Coverage under Liability Insurance Policies - What Is the Trigger?
Settlements in Litigated Cases - Can the Client Sue for Malpractice?
Articles on Current Legal Issues
Coverage under Liability Insurance Policies - What Is the Trigger?The question what triggers coverage under a liability insurance policy depends on what sort of event must happen during the policy period to activate the insurer's duty to defend and indemnify the insured. As the California Supreme Court stated, "[T]he issue is one of timing - what must take place within the policy's effective dates for the potential of coverage to be 'triggered'?" Montrose Chemical Corp v. Admiral Insurance Co. (1995) 10 Cal.4th 645, 655, fn. 2.
In an "occurrence- based" liability policy, coverage is established at the time the complaining party was actually damaged - such as when the bodily injury occurs - regardless of when the insured's wrongful conduct took place. If the injury occurred during the policy period, then coverage under the policy is triggered provided the accident or condition is at least a potentially covered risk. In continuous injury cases, such as exposure to toxic chemicals, where the claimant suffers progressively deteriorating bodily injury, coverage under multiple insurance policies and policy periods can be triggered.
Settlements in Litigated Cases - Can the Client Sue for Malpractice?
California case law shows that the crucial inquiry is not whether there has been any settlement of the lawsuit, but whether the attorney committed a breach of professional duty leading up to the settlement and whether that breach of duty caused actual damage. Claims of attorney malpractice are subject to the established elements of a cause of action in tort for professional negligence. As the California Supreme Court stated in a leading case:
The question is what professional duties did the attorney allegedly breach, and what is the connection between this breach of duty and any actual damages suffered by the client?
The former client must prove that he or she was actually damaged by the attorney’s failure to competently handle a lawsuit. In Jackson v. Johnson (1992) 5 Cal.App.4th 1350, a jury found that the attorney had acted negligently in failing to prosecute a client’s employment case. However, it awarded "the sum of 0 dollars" for the client’s actual damages based on the lack of merit of the underlying case. The jury then awarded punitive damages. This was wrong. If the actual damages were zero, there was no liability, thus no punitive damages. Thus, the verdict was reversed on appeal.
The Halvonik case shows that a client alleging an attorney’s breach of duty in handling a lawsuit must prove that he or she suffered damage from the breach of duty; otherwise, there can be no judgment of negligence or breach of fiduciary duty against the former attorney. In Thompson v. Halvonik, (1995) 36 Cal.App.4th 657, at 663, there was a $1.75 million-dollar settlement against a hospital on behalf of a retarded infant, but it was obtained in the underlying tort case more than a year later by the second law firm, not by the original law firm. The malpractice plaintiff did not claim that the million dollar settlement by the second law firm was inadequate. Plaintiff in Halvonik hypothesized, however, that if attorney Halvonik (the original attorney) had obtained a settlement some time well before the date of the actual settlement by the second law firm in May 1991, then the value to the retarded infant could have been greater. The Court of Appeal rejected this claim, stating, "None of this evidence does more than suggest speculative harm, because it does not demonstrate that but for respondents’ delay, appellant’s underlying case would have settled at all, let alone at an earlier date, for the same amount, or with the same structure."
In the case Loube v. Loube (1998) 64 Cal.App.4th 421, the plaintiffs had retained the defendant law firm to recover damages from the general partners in a real estate partnership. The defendant general partners failed to appear and defend, and plaintiffs obtained judgment for compensatory damages and $200,000 punitive damages after a prove-up hearing. The defaulting general partners then appeared and moved for relief from default on grounds that no specific amount of damages had been stated in the complaint. The trial court accordingly amended the default judgment to reduce the amount of compensatory damages to the jurisdictional minimum of $25,000. At trial in plaintiffs’ subsequent malpractice action, the trial court found that each former client would have been awarded no more than $12,850 compensatory damages and would have been awarded no punitive damages. Accordingly, the trial court granted defendants’ motion for judgment. The Court of Appeal affirmed this part of the judgment, stating:
The former clients in the Loube case claimed that if their attorney had specified a large number for their compensatory damages in the prayer of the complaint, then they might have received a more generous award after the default prove-up hearing. The Court of Appeal replied, "[w]e cannot endorse a rule that determines liability by measuring the amount that a client might have received in connection with a claim, rather than the actual value of the claim."
