Ewing v. Westport Ins. Corp.

• Decision Date: 19 November 2020
• Docket Number: No. 2020-C-00339,2020-C-00339
• Citation: 315 So.3d 175
• Parties: Elaine EWING v. WESTPORT INSURANCE CORPORATION, et al.
• Court: Louisiana Supreme Court

315 So.3d 175

Elaine EWING
v.
WESTPORT INSURANCE CORPORATION, et al.

No. 2020-C-00339

Supreme Court of Louisiana.

November 19, 2020

Alan Whittington Stewart, James Huey Gibson, Lafayette, for Applicant-Defendant.

Donald J. Cazayoux, Jr., Baton Rouge, John Lane Ewing, Jr., for Respondent-Plaintiff.

JOHNSON, CHIEF JUSTICE¹

We granted this writ application to determine whether "collectibility" is a relevant consideration in a legal malpractice action. Specifically, we must decide whether plaintiff's damages in this legal malpractice action are limited to the amount she could have actually collected on a judgment against the tortfeasor in the underlying lawsuit. For the following reasons, we answer these questions in the negative, holding proof of collectibility of an underlying judgment is not an element necessary for a plaintiff to establish a claim for legal malpractice, nor can collectibility be asserted by an attorney as an affirmative defense in a legal malpractice action.

FACTS AND PROCEDURAL HISTORY

Elaine Ewing was injured in an automobile accident on April 9, 2015, when her vehicle was hit by a vehicle driven by Marc Melancon. Ms. Ewing retained attorney Chuck Granger to represent her relative to damages she sustained in the accident. On April 4, 2016, Mr. Granger fax-filed a petition for damages with the 18th Judicial District Court. However, Mr. Granger failed to forward the original petition for damages within seven days as required by La. R.S. 13:850.² The original petition was

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filed on April 22, 2016, after the one-year prescriptive period had passed. Ms. Ewing's suit was dismissed on an exception of prescription.

Ms. Ewing subsequently filed a legal malpractice action against Mr. Granger and Westport Insurance Corporation, Mr. Granger's malpractice insurer. Defendants filed a motion for partial summary judgment asserting the court should apply the "collectibility rule." Defendants alleged Ms. Ewing's recovery could be no greater than her potential recovery in the underlying personal injury lawsuit, and recovery in this case should be capped at Mr. Melancon's insurance policy limits.

The district court initially denied the motion for summary judgment because there was no evidence indicating Mr. Melancon would be unable to pay a judgment in excess of the policy limits. However, defendants reurged the motion immediately prior to trial, introducing the deposition of Mr. Melancon in support of the motion. The parties stipulated insurance coverage totaled $30,000. It was also stipulated that there was an attorney/client relationship between Mr. Granger and Ms. Ewing, and Mr. Granger breached the standard of care. In granting the partial motion for summary judgment and capping Ms. Ewing's damages at $30,000, the district court stated:

The Court after considering the deposition of the defendant driver, Marc Melancon, it's very clear that Mr. Melancon's testimony is that he would have filed bankruptcy for any judgment in excess of, and that his ability to pay would not support his paying any judgment above the underlying $30,000 of coverage. In addition, the deposition from a factual standpoint seems to leave no genuine issue of material fact as to whether or not he had an ability to pay anything.... I find that, in this case, the plaintiff cannot pursue damages in excess of the $30,000 of insurance, and my rationale is this, in every case where insurance is involved and limited insurance is involved, say in personal injury actions, where you have a $15,000 auto policy or you have, in this case a $30,000 of underlying auto coverage, a plaintiff would—for me to rule otherwise, would mean that a plaintiff, where there is limited insurance coverage, would be better off if their attorney committed malpractice, because the attorney would have more coverage than that underlying coverage.

After trial, the court awarded Ms. Ewing $30,000 concluding the evidence proved she incurred damages of at least that amount. However, the court did not make a determination of the amount of actual damages, finding that issue moot due to the grant of summary judgment in favor of the defendants on the issue of collectibility.

