Opinion ID: 3212116
Heading Depth: 2
Heading Rank: 1

Heading: CNX Damages

Text: Rubin seeks damages in the amount of $32,455, which it paid to settle its dispute with CNX and to obtain CNX’s consent for Rubin to continue to operate the well on the 120-acre tract. Rubin argues there is a clear nexus between Mr. Morris’s negligence and its damages; the damages that resulted in reliance on this error were both 6 Notwithstanding our ultimate focus upon the proximate causation of damages, we note the second element of a legal malpractice claim requires a showing that Mr. Morris acted negligently and breached his duty to Rubin through the failure to discover the declaration of pooling. “An attorney who undertakes to perform professional services for a client is required to exercise the knowledge, skill, and ability ordinarily possessed and exercised by members of the legal profession in similar circumstances.” Syl. Pt. 1, Keister, 182 W.Va. at 746, 391 S.E.2d at 896. Rubin retained Mr. Morris for the express purpose of determining whether Rubin could acquire good and marketable title and the exclusive right to drill upon the leasehold. Clearly, Mr. Morris failed to conduct a proper title search that would have disclosed the declaration of pooling and deviated from the accepted standard of care. 9 direct and foreseeable when it promptly put the property to its intended use of producing oil and gas, thereby violating the declaration of pooling of record that Mr. Morris omitted from his title opinion. Accordingly, Rubin asserts it met the proximate cause requirement, typical of any negligence tort. See e.g., Spencer v. McClure, 217 W.Va. 442, 446, 618 S.E.2d 451, 455 (2005) (recognizing plaintiff has burden in tort action to prove by preponderance of evidence defendant was negligent and such negligence was proximate cause of injury). Rubin further argues the circuit court clearly misconstrued this Court’s holding in Calvert when it determined Rubin’s settlement with CNX precluded any finding that these damages were proximately caused by Mr. Morris’s negligence. We agree that Calvert does not stand for the proposition that plaintiffs cannot maintain a legal malpractice action after settling a lawsuit. See, e.g., Parnell v. Ivy, 158 S.W.3d 924 (Tenn. Ct. App. 2004) (holding settlement of underlying lawsuit does not shield former attorneys from legal malpractice liability). Rather, this Court in Calvert simply declined the invitation to deviate from the proximate cause standard.7 7 In Calvert, the plaintiff filed suit alleging malpractice when the lawyer was negligent in drafting a provision in a will. We rejected the contention that the Calverts were entitled to damages merely because they were called into court by virtue of the declaratory action regarding the will. 217 W.Va. at 696, 619 S.E.2d at 209. Instead, we found the Calverts were required to establish they suffered an actual loss and that the loss “was proximately caused by negligence in the drafting” of the will. Id. at 695-96, 619 S.E.2d at 208-09. Because the defect was ultimately cured so that the intended (continued . . .) 10 Conversely, Mr. Morris argues that because Rubin extracted natural gas from the property for a dozen years, it had obtained fee simple title to the oil and gas rights underlying the 120-acre tract through adverse possession long before it settled the claims of CNX. Mr. Morris states Rubin could have avoided any liability had it raised with CNX the defense of adverse possession; because Rubin had the ability to avoid the CNX losses, Mr. Morris contends its failure to mitigate becomes the proximate cause of its injury. Rubin disagrees with Mr. Morris’s legal assessment and maintains it had no reasonable prospect of prevailing on the theory of adverse possession.8 Rubin claims it properly mitigated damages upon discovery of its trespass by immediately cutting off its liability and reaching a favorable settlement. While the circuit court categorized its decision to deny Rubin’s request for the CNX damages as Rubin’s failure to establish the element of proximate cause, this beneficiary received his bequest pursuant to the will, we found “no causal connection between the attorney’s negligence and the beneficiary’s damages, because the beneficiary has not suffered damages proximately caused by the attorney’s negligence.” Id. 8 Rubin asserts it could not establish the existence of each of the six elements of adverse possession by clear and convincing evidence. See Syl. Pt. 2, Brown v. Gobble, 196 W.Va. 559, 474 S.E.2d 489 (1996) (“The burden is upon the party who claims title by adverse possession to prove by clear and convincing evidence all elements essential to such title.”); Syl. Pt. 3, Somon v. Murphy Fabrication and Erection Co., 160 W.Va. 84, 232 S.E.2d 524 (1977) (“One who seeks to assert title to a tract of land under the doctrine of adverse possession must prove each of the following elements for the requisite statutory period: (1) That he has held the tract adversely or hostilely; (2) That the possession has been actual; (3) That it has been open and notorious (sometimes stated in the cases as visible and notorious); (4) That possession has been exclusive; (5) That possession has been continuous; (6) That possession has been under claim of title or color of title.”). 