The Georgia Court of Appeals upheld the dismissal of a legal malpractice complaint against Taylor English Duma and firm partner Michael Trotter, ruling the trial judge was correct in finding an inventor’s claims against the firm can’t proceed, since he settled the underlying case.
Like the lower court, the appellate panel found that Michael Lalonde had agreed to settle his claims with his former investor—the business’ majority partner—and thus could not prove that any negligence on the firm’s part caused his financial losses.
Lalonde could have pursued further litigation instead of settling, wrote Judge Steve Goss, and “it was possible that a further litigation would have yielded a favorable result.”
But by “settling a claim that is viable, despite the attorney’s alleged negligence, the client severs proximate cause because it is impossible for the claim, through an underlying lawsuit, to terminate in the client’s favor,” wrote Goss, with the concurrence of Judges E. Trenton Brown III and Ken Hodges.
The ruling affirmed an order by Fulton County Superior Court Judge Craig Schwall, who dismissed the case three weeks before trial last year.
“Simply put, even if this court were to agree with plaintiff’s assertions and determine that defendants violated their standard of care as his counsel, plaintiff has not shown, and cannot uphold his burden to show, that defendants were the proximate cause of his damages and, therefore, his legal malpractice claim fails as a matter of law,” Schwall wrote.
Lalonde will be filing a petition for certiorari, said Lamar, Archer & Cofrin partner Robert Lamar, who represents the plaintiff with firm colleague David Davenport. Lamar declined to comment further.
Trotter and Taylor English are represented by Dana Maine and Kevin Stone with Freeman, Mathis & Gary, who were not at liberty to comment.
As detailed in the complaint and other filings, the case began in 2010 when Lalonde approached Virginia-based PBM Capital Investments to discuss funding for a device he invented to deal with sleep apnea, the occurrence of erratic breathing when one is asleep.
One treatment uses a continuous positive airway pressure, or CPAP, device to provide a steady stream of air through a mask. Finding the existing devices large and noisy, Lalonde developed a smaller, battery-powered model.
PBM and its president, Paul Manning, expressed an interest, and Lalonde retained Taylor English to draw up an operating agreement under which PBM would provide $5 million in funding in return for two-thirds interest in his company, Deshum Medical.
Lalonde contributed his invention, patents and related assets in return for an agreed-upon value of $2.1 million, made up of $350,000 in cash and a one-third interest in the company.
Among the terms of the agreement was a stipulation that Deshum Medical could be dissolved by a majority vote of the shareholders.
There were difficulties getting the device to market, and in 2013 PBM pulled the plug and fired Lalonde. Later that year, PBM sued Lalonde in Virginia, claiming he’d defrauded the company of millions of dollars.
The parties settled a few months later, with Lalonde accepting $310,000 and agreeing not to sue PBM.
In 2015, Lalonde sued Taylor English, Trotter and another lawyer no longer with the firm, who was later dismissed by consent. The complaint said Taylor English breached the standard of care by drafting an agreement that allowed Deshum to be dissolved without Lalonde’s consent.
In addition to costing him his equity in Deshum, Lalonde’s complaint said PBM had gone on to sell his device to another company for millions of dollars.
Three court-ordered mediations failed, and Schwall dismissed the case in May, writing that Lalonde had been paid for his interest in Deshum.
“If he believed he was not getting the value of Deshum’s corporate opportunities, he had the litigation to pursue that claim,” Schwall wrote then. “He could have, but did not utilize the process that was available, choosing instead to settle.”
In upholding the trial court, Goss noted that Lalonde had not only settled his claims, but also actively sought to dissolve PBM in Delaware Chancery Court prior to settling.
Lalonde also had argued that he should have been awarded the $58,000 he paid Trotter and his firm for drafting the operating agreement and another $80,000 he paid to his lawyer in the Delaware action.
“Lalone cites to no authority on point regarding attorney fees stemming from an allegation of legal malpractice where, as here, the trial court specifically stated that it was not finding that Lalonde’s attorneys breached the standard of care,” the opinion said.
In a second enumeration of error, Lalonde had argued that drafting of the operating agreement allowing PBM to unilaterally dissolve Deshum caused his damages but “points us to nothing indicating that PBM ever agreed or would have agreed” to changing the language regarding the company’s dissolution.
“Lalonde’s claims thus fail as a matter of law, because he cannot show that Trotter and Taylor English were the but-for cause of his damages, in that there is no evidence that his lawyers could have gotten him a better deal,” Goss wrote.