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A recent case, Masellis v. Law Offices of Leslie Jensen, 50 Cal. App. 5th 1077, Court of Appeals of California (5th District. June 2020), discusses the burden of proof in a “settle and sue” legal malpractice case. That is a case where the plaintiff (represented by the lawyer) settles the underlying matter and then sues his lawyer alleging that the settlement was insufficient due to legal malpractice.

Here is the summary by Court of the issue and the conclusion:

The main legal question in these appeals is what burden of proof is appropriate in a legal malpractice action alleging an inadequate settlement? The defendant attorney Leslie F. Jensen (Attorney) addresses this question in two steps. First, she contends the elements of causation and damages in a “`settle and sue'” legal malpractice case[1] must be proven to “`a legal certainty.'” (Filbin v. Fitzgerald (2012) 211 Cal.App.4th 154, 166 [149 Cal.Rptr.3d 422] (Filbin).) Second, she contends the legal certainty standard imposes a burden of proof higher than a mere preponderance of the evidence.

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State v. Roat, 466 P.3d 439 (Kansas 2020) is an unlikely case to provide an interesting discussion of a legal malpractice issue. Roat, having served his sentence, argued that his sentence for a crime had been computed incorrectly. The court held the appeal was moot. Roat tried to argue that his lawyers committed malpractice but the court rejected that argument as well. The discussion is thoughtful and the court concludes that a lawyer does not have a duty to argue for a change in the law.

Roat provides little in the way of the details of what he might assert as a factual basis for a legal malpractice claim. He leaves it to the appellate courts to flesh out the nature of his claims against his trial counsel. Failure to brief an analytic framework sufficiently for effective appellate review is tantamount to not raising the issue at all. See State v. Boleyn, 297 Kan. 610, 633, 303 P.3d 680 (2013); State v. Easterling, 289 Kan. 470, 487, 213 P.3d 418 (2009). A party should not leave the court “to guess about the specifics of how [a party] would frame his arguments….” State v. Berriozabal, 291 Kan. 568, 594, 243 P.3d 352 (2010).

We are reluctant to try to put flesh onto the skeleton of a hypothetical legal malpractice claim that Roat suggests creates an interest sufficient to defeat mootness. It may be that he would argue that his attorney should have made the arguments that appellate counsel successfully made in State v. Dickey, 301 Kan. 1018, 350 P.3d 1054 (2015). If Roat’s trial attorney had successfully made those arguments, then, the reasoning might be, he would have spent less time incarcerated.

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Every plaintiff must surmount the hurdle of proximate causation. You cannot just allege that the lawyer committed malpractice, you must show how the error caused you damage. If you cannot do that, your legal malpractice case will be dismissed.  In Katsoris v. Bodnar & Milone, LLP, 2020 NY Slip Op 05040 (New York Appellate Division Second Department). The lawyers represented Katsoris in his divorce case, which was resolved by settlement. He sued for malpractice but the case was dismissed because Katsoris was unable to allege an error that caused any harm to him. The key discussion:

Here, the complaint failed to adequately allege actual, ascertainable damages. The general allegations that, as a result of the alleged acts of malpractice, the plaintiff was caused to incur “additional legal fees,” and caused to suffer “financial damages and expense,” “adverse financial consequences,” and “direct financial damage,” were all conclusory and inadequate to constitute “actual, ascertainable damages” (Dempster v Liotti, 86 AD3d at 177). To the extent that the complaint addressed the plaintiff’s settlement, the complaint alleged that the defendant’s negligence in its handling of the divorce action caused the plaintiff to suffer “direct prejudice . . . in both trial and/or settlement,” and that, but for such negligence, the plaintiff “would have fared far better at trial and/or in settlement of the Divorce Action.” These allegations are conclusory and lack any factual support, and they are inadequate to sufficiently allege that the stipulation of settlement that the plaintiff entered into with his former wife was “effectively compelled” by the mistakes of counsel (Rau v Borenkoff, 262 AD2d 388, 389; see Benishai v Epstein, 116 AD3d 726, 728). “The fact that the plaintiff subsequently was unhappy with the settlement [he] obtained . . . does not rise to the level of legal malpractice” (Holschauer v Fisher, 5 AD3d 553, 554). “Moreover, the plaintiff failed to plead specific factual allegations showing that, had he not settled, he would have obtained a more favorable outcome” (Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d 756, 758; see Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d at 813; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C.,21 AD3d at 1083; Dweck Law Firm v Mann, 283 AD2d 292, 293; Rau v Borenkoff,262 AD2d at 389). Accordingly, we agree with the Supreme Court’s determination to grant that branch of the defendant’s motion which was pursuant to CPLR 3211(a)(7) to dismiss the first cause of action, alleging legal malpractice.

