A plaintiff suing lawyers who initially represented him in a personal injury case has no malpractice claim against them for failing to include a “deep-pocket” corporate defendant, a splintered Alabama Supreme Court held May 31 (Hand v. Howell, Sarto & Howell, Ala., No. 1120133, 5/31/13).
In the lead opinion, Justice Jacquelyn L. Stuart explained that because adding the corporation as a defendant would not have increased the potential insurance proceeds, the plaintiff was essentially arguing that had his personal injury case gone to trial rather than settled, the jury would have awarded him higher damages against a corporate opponent. That argument is impermissible in that it depends on an assumption of juror bias against corporations or wealthy defendants, Stuart said.
The issue split the court, which did not produce a majority opinion. Three other justices joined Stuart's opinion, one member of the court concurred in the result, and three justices dissented.
Tommy Hand sued Howell, Sarto & Owell and a former associate at the firm, William P. Roberts II, for alleged malpractice in pursuing his action to recovery damages for back injuries he sustained in an accident on an interstate highway when another driver, Julie Bennett, rear-ended the vehicle he was driving.
At the time of the accident, Bennett was on duty working for the Montgomery Advertiser, a newspaper in Montgomery, Ala.; however, Roberts and the Howell firm named only Bennett as a defendant in Hand's suit and not the newspaper or its corporate parent, Gannett Inc.
Hand ultimately hired different counsel, but by that time it apparently was too late to add other defendants. Following mediation, he settled his case for $625,000--less than the $872,000 amount an accountant hired by the Howell firm had calculated to be the present value of Hand's economic loss.
Nearly all of the settlement was paid by Travelers Insurance under a policy it had issued to Gannett. Bennett was an additional insured under that policy, and she invoked the coverage when Hand sued her.
In his malpractice action, Hand argued that not including the Montgomery Advertiser--which he called “the critical deep-pocket defendant”--as a party in his personal injury action devalued his case to the extent that he had to settle for approximately half of what his case was worth.
As proof, Hand presented affidavits from the lawyers who took over in the personal injury suit. The lawyers stated in their affidavits that the settlement value of a case against the Montgomery Advertiser would have been $1 million to $1.2 million.
The trial court entered summary judgment in favor of Roberts and the Howell firm. The supreme court affirmed.
In the main opinion, Stuart emphasized the dearth of evidence that any additional insurance coverage would have been available had the newspaper been named as a defendant.
Hand was really arguing, Stuart said, that a jury would have punished a “deep-pocket defendant” like the Montgomery Advertiser more than an individual like Bennett, and that the likelihood of a higher verdict had the newspaper been a party would have enabled Hand to negotiate a higher settlement.
Even if it were true, as Hand alleged, that “every trial lawyer in the country” would agree with that assertion, Hand's argument fails, Stuart said, because long-established Alabama law requires a jury to calculate damages based on the evidence of injury, not the identity of the defendant or the defendant's presumed wealth.
Furthermore, Stuart said, Alabama cases have made it clear that corporations are entitled to the same fair trial an individual would receive. Thus, she said, it would be improper for the jury to hold the Montgomery Advertiser to a standard of justice different from the one applicable to Bennett merely because the newspaper is a corporation.
It would likewise be improper to assume that the jury would exhibit prejudice against a corporation, and the court would effectively be making that improper assumption if it accepted Hand's argument that including the newspaper as a defendant would have resulted in a higher settlement, Stuart said.
As authority, Stuart drew on a factually similar Pennsylvania case, Schenkel v. Monheit, 405 A.2d 493 (Pa. Super. Ct. 1979), which reasoned that the tort was the same whether or not the corporate employer was a party to the action along with the actual tortfeasor. Using that same rationale, Stuart stated:
The “tort was the same” whether or not the Montgomery Advertiser was a party to the action, and the settlement Hand agreed to was in fact paid by the Montgomery Advertiser's insurer; thus, there is no evidence indicating that Hand was prejudiced by the failure to name the Montgomery Advertiser as a defendant.
Stuart distinguished Hand's case from situations in which the plaintiff was unable to obtain a meaningful settlement or collect a judgment because of the defendant's judgment-proof status. Bennett was covered by the $5 million Travelers policy held by Gannett, and most of the money that paid Hand's settlement came from that policy, she pointed out.
“Accordingly, it is mere speculation to assume that either the settlement or any jury verdict would have been higher if the Montgomery Advertiser were a named defendant in Hand's action against Bennett,” Stuart wrote. In a footnote, she emphasized that it was ultimately Hand's decision to settle rather than present his case to a jury.
Justice Glenn Murdock, concurring in the result, pointed out that it was Hand's choice to mediate his case and settle rather than go to trial. Murdock also contended that even if it were not speculative to assume that joining the newspaper would have produced a higher settlement, it would still be speculation to assess how much higher the settlement would have been.
In a dissenting opinion joined by Justices Tom Parker and James Allen Main, Justice Greg Shaw emphasized that Hand presented affidavits from his second set of attorneys indicating that the settlement value of the case would have been $1 million to $1.2 million if the Montgomery Advertiser had been named as a party. Nothing in the record contradicted those affidavits, Shaw noted.
Thus, Shaw contended, there was substantial evidence indicating that Hand would have been able to settle his injury claim for a higher amount if the newspaper had been named as a defendant.
William L. Pfeifer Jr. of Pfeifer Law Offices, Marietta, Ga., represented Hand.
Defense counsel were Ronald G. Davenport and J. Evans Bailey of Rushton Stakely Johnston & Garrett in Montgomery, Ala., and Elizabeth B. Carter and Randall C. Morgan of Hill Hill Carter Franco Cole & Black, Montgomery.
Full text at http://op.bna.com/mopc.nsf/r?Open=kswn-98ark7.
Copyright 2013, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)