Law Firm of Stewart & DeChant

Facts in Environmental

Facts in Environmental

The underlying case was a complex commercial lawsuit.

The underlying claim is one of breach of contract.

The underlying claim ended in settlement agreement.

The Plaintiff was dissatisfied with the settlement and sued.

The Plaintiff received a jury verdict.

The Plaintiff alleged negligent preparation and prosecution of the claim forcing the settlement.

The jury returned an award for over 2.49 Million, but in the counterclaim for lawyer fees awarded $15,540.

Motions for directed verdict and JNOV.

The defense lawyer challenged the sufficiency of evidence concerning the damages and the causal connection between the negligent representation and the damage.

The court in Environmental summarized Vahila and summarized the fact that the defendant in Vahila was being pursued for criminal charges in an investigation by the Ohio Department of Insurance. In Vahila there were agreed losses of $100,000 and $200,000 based on plea bargains and settlements with respect to the civil matters and the court said “given the facts of the case, plaintiffs have arguably sustained damage or loss regardless of the fact they may be unable to prove that they had been successful in the underlying matters. Environmental said Vahila stood for the fact that depending on the situation the plaintiff may be required to provide some evidence of the merits in the underlying claim.

The Environmental Supreme Court said Vahila did not endorse the blanket proposition that requires a plaintiff to prove in every instance that he or she would have been successful in the underlying matter. The court found that based on the Vahila decision that Environmental Network was a case that Vahila necessarily implied required the plaintiff establish the case within a case. The Supreme Court determined that Environmental Network was that case.

Why? (My belief) the theory of recovery is the settlement is inadequate and should not have been recommended because if the underlying matter had been tried to conclusion, they would have received a more favorable outcome than they obtained in the settlement. Therefore, unlike Vahila who sustained losses that were admitted by the defendant which made it unnecessary to prove whether the underlying case was meritorious, the appellee could only recover here if they could prove they would have been successful in the underlying case. Thus, the merits in the underlying litigation are directly at issue. Therefore, it is insufficient for the plaintiff to simply present some evidence of the merits of the underlying claim. Instead the plaintiff had the burden of proving by a preponderance of the evidence but for the lawyer’s conduct they would have received a more favorable outcome. That burden is the same as if their case had gone to trial, i.e. whatever the burden was in the underlying trial would be the burden in the malpractice case.

The court said if they applied Vahila here it would unfairly reduce the plaintiff’s burden of proving causation, i.e. only some evidence and it would be a nebulous standard with no clarity or guidance and it would eviscerate the established rule that the plaintiff must establish by a preponderance of the evidence that the defendant’s actions were the proximate cause of their losses.
The court looked at the underlying evidence to see if it could sustain the verdict and found that it could not.

There was a dissent by Paul Pfeifer, O’Donnell concurred, Moyer, Lundberg Stratton, Lanzinger and Cupp agreed with the entire published opinion.

Justice Pfeifer’s dissent was that there was ample evidence that the losses were suffered and aggregate exceeded.