American International Adjustment Co. v. Frank J. Galvin, Jr., and Galvin, Stalmack and Kirschner

86 F.3d 1455

• Court: Court of Appeals for the Seventh Circuit
• Decided: August 1, 1996
• Docket: 95-1966, 95-2089
• Status: Published

Opinions

BAUER, Circuit Judge.

Frank J. Galvin, Jr. and his law firm (“Galvin”) appeal a legal malpractice judgment entered after a jury trial. Actually, Galvin appeals the final judgment as well as certain summary judgments entered by the district court prior to trial. The appellee and cross-appellant, American International Adjustment Company (“AIAC”), appeals the district court’s order of remittitur which reduced the damage award from $1,250,000 to $1,000,000. To summarize our conclusions in advance: we reverse the judgment entered against Galvin and remand for a new trial. However, we affirm the district court’s elimination of contributory negligence as a defense to AIAC’s legal malpractice claim. Given these conclusions, AIAC’s cross-appeal is moot. BACKGROUND

This diversity, legal malpractice action arose out of a personal injury lawsuit. In 1989, a Tri-State Transport Company truck ran into Virginia Dickinson’s car, seriously injuring Ms. Dickinson. Ms. Dickinson never left the hospital and died of a pulmonary embolism a month after the accident. Prior to her death, she filed suit against TriState, which retained Galvin as legal counsel.¹ Dickinson’s two-count complaint raised alternative claims, seeking damages under both the Indiana survival statute, Ind.Code 34-1-1-1, and the Indiana wrongful death statute, Ind.Code 34-1-1-2. Under Indiana law, Tri-State could be liable under either statute but not both. If the victim had died from the accident, the case was for wrongful death. If the victim died from unrelated causes, the case was a survival action. The distinction is important because each statute allows for different recoveries. In a ease governed by the survival statute, Ms. Dickinson’s estate could receive full damages including pain and suffering. Under the wrongful death statute, the estate could recover only Ms. Dickinson’s medical and funeral expenses plus any other pecuniary or other loss suffered by her survivors.

As any attorney would recognize from the above description, one significant pre-trial task for Galvin would be to ascertain the cause of death in the hopes of limiting his client’s exposure. Most critically, if there were no evidence that Ms. Dickinson died from a cause other than Tri-State’s negligence, then the case would be a wrongful death action and evidence of her pain and suffering would be inadmissible at trial.

This distinction became especially important to AIAC and Galvin because there was little doubt about Tri-State’s liability. The trial would focus on damages, and the plaintiff had made a “day-in-the-life” video of Ms. Dickinson’s last day and intended to offer it as evidence to show her pain and suffering. The full length video consisted primarily of Ms. Dickinson sleeping, but the version edited for trial focused on her periods of intense suffering. Galvin estimated prior to trial that if the case proceeded to the jury as a survival action, i.e. if the jury saw the videotape, the verdict would be around $2.5 million. If, however, it were solely a wrongful death case, the verdict would be closer to $850,000.

Normally, a defense attorney in Galvin’s position would utilize various discovery tools to pin down the cause of death. Galvin might have served requests for admission and/or interrogatories on his opposing counsel, or deposed the treating physicians. Instead, on the eve of trial, he filed a “Motion in Limine” asking the district court to force the plaintiff to choose between the mutually exclusive theories of survival and wrongful death. Plaintiffs counsel responded that the cause of death was a question of fact that was for the jury. The district court pressed the plaintiff’s lawyer about which theory the plaintiff would be pursuing at trial. The lawyer responded, “I haven’t interviewed Dr. Walsh in depth, and I haven’t interviewed Dr. Kaufman in depth as to the [cause of death] and until they testify under oath, I honestly don’t know what they’re going to say.” Possibly sensing a lack of candor in that response, the district court instructed plaintiffs counsel to report back the next day about what testimony he would present as to the cause of death. The next day however, the district court did not revisit its concerns because it ruled that it had no authority to force the plaintiff to elect one theory over the other.

