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Booth v. Davis

United States District Court, District of Kansas

October 28, 2014

SCOTT BOOTH, KATIE M. BOOTH, COLTEN S. BOOTH, BRIAN C. BOOTH, Plaintiffs,
v.
GRANT DAVIS, Defendant. KIMBERLY CARRELL, Plaintiff,
v.
GRANT DAVIS, Defendant. VIRGIL WILLE, Plaintiff,
v.
GRANT DAVIS, Defendant. PRUDENCE KIRKEGAARD, Plaintiff,
v.
GRANT DAVIS, Defendant. RONALD M. BOEHMER, RONDA CARRANZA, Plaintiffs,
v.
GRANT DAVIS, Defendant. PEGGY S. WALDON, JAMES C. WALDON, MARILYN SMITH, Plaintiffs,
v.
GRANT DAVIS, Defendant. DOROTHY SCHMITZ, JILL SCHMITZ-NOBLE, BILL SCHMITZ, LADONNA OLIPHANT, NEELEY SCHMITZ, DAVID SCHMITZ, Plaintiffs,
v.
GRANT DAVIS Defendant.

MEMORANDUM AND ORDER

Richard D. Rogers United States District Judge

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 that were sued for negligence involving the dilution of chemotherapy drugs by a pharmacist named Robert Courtney. 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-a-trial method and that the record before the court is insufficient at this stage for the court to make any decision regarding the adequacy of plaintiffs’ proof of damages and causation, regardless of which method of proof plaintiffs employ.[1]

I. BACKGROUND

This court has diversity jurisdiction to decide these cases. 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 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. Plaintiffs allege that defendant’s misconduct resulted in 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.

Missouri case law does not state that a trial-within-a-trial approach to proving causation and damages is an element of proof in cases alleging attorney misconduct. The elements have been listed in various forms. See, e.g., Nail v. Husch Blackwell Sanders, LLP, 436 S.W.3d 556, 561 (Mo. 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 claim in the case against the plaintiff’s former attorney. 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. So, the court finds that proof that a substantial settlement would have been achieved in the absence of an attorney’s misconduct will satisfy that requirement. Indeed, in 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 advice (or lack thereof) regarding the exercise 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’ claims according to Missouri law, the court believes the type of proof plaintiffs employ to 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.4th1232, 1240 n.4 (Cal. 2003); see also, John H. Bauman, “Damages for Legal Malpractice: An Appraisal of the Crumbling Dike and The Threatening 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”).

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”). The court may step in to avoid speculation and conjecture. 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. London, 884 S.W.2d at 677-78; Baldridge v. Lacks, 883 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 ...


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