AI Case Brief
Generate an AI-powered case brief with:
Estimated cost: $0.001 - $0.003 per brief
Full Opinion
In Prande v. Bell, 105 Md.App. 636, 656, 660 A.2d 1055, 1065 (1995), the Court of Special Appeals held that an attorney may be liable for professional malpractice for recommending that a clientâs case be, or not be, settled on particular terms if âthe attorneyâs recommendation in regard to settlement was one that no reasonable attorney, having undertaken a reasonable investigation into the facts and law as would be appropriate under the circumstances, and -with knowledge of the same facts, would have made.â Applying Prande v. Bell, the appellate court in this case reversed a judgment N.O.V. entered by the Circuit Court for Baltimore City and reinstated a $125,000 judgment entered against an attorney upon a jury verdict. We granted certiorari to review that decision and shall affirm it.
BACKGROUND
Like most cases tried on their merits, some of the relevant facts in this action were in dispute. Because what is before us is the appropriateness of a judgment N.O.V., overturning the effect of a jury verdict in favor of the plaintiffs, we must view the evidence and the permissible inferences from that evidence in a light most favorable to the plaintiffs. Impala Platinum v. Impala Sales, 283 Md. 296, 389 A.2d 887 (1978); Houston v. Safeway, 346 Md. 503, 697 A.2d 851 (1997). The principal issues before us, however, are essentially legal, rather than factual, ones.
In August, 1981, petitioner, David Thomas, commenced representation of the respondents, Marsharina Bethea (a minor) and her mother, Gerrine Bethea,
In March, 1995, nearly 12 years after accepting the settlement, Marsharina filed this lawsuit against Thomas in the Circuit Court for Baltimore City, alleging that, as a result of Thomasâs failure to properly investigate, prosecute, and litigate her claim and his recommendation to Gerrine that she accept a settlement that was âgrossly inadequate to cover the damages,â Gerrine accepted the $2,500 settlement. Following the decision in Prande v. Bell, supra, Marsharina amended her complaint to add the allegation that Thomasâs recommendation to settle âwas one that no reasonable attorney, having undertaken a reasonable investigation of the facts and law as would be appropriate under the circumstances, and with the knowledge of the same facts, would have made.â The essence of her case, as it was presented at trial, was Thomasâs recommendation that the Betheas accede to a release of the unserved owner of 1217 East Preston Street, W.H. Groscup & Sons, Inc., as a condition of the $2,500 settlement. Although her expert witness testified to the inadequacy generally of the $2,500 settlement, Marsharina later stipulated that the alleged breach of the standard of care by Thomas concerned only the settlement with respect to Groscup. With that stipulation, her contention was not that $2,500 was an unreasonable consideration for releasing the owners of the other two properties, but rather that a valuable case against Groscup was surrendered for no compensation at all.
In that regard, Marsharina presented evidence that Gerinne advised Groscup, before entering into the lease, that Marsharina had an elevated lead level, that Groscup informed her that
At the conclusion of trial, the court submitted a number of specific issues for the jury to resolve. In response to the questions posed, the jury determined that (1) Groscup was negligent in regard to the presence of a lead paint hazard; (2) the presence of that hazard was a substantial factor in causing injury to Marsharina; (3) Thomasâs recommendation in regard to the settlement of Marsharinaâs lead paint poisoning case was one that no reasonable attorney would have made; (4) the
In an unreported Opinion, the Court of Special Appeals, applying its decision in Prande v. Bell, reversed the judgment N.O.V. and reinstated the $125,000 judgment entered on the juryâs verdict. It concluded that, in the case before it, evidence of the fair settlement value was unnecessary. Citing Ronald E. Mallen and Jeffrey M. Smith, legal malpractice, § 32.11, at 190, 4th ed. (1996), the appellate court held that â[wjhere the issue concerns the value of a lost cause of action, both the amount of the probable judgment and its collectibility are for the jury to decide ... and the jury decided that the amount of the probable judgment was $125,000.â Bethea v. Thomas, No. 367, Slip op. at 5, 118 Md.App. 710 (Md.Ct.Spec.App. November 13, 1997).
