Schlomer by Bye v. Perina

• Decision Date: 11 June 1991
• Docket Number: No. 90-0952,90-0952
• Citation: 473 N.W.2d 6,173 Wis.2d 889
• Parties: Lyle SCHLOMER, a minor, by C.M. BYE, his guardian ad litem, d Plaintiff-Respondent-Cross-Appellant, v. Robert I. PERINA and Northwestern National Insurance Company, Defendants-Appellants-Cross-Respondents.
• Court: Wisconsin Court of Appeals

Page 6

473 N.W.2d 6

173 Wis.2d 889

Lyle SCHLOMER, a minor, by C.M. BYE, his guardian ad litem,^d Plaintiff-Respondent-Cross-Appellant, v. Robert I. PERINA and Northwestern National Insurance Company, Defendants-Appellants-Cross-Respondents.

No. 90-0952.

Court of Appeals of Wisconsin.

Submitted on Briefs Dec. 17, 1990.

Opinion Released June 11, 1991.

Opinion Filed June 11, 1991.

[173 Wis.2d 890] Virginia L. Newcomb, of Bell, Metzner, Gierhart & Moore, S.C., Madison, for defendants-appellants-cross-respondents.

Arnold P. Anderson, of Capwell, Berthelsen, Nolden, Casanova, Pitts & Kallenbach, Ltd., Racine, for plaintiff-respondent-cross-appellant.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

LaROCQUE, Judge.

Attorney Robert I. Perina and his insurer, Northwestern National Insurance Company, appeal a judgment entered upon a legal malpractice verdict in favor of Perina's former client, Lyle Schlomer, d.o.b. 11/5/75. Lyle, through the efforts of another attorney, settled his underlying personal injury claim against a farm machinery manufacturer and its insurer. Lyle then pursued this malpractice action on the theory that Perina's three years of unjustified inactivity caused a lesser settlement and also caused Lyle the loss of use of the money from an earlier and larger settlement. A jury agreed, and the trial court, after deducting a hypothetical attorney fee, entered judgment on the verdict.

We conclude that allowance of recovery here opens the door to malpractice claims whereby there is no just or sensible stopping point. We therefore reverse the judgment and need not address the other issues raised by the parties.

Lyle fell into a silo auger on his family farm in 1977 when he was less than two years old and suffered permanent disabling injuries. Lyle's parents sought no legal advice in the belief that Lyle's father, Marvin Schlomer, was primarily responsible for the accident. Perina went to the farm in 1981 and solicited the potential products liability claim from Lyle's parents. He did some preliminary investigation and prepared a "Day in the Life" video demonstrating the impact of Lyle's injuries on his ability to function as a five-year-old. He had photos taken, gathered medical records and consulted with experts. According to Lyle's trial witnesses, however, Perina did little or nothing of consequence for three years thereafter. At the end of the three years, in December 1984, the Schlomers discharged Perina and retained attorney C.M. Bye, who promptly filed suit in federal court and, within a year, after discovery and negotiations, settled Lyle's claim against A.O. Smith and its insurer for $1,036,236.

Several years later, in 1988, Lyle filed this malpractice action. At trial, Lyle presented expert testimony including that of attorney Robert Weisel. According to Weisel, who reviewed Perina's pretrial deposition and affidavit, Perina essentially did nothing for a three-year period. Weisel testified that Perina gave four "excuses" for his behavior. First, Perina spent time traveling to agricultural shows and related activities to broaden his knowledge of farm machinery and observe developments in engineering safety; second, Perina was waiting for the decision in Korth v. American Family Ins. Co., 115 Wis.2d 326, 340 N.W.2d 494 (1983), dealing with the statute of limitations upon parents' claims arising out of injuries to their child; third, Perina became disabled by illness; and fourth, Perina delayed further action due to "inflationary factors."

Weisel told the jury that none of these explanations was valid: Perina, an experienced farm accident attorney, had ample time to acquire all the necessary knowledge relevant to the claim before 1982; Korth had no bearing whatever upon Lyle's claim; ¹ Perina's illness did not occur until 1984 and was of short duration; and it is unheard of to delay a claim of such magnitude in expectation that inflation may increase the amount of settlement.

Weisel also testified that Perina's unjustified failure to act caused Lyle's personal injury claim to diminish in value. Specifically, the otherwise dramatic impact of the "Day in the Life" video was partially lost because it was an image of the past and no longer reflected Lyle's condition. On the issue of damages, Weisel testified that the claim had a prior value 20% higher than the amount the insurance company paid in 1985, while attorney Bye set the value of the case prior to the three-year delay at $1.5 million. The jury set the prior value of the claim at $1,270,000. It also awarded $406,000 for loss of use of the earlier and larger lost settlement. The trial court deducted an attorney fee from the award and approved the verdict as adjusted.

