It is generally well-settled that a party cannot sue the laywer who represents an opposing party. In the case Hitchcock v. USAA Casualty Insurance Company, (M.D. Florida) (6:18-cv-1986-ORL-28TBS), Hitchcock sued USAA after a she became subject to a large judgment in a personal injury action. She alleged that USAA should have settled the case within the policy limits. What makes her case interesting is that she also tried to sue USAA’s lawyers. The court dismissed that action on the ground that there was no attorney-client relationship between Hitchcock and the law firm. Nor was Hitchcock an intended third-party beneficiary of the attorney-client relationship.
Ed Clinton, Jr.
The Iowa court of appeals decided a case, P&C Sierra v. John M. Carroll, 18-0826, which illustrates a common problem in the legal malpractice jurisprudence. Here, the plaintiff sold real estate to a third party, Richard Brown. According to the plaintiffs, their lawyer Mr. Carroll allegedly forgot to record the real estate contract and the mortgage. The owner of the property then borrowed money from a bank which did record a mortgage. This meant that the interests of the plaintiffs were junior to the interest of the bank. The transaction occurred in 2008.
Plaintiff argued that they were injured in 2012 when Brown stopped paying on their installment note. The court disagreed and found that the plaintiffs were aware, as early as 2009, that there was a problem with their security interest in the property. Therefore, the lawsuit, filed in 2017, was untimely. Iowa has a five-year statute of limitations for legal malpractice claims.
This is a classic case where a plaintiff waited too long to file suit. Once the plaintiff realized that the lawyer may have made an error, the plaintiff discovered the injury and the statute of limitations began to run.
May an insurance company sue the defense firm that it hired where it alleges that the defense firm did not meet the standard of care? In Florida, according to Arch Insurance Company v. Kubicki Draper, 4-D17-2889, the insurance company may not file suit because it lacks privity with the law firm. The insurance company alleged that it hired the firm to defend a case for one of its insureds. The law firm allegedly failed to raise the statute of limitations defense, which caused the insurance company to incur a loss.
The privity defense holds that a plaintiff cannot sue a defendant unless he was “in privity” with that defendant. Here, even though the insurance company hired the law firm to defend its insured, there was no privity because the law firm was responsible only to its client, the insured. The court rejected the insurance company’s public policy arguments:
The insurer nevertheless argues public policy and common sense dictate that an insurer should be able to pursue legal malpractice claims against defense counsel retained to represent its insureds. According to the insurer:
One question that comes up over and over again is “How do I prove that the lawyer (who I am unhappy with) was my lawyer?” How do I demonstrate an attorney-client relationship.
This video has some basic thoughts on that issue:
The case is Knox v. Aronson, Mayefsky & Sloan, LLP, 2018 NY Slip Op 9030. The plaintiff was represented in her divorce by two law firms and she sued both firms in this legal malpractice case. Plaintiff lost a custody fight with her ex-husband and was ordered to pay attorney fees when she failed to comply with a court order to return the child to New York from Connecticut. She sued the Aronson firm for bad advice (alleged) and for failing to move for attorney fees. The reasoning is instructive:
Turning first to plaintiff’s legal malpractice cause of action against AMS, she alleges that AMS was negligent in failing to move for attorneys’ fees, resulting in her failure to receive an undetermined award to pay her attorneys. This claim fails because plaintiff’s various successor counsel had ample time and opportunity to make such a motion, and in fact one did (although it was purportedly abandoned) (see Davis v Cohen & Gresser, LLP, 160 AD3d 484, 487 [1st Dept 2018]).
Even assuming AMS was negligent in failing to move for attorneys’ fees, by agreeing as part of the settlement to forgo any award of attorneys’ fees except for $20,000, plaintiff cannot show that but for AMS’s negligence she would not have sustained the loss (see generally Tydings v Greenfield, Stein & Senior, LLP,43 AD3d 680, 682 [1st Dept 2007], affd 11 NY3d 195  [to establish proximate cause, the plaintiff must demonstrate that “but for” the attorney’s negligence, plaintiff would have prevailed in the matter in question; failure to demonstrate proximate cause mandates the dismissal of a legal malpractice action regardless of whether the attorney was negligent]); 180 Ludlow Dev. LLC v Olshan Frome Wolosky LLP, 165 AD3d 594, 595 [1st Dept 2018] [“While proximate cause is generally a question for the factfinder. . . it can, in appropriate circumstances, be determined as a matter of law”]).
The case is GB v. Christine Rossi, A-240-17T3. The case was decided in New Jersey and is an unpublished opinion. The case illustrates one problem with legal malpractice cases – there may be wrongful conduct, but the plaintiff must tie the wrongful conduct to her damages.
Plaintiff was getting divorced. She met with Rossi for about an hour and made numerous disclosures. Rossi declined representation.
Later, plaintiff’s husband filed for a temporary restraining order against plaintiff alleging that she had committed domestic violence. At trial, Rossi represented husband. Husband won the trial and GB was evicted from the marital home. Please note that Rossi did not file an appearance in the divorce case. She only appeared in the domestic violence case.
The case is Yung v. Grant Thornton, 2016-SC-00571 and 2017-SC-00151. The plaintiffs sued Grant Thornton for fraud for placing them in a tax shelter. The IRS disallowed the tax shelter and the Yungs were required to pay $20 million in back taxes and penalties. The Yungs sued Grant Thornton for fraud and, in the trial court, obtained a judgment of $20 million in compensatory damages (for the back taxes they had to pay) and, more controversially, $80 million in punitive damages.
Punitive damages awards were once quite common. They have become far less common in recent years after the Supreme Court decided a series of cases requiring that the punitive damage award be proportional to the compensatory damages award.
The Appellate Court reversed the punitive damages award and the Yungs appealed to the Kentucky Supreme Court. In a thoughtful and detailed opinion, The Kentucky Supreme Court reinstated the punitive damage award!
One issue that arises frequently is whether or not a criminal defendant must obtain a finding of actual innocence before he can sue trial counsel for legal malpractice. The Kentucky Supreme Court adopted the Exoneration Rule on December 13, 2018, in the case of Lawrence v. Bingham. The Rule has been criticized by some scholars and lawyers on the ground that it is unfair to criminal defendants and that it allows bad lawyers to escape liability.
The link to the case is below:
In the wake of recent publicity that lying to a government agent is a crime, 18 USC Section 1001, here is a set of simple instructions should two FBI agents appear in person at your home or place of business:
FBI Person – I’m Agent so and so and with me is Agent so and so and we would like to ask you a few questions:
Person – May I have your card?…Thank you. I’m going to ask you to talk to my lawyer. He will be happy to answer your questions.