Lead Opinion
Affirmed by unpublished opinion.
Judge WYNN wrote the majority opinion, in which Judge KING joined. Judge SHEDD wrote a dissenting opinion.
Unpublished opinions are not binding precedent in this circuit.
When reviewing the denial of a post-verdict motion for judgment as a matter of law, we view the evidence in the light most favorable to the party that prevailed at trial and will affirm the denial of the motion “unless we conclude that the jury lacked ‘a legally sufficient evidentiary basis’” to render the challenged verdict. Sloas v. CSX Transp. Inc.,
I.
A.
In November 2004, Richard J. Chasen (“Richard Chasen”) hired Terrence Batzli (“Batzli”) of the law firm Batzli Wood & Stiles, P.C., (“Batzli Wood”) to represent him in his divorce from Karen Chasen. As part of that representation, Batzli engaged in property settlement negotiations with Karen Chasen’s attorney, Murray Janus (“Janus”).
Richard Chasen had various degrees of ownership in a number of businesses, including Chasen Properties, LLC, (“Cha-sen Properties”), a family business in
On October 27, 2005, Batzli sent Janus a letter with a settlement proposal. After proposing Karen Chasen’s retention of certain assets such as the marital home and her current automobile, the document proposed the transfer to Richard Chasen of Karen Chasen’s interests in “JACKAN, Chasen Properties, the Chasen Family Limited Partnership, and her interest in all other marital assets.” J.A. 487.
In response, Janus sent Batzli a letter on December 29, 2005, stating points of agreement as well as certain counterpropo-sals. Importantly, the letter proposed that instead of transferring her interests in the Chasen Family Limited Partnership and JACKAN to Richard Chasen, Karen Chasen would transfer those interests to the couple’s children in equal percentages. Karen Chasen also rejected the proposed payment structure and suggested that Richard Chasen instead pay her a lump sum of $500,000. The letter did not mention the transfer of Karen Chasen’s interest in Chasen Properties, and in its conclusion Janus wrote, “I believe this would resolve all issues between the parties.” J.A. 491.
Batzli responded via letter on January 4, 2006, suggesting that Richard Chasen would buy Karen Chasen’s interests in the Chasen Family Limited Partnership and JACKAN, but making no mention of Cha-sen Properties. Ultimately, Richard Cha-sen decided not to buy those interests and, on January 9, 2006, Batzli sent a letter to Janus stating, “[Richard] will agree, with regard to Karen’s interest in the Chasen Family Limited Partnership and JACK-AN, that Karen’s interest will simply be transferred to the children.” J.A. 109. Batzli did not mention Chasen Properties in this correspondence either.
Notwithstanding, Batzli believed he had negotiated a deal under which Karen Cha-sen would transfer her interest in Chasen Properties to Richard Chasen. However, Batzli drafted an Agreement and Stipulation (“the Agreement”) which called for the transfer of Karen Chasen’s interests in JACKAN and the Chasen Family Limited Partnership to the children. Despite Batz-li’s intention to draft the Agreement so that Karen Chasen’s interest in Chasen Properties would be transferred to Richard Chasen, he failed to do so. As drafted, the Agreement indicated that Richard Chasen would retain “[h]is interest in Cha-sen Properties, LLC” instead of “their interest” in the business. J.A. 119. Batzli and Richard Chasen both reviewed the document, and neither noticed the omission before Richard Chasen and Karen Chasen signed the Agreement on January
Thereafter, Batzli sent Janus a follow-up document for Karen Chasen to sign to affect the transfer of her 20% ownership in Chasen Properties to Richard Chasen. Recognizing that the Agreement did not address Karen Chasen’s interest in Chasen Properties, Janus responded that his client had not agreed to such a transfer. Nonetheless, Janus stated that Karen Chasen would be willing to transfer her interest in Chasen Properties to the couple’s children as she had done, pursuant to the Agreement, with respect to her interests in JACKAN and the Chasen Family Limited Partnership. Thereafter, Batzli called Janus, who reiterated that Karen Chasen never intended to transfer her interest in Chasen Properties to Richard Chasen. Janus further asserted that Karen Cha-sen’s interest was separate property, as it had been gifted to her individually by Richard Chasen’s parents.
