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Legal Malpractice Verdict Of $125,000 Upheld Against Plaintiff’s Attorney Based On Settlement 12 Years Before Thomas v. Bethea, __A.2d __, (Md. Oct. 9, 1998) The Court of Appeals considered whether there should be a heightened standard of negligence applied to an attorney’s settlement recommendation. It held that there is not, and that an attorney’s settlement recommendation can be examined in light of the traditional standard applicable to professional malpractice actions The attorney in this case had represented a minor and her mother as plaintiffs in a lead paint poisoning case. On the attorney’s recommendation, the mother settled the case in December, 1983, on behalf of herself and her daughter, for only $2,500. Although only two of three defendants had been served in that action, the attorney and his clients agreed to a general release of all three defendants. In March, 1995, nearly 12 years after accepting the settlement, the minor child filed a lawsuit against her former attorney, alleging that due to his negligence the settlement was grossly inadequate. Her contention at trial was not that $2,500 was an unreasonable consideration for releasing the two defendants who appeared in the prior action, but that a valuable case against the third property owner was surrendered for no compensation at all. The third property owner had known that the child had already had an elevated lead level, had misinformed the mother that the apartment was lead-free, and had $300,000 of insurance on the property. Plaintiff’s expert testified that no reasonable attorney would have entered into such a settlement. The jury found that the attorney’s recommendation in regard to settlement was negligent; that a reasonable attorney would have recommended a $25,000 settlement; and that the child sustained $125,000 in damages. The trial court entered judgment n.o.v. for the attorney. The trial court reasoned that the proper measure of damages was what a reasonable settlement with the third property owner would have been, not the verdict value of the child’s claim against that defendant. There was no evidence presented as to what a reasonable settlement would have been. The Court of Special Appeals reversed the judgment n.o.v. and reinstated the $125,000 judgment. The Court of Special Appeals concluded that evidence of the fair settlement value was unnecessary, and held that where the issue concerns the value of a lost cause of action, both the amount of the probable judgment and its collectibility are for the jury to decide. In affirming the Court of Special Appeals, the Court of Appeals first addressed whether there should be a heightened standard of negligence applied to an attorney’s settlement recommendation. It held that there is not, and that an attorney’s settlement recommendation can be examined in light of the traditional standard applicable to professional malpractice actions. Thus, the Court overruled, in part, the recent decision in Prande v. Bell, 105 Md. App. 636, 660 A.2d 1055 (1995). The correct standard is that:
Further, the Court rejected the argument that, in a negligent settlement case, the measure of damages is necessarily the difference between the reasonable settlement value and what was, in fact, obtained in settlement. The Court held that that is not the only possible measure of damages. Rather, it depends on how the plaintiff frames the case. The Court observed that to prove that the case, in the absence of negligence, could have been settled for a higher amount, one would need the testimony of the settling adversary. "Extraneous evidence of settlement value might be relevant to establish liability - that the settlement actually recommended and concluded was one that a lawyer exercising reasonable skill, judgment, and diligence would not have recommended - but it cannot reasonably serve to establish the measure of damages absent a showing that the case would likely have been settled for a higher amount." When the plaintiff frames the case to assert that the lawyer should have recommended that the offer be rejected and that a trial should have resulted, the measure of damages necessarily becomes the difference between what was accepted in settlement and what likely would have been received from the adjudication. That is proved by the "trial within a trial." The Court noted that in some cases, the "trial within a trial" would present dispositive issues for the court, rather than the jury - e.g., appellate malpractice. The Court of Appeals stated that under a trial with a trial approach, the plaintiff here was required to prove (1) that the attorney was negligent in recommending acceptance of the settlement; (2) that the underlying defendant would have been found liable; (3) the amount of damages that would have been awarded in the underlying case; and (4) that the judgment would have been collectible with reasonable effort. The Court found sufficient evidence to affirm the reinstatement of the verdict. Judge Chasanow filed a strong dissent, in which Judge Cathell joined [Editor’s Note: The Court of Appeals stated without any discussion that the burden of proving the collectibility of the underlying judgment is on the plaintiff. This is the majority rule, however, courts in two of Maryland’s neighboring jurisdictions, Pennsylvania and the District of Columbia, have held that it is more fair to place that burden on the defendant attorney..] |
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