473 N.W.2d 6 | Wis. Ct. App. | 1991
Lead Opinion
Attorney Robert I. Perina and his insurer, Northwestern National Insurance Company, appeal a judgment entered upon a legal malpractice verdict in favor of Perina's former client, Lyle Schlomer, d.o.b. 11/5/75. Lyle, through the efforts of another attorney, settled his underlying personal injury claim against a farm machinery manufacturer and its insurer. Lyle then pursued this malpractice action on the theory that Perina's three years of unjustified inactivity caused a lesser settlement and also caused Lyle the loss of use of the money from an earlier and larger settlement. A jury agreed, and the trial court, after deducting a hypothetical attorney fee, entered judgment on the verdict.
We conclude that allowance of recovery here opens the door to malpractice claims whereby there is no just or sensible stopping point. We therefore reverse the judgment and need not address the other issues raised by the parties.
Lyle fell into a silo auger on his family farm in 1977 when he was less than two years old and suffered permanent disabling injuries. Lyle's parents sought no legal advice in the belief that Lyle's father, Marvin Schlomer, was primarily responsible for the accident. Perina went to the farm in 1981 and solicited the potential products liability claim from Lyle's parents. He did some preliminary investigation and prepared a "Day in the Life" video demonstrating the impact of Lyle's injuries on his ability to function as a five-year-old. He had photos taken, gathered medical records and consulted with experts. According to Lyle's trial witnesses, however,
Several years later, in 1988, Lyle filed this malpractice action. At trial, Lyle presented expert testimony including that of attorney Robert Weisel. According to Weisel, who reviewed Perina's pretrial deposition and affidavit, Perina essentially did nothing for a three-year period. Weisel testified that Perina gave four "excuses” for his behavior. First, Perina spent time traveling to agricultural shows and related activities to broaden his knowledge of farm machinery and observe developments in engineering safety; second, Perina was waiting for the decision in Korth v. American Family Ins. Co., 115 Wis. 2d 326, 340 N.W.2d 494 (1983), dealing with the statute of limitations upon parents' claims arising out of injuries to their child; third, Perina became disabled by illness; and fourth, Perina delayed further action due to "inflationary factors."
Weisel told the jury that none of these explanations was valid: Perina, an experienced farm accident attorney, had ample time to acquire all the necessary knowledge relevant to the claim before 1982; Korth had no bearing whatever upon Lyle's claim; Korth dealt only with the parents' claims arising out of the child's injuries; Weisel also testified that Perina would have a conflict of interest if he pursued the claims of both Lyle and his parents, and that, in any case, the parents' claim here was dwarfed by the enormous injuries and damages suffered by the child. Perina's illness did not occur until 1984 and was of short duration; and it is unheard of to
Weisel also testified that Perina's unjustified failure to act caused Lyle's personal injury claim to diminish in value. Specifically, the otherwise dramatic impact of the "Day in the Life" video was partially lost because it was an image of the past and no longer reflected Lyle's condition. On the issue of damages, Weisel testified that the claim had a prior value 20% higher than the amount the insurance company paid in 1985, while attorney Bye set the value of the case prior to the three-year delay at $1.5 million. The jury set the prior value of the claim at $1,270,000. It also awarded $406,000 for loss of use of the earlier and larger lost settlement. The trial court deducted an attorney fee from the award and approved the verdict as adjusted.
Generally, liability will follow a proper finding of causal negligence:
However, negligence plus an unbroken sequence of events establishing cause-in-fact does not necessarily lead to a determination that the defendant is liable for the plaintiffs injuries. The determination to not impose liability in instances where a negligent act has been committed and the act is a 'substantial factor' in causing the injury rests upon considerations of public policy.
Coffey v. City of Milwaukee, 74 Wis. 2d 526, 541, 247 N.W.2d 132, 140 (1976) (quoting Hass v. C&NW Ry. Co., 48 Wis. 2d 321, 326, 179 N.W.2d 885, 888 (1970)).