Another appellate opinion on this issue is Carlton v. Quint (2000) 77 Cal.App.4th 690, in which the former client claimed that his attorney’s failure to have the summons and complaint served resulted in a dismissal of that action, thereby requiring plaintiff to proceed with a cross-complaint for an identical claim based on the same allegations. The former client claimed that if the action on the complaint had not been dismissed for failure to timely serve it, then the case could have gone to trial some nine months before the action on the cross-complaint was resolved. Plaintiff’s purported damages consisted in nine months’ interest on the settlement. However, the plaintiff presented no evidence whatsoever that the action on the complaint, if not dismissed, would have gone to trial any time before the settlement was obtained on the action on the cross-complaint, and no evidence that the result at trial was objectively insufficient. Defendant accordingly negated two elements of plaintiff’s legal malpractice cause of action – causation and damages – and summary judgment was properly granted. Id., 77 Cal.App.4th at 699-701.
Attorney malpractice claims are divided into two groups, those in which the matter the attorney handled for the client was a transaction, and those which involved a lawsuit. Generally, attorney malpractice claims involving breaches of duty in handling a client’s lawsuit are resolved by the "trial- within- a- trial" method. A long line of cases approves the trial-within-a-trial method of proof when an attorney is accused of losing a client’s legal claim or defense. Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 832. "Proof that the client would have prevailed on the underlying action generally requires trial of a ‘suit within a suit,’ i.e., a determination of the merits of the underlying action in the malpractice trial." Galanek v. Wismar (1999) 68 Cal.App.4th 1417, 1425.
California law permits physicians with proper expertise to testify in court about the causal connection between a doctor's incompetent treatment and the patient's resulting injuries. In Davis v. Memorial Hospital, 58 Cal. 2d 815, 817-818, there was expert testimony which showed that 90% of perirectal abscesses result from bacterial infection, that a patient’s infection started from break in mucous membrane, and defendant's incompetent insertion of an enema tube probably caused the break. In Quintal v. Laurel Grove Hospital, 62 Cal.2d 154, 156-158, 164, expert testimony showed that 90% of deaths from cardiac arrest occurred from faulty intubation and if an operation had been performed within three minutes of heart stoppage no brain damage would have resulted. In Cline v. Lund, 31 Cal.App.3d 755, 763, expert testimony showed that death after hysterectomy was very uncommon and there was evidence of specific acts of negligence by defendant physician as a factor causing the wrongful death of the patient. In Carrasco v. Bankoff, 220 Cal.App.3d 230, 241, expert testimony showed that better results were usually obtained in burn cases from early skin grafts, hence a physician's failure to do so resulted in plaintiff's serious injury. In Brown v. Colm, 11 Cal.3d 639, 643, expert testimony showed that use of nonabsorbable stainless steel sutures in repairing a fistula was likely to become distorted and cause injury. Another interesting case is Bardessono v. Michels, 3 Cal.3d 780, 788-793, in which the plaintiff had suffered paralysis as a result of a routine injection of cortisone. The question for the jury was whether the doctor had incompetently given the injection, given that paralysis rarely resulted from such a routine procedure.
However, expert physicians are not always permitted to testify about the cause of an injury. In Folk v. Kilk, 53 Cal.App.3d 176, the presence of the HI bacterium shown by a throat culture was not regarded at the time as a danger signal that would preclude a tonsillectomy and hence there was no reason to overturn the verdict for the defendant doctors given by the jury. Also, in Morgenroth v. Pacific Medical Center, 54 Cal.App.3d 521, 529-530, an informed consent case, the only evidence of causation was a physician's testimony that the plaintiff's stroke was 'more probably' a complication from one vascular procedure. The expert testimony was purely speculative, thus not admissible at trial.
Experts in the field of accident reconstruction often testify in trials of serious automobile accident injuries. But proposed testimony relating to accident reconstruction experiments which were not conducted under similar circumstances may be excluded where such evidence tends to confuse the issues or mislead the jury. Thus, in Solis v. Southern California Rapid Transit District, 105 Cal.App.3d 382, 387, an accident reconstruction experiment conducted on a clear day when pavement was dry was not conducted under similar circumstances where accident occurred on rainy day, so the testimony was not permitted.