Royal Ins. Co. of America v. Miles & Stockbridge

• Decision Date: 27 April 2001
• Docket Number: Civil Action No. S-99-1351.
• Citation: 138 F.Supp.2d 695
• Parties: ROYAL INSURANCE COMPANY OF AMERICA, Plaintiff, v. MILES & STOCKBRIDGE, P.C., et al., Defendants.
• Court: U.S. District Court — District of Maryland

138 F.Supp.2d 695

ROYAL INSURANCE COMPANY OF AMERICA, Plaintiff, v. MILES & STOCKBRIDGE, P.C., et al., Defendants.

Civil Action No. S-99-1351.

United States District Court, D. Maryland, Northern Division.

April 27, 2001.

COPYRIGHT MATERIAL OMITTED

Mitchell A. Stearn, Porter Wright Morris & Arthur, LLP, Virginia Elizabeth Richards, Law Office, Washington, DC, for plaintiff.

William J. Murphy, Murphy & Shaffer, Baltimore, MD, Robert T. Shaffer, III, Murphy & Shaffer, Baltimore, MD, for defendants.

MEMORANDUM OPINION

SMALKIN, District Judge.

This matter is before the Court on Third-Party Defendant Parler & Wobber's Motion for Reconsideration of this Court's March 13, 2001 Memorandum Opinion and Order, in which this Court denied Parler & Wobber's motion for summary judgment on the issue of contribution and held that Parler & Wobber's settlement recommendation to Salomon was negligent as a matter of law.

There is no procedural or substantive impediment to the present motion for reconsideration, as it calls to the Court's attention an error in its original handling of the issue. For the reasons that follow, it will be granted.

BACKGROUND

In its motion for reconsideration, Parler submits that the Court's decision that Parler was negligent as a matter of law in recommending that Salomon, Inc. ("Salomon") settle the Jerome litigation for $1.6 million was premature, as Miles & Stockbridge ("Miles") had not moved for summary judgment against Parler at the time the Court concluded that Parler was negligent as a matter of law. Thus, Parler argues that, although the Court was procedurally correct in denying Parler's motion for summary judgment based on its argument that it was not negligent as a matter of law in recommending settlement for $1.6 million, the Court should not have ruled, sua sponte, that Parler was negligent as a matter of law before that particular issue was affirmatively before the Court and briefed by the parties. Parler specifically claims that the evidence submitted in its summary judgment motion supported the issues and arguments framed by Parler as the moving party. As the non-moving party opposing a summary judgment motion, however, Parler says it would have given the Court the opportunity to consider additional evidence revealing the existence of factual dispute as to whether its settlement recommendation was negligent. Parler has a strong argument that it should be permitted to introduce defensive evidence to defeat summary judgment in favor of Miles¹; however, because the Court overlooked a key argument that Parler initially presented in a footnote to its summary judgment motion and reply memorandum, the Court will reconsider its March 13, 2001 Order, confessing thereby its own error. Thus, this Court has now done its bit to add to the megaplex of errors already committed by virtually everyone who had come close to this nettlesome mess.

In its summary judgment memorandum, Parler argued that the settlement recommendation to Salomon was less than both the highest potential verdict, as opined by Miles's expert F. Ford Loker, and the average verdict for a mesothelioma case in Baltimore City. Parler further claimed that its settlement recommendation for less than the highest potential verdict was within the standard of care, because Salomon preferred paying an amount certain in settlement to proceeding to trial and risking a judgment higher than the settlement amount. In other words, according to Parler, the settlement decision was a question of risk tolerance. Parler also emphasized that Miles's settlement expert did not take subjective factors into account in his opinion as to the reasonable settlement value of the Jerome matter. Specifically, Parler maintained that an important factor in its calculation of a settlement recommendation to Salomon was the possibility of a punitive damages award. Because Salmon allegedly expressed great concern about the ramifications of a punitive damages award, particularly negative publicity and the effect a damages award would have on various corporate mergers, and because Parler felt that it could not rule out a punitive damages award based on existing precedent on the issue, Parler allegedly considered Salomon's desire to avoid a punitive damages award when it provided settlement advice.