Prior to trial, the district court opined that the case could be settled for $853,000. AIAC refused to budge irom its last offer of $700,-000, and the case proceeded to trial. At trial, the plaintiff introduced the edited videotape — the fifteen worst minutes of Virginia Dickinson’s last day. At the close of the plaintiffs case, Galvin moved for a directed verdict on the survival claim. Plaintiffs counsel acknowledged that he had not presented any competent medical testimony or expert testimony showing the cause of death to be anything but the accident, and the district court granted Galvin’s directed verdict motion. The case went to the jury solely on the wrongful death count. However, Galvin did not ask the district court for a jury instruction precluding the jury’s consideration of the videotape. The jury returned a verdict for the plaintiff in the amount of $2.6 million. The parties settled for $2.3 million with post-trial motions pending. This legal malpractice suit followed.

AIAC raised nine specific instances of alleged malpractice, the most significant of which was that Galvin failed to ascertain the cause of death prior to trial. AIAC contended that had Galvin done so, he could have obtained summary judgment on the survival claim and kept from the jury all evidence of pain and suffering, especially the videotape. The magistrate judge presiding over the malpractice trial granted partial summary judgment for AIAC, ruling that Galvin had breached his standard of care as a matter of law by failing to ascertain the cause of death. The judge permitted the causation and damages aspect of this claim to go to the jury. The court also allowed AIAC’s other allegations, including Galvin’s failure to object to the plaintiff’s opening statement and closing argument and Galvin’s stipulation to the fact that TriState had 126 traffic accidents within a two-year period, to go to the jury. Finally, the magistrate judge precluded Galvin from presenting the defenses of incurred risk and contributory negligence. The jury returned a general verdict for AIAC of $1.25 million, which the court reduced to $1 million.

ANALYSIS

We review the district court’s grant of summary judgment de novo, taking the record in the light most favorable to the nonmovant. Harris v. City of Marion, Ind., 79 F.3d 56, 58 (7th Cir.1996). Summary judgment is appropriate where there are no genuine disputes of material fact and where the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. Athough summary judgment is an effective tool for district courts to manage their caseload, they must avoid the temptation to use summary judgment “as an abbreviated trial.” Door Systems, Inc. v. Pro-Line Door Systems, Inc., 83 F.3d 169, 172 (7th Cir.1996).

To prove legal malpractice under Indiana law, a plaintiff must show: (1) employment of the attorney, (2) the attorney’s failure to exercise ordinary skill and knowledge, and (3) damages to the plaintiff proximately resulting from that failure. Hacker v. Holland, 570 N.E.2d 951, 955 (Ind.App. 1 Dist.1991). In a typical legal malpractice case, the plaintiff must prove that “as a result of the lawyer’s incompetence ... the client ... lost his case or paid a larger judgment than would have been awarded had the defendant performed competently.” Transcraft v. Galvin, Stalmack, Kirschner, & Clark, 39 F.3d 812, 815 (7th Cir.1994), cert. denied, — U.S. -, 115 S.Ct. 1990, 131 L.Ed.2d 876 (1995). There are two components to evaluating Galvin’s performance. First, whether he committed legal error is undoubtedly a question of law. 4 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice, § 32.11 at 183 (4th ed.1996). Next, whether that error amounted to negligence is normally a question of fact to be decided by the jury (or judge as fact finder). Id. With those introductory matters out of the way, we turn to the substance of this case.

A. Tort vs. Contract

We give short shrift to ALAC’s initial argument that we should affirm because Galvin failed to challenge the breach of contract judgment entered by the district court. While it is true that AIAC’s complaint raised both tort and contract claims, these claims were identical. Given that the alleged “breach” complained of is the failure to adhere to the appropriate standard of care, there is no difference between the tort and breach of contract claims. Thus, courts have held repeatedly that legal malpractice claims are governed by tort principles regardless of whether they are brought as a tort, a breach of contract, or both.² See, e.g., Shideler v. Dwyer, 275 Ind. 270, 417 N.E.2d 281, 285-88 (1981); Keystone Distribution Park v. Kennerk, Dumas, Burke, Backs, Long & Salin, 461 N.E.2d 749, 751 (Ind.App.1984); FDIC v. Clark, 768 F.Supp. 1402, 1410-11 (D.Colo. 1989), aff'd. 978 F.2d 1541 (10th Cir.1992); 1 Mallen & Smith, Legal Malpractice, §§ 8.1, 8.6.

