Client Doesn’t Forfeit Malpractice Claim by Not Appealing Adverse Underlying Ruling

By Samson Habte  


A client who decides not to appeal an adverse judgment in a lawsuit does not automatically forfeit the right to sue his attorneys for malpractice in connection with the underlying action, the New York Supreme Court, Appellate Division, Fourth Department, held July 19 (Grace v. Law, N.Y. Sup. Ct. App. Div. 4th Dep't, No. 625 CA 13-00036, 7/19/13).

The ruling addressed an issue of apparent first impression in New York: whether a malpractice action is barred when a client fails to perfect an appeal in the underlying action in which the attorney's alleged negligence occurred.

“[R]equiring parties to exhaust the appellate process prior to commencing a legal malpractice action would discourage settlements and potentially conflict with an injured party's duty to mitigate damages.”
N.Y. Sup. Ct., App. Div., 4th Dep't

Dividing 4-1, the court declined to establish “a per se rule that a party who voluntarily discontinues an underlying action and forgoes an appeal thereby abandons his or her right to pursue a claim for legal malpractice.”

Courts in other states have rejected such a rule for several persuasive reasons, the panel declared in a per curiam opinion.

Drop Case, Sue Lawyers

Plaintiff John W. Grace claimed that he partially lost his vision due to the alleged negligence of medical staff at the Veterans Administration who failed to monitor and treat his eye condition.

In August 2006, Grace hired attorney Robert L. Brenna Jr., and his law firm, Brenna, Brenna & Boyce, to file a Federal Tort Claims Act (FTCA) claim against the VA. Acting on Brenna's recommendation, Grace also hired Michael R. Law and his law firm, Phillips Lytle, to pursue a medical malpractice action in federal court.

After discovering that Grace's primary physician at the VA was also employed by the University of Rochester, the government was granted leave to file a third-party action against the doctor and the university.

That change in the composition of the parties created a conflict for Law and his firm. Brenna assumed sole responsibility for Grace's medical malpractice suit and moved to amend the complaint to name the university and the doctor as defendants and assert state-law medical malpractice claims against them.

The trial court rejected those claims as time-barred. It also granted summary judgment dismissing any FTCA claims against the government insofar as they were based on the alleged negligence of the university and its physician--who, the court concluded, was an independent contractor and not a VA employee.

“The only remaining claim in the amended complaint was that the VA was negligent in failing to reschedule an ophthalmology appointment after a July 2003 appointment was cancelled,” the opinion states.

Grace declined to appeal those rulings. Instead he discontinued the federal lawsuit and commenced the present action, which alleges that the defendant lawyers and their firms were negligent in failing to name the university and its doctor in Grace's initial complaint.

Not Waived

The defendants moved to dismiss Grace's lawsuit on the grounds that he waived or abandoned his legal malpractice claim by voluntarily discontinuing what remained of his medical malpractice action and not appealing the order dismissing the bulk of his claims.

A trial judge refused to dismiss the legal malpractice action; the appeals court affirmed.

The defendants relied primarily on Rupert v. Gates & Adams, P.C., 919 N.Y.S.2d 706 (N.Y. App. Div. 2011). In that case, the panel said, “we concluded that the plaintiff waived his right to raise certain allegations of legal malpractice in the context of a matrimonial action based upon his execution of a settlement agreement.”

“Specifically,” it added,  

we concluded that, although certain allegations of legal malpractice had merit, [the trial court] “did not err in granting defendants' motion concerning those alleged errors because they could have been corrected on an appeal from the final judgment in the matrimonial action, and plaintiff consented to the dismissal on the merits of any appeal in the matrimonial action as part of the global settlement resolving a bankruptcy proceeding in which he was involved. In so doing, plaintiff precluded pursuit of the very means by which defendants' representation of plaintiff in the matrimonial action could have been vindicated.  




Rupert is distinguishable, the court said.

“Here, unlike in Rupert, plaintiff did not, as part of a settlement agreement or otherwise, waive his right to raise the claim that defendants committed malpractice in the underlying action by failing to sue the appropriate parties before the expiration of the applicable statute of limitations,” it stated.

