GMG Insurance Agency v. Margolis Edelstein, 328 A.3d 302

GMG Insurance Agency (GMG) sued its former law firm, Margolis Edelstein (Margolis), for legal malpractice after Margolis represented GMG in underlying litigation (the “Chancery Litigation”) involving non-compete and tortious interference claims brought by Lyons Insurance.
After Margolis was fired, and Wilson (a GMG employee and co-defendant) was represented by new counsel, Wilson recanted prior testimony via affidavit right before trial, providing statements damaging to GMG.
GMG settled with Lyons for $1.2 million; Wilson’s case went to trial separately.
GMG alleged in the malpractice suit that Margolis’s mishandling of discovery and summary judgment, as well as joint representation of adverse parties, allowed the tortious interference claim to survive, ultimately causing GMG’s damages.
The Superior Court entered summary judgment for Margolis, finding Margolis did not breach the standard of care and that Wilson’s affidavit was a superseding cause.
The Delaware Supreme Court reversed, holding material fact disputes preclude summary judgment and further fact-finding is needed on several issues.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Margolis breached the standard of care	Margolis mishandled discovery, failed to brief key issues, and had conflicts of interest	Margolis acted competently; any deficiencies did not proximately cause harm	Material disputes exist; summary judgment inappropriate
Whether GMG would have prevailed but for alleged malpractice	Absent Margolis’s actions, all claims would be defeated on summary judgment	Margolis disputes causation and completeness of evidence	Superior Court failed to adequately address; must consider on remand
Whether Wilson’s affidavit was a superseding cause as a matter of law	Damages would not have been possible but for Margolis’s negligence	Wilson’s unexpected perjury was unforeseeable and broke causation	Superior Court erred; foreseeability of ultimate harm controls
Whether fraud on the court disqualifies GMG from relief	(Issue recognized by concurrence; potential GMG misconduct)	If GMG relied on known perjury, it should be barred from recovery	To be determined by trial court on remand

Delaware Elec. Co-op., Inc. v. Duphily, 703 A.2d 1202 (Del. 1997) (clarifies intervening versus superseding causation and foreseeability)
Sirmans v. Penn, 588 A.2d 1103 (Del. 1991) (discusses foreseeability and intervening causes)
Stucker v. American Stores Corp., 171 A. 230 (Del. 1934) (liability not barred by foreseeable intervening harm)
Flowers v. Ramunno, 27 A.3d 551 (Del. 2011) (sets out legal malpractice elements)
Johnson v. Kosmos Portland Cement Co., 64 F.2d 193 (6th Cir. 1933) (foreseeability of harm, not specific manner)