11 issue is actually governed by the related principle of mitigation of damages. The theoretical foundation for a plaintiff’s duty to mitigate damages is that the defendant’s negligence is not the proximate cause of any damages that could have been avoided had the plaintiff taken reasonable steps to mitigate. Preston v. Keith, 584 A.2d 439, 441-42 (Conn. 1991). As discussed above, proximate cause of damages is an element of a negligence action and thus the plaintiff has the burden of establishing this element. Based on the undisputed facts of this case, we find that Rubin has established that the damages it incurred by settling the claims of CNX were proximately caused by Mr. Morris’s negligence because those damages naturally flowed from his failure to detect the declaration of pooling. We now turn to Mr. Morris’s argument regarding mitigation of damages. A plaintiff’s duty to mitigate damages focuses on whether the plaintiff took reasonable steps to avoid or reduce damages that were proximately caused by the negligence of the defendant. A damaged party is only expected to do what is reasonable under the circumstances and need not embark upon a course of action that may cause further detriment to him or her. The doctrine of mitigation of damages does not permit damages reduction based on what could have been avoided through Herculean efforts, and a plaintiff’s duty to mitigate damages does not extend to accepting a position that entails great hardship or personal embarrassment. An injured party is only accountable for those hypothetical ameliorative actions that could have been accomplished through ordinary and reasonable care, without requiring undue effort or expense. Furthermore, when both of the parties have the same opportunity to reduce damages, the defendant cannot later 12 contend that the plaintiff failed to mitigate. The general rule is that injured parties need not institute and prosecute lawsuits in order to mitigate damages as litigation is too uncertain and costly to impose such a duty on a party. 25 C.J.S. Damages § 184 (emphasis added and footnotes omitted); see also Robinson v. Carney, 632 A.2d 106, 108 (D.C. Ct. App. 1993) (noting general rule is injured party need not institute and prosecute lawsuits in order to mitigate damages). The failure to mitigate damages is a defense which precludes recovery for those consequences of the negligent attorney’s actions which could have been avoided through a plaintiff’s reasonable efforts to minimize loss. See Smith v. Childs, 437 S.E.2d 500, 507 (N.C. Ct. App. 1993). As with other defenses, the burden is on the attorney defendant to show the plaintiff neglected to mitigate damages. Id.; MB Indus., LLC v. CNA Ins. Co., 74 So.3d 1173, 1181 (La. 2011) (holding in legal malpractice action, failure to mitigate damages is an affirmative defense, and burden of proof is on party asserting defense). When raising this defense, the defendant attorney bears the burden of proving that the proposed means of mitigation were reasonable under the circumstances, could be accomplished at a reasonable cost, and were within the plaintiff’s ability. See McCormick Int’l USA, Inc. v. Shore, 277 P.3d 367, 371 (Idaho 2012). We hereby hold that a plaintiff in a legal malpractice action has a general duty to mitigate his or her damages. This doctrine requires a plaintiff to take reasonable steps within his or her ability to minimize losses caused by the attorney’s negligence. 13 However, a plaintiff is not required to take actions which are impractical, disproportionately expensive, or likely futile. The scope of a plaintiff’s duty to mitigate damages depends on the particular facts of the case. See MB Indus., 74 So.3d at 1181 (La. 2011); Am. Reliable Ins. Co. v. Navratil, 445 F.3d 402, 406 (5th Cir. 2006) (“Although as a general principle, a client has a duty to mitigate damages caused by its attorney’s malpractice, such a duty cannot require the client to undertake measures that are unreasonable, impractical, or disproportionately expensive considering all of the circumstances.”). Applying this standard to the instant case, it is clear that Rubin took reasonable steps under the circumstances to mitigate its damages. After discovering the title defect, Rubin took responsible actions to minimize the liabilities arising from the problem, which is the essence of mitigation of damages. Rubin weighed the consequences to be avoided and assessed its overall exposure to liability at approximately $147,000 arising from Mr. Morris’s failure to alert it to the title defect. 9 By contrast, Rubin negotiated a settlement with CNX that was much less expensive. Based on these facts, we find that Rubin’s decision to settle the matter with CNX instead of pursuing litigation on what it believed to be an unmeritorious affirmative defense of adverse 9 Rubin contends it was facing approximately $30,000 in plugging expenses to abandon the well, $17,000 in royalty payments that the owner would have demanded, and approximately $100,000 of lost profits owed to the working interest owners of the well. Rubin also claims it would have lost its own investment in producing and operating the well. 14 possession was mitigation of damages. “Many settlements are a reasonable response to a difficult situation created by another’s negligence.” Flint v. Hart, 917 P.2d 590, 596 (Wash. Ct. App. 1996). The flaw in Mr. Morris’s argument is that it is built on the faulty premise that Rubin’s adverse possession claim would come without cost. However, Rubin’s proactive settlement not only eliminated the risk of a much larger judgment against it, the settlement also removed from the equation the certainty of litigation costs and delays of production. “[T]he mitigation rule does not require plaintiff to grasp vainly for twigs while drowning in flood-waters of defendant’s creation.” Smith, 437 S.E.2d at 508; see also Covino v. Peck, 559 A.2d 868, 872 (N.J. Super. Ct. App. Div. 1989) (finding “as a matter of law,” plaintiff was not required to institute action in an effort to mitigate damages; “wrongdoer should not be permitted to avoid real damages by raising an issue made necessary by his very wrong.”). Accordingly, we find that Rubin is entitled to recover the damages it incurred by settling the claims of CNX. See McCormick Int’l USA, 277 P.3d at 371 (“Where an injured party takes steps to mitigate the damages caused by another, she is entitled to the costs she reasonably incurs in avoiding those damages.”); Comment Note – Duty to Mitigate Damages, 81 A.L.R. 282 (Originally published in 1932) (“A party has an obligation to take such steps as will reasonably tend to minimize damages occasioned 15 by breach of contract or by tort, and such party is entitled to recover costs reasonably incurred in minimizing such damages[.]”).