B. Partial Summary Judgment on Liability

The main issue on appeal is not whether Galvin performed poorly, but whether the district court correctly ruled that Galvin’s conduct was malpractice as a matter of law. We conclude that the deposition testimony of Galvin’s expert witness and the behavior of Dickinson’s counsel taken together created a factual dispute about whether Galvin’s conduct fell below the applicable standard of care.

There is no question that the best method of ascertaining the cause of death would have been some discovery tool — requests for admissions, interrogatories, or depositions. Instead, Galvin filed a motion in limine on the eve of trial seeking to force the plaintiffs counsel to state what the plaintiffs evidence would show on this vital fact. The central question, therefore, is whether Galvin’s method of ascertaining the cause of death was negligent as a matter of law.

Galvin’s motion essentially sought to force the plaintiff to elect a remedy. However, Fed.R.Civ.P. 8(e)(2) abolished the doctrine of election of remedies in federal court. See Olympia Hotels Corp. v. Johnson Wax Development Corp., 908 F.2d 1363, 1371 (7th Cir.1990). Thus, it -seems that Galvin’s motion was doomed to failure. If so, maybe that means that filing such a motion automatically would fall below the applicable standard of care. We think not.

First, the gambit almost worked. At the hearing on the motion in limine, the district court instructed the plaintiffs counsel:

I want you to find out today from all your evidence ... whether or not there is going to be testimony over and above what you have indicated already, that the cause of death was related to [ ] causes other than this accident, i.e. the main area would be of course this possibility of malpractice that you have mentioned. And I want you to advise me of that tomorrow morning when we start____ I would be very concerned with allowing evidence in and then at the eleventh hour, striking everything, because once it’s in, the damage may be done.

This instruction followed repeated attempts during the hearing by both the district court and Galvin to ascertain the theory on which the plaintiff planned to proceed at trial. In response to the court’s questions about the cause of Ms. Dickinson’s death and the substance of her treating physician’s testimony, the plaintiffs lawyer said:

I haven’t interviewed Dr. Walsh in depth, and I haven’t interviewed Dr. Kaufman in depth as to these issues [i.e. cause of death] and until they testify under oath, I honestly don’t know what they’re going to say.

This fails the laugh test by two country miles. The plaintiffs counsel knew exactly what the treating physicians would say on the witness stand. Their testimony was crucial to the plaintiffs case. Plaintiffs counsel feigned ignorance only to get the damaging videotape into evidence. He knew very well that he had no evidence of any cause of death beyond the accident. Plaintiffs counsel did not suggest any other causes during his opening statement. He did not introduce any such evidence during his case in chief. And in response to the district court’s queries during a hearing on defendant’s motion for directed verdict, he agreed with the district court that the plaintiff had not presented any competent medical testimony or expert testimony showing the cause of death to be anything but the accident. Indeed, plaintiffs counsel acknowledged that “the weight of the evidence shows that she died as a result of the accident.” He had to have known that the day before trial, at the time of the hearing on the motion in limine.

Assuming that Galvin’s opposing counsel acted unethically in misleading the court on the cause-of-death evidence, perhaps attorneys should anticipate such behavior from opposing counsel. And regardless, plaintiffs counsel’s actions were supported by the apparently ethical argument that Fed. R.Civ.P. 8(e)(2) abolished the doctrine of election of remedies. We do not think much of either argument. First, we conclude that the risk of a violation of professional ethics by opposing counsel is unforeseeable, and therefore any damages flowing from a failure to foresee the violation cannot support a malpractice finding. Rule 3.3 of the Indiana Rules of Professional Conduct (“Candor Toward the Tribunal”) declares that “a lawyer shall not knowingly make a false statement of material fact ... to the tribunal.” The Official Commentary to the Rules states further that:

an assertion ... [made] in open court, may properly be made only when the attorney knows the assertion is true or believes it to be true on the basis of a reasonably diligent inquiry. There are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation.

