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2006-1811. Paterek v. Petersen & Ibold, Slip Opinion No. 2008-Ohio-2790.
Geauga App. No. 2005-G-2624, 2006-Ohio-4179. Judgment reversed and cause remanded.
Moyer, C.J., and Pfeifer, Lundberg Stratton, Brogan, Lanzinger, and JJ., concur.
O'Connor and Cupp, JJ., concur in part and dissent in part.
James A. Brogan, J., of the Second Appellate District, sitting for O'Donnell, J.
Opinion: http://www.supremecourtofohio.gov/rod/docs/pdf/0/2008/2008-Ohio-2790.pdf
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(June 18, 2008) The Supreme Court of Ohio held today that to establish a client’s actual damages resulting from attorney malpractice, the client is required not only to demonstrate that he could have won a lawsuit against a third party if not for his attorney’s negligence, but also must show the amount of damages that would have been collectible from that third party.
In a 5-2 decision authored by Justice Paul E. Pfeifer, the Court also held that, in calculating the collectible amount of a damage award arising from an auto accident, a trial court should include any amounts the plaintiff could have collected from his own insurer under the uninsured/underinsured motorist (UM/UIM) coverage in the plaintiff’s auto insurance policy.
In May 1997, Edward Paterek was injured in a traffic accident caused by Kristopher Richardson. Paterek and his wife, Irene, retained the law firm of Peterson and Ibold to represent them in a personal injury lawsuit against Richardson. The firm assigned attorney Jonathon Evans to their case. In May 1998, Evans filed suit against Richardson but subsequently dismissed the complaint without prejudice in October 2000. Evans subsequently failed to refile the Patereks’ complaint within the one-year statutory time limit for doing so, with the result that the Patereks were permanently barred from pursuing any future legal action against Richardson arising from the 1997 accident.
Mr. Paterek died in February 2003. Mrs. Paterek initiated a legal malpractice action against Evans and Peterson & Ibold on behalf of herself and her husband’s estate, seeking to recover for her husband’s injuries, pain and suffering and her own loss of consortium. A jury awarded the Patereks malpractice damages against the law firm totaling $382,000. The firm filed a motion asking the trial judge to reduce the jury’s damage award. The trial court agreed that the maximum the Patereks were entitled to recover from the law firm for malpractice was the maximum amount they could have collected from Richardson if they had won their lawsuit. Finding that Richardson, who was 17 at the time of the accident, had no property or earning capacity from which the Patereks could make any additional recovery, the judge reduced the jury award to the $100,000 limit of liability coverage in Richardson’s auto insurance policy.
The Patereks appealed that ruling. On review, the 11th District Court of Appeals overruled the trial court’s order and reinstated the jury’s original $382,000 damage award. The court of appeals held that Ohio case law requires a malpractice plaintiff to demonstrate that he could have won a lawsuit against the tortfeasor (party who caused his injuries) if not for his lawyer’s negligence, but does not require the client to establish an amount of damages would have been actually collectible from the torfeasor. Peterson & Ibold sought and were granted Supreme Court review of the 11th District’s decision.
Writing for the Court in today’s decision, Justice Pfeifer noted that the case presents an issue of first impression in Ohio. He observed that courts in other states have issued conflicting rulings on whether the plaintiff or the defendant in a legal malpractice plaintiff bears the burden of proving the amount of damages that would have been recoverable from a tortfeasor. While a minority of courts have ruled that a plaintiff is not required to prove collectibility, Justice Pfeifer agreed with the majority of jurisdictions which have held that “collectibility is logically and inextricably linked to the legal-malpractice plaintiff’s damages, for which the plaintiff bears the burden of proof.”
“The jury in this case arrived at a figure for damages that was not necessarily reflective of the value of the Patereks’ claim against their lawyers; the jury’s damage award reflects what the Patereks’ suffered through the negligence of Richardson,” wrote Justice Pfeifer. “But the appellant attorneys in this case are not responsible for Richardson’s negligent conduct; they are responsible for their own. This case is not about what Irene Paterek suffered on account of Richardson’s bad driving, but what she suffered on account of the appellants’ bad lawyering. The proper inquiry, then, is this: Had the appellants not been negligent, how much could Irene have received from a settlement or a judgment?”
Noting that Mrs. Paterek stipulated that she could not have recovered any damages directly from Richardson, and presented no evidence regarding possible recovery from his future earnings, Justice Pfeifer concluded that the case record “does not show that she could have collected more than $100,000 from sources related to Richardson.”
He went on, however, to note that in reducing the jury’s award to $100,000, the trial court failed to take into account the value of the Patereks’ own UM/UIM insurance coverage, which the parties had stipulated was $250,000 less a set-off for any recovery they made from Richardson’s liability coverage. Citing a 1996 decision of the U.S. Sixth Circuit Court of Appeals, Sparks v. Craft, Justice Pfeifer wrote: “In determining the collectibility of an unrealized judgment, the factfinder should consider the amount of the plaintiff’s underinsured-motorist policy. ... The amount payable under the policy springs from the judgment against the underlying tortfeasor and that tortfeasor’s collectibility. As part of the pot available to a successful plaintiff in a case properly handled by an attorney, underinsured-motorist coverage is evidence of collectibility of the underlying claim in an attorney-malpractice case.”
“Here, the appellants stipulated to the existence of the underinsured-motorist coverage and the amount that would be available to Irene Paterek from that policy. The trial court erred in failing to include the additional $150,000 available to Irene under the UIM policy in its calculation of damages. It should have entered judgment for her in the amount of $250,000. Accordingly, we reverse the judgment of the court of appeals, remand the cause to the trial court, and instruct the trial court to enter judgment in favor of the appellees in the amount of $250,000 plus applicable interest.”
Justice Pfeifer’s opinion was joined by Chief Justice Thomas J. Moyer, Justices Evelyn Lundberg Stratton and Judith Ann Lanzinger and Judge James A. Brogan of the 2nd District Court of Appeals, who sat in the case in place of Justice Terrence O’ Donnell.
Justice Robert R. Cupp entered a partial dissent, joined by Justice Maureen O’Connor, in which he concurred with the majority’s holding that the collectibility of a judgment lost through attorney negligence is an element of a malpractice claim that must be proved by the plaintiff. He disagreed, however, with the majority finding that the underinsured motorist coverage in the Patereks’ own insurance policy should be included in the damage award against Petersen and Ibold.
“The Patereks dismissed their claim against their underinsured-motorist coverage carrier without prejudice shortly before trial. The court of appeals did not resolve the issue of whether the value of such coverage could properly be included in the Patereks’ judgment against the attorneys in the malpractice case,” wrote Justice Cupp. “In fact, the appellate court stated: ‘The issue of whether [Irene Paterek] could collect from the Patereks’ own carrier on their UM/UIM coverage was not submitted to the jury, and this court declines to weigh in as to whether such proceeds would ever be received. That issue is certainly not before us in this appeal.’ (Emphasis added.) Under these circumstances, I would not reach this issue. Accordingly, I would reverse the judgment below and remand the case to the trial court with directions to reinstate its judgment notwithstanding the verdict in favor of Irene Paterek in the amount of $100,000. Because the majority does not so limit its decision, I respectfully dissent.”
Contacts
Timothy D. Johnson, 216.241.6602, for Timothy D. Johnson, 216.241.6602.
Paul W. Flowers, 216.344.9393, for Irene Paterek.