Natl. Union Fire Ins. Co. v. Wuerth

• Decision Date: 29 July 2009
• Docket Number: No. 2008-1334.,2008-1334.
• Citation: 122 Ohio St.3d 594,2009 Ohio 3601,913 N.E.2d 939
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA v. WUERTH et al.
• Court: Ohio Supreme Court

913 N.E.2d 939

122 Ohio St.3d 594

2009-Ohio-3601

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA v. WUERTH et al.

No. 2008-1334.

Supreme Court of Ohio.

Submitted March 24, 2009.

Decided July 29, 2009.

Keating, Muething & Klekamp, P.L.L., Joseph M. Callow Jr., Danielle M. D'Addesa, and Charles M. Miller, Cincinnati, for petitioner.

Taft, Stettinius & Hollister, L.L.P., Lawrence D. Walker, and Benjamin J. Parsons, Columbus, for respondents.

O'DONNELL, J.

{¶ 1} The United States Court of Appeals for the Sixth Circuit has certified one question of state law for our resolution: "Under Ohio law, can a legal malpractice claim be maintained directly against a law firm when all of the relevant principals and employees have either been dismissed from the lawsuit or were never sued in the first instance?"

{¶ 2} We answer the certified question in the negative and hold that a law firm does not engage in the practice of law and therefore cannot commit legal malpractice directly and that a law firm is not vicariously liable for legal malpractice unless one of its principals or associates is liable for legal malpractice.

Facts and Procedural History

{¶ 3} In accordance with the findings of the United States District Court and the certification order submitted by the United States Court of Appeals, we ascertain the following factual and procedural history.

{¶ 4} In August 1998, Hurricane Bonnie struck Virginia Beach, Virginia, and damaged six hotels that were insured by the Nationwide Mutual Insurance Company. Nationwide contacted National Catastrophe Adjusters ("NCA") to provide claims adjustment services, and NCA retained McLarens Toplis North America to perform the work. McLarens, in turn, hired an individual adjuster, Larry Wood. Eleven days after Wood began working on the project, however, Nationwide demanded his removal, claiming that he had negligently overestimated the damage to the six hotels by more than $16 million.

{¶ 5} Nationwide subsequently filed suit against NCA, McLarens, and Wood, claiming negligence and damages in excess of $16 million. McLarens and Wood are insureds of the National Union Fire Insurance Company of Pittsburgh, PA, petitioners, which retained the Columbus, Ohio, law firm of Lane, Alton & Horst, L.L.C., respondents, to provide their defense. The firm assigned the matter to one of its partners, Richard Wuerth, and an associate, Beth Lashuk.

{¶ 6} A jury trial on Nationwide's claims commenced in the United States District Court for the Southern District of Ohio on February 4, 2002. In the second week of trial, Wuerth informed the firm and the district court that he did not feel well. Wuerth continued representing McLarens, however, until February 14, 2002, when he collapsed in his home and required emergency transport to the hospital. His treating physician opined that he could not continue with the trial and would be incapacitated for the foreseeable future. After the district court denied a motion for mistrial filed by McLarens and Wood, the trial continued with other attorneys from Lane Alton. The jury returned a verdict in favor of Nationwide on February 21, 2002, awarding it $16.2 million. Pursuant to a "high-low" settlement reached by the parties during the jury's deliberations, National Union paid Nationwide $8.25 million.

{¶ 7} On February 21, 2003, National Union filed the instant action in the United States District Court for the Southern District of Ohio, claiming that Wuerth had committed legal malpractice, that Lane Alton was vicariously liable for Wuerth's malpractice, and that the firm itself had committed malpractice. While National Union alleged numerous wrongful acts and omissions by several individuals in the firm, Wuerth was the only individual named as a defendant in the complaint.

{¶ 8} On a motion for summary judgment filed by Wuerth and Lane Alton, the district court dismissed Wuerth from the action because National Union had filed its complaint after the expiration of the one-year statute of limitations for legal malpractice claims set forth in R.C. 2305.11(A). Natl. Union Fire Ins. Co. of Pittsburgh, PA v. Wuerth (S.D.Ohio 2007), 540 F.Supp.2d 900, 911. Because National Union had no cognizable claims against Wuerth, the district court further dismissed the claims for vicarious liability against Lane Alton. Id. at 912. Finally, the district court determined that Lane Alton cannot be held directly liable for legal malpractice because it is not an attorney and does not practice law. Id. at 913. Thus, the district court entered summary judgment in favor of Wuerth and Lane Alton. Id. at 914.