Rule 3.4(e) (“Fairness to Opposing Party and Counsel”) provides that a lawyer shall not “in trial, allude to any matter that the lawyer does not reasonably believe is relevant or that will not be supported by admissible evidence.” Plaintiffs counsel did not act in accordance with these rules and we will not ignore his unethical conduct in deciding whether Galvin acted negligently as a matter of law.

As for the abolition of election of remedies, a pleader may assert contradictory statements of fact only when legitimately in doubt about the facts in question. Fed. R.Civ.P. 11; Great Lakes Higher Education Corp. v. Austin Bank of Chicago, 837 F.Supp. 892, 894 (N.D.Ill.1993). Here there could have been no legitimate doubt. While Rule 11 does not impose a continuing obligation to revise pleadings, counsel should not have opposed Galvin’s motion in limine. Thomas v. Capital Sec. Services, Inc., 836 F.2d 866, 874 n. 9 (5th Cir.1988) (citation omitted). But counsel did respond, stating that “it was up to the jury to determine if this is a wrongful death action or survival action.” That may be, assuming available evidence for each of the two possibilities, but it does not excuse blatantly misrepresenting the facts of the case to opposing counsel, and even more importantly, to the district court.

Next, we are extremely wary of holding that pre-trial discovery is required as a matter of law. As we explained in Trans-craft, we are reluctant to encourage the practice of “defensive law.” 39 F.3d at 816. Of course, this does not mean that failure to conduct discovery will never constitute legal malpractice as a matter of law. Nevertheless, it will be the rare exception. The recent trend in the Federal Rules of Civil Procedure has been to prevent the overuse of pre-trial discovery, and we do not wish to buck that trend.

Finally, even conceding that Galvin’s chosen method of knocking out the survival claim was ill-conceived, Galvin presented expert testimony to the effect that he did not breach the relevant standard of care. Under Indiana law, “expert testimony is normally required to demonstrate the standard of care by which the defendant attorney’s conduct is measured.” See Hacker, 570 N.E.2d at 953. In fact, the requirement of expert testimony in proving most types of malpractice claims has been adopted so widely that it may be legal malpractice to litigate a legal malpractice claim without expert testimony. See Flanders & Medeiros, Inc. v. Bogosian, 65 F.3d 198, 206 n. 16 (1st Cir.1995) (citation omitted). Expert testimony is crucial for defending as well as prosecuting a legal malpractice action. 4 Mallen & Smith, Legal Malpractice, § 32.23 at 238-39. Finally, under Fed.R.Evid. 704(a), an expert may testify about the ultimate issue to be decided by the trier of fact.

The only exception to the expert witness requirement even remotely relevant here is where the breach is so obvious that any lay person would recognize it. 4 Mallen &• Smith, Legal Malpractice, § 32.16 at 207. Here, however, it is hardly likely that lay people know about the doctrine of election of remedies, let alone whether it has been abolished by something called the “Federal Rules of Civil Procedure.” Therefore, expert testimony about the standard of care was required in this ease.

Galvin’s expert — a former Indiana state court judge — gave extensive deposition testimony on the standard of care issue. He explained that asking the court to force the plaintiff to choose a theory was “a reasonable tactic.” He conceded that a motion for summary judgment would have had a higher likelihood of success, but that nevertheless Galvin’s chosen method did not breach the standard of care. In response to probing questions by plaintiffs counsel at his deposition, Galvin’s expert stated repeatedly that “it was reasonable for [Galvin] to attempt to persuade the judge that the plaintiff had to choose from the onset.” Although this opinion runs squarely into the abolition of election of remedies, neither the district court nor the plaintiffs lawyers, in opposing Galvin’s motion in limine, referred to the Federal Rules of Civil Procedure or, for that matter, the doctrine of election of remedies.

