Collectibility And Legal Malpractice

The Ohio Supreme Court recently held that the plaintiff in a legal malpractice case must prove that the proven damages are collectible. The court’s web page notes the following from the majority opinion in the 5-2 decision:

Writing for the Court in today’s decision, Justice Pfeifer notedthat the case presents an issue of first impression in Ohio.  Heobserved that courts in other states have issued conflicting rulings onwhether the plaintiff or the defendant in a legal malpractice plaintiffbears the burden of proving the amount of damages that would have beenrecoverable from a tortfeasor. While a minority of courts have ruledthat a plaintiff is not required to prove collectibility, JusticePfeifer agreed with the majority of jurisdictions which have held that“collectibility is logically and inextricably linked to thelegal-malpractice plaintiff’s damages, for which the plaintiff bearsthe burden of proof.”

“The jury in this case arrived at afigure for damages that was not necessarily reflective of the value ofthe Patereks’ claim against their lawyers; the jury’s damage awardreflects what the Patereks’ suffered through the negligence ofRichardson,” wrote Justice Pfeifer. “But the appellant attorneys inthis case are not responsible for Richardson’s negligent conduct; theyare responsible for their own. This case is not about what IrenePaterek suffered on account of Richardson’s bad driving, but what shesuffered on account of the appellants’ bad lawyering. The properinquiry, then, is this: Had the appellants not been negligent, how muchcould Irene have received from a settlement or a judgment?”

Notingthat Mrs. Paterek stipulated that she could not have recovered anydamages directly from Richardson, and presented no evidence regardingpossible recovery from his future earnings, Justice Pfeifer concludedthat the case record “does not show that she could have collected morethan $100,000 from sources related to Richardson.” 

Hewent 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 thePatereks’ own UM/UIM insurance coverage, which the parties hadstipulated was $250,000 less a set-off for any recovery they made fromRichardson’s liability coverage. Citing a 1996 decision of the U.S.Sixth Circuit Court of Appeals, Sparks v. Craft, JusticePfeifer wrote: “In determining the collectibility of an unrealizedjudgment, the factfinder should consider the amount of the plaintiff’sunderinsured-motorist policy. … The amount payable under the policysprings from the judgment against the underlying tortfeasor and thattortfeasor’s collectibility. As part of the pot available to asuccessful plaintiff in a case properly handled by an attorney,underinsured-motorist coverage is evidence of collectibility of theunderlying claim in an attorney-malpractice case.”

“Here,the appellants stipulated to the existence of the underinsured-motoristcoverage and the amount that would be available to Irene Paterek fromthat policy. The trial court erred in failing to include the additional$150,000 available to Irene under the UIM policy in its calculation ofdamages. 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 toenter judgment in favor of the appellees in the amount of $250,000 plusapplicable interest.”

(Mike Frisch)