Kirkegaard v. Davis
Filing
185
MEMORANDUM AND ORDER granting in part and denying in part 149 Plaintiffs' motion for determination of method for proof of damage causation is granted to the extent that the court finds that the trial-within-a-trial method of proof is not a lega l prerequisite under Missouri law for establishing claims of loss of settlement value. This ruling is not a finding that plaintiffs' proof of damages and causation will be sufficient to prevail upon a summary judgment motion or at trial. Pro hac vice attorneys must obtain sealed document(s) from local counsel. Signed by District Judge Richard D. Rogers on 10/28/14. Sealed Motion. (meh)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
SCOTT BOOTH, KATIE M. BOOTH,
COLTEN S. BOOTH, BRIAN C. BOOTH,
Plaintiffs,
v.
Case No. 10-4010-RDR
GRANT DAVIS,
Defendant.
--------------------------------------------------------------KIMBERLY CARRELL,
Plaintiff,
v.
Case No. 10-4124-RDR
GRANT DAVIS,
Defendant.
---------------------------------------------------------------VIRGIL WILLE,
Plaintiff,
v.
Case No. 11-4121-RDR
GRANT DAVIS,
Defendant.
--------------------------------------------------------------PRUDENCE KIRKEGAARD,
Plaintiff,
v.
Case No. 10-4125-RDR
GRANT DAVIS,
Defendant.
----------------------------------------------------------------
RONALD M. BOEHMER, RONDA CARRANZA,
Plaintiffs,
v.
Case No. 11-4059-RDR
GRANT DAVIS,
Defendant.
PEGGY S. WALDON, JAMES C. WALDON,
MARILYN SMITH,
Plaintiffs,
v.
Case No. 11-4060-RDR
GRANT DAVIS,
Defendant.
-------------------------------------------------------------DOROTHY SCHMITZ, JILL SCHMITZ-NOBLE,
BILL SCHMITZ, LADONNA OLIPHANT,
NEELEY SCHMITZ, DAVID SCHMITZ,
Plaintiffs,
v.
Case No. 10-4011-RDR
GRANT DAVIS
Defendant.
MEMORANDUM AND ORDER
These cases are before the court upon a motion titled:
“Plaintiffs’ Motion for Determination of Method for Proof of
Damage Causation.”
Defendant in these cases is an attorney.
Plaintiffs allege that defendant committed negligence, fraud and
breach of fiduciary duty while he was representing plaintiffs
during the settlement of cases brought against drug companies
2
that
were
sued
for
negligence
involving
the
dilution
chemotherapy drugs by a pharmacist named Robert Courtney.
of
It
was alleged that the drug companies had knowledge of Courtney’s
dilution activity.
The court shall treat the motion as seeking
a ruling that there is no requirement under Missouri law that
plaintiffs try the issues of their underlying claims against the
drug companies to a jury (the so-called “trial-within-a-trial”
or “case-within-a-case” method) in order to prove the elements
of causation and damages from defendant’s alleged misconduct.
As shall be explained, the court finds that Missouri law does
not require, as a legal prerequisite, proof by a trial-within-atrial
method
and
that
the
record
before
the
court
is
insufficient at this stage for the court to make any decision
regarding
the
causation,
adequacy
regardless
of
of
plaintiffs’
which
method
proof
of
damages
of
proof
and
plaintiffs
employ.1
I.
BACKGROUND
This
cases.
court
has
diversity
jurisdiction
to
decide
these
It is agreed that the state law of Missouri must be
applied.
Plaintiffs’ motion states that defendant represented them
and other persons in 240 cases related to Courtney and the drug
1
Defendant has requested oral argument upon plaintiffs’ motion. Upon due
consideration, the court is not convinced that oral argument would be of
material benefit. Therefore, the request for oral argument shall be denied.
3
companies, and that he represented a plaintiff named Georgia
Hayes in a case which was scheduled for trial in October 2002.
After
jury
selection
in
Hayes’
case,
a
Global
Settlement
Agreement (“GSA”) was negotiated between defendant and counsel
for the drug companies.
An amount of $75 million was stipulated
in the agreement to settle all pending cases, including the
Hayes case, and cases that had not yet been filed.
