Brian Nail v. Husch Blackwell Sanders, LLP
436 S.W.3d 556
Mo.2014Background
- Nail sued Husch Blackwell for legal malpractice over advice and drafting of a settlement in a stock-options dispute.
- Husch Blackwell previously represented Nail in relation to MTW’s stock options after MTW merged with TIG, which triggered a 12-month lock-up on TIG stock.
- A settlement extended Nail’s option period, placed shares in escrow, and included a liquidated-damages clause for failure to deliver the transfer notice.
- TIG stock’s value declined during the lock-up, affecting Nail’s potential gains, while Mueller (the former employer) was responsible for finalizing transfers and documents.
- Nail’s two malpractice theories were negligent advice (remedies after the merger) and negligent drafting (settlement terms); Nail ultimately sought damages exceeding $17 million.
- The trial court granted summary judgment for Husch Blackwell on both claims, and Nail appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Causation for negligent-advice claim | Nail: negligence caused damages equal to stock-value loss | Husch Blackwell: market decline not caused by negligence | No proximate causation; market decline not a foreseeable result. |
| Causation for negligent-drafting claim | Nail: negligent drafting would have yielded a liquidated-damages claim | Husch Blackwell: Mueller would have to breach and be willing to pay liquidated damages | No causation in fact; Mueller would have needed to agree and breach, which is speculative. |
| Damages measure in legal malpractice | Damages equal to market-value decline | Damages limited to client’s recoverable amount from underlying claim | Damages for market decline not recoverable; proper measure not satisfied. |
Key Cases Cited
- Movitz v. First National Bank of Chicago, 148 F.3d 760 (7th Cir. 1998) (market decline not within scope of negligence unless linking harm is direct)
- Charter Appraisal v. First, 724 A.2d 497 (Del. 1999) (defendant’s negligent appraisal not liable for market-wide losses)
- Oregon Steel Mills v. Coopers & Lybrand, LLP, 83 P.3d 322 (Or. 2004) (losses due to market conditions not foreseeable from negligence)
- Donahue v. Shugart, Thomson & Kilroy, P.C., 900 S.W.2d 624 (Mo. banc 1995) (elements of legal-malpractice causation; case-within-a-case framework)
- Callahan v. Cardinal Glennon Hosp., 863 S.W.2d 852 (Mo. banc 1993) (causation in fact and proximate causation required)
- ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371 (Mo. banc 1993) (summary-judgment standard; de novo review on legal questions)