{¶ 9} National Union appealed to the United States Court of Appeals for the Sixth Circuit, arguing inter alia that Lane Alton may be held directly liable for legal malpractice. The court of appeals determined that Ohio law is unsettled on this issue and, pursuant to Sup.Ct.Prac.R. XVIII, certified the following question of state law to this court: "Under Ohio law, can a legal malpractice claim be maintained directly against a law firm when all of the relevant principals and employees have either been dismissed from the lawsuit or were never sued in the first instance?" We subsequently agreed to answer the question. Natl. Union Fire Ins. Co. of Pittsburgh, PA v. Wuerth, 119 Ohio St.3d 1442, 2008-Ohio-4487, 893 N.E.2d 514.

{¶ 10} National Union contends that an attorney-client relationship may exist between a law firm and a client and that a firm owes a duty of care to its clients. Thus, according to National Union, a law firm should be directly liable for malpractice when the firm breaches its professional duties. Moreover, National Union asserts that a firm is vicariously liable for malpractice committed by its attorneys, even when no attorney can be held liable or has been named as a defendant.

{¶ 11} Lane Alton, on the other hand, maintains that only attorneys are able to practice law and thus that only attorneys can breach a professional duty. The firm further asserts that it cannot be held vicariously liable for malpractice unless one of its attorneys is liable for malpractice. Thus, Lane Alton urges this court to hold that a law firm is not liable for malpractice unless one or more of its attorneys is liable for malpractice.

{¶ 12} Accordingly, we are presented with two limited issues for review: one, whether a law firm may be directly liable for legal malpractice—i.e., whether a law firm, as an entity, can commit legal malpractice —and two, whether a law firm may be held vicariously liable for malpractice when none of its principals or employees are liable for malpractice or have been named as defendants.

Direct liability of a law firm for legal malpractice

{¶ 13} When analyzing issues that relate to malpractice by attorneys and physicians, we have often drawn upon the similarities between the legal and medical professions. For example, in Richardson v. Doe (1964), 176 Ohio St. 370, 372, 27 O.O.2d 345, 199 N.E.2d 878, we addressed an issue concerning the statute of limitations that applies to malpractice claims and observed that "[i]t is the misfortune of both physicians and lawyers that, in a very considerable proportion of their cases, they are unable to accomplish the purpose desired. * * * Since physicians must often fail to fulfill expectations, they, along with lawyers, are peculiarly susceptible to the charge of failure in the performance of their professional duties." And in Zimmie v. Calfee, Halter & Griswold (1989), 43 Ohio St.3d 54, 57, 538 N.E.2d 398, we held that "[m]edical and legal malpractice actions should conform to the same standard for determining when a cause of action accrues and when the statute of limitations commences so we do not discriminate `for or against' doctors or `for or against' lawyers."

{¶ 14} Thus, our precedent concerning medical malpractice is instructive, and in the medical context, we have recognized that because only individuals practice medicine, only individuals can commit medical malpractice. For instance, in Browning v. Burt (1993), 66 Ohio St.3d 544, 556, 613 N.E.2d 993, we explained that "[a] hospital does not practice medicine and is incapable of committing malpractice." Browning cites Lombard v. Good Samaritan Med. Ctr. (1982), 69 Ohio St.2d 471, 23 O.O.3d 410, 433 N.E.2d 162, and Richardson, 176 Ohio St. 370, 27 O.O.2d 345, 199 N.E.2d 878 (only physicians can commit medical malpractice). See also Youngstown Park & Falls St. Ry. Co. v. Kessler (1911), 84 Ohio St. 74, 77, 95 N.E. 509 ("a railroad company cannot be guilty of malpractice. It is not authorized to practice medicine or surgery * * *"); Propst v. Health Maintenance Plan, Inc. (1990), 64 Ohio App.3d 812, 814, 582 N.E.2d 1142 (a corporation cannot be held liable for medical malpractice because it does not practice medicine).

{¶ 15} This precedent concerning medical malpractice is consistent with the general definition of "malpractice" that we set forth in Strock v. Pressnell (1988), 38 Ohio St.3d 207, 527 N.E.2d 1235, wherein we stated, "The term `malpractice' refers to professional misconduct, i.e., the failure of one rendering services in the practice of a profession to exercise that degree of skill and learning normally applied by members of that profession in similar circumstances." (Emphasis added.) Id. at 211, 527 N.E.2d 1235, citing 2 Restatement of the Law 2d, Torts (1965), Section 299A. Moreover, we have traditionally taken a narrow view of who may commit malpractice. As we explained in Thompson v. Community Mental Health Ctrs. of Warren (1994), 71 Ohio St.3d 194, 195, 642 N.E.2d 1102, "[i]t is well-established common law of Ohio that malpractice is limited to the negligence of physicians and attorneys." See also Richardson, 176 Ohio St. at 372-373, 199 N.E.2d 878; Investors REIT One v. Jacobs (1989), 46 Ohio St.3d 176, 179-180, 546 N.E.2d 206.

{¶ 16} As with the practice of medicine, it is apparent that only individuals may...