The expert explained that in Indiana, in the ordinary negligence case, “more frequently than not, the defendant does not take the deposition of the plaintiffs doctors.” The expert also explained in greater detail about different avenues available for a defendant’s attorney to ascertain information crucial to his or her client’s defense. He testified repeatedly that he believed that Galvin’s use of the motion in limine did not breach the standard of care. He suggested a couple of strategic reasons for choosing a motion in limine, but he conceded that he did not know Galvin’s actual strategy. He also pointed out that Dickinson’s counsel “lost a little credibility with the judge when he asserted to the judge that he didn’t know what his doctors were going to say.” All in all, the expert’s testimony provides sufficient “hint of inferential process” to pass muster under Fed. R.Civ.P. 56(e). Mid-State Fertilizer v. Exchange Nat. Bank, 877 F.2d 1333, 1339 (7th Cir.1989). The district court believed that Galvin’s expert was simply wrong. That may be, but it is for the jury to determine.

This is a close case, and were we reviewing a jury verdict against Galvin, the result might be different. Nevertheless, we conclude that Galvin’s expert’s testimony was material and, taken together with the questionable conduct of the plaintiffs lawyers in opposing the motion in limine, created a genuine factual dispute as to whether Galvin’s failure to ascertain the cause of death prior to trial breached the standard of care. Accordingly, we reverse and remand for a new trial on all of AIAC’s malpractice allegations.³

C. Contributory Negligence

While a new trial is necessary, Galvin may not present his contributory negligence and incurred risk defenses.⁴ Although contributory negligence generally is available as a defense to a legal malpractice action in Indiana, see Hacker, 570 N.E.2d at 958, Galvin’s proffered defense fails as a matter of law. In effect, Galvin argues that AIAC was negligent in failing to settle the Dickinson ease prior to trial. However, there is no legal duty to settle a case. Even assuming that AIAC’s failure to settle the case was stupid, such stupidity bore no causal connection to the injury it claims.

The lack of merit to Galvin’s defense is further illustrated by taking it to its logical conclusion. Let’s say that Tri-State turns out to have been a bad risk. Does that mean that Galvin can raise ALAC’s “negligent” decision to underwrite Tri-State as a defense to this lawsuit? Of course not. As a general matter, people and corporations often retain attorneys because they somehow have created their own problems. Once retained, the attorney is not shielded from liability because of the initial mistake. A criminal defendant suing his attorney for legal malpractice would not be contributorily negligent merely because he actually had committed the charged crime. This is not to say that a client’s conduct can never be contributorily negligent vis-a-vis his or her attorney. If AIAC actively had prevented Galvin from deposing the doctors, or had assisted Galvin in devising the motion in limine “strategy,” then perhaps Galvin’s defense would be viable. 2 Mallen & Smith, Legal Malpractice, § 20.2 at 641. Here, however, we agree with the district court that Galvin’s contributory negligence defense fails.

CONCLUSION

For the foregoing reasons, we Reverse in part the judgment of the district court and remand for a new trial, at which Galvin will be precluded from raising the defenses of contributory negligence and incurred risk.

Reversed In Part And Remanded.

1 . In May 1990, Tri-State tendered its defense to AIAC, its liability carrier.

2 . Often the only reason a plaintiff couches a legal malpractice action as a breach of contract suit is to avoid a fatal tort-based statute of limitations. See Sherman Industries, Inc. v. Goldhammer, 683 F.Supp. 502, 506 (E.D.Pa. 1988). AIAC resorts to its contract argument to avoid Galvin's contributory negligence defense. However, as we discuss in section C, AIAC does not need this argument in order to prevail on this issue.

3 . The failure to ascertain the cause of death was only one of a laundry list of malpractice allegations that went to the jury. However, given its preeminence, and the fact that the jury delivered a general verdict of liability, we must reverse the jury verdict and the earlier summary judgment ruling and remand for a new trial.

4 . We treat the two defenses as interchangeable and refer to them jointly as "contributory negligence.”