United Auto. Ins. Co. v. Metzger Rosta, LLP
| Decision Date | 26 March 2021 |
| Docket Number | No. 1:19-cv-00956-SEB-MPB,1:19-cv-00956-SEB-MPB |
| Parties | UNITED AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. METZGER ROSTA, LLP, THOMAS E. ROSTA, Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
Plaintiff United Automobile Insurance Company ("UAIC") initiated this legal malpractice lawsuit against Defendants Metzger Rosta, LLP and Thomas E. Rosta (collectively, "Rosta" unless context requires otherwise) on March 7, 2019, invoking our diversity jurisdiction.1 Now before the Court are cross-motions for partial summary judgment. For the reasons set forth herein, UAIC's motion is granted in part and denied in part, and Mr. Rosta's cross-motion is denied.
On June 28, 2013, Brieane Wiley's ("Ms. Wiley") car rear-ended a car driven by Mary Sellers ("Ms. Sellers"). Ms. Sellers's son, Joshua Sellers ("Joshua") was a passenger in her car at the time of the accident. Ms. Wiley was alone in her vehicle. A police officerresponding to the collision found that Ms. Wiley had been "following too closely," and that Ms. Sellers did not contribute to the accident. [UAIC Exh. 3; Rosta Exh. 15]. Ms. Sellers did not suffer any visible injuries, though she complained of chest pain. Joshua incurred an abrasion on his head. [Id.].
At the time of the accident, Ms. Wiley maintained an automobile insurance policy with UAIC, which provided $25,000 in personal-injury coverage and $50,000 per collision. [Pl. Ex. 4]. This policy also established UAIC's contractual duty to defend Ms. Wiley against any claims within the contract's purview. On July 2, 2013, Ms. Wiley promptly notified UAIC of her collision with the Sellerses. [Pl. Exh. 15; Def. Exh. 17].
Following the Collision, Ms. Sellers retained attorney Michael Galanis to represent her and her son in any claims arising from this accident. Mr. Galanis informed UAIC that Ms. Sellers had incurred $353 in medical expenses. [Pl. Exh. 5]. On October 1, 2013, Mr. Galanis transmitted a second notice to UAIC, indicating that Ms. Sellers's medical bills had increased to a current total of $7000. [Pl. Exh. 6]. Neither communication included a settlement demand nor confirmation of the full amount Ms. Sellers had personally paid toward her medical expenses. UAIC responded to Mr. Galanis on October 24, 2013, requesting, upon completion of Ms. Sellers's medical treatment, a "prompt settlement demand along with any preliminary medical records and . . . occupation and wage loss information." [Pl. Exh. 7].
Thereafter, several communications were exchanged between UAIC and Mr. Galanis, wherein Ms. Sellers's injuries and lost wages were discussed, the costs associated therewith totaled $3213.44. [Pl. Exh. 7, 8]. On February 28, 2014, UAICextended an offer of $3000 to Ms. Sellers to settle her claims. [Pl. Exh. 9, 10, 11; Def. Exh. 18]. Mr. Galanis made no response to this offer. Unbeknownst to UAIC, he had previously initiated a lawsuit against Ms. Wiley on behalf of the Sellerses on January 29, 2014, in Lake Superior Court (Indiana) (the "State Court Litigation"). [Def. Exh. 21]. Though Ms. Wiley reports that she mailed a copy of the summons and complaint to UAIC, UAIC denies having ever received any notice that a lawsuit had been filed. [Wiley. Int. Res., p. 7-8]. Allegedly unaware of the litigation against Ms. Wiley, UAIC did not assign counsel to defend her. [Pl. Exh. 15].
Believing that "everything was being taken care of by UAIC," Ms. Wiley failed to appear or otherwise defend herself in the State Court Litigation, and an Order of Default was therefore entered against her on July 14, 2014, which order was amended on August 7, 2014. [Id.; Pl. Exh. 16]. On August 22, 2014, UAIC, after "check[ing] the [c]ourt site" to confirm that no suits had been filed against Ms. Wiley, closed her claim file for "lack of interest." [Def. Exh. 17, at 31].
In the interim, the Sellerses retained new counsel, Donald Wruck, who, nine months after the Order of Default had been entered against Ms. Wiley, wrote to UAIC on May 18, 2015, notifying it of the default as well as the fact that the case was scheduled for a bench trial to determine damages. Mr. Wruck's transmittal of this information was coupled with an invitation to engage in settlement discussions. [Pl. Exh. 18]. Following his receipt of information, UAIC Claims Adjuster Norman Schwartzman hired Mr. Rosta,an insurance defense attorney, providing to him written instructions to defend Ms. Wiley. Mr. Rosta was specifically directed to "verify proper service," "enter an appearance," and "move to set [the default] aside." [Pl. Exh 19, Def. Exh. 56]. UAIC further communicated to Mr. Rosta that it could evaluate and produce a settlement offer once Mr. Rosta obtained all of Ms. Sellers's relevant medical information. [Id.]. UAIC's final instruction was for Mr. Rosta to produce "an initial status report within 30 days" and to furnish additional reports "at least every 60 days that provide information on all development since the prior report," including " a "plan of action on how the lawsuit will move forward." [Id.] Ms. Wiley was mailed a copy of this communication. [Id.].