Miles, on the other hand, maintained that Parler breached the standard of care by recommending that Salomon settle for $1.6 million. Miles alleged that Parler was inexperienced in handling asbestos claims and that Parler failed to take into account the likelihood of a successful appeal when advising Salomon on settlement. Furthermore, Miles alleged that Parler failed to recognize that the Jerome action was a survival action only, as opposed to a customary survival and wrongful death action. The omission of a wrongful death claim in the Jerome action, according to Miles, would have resulted in a significant reduction in the plaintiff's damages award. On the issue of punitive damages, Miles cited to testimony of Ellen O'Brien, Salomon's claims representative, that undermined Parler's claim that Salomon settled because of concern about a possible punitive damages award. Miles then argued that, even if Salomon expressed concern about the implications of a punitive damages award, Parler was nonetheless negligent in factoring punitive damages into its settlement recommendation, because punitive damages would have been unavailable under controlling authority. Finally, Miles maintained that even if Salomon had legitimate reasons to settle for an unreasonable amount, Royal, not Salomon, made the settlement decision.

The Court, in its memorandum opinion and order, held that the evidence to which Parler cited in the record did not support its claim that Salomon's concern about negative publicity and financial viability justified Parler's settlement advice. Finding insufficient evidence that subjective factors influenced the settlement recommendation, the Court held that Parler was negligent as a matter of law in recommending that Salomon settle for $1.6 million, because Salomon could successfully have appealed the default judgment, asserted the defense of limitations, and paid nothing in damages.² In so holding, however, the Court overlooked a point made by Parler in a footnote to its summary judgment memorandum and in a footnote to its reply memorandum. In these footnotes, Parler stated that the likelihood of success on appeal had a negligible impact on the calculation of the settlement amount, because two of Miles's own experts, F. Ford Loker and Paul Bekman, testified that it would not have been a breach of the standard of care for an attorney in the Jerome litigation to advise that the chance of success on appeal was less than 50%. See Parler's Memorandum in Support of its Motion for Summary Judgment, at p. 19, n. 9 and Parler's Reply Memorandum, at p. 8, n. 6. Because of the unique role of experts in legal malpractice cases, these concessions by Miles's experts in deposition are fatal to Miles's claim for contribution against Parler.

ANALYSIS

As stated in the Court's memorandum opinion, a trial judge decides the issue of proximate cause as a matter of law in attorney malpractice cases where the determination of proximate cause depends on whether an appeal of the underlying action would have been successful. Mem Op. at 27. Thus, the Court appropriately determined that a Maryland appellate court would have reversed Judge Angeletti's decision to enter a default judgment against Salomon.³ A trial judge does not, however, determine the standard of care in a legal malpractice case, even though it is an area in which a court arguably has unique expertise. See Fishow v. Simpson, 55 Md.App. 312, 319, 462 A.2d 540 (1983). In Fishow, the Maryland Court of Special Appeals rejected a legal malpractice plaintiff's argument that a trial judge can take judicial notice of the standard of care required of attorneys in specific situations. Id. at 319, 462 A.2d 540. The plaintiff cited to Central Cab. Co. v. Clarke, 259 Md. 542, 270 A.2d 662 (1970), to support her argument that expert testimony is not required in all legal or medical malpractice cases. In Central Cab. Co., the Court of Appeals held that expert testimony was not necessary to establish a breach of the standard of care where the attorney failed to notify his client that he would no longer represent him, thereby preventing the client from obtaining new counsel and avoiding a default judgment. Id. at 551, 270 A.2d 662. The Court acknowledged that expert testimony may be required in certain malpractice cases, but concluded that the attorney's conduct in the case before it was "such a clear violation of the [defendant's] duty as an attorney that the trial court should have ruled this as a matter of law." Id. The Court analogized the attorney's conduct to other conduct in malpractice actions that did not require proof of negligence by expert testimony, to wit, that of a dentist who pulls the wrong tooth, see McClees v. Cohen, 158 Md. 60, 148 A. 124 (1930), or that of a medical professional who negligently leaves a sponge in a patient after an operation, see Rural Educ. Ass'n v. Bush, 42 Tenn.App. 34, 298 S.W.2d 761 (1956). Central Cab thus eliminated the requirement for expert testimony in classes of cases "where the common knowledge or experience of laymen is extensive enough to recognize or infer negligence from the facts." See Fishow, 55 Md.App. at 318-19, 462 A.2d 540; see also Franch v. Ankney, 341 Md. 350, 357 n. 4, 670 A.2d 951 (1996). The plaintiff's claim for malpractice in Fishow was not based on a specific shortcoming on the part of the attorney; rather the plaintiff claimed that the attorney should have pursued a different strategy in presenting the plaintiff's claim for medical malpractice. Id. at 317, 462 A.2d 540. As such, the Court held that the case was not "one where that alleged incompetence or negligence of c...