Having realized his drafting omission, Batzli discussed various options with Richard Chasen. Richard Chasen indicated that he was unwilling to accept Karen Chasen’s offer to transfer her interest in Chasen Properties to the children. Batzli and Richard Chasen also discussed the option of moving to set aside the Agreement on the theory that there was not a meeting of the minds. Richard Chasen declined to pursue that option because he considered the Agreement favorable to him even without the transfer of Karen Chasen’s 20% interest in Chasen Properties.
On August 24, 2006, at his client’s direction, Batzli filed a motion
Thereafter, the Court of Appeals of Virginia affirmed the Circuit Court’s denial of Richard Chasen’s scrivener’s error motion, stating “[t]here is no evidence in this record to suggest a meeting of the minds (i.e., a contract-offer and acceptance) over wife’s relinquishment of her interest in Chasen Properties. As the trial court properly noted, wife’s silence on this issue cannot be found to be an acceptance of husband’s offer.” Chasen v. Chasen, No. 0004-07-2,
B.
Months after the decision by the Court of Appeals of Virginia, Batzli Wood renewed its Professional Liability Policy, which was issued by Minnesota Mutual.
On July 9, 2009, Minnesota Mutual filed an action in federal court in the Eastern District of Virginia seeking a declaratory judgment that it was not required to defend the Chasen malpractice action. Minnesota Mutual asserted that, at the latest, when Batzli filed the scrivener’s error motion he was aware of facts that he knew, or should have known, would support a demand for damages. On August 5, 2009, Batzli filed an answer and counterclaim. Under the counterclaim Batzli sought a declaratory judgment that Minnesota Mutual was obligated to defend against the Chasen malpractice suit and indemnify the insured in the event of an unfavorable judgment in the malpractice case. Moreover, Batzli asserted a legal claim for breach of contract based on Minnesota Mutual’s denial of coverage.
The parties filed cross-motions for summary judgment. The district court denied the cross-motions, reasoning that there was “a genuine factual dispute between the parties as to whether it was reasonable for Batzli to anticipate a claim by Mr. Cha-sen.” J.A. 170. The district court granted Batzli’s request for a jury trial on the breach of contract counterclaim and stated that the declaratory judgment claims would be decided after that trial.
Trial began on March 1, 2010, and a central issue was whether Batzli’s notice to Minnesota Mutual was too late to comply with the policy’s notice provision. Batzli argued that he complied with the notice provision by notifying Minnesota Mutual when he first received the complaint and again after receipt of formal service, so Minnesota Mutual’s denial of coverage constituted a breach of contract. Minnesota Mutual argued that Batzli had sufficient knowledge to trigger the contract’s notification requirement well before receipt of the complaint and Batzli’s failure to notify Minnesota Mutual under those circumstances constituted a failure to satisfy a condition placed on coverage. During the trial, Minnesota Mutual made two motions for judgment as a matter of law (one after Batzli rested his case and another at the close of all evidence); the district court denied both. Ultimately, the jury found for Batzli and awarded damages of $8,400.
Thereafter, Minnesota Mutual filed a renewed motion for judgment as a matter of law under Rule 50(b) of the Federal Rules of Civil Procedure. First, Minnesota Mutual contended that Batzli failed to present sufficient evidence to establish that the attorney’s fees sought were reasonable and necessary, so Batzli could not state a pri-ma facie case for breach of contract based on actual damages. Second, Minnesota Mutual argued that Batzli’s failure to
The district court agreed with Minnesota Mutual’s first argument, reasoning that “Batzli’s failure to provide evidence of the reasonableness of the fees, such as the nature of the services performed, the length of such services, and the applicable rates for such representation, left the jury with insufficient evidence to justify the damages awarded.” Minn. Lawyers Mut. Ins. Co. v. Batzli, No. 3:09CV432-HEH,
Next, the district court considered Minnesota Mutual’s argument that Batzli’s notice of a claim by Richard Chasen was untimely as a matter of law. It was uncontested that Karen Chasen would not have agreed to transfer her interest in Chasen Properties to Richard Chasen. The court opined that this fact, combined with Richard Chasen’s apparent overall satisfaction with the Agreement, was enough to support the jury’s conclusion that a reasonable person in Batzli’s position would not have thought that his drafting omission would support a demand for damages. Additionally, the court noted that Richard Chasen never indicated an intention to sue, promptly paid attorney’s fees, and maintained a positive attorney-client relationship with Batzli during the divorce proceedings. Ultimately, the court determined that there was sufficient evidence to permit a reasonable jury to find in Batzli’s favor, so it denied Minnesota Mutual’s Rule 50(b) motion. Minnesota Mutual appealed.