Generally, liability will follow a proper finding of causal negligence:

However, negligence plus an unbroken sequence of events establishing cause-in-fact does not necessarily lead to a determination that the defendant is liable for the plaintiff's injuries. The determination to not impose liability in instances where a negligent act has been committed and the act is a 'substantial factor' in causing the injury rests upon considerations of public policy.

Coffey v. City of Milwaukee, 74 Wis.2d 526, 541, 247 N.W.2d 132, 140 (1976) (quoting Hass v. C & NW Ry. Co., 48 Wis.2d 321, 326, 179 N.W.2d 885, 888 (1970)).

The application of these public policy considerations is solely a function of the court. Id. Thus, our supreme court has held that even where the chain of causation is complete and direct, recovery may be denied if: (1) The injury is too remote from the negligence; (2) the injury is too wholly out of proportion to the tort-feasor's culpability (3) in retrospect it appears too highly extraordinary that the negligence should have brought about the harm; (4) because allowance of recovery would place too unreasonable a burden on the negligent tort-feasor; (5) because allowance of recovery would be too likely to open the way for fraudulent claims; or (6) allowance of recovery would enter a field that has no sensible or just stopping point. Id. The cases in which a causally negligent tort-feasor is relieved of liability are infrequent and present unusual and extreme considerations. Stewart v. Wulf, 85 Wis.2d 461, 479, 271 N.W.2d 79, 88 (1978).

Among the various criteria set forth, the absence of a sensible or just stopping point has application here. The traditional elements of a cause of action in negligence are (1) duty and its breach (negligence), (2) a close connection between the conduct and the injury (cause in fact) and (3) actual loss (damages). PROSSER & KEETON ON THE LAW OF TORTS § 30 (5th ed. 1984). In rejecting the cause of action here for loss of an earlier and larger settlement, we will assume without deciding that Perina is wrong when he argues that Lyle has not proven either cause in fact or damages to the degree of proof required.

With regard first to negligence, if unjustified inactivity toward a file for a time less than the limitation period is actionable, an unjustified delay of three months may serve the purpose as well as one of three years. Countless busy law offices may be negligent for failing to hire additional help where caseloads are high and matters are temporarily set aside. While the Supreme Court Rules of Professional Conduct for Attorneys provide ethical duties that a lawyer make reasonable efforts to expedite litigation consistent with the interests of the client, SCR 20:3.2, repealed and recreated June 10, 1987, effective January 1, 1988, no one argues that a violation of this rule is intended to give rise to a civil cause of action for negligence. We also point out that the decision in this case does not resolve the issue of negligence that arises when an attorney approves a settlement for less than reasonable value of the claim. In that situation, the negligence is not the delay in settlement but the failure to use reasonable care to determine settlement value.

Lyle's proof of causation, a connection between Perina's delay and the injury, is largely an inference drawn from the fact that because the insurance company settled later, with proper effort it would have settled earlier. The effect of that inference on malpractice claims is that the temporary delay may be causal whenever the plaintiff's pain and suffering diminishes, or his injuries heal or a witness' memory fades. Lyle's own expert, Weisel, had some difficulty with the question of whether the evidence established the connection between the negligence and the likelihood of an earlier settlement. When first asked if he had an opinion to a reasonable degree of certainty whether in the handling of this case an attorney exercising ordinary care would have reached an earlier settlement, Weisel stated: "I have a problem with the word "settlement," ... because it takes two people to do it." Weisel went on to indicate that the case should have been "resolved" within a year of Perina's taking the case. It must be noted that the jury was not asked whether Perina should have tried the case to a successful conclusion at an earlier date but merely whether he should have settled the case earlier.

With regard to damages, quite apart from the unavoidable fact that personal injury awards are never capable of determination with mathematical certainty, the question of the prior settlement value of a claim enters an area even more esoteric. Economic and legal factors that influence an insurance company to settle a claim for a given sum requires a jury to reach its verdict largely upon the opinion of experts rather than its own common knowledge. Every insurance claim for personal injuries, as even Lyle's expert acknowledged, has a settlement range rather than a fixed certain value. Recovery for failing to settle a claim at an earlier date for more money thus opens the door to malpractice claims immeasurably wider and resting largely on evidence of an abstract and hypothetical...