DISCUSSION
A. Attorneyâs Liability For Negligently Recommending Settlement
Prande v. Bell arose out of the settlement of two motor vehicle tort claims. In April, 1984, Ms. Prande was involved in an accident with Susan Spillman. Claiming that the accident was entirely Spillmanâs fault and that she sustained permanent injuries as a result, Prande retained Bell and his
The Spillman case was the first to be scheduled for trial. Prior to the September, 1990 trial date, upon Bellâs recommendation, Prande settled that case for $7,500. In March, 1992, again upon Bellâs recommendation, Prande agreed to settle the Wishart suit for $3,000. When she later reneged on the Wishart agreement, the settlement was enforced, and Prande then sued Bell for malpractice for having recommended the two settlements. The Circuit Court granted summary judgment to the defendants on the ground of non-mutual collateral estoppelâthat, by agreeing to the settlements with the tort defendants, she was precluded from relitigating those claims against her attorneys.
The Court of Special Appeals concluded that a release signed in the underlying tort action did not preclude a lawsuit against the attorney for having negligently recommended the settlement if the question of the attorneyâs negligence was not decided in the tort action. It held that â[w]hen a client sues a lawyer for malpractice resulting from the settlement of an earlier claim and the issue of the attorneyâs negligence was not decided in the earlier adjudication, the party claiming the malpractice has not been given a fair opportunity to be heard on the issue of the attorneyâs negligence.â Prande, 105 Md.App. at 652, 660 A.2d at 1063. As a matter of public policy, the court continued, â[i]t would be patently unfair to allow attorneys who may have committed malpractice in handling a case to turn around and rely on a defense that
In line with that view, the court adopted the heightened standard for judging malpractice in this context that we previously mentioned: there is no malpractice unless âthe attorneyâs recommendation in regard to settlement was one that no reasonable attorney, having undertaken a reasonable investigation into the facts and law as would be appropriate under the circumstances, and with knowledge of the same facts, would have made.â Id.
Prande v. Bell is not a unique case. More than a dozen States have dealt with the question of whether, and under what circumstances, a client who settles a dispute on terms that the client later determines were unreasonably disadvantageous, may sue his or her lawyer for having negligently recommended the settlement. The great majority of those States have reached conclusions consistent with those reached in Prande v. Bell, except that they have applied general, not heightened, negligence standards in doing so.
The cases present a number of issues. One, which predominated the discussion in Prande v. Bell, is whether non-mutual collateral estoppel bars a client who has settled an underlying dispute from later suing his or her attorney for advice given in
A second, more substantive, issue arises from the premise, recognized in Prande, that a recommendation as to settlement of a dispute in, or susceptible to, litigation is a subjective judgment call and posits whether a lawyer should later be called to account for the exercise of that judgment. This issue embodies the concern that the allowance of such an action for negligently recommending a settlement may have the undesirable effect of chilling settlements, prolonging litigation, and encouraging frivolous malpractice suits by former clients who settle their dispute and later decide that the settlement was, in some way, unfair. Defendants have urged that lawyers will become reluctant to negotiate and recommend settlements, which the law encourages and the judicial system depends upon, if they face the prospect of later being sued for having made the recommendation. As we shall see, the great majority of courts, though acknowledging those concerns, have not allowed them to override the application of well-established principles of tort law. Like the Court of Special Appeals in Prande v. Bell, they have treated the negotiation and recom
These kinds of cases have tended to fall into two categories, although they sometimes contain features of both. One category involves situations in which the client claims that he or she was given little choice but to settle on disadvantageous terms because the lawyer failed in some other respect to prepare or prosecute the case properly, thereby diminishing the prospect of success if the litigation continued. The gravamen of the action in those situations is not so much that the lawyer negligently recommended a settlement that was unreasonably low, but that what otherwise would be an unreasonably low settlement was essentially forced on the client because of other deficiencies by the lawyer. If the client was aware of those deficiencies prior to settling, the settlement itself, given the circumstances then faced by the client, may not have been unreasonable at all, and, indeed, may have been entirely prudent. The question still is raised of whether, by agreeing to the settlement, the client should be barred from litigating its fairness in a suit against the lawyer, and the answer appears to be âno.â See, for example, Fishman v. Brooks, 396 Mass. 643, 487 N.E.2d 1377 (1986); Cohen v. Lipsig, 92 A.D.2d 536, 459 N.Y.S.2d 98 (1983); Schaefer v. Manfredi, 156 A.D.2d 552, 549 N.Y.S.2d 59 (1989); Lowman v. Karp, 190 Mich.App. 448, 476 N.W.2d 428 (1991); Brooks v. Brennan, 255 Ill.App.3d 260, 193 Ill.Dec. 67, 625 N.E.2d 1188 (1994). See also Central Cab Co. v. Clarke, 259 Md. 542, 270 A.2d 662 (1970), where we held that a malpractice action against an attorney based on neglect was not barred by the fact that the client had settled the underlying case.