On appeal, Minnesota Mutual argues that the district court considered improper evidence when concluding that a jury could find in favor of Batzli on the notice issue. Minnesota Mutual also contends that Batz-li failed to establish the element of damages necessary for a prima facie case of breach of contract and that the court erred when determining that nominal damages satisfied that element. Batzli filed a cross-appeal, arguing that the district court erred in reducing the damage award from $8,400 to a nominal award of $1 because there was sufficient evidence to support the jury’s award of actual damages.
II.
We review the denial of a renewed motion for judgment as a matter of law de novo. Sloas,
Mindful of this deferential standard of review, we must determine whether there was sufficient evidence presented at trial to allow a reasonable jury to conclude that Minnesota Mutual breached its contract with Batzli Wood and Batzli by denying coverage. To establish a claim for breach of contract under Virginia law,
Here, the “obligation” in question was Minnesota Mutual’s duty to defend against the malpractice suit brought by Richard Chasen. However, because the notice requirement in the policy operated as a condition to coverage, Minnesota Mutual argues that it owed no legally enforceable duty to defend.
A. Proof of Minnesota Mutual’s Breach
To address Minnesota Mutual’s contention, we must determine whether a reasonable jury could have concluded that the insured satisfied the policy’s notice requirement. Under the insurance contract, Batzli was required to “give immediate written notice” to Minnesota Mutual whenever “an act, error or omission by any INSURED occurred] which ha[d] not resulted in a demand for DAMAGES but which an INSURED [knew] or reasonably should [have known], would support such a demand.” J.A. 563. Virginia courts have consistently held that, to be entitled to coverage, an insured must “substantially comply” with such notice provisions. See, e.g., Craig v. Dye,
Minnesota Mutual attacks the district court’s conclusion that there was sufficient evidence to support the jury’s determination, arguing that the court erred as a matter of law by improperly basing its decision on evidence that had no bearing on the issue. Specifically, Minnesota Mutual asserts that the district court erred by basing its decision on 1) Richard Chasen’s failure to threaten suit and/or Batzli’s subjective belief that Richard Chasen would not sue him; 2) Batzli’s belief that he enjoyed a good-attorney client relationship with Richard Chasen; and 3) whether a claim brought by Richard Chasen would be meritorious.
To the extent that Minnesota Mutual argues that the district court erred by relying on Richard Chasen’s subjective impressions of the circumstances, Minnesota Mutual misreads the court’s opinion. To begin, the district court was well aware that the test employed is an objective one, and quoted the following from Dan River, Inc. v. Commercial Union Ins. Co.,
Failure to give timely notice will not be excused when the insured only subjectively concludes that coverage under the policy will not be implicated. Such a policy provision requires the insurer to be notified whenever, from an objective standpoint, it should reasonably appear to the insured that the policy may be involved.
Id. at 489,
Minnesota Mutual also contends that the district court erred by considering the likelihood of Richard Chasen’s success on the merits in the event that a claim were brought. Once again, Minnesota Mutual mischaracterizes the district court’s analysis. The court did not opine that Batzli did not need to notify Minnesota Mutual because any foreseeable potential claim would lack merit; instead, it determined that there was no reasonably foreseeable
Like the district court, we are unconcerned with the ultimate merits of a potential claim. However, we also conclude that a reasonable belief that an insured’s error caused no harm to the insured’s client is relevant to whether an objectively reasonable person in the insured’s position would expect his error to give rise to a claim for damages. See Commercial Underwriters Ins. Co. v. Hunt & Calderone, P.C.,
could potentially result in a loss of a $125,000 tax credit for the client, but she did not think that a claim would result because she was told by an administrator of the government tax credit program that sufficient funds would likely be available after all the timely applications had been processed.