The application of these public policy considerations is solely a function of the court. Id. Thus, our supreme court has held that even where the chain of
Among the various criteria set forth, the absence of a sensible or just stopping point has application here. The traditional elements of a cause of action in negligence are (1) duty and its breach (negligence), (2) a close connection between the conduct and the injury (cause in fact) and (3) actual loss (damages). Prosser & Keeton on the Law of Torts § 30 (5th ed. 1984). In rejecting the cause of action here for loss of an earlier and larger settlement, we will assume without deciding that Perina is wrong when he argues that Lyle has not proven either cause in fact or damages to the degree of proof required.
With regard first to negligence, if unjustified inactivity toward a file for a time less than the limitation period is actionable, an unjustified delay of three months may serve the purpose as well as one of three years. Countless busy law offices may be negligent for failing to hire additional help where caseloads are high and matters are temporarily set aside. While the Supreme Court Rules of Professional Conduct for Attorneys provide ethical duties that a lawyer make reasonable efforts to expe
Lyle's proof of causation, a connection between Per-ina's delay and the injury, is largely an inference drawn from the fact that because the insurance company settled later, with proper effort it would have settled earlier. The effect of that inference on malpractice claims is that the temporary delay may be causal whenever the plaintiffs pain and suffering diminishes, or his injuries heal or a witness' memory fades. Lyle's own expert, Weisel, had some difficulty with the question of whether the evidence established the connection between the negligence and the likelihood of an earlier settlement. When first asked if he had an opinion to a reasonable degree of certainty whether in the handling of this case an attorney exercising ordinary care would have reached an earlier settlement, Weisel stated: "I have a problem with the word 'settlement,' . . . because it takes two people to do it." Weisel went on to indicate that the case should have been "resolved" within a year of Perina's taking the case. It must be noted that the jury was not asked whether Perina should have tried the case to a successful conclusion at an earlier date but merely whether he should have settled the case earlier.
With regard to damages, quite apart from the unavoidable fact that personal injury awards are never capable of determination with mathematical certainty, the
In conclusion, it is the concern for the absence of a sensible or just stopping point as to each of the three elements of Lyle's cause of action, negligence, causation and damages, rather than any one element that invokes considerations of public policy. Because we reverse the award for the loss of a larger settlement, it is not necessary to address the issues of the award of yet an additional sum for the loss of use of the larger settlement, or Lyle's cross-claim concerning the deduction of an attorney fee from the verdict.
By the Court. — Judgment reversed.
Dissenting Opinion
(dissenting). I would conclude that (1) the evidence is sufficient to sustain the verdict finding a loss of a larger settlement; (2) public policy does not bar the claim; and (3) a legal malpractice verdict does not provide an exception to the general rule that pre-verdict interest is not allowed in this state; the award for loss of use of a settlement amounts to prohibited pre-verdict interest.
Perina does not directly challenge the jury's finding that his inaction was a form of negligence; rather, he argues that the evidence failed to prove that his negligence caused damage, in other words, that there was no basis to find that the farm machinery manufacturer, A.O. Smith, and its insurer would have settled the claim for more at an earlier date even if Perina had pursued the issue properly. In a legal malpractice action, the client has the burden of showing that the attorney's negligence caused injury. Lewandowski v. Continental Cas. Ins. Co., 88 Wis. 2d 271, 277, 276 N.W.2d 284, 287 (1979). A jury verdict cannot stand on conjecture, unproved assumptions or mere possibilities. Schwalbach v. Antigo Elec. & Gas, 27 Wis. 2d 651, 655, 135 N.W.2d 263, 265 (1965). Perina points to the absence of any evidence from A.O. Smith's insurer indicating that it would have consented to a larger settlement.
However, the jury's conclusion that the insurance company would have voluntarily agreed to settle for a larger sum, implicit in their finding of causal negligence, is not mere conjecture. Attorney Robert Weisel rendered an expert opinion of the prior value of the case based in part on his experience as a former field claims adjuster, branch office manager and home officer supervisor for an insurance company; his extensive work as an attorney in insurance defense work; and his experience in trial of either side of negligence cases, both as a judge and an attorney. The expert opinion of an attorney is a basis upon which a jury may set the value of a claim. See Milwaukee Auto. Mut. Ins. Co. v. National Farmers Union Prop. & Cas. Co., 23 Wis. 2d 662, 669, 128 N.W.2d 12, 15 (1964).