Here, plaintiff could not explain what the lawyer did that was wrong and why that purported error caused damage.

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This is a case raising a proximate causation argument. To prove malpractice the plaintiff must allege and prove that but for the negligence of the attorney he would have won the underlying case. Here, in Ackerman v. Dembin, 2020 NY Slip Op 32398(U), a doctor was disciplined by the New York Department of Public Health for professional misconduct.  The major issue in the case was a claim that the lawyers failed to adequately defend a claim of an improper procedure. Apparently, after he agreed to a three-year period of probation the doctor obtained new counsel who corrected the record.

The Facts

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In re Bruess, No. 19-2714, was decided by the District Court for the District of Minnesota. The debtor claimed that her bankruptcy lawyer made an error by filing a chapter 7 case on her behalf and thereby making her homestead interest in property subject to creditor claims. The court also held that the malpractice claim was an asset of the bankruptcy court. I don’t doubt that the reasoning was correct, but the practical effect is that the debtor’s interest in the claim will be subject to the claims of her creditors. The result of the case is a double whammy for the debtor.

Background Facts and Procedural History

On January 14, 2013, Plaintiff Sandra Jo Bruess of New Ulm, Minnesota, was granted a one-third interest in her father’s Brown County property (“Homestead”) valued at $562,760.33.[1] (Notice of Appeal, Attachment 4 (“Order on Appeal”) at 2, October 15, 2019, Docket No. 1.) Despite knowing of the Homestead interest, Bruess’s attorney, Stephen Behm, advised her to file for bankruptcy relief. (Id. at 4.) Behm incorrectly assured Bruess that her entire interest in the Homestead would be protected in bankruptcy. (Id.) On December 15, 2014, Bruess filed for Chapter 7 bankruptcy and claimed an exemption on her one-third interest in the Homestead. (Id. at 2.)

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The issue that arises often in litigation is: when was the plaintiff put on notice that the lawyer may have breached the duty of care? The answer to this question often determines whether or not the statute of limitations bars a claim. A case decided by the Delaware Supreme Court earlier this year captioned, ISN Software v. Richards, Layton & Finger 226 A.3d 727 (Del. Supreme Court), offers a thoughtful discussion of that very issue.

ISN Software wished to convert to an S Corporation. However, four of its shareholders could not legally be shareholders of an S Corporation. Thus, the question was how can we remove these shareholders from our company? The law firm allegedly advised ISN to use a merger to cash out the four shareholders. The way it typically works is that the company offers the shareholder a cash payment. If the shareholder accepts the cash offer, that is the end of the matter. If the shareholder elects appraisal, there is a court case where a judge decides the value of the shares. In this transaction, all four shareholders were eligible for appraisal rights. The law firm told the client in 2013 that its legal advice on who was eligible for appraisal was incorrect.

The company proceeded to litigate the value of the shares. When the court made its decision, the value was substantially higher than ISN thought it would be. ISN then sued the law firm for malpractice. The Delaware courts held the the case was time-barred because the cause of action accrued in 2013 (when the firm told the client that the advice it had given was incorrect) not 2018 when the unfavorable litigation ruling occurred.

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On June 30, 2020, the Missouri Supreme Court decided Laughlin v. Perry and Flotman, No. SC98012. The court held that the defendants, two public defenders, were immune from suit because public defenders are state employees performing discretionary acts. In Laughlin’s case, the two public defenders missed a jurisdictional problem with his prosecution in state court for burglarizing a post office. They did not object that the Missouri courts lacked jurisdiction over the federal post office. Eventually Laughlin discovered the jurisdictional problem, filed a habeas corpus petition and was released from custody.

This is a policy question and the Missouri court has resolved it in favor of the public defenders. I do not question the statutory interpretation, but the ruling creates a moral hazard and a further risk for those who cannot afford an attorney in a criminal proceeding.