Mr. Rosta agreed to represent Ms. Wiley, but what occurred thereafter is in dispute.
The parties disagree as to whether Mr. Rosta ever attempted to contact Ms. Wiley. According to Mr. Rosta, he directed his paralegal, Ms. Jen Bunner, to call Ms. Wiley. Though he testified that Ms. Bunner "attempted to speak with her," his interrogatory responses reflect his uncertainty as to whether any attempts were actually made. [Pl. Exh. 12, Rosta Depo, at p. 111, 122-23; Pl. Exh. 24; Def. Exh 30., Rosta Depo, at 126-129]. Ms. Bunner cannot recall whether she was given this instruction or whether she made the call. Had she called Ms. Wiley and spoken with her or left a voicemail for her, she would have billed for that time; had Ms. Wiley's phone number been disconnected or her contact information incorrect, Ms. Bunner would have informed Mr. Rosta of such. [Pl. Exh. 23, Bunner Depo., at p. 50-51, 57, 61]. However, no time was ever billed for a phone call to/with Ms. Wiley, and there is no indication that Ms. Bunner ever informedMr. Rosta that the telephone number for Ms. Wiley was invalid for any reason. [See Pl. Exh. 25].
Regardless of whether those attempts were made, it is undisputed that no representative of Mr. Rosta's office ever spoke to or otherwise communicated with Ms. Wiley. It is also undisputed that Mr. Rosta's office never transmitted any letters to Ms. Wiley by regular or certified mail, though his office protocol for contacting clients in insurance defense cases would typically have included issuing a letter via regular mail as well as a follow up letter via certified mail, calling the client, and even hiring a private investigator, if needed. [Pl. Exh. 12, Rosta Depo. 105-106, 109].
Mr. Rosta has testified that, within a few weeks of his acceptance of Ms. Wiley's case, he was verbally instructed by Mr. Schwartzman to "stand down" from litigating it. The purported basis for this instruction, according to Mr. Rosta, was that UAIC had realized that it was dealing with a "clear liability case" with "nominal value," so Mr. Schwartzman intended to attempt to settle it without the assistance of counsel. [Def. Exh 30, Rosta Depo, at 126-129]. Citing this alleged instruction to "stand down," Mr. Rosta took no actions, beyond allegedly instructing Ms. Bunner to telephone Ms. Wiley, between May 20, 2015 and February 18, 2016, with respect to litigating the case. Mr. Schwartzman denies having issued any "stand down" instruction.
Meanwhile, on June 8, 2015, Ms. Wiley faxed a copy of a court order to UAIC which indicated that a status hearing in the State Court Litigation was scheduled for July 17, 2015. [Pl. Exh. 26; Def. Exh. 32]. She included with her fax a handwritten note stating that she could not afford an attorney. [Id.]. No representative of UAIC respondedto Ms. Wiley. Mr. Schwartzman, however, did send an email to Ms. Kari Wakeland—Ms. Rosta's office manager, whose only involvement with cases or insurance adjusters pertained to invoices— with the subject line "TRIAL COUNSEL." The body of the email was empty, and it did not include Ms. Wiley's fax nor notice of the status conference; instead, Mr. Schwartzman's email attached only a copy of the default order as well as Mr. Wruck's May 18, 2020 letter. [Def. Exh. 34]. The email was not sent to Mr. Rosta, his paralegal, or his legal assistant. Ms. Wakeland testified that it would have been "very unusual" for her to receive substantive emails related to the law firm's cases, though her practice in such instances would have been to immediately forward such emails to Mr. Rosta. [Pl. Exh 61, Wakeland Depo., p. 14-15; Def. Exh. 58, Wakeland Depo. p. 8-10, 14-15]. She has no specific recollection of receiving this email, however, and Mr. Rosta maintains he never received any notice of it. [Id.; Def. Exh. 59, ¶¶ 2-3]. In any event, it is uncontested that Mr. Schwartzman's email contained no reference to Ms. Wiley's fax or the upcoming court status conference.
Around this same time, UAIC transferred Ms. Wiley's claim file to Zuzana Berrios, a claims adjuster at UAIC with a reputation of falling behind on her work. [Def. Exh. 40, p. 18-19]. Ms. Schwartzman forwarded Ms. Wiley's June 8, 2015 fax to Ms. Berrios, but she likewise did not respond to Ms. Wiley nor follow up with Mr. Rosta's office. [See Def. Exh. 33].
Ms. Wiley appeared for the July 17, 2015 status hearing pro se and soon thereafter retained private counsel, Geoffrey Giorgi. [See Pl. Exh. 15, Pl. Exh. 29]. On August 20, 2015, Attorney Wruck filed a "Damages Brief" on behalf of Ms. Sellers, seeking acombined damages award for Mary and Joshua Sellers between $762,877 and $883,797. [Pl. ...
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