The court of appeal reversed, citing to this court's decisions in Rodriguez v. Traylor , 468 So. 2d 1186, 1188 (La.1985) (holding "the wealth or poverty of a party to a lawsuit is not a proper consideration in the determination of compensatory damages.") and Costello v. Hardy , 03-1146 (La. 1/21/04), 864 So. 2d 129, 138 (stating "[a] plaintiff can have no greater rights against attorneys for the negligent handling of a claim than are available in the underlying claim."). Ewing v. Westport Ins. Corp ., 19-551 (La. App. 3 Cir. 2/5/20), 290 So. 3d 707. The court of appeal explained:

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We find that the Defendants cannot rely on a hypothetical situation of bankruptcy to limit Ms. Ewing's recovery. It is just as possible that Mr. Melancon may not file bankruptcy and the judgment may become collectible in the future should Mr. Melancon receive some money from other sources. It is admitted that Ms. Ewing would have been successful in her claim against Mr. Melancon. Ms. Ewing had a right to a judgment for the recovery of the full amount of her damages against Mr. Melancon, without the consideration of his ability to pay the judgment. An inability to pay Ms. Ewing does not relieve Mr. Melancon of the obligation to pay her. Because of Mr. Granger's negligence, we will never know what Ms. Ewing would have collected from Mr. Melancon. Mr. Granger can have no greater rights in his defense of legal malpractice than Mr. Melancon would have had in the underlying suit. Ms. Ewing is entitled to the same rights against the Defendants as she had against Mr. Melancon, due to the negligence of Mr. Granger in depriving of her the ability to sue Mr. Melancon. Collectibility could not be raised in the underlying lawsuit and should not be considered in Ms. Ewing's malpractice claim against the Defendants either.

Id . at 711. The court of appeal remanded the case to the district court for consideration of the amount of damages suffered by Ms. Ewing as a result of the accident. Id .

Defendants filed a writ application in this court, which we granted. Ewing v. Westport Ins. Corp ., 20-0339 (La. 6/22/20), 297 So. 3d 759.

DISCUSSION

The general issue presented is whether the collectibility of damages is a relevant consideration in a legal malpractice action. In particular, we must determine whether the loss caused by Mr. Granger's admitted negligence is limited to the amount Ms. Ewing could have actually collected on a judgment against the underlying tortfeasor, Mr. Melancon. The concept of "collectibility" concerns the measure of damages. Application of the "collectibility rule" limits the measure of a legal malpractice plaintiff's damages to what the plaintiff could have actually collected from the tortfeasor in the underlying litigation absent the attorney's negligence, regardless of the face value of the lost claim. The justification for applying the collectibility rule is that the attorney's negligence did not cause the client any damage if the client would have been unable to collect upon a judgment, even it if had been obtained in the underlying action. The primary rationale is the perceived inequity if the plaintiff is able to obtain a judgment against the attorney that is greater than the judgment the plaintiff could have collected from the underlying tortfeasor. See Ronald E. Mallen, The plaintiff's attorney—The cause of action—Collectibility and offsets , 4 Legal Malpractice § 33:32 (2020 ed.); 3 Modern Tort Law: Liability and Litigation, Damages: In general--Collectibilty § 25:42 (June 2020).

A majority of courts that have considered this issue view collectiblity as an essential element of the plaintiff's legal malpractice case demonstrating the attorney's negligence proximately caused the resulting damages, thus placing the burden of proof on the malpractice plaintiff. See Daniel D. Tostrud, "Payability as the Logical Corollary to Collectibility" in Legal Malpractice , 4 St. Mary's J. Legal Malpractice & Ethics 408 (2014). As recently explained by the Colorado Supreme Court:

Where, as here, a legal malpractice claim is founded on professional negligence, the plaintiff must prove duty,

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breach, causation, and damages (as in every negligence case)....[T]he collectibility of the underlying judgment implicates both the causation and damages elements of a negligence claim. In order to prove that the attorney's negligence caused the client harm, the client-plaintiff must show that the claim underlying the malpractice action would have been successful "but for" the attorney's negligence. But if the underlying judgment was uncollectible, for example, due to insufficient assets or bankruptcy, the lost value of the judgment is not the proximate result of an attorney's negligence. Proving collectibility, therefore, necessarily follows from the rule that plaintiffs must prove causation.

LeHouillier v. Gallegos , 434 P.3d 156, 162, reh'g denied (Colo. 2019). "Collectibility is logically and inextricably linked to the legal-malpractice plaintiff's damages,...