Opinion ID: 1908036
Heading Depth: 2
Heading Rank: 2

Heading: The Measure and Proof of Damages

Text: As we observed, the gravamen of Marsharina's complaint with respect to the settlement centered on the demand that Groscupthe unserved owner of 1217 East Preston Streetbe released along with the owners of the other two properties. Through her stipulation, she abandoned any assertion that $2,500 was an inappropriate amount for the release of the two paying defendants. Her position was that Thomas was negligent in recommending that, through Gerrine, she accede to the release of Groscup as a condition of the settlement with the two other defendantsthat, because Marsharina had a good case against Groscup, who had a $300,000 insurance policy, Thomas should have recommended that the settlement offer, with that condition, be rejected, and that the case be pursued against the three defendants. Consonant with her stipulation, Marsharina did not seek any damages arising from the release of the two paying defendants, implicitly accepting that, had the case proceeded against them, she would have received no more than the $2,500 she and her mother got. Consonant with her view that the case should have proceeded to trial against Groscup, Marsharina presented no evidence of what a reasonable settlement would have been with respect to Groscup or even that a settlement could have been effected with that defendant. The sole basis of her case against Thomas was that, upon his recommendation, a valuable case against Groscup was given away for no recompense. The only damages she sought from Thomas, therefore, was the amount she likely would have recovered from Groscup had the case proceeded to trialthe difference between that amount and zero. Thomas urges that that was an inappropriate measure of damages. Citing LEGAL MALPRACTICE, § 29.38, 4th ed. (1996), he urges that, in a negligent settlement case, the measure of damages is the difference between the reasonable settlement value and what was, in fact, obtained in settlement. Without any supporting evidence, the jury found the reasonable settlement value of the case against Groscup to be $25,000, and, subject to his argument that no action at all should be permitted, Thomas contends that the maximum judgment permissible in this case would be $25,000. Thomas's citation to LEGAL MALPRACTICE is misplaced. Those authors do not state, or even suggest, that the only measure of damages in a negligent settlement case is the difference between the actual settlement and a reasonable settlement. They simply point out that, among the various situations in which lawyers are charged with malpractice, are those in which the client seeks the difference between the amount paid or received and what should have been paid. In that setting, they point out that the plaintiff not only must establish that concluding such a settlement fell outside the standard of care, but also what would have been a reasonable settlement and that such sums would have been agreed to and could have been paid. LEGAL MALPRACTICE, § 29.38 at 745. See, for example, Whiteaker v. State, 382 N.W.2d 112 (Iowa 1986), where the plaintiff claimed, alternatively, that his lawyer's negligence cost him a favorable judgment and a lost settlement opportunity. As to the latter, the plaintiff would have to prove that a settlement probably would have occurred. [6] If that is how the plaintiff frames the case, Thomas's view as to the measure of damages would be correct. If, for example, the client produces evidence that (1) the settlement recommended by the lawyer was one that a lawyer exercising reasonable skill, judgment, and diligence would not have recommended under the circumstances, (2) had that settlement offer not been accepted, the defendant in the underlying case would and could have settled for substantially more, and (3) that higher amount would have been a reasonable settlement, one that a lawyer exercising reasonable skill, judgment, and diligence would have recommended, the proper measure of damages would indeed be the difference between what reasonably could have been obtained and what, in fact, was obtained. That kind of evidence is not easy to produce, however. Absent some compelling circumstances, the settling adversary in the underlying case is not likely to admit that, had the lawyer held out, it would have offered substantially more in settlement than was, in fact, offered, and evidence from other persons, either as to settlement value or as to the actual prospect of a better settlement, has been regarded as speculative. See, for example, Fuschetti v. Bierman, 128 N.J.Super. 290, 319 A.2d 781 (Law 1974); Merzlak v. Purcell, 252 Mont. 527, 830 P.2d 1278 (1991). Extraneous evidence of settlement value might be relevant to establish liabilitythat the settlement actually recommended and concluded was one that a lawyer exercising reasonable skill, judgment, and diligence would not have recommendedbut it cannot reasonably serve to establish the measure of damages absent a showing that the case would likely have been settled for the higher amount. A lawyer cannot be held liable for not having held out for a settlement that could not have been achieved in any event. Because of the practical difficulties in establishing the reasonable prospect of a better settlement, and perhaps for other reasons as well, it is not uncommon for plaintiffs in the position of Marsharina to frame their case as it was framed here, to assert that, given the inadequacy of the settlement offer, the lawyer should have recommended that the offer be rejected and that the litigation be pursued to adjudication. When so framed, the measure of damages necessarily becomes the difference between what was accepted in settlement and what likely would have been received from the adjudication. That is the approach most commonly taken by the courts. See, for example, Grayson v. Wofsey, Rosen, Kweskin and Kuriansky, supra, 231 Conn. 168, 646 A.2d 195; Callahan v. Clark, supra, 321 Ark. 376, 901 S.W.2d 842; Baldridge v. Lacks, supra, 883 S.W.2d 947; McWhirt v. Heavey, supra, 250 Neb. 536, 550 N.W.2d 327. The normal way in which that approach is implemented is through what has become known as a trial within a trial, or a suit within a suit, i.e., litigating before the malpractice jury the underlying case that was never tried. Mallen and Smith point out that [t]his is the accepted and traditional means of resolving the issues involved in the underlying proceeding in a legal malpractice action and avoids speculation by requiring the plaintiff to bear that burden of producing evidence that would have been required in the underlying action. LEGAL MALPRACTICE, supra, § 32.8, 4th ed. and 1998 Supp. [7] See Pickett v. Haislip, 73 Md. App. 89, 533 A.2d 287 (1987); cert. denied, 311 Md. 719, 537 A.2d 273 (1988); Fishman v. Brooks, supra, 396 Mass. 643, 487 N.E.2d 1377 (1986); Haberer v. Rice, 511 N.W.2d 279 (S.D.1994); Nika v. Danz, 199 Ill.App.3d 296, 145 Ill.Dec. 255, 556 N.E.2d 873 (1990); Lieberman v. Employers Ins. of Wausau, 84 N.J. 325, 419 A.2d 417 (1980); Houghton v. Leinwohl, 135 Vt. 380, 376 A.2d 733 (1977); Herston v. Whitesell, 374 So.2d 267 (Ala.1979); Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686 (Minn.1980). The case within a case or suit within a suit approach has been criticized on a number of groundsthat it does not represent an accurate or complete reconstruction of the original lawsuit; that the evidence may not be of the same quality as that which would have been offered in the underlying case; that there is an artificiality to it; that it is unfair to require the plaintiff to litigate the case against his or her own lawyer, who has superior knowledge about the strengths and weaknesses of the case, including knowledge obtained from the client's own confidences; and that, because the original defendant is not a party, the malpractice plaintiff may not have the benefit of discovery against that defendant to marshal evidence in support of his claim. See Developments in the LawLawyers' Responsibilities and Lawyers' Responses, 107 HARV. L.REV. 1557, 1568-69 (1994); Melissa A. Thomas, When Is an Attorney's Breach of Fiduciary Duty in Missouri Not Legal Malpractice?, 63 MO. L.REV. 595, 600-601 (1998); John Leubsdorf, Legal Malpractice and Professional Responsibility, 48 RUTGERS L.REV. 101, 148-150 (1995); Polly A. Lord, Loss of Chance in Legal Malpractice, 61 WASH. L.REV. 1479, 1480-1485 (1986). The courts have not seemed eager to adopt any of the alternatives that have been suggested, however, so the trial within a trial approach continues to be used. It was not an inappropriate method in this case.