Failure To Achieve Settlement No Basis For Legal Malpractice Claim

The Vermont Supreme Court affirmed the grant of summary judgment to the defendant law firm in a legal malpractice case but not as to a consumer protection claim.

The underlying litigation involved erosion damage

In 2011, following major erosion damage on a portion of the embankment on the lakefront, MBP’s manager, Bruce Mongeon, notified the Association that it was in default for failing to maintain the property and gave the Association forty-five days to make specified, substantial repairs. After the Association failed to make the repairs, MBP filed a complaint against the Association in January 2012 seeking damages and to void the lease for the Association’s violation of its terms.

The Association retained defendant Heilmann, Ekman, Cooley & Gagnon, Inc. in March 2012. Prior to retaining defendant, an Association representative met with a partner of the firm, Thomas Heilmann, to whom they had been referred. The retainer agreement, signed by Heilmann, states that the firm “may assign tasks to [its] associates and paralegals in a manner commensurate with the level of complexity and expertise required.” Following retention of the firm, an associate attorney primarily handled the Association’s case.

After the ensuing loss

The Association and members filed a complaint against defendant in the instant case in December 2019, alleging legal malpractice and a violation of the VCPA. The crux of their legal malpractice claim is a lost opportunity to settle. They assert that defendant was negligent because it should have tried to settle the underlying litigation between the Association and MBP. They propose that, had defendant tried to settle, the Association and MBP would have likely agreed to 4 terms involving repairs and payment of MBP’s attorney’s fees thus avoiding lease termination and eviction of the Association’s members. For the VCPA claim, plaintiffs propose that Heilmann made misleading representations regarding what his level of involvement in the Association’s case would be. They allege that the Association relied on these material misrepresentations when retaining defendant.

After discovery

The trial court granted summary judgment in favor of defendant. On the legalmalpractice claim, the trial court concluded that the undisputed material facts demonstrated that plaintiffs could not establish that defendant’s alleged negligence proximately caused their claimed damages. Without analyzing the VCPA claim, for which neither party requested summary judgment, it entered judgment for defendant on all of plaintiffs’ claims, stating that “[a]ll of [p]laintiff’s claims fail for lack of competent proof of proximate cause.”

Here

First, we conclude that we need not address members’ standing to sue. Second, we determine that summary judgment in favor of defendant was appropriate on the legal-malpractice claim because the Association failed to establish proximate cause. Third, we conclude that judgment was inappropriate on the VCPA claim, because a showing of proximate cause is not required for the Association’s claim.

Failure to settle claim too speculative here

Requiring plaintiffs to establish not only that a settlement probably would have occurred but the terms of such settlement serves an important purpose by preventing unduly speculative claims. Because legal-malpractice claims involve a comparison of what happened and what the plaintiff alleges should have happened, they necessarily require evaluation of a hypothetical scenario in which the defendant attorney was not negligent…

We hold that, to recover for a lost opportunity to settle, a plaintiff must prove by a preponderance of the evidence (1) that but for the defendant’s negligence a settlement would have occurred and (2) the probable terms of that settlement.

Consumer protection claim

Defendant additionally argues that the Association’s claim involves a nonentrepreneurial aspect of the law to which the VCPA does not apply. We disagree. The Association’s claim involves representations made while obtaining a client, which is an entrepreneurial aspect of the law covered by the VCPA. See Rodrigue, 2022 VT 9, ¶ 32 (explaining that VCPA covers deceptive practices in commercial aspects of law, such as “advertising, billing and collection practices, fee arrangements, and methods of obtaining, retaining and dismissing clients” (quotation omitted)). Not all case-staffing decisions are commercial in nature; the nuances of assigning work to associates and paralegals within a firm is a matter of legal discretion. However, when a law firm makes factual representations about case staffing in order to obtain a client, as is alleged here, that is commercial conduct. See Eriks v. Denver, 824 P.2d 1207, 1214 (Wash. 1992) (en banc) (concluding that defendant’s breach of fiduciary duty to client was violation of Washington CPA only if misleading omission constituting breach was for “purpose of obtaining clients or increasing profits”); cf. Winton v. Johnson & Dix Fuel Corp., 147 Vt. 236, 240, 515 A.2d 371, 374 (1986) (acknowledging that “statements that imply the existence of accurate and readily ascertainable facts that either concern the law or have legal significance” are actionable under VCPA). Neither of the arguments raised can sustain a grant of summary judgment in favor of defendant on plaintiff’s VCPA claim.

(Mike Frisch)