Cases in the second category focus more on the settlement itself, although they are often grounded, to some extent, on the attorneyâs failure to know the relevant facts or law or to appreciate the real value of the case. A common complaint in this category is that the lawyerâs settlement recommendation
In any of these situations, allowance of the lawsuit presents a number of subsidiary issues with which courts have had to wrestle. There may be a question of limitations, although not presented here with respect to Marsharina. There is nearly always a question of the measure of damages, and with it debates over the standards to be applied and the nature of the proof required. Assuming liability, is the measure of damages what the plaintiff likely would have obtained had the case proceeded to trial or other adjudication, or is it what a reasonable settlement would have been (assuming that the case could have been settled on terms other than it was), and, in either event, are such damages reasonably calculable or are they too speculative? If they are calculable, who makes the calculation, and upon what evidence? If the measure is what a reasonable settlement would have been, is expert testimony necessary to establish that amount? If the measure is what a judge or jury would have done had the case proceeded to
A few courts have declined to permit an action against an attorney based on negligence in recommending a settlement. The case most often cited for that approach is the decision of the Pennsylvania Supreme Court in Muhammad v. Strassburger, et al., supra, 526 Pa. 541, 587 A.2d 1346. The plaintiffs there employed the defendant law firm to represent them in a medical malpractice action against two physicians and a hospital allegedly responsible for the death of their infant son following surgery. Suit was filed against the doctors and the hospital. Following discovery, the defendants offered $23,000 in settlement, which the plaintiffs said they would accept. At a pre-trial conference, that amount was increased to $26,500 at the courtâs suggestion. Prior to actual payment, the plaintiffs changed their mind, but the court, finding that the $26,500 had been agreed to, upheld the settlement. After an unsuccessful appeal, the plaintiffs sued their lawyers for fraudulent misrepresentation, fraudulent concealment, non-disclosure, breach of contract, negligence, and outrageous conduct. The courtâs opinion does not reveal the details of any of those counts. The trial court dismissed the action as barred by collateral estoppel. The intermediate appellate court reversed that determination.
The Pennsylvania Supreme Court agreed that the action was not barred by collateral estoppel, but refused to countenance it on public policy grounds. Concerned that permitting such an action would violate âour strong and historical public policy of encouraging settlementsâ (id. at 1349), the court declared that a lawyer could not be held liable for simple negligence in recommending a settlement, but that liability could attach only if the settlement was procured by fraud:
âSimply stated, we will, not permit a suit to be filed by a dissatisfied plaintiff against his attorney following a settlement to which that plaintiff agreed, unless that plaintiff can*525 show he was fraudulently induced to settle the original action. An action should not lie against an attorney for malpractice based on negligence and/or contract principles when that client has agreed to a settlement. Rather, only cases of fraud should be actionable.â
Id. at 1348.
