Kitchen v. Hart
307 Ga. App. 145
Ga. Ct. App.2010Background
- This is a legal malpractice action by Charlotte and Harry Kitchen against Hart and the law firm Hart regarding the Adams Group transaction and related SunTrust loans.
- The trial court granted Hart summary judgment on damages and later on the stock-purchase/read-or-perish issues; the Kitchens appeal seeking damages and application of liability principles.
- Hart represented multiple parties in the subject transaction without a conflict-of-interest waiver from the Kitchens.
- Three SunTrust loans totaled $3.6 million; Plaintiffs, Adams, and McEachern were jointly and severally liable, with the Kitchens' collateral tied to a CD intended to be swapped for 2.2 acres.
- There was a dispute whether the Kitchens were liable for the full loan amount or only one-third, with evidence suggesting they believed their exposure was one-third at the time of signing.
- Subsequent settlements and actions led the Kitchens to assume full liability to mitigate losses, which the court treated as severing proximate causation from Hart's alleged negligence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proximate cause for damages tied to full liability assumption | Kitchens: Hart's negligence caused the damages from misdrafting; their later full obligation did not sever causation. | Hart: Kitchens' voluntary assumption of full liability severed proximate cause. | Proximate cause severed; Hart not liable for the difference. |
| Lost profits due to rescission of stock purchase agreements | MSA would have profited; damages should include lost profits from rescission. | Insufficient evidence of prior profits and future gains; speculative. | No recoverable lost profits due to lack of definite, certain, and reasonable data. |
| Application of the read-or-perish rule to stock-purchase damages | Read-or-perish should not bar damages for the failed stock purchase. | Read-or-perish applies to the stock purchase damages. | Court need not decide applicability; affirmed on other grounds. |
Key Cases Cited
- Kramer v. Yokely, 291 Ga.App. 375 (2008) (proximate cause burden in legal malpractice; summary judgment standard)
- Duke Galish, LLC v. Arnall Golden Gregory, LLP, 288 Ga.App. 75 (2007) (settlement can sever proximate cause relating to attorney negligence)
- McWhorter, Ltd. v. Irvin, 154 Ga.App. 89 (1980) (read or perish rule application in professional malpractice)
- KAR Printing v. Pierce, 276 Ga.App. 511 (2005) (lost profits require definite, certain and reasonable data)