Monday, June 24, 2013

Emotionally Damaged?

Vincent v. DeVries, 2013 VT 34

Today’s edition of “Ask the SCOV” is about damages in legal malpractice cases.

A reader asks, “SCOV . . . can a jury award damages for emotional distress in a legal malpractice action?”

“It depends,” says the SCOV, “But not in this case.”    

This ain’t the first time the underlying case has been to the SCOV.  The SCOV begins its analysis noting three previous unpublished decisions regarding the underlying case.

We’ll make the background as simple as possible.  This is a legal malpractice action.  Prior to this lawsuit, Defendant was Plaintiff’s lawyer.  The case was an action for specific performance in the sale of Plaintiff’s home that arose after Plaintiff refused to sell his home according to a purchase contract that he and his older sister had signed.  Plaintiff’s older sister died between the contract signing and the prospective closing date.  Plaintiff was 82 at the time and legally blind.  Plaintiff ultimately had to pay a significant sum—nearly twice the underlying contract’s purchase price—in order to keep his home.  Because Plaintiff was under a guardianship, the probate court had to approve the settlement.  Defendant was Plaintiff’s lawyer through this last process. 

The gist of Plaintiff’s claim—without getting into all the gory procedural details—is that Defendant screwed up handling the case—primarily in not filing an answer and identifying affirmative defenses—such that Plaintiff was damaged. 

Because Defendant admitted to the underlying facts and a breach of duty, the trial was basically a causation-and-damages affair.  Defendant repeatedly and “strenuously argued” that damages for emotional distress were barred as a matter of law.  Defendant also argued that what Plaintiff paid to settle the underlying case—and keep his home—was an improper measure of damages because the only remedy was specific performance and Plaintiff had no risk of a judgment for damages to buyers.  Thus, Defendant argued, there was no showing that it was reasonable for Plaintiff to pay $103K to keep his home.  Defendant filed motions for judgment as a matter of law on both issues and the trial court denied them.

The jury found for Plaintiff and awarded damages, including the settlement amount plus $80K in emotional distress damages.  Defendant appealed. 

Regarding the emotional distress damages claim, the SCOV notes, “We have never decided the question [of whether emotional distress damages are available in a legal malpractice case]; the closest we have come was a case relied upon by plaintiff in which we suggested that under certain exceptional circumstances, emotional distress damages might be available.”

Let me say right here that this opinion is a legal-research tour de force.  If you’re at all curious about damages in negligent-infliction-of-emotional-distress claims, this is the Vermont opinion to read.  If you’re planning to write a law-review article on the same, start here.  That said, I’m just going to hit the major points.

Negligently inflicted emotional harm generally requires some physical manifestation of the distress for damages to be awarded.  As always, there are a couple exceptions to that rule—mishandling of bodily remains and negligent transmission of a message announcing death are the well-established exceptions.  The SCOV notes that the rationale behind the no-physical-symptoms-no-recovery rule is less than perfectly clear, but that some courts tend to be receptive to emotional-distress damages when the reasons for restrictions on those damages do not apply, or when the conduct complained of is particularly egregious.  The SCOV notes that in some cases, when the risk of emotional harm is readily apparent from the context, ordinary negligence may give rise to damages for emotional distress.     

In this case, the SCOV considers the threatened loss of Plaintiff’s home insufficient to support an award of emotional-distress damages.   As the SCOV puts it, the loss is “not of such a personal and emotional nature that it would support an exception to the general rule disallowing recovery of emotional distress damages in the absence of either physical impact or substantial bodily injury or sickness.”  The SCOV does leave the door open for emotional-distress damages in a legal malpractice setting, but in this case concludes that Plaintiff’s damages are economic and reverses the award of emotional-distress damages. 

The final question is whether Plaintiff’s economic damages were proximately caused by Defendant’s negligence and are reasonable under the circumstances.  Although Plaintiff paid approximately twice what the house was “worth” in order to keep it, the SCOV concludes that the damages were reasonable.   

The SCOV notes, “Ultimately, the question of whether a settlement is reasonable is for the jury.”  Plaintiff’s economic damages were based solely on the $103K settlement Plaintiff entered into to void the court order and allow him to remain in his house.

Plaintiff’s age, his impaired vision, his desire to remain in his lifelong home, and the fact that the probate court reviewed the settlement all contribute to the SCOV concluding that the jury had enough evidence to find that the settlement was reasonable. 

The SCOV is careful to note that just because the settlement was reasonable doesn’t mean that Plaintiff was entitled to the entire settlement amount.  But Defendant had an opportunity to challenge the award and to paraphrase slightly, “The jury done what the jury done.”      

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