the result would have been different since then part of the judgment would remain unsatisfied. 

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Garcia v. Kozlov, Seaton, Romanini & Brooks, P.C., 179 N.J. 343 (2004)

Student Contributor:  Melissa Goldberg

NJ Underlying  Litigation (Personal Injury Action)

Facts: In this case, Plaintiff settled an underlying action involving a car crash and later alleged that her lawyer had negligently failed to include a responsible party in the underlying lawsuit. Plaintiff attempted to include this necessary, responsible party as a defendant in the underlying suit, but summary judgment was granted in favor of the new defendant under the statute of limitations. In the malpractice action, Plaintiff argued that failure to include the responsible party lessened her po-tential recovery. The attorney argued that (1) Plaintiff’s settlement barred any recovery in the mal-practice action; and (2) the value of her claim would have been no different with or without the new defendant. Plaintiff, however, proceeded to prove her case using expert testimony regarding the settlement and other evidence regarding her case. The defendant objected to the expert testimony and argued that the “suit within a suit” method, where Plaintiff presents evidence that would have been presented at trial in the underlying action had the malpractice not occurred, was the only way the Plaintiff should be allowed to prove her case.

Issue: Is the “suit within a suit” method the only way to prove proximate cause in a  legal malpractice case based on underlying litigation?

Ruling: No.

The proper approach in trying a legal malpractice action will depend on the facts, the legal theories, the impediments to one or more modes of trial, and, where two or more approaches are legitimate, on Plaintiff’s preference.

Lesson: Alternative approaches to the “suit within a suit” method are permitted to prove  the causation element  in legal malpractice, so long as the jury is provided with an independent basis to determine the effect of the alleged malpractice and the value of plaintiff’s losses.

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Fishman v. Brooks, 396 Mass. 643; 487 N.E.2d 1377 (1986) (PDF)

MA Underlying Personal Injury Action

Student Contributor: Natalie Resto

Facts: Brooks hired Fishman to represent him in an action for personal injuries he sustained when a negligently operated motor vehicle collided with the bicycle Fishman was riding. Fishman did not commence the personal injury suit until 16 months after the accident, and did not obtain service on the driver defendant for more than 10 months after filing the complaint. He also made a settlement demand of $250,000 on the driver’s insurer when the insurance coverage was $1 million. Shortly before trial, after Fishman told Brooks that he could not win if he went to trial, Brooks agreed to settle his personal injury claim for $160,000. The client sued the attorney for malpractice. The jury found for clients and the attorney appealed.
     
Issue: Whether the trial court properly admitted the testimony of an adjuster and tort lawyer as to liability and causation?

Ruling: The court affirmed the lower court’s holding. It found that expert testimony from an experienced tort lawyer and an experienced claims adjuster as to reasonable settlement value of underlying claim was properly admitted, and that

evidence of the fair settlement value of the underlying claim was admissible to prove not only Fishman’s negligence but also that his negligence caused a loss to Brooks. Id. at 648.

Lesson: An attorney is liable when he causes a client to settle a claim for an amount below what a properly represented client would have accepted. The court states that the typical case of malpractice liability for an inadequate settlement involves an attorney who, having failed to prepare his case properly or lacking the ability to handle the case through trial (or both), causes his client to accept an unreasonable settlement.

EDITOR'S NOTE: With our thanks to Westlaw, Thomson Reuters for permitting the case hyperlink.

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Daly v. Peace,54 A.D.3d 801, 863 N.Y.S.2d 770, 2008 N.Y. Slip Op. 06955

NY Underlying defense of criminal  action

Student Contributor: Angela M. Ignelzi

Facts: Plaintiff-Client brought an action against his Attorney who had represented him in defending a prior criminal action where he was convicted. Client sought to recover damages for legal malpractice. Attorney made a motion to dismiss the complaint on the grounds that the client could not prove he was innocent. Client appealed the dismissal of his Complaint.

Issue: Was the motion Court correct in dismissing the Client’s malpractice complaint?

Ruling: The Appellate Division (2nd Department), held that:

•  Client could not establish his innocence of the underlying criminal charge
•  Client has no cause of action for legal malpractice against his criminal defense attorney, unless he was ultimately successful in his attempts to have the underlying conviction reversed and he proves his innocence.

Lesson: To prove that his lawyer's allegedly negligent conduct in defending him in an underlying criminal case was the proximate cause of his damage, i.e., his wrongful conviction, the client must have his conviction reversed and he must prove his innocence of the underlying criminal charges. 

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