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The case of Breitenstein v. Deters, 19 -cv-413 (S.D. Ohio Western Division) is unusual. Plaintiff retained the Defendant lawyers to represent her in a medical malpractice case. The underlying case was dismissed, but the plaintiff appealed that decision. While the appeal was pending, she sued her lawyers for legal malpractice. The court dismissed the legal malpractice case because plaintiff filed the case before her underlying case was resolved.  In other words, the plaintiff filed suit too soon. This case was decided in the 6th Circuit, under Ohio law. (In Illinois, the result might have been different.)  The discussion by the court notes that plaintiff might win her appeal and thus the dispute with her lawyers is not ripe.

Here, Defendants contend that dismissal for lack of subject matter jurisdiction is proper because Plaintiff’s claim lacks ripeness. The primary basis for Defendant’s argument is that Plaintiff’s 2013 suit is still pending on appeal. As such, Defendants are still representing Plaintiff. (Doc. 3 at 3). Because the appeal is ongoing, Defendants assert that Plaintiff has not yet suffered any ascertainable damages from the underlying lawsuit. Id. at 1. Further, because Defendants have tolled the statute of limitations, Plaintiff may bring her claims, if appropriate, within a year after the appeal is over. Defendants therefore conclude that Plaintiff does not face a threat of future harm that warrants the Court to entertain the matter before it is ripe. (Doc. 7 at 1-2).

In support of their assertions, Defendants heavily rely on the decision in Kovacs v. Chesley to support their arguments for dismissal. Kovacs v. Chesley, 2000 U.S. App. LEXIS 8989 (6th Cir. 2000). The fact pattern in Kovacs is similar to the current matter: Plaintiff sued her attorneys for negligent evaluation of her medical records during Defendant’s representation of Plaintiff in a medical malpractice lawsuit. When Plaintiff brought the lawsuit against her attorneys, the underlying lawsuit was still undergoing settlement processes. Consequentially, the Court of Appeals for the Sixth Circuit upheld this Court’s dismissal of the case for lack of ripeness. (Id. at 2-3).

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Whether or not a case is barred by the statute of limitations in the legal malpractice context is not a matter of science, but rather of art. Indeed, you may think the case you filed was timely and a thoughtful defense lawyer will use the facts to creatively argue that your client should have “discovered” the injury and the malpractice long before you think they might have discovered the injury. Often the statute of limitations is the only defense the lawyer has. If that defense fails, there is no defense to the case.

The Court of Appeals of Utah recently decided a case where the negligence occurred long before suit was filed, but the plaintiff successfully argued that the lawyer fraudulently concealed the cause of action. In other words, plaintiff claimed that the lawyer was negligent and then hid the evidence of the negligence so the statute of limitations would expire. The case is First Interstate Financial LLC v. Scott Savage and Savage Yeats and Waldron, P.C., No. 20180660-CA. The Plaintiff alleged that it lost a jury trial due to the negligence of the lawyer defendant. The problem for plaintiff was that the verdict occurred in 2010, which would render the case time-barred by the statute of limitations.

The court set for the pertinent facts and the statute of limitations issue as follows:

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The opinion in Lloyd’s Syndicate 2987 v. Furman, Kornfeld & Brennan, LLP, 2020 NY Slip Op 02365 is pithy but worth considering.  Apparently the law firm advised an insurance company that it could deny coverage to a policyholder. That decision proved to be in error and the insurance company sued the law firm. Result: case dismissed.

The pertinent part of this pithy opinion is quoted here:

In this legal malpractice action, plaintiffs allege that they sustained damages when they relied on defendants’ negligent advice that they could disclaim coverage of their insured in an underlying malpractice action. In support of their motion to dismiss, defendants properly relied on documentary evidence, including the challenged disclaimer letter and the relevant policy, since their authenticity is undisputed and their contents are “essentially undeniable” (see DSA Realty Servs., LLC v Marcus & Millichap Real Estate Inc. Servs. of N.Y., Inc., 128 AD3d 587 [1st Dept 2015]; see also Kaplan v Conway & Conway, 173 AD3d 452, 453 [1st Dept 2019]; CPLR 3211[a][1]). The disclaimer letter sets forth an analysis of plaintiffs’ right to refuse coverage to their insured on two independent bases. Plaintiffs’ failure to allege with specificity or argue that one of the two bases for defendants’ advice was incorrect, requires dismissal of this legal malpractice action.

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