Last week, Oregon's Court of Appeals upheld a verdict in favor of attorneys accused of legal malpractice in the case of Perry Watson, III v. Meltzer. Although jurors found that one of the attorneys screwed up, they also said the client did not prove that the attorney's malpractice cost him any money.
The case involved a sale of an automobile dealership. After the parties signed a contract to sell the assets, the seller, Mr. Watson learned that he would owe roughly $2 million to cover liabilities on an employee benefit plan. Mr. Watson said his lawyers should have alerted him to the $2 million obligation. The jury agreed: the attorney's failure to discover the two million dollar issue and address it breached the attorney's duty of care to Mr. Watson.
But breach of duty is only the first element of legal malpractice lawsuit in Oregon. A client must also prove (1) that the breach caused harm and (2) the value of the harm. Here, the question was what would have happened if everyone had known about the $2 million dollar obligation? Would the sale have occurred, anyway? Would the buyer have paid more money to help cover the loss? In other words, "So what if the lawyer screwed up?"
Apparently, the only evidence offered on "so what" was the testimony of the buyer who swore that he "could not say" if he would have restructured the deal to soften the $2 million-dollar blow to the buyer. The jury said that was not enough evidence to prove that the mistake caused harm to Mr. Watson. The Court of Appeals held that the trial judge's instructions to the jury were appropriate. End of case.
The opinion does not disclose whether the legal malpractice attorney for Mr. Watson alleged -- as a distinct element of damages -- the "lost opportunity" to consider the $2 million liability in the negotiations. The "loss of a chance" is a viable damage in some types of malpractice, although that doctrine might have had an uphill battle in this case.
The other question I have is what other evidence could the legal malpractice attorneys have presented to the jury? Could there have been expert opinion on how buyers and sellers normally resolve such issues? Did the buyer have a history of other deals that could have shed light on how the buyer likely would have reacted to the $2 million conundrum it had arisen earlier, BEFORE they signed the asset purchase agreement.
Every case is about the evidence. Here, the evidence just was not enough to prove, "more likely that not," that a thorough attorney could have helped the client achieve a better outcome.
Jeff Merrick, Oregon Trial Attorney
503-665-4234
The above is not legal advice. I cannot give you sound advice without knowing more information. It is intended to raise some issues for you to discuss with your own lawyer.