The court appeared to limit the right of action, even when based on fraud, to where âthe lawyer knowingly commits malpractice, but does not disclose the error and convinces the client to settle so as to avoid the discovery of such error.... â Id. at 1351 (emphasis added). Although the plaintiffs in Muhammad had, indeed, charged the lawyers with fraudulent concealment, the court held that the allegations were âmere suppositionsâ and otherwise insufficient to state a cause of action. The two dissenters complained that the majority had just declared a âlawyerâs holiday.â
The Muhammad decision represents a distinct minority view. It is not only inconsistent with most of the cases decided prior to its rendition, none of which are even mentioned in the opinion, but it has been expressly rejected by all of the courts that have had the benefit of considering it. Perhaps the earliest repudiation came from the New Jersey Supreme Court in Ziegelheim v. Apollo, supra, 128 N.J. 250, 607 A.2d 1298. The plaintiff there sued the lawyer who had represented her in her divorce action for advising her to settle for far less than she likely would have obtained from the court. Evidence showed that the lawyer not only failed to discover significant assets of the plaintiffâs husband but advised her that she could expect to get only 10% to 20% of the marital estate when, given the state of her health, the gross disparity in earning capacities, and the high standard of living the couple enjoyed during their marriage, she could have expected an award of about 50%. The trial court entered summary judgment for the lawyer, which the New Jersey Supreme Court reversed. Rejecting the Pennsylvania approach, urged by the defendant, the court noted, at 1304:
*526 âAlthough we encourage settlements, we recognize that litigants rely heavily on the professional advice of counsel when they decide whether to accept or reject offers of settlement, and we insist that the lawyers of our state advise clients with respect to settlements with the same skill, knowledge, and diligence with which they pursue all other legal tasks.â
In that regard, the court added that â[ajfter all, the negotiation of settlements is one of the most basic and most frequently undertaken tasks that lawyers perform.â Id. The court did not expect its decision to âopen the door to malpractice suits by any and every dissatisfied party to a settlementâ for plaintiffs âmust allege particular facts in support of their claims of attorney incompetence and may not litigate complaints containing mere generalized assertions of malpractice.â Id. at 1306. It made clear that attorneys will not be held liable simply because they are unable to persuade their adversary to accept particular terms or because their strategies prove unsuccessful. The law, it said, demands only that attorneys handle their cases with knowledge, skill, and diligence, not that they be infallible or always secure optimum results for their clients.
In Grayson v. Wofsey, Rosen, Kweskin and Kuriansky, 231 Conn. 168, 646 A.2d 195 (1994), the Connecticut Supreme Court also rejected Muhammad. As in Ziegelheim, the plaintiff in Grayson sued the attorneys who had represented her in her divorce action for failing to prepare her case properly, as a result of which she agreed to a settlement that she claimed was not reflective of her legal entitlement. Evidence was presented that the lawyers had failed to discover and evaluate significant assets and income of the husband and that, based on the true value of the marital estate and the husbandâs actual income, she could have expected to receive through a court judgment $1,000,000 more in property distribution and $35,000 more in alimony than she was entitled to receive under the settlement recommended by the lawyers. In her subsequent malpractice action, the jury awarded damages of $1,500,000, which the Connecticut Supreme Court affirmed.
âDefendants ask this court to adopt the Pennsylvania view as set forth in Muhammad. The language in that case, however, goes well beyond the proposition that settled cases should not be readily revisited. In essence, defendants ask us to grant attorneys immunity from civil liability in cases where their clients have settled, absent some affirmative misrepresentation or fraud by the attorney. We do not believe it would serve the interests of justice to do so. Accordingly, we refuse to adopt a âbright lineâ rule that protects attorneys from liability where a plaintiff has made a submissible case of negligence.â
Baldridge, 883 S.W.2d at 952.
The principle that a lawyer may be held liable for negligence in the handling of a case that was ultimately settled by the client, whether based on deficiencies in preparation that prejudiced the case and more or less required a settlement or on a negligent evaluation of the clientâs case, has been accepted by nearly every court that has faced the issue. In addition
In Flaherty v. Weinberg, 303 Md. 116, 128, 492 A.2d 618, 624 (1985), we confirmed that a former client may have an action against a lawyer if the client can prove (1) the attor
We share the concern expressed by the Court of Special Appeals in Prande v. Bell that lawyers not be regarded as negligent simply because another lawyer, or even most lawyers, with the benefit of hindsight, would not have made the recommendation at issue. We also share that courtâs observation that the factors that the lawyer must consider in developing a settlement recommendation, as well as the recommendation itself, âare mostly subjective in nature,â and that there can legitimately exist âa range for honest differences of opinion in making settlement recommendations.â Id. at 656, 660 A.2d at 1065. Nonetheless, we see no reason to adopt any heightened standard of negligence. Lawyers, like doctors and other professionals, are often called upon to make judgment calls with which their colleagues may disagree. Those calls, if challenged, can be examined in the light of the traditional standard applicable to professional negligence actions. That is the standard applied by courts in other States, and we are