Allied Waste North America, Inc. v. Lewis, King, Krieg & Waldrop, P.C.
93 F. Supp. 3d 835
M.D. Tenn.2015Background
- Allied Waste North America and BFI (Allied/BFI) were defendants in a Tennessee state suit arising from a 2002 fire; a jury returned a $7.2 million verdict and final judgment entered in 2010, later settled for $8 million.
- Allied/BFI retained Levine, Orr & Geracioti (Levine Orr) to defend the case; plaintiffs allege multiple trial-level missteps including late designation of the Rule 30.02(6) corporate witness (resulting in an adverse-inference jury instruction) and failure to present/replace an excluded valuation expert (Jonathan Held).
- Allied/BFI later retained Lewis King to preserve appellate issues and Weinberg Wheeler for post-verdict motions and potential retrial; plaintiffs claim these firms failed to preserve the Held exclusion issue on appeal.
- Tennessee Court of Appeals affirmed the trial court; Allied/BFI sued the three law firms for legal malpractice, breach of contract (later conceded as to Levine Orr) and breach of fiduciary duty, and sought damages for amounts it paid (notably its $2.5 million self-insured retention) and litigation costs.
- Defendants moved for summary judgment chiefly arguing (1) the malpractice suit is time-barred under the statute of limitations and (2) lack of causation/limited damages (insurer-paid amounts or stipulated damages would have been the same).
- District court denied defendants’ statute-of-limitations summary judgment, limited recoverable damages to Allied/BFI’s out-of-pocket payments (SIR/deductible and incurred costs), and denied other summary judgment grounds where factual disputes (including dueling expert opinions) remained.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did the malpractice statute of limitations accrue? | Accrual triggered by the Court of Appeals’ affirmance; suit filed within one year of that decision. | Accrual occurred earlier (e.g., on receipt of post-trial motion or when appellate briefs/billing put Allied/BFI on notice). | Denied summary judgment for defendants — factual disputes exist about when plaintiffs reasonably should have known of the malpractice; accrual is typically a question for the jury. |
| Scope of recoverable damages / collateral-source rule | Allied/BFI seeks full amount paid to resolve underlying exposure and consequential costs. | Defendants argue plaintiffs were not damaged beyond insurer payments; any recovery should be limited to stipulated or deductible amounts; collateral-source rule should limit recovery. | Court held plaintiff’s recoverable damages are limited to out-of-pocket amounts (the $2.5M self-insured retention/deductible and litigation costs); collateral-source rule does not expand insured’s recovery beyond amounts it actually paid. |
| Causation / whether exclusion of Held was preserved and prejudicial | Failure to preserve or replace Held — and related discovery failures/adverse inference — caused loss; appeal would likely have resulted in relief and retrial. | Defendants contend the exclusion was proper or harmless, or that plaintiff cannot prove a different outcome on appeal/trial. | Summary judgment denied: factual disputes (including dueling expert opinions and whether trial judge abused discretion) preclude resolving causation; jury must decide what would have occurred but for alleged malpractice. |
| Breach of fiduciary duty distinct from malpractice; client-file and counsel-selection claims | Plaintiffs assert independent fiduciary claims (delay in returning file; not informing client about decision to have Orr try the case). | Levine Orr sought dismissal as duplicative of malpractice claim. | Court allowed fiduciary-duty claim to proceed to the extent it alleges harms separate from malpractice (file access and failure to keep client informed); breach-of-contract claim against Levine Orr was conceded/dismissed. |
| Assumption of risk / comparative-fault for refusing to settle | Plaintiffs had no duty to settle and did not assume risk by pursuing trial/appellate strategy; comparative fault should not bar recovery. | Defendants argue Allied/BFI refused settlement and failed to mitigate, contributing to its damages. | Court rejected summary judgment for defendants on this point: no duty to settle; failure-to-mitigate is an affirmative defense not pled by defendants; comparative-fault issues are for factfinder. |
Key Cases Cited
- John Kohl & Co., P.C. v. Dearborn & Ewing, 977 S.W.2d 528 (Tenn. 1998) (articulates the discovery rule for legal-malpractice accrual in Tennessee)
- Carvell v. Bottoms, 900 S.W.2d 23 (Tenn. 1995) (refuses to toll malpractice limitations until all appellate proceedings conclude)
- Hartman v. Rogers, 174 S.W.3d 170 (Tenn. Ct. App. 2005) (legal-malpractice accrual elements and discovery-rule application)
- Woodruff v. Tomlin, 616 F.2d 924 (6th Cir. 1980) (recognizes judgmental immunity for lawyers exercising honest professional judgment)
- Mercer v. Vanderbilt Univ., Inc., 134 S.W.3d 121 (Tenn. 2004) (comparative-fault analysis in malpractice-context — clients entitled to non-negligent representation)
- Am. Int’l Adjust. Co. v. Galvin, 86 F.3d 1455 (7th Cir. 1996) (discusses whether refusal to settle can be a defense in malpractice actions)
- Konvalinka v. Chattanooga-Hamilton Cnty. Hosp. Auth., 249 S.W.3d 346 (Tenn. 2008) (standard for abuse of discretion review)
- Bellar v. Baptist Hosp., Inc., 559 S.W.2d 788 (Tenn. 1977) (imputation of attorney knowledge to client)
- Ohio Cent. R.R. Sys. v. Mason Law Firm Co., L.P.A., 915 N.E.2d 397 (Ohio Ct. App. 2009) (limits insured’s malpractice recovery to its self-insured retention when insurer paid remainder)