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Many of us remember the old adage: “If at first you don’t succeed, try, try again.” Recently the Texas Supreme Court noted in Rogers v. Zanetti, 518 S.W.3d 394 (Tex. 2017): “Legal malpractice is a land of second chances.”
However, Rogers illustrates how difficult it can be to recover on a second chance. In Rogers, an investor sought to acquire a majority ownership interest in a home health care business. The investor retained a business attorney to draft an agreement to acquire a majority interest in the business from the founders. After the transaction closed, the investor did not follow through with his commitment to invest in the business, but instead acquired control of the accounts of the business and began transferring funds out of the business. The founders sued the investor who requested a recommendation from his business lawyer for a litigator to represent him in the lawsuit. The business lawyer recommended a litigator from his firm. The litigator represented the investor for a while. Later the litigator and the business lawyer withdrew after requesting the investor find new counsel which he did. In a jury trial, the jury decided that the founders had been defrauded, and the jury awarded almost $2.5 million in damages. The trial court declared the investment agreement void because it was procured by fraud, was unconscionable, and lacked consideration. The trial results were affirmed on appeal.
The investor sued the business lawyer, the litigator and their firm for malpractice. The investor claimed the business lawyer had negligently drafted the investment agreement, the litigator should not have accepted the representation because it caused the litigator not to name the business lawyer and their firm as responsible parties, and because the litigator failed to designate a rebuttal damages witness. The lawyers filed a motion for summary judgment on causation. The trial court granted the motion and the court of appeals affirmed.
The investor argued in the Supreme Court that the traditional formulation of causation that would require him to prove “but for” causation was inappropriate largely because of the transactional component of the malpractice claim. The Supreme Court refused to eliminate the “but for” element of causation. The court noted that in a few instances such as where there are concurrent causes as occurs in multiple exposure asbestos cases, the “but for” rule had been relaxed. However, the court found that the transactional aspect of the malpractice claim did not bring the case within that narrow group of cases where but for causation would be relaxed.
The court noted the fraud finding in the underlying case reflected that the investor had already committed fraud to render the agreement unenforceable regardless of its language. Similarly, the court found the investor’s fraud rendered any failure to name the business lawyer and his firm as responsible third parties in the underlying lawsuit as causally irrelevant.
Turning next to the issue of failure to designate a rebuttal damages expert, the court reviewed each of investors experts. As to the investor’s valuation expert, the court noted that he disclaimed any opinion on causation.
The court next reviewed the testimony of three lawyer experts. The first expert’s opinion was that not designating a rebuttal damages expert was a high risk endeavor, but that he had seen it done. He noted that one of the other experts had thought the failure to designate was a significant contributing factor. The risk associated with the tactic of not designating went to the issue of the standard of care and did not support causation. The court also noted that repeating another expert’s opinions without any basis for the borrowed conclusion was no evidence.
Turning next to the second expert the court noted that the expert had testified he had been contacted after trial by a juror who divulged the entire thought process of the jury deliberations; told him that the foreman had asked whether they were awarding too much in damages; and that because there was no competing damage calculation they had followed the testimony of the damage expert who testified at trial. Although the court did not decide if the jury story was competent evidence, it gave a substantial hint that it would not be because there is an inherent difficulty of using the testimony of a single juror to speak for all twelve. The court noted the juror’s story provided some insight into what the jury was thinking. Nevertheless, the court pointed out that an adequate basis for a causation opinion in this case required a comparison—a consideration of the result in the underlying case on the one hand, and the hypothetical clash of experts on the other. The court explained that jurors’ abandoned reservations about testimony in the actual case was no support for an opinion that a reasonable hypothetical jury would have credited the testimony of a competing expert had it been given the chance. Absent a comparison between the real and the hypothetical, the expert was left to speculate on causation.
As to the third expert, the court noted he had been counsel in the underlying case, but being counsel in the case was not by itself a sufficient basis for his conclusions. The court also noted that the expert’s criticisms of the jury’s decision was not supported by the evidence and was legally wrong because the award had been found reasonable on appeal. Finally, the court noted the opinion was missing a predictive factual basis about what a reasonable jury would do with competing evidence in the hypothetical trial.
Rogers highlights how difficult it can be to support a litigation malpractice claim. Finding experts who can offer predictive information about the hypothetical trier of fact will likely prove to be challenging in future cases.