Id. at 38,
This case is analogous. The evidence demonstrates that shortly after realizing his drafting error, Batzli learned of facts supporting a reasonable belief that no harm had been done to his client by the error. To begin, a reasonable jury could conclude that no damage to Richard Cha-sen resulted from his payment of fees for Batzli’s services. See Rutter v. Jones, Blechman, Woltz & Kelly, P.C.,
More importantly, Janus told Batzli that Karen Chasen’s interest in Chasen Properties was separate property that she was unwilling to transfer to Richard Chasen. Indeed, Karen Chasen testified that she would not have signed an agreement to
Minnesota Mutual argues that evidence of other harm would have led a reasonable lawyer in Batzli’s position to notify his insurer. First, Minnesota Mutual contends that Batzli should have known that his failure to recognize the drafting error kept him from arguing during the spousal support hearing that Karen Chasen had additional income-producing separate property. However, a reasonable jury could instead have focused on Karen Cha-sen’s testimony that she never received any money or income from her 20% interest in Chasen Properties. Minnesota Mutual also argues that Batzli should have known that his conflict of interest in pursuing the scrivener’s error motion instead of seeking to have the Agreement set aside constituted actionable malpractice. But a reasonable jury could have relied on evidence showing that Richard Chasen, not Batzli, made the decision to pursue the scrivener’s error motion.
In addition to evidence supporting a reasonable belief that there was no loss to the client, there was evidence, as in Hunt & Calderone, that the client was comfortable with the result, notwithstanding the professional error. The jury heard evidence that Richard Chasen rejected the idea of seeking to set aside the Agreement and renegotiate. Indeed, under the Agreement as written, Richard Chasen received the full interest in an arguably joint asset that had appreciated by $2 million during the marriage. The jury heard testimony that it was more important to Richard Chasen to keep that aspect of the deal intact than to pursue Karen Chasen’s interest in Chasen Properties. Further, the jury heard evidence that, notwithstanding the error, Batzli secured for his client $4 million of a $6 million estate.
Under these circumstances, viewing the evidence in the light most favorable to Batzli, as we must, we conclude that the jury had a sufficient evidentiary basis to conclude that Batzli reasonably thought his drafting error would not result in a claim until he learned from Richard Cha-sen that a claim would in fact be filed, at which point he promptly notified Minnesota Mutual. Likewise there was sufficient evidence to support the jury’s conclusion
B. Proof of Damage to Batzli
Next, Minnesota Mutual maintains that there was insufficient evidence presented at trial to permit a reasonable jury to conclude that the damage element of a breach of contract claim had been satisfied. Minnesota Mutual agrees with the trial court’s determination that actual damages were not proven to a reasonable degree of certainty. However, Minnesota Mutual challenges the district court’s determination that an award of “nominal damages” supported by the evidence at trial was sufficient to make out a prima facie case for breach of contract. We find no merit to Minnesota Mutual’s argument.
It stands to reason that Minnesota Mutual’s refusal to defend the malpractice suit forced Batzli to retain legal counsel. Moreover, there was evidence that the cost of those legal services was billed to Batzli. In other words, there was sufficient evidence to support a determination that there was “injury or damage to the plaintiff caused by the breach of obligation.” Filak,
The district court relied on the inferred nominal damages that result from the violation of the legal rights created by the contract. Minnesota Mutual correctly argues that such damages are insufficient to satisfy the third prong of a prima facie case for breach of contract. However, neither of the cases on which Minnesota Mutual relies stands for the proposition that nominal damages can never satisfy the third element in a Virginia breach of contract claim.
