Opinion ID: 1717661
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Heading: The Proximate Cause Issue.

Text: In representing a client, an attorney is required to exercise that degree of care, skill, diligence and knowledge ordinarily possessed and exercised by members of the legal profession in good standing in similar communities. See Sheets v. Letnes, Marshall & Fiedler, Ltd., 311 N.W.2d 175, 180 (N.D.1981). In lawyer malpractice cases, the plaintiff must show: 1. the existence of an attorney-client relationship giving rise to a duty; 2. that the attorney, either by an act or a failure to act, violated or breached that duty; 3. that the attorney's breach of duty proximately caused injury to the client; and 4. that the client sustained actual injury, loss, or damage. D. Meiselman, Attorney Malpractice: Law and Procedure § 3:1, at 39-40 (1980). Concerning the third element, proximate cause, Meiselman states: [I]n attorney malpractice, the causal requirement is worded in the negative. For example, it is often said that the plaintiff can recover against the defendant-attorney only when it can be shown that the injury would not have occurred but for the negligence of the lawyer. Thus, the plaintiff must establish that the total or partial loss would not have occurred had it not been for some act or omission on the part of the attorney. In other words, the plaintiff must show that but for the negligence of the lawyer, the client's cause of action or defense against a claim in the underlying action would have been successful. Id. at 40. A showing of proximate cause requires proof that the client would not only have prevailed in the underlying claim but that a judgment in the client's favor would have been collectible. See Whiteaker v. State, 382 N.W.2d 112, 114-15 (Iowa 1986); Meiselman § 3:4, at 43-44 (requirement of solvency of defendant in underlying case is both longstanding and widespread). In Whiteaker, we said: Proof of damages proximately caused by negligence is a fundamental element of a malpractice action. When the alleged legal malpractice consists of a client's assertion that the defendant lawyer has mishandled a claim or lawsuit, proof of damages necessarily involves analysis of the value of that underlying cause of action. See Baker v. Beal, 225 N.W.2d 106, 110-11 (Iowa 1975). The measure of injury to the client's cause of action is the difference between what the client should have recovered but for the negligence, and what the client actually recovered. R. Mallen & V. Levit, Legal Malpractice § 303, at 354-55 (2d ed. 1981). Moreover, in proving the value of the underlying claim the client has the burden to show not just that a judgment in an ascertainable amount would have been entered, but the amount that would have been collected on that judgment. Beeck v. Aquaslide `N' Dive Corp., 350 N.W.2d 149, 160 (Iowa 1984); Pickens, Barnes & Abernathy v. Heasley, 328 N.W.2d 524, 526 (Iowa 1983). The rationale of this collectibility requirement is fully explained in Beeck: At the trial of the malpractice action, can the lawyer successfully contend that, regardless of the substantial amount of the probable verdict in the underlying suit, the measure of the client's damages is limited to the amount he would have actually recovered by way of a satisfied judgment? The question should be answered affirmatively, since otherwise the client would be placed in a better position as a result of the lawyer's malpractice than he would have been in had the attorney not been negligent. 350 N.W.2d at 160-61 (quoting from Barry, Legal Malpractice in Massachusetts, 63 Mass.L.Rev. 15, 18-19 (1978)). 382 N.W.2d at 114-15. This rule of proximate cause for malpractice cases is a fair rule, allowing compensation to a client while not permitting the client to profit from the lawyer's negligence. See Beeck, 350 N.W.2d at 160-61. At trial, the court rejected Roberson's objections based on a failure of proof of proximate cause. Collectibility as it is used in the present case is broader than a recovery of money; it includes all of the rights available to a seller under an installment contract as will be discussed later. Nevertheless, in the interest of brevity, we will refer to the concept as collectibility. Here, the issue turns on what rights Burkes lost as a result of the negligent drafting of the contract. In other words, how well could the Burkes have done against Stampes under an enforceable contract? Presumably, Burkes could have forfeited the contract under Iowa Code chapter 656 and retained the Stampes' $50,000 deposit. They also could have obtained specific performance of the contract. Burkes acknowledge the general rule that a malpractice recovery cannot exceed the amount which would have been collectible under the underlying claim, but they argue that the rule is inapplicable under the facts of this case. They pose three scenarios which might have occurred if the contract had been properly drawn, any one of which would have been better for them than the recovery they made in their suit against Roberson. These scenarios are: (1) Stampes would have signed an enforceable contract and performed, (2) Stampes would have signed an enforceable contract and not performed, or (3) Stampes would have refused to sign at all. It is asserted that, under any of these scenarios, Burkes would have been better off. Had Stampes signed and performed, Burkes would have their full contract price. Under the second possibility, had Stampes signed and not performed, Burkes could have obtained specific performance and thus received the Stampes' downpayment (either $535,000, which represents Stampes' claimed equity in the farm if it had been sold on contract before the settlement date, or the farm itself). Burkes then could foreclose to get their farm back and presumably could end up owning both farms. Under the third scenario, had Stampes not signed the contract at all, someone else would have bought Burkes' farm. Burkes claim the latter result is supported by opinion evidence that the likelihood was good that Burkes could have sold the farm to someone else. While these scenarios might have worked out better for Burkes than the malpractice recovery, it is not certain that that would be the case. Success for the Burkes under the last two scenarios would turn on several factors which were not clearly established in the record. They are: (1) the value of Stampes' equity in their farm (and thus the value to Burkes in the event of a specific performance suit), and (2) the value and salability of Burkes' farm to some other party under the third scenario. All of these factors were contested at trial, and there was no finding as to any of them. The jury only considered the issue of Burkes' lost opportunity from the time of the breach until the dismissal of the specific performance appeal. We have said that it is a rare case when an issue of collectibility in a malpractice case is so clear that it can be decided as a matter of law. See Pickens, 328 N.W.2d at 526. We decline Burkes' invitation to do it here. The case must be reversed and remanded for a determination of proximate cause insofar as it pertains to the collectibility of any underlying claim against Stampes.