The trial of
the Hayes case continued against Courtney and a jury returned a
verdict of $225 million in actual damages and $2 billion in
punitive damages.
Plaintiffs emphasize that they are not alleging negligence
or misconduct in the “litigation” phase, only in the settlement
phase.
They
assert
that
defendant
did
not
make
adequate
disclosures regarding the GSA and did not involve plaintiffs in
the settlement process.
They claim that they were coerced and
required to sign releases without knowing how much money they
would get in return or how other settlement participants would
be compensated.
Plaintiffs assert that the GSA violated the
aggregate settlement rule found in Rule 4-1.8(g) of the Supreme
Court Rules governing the Missouri Bar and the Judiciary.
Plaintiffs’ motion is an effort to obtain a preliminary
ruling regarding what method of proof is not required in order
for plaintiffs to establish damages and causation.
allege
that
defendant’s
misconduct
4
resulted
in
Plaintiffs
a
loss
of
settlement value.
Plaintiffs state that they “intend to prove
damages and causation with objective evidence of the strength of
the
underlying
case,
the
drug
companies’
opinions
of
their
damage exposure, expert opinions on valuation of the case and
its settlement value, and examples of the settlement of cases
that
actually
began
trial.”
Doc.
No.
210,
p.
1.
What
plaintiffs desire from this court is a ruling that plaintiffs
are not required to conduct a trial of the underlying claims
against the drug companies within the trial against defendant
Davis, as is often done in legal malpractice cases, in order to
establish that defendant’s alleged malfeasance caused a loss of
settlement
value.
Plaintiffs
contend
a
determination
that
plaintiffs would have prevailed upon their claims if they had
been tried against the drug companies and an estimate from a
jury of the judgment value of those claims, is not required to
determine
whether
defendant
caused
a
loss
in
the
settlement
value of plaintiffs’ claims.
As stated, we find that there is no hard and fast rule in
Missouri
which
would
require
in
these
cases
that
plaintiffs
employ the trial-within-a-trial method of proving causation and
damages.
We reach this decision for the following reasons.
II.
THE ELEMENTS OF PROVING PLAINTIFFS’ CLAIMS DO NOT MAKE
TRIAL-WITHIN-A-TRIAL PROOF A LEGAL PREREQUISITE.
5
Missouri case law does not state that a trial-within-atrial approach to proving causation and damages is an element of
proof in cases alleging attorney misconduct.
been
listed
Blackwell
in
various
Sanders,
forms.
LLP,
436
See,
S.W.3d
The elements have
e.g.,
556,
Nail
561
v.
(Mo.
Husch
2014)2;
Selimanovic v. Finney, 337 S.W.3d 30, 35 (Mo.App. 2011)3; London
v. Weitzman, 884 S.W.2d 674, 677 (Mo.App. 1994).4
None of the
listings require proof that a plaintiff litigate all of the
issues
in
an
underlying
plaintiff’s former attorney.
claim
in
the
case
against
the
Sometimes, it is stated that proof
must be shown that but for an attorney’s conduct, the client
would have been successful in the prosecution of the underlying
claim.
See Nail, supra; Coin Acceptors, Inc. v. Haverstock,
Garrett & Roberts, LLP, 405 S.W.3d 19, 24 (Mo.App. 2013).
But,
a significant settlement can be considered a successful end to
litigation.
settlement
So, the court finds that proof that a substantial
would
have
been
achieved
in
the
absence
attorney’s misconduct will satisfy that requirement.
2
of
an
Indeed, in
In Nail, the elements are listed as follows: “’1) that an attorney-client
relationship existed; 2) that the defendant acted negligently or in breach of
contract; 3) that such acts were the proximate cause of the plaintiff[‘s]
damages; [and] 4) that but for defendant’s conduct the plaintiff[] would have
been successful in prosecution of their underlying claim.’” (Quoting Donahue
v. Shughart, Thomson & Kilroy, P.C., 900 S.W.2d 624, 626 (Mo. banc 1995)).