Perina also complains that the court did not use the usual "trial within a trial" method to establish the probable outcome had the case been properly handled. The trial procedure used in this case may be attributable to the fact that the underlying claim was ultimately settled and not tried. Our supreme court has stated:
Regardless of the approach used to resolve the issue of liability and damages in a legal malpractice case the ultimate goal should be to determine what the outcome should have been if the issue had been properly presented in the first instance . . ..
The general rule should be adapted to the facts of the particular case . . .. Situations can be readily conceived where it would be difficult to determine the value of an original action which could not be tried, but it is the duty of the courts to fashion a remedy as best they can.
Lewandowski, 88 Wis. 2d at 281, 276 N.W.2d at 289 (emphasis in original). This trial court fashioned an appropriate remedy to meet the circumstances presented.
Perina also argues that it was error to allow Weisel to express an opinion based upon his experience as a
Perina next argues that the court erred by excluding evidence that part of the structured settlement of $1,036,236 belonged not to Lyle but to his parents. The structured settlement included the purchase of an annuity that paid the sum of $1,500 per month to Lyle's mother until he reached the age of eighteen to be used
PUBLIC POLICY CONSIDERATIONS
Perina next argues, and the majority agrees, that even if the plaintiff established causal negligence, public policy dictates that the claim be rejected. I disagree. Generally, liability will follow a proper finding of causal negligence:
However, negligence plus an unbroken sequence of events establishing cause-in-fact does not necessarily lead to a determination that the defendant is liable for the plaintiffs injuries. The determination to not impose liability in instances where a negligent act has been committed and the act is a 'substantial fac*901 tor' in causing the injury rests upon considerations of public policy.
Coffey v. City of Milwaukee, 74 Wis. 2d 526, 541, 247 N.W.2d 132, 140 (1976) (citations omitted).
The majority correctly states that our supreme court has held that even where the chain of causation is complete and direct, recovery may be denied if: (1) The injury is too remote from the negligence; (2) the injury is too wholly out of proportion to the tort-feasor's culpability; (3) in retrospect it appears too highly extraordinary that the negligence should have brought about the harm; (4) because allowance of recovery would place too unreasonable a burden on the negligent tortfeasor; (5) because allowance of recovery would be too likely to open the way for fraudulent claims; or (6) allowance of recovery would enter a field that has no sensible or just stopping point. Id. The cases in which a causally negligent tortfeasor is relieved of liability are infrequent and present unusual and extreme considerations. Stewart v. Wulf, 85 Wis. 2d 461, 479, 271 N.W.2d 79, 88 (1978).
I also agree that among the various criteria set forth, only (6), the absence of a sensible or just stopping point, has application here. In respect to that criterion, the parties dispute the applicability of this court's holding in Bolte v. Joy, 150 Wis. 2d 744, 443 N.W.2d 23 (Ct. App. 1989), to the present circumstances. In Bolte, this court approved the trial court's dismissal of a legal malpractice action on policy grounds. In that case, the client, Bolte, had sued his fire insurer, but a jury found that the client had set the fire himself. When a new trial was ordered, the insurer settled the client's claim. The client then sued his attorney, alleging negligence in failing to discover in the process of trial preparation that an eyewitness had given a description of the arsonist that excluded the client from suspicion. The client thus
If a party is permitted to sue his trial attorney for consequential damages even though he has received the remedy originally sought in the action, no legal check would remain on claims against trial lawyers by their clients. In a highly publicized case, one can imagine mental anguish or consequential damage claims based on counsel's failure to ask a question, failure to object to a question, failure to convince a judge that an objection was proper, failure to prevail on a motion in limine as to certain evidence . . . the list could go on and on.
Id. at 250-51, 443 N.W.2d at 25-26. Bolte is easily distinguished on its facts. The client there "received the remedy originally sought," here he did not; the client there sought consequential damages arising out of the manner in which the desired result was reached, the client here seeks only the original result to which he was entitled from the start.
