Continental Cas. Co. v. Pullman, Comley, Bradley & Reeves

• Citation: 929 F.2d 103
• Decision Date: 02 April 1991
• Docket Number: No. 819,D,819
• Parties: CONTINENTAL CASUALTY COMPANY, Plaintiff-Appellant, v. PULLMAN, COMLEY, BRADLEY & REEVES; Aetna Casualty & Surety Company; Frederick L. Comley; John S. Barton; Dwight F. Fanton; Francis A. Smith, Jr.; Samuel A. Gilliland; Raymond E. Baldwin, Jr.; James W. Venman; William B. Rush; Robert J. Cooney; David O. Jackson; Herbert H. Moorin; G. Whitney Biggs; W. Parker Seeley, Jr.; Grove W. Stoddard; Peter J. Dauk; Douglas A. Strauss; Edward Maum Sheehy; James B. Stewart; Jeffrey V. McCormick; Peter W. Oldershaw; Frank B. Cleary; Collin P. Baron; Peter D. Clark; Michael N. Levelle; Robert Morris; James P. White, Jr., Defendants-Appellees. ocket 90-7722.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 103

929 F.2d 103

CONTINENTAL CASUALTY COMPANY, Plaintiff-Appellant, v. PULLMAN, COMLEY, BRADLEY & REEVES; Aetna Casualty & Surety Company; Frederick L. Comley; John S. Barton; Dwight F Fanton; Francis A. Smith, Jr.; Samuel A. Gilliland Raymond E. Baldwin, Jr.; James W. Venman; William B. Rush Robert J. Cooney; David O. Jackson; Herbert H. Moorin G. Whitney Biggs; W. Parker Seeley, Jr.; Grove W. Stoddard; Peter J. Dauk; Douglas A. Strauss; Edward Maum Sheehy; James B. Stewart; Jeffrey V. McCormick; Peter W. Oldershaw; Frank B. Cleary; Collin P. Baron; Peter D. Clark; Michael N. Levelle; Robert Morris; James P. White, Jr., Defendants-Appellees.

No. 819, Docket 90-7722.

United States Court of Appeals, Second Circuit.

Argued Jan. 11, 1991.

Decided April 2, 1991.

Cushing O. Condon, Ford, Marrin, Esposito & Witmeyer, New York City (D. Jeffrey Burnham, of counsel), for plaintiff-appellant.

Jacob D. Zeldes, Zeldes, Needle & Cooper, Bridgeport, Conn. (L. Douglas Shrader and Beverly Stauffer Knapp, of counsel), for defendant-appellee Pullman, Comley, Trudie R. Hamilton, Carmody & Torrance, Waterbury, Conn. (Anthony M. Fitzgerald and William I. Garfinkel, of counsel), for defendant-appellee Aetna Cas. & Sur. Co.

Bradley & Reeves and individual defendants-appellees.

Before KAUFMAN, NEWMAN and McLAUGHLIN, Circuit Judges.

McLAUGHLIN, Circuit Judge:

Plaintiff, the Continental Casualty Company ("Continental"), appeals from an order of the United States District Court for the District of Connecticut (Nevas, Judge ), granting the defendant law firm of Pullman, Comley, Bradley & Reeves ("Pullman") judgment on the pleadings. The district court held that: (1) Continental was not the foreseeable or intended beneficiary of Pullman's legal services in the underlying personal injury litigation; and (2) Continental could not sue Pullman for malpractice under the doctrine of equitable subrogation. Fed.R.Civ.P. 12(c). Continental also appeals the district court's dismissal of its amended complaint (alleging an actual attorney-client relationship) against the Pullman firm for legal malpractice. Building on this claimed legal duty owed to Continental by Pullman, Continental also appeals from the district court's order dismissing the amended complaint against the Aetna Casualty & Surety Company ("Aetna"), the primary insurer in this case.

We affirm the order dismissing the complaint against Pullman. We therefore find no need to address the claims against Aetna.

BACKGROUND

In 1984 the Griffin Hospital had to defend a lawsuit arising from the tragic injury suffered by a newborn baby in the hospital's delivery room. Defendant-appellee Aetna provided the primary insurance coverage up to $500,000. Plaintiff-appellant Continental provided the secondary or excess insurance, and was contractually obligated to pay on behalf of Griffin losses exceeding $500,000 up to the policy limit of $20 million.

Aetna retained the Connecticut law firm of Pullman, Comley, Bradley & Reeves to defend the hospital in the underlying state court action for medical malpractice. The jury returned a multi-million dollar verdict against Griffin, which was upheld on appeal. Mather v. Griffin Hospital, 207 Conn. 125, 540 A.2d 666 (1988). Continental, as excess insurer, has paid over $10 million in satisfaction of that judgment.

In the wake of this staggering verdict, Continental filed a civil complaint against Pullman and Aetna in the Connecticut District Court. Count one against Pullman alleged legal malpractice by the Pullman firm in failing to prepare an adequate defense in the Mather case. Count two against Aetna charged Aetna with a lack of good faith, negligence, and breach of Aetna's duty to provide a competent defense.

