Opinion ID: 1198908
Heading Depth: 2
Heading Rank: 3

Heading: PCI's Legal Malpractice Action

Text: Several months later, PCI filed suit against a number of Taylor & Hintze attorneys and against the firm itself (collectively, TH), alleging negligent acts and omissions in TH's handling of PCI's suit against A/H and Ebasco. PCI later amended its complaint to include claims for breach of contract, warranties, and various fiduciary duties, as well as gross negligence; PCI requested punitive damages. On February 4, 1994, TH made an offer of judgment for a total of one million dollars. PCI did not accept this offer. Prior to trial TH moved for partial summary judgment on the issue of punitive damages; the motion was granted, and PCI's punitive damage claim stricken. TH moved to bar PCI from relying on the total cost method of proving damages on its original powerline construction project claims against A/H and Ebasco. The court granted the motion, directing that PCI rely on the actual cost method. TH also moved to preclude admission of any evidence concerning a November 29, 1989, memorandum written to the City of Seward by TH attorney Robert Owens, in which Owens estimated PCI's damages in the underlying case at $5,041,134. For its part, PCI moved to estop TH from denying that PCI had suffered the amount of damages specified in Owens's November 29 memorandum. The trial court denied both motions, declining to estop TH from contesting the issue of damages but allowing PCI to rely on TH's memo as evidence of damages. TH further moved for an order precluding PCI from seeking damages for the expenses PCI incurred in originally pursuing its claim for additional compensation against the City of Seward; TH likewise moved to bar PCI from seeking damages for the City's expenses in defending against PCI's claim. The trial court allowed PCI to claim these expenses as damages, but only to the extent that PCI could show that the expenses directly related to construction problems attributable to A/H or Ebasco.
PCI's case against TH proceeded to trial using the trial-within-a-trial approach for proof of malpractice damages. Under this approach, in order to show that TH's malpractice resulted in compensable damages, PCI was required to try the merits of its underlying case against A/H and Ebasco as part of its malpractice case against TH. At the conclusion of PCI's evidence, and again at the conclusion of its own case, TH moved for directed verdicts on the grounds that PCI failed to prove (1) causation and damages by the actual cost method, (2) its damages with sufficient specificity, or (3) the collectibility of any judgment that PCI might have received in the underlying action. The court denied these motions, finding sufficient evidence of actual, specific, and collectible damages. At the conclusion of TH's case, PCI moved for a directed verdict on the issue of TH's liability. The court denied this motion as well. The jury returned a verdict for PCI in the amount of $419,905. The verdict found TH negligent and that its negligence resulted in dismissal of PCI's suit against A/H and Ebasco. On the merits of the underlying action, the jury found no negligence or misrepresentation on the part of Ebasco but found A/H liable to PCI and the City for both negligence and misrepresentation. The jury's award of $419,905 reflected its conclusion that A/H's negligence caused the City of Seward to suffer $40,000 in increased administrative costs and $136,271 in arbitration expenses, and PCI to suffer $200,000 in increased construction costs and $43,634 in arbitration expenses. [1]
Following trial PCI moved for entry of judgment, for an award of attorney's fees, and for a determination of prejudgment interest. In support of these motions, PCI submitted a proposed judgment calculating its total recovery at $1,090,000  $90,000 more than TH's pretrial offer of judgment. The trial court subsequently rejected PCI's computations and, for purposes of comparison with TH's offer of proof, recalculated the judgment to be worth at most $895,802. Relying on this figure, the court ruled that PCI's verdict resulted in a judgment less favorable than TH's offer of judgment. The court proceeded to fix prejudgment interest at the reduced rate of 5.5%. The court awarded attorney's fees to PCI only through the date of the offer of judgment, and, in so doing, used Civil Rule 82's partially contested (without trial) schedule. In addition, using the Rule 82 contested (trial) schedule, the court awarded attorney's fees to both the Taylor & Hintze law firm and its principal member, Robert G. Taylor (who was separately represented), from the date of their offer of judgment to the date of the verdict. The court likewise awarded both the law firm and Taylor their post-offer costs. PCI appeals; TH cross-appeals.