It is possible to hypothesize future malpractice actions arising out of attorneys' delay in settling claims where a much shorter delay is involved than was the case here, thereby subjecting attorneys to malpractice actions where there is no just or sensible stopping point. The negligence and causation found here, however, is not so unusual that we should invoke the drastic remedy of public policy to set aside the jury verdict and bar the claim. I recognize the majority's concern, but whether the delay was unreasonable can be determined through the inquiry of whether such action was causally negligent. We have not hesitated to impose a similar burden
LOSS OF USE OF SETTLEMENT FUNDS
The jury awarded Lyle the sum of $406,000 for the loss of use of the larger settlement figure of $1,270,000 for the three years that Perina negligently failed to pursue the matter. Pre-verdict interest reflects the value of the use of money. Anderson v. LIRC, 111 Wis. 2d 245, 259, 330 N.W.2d 594, 601 (1983). The witness testified to the amount of simple interest a specified sum would have earned for the years 1983, 1984 and 1985 if invested in certificates of deposit or United States treasury notes. Our supreme court has consistently, but certainly not unanimously, adhered to the general rule that pre-ver-dict interest is recoverable only on damages that are either liquidated or liquidable. Johnson v. Pearson Agri-Systems, 119 Wis. 2d 766, 783-87, 350 N.W.2d 127, 136-37 (1984) (Callow, J., Abrahamson, J. and Heffer-nan, C.J., dissenting). Justice Bablitch concurring with the majority stated:
The economics of the issues presented in this case have not been adequately explored by the parties, and may well be more appropriately addressed by the legislature. However, should the legislature fail to address the problems and issues raised in the dissent, I believe this court may have to address these issues again in an appropriate case.1
Lyle cites a decision of this court, Glamann v. St. Paul Fire & Marine Ins. Co., 140 Wis. 2d 640, 412 N.W.2d 522 (Ct. App. 1987), overruled on other grounds, 144 Wis. 2d 865, 424 N.W.2d 924 (1988), for the proposition that in a legal malpractice action the general rule does not apply because the action is against a third party whose negligence delayed recovery of damages from the original tort-feasor. Glamann, however, grounded the award of pre-verdict interest on the unique legislative purposes of the Wisconsin Fair Employment Act (WFEA). Id. at 657-58, 412 N.W.2d at 529. Glamann relied upon Anderson v. LIRC, 111 Wis. 2d 245, 258-59, 330 N.W.2d 594, 601 (1983), wherein it was held that an award of pre-verdict interest in WFEA cases is consistent both with the federal law after which the Wisconsin Act is patterned and with the general rule that lost wages under the Act is a liquidable claim.
The tort damages in this case were neither liquidated nor liquidable damages, and I defer to the supreme court as to whether this case presents a proper vehicle to change the present rule against pre-verdict interest.
Because I would reverse the loss of use award, it is not necessary to address Lyle's cross-appeal challenging the deduction of an attorney fee from that award.
In conclusion, I would affirm the judgment awarding damages for the lost larger settlement. I would reverse that portion of the judgment allowing an award for loss of use of the larger settlement.
The court in Johnson uses the term "pre-verdict" interest rather than the term "pre-judgment" interest because sec. 814.04 (4), Stats., provides for interest from the time of the verdict until judgment is entered and thus is "pre-judgment" interest. Id. at 768 n.1, 350 N.W.2d at 129 n.1.
This court has stated on at least one prior occasion, in dictum, that pre-verdict interest was not appropriate in a legal malpractice action in Burns v. Geres, 140 Wis. 2d 197, 202-04, 409 N.W.2d 428, 431-32 (Ct. App. 1987).
I note that neither party questions the deduction of the attorney fee from the loss of use award rather than from the award for the lost settlement. It would appear that if a fee is to be deducted from the client's damage award, it would come from the amount the case should have settled for and not from the amount awarded for loss of use of that award. In any case, the parties have not raised this issue and it is not preserved for appeal.