3
In Selimanovic, the elements were listed as follows:
“’(1) an attorneyclient relationship; (2) negligence or breach of contract by the defendant;
(3) proximate causation of plaintiff's damages; (4) damages to the
plaintiff.’” (Quoting Klemme v. Best, 941 S.W.2d 493, 495 (Mo. banc 1997)).
4
In London, the court listed the elements as: “1) that the defendant lawyer
was negligent . . .; 2) that plaintiff sustained some loss or injury; and 3)
a causal connection between the negligence and the loss.”
6
Nail, 436 S.W.3d at 562, the court described the necessary proof
as
“the
difference
between
what
the
result
would
have
been
[absent the alleged misconduct] and what it was,” and does not
mention the absence of trial-within-a-trial proof as grounds for
finding that causation was not established in that case.
This
is probably because the alleged malpractice in Nail did not
involve the litigation of a claim to judgment.
Instead, it
involved
exercise
advice
(or
lack
thereof)
regarding
the
of
stock options and the drafting of a settlement agreement (as
also alleged in the cases at bar).
Since trial-within-a-trial proof is not an explicit element
of
plaintiffs’
believes
the
claims
type
of
according
proof
to
Missouri
plaintiffs
law,
employ
to
the
court
prove
the
elements of their claims should be limited only by the rules of
evidence.
This is consistent with comments from other sources
which describe “trial within a trial” as a method of proof as
opposed to an element of proof.
See Viner v. Sweet, 30 Cal.4th
1232, 1240 n.4 (Cal. 2003); see also, John H. Bauman, “Damages
for Legal Malpractice:
The
Threatening
An Appraisal of the Crumbling Dike and
Flood,”
61
TEMPLE
L.
REV.
1127,
1133
(1988)(stating that the trial-within-a-trial “method” of proof
“is at best one method of trying to estimate the loss caused by
the malpractice”).
7
The common thread to the elements listings is a requirement
of proof of damages and causation. These are elements which
require proof to a jury.
See Williams v. Preman, 911 S.W.2d
288, 295 (Mo.App. 1995)(discussing the submission of damages and
proximate cause issues to the jury); Lange v. Marshall, 622
S.W.2d 237, 238 (Mo.App. 1981)(“the question of proximate cause
is usually for the jury, and [only] in rare cases and under
clear and compelling circumstances, the question becomes one of
law for the court”).
and conjecture.
The court may step in to avoid speculation
Nail, 436 S.W.3d at 563; Coin Acceptors, Inc.,
405 S.W.3d at 24.
But, at this stage in the proceedings, the
record before the court does not permit such a judgment.
III. MISSOURI CASES HAVE PROCEEDED WITHOUT TRIAL-WITHIN-A-TRIAL
PROOF AND RESTATEMENT AUTHORITY SUPPORTS THIS PROCEDURE.
The
second
reason
for
the
court’s
finding
that
trial-
within-a-trial proof is not a legal prerequisite in Missouri is
that Missouri courts have not required this method in some cases
involving
settlements.
For
example,
in
situations
where
property settlements were reached in divorce actions and later
malpractice
actions
claimed
that
the
settlements
were
mishandled, courts have approved expert testimony regarding the
settlement value of the cases in the form of opinions concerning
the normal and fair division of marital property.
S.W.2d
at
677-78;
Baldridge
v.
8
Lacks,
883
London, 884
S.W.2d
947,
953
(Mo.App.
1994).
The
Restatement
(Third)
of
Law
Governing
Lawyers § 53 Comment b (2000) also provides that a malpractice
plaintiff “may recover without proving the results of a trial if
the party claims damages other than the loss of a judgment.”
There is logic to this comment since the result of a trial
within a trial is an estimation of judgment value which is of
limited
utility
here:
i.e.,
defendant’s
in
the
deciding
the
settlement
conduct
caused
issues
value
a
loss
of
of
raised
the
by
plaintiffs
cases;
settlement
whether
value
to
plaintiffs; and what kind of settlement the drug companies would
have entered.
IV.
CASES CITED BY DEFENDANT
MOTION ARE DISTINGUISHABLE.
