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Legal Malpractice Claim Dismissed Because Plaintiff does not adequately allege proximate causation

The Seventh Circuit has affirmed a decision to dismiss a legal malpractice complaint in which West Bend Insurance alleged that its former counsel committed legal malpractice in connection with the defense of a worker’s compensation claim. The claim set forth numerous deficiencies in the lawyer’s performance in the worker’s compensation case, including his unauthorized decision to admit liability. However, the complaint was dismissed because West Bend never explained why the alleged errors would have made a difference. Put another way, West Bend never alleged how the result would have been different in the absence of the alleged breaches of duty. Judge Ripple’s opinion sets forth the court’s reasoning on proximate causation in some detail and is worth quoting here:

There is no dispute that West Bend has described adequately the duty element in its malpractice claim. Nor is there any disagreement about the adequacy of West Bend’s narrative with respect to the alleged attorney conduct constituting a breach of that duty. In that respect, West Bend alleges that Mr. Schumacher, having assumed responsibility for the defense of the claim, failed to prepare adequately for the hearing, revealed inappropriately the defense theory of the case to Marzano’s counsel, and then, without authorization, conceded liability for Marzano’s workers’ compensation claim.[15]

The allegations with respect to causation and damages present, however, significant concerns. At the outset, we note that the treatment by the Second Amended Complaint of the underlying workers’ compensation claim, which, as we have explained, is central to an assessment of causation and damages, is markedly different from the treatment of Mr. Schumacher’s alleged litigation conduct. While the complaint describes the conduct in some detail, it describes the underlying workers’ compensation claim in rather summary fashion. Specifically, while the complaint identifies the injured party as John Marzano, it tells us nothing about his claimed injury or his claim against his employer. Instead, it summarily states that “[p]rior to August 2006, there existed certain factual defenses and a medical causation defense to the Marzano claim.”[16]

West Bend’s brief on appeal invites our attention to paragraph 25 of the Second Amended Complaint as “set[ting] forth [its] factual allegations concerning defendants’ breach of duty, proximate cause and damages.”[17] That paragraph of the complaint contains an abbreviated description of Mr. Schumacher’s claimed errors, but, with respect to the crucial elements of causation and damages, says only that West Bend “was forced to accept a disadvantageous position which greatly compromised its ability to defend the claim.”[18] This same sort of general language appears in paragraph 28; there West Bend refers to a loss of “valuable factual and legal defenses that would have eliminated or substantially reduced any liability of [West Bend] to the claimant.”[19] These allegations are conclusory assertions and certainly do not set forth a plausible description of a lost defense that, absent Mr. Schumacher’s alleged neglect, would have assured West Bend’s success on the underlying claim. Iqbal, 556 U.S. at 678-79.

West Bend has not invited our attention to any other factual allegations which detail the “valuable factual and legal defenses” lost because of Mr. Schumacher’s litigation conduct. In its appellate brief, West Bend does assert that it “is prepared to offer evidence that, had defendants not committed the breaches from the standard of care, the Marzano claim would likely have gone in an entirely different direction,” and indeed, that “there is a strong likelihood [that] West Bend could have either won the entire case or significantly reduced the amount of money it ultimately paid.”[20] But again, even now, it does not tell us what these defenses are or how they would have produced near or total success in workers’ compensation proceedings.[21]

The complaint’s description of Mr. Schumacher’s conduct does include an allegation that, prior to the date of the scheduled workers’ compensation hearing,

defendant Schumacher possessed other documentation and information to support a denial of compensabil[i]ty [of the Marzano claim], including: (a) the claimant’s completion of the day’s work on the day of the alleged incident; (b) the fact that the claimant continued to work following the alleged incident for an additional two weeks until he was laid off on September 28, 2005; and (c) the fact that the claimant’s own treating physician, Dr. Sheinkop, could not find any change in the condition of his knee after the alleged incident, as it had already been determined that the claimant was in need of knee replacement surgery.[22]It also asserts that an unspecified “witness with relevant testimony” was not available to testify and complains that Mr. Schumacher did not request a continuance.[23] It continues by faulting Mr. Schumacher for “reveal[ing] all of this documentation and information—all the key theories of [West Bend]’s defense—to counsel for claimant, which severely compromised [West Bend’s] ability to continue to defend the workers’ compensation claim.”[24] We are given no description, however, as to whether or how this evidence would have produced a successful outcome for West Bend.

With respect to the allegation that Mr. Schumacher had stipulated improperly to the compensability of the claim, West Bend at least makes the allegation that it was required to pay substantial amounts of money because of the stipulation. But it makes no concrete allegation that its final liability in this matter would have been any different if the stipulation had not occurred.

The Second Amended Complaint therefore leaves us to speculate as to whether and how West Bend would have prevailed on the underlying claim in the absence of the missteps of which it now accuses its former attorney. But, as our colleague in the district court recognized throughout West Bend’s several attempts to improve the complaint, a plaintiff “must plead some facts that suggest a right to relief that is beyond the speculative level.” In re marchFIRST Inc., 589 F.3d at 905(internal quotation marks omitted). The district court correctly concluded that the allegations that deal with the substance of the underlying compensation claim and defense fall short of that standard because they provide no plausible description as to how the attorney’s negligence, if it occurred, was the cause of harm to West Bend. Even when evaluated as a whole, the complaint fails to describe, in even the most rudimentary of ways, “that but for [Mr. Schumacher’s] negligence, the plaintiff would have been successful in th[e] underlying” workers’ compensation action. Tri-G, Inc. v. Burke, Bosselman & Weaver, 856 N.E.2d 389, 395 (Ill. 2006). West Bend simply has failed to allege plausibly, despite multiple amendments, that it lost actual, specific, meritorious defenses in the Marzano claim because of Mr. Schumacher’s conduct.

Comment: proximate causation is often the most difficult hurdle for a plaintiff to overcome. It is often easy to allege that the lawyer made a mistake or failed to return a phone call. To win you have to show how a different decision would have made a difference in the outcome of the case. That can be very difficult. Here West Bend did not explain what the result would have been had the lawyer met the standard of care.

For those interested in these issues, this is an outstanding opinion because it explains in detail just how hard it is to allege proximate causation.

Edward X. Clinton, Jr.

Source: WEST BEND MUTUAL INSURANCE COMPANY v. Schumacher, Court of Appeals, 7th Circuit 2016 – Google Scholar