In Orebaugh v. Antonious,
In Bailey v. Potter, No. 1:05c936(JCC),
This case is distinguishable from Ore-baugh and Bailey because here, “actual loss or injury is shown, but the plaintiff fails to prove the amount of damages.” See 22 Am.Jur.2d Damages § 8 (2003). Batzli demonstrated that he had to pay attorney’s fees as a result of Minnesota Mutual’s breach, but failed to prove that the amount claimed was reasonable.
Indeed, in Crist v. Metropolitan Mortg. Fund, Inc.,
In sum, we conclude that there was sufficient evidence presented to the jury to permit its conclusion that Minnesota Mutual owed a duty to its insured and that the breach of that duty caused the insured to suffer damage. Consequently, the jury had a legally sufficient evidentiary basis to find for the insured on the breach of contract counterclaim. See Filak,
III. Batzli’s Cross Appeal
In his cross appeal, Batzli contends that the district court erred when reducing the damage award from $8400 to $1 and argues that the evidence supported the jury’s award of compensatory damages. Batzli concedes that ruling in his favor would require our determination that he presented sufficient evidence to permit a reasonable jury to determine that the attorney’s fees sought were reasonable and necessary. See Hiss v. Friedberg,
Minnesota Mutual does not contest the fact that its refusal to provide coverage under the policy necessitated Batzli’s independent retention of legal counsel to defend the Chasen complaint — i.e. that Batzli incurred damages. To support the contention that the damage award was reasonable, Batzli points to the malpractice complaint which he argues demonstrates the complexity and high stakes of the case, the fact that the complaint had been “pending” for a year,
In Chawla v. BurgerBusters, Inc.,
In determining whether a party [seeking recovery of attorney’s fees] has established a prima facie case of reasonableness, a fact finder may consider, inter alia, the time and effort expended by the attorney, the nature of the services rendered, the complexity of the services, the value of the services to the client, the results obtained, whether the fees incurred were consistent with those generally charged for similar services, and whether the services were necessary and appropriate.
Id. at 623,
Here, there was no testimony regarding how much time Batzli’s lawyers spent on the defense of the Chasen complaint, no indication of what services they performed in their representation of Batzli, and no testimony, expert or otherwise, regarding the rates charged by lawyers defending malpractice suits in Virginia. In light of Chawla and Mullins, we conclude that Batzli’s argument — that $8,400 was per se reasonable in light of the amount sought in the “complex” malpractice action — is mer-itless. See Crist,
This allocation of the burden of proof is also dispositive of Batzli’s second argument. Batzli maintains that because Minnesota Mutual did not object to the evidence entered in support of the reasonableness determination, he is foreclosed from arguing that the amount awarded was unreasonable. However, applying such a rule would relieve the plaintiff of the burden of making a prima facie case simply because his opponent was silent. We decline Batzli’s invitation to so dramatically shift the burden of proof.
Ultimately, to decide the cross appeal in Batzli’s favor would require the absurd conclusion that a party establishes the “reasonableness” of attorney’s fees if (when viewed in the light most favorable to that party), the evidence shows that the fees were assessed in a difficult case. However, following Chawla and Mullins, we conclude that more is required to support a determination that the attorney’s fees assessed were reasonable.
IV.
In sum, while reasonable minds may disagree regarding whether Batzli should have notified Minnesota Mutual earlier than he did, even when faced with reasonable disagreement about the propriety of the verdict, we must affirm the denial of a renewed motion for judgment as a matter of law. ABT Bldg. Prods. Corp, 472 F.3d
AFFIRMED.
Notes
. Citations herein to "J.A. -" refer to the contents of the Joint Appendix filed by the parties in this appeal.
. Richard Chasen would later testify that when he signed the document, he believed that Karen Chasen's interest in Chasen Properties was supposed to transfer to him under the Agreement. He based this belief on the "initial instructions” given to Batzli upon his retention as counsel "as well as the previous negotiations that had gone back and forth between Mr. Batzli and Mr. Janus.” J.A. 358.
