978 F.2d 1199 (10th Cir. 1992), 92-1015, McGinnis v. Gustafson

Docket Nº:92-1015.
Citation:978 F.2d 1199
Party Name:Lew S. McGINNIS, Debtor-in-possession of the Bankruptcy Estate of Lew S. McGinnis; Michael R. Mastro; John F. Sherwood, Plaintiffs-Appellants, v. Gary GUSTAFSON; Trott, Kunstle & Hughes, Defendants-Appellees.
Case Date:November 03, 1992
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1199

978 F.2d 1199 (10th Cir. 1992)

Lew S. McGINNIS, Debtor-in-possession of the Bankruptcy

Estate of Lew S. McGinnis; Michael R. Mastro;

John F. Sherwood, Plaintiffs-Appellants,

v.

Gary GUSTAFSON; Trott, Kunstle & Hughes, Defendants-Appellees.

No. 92-1015.

United States Court of Appeals, Tenth Circuit

November 3, 1992

Page 1200

Appeal [*] from the United States District Court for the District of Colorado; Zita I. Weinshienk, Judge.

Thomas J. Helms, of Miller & McCarren, P.C., Denver, Colo., for plaintiffs-appellants.

Colin C. Campbell, of Wood, Ris & Hames, P.C., Denver, Colo., for defendants-appellees.

Before McKAY, Chief Judge, and BARRETT, Circuit Judge, and BRIMMER, [**] District Judge.

McKAY, Chief Judge.

Plaintiffs brought this diversity action for breach of contract and professional negligence to recover damages allegedly incurred when a default judgment was entered against them in a state interpleader action after counsel, i.e., Defendants, failed to file a timely answer to a cross-claim asserted therein. They now appeal from a district court order granting Defendants' Motion for Summary Judgment and dismissing the case. 1

Defendants argued in the district court that, as a matter of law, Plaintiffs could not have prevailed in the interpleader proceeding and, therefore, the default judgment Defendants' professional nonfeasance brought upon Plaintiffs did not proximately cause any damages cognizable under state (Colorado) law. App. at 14 (Defendants' Motion for Summary Judgment); id. at 16-28 (Brief in Support of Motion). In response, Plaintiffs did not challenge Defendants' unfavorable characterization of their litigation position in the interpleader action, but instead maintained that Colorado law would recognize and permit recovery of damages--for loss of a potential settlement, for example--notwithstanding the intrinsic futility of their defaulted case. Id. at 52-67 (Plaintiff's Response to Motion). Finally, in reply, Defendants reasserted their original argument, but also contended alternatively that, even if Colorado law would not absolutely prohibit recovery of damages in such "lost cause" legal malpractice cases, the damages sought in this particular action lacked evidentiary support and were too speculative. Id. at 119-20 (Defendants' Reply Brief in Support of Motion).

The district court heard oral argument, and then...

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