IN
OPPOSITION
TO
PLAINTIFFS’
Defendant argues on the basis of several cases that trialwithin-a-trial proof is required under the facts proffered here.
The court disagrees.
One
case
cited
by
defendant
is
Novich
Eppenberger, 24 S.W.3d 734 (Mo. App. 2000).
v.
Husch
&
In Novich, the
plaintiff was a defendant in a case alleging damages under a
lease.
A default judgment was obtained against the plaintiff in
the underlying case.
The default judgment was set aside, but
the plaintiff lost at trial and judgment was entered against him
on the damages claim.
In his malpractice suit, the plaintiff
asserted that he was not aware that counsel accepted service on
9
his behalf, entered an appearance, and then withdrew, leading to
the default judgment.
The plaintiff claimed he missed out on
the chance to settle the case on terms extended to other persons
on the lease.
The plaintiff did not deny liability on the
underlying claim.
He merely alleged that he would have obtained
a better settlement, compared to the trial judgment, had he
known
that
the
attorneys
he
was
counsel in the underlying case.
suing
had
withdrawn
as
his
The court rejected the claim,
first, on the grounds that plaintiff did not prove his defense
to
the
case
would
have
been
successful
absent
the
alleged
malpractice, and second, because plaintiff’s claim that a more
favorable
settlement
would
have
occurred
absent
the
alleged
negligence was speculative and inconsistent with other evidence.
The
cases
at
bar
are
distinguishable
because
plaintiffs
do
allege they would have obtained favorable judgments at trial and
it
is
undisputed
settlements
indicating
Therefore,
this
attempting
to
that
is
shift
plaintiffs
the
potential
not
a
obtained
merit
situation
liability
for
a
of
substantial
their
involving
judgment
claims.
litigants
onto
their
attorneys or their opponents’ attorneys, nor does it appear to
be a situation in which plaintiffs are seeking compensation from
their attorney for the settlement value of a baseless claim.
The
claims
considered
in
Novich
speculative.
were
At
also
rejected
this
10
stage,
because
the
they
court
were
cannot
determine whether the evidence of damages and causation to be
advanced by plaintiffs is speculative.
In sum, Novich does not
state a requirement that the proof of success at trial must be
demonstrated
by
a
trial-within-a-trial
method
in
order
for
plaintiffs to prove loss of settlement value.
Defendant
also
relies
upon
language
contained
in
Day
Advertising, Inc. v. DeVries & Associates, P.C., 217 S.W.3d 362,
367
(Mo.App.
2007)(“Day”).
In
Day,
the
plaintiff
sued
its
attorneys after reaching a settlement upon employment contract
claims
filed
employee.
on
behalf
of
the
plaintiff
against
a
former
The plaintiff alleged that it would have recovered
liquidated damages against the employee at a trial if not for
the attorneys’ negligence.
established
that
there
The attorneys prevailed because they
were
affirmative
defenses
which
have prevented recovery upon the liquidated damages claim.
would
The
court held that, “’because the alleged damages are based on the
resolution of the underlying action …. the plaintiff [had to]
prove a “case within a case,”’” which the plaintiff failed to
do.
Id. at 367 (quoting Williams v. Preman, 911 S.W.2d 288, 294
(Mo.App. 1995)).
Unlike the situation in Day, the cases before
the court are not alleging damages based on the resolution of
the underlying actions.
Plaintiffs are not alleging damages
based on the judgment value of their claims against the drug
companies.
They are alleging damages based on an alleged loss
11
of
the
settlement
value
of
their
claims
against
the
drug
companies.
Furthermore, it is not evident on this record that
there
affirmative
were
defenses
to
plaintiffs’
claims
which
apparently could not be overcome as in Day.5
Defendant also cites language in Williams, 911 S.W.2d at
297,
for
the
proposition
that
if
the
underlying
action
is
settled, “the plaintiff must show what would have happened if
the
adversarial
action
Doc. 229 at p. 19.
had
been
tried
rather
than
settled.”
This language was employed in the context of
“[w]hen a plaintiff has compromised an underlying claim, after
having
notice
of
the
attorney’s
alleged
negligence
.
.
