Opinion ID: 199460
Heading Depth: 2
Heading Rank: 2

Heading: The malpractice action

Text: 6 Approximately a year later, Clauson filed a malpractice suit against Kirshenbaum in the Rhode Island Superior Court. Kirshenbaum held a professional malpractice insurance policy through NEIC during the time he represented Clauson. The policy limited NEIC's liability to $100,000 per claim, an amount that would also be reduced by all claims expenses, including reasonable attorney's fees. Kirshenbaum informed NEIC of the malpractice suit and filed a counterclaim for unpaid attorney's fees. NEIC undertook Kirshenbaum's defense under a reservation of rights. Kirshenbaum focused his defense upon the issue of causation, claiming that Clauson was not harmed by his failure to attend the hearing on the sale of the trawler. Nonetheless, Michael Stone, the attorney assigned by NEIC to defend Kirshenbaum, opined from the outset of the suit that despite this weakness in Clauson's case, there was a significant danger of an adverse judgment. 7 The case went to court-annexed arbitration, and the arbitrator found in Clauson's favor in July of 1994, awarding him $20,000. Though NEIC and Attorney Stone recommended that he accept the arbitration award, Kirshenbaum rejected the award pursuant to the Rhode Island Superior Court Rules Governing Arbitration in Civil Actions. NEIC wrote to Kirshenbaum and complained that his refusal to consent to settlement of the case after a decision by an unbiased arbitrator was unreasonable. Consequently, NEIC said it was invoking the clause in its policy that limited its exposure to the amount of the rejected settlement. Nonetheless, NEIC continued to defend Kirshenbaum and the case was scheduled for de novo trial. 8 Continuing to express his concern that a trial could result in an even greater judgment for Clauson, Attorney Stone met with Clauson's attorney to discuss the possibility of a settlement. Though both attorneys agreed that the arbitrator's award, plus interest, would be a reasonable basis for settlement, Kirshenbaum again refused to consent to a settlement. Approximately three months later, Clauson reiterated in writing the offer to settle for the arbitrator's award plus interest, for a total of $29,600. Again Attorney Stone recommended that Kirshenbaum agree to the settlement and again Kirshenbaum refused to give his consent. NEIC then wrote to Kirshenbaum requesting that he accept the settlement offer. NEIC indicated that this settlement would be beneficial to Kirshenbaum, that his refusal was unreasonable, and that if Kirshenbaum again refused to consent, NEIC's liability would be limited to the amount of the rejected settlement. Kirshenbaum remained recalcitrant and the case was scheduled for trial in September of 1995. On the morning of trial, Clauson renewed his offer to settle, Attorney Stone recommended the settlement, and Kirshenbaum refused to consent. 9 After a jury-waived trial, the Superior Court found for Clauson, both on his claim of malpractice and on Kirshenbaum's counterclaim for unpaid attorneys' fees. The court found that Kirshenbaum's failure to appear at the hearing on the sale of the trawler was a clear breach of duty that caused $97,716.50 in damages to Clauson. The court based this damages calculation on Kirshenbaum's failure to advise Clauson to submit his own offer to purchase the vessel. Clauson, however, did not provide any evidentiary support for a finding that the failure to advise of the purchase option (as opposed to the failure to appear at the hearing) was a breach of duty, and Kirshenbaum moved for a new trial on this basis. 10 While the motion for a new trial was pending, Kirshenbaum and NEIC exchanged further correspondence. Kirshenbaum repeated his refusal to allow a settlement of the claim. NEIC responded that it was relinquishing control over his defense. Furthermore, it denied responsibility for any costs or expenses associated with Kirshenbaum's defense accruing after the date of the adverse judgment and again asserted that its liability on the judgment was capped at the amount of the proposed but rejected settlement. Kirshenbaum discharged Attorney Stone and reiterated that the carrier is directed not to make any payments on my judgment in favor of Clauson against me. 11 The motion for a new trial was granted, the prior judgment on Clauson's claim was vacated, and the case was returned to the trial calendar. 2 Clauson again contacted Attorney Stone for the purpose of settling the case. Stone referred him to NEIC, which indicated that it was no longer conducting the defense and that Clauson should discuss any settlement directly with Kirshenbaum. Clauson nonetheless sent a written offer of settlement to both NEIC and Kirshenbaum, revoking the earlier settlement offer and offering to settle instead for the policy limit of $100,000. NEIC never responded to this offer. Shortly thereafter, the Superior Court allowed Attorney Stone to withdraw. 12 The case again went to trial with Kirshenbaum continuing pro se. Clauson introduced evidence to eliminate the deficiencies the court noted in granting a new trial. Once again, the court entered judgment for Clauson in the amount of $97,716.50. Kirshenbaum did not appeal from this judgment. Once the judgment became final, NEIC paid Clauson approximately $29,000, the amount it considered the limit of its liability for the judgment under the policy. 3 Clauson accepted this payment without prejudice to his right to proceed against NEIC for the balance.