This is an opinion of the United States District Court for the Middle District of Tennessee denying motions for summary judgment filed by the three law firms that represented Allied Waste in an underlying suit.
The underlying suit was filed after a waste facility owned by the Metropolitan Government of Nashville and Davidson County (“Metro”) burned to the ground. Metro sued Allied and other defendants. The underlying case ended with a $7.2 million verdict against Allied.
Allied’s first set of lawyers was the Levine, Orr & Geracionti firm. Allied alleged that the Levine Orr firm made three errors. First, Levine Orr allegedly failed to disclose a corporate representative in response to a Rule 30.02(6) notice during discovery. (The notice is similar to the federal Rule 30(b)(6) notice). Instead the witness was disclosed before trial. As a result of the prompt failure to disclose the witness, the court gave an adverse inference instruction to the jury.
Second, Levine Orr allegedly made errors in connection with the disclosure of an expert witness. The lawyers disclosed Jonathan Held to offer expert testimony that on the facilities fair market value and the diminution in value due to the fire. The trial court barred Held from testifying on the ground that he was not a licensed appraiser. The court also ruled that the only measure of damages was repair cost, not diminution of value. In the legal malpractice suit, Allied alleged that the lawyers should have either (a) retained a qualified expert or (b) should have “taken the necessary steps to prepare and introduce other evidence that the value was far less than the cost of repair.”
Two other firms became involved in drafting a Motion for a New Trial. The motion was denied. Allied appealed.
On appeal, the Tennessee Court of Appeals held that the “issue surrounding the exclusion of Head’s valuation testimony was waived because ‘Held was not named in Defendants’ motion for new trial or supporting memorandum nor is the exclusion of his valuation testimony expressly alleged as an error in either.'”
So, Allied alleged that the trial lawyers made errors in relation to the exclusion of Held’s testimony and alleged that the lawyers who prepared the motion for a new trial failed to preserve the issue for appeal.
The lawyers moved for summary judgment on statute of limitations grounds. The lawyers argued that the client should have been aware of the alleged negligence in preparing the motion for new trial because they emailed it to the client. The court rejected this argument, holding that the client would not necessarily have discovered the error at that time.
The court also rejected any application of the collateral source rule because Allied had insurance that would have paid any judgment. The court held that the collateral source rule does not apply in legal malpractice actions.
The lawyers who did the motion for new trial and the appeal argued that their decision not to include the exclusion of Held’s testimony as an issue was a “reasoned, tactical decision” and that there is no proof that any alleged error caused the client any damages.
The court rejected the judgmental immunity argument on the ground that there was evidence that the lawyers intended to include the issue in the brief and somehow failed to do so and because there was expert testimony that the lawyers breached the duty of care.
The defendants’ motions for summary judgment were denied in all respects.
The opinion denying the motions for summary judgment is exceptionally thorough and thoughtful on the issues raised and is a worthwhile read for anyone interested in legal malpractice. The case illustrates the dangers of getting involved in a case tried by another law firm. When you step in late after discovery is closed (here there was a verdict when the appellate firms became involved), there is a chance that an issue would be missed. Finally, the case raises tough issues for the jury: Did the exclusion of one witness cause the underlying jury to award $7.2 million against Allied? It requires the jury to quantify the value of the testimony of a witness who never testified. That is not an easy task.
Edward X. Clinton, Jr.