Pullman moved for judgment on the pleadings. Fed.R.Civ.P. 12(c). The focal point of that motion was whether Continental, as an excess carrier, had any standing to bring a legal malpractice claim against Pullman, who had been retained by Aetna, the primary insurer. In support of its claimed right to sue Pullman, Continental pressed three alternative theories before the district court: (1) that an attorney-client relationship existed between Pullman and Continental because Continental was an intended and foreseeable beneficiary of Pullman's legal services for Griffin; (2) that Continental, by operation of equitable subrogation, was "imbued with the insured's [i.e., Griffin Hospital's] right to sue Pullman for malpractice;" and (3) that an actual attorney-client relationship existed between Pullman and Continental. Continental Casualty Co. v. Pullman, Comley, Bradley & Reeves, 709 F.Supp. 44, 46 (D.Conn.1989).

The district court granted Pullman's motion for judgment on the pleadings but gave Continental leave to amend its complaint to plead facts--if possible and in good faith--on the single claim of an actual attorney-client relationship with Pullman. Although the district court certified that With its appeal foreclosed, Continental exercised its option and filed an amended complaint on the isolated issue of a direct attorney-client relationship with Pullman. Pullman moved to dismiss the amended complaint and, after oral argument, that motion was granted. Fed.R.Civ.P. 12(b)(6). With Pullman now out of the case, Aetna moved to have count two dismissed. Continental, apparently convinced that liability against Aetna could not exist in the absence of a duty from Pullman to Continental, chose not to oppose Aetna's motion. Given that concession, the district court granted Aetna's motion and entered a final judgment in the case, making ready the path for this appeal.

                order for interlocutory appeal, this court declined to hear the appeal.  28 U.S.C. Sec. 1292(b).    Continental Casualty Co. v. Pullman, Comley, Bradley & Reeves, No. 89-8042 (2d Cir. May 19, 1989) (order denying interlocutory appeal)
                

On appeal, Continental raises the same arguments to support its malpractice claims against the Pullman firm and its related claims against Aetna.

DISCUSSION

In a diversity case a district court looks to the forum state to select choice of law rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Lund's Inc. v. Chemical Bank, 870 F.2d 840, 845 (2d Cir.1989) ("A federal district court deciding a diversity case applies the same choice of law rules as the state courts in the state in which it sits."). Applying Connecticut's choice of law rules under both a tort and contract analysis, the district court rightly concluded that the substantive law of Connecticut applies. See O'Connor v. O'Connor, 201 Conn. 632, 519 A.2d 13 (1986); Whitfield v. Empire Mut. Ins. Co., 167 Conn. 499, 356 A.2d 139 (1975).

I. Continental As An Intended and Foreseeable Beneficiary

Although a federal court sitting in diversity "must follow the law directed by the Supreme Court of the state whose law is found to be applicable," Plummer v. Lederle Laboratories, 819 F.2d 349, 355 (2d Cir.), cert. denied, 484 U.S. 898, 108 S.Ct. 232, 98 L.Ed.2d 191 (1987), the district court found, and the parties agree, that the Connecticut Supreme Court has never decided whether an excess carrier may have a claim founded in either contract or tort against a law firm hired by the primary insurer to represent the insured. In the absence of controlling state precedent:

[W]e must make our best estimate as to how [Connecticut's] highest court would rule in this case. In making that determination, we are free to consider all the resources the highest court of the state could use, including decisions reached in other jurisdictions.

Calvin Klein, Ltd. v. Trylon Trucking Corp., 892 F.2d 191, 195 (2d Cir.1989) (citing Francis v. INS Life Ins. Co. of New York, 809 F.2d 183, 185 (2d Cir.1987) (citations omitted)); see also Plummer, 819 F.2d at 355.

Continental's first argument is that it was an intended and foreseeable beneficiary of the legal services rendered by counsel hired by Aetna to defend the Griffin Hospital. Continental contends, therefore, that Pullman owed a duty to Continental, and for breach of this duty Continental has a claim for legal malpractice.

Connecticut follows the general rule that "attorneys are not liable to persons other than their clients for the negligent rendering of services." Krawczyk v. Stingle, 208 Conn. 239, 244, 543 A.2d 733, 735 (1988). While Connecticut has recognized some exceptions to this rule in will cases, see Stowe v. Smith, 184 Conn. 194, 441 A.2d 81 (1981) (beneficiaries have claims against attorney who drafted a will which, although valid, provided for benefit shares less generous than the testatrix's expressed intention), Licata v. Spector, 26 Conn.Supp. 378, 225 A.2d 28 (1966) (beneficiaries have a claim against attorney who drafted a will where attorney failed to get the required number of witnesses and, consequently, the will was invalid), that state has been cautious in expanding attorney liability, and has expressed a continuing concern over "the The Krawczyk court forthrightly recognized that "[d]etermining when attorneys should be held liable to parties with whom they are not in privity is a question of public policy." Krawczyk, 208 Conn. at 245, 543 A.2d at 735. Acknowledging the exception that permits a third party malpractice claim against an attorney drafting a defective will, Krawczyk framed the issue as "whether such liability should be further expanded to encompass negligent delay in completing and furnishing estate planning documents for execution by the client." Id. Declining to take that next step, the supreme court wrote:

                chilling effect of third party intrusion into an attorney's primary duty of loyalty to the best interests of his or her client."    Mozzochi v. Beck, 204 Conn. 490, 501, 529 A.2d 171, 176 (1987)
                

In addressing this issue, courts have looked principally to whether the primary or direct purpose of the transaction was to benefit the third party. Additional factors...