Opinion: Legal Malpractice Damages

Shoemake v. Ferrer, No. 81812-6. Attorney Douglas Ferrer badly mishandled Andrea and Keith Shoemake's lawsuit related to Andrea Shoemake's serious injuries from a 1992 automobile accident. As a result of his legal malpractice, the case was dismissed in 1996. Ferrer mislead the Shoemake's about this until 2005. The Shoemake's retained another attorney and eventually recovered a $100,000 insurance settlement and then prevailed in a legal malpractice suit against Ferrer. The trial court awarded the Shoemake's ten years of interest on $60,000, which was the amount of the insurance settlement minus the 40% contingency fee that Ferrer would have received.

The Shoemake's appealed and the Court of Appeals found that the interest should have been based on the full $100,000. Today, in an opinion written by Justice Stephens, the Supreme Court unanimously upholds that decision.

We affirm the Court of Appeals and follow the approach favored by the majority of jurisdictions. In this case, calculating damages without deducting a negligent attorney's hypothetical contingency fee is an appropriate measure of damages. The Shoemakes had to expend fees on a second lawyer in order to finish the job the first lawyer neglected to do. The majority approach makes the plaintiffs whole without conferring a windfall.

(briefs and argument)

Tomorrow's opinions, Feb. 4, 2010

The Supreme Court will issue decisions in at least two cases tomorrow.

Shoemake v. Ferrer, No. 81812-6 (briefs and argument). Whether damages in a legal malpractice claim should be reduced because of a contingency fee agreement, and whether attorney fees can be awarded for acts of bad faith that happen prior to the start of litigation. Andrea Shoemake was hit by a drunk driver and retained Douglas Ferrer to file a lawsuit for her, agreeing to give him a 40% contingency fee (i.e. Ferrer would get 40% of any damages). Ferrer filed the complaint, failed to appear for trial, and the case was dismissed. For eight years he told Shoemake that the case was simply backlogged in court. She eventually discovered the truth and sued for malpractice.

The trial court awarded damages to Shoemake for malpractice, but reduced the award by the 40% she would have paid to Ferrer. She also received attorney fees for the malpractice suit costs because Ferrer had acted in bad faith. The Court of Appeals reversed these two decisions, finding that Shoemake was not fully compensated if she had to pay Ferrer’s 40% plus the costs for her new attorney, and finding that attorney fees cannot be awarded for bad faith acts that occur prior to the start of litigation.

In re PRP of Grantham, No. 82194-1 (briefs and argument). Did the Department of Corrections violate James Grantham’s due process rights by refusing to give him access to evidence used against him in a prison disciplinary hearing? Grantham is an inmate at McNeil Island prison, and was charged with violating rules when a correctional officer was caught smuggling tobacco and marijuana to him. The evidence against him included a report of suspicious comments he was overheard making to his brother on the phone. Grantham was given notice of the disciplinary hearing where he was charged, but the notice didn’t contain the dates and times of his alleged violations. He also requested a copy of the phone record on which the charges were based, which was refused. He appeals for violation of due process due to this lack of evidence. The Court of Appeals denied Grantham’s petition, but the Supreme Court granted discretionary review.

Today's Arguments - October 22, 2009

Today the Court will hear oral argument in three cases, two in the morning and one in the afternoon. (Docket, briefs)

In the morning session, starting at 9:00 a.m., the Court will hear:

Shoemake v. Ferrer, No. 81812-6. On appeal from Division One Court of Appeals, this case originated in King County Superior Court. It concerns whether damages in a legal malpractice claim should be reduced because of a contingency fee agreement, and whether attorney fees can be awarded for acts of bad faith that happen prior to the start of litigation.

Andrea Shoemake was hit by a drunk driver and retained Douglas Ferrer to file a lawsuit for her, agreeing to give him a 40% contingency fee (i.e. Ferrer would get 40% of any damages). Ferrer filed the complaint, failed to appear for trial, and the case was dismissed. For eight years he told Shoemake that the case was simply backlogged in court. She eventually discovered the truth and sued for malpractice.

The Superior Court awarded damages to Shoemake for malpractice, but reduced the award by the 40% she would have paid to Ferrer. She also received attorney fees for the malpractice suit costs because Ferrer had acted in bad faith. The Court of Appeals reversed these two decisions, finding that Shoemake was not fully compensated if she had to pay Ferrer's 40% plus the costs for her new attorney, and finding that attorney fees cannot be awarded for bad faith acts that occur prior to the start of litigation.

Clayton v. Wilson, No. 81920-3. On appeal from Division One Court of Appeals, this case also originated in King County Superior Court. It concerns whether a couple's community property is liable for the intentional wrongful sexual acts of one spouse perpetrated on someone employed to take care of the community property.

Without his wife's knowledge, Mr. Wilson repeatedly sexually abused a neighbor boy, Andrew Clayton, whom he was paying to do yard work at the Wilson's home. When Mrs. Wilson found out she obtained a divorce and 90% of the community property. Clayton sued, and the entire community was found liable because the assaults occurred while Clayton was working for the community. 

The trial court also found evidence of fraud in the extremely lopsided division of marital property, and voided the transfer.

In the afternoon session, starting at 1:30 p.m., the Court will hear:

Renner v. City of Marysville, No. 81959-9. On appeal from Division One Court of Appeals, this case originated in Snohomish County Superior Court. The primary issue is whether a lawsuit can be dismissed if the originating party failed to include in his claim all the information required by the filing statute.

Renner was fired for misconduct from his job as Network Administrator for the City of Marysville. He sued for wrongful termination, but failed to include 1) a specific damage amount, and 2) his address for the prior six months. The City successfully moved to dismiss the case for failure to comply with the filing requirements. The Court of Appeals reversed, finding the Renner had substantially complied with the rules.