Labair v. Carey

10/25/2016
DA 15-0621
Case Number: DA 15-0621
IN THE SUPREME COURT OF THE STATE OF MONTANA
2016 MT 272HOLLY LABAIR and ROBERT LABAIR,
Individually and on behalf of DAWSON R.
LABAIR, deceased minor child,
Plaintiffs and Appellants,
v.
STEVE CAREY, Esq., and CAREY LAW FIRM,
and JANE DOES 1-4,
Defendants and Appellees.
APPEAL FROM: District Court of the Fourth Judicial District,
In and For the County of Missoula, Cause No. DV 10-254
Honorable Edward P. McLean, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Tina L. Morin, Morin Law Firm, PLLC, Butte, Montana
Paul Warren, Paul Warren Law, PLLC, Billings, Montana
For Appellees:
Mikel L. Moore, Katherine A. Matic, Moore, Cockrell, Goicoechea &
Johnson, P.C., Kalispell, Montana
Submitted on Briefs: June 29, 2016
Decided: October 25, 2016
Filed:
__________________________________________
Clerk
Justice Patricia Cotter delivered the Opinion of the Court.
¶1 Holly and Robert Labair (the Labairs) appeal from final judgment on their legal
malpractice claim entered for defendants Steve Carey and Carey Law Firm (collectively
“Carey”) in the Montana Fourth Judicial District Court, Missoula County. We vacate and
remand for a new trial.
ISSUE
¶2 The issue on appeal is whether the District Court erred in instructing the jury to
decide whether the plaintiffs would have settled the claim underlying their legal
malpractice suit.
BACKGROUND
¶3 The factual background of this case was detailed in Labair v. Carey, 2012 MT
312, 367 Mont. 453, 291 P.3d 1160 (Labair I), and will not be repeated here at great
length. In short, this case stems from the October 2003 death of Dawson Labair, the
Labairs’ newborn child, following an early delivery by C-section. The Labairs signed a
retainer agreement with Carey in January 2004 to pursue a potential medical malpractice
claim against Dr. Thomas Baumgartner, their obstetrician. In September 2006, Carey
filed a complaint in District Court against Dr. Baumgartner and Community Medical
Center alleging negligence and negligent infliction of emotional distress. Carey did not
file an application with the Montana Medical Legal Panel (MMLP) before filing the
complaint, as required by §§ 27-6-301 and -701, MCA (2005). Carey also failed to file
an application with the MMLP before the expiration of the three-year statute of
2
limitations for medical malpractice claims. See § 27-2-205, MCA (2005). Carey later
admitted to an error in calculating the statute of limitations.
¶4 In March 2010, the Labairs filed a legal malpractice complaint against Carey
alleging negligence and several other causes of action stemming from the lapsed statute
of limitations. In November 2011, the District Court granted summary judgment to
Carey on the grounds that the Labairs had failed to establish a prima facie legal
malpractice case because they failed to provide expert evidence on causation and
damages in the underlying medical malpractice claim. The Labairs appealed, and we
reversed and remanded in Labair I.
¶5 We concluded in Labair I that the Labairs were entitled to summary judgment on
the duty, breach, and causation elements of their legal malpractice claim against Carey.
We remanded the case to the District Court for a trial to establish two required
components of the damages element of the Labairs’ claim: first, “that it is more probable
than not that they would have recovered a settlement or a judgment against Dr.
Baumgartner but for Carey’s negligence,” and second, “the value of the lost settlement
and/or judgment.” Labair I, ¶ 41.
¶6 On remand, the District Court conducted a six-day jury trial in which both sides
presented expert testimony on the likelihood of a settlement or a judgment in the
underlying case and the estimated value of that settlement or judgment. Charles Burdell,
the Labairs’ expert witness on settlements, testified that the case could have settled for
$500,000 to $750,000. He also testified that over 90% of medical negligence cases settle.
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Carey’s settlement expert testified that 95% of medical negligence cases settle, and that
the Labairs’ claim likely would have settled for $100,000 to $300,000.
¶7 Both Holly and Robert Labair testified at trial, but neither explicitly said whether
or not they would have settled with Dr. Baumgartner. Holly Labair said she believed
Steve Carey could help her “[o]btain justice” and “hold [Dr. Baumgartner] accountable.”
Steve Carey testified that Robert Labair was angry at Dr. Baumgartner, but neither the
Labairs’ attorney nor Carey actually established the Labairs’ desires regarding settlement.
The defense played a videotaped deposition of Dr. Baumgartner, in which Dr.
Baumgartner said he would have settled with the Labairs for a nominal amount. No other
evidence on the Labairs’ or Dr. Baumgartner’s willingness to settle the underlying
medical malpractice claim was presented at trial.
¶8 The jury issued its verdict on a special verdict form, which posed yes or no
questions to the jury regarding key elements of the Labairs’ claim. Relevant portions of
the verdict form, including the jury’s responses, read as follows:
QUESTION NO. 1:
Have the Labairs proven by a preponderance of the evidence that Dr.
Baumgartner’s treatment of Holly and Dawson Labair failed to meet the
accepted standards of skill and care at the time the services were provided?
ANSWER: [ X ] Yes [ ] No
If your answer to QUESTION NO. 1 is “No,” then skip QUESTION
NO. 2 and QUESTION NO. 3 and proceed to QUESTION NO. 4. If your
answer to QUESTION NO. 1 is “Yes,” then proceed to QUESTION NO. 2.
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QUESTION NO. 2:
Have the Labairs proven by a preponderance of the evidence that Dr.
