In a legal malpractice case, a plaintiff must usually present expert testimony regarding the standard of care and causation.
In Franklin-Murray Development Company, L.P. v. Shumacker Thompson, PC, No. M2015-01968-COA-R3-CV (Tenn. Ct. App. Aug. 18, 2017), plaintiff sued defendant attorneys who had represented plaintiff in litigation related to a commercial real estate deal. In the underlying matter, plaintiff had contracted with First American Trust Company (FATC) to purchase property in Williamson County, giving FATC $100,000 in earnest money. Another $100,000 in earnest money was due “on the first business day after the last day on which [plaintiff had] a right to terminate the contract.” Just before the scheduled closing date, plaintiff found out there was a federal estate tax lien on the property, and so the sale did not close. Plaintiff “did not terminate the agreement in accordance with the termination provision, nor did it seek a refund of the earnest money previously paid or pay FATC the additional $100,000 in earnest money. Rather, [plaintiff] contacted FATC regarding the possibility of setting a new closing date.” Negotiations eventually broke down between the parties, and FATC filed suit seeking a declaratory judgment that the lien did not prevent conveyance of good title and for $200,000 in liquidated damages.
Defendant lawyers in the current suit represented plaintiff in the real estate litigation. Defendants filed a counter-claim on behalf of plaintiff, alleging breach of contract and fraud. Defendants also gave notice of a lien lis pendens in the suit. When FATC moved to have the lien removed, there was a hearing “during which counsel for both [plaintiff] and FATC stated that the parties were still willing to close the sale[.]” The trial court eventually ordered the parties to appear and close the sale, but plaintiff “failed to appear because it was not in a position to close.” The trial court then granted summary judgment to FATC and awarded it the $200,000 in liquidated damages against plaintiff.
Plaintiff subsequently filed the instant malpractice case, which was “grounded in the circumstances surrounding the assertion of the lien lis pendens and representations made by the [defendants] at the hearing” that plaintiff was still interested in closing. Defendants moved for summary judgment, and the trial court first granted partial summary judgment regarding plaintiff’s “claim for consequential damages for lost profits,” then later granted summary judgment as to plaintiff’s legal malpractice claims. Plaintiff appealed, and the Court of Appeals affirmed.
First, the Court analyzed the trial court’s grant of summary judgment on the legal malpractice claims. The trial court held that expert proof was required as to proximate causation in this case, and that plaintiff had not satisfied this burden, which the Court of Appeals affirmed.
A plaintiff claiming legal malpractice “must prove (1) that the defendant lawyer owed a duty to the plaintiff, (2) that the lawyer breached the duty, (3) that the plaintiff was damaged, (4) that the lawyer’s conduct was the cause in fact of the damages, and (5) that the lawyer’s conduct was the proximate or legal cause of the plaintiff’s damages.” (internal citation omitted). Further, the plaintiff must show that she “would have prevailed in the underlying action, but for the attorney’s malpractice[.]” (internal citation omitted). Regarding the need for expert testimony in legal malpractice cases, Tennessee case law states:
Whether a lawyer’s conduct meets the applicable professional standards is generally believed to be beyond the common knowledge of laypersons. Thus, except in cases involving clear and palpable negligence, most courts considering the issue have held that cases of legal malpractice cannot be decided without expert proof regarding the applicable standard of care and whether the lawyer’s conduct complies with this standard.
(internal citation and quotation omitted). Further, “[t]he requirement of expert testimony includes testimony on the issue of causation.” (internal citation omitted). Here, because the underlying case involved a sophisticated commercial real estate contract, the Court affirmed the holding that “expert testimony as to proximate cause was an essential element of [plaintiff’s] claim of legal malpractice.”
Defendants’ expert in this case submitted a seven-page affidavit regarding “the circumstances which led to the underlying lawsuit and the strategies involved in [plaintiff’s] defense and prosecution of the counterclaim.” Defendants’ expert noted that plaintiff’s “failure to terminate the contract following FATC’s alleged breach, not the actions of the [defendants], caused [plaintiff’s] earnest money deposit to become non-refundable,” and that “[by] the time [defendants] were engaged to represent [plaintiff], events such as [plaintiff’s] failure to terminate the agreement with FATC in accordance with the contract, and the parties’ continued negotiations following FATC’s alleged breach, and [plaintiff’s] inability to perform its obligation under the contract, precluded [plaintiff] from successfully pursuing a claim against FATC; consequently, the statements regarding the parties’ willingness to complete the sale…were not the cause of [plaintiff’s] injury.” Ultimately, the defense expert concluded that “the actions, or failure to act, or advice given by [defendants to plaintiff] did not cause any damage or harm to [plaintiff].”
Plaintiff asserted that it created an issue of fact on causation by presenting its own expert affidavit. This affidavit stated that plaintiff’s expert would testify that “defendants violated the standard of care by advising plaintiffs to permit defendants to file the notice of lien,” by “arguing to the Court that the plaintiffs were still interested in closing on the property,” and by taking no corrective action after the court’s order stating that both parties were willing to close. Looking at this expert affidavit, the Court stated: “[Plaintiff’s expert] opines as to why several of [defendants’] actions constituted legal malpractice…however, [his] opinions do not address the issue of proximate cause. [Plaintiff’s] failure to contravene [defense expert’s] unrebutted affidavit is fatal to its claim.” Accordingly, summary judgment on the legal malpractice claim was affirmed.
The Court next looked at summary judgment on the claim for lost profits. The trial court based its decision on “the fact that [plaintiff] continued to negotiate with FATC after the alleged breach,” holding that “by continuing to negotiate, [plaintiff] waived any breach and could not have prevailed on the breach of contract claim in the underlying case; accordingly, it was estopped from asserting the claim for lost profits in the malpractice case.” The Court of Appeals affirmed this ruling, noting that there was “substantial evidence” that the parties to the real estate contract continued negotiations after the initial breach by FATC, including efforts to set a new closing date. The Court held that by “engaging in such conduct, [plaintiff] would be estopped in the underlying case from pursuing a breach of contract claim and the claim for lost profits could not be sustained in the malpractice action.” Summary judgment was thus affirmed.
The standard for proving a legal malpractice claim is high, and plaintiffs need to be very aware of the elements of the claim and the required expert testimony when preparing their case. Here, plaintiff’s expert affidavit addressed standard of care, but apparently failed to address causation, resulting in summary judgment and the inability to try the case on its merits.