Thursday, June 19, 2008

Collectibility And Legal Malpractice

The Ohio Supreme Court recently held that the plaintiff in a legal malpractice case must prove that the proven damages are collectible. The court's web page notes the following from the majority opinion in the 5-2 decision:

Writing for the Court in today’s decision, Justice Pfeifer noted that the case presents an issue of first impression in Ohio.  He observed that courts in other states have issued conflicting rulings on whether the plaintiff or the defendant in a legal malpractice plaintiff bears the burden of proving the amount of damages that would have been recoverable from a tortfeasor. While a minority of courts have ruled that a plaintiff is not required to prove collectibility, Justice Pfeifer agreed with the majority of jurisdictions which have held that “collectibility is logically and inextricably linked to the legal-malpractice plaintiff’s damages, for which the plaintiff bears the burden of proof.”


“The jury in this case arrived at a figure for damages that was not necessarily reflective of the value of the Patereks’ claim against their lawyers; the jury’s damage award reflects what the Patereks’ suffered through the negligence of Richardson,” wrote Justice Pfeifer. “But the appellant attorneys in this case are not responsible for Richardson’s negligent conduct; they are responsible for their own. This case is not about what Irene Paterek suffered on account of Richardson’s bad driving, but what she suffered on account of the appellants’ bad lawyering. The proper inquiry, then, is this: Had the appellants not been negligent, how much could Irene have received from a settlement or a judgment?”


Noting that Mrs. Paterek stipulated that she could not have recovered any damages directly from Richardson, and presented no evidence regarding possible recovery from his future earnings, Justice Pfeifer concluded that the case record “does not show that she could have collected more than $100,000 from sources related to Richardson.” 


He went on, however, to note that in reducing the jury’s award to $100,000, the trial court failed to take into account the value of the Patereks’ own UM/UIM insurance coverage, which the parties had stipulated was $250,000 less a set-off for any recovery they made from Richardson’s liability coverage. Citing a 1996 decision of the U.S. Sixth Circuit Court of Appeals, Sparks v. Craft, Justice Pfeifer wrote: “In determining the collectibility of an unrealized judgment, the factfinder should consider the amount of the plaintiff’s underinsured-motorist policy. ... The amount payable under the policy springs from the judgment against the underlying tortfeasor and that tortfeasor’s collectibility. As part of the pot available to a successful plaintiff in a case properly handled by an attorney, underinsured-motorist coverage is evidence of collectibility of the underlying claim in an attorney-malpractice case.”


“Here, the appellants stipulated to the existence of the underinsured-motorist coverage and the amount that would be available to Irene Paterek from that policy. The trial court erred in failing to include the additional $150,000 available to Irene under the UIM policy in its calculation of damages. It should have entered judgment for her in the amount of $250,000. Accordingly, we reverse the judgment of the court of appeals, remand the cause to the trial court, and instruct the trial court to enter judgment in favor of the appellees in the amount of $250,000 plus applicable interest.”

(Mike Frisch)

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