. Under the Agreement, Richard Chasen received all of his interest in N. Chasen & Son, Inc., the value of which had appreciated by some $2 million during the marriage. Janus had expressed to Batzli Karen Chasen’s position that the business was therefore “hybrid property” and she was entitled to a portion of the appreciation. See Va.Code Ann. § 20-107.3(A)(3)(a) (2008) ("In the case of the increase in value of separate property during the marriage, such increase in value shall be marital property ... to the extent that marital property or the personal efforts of either party have contributed to such increases, provided that any such personal efforts must be significant and result in substantial appreciation of the separate property.”). Richard Chasen told Batzli he did not want to risk the possibility that a divorce court, identifying this increase as marital property, might give a portion to Karen Chasen. By keeping the Agreement in effect, Richard Chasen hoped to avoid this possibility. See id. § 20-107.3(1) ("Nothing in this section shall be construed to prevent the affirmation, ratification and incorporation in a decree of an agreement between the parties pursuant to §§ 20-109 and 20-109.1.”).
. Batzli initially did not charge Richard Cha-sen for the work done in preparing, drafting, or arguing the motion; Batzli claimed that he gave Richard Chasen “courtesy discounts” for the purpose of client relations. J.A. 289. Later, Batzli sent a bill for a month’s worth of work, asking Chasen if he would pay half the amount on the theory that the error was a "joint mistake,” but Batzli ultimately accepted no money for that work either. J.A. 292.
. This statute permits a court to correct "[cjlerical mistakes in all judgments or other parts of the record and errors therein arising
. There were two arguments on appeal. One concerned the denial of the scrivener’s error motion. The other asserted that the trial court erred in awarding Karen Chasen $10,000 per month in spousal support; the latter issue has no bearing on this appeal. Chasen,
. Minnesota Mutual had insured Batzli Wood and Batzli against malpractice since 2005.
. While Batzli Wood was the "named insured,” the policy made clear that Batzli was himself, as an employee acting on behalf of Batzli Wood, an "insured” as well.
. Here, all relevant conduct related to Batzli’s representation of Richard Chasen took place prior October 1, 2008 but after the prior acts retroactive date which, in the case of Batzli, was the date on which he "first entered the private practice of law.” J.A. 559.
. Because both Batzli Wood and Batzli fell under the policy’s definition of an "insured,” the notice requirement could have been triggered by knowledge possessed by either entity. However, there is no evidence that Batzli Wood had knowledge of any facts, other than those known to Batzli, which would be relevant to a demand for damages based on Batz-li’s representation of Richard Chasen.
. Minnesota Mutual filed its notice of appeal of the denial of its 50(b) motion on June 18, 2010. On July 12, 2010, the district court entered a Final Order declaring that Minnesota Mutual has "an obligation to provide a defense and to indemnify against all claims asserted” in the Chasen malpractice suit. J.A. 767. Minnesota Mutual filed a notice of appeal of the Final Order on July 21, 2010. Both of Minnesota Mutual's appeals were consolidated into the instant case.
. Because this case commenced in the Eastern District of Virginia, was based on diversity jurisdiction, and concerned a dispute over the coverage provided by an insurance policy issued in Virginia, we apply Virginia law. See Klaxon Co. v. Stentor Elec. Mfg. Co.,
. As stated in Atlas Ins. Co. v. Chapman,
[t]he rationale behind the rule requiring compliance with the notice provision is compelling. Absent the requirement of prompt notice by the insured of all accidents and occurrences which could implicate the policy, the insurer is at the mercy of its insured's willingness to reveal such potential claims. As the Virginia Supreme Court has made
Id., at 745 (citing North River Ins. Co. v. Gourdine,
. Notably, there was no evidence that Richard Chasen’s payment of Batzli’s legal fees was contingent on Batzli negotiating the transfer of Karen Chasen’s interest in Chasen Properties. In any event, a contingent fee arrangement would arguably have been unenforceable on public policy grounds absent extenuating circumstances. See Smith v. Ramey, No. 8511,
. The following excerpt from Karen Cha-sen's deposition testimony, which was presented to the jury, clarifies that Karen Chasen would not have agreed to transfer her interest in Chasen Properties to Richard Chasen:
Q:_Prior to signing the agreement-or at any time-did you ever agree to give your interest in Chasen Properties, LLC to [Richard] Chasen?