Accordingly, the court said, “We reject defendants' invitation to extend the ruling in Rupert to a per se rule that a party who voluntarily discontinues an underlying action and forgoes an appeal thereby abandons his or her right to pursue a claim for legal malpractice.”

Policy Arguments

“Although the precise question presented herein appears to be an issue of first impression in New York,” the court acknowledged, “we note that several of our sister states have rejected the per se rule advanced by [the defendants].”

A rule that a client forfeits a malpractice claim by voluntarily discontinuing an underlying action “would force parties to prosecute potentially meritless appeals to their judicial conclusion in order to preserve their right to commence a malpractice action, thereby increasing the costs of litigation and overburdening the court system,” the court noted, citing Eastman v. Flor-Ohio, Ltd., 744 So. 2d 499, 15 Law. Man. Prof. Conduct 337 (Fla. Dist. Ct. App. 1999).

“The additional time spent to pursue an unlikely appellate remedy could also result in expiration of the statute of limitations on the legal malpractice claim,” the court added, citing MB Indus., LLC v. CNA Ins. Co., 74 So. 3d 1173, 27 Law. Man. Prof. Conduct 683 (La. 2011) (failure to appeal adverse outcome doesn't preclude malpractice claim unless reasonably prudent party would have appealed).

“Further, requiring parties to exhaust the appellate process prior to commencing a legal malpractice action would discourage settlements and potentially conflict with an injured party's duty to mitigate damages,” the court said, citing Crestwood Cove Apartments Bus. Trust v. Turner, 164 P.3d 1247, 23 Law. Man. Prof. Conduct 344 (Utah 2007).

Effect on Causation Issue

Beyond the policy considerations, the court rejected the argument that Grace's failure to appeal the adverse rulings precludes him from establishing that the defendants' alleged negligence was a proximate cause of his damages.

“Specifically, the defendants failed to establish that plaintiff was likely to succeed on an appeal from [the] order and, therefore, that their alleged negligence was not a proximate cause of his damages,” the panel stated, citing Hewitt v. Allen, 43 P.3d 345, 18 Law. Man. Prof. Conduct 270 (Nev. 2002).

The defendants may yet make a showing on that issue, the court said, but they have not done so at this point because “the record before us does not include the full record from the underlying action, i.e., the record that would have been before the Second Circuit on an appeal.”

Countervailing Policy

In a long dissent, Justice Gerald J. Whalen argued that Grace should be “precluded as a matter of law from bringing this legal malpractice action based upon his voluntary discontinuance of the underlying federal action and failure to pursue a nonfrivolous appeal.”

“It is important to note that, if plaintiff had been successful in his appeal in the underlying federal action, we would not have a subsequent legal malpractice case,” said Whalen, who went on to discuss why he believed Grace could have prevailed if he had challenged the ruling that his treating physician at the VA was an independent contractor.

Whalen also disagreed that Rupert was inapplicable. “Our decision in Rupert was based upon sound policy and should be applied here for various reasons, the first being judicial economy,” he said.

While the majority “is concerned that forcing a party to pursue a potentially meritless appeal will result in increased costs of litigation and overburdening the court system,” Whalen said, “I believe that allowing a plaintiff to discontinue his or her underlying case in order to pursue a legal malpractice action will result in the increased litigation costs and overburdening of the court system that the majority seeks to avoid.”

“Additionally, allowing a litigant to choose to forego the appeal process and commence a legal malpractice action against his or her attorney allows the litigant to select a new defendant that he or she may feel is an easier target before a jury than a physician or hospital would be,” Whalen argued.

He added: “I cannot see the merit in allowing a litigant, who does not give his or her attorney an opportunity to pursue a potentially meritorious appeal, to abandon his or her underlying case as a strategic decision in order to pursue a legal malpractice claim against his or her attorney.”

Grace was represented by Brian J. Bogner of Lotempio & Brown, Buffalo.

Kevin J. English of Phillips Lytle, Buffalo, N.Y., argued for Law and his firm.

Gregory D. Eriksen of Smith, Sovik, Kendrick & Sugnet, Syracuse, N.Y., argued for Brenna and his firm.

Full text at

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