.”
because in that situation “a factor of speculation has been
voluntarily
introduced
justification.”
by
the
Id. (emphasis in the original).
different in the instant cases.
were
aware
of
plaintiff
defendant’s
which
requires
The context is
No one asserts that plaintiffs
alleged
negligence
and
misconduct
before settling their claims with the drug companies.
Thus,
plaintiffs did not voluntarily introduce a factor of speculation
as
to
the
issues
of
causation
and
damages.
The
court
in
Williams mentioned this as a distinguishing factor in the London
and Baldridge cases where expert testimony was allowed regarding
5
The court in Day determined that the plaintiff had not preserved its
objection to the affirmative defense issue and therefore the court was only
reviewing the point to determine whether the claim established substantial
grounds for believing that a manifest injustice or miscarriage of justice had
resulted. Id. at 366.
12
the range of a fair and equitable property distribution that may
have resulted without the alleged ill-advised settlements.6
Id.
V.
PUBLIC POLICY FAVORING SETTLEMENTS DOES NOT REQUIRE TRIALWITHIN-A-TRIAL PROOF IN THESE CASES.
The court is persuaded that Missouri public policy does not
require
the
employment
of
proof in these cases.
the
trial-within-a-trial
method
of
Defendant has alleged that plaintiffs’
proposed approach would be contrary to the public policy in
favor of settlements.
But, a general appeal to pro-settlement
public policy was overruled in Baldridge, 883 S.W.2d at 952.
This issue was also mentioned in Collins v. Missouri Bar Plan,
157 S.W.3d 726, 735 (Mo.App. 2005) where the court observed that
“settlements
cases.
do
The
settlement
of
not
court
an
preclude
damage
further
underlying
claims”
commented
lawsuit
in
that:
injects
malpractice
“Although
some
a
speculation
into a claim for attorney malpractice, it does not preclude a
plaintiff from proving malpractice so long as the plaintiff can
establish a causal link between the alleged negligence and any
loss incurred.”
Id.
The court did not state that a trial
within a trial was required to establish the causal link and
noted that expert testimony from someone with long experience in
the
adoption
advance
the
issues
at
malpractice
play
in
claim
that
beyond
6
case
was
summary
sufficient
judgment
where
Similar expert testimony appears to have been rendered in Bross v. Denny,
791 S.W.2d 416, 421 (Mo.App. 1990).
13
to
plaintiff’s obligation was to “’prove that the settlement was
necessary to mitigate . . . damages’” . . . “or ‘that plaintiff
was driven to the necessity of settling because, if the case had
not been settled, plaintiff would have been worse off.’”
735-36.
Id. at
The facts in this case are different from those in
Collins, where the settlement was reached after the plaintiffs
had
knowledge
of
the
alleged
malpractice.
But,
the
point
remains that the public policy in favor of settlements does not
prevent proof of damages and causation in a malpractice case,
and,
for
reasons
already
explained,
such
proof
does
not
necessarily have to be made by a trial-within-a-trial method.
VI.
THE COURT
SPECULATION.
SHALL
NOT
RENDER
ANY
RULING
UPON
CLAIMS
OF
Defendant argues that plaintiffs’ motion should be denied
because plaintiffs’ proposed expert testimony regarding damages
is
speculative.
As
the
court
has
already
mentioned,
under
Missouri law, causation and damages are considered jury issues,
but
the
court
conjecture.
can
draw
the
line
against
speculation
and
At this time, the court does not believe the record
is sufficient to make a decision upon defendant’s contention.
The argument might be better presented as a motion in limine or
a motion for summary judgment.
14
VII.
CONCLUSION
Plaintiffs’ motion for determination of method for proof of
damage causation is granted to the extent that the court finds
that the trial-within-a-trial method of proof is not a legal
prerequisite under Missouri law for establishing claims of loss
of
settlement
value.
This
ruling
is
not
a
finding
that
plaintiffs’ proof of damages and causation will be sufficient to
prevail upon a summary judgment motion or at trial.
IT IS SO ORDERED.
Dated this 28th
day of October, 2014, at Topeka, Kansas.
s/ RICHARD D. ROGERS
Richard D. Rogers
United States District Judge
15
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