A: No.
Q: If you had read this agreement and it had stated that you had transferred your interest in Chasen Properties, LLC to [Richard Chasen], would you have signed that agreement?
A: I would not have signed it.
J.A. 391.
. Additionally, we find no support for the contention that Batzli's error harmed Richard Chasen by causing him to pay for more than he received under the Agreement. Stated differently, there is no support for the argument that Richard Chasen might not have been willing to pay as much if he had known that he was not getting Karen Chasen's interest in Chasen Properties as part of the deal. However, the $500,000 that Richard Chasen paid was first proposed by Karen Chasen, who obviously did not consider it consideration for her transfer of her interest in Chasen Properties. Also, the jury heard evidence that "there was no document or spreadsheet that showed how the 500k [figure] was arrived at.” J.A. 307. Moreover, Batzli testified that "the $500,000 was paid to get her to agree to what she ultimately agreed to.” J.A. 308.
. Although we distinguish Bailey, we also note that, as an unpublished opinion, it bears no precedential weight that would necessarily alter our analysis. United States v. Ruhe,
. See infra, Section III.
. We reject Minnesota Mutual’s contention that Batzli’s failure to specifically plead nominal damages barred the award thereof, particularly when the counterclaim asked the court tó award, in addition to the costs and fees incurred in prosecuting the counterclaim and defending the Chasen malpractice suit, "such other and further relief as the Court deems just.” [J.A. 76] See Yniguez v. State,
. Notwithstanding Batzli's argument to the contrary, the amount of time that had elapsed since the complaint was filed is irrelevant to our inquiry given the absence of any evidence regarding what, if any, actions were taken by Batzli’s lawyers to defend against the Chasen complaint during that time.
. Expert testimony is not necessarily required if lay testimony can establish the reasonableness of the fee award. For instance, when a party seeking attorney’s fees submitted “almost 300 pages of contemporaneous time records detailing the activities for which fees were sought" and "affidavits of its attorneys upon the reasonableness of the hourly rates charged and the accuracy of the time billed,” the court ruled that expert testimony was not necessary. Tazewell Oil Co., Inc. v. United Va. Bank,
. As discussed above, the district court did not rely on the actual compensatory damages award of $8,400 to confirm Batzli's satisfaction of the damage element of a prima face breach of contract claim. Instead, the court imposed nominal damages. Indeed, if precisely quantifiable actual damages were the only basis for finding a breach of contract in this case, the court would have been compelled to grant Minnesota Mutual’s motion. See Bennett v. Fairfax Cnty. Va.,
Dissenting Opinion
Terrence Batzli’s Professional Liability Insurance Policy with Minnesota Lawyers Mutual does not cover an error made prior to the liability policy’s date, “which an insured knows or reasonably should know, would support” a demand for damages. (J.A. 25.) The majority holds that there was sufficient evidence for the jury to find that Batzli lacked, or that any reasonable person in his position would have lacked, such knowledge under the facts of this case. In my view, Batzli reasonably should have known, as a matter of law, that he faced a potential demand for damages from Mr. Chasen. Therefore, with due respect, I dissent.
As the majority correctly notes, when determining whether sufficient evidence exists to support a jury verdict, “we may not substitute our judgment for that of the jury.” Price v. City of Charlotte, N.C.,
The evidence presented in this case cannot support the jury verdict. The record clearly establishes that Batzli knew he had committed a significant error and that his error could support a claim for damages. Batzli believed that there was an agreement between Mr. and Ms. Chasen, pursuant to which Ms. Chasen would give her 20% interest in Chasen Properties, LLC to Mr. Chasen. Batzli drafted a property settlement agreement (“the Agreement”) between Mr. and Ms. Chasen with the intent of ensuring Mr. Chasen would receive Ms. Chasen’s 20% interest. However, Batzli admittedly made an error in drafting the Agreement and testified to this fact before the jury, stating:
And that’s where I made the error. I said “his interest.” It should have said “their interest” in Chasen Properties, LLC.
(J.A. 258.) Batzli also admitted his error to Mr. Chasen in a letter and, consequently, offered to bear the costs of the action in state court to correct the error. Moreover, upon realizing his error, Batzli said that he felt sick about it and had lost sleep over it.
Finally, Batzli knew this error resulted in significant financial and personal costs for Mr. Chasen. Batzli knew Mr. Chasen believed the 20% interest was worth $440,000. In addition to the monetary value, Batzli also knew how important it was to Mr. Chasen’s business that he receive Ms. Chasen’s 20% interest. Without that 20% interest, Mr. Chasen stood to lose control of Chasen Properties, LLC. Mr. Chasen explicitly expressed this concern to Batzli in a letter, writing:
[W]ith only a 20% ownership on my part, it would be easy for her and the kids to remove me as director/manager of chasen properties [sic]. If I own at least 34% ... it is more difficult for them to remove me form [sic] that roll [sic] and Karen [Ms. Chasen] can have no part of the process. I just can not [sic] have Karen owning part of any*56 entity that I am part of ... much less part of my business location!
(J.A. 461.) Furthermore, in a letter to Batzli’s law partner, who worked on the case with Batzli, Mr. Chasen wrote that he was “still in shock that the appeal [to correct the error] failed on all fronts,” (J.A. 551) and Mr. Chasen did not respond to Batzli’s request for payment of the attorneys’ fees incurred in the state court action. Against this factual backdrop, Batzli should have known that his error would support a demand for damages.
Despite these facts, the majority concludes there is sufficient support for the jury verdict based largely on evidence that addresses the merits of Mr. Chasen’s malpractice claim. Such evidence is irrelevant as to whether a reasonable lawyer could expect a demand for damages. The liability policy requires only that the insured report an act, error, or omission that would support a demand for damages, not that such a demand would ultimately be successful.
The majority believes that testimony by Ms. Chasen that she would never have relinquished her 20% interest supports the jury verdict. The majority reasons that Mr. Chasen was not damaged because in a divorce action, Mr. Chasen was not legally entitled to have this non-marital asset included in a settlement. However, Ms. Chasen’s testimony actually underscores the materiality of Batzli’s admitted error. Because the divorce court did not have jurisdiction over and could not award Ms. Chasen’s 20% interest through a court order, the only way Mr. Chasen could have received her 20% interest was through the Agreement, which Batzli failed to properly draft.
Additionally, as support for the jury verdict, the majority relies upon the fact that Mr. Chasen did not want to set aside the Agreement. This fact, as well, is irrelevant as to whether Batzli should have known if Mr. Chasen would have a claim for damages. Mr. Chasen negotiated the Agreement to receive a number of assets, including Ms. Chasen’s 20% interest in Chasen Properties, LLC. The fact that Mr. Chasen wanted to keep what he actually received in the otherwise favorable Agreement is irrelevant in determining whether he was entitled to what he thought he had also received — Ms. Chasen’s 20% interest. Therefore, Batzli should have known that his error would support a claim for damages despite the fact that Mr. Chasen was, overall, satisfied with the Property Settlement. See 17A Am.Jur.2d Contracts § 708 (“As a general rule, upon the breach of a contract, the injured party may, by election, rescind and recover the value of any performance, or stand by the contract and recover damages for the breach.”); Richmond v. Hall,
In sum, the evidence in this case clearly establishes that Batzli should have known that he made an error that would support a demand for damages and failed to report this error to the insurance company. Pursuant to the plain language of the liability policy, this claim was not covered and, therefore, the insurance company did not have a duty to defend or indemnify Batzli against Mr. Chasen’s malpractice claim.
The majority asserts that Batzli could not reasonably expect a claim for damages because Mr. Chasen had suffered no damages. To the contrary, Mr. Chasen was damaged. Mr. Chasen agreed to the settlement with die understanding that he would be receiving Ms. Chasen’s 20% interest in Chasen Properties, LLC. Therefore, Mr. Chasen’s damages are— at a minimum — the difference between what Mr. Chasen paid for the Agreement and what he would have paid for a settlement that did not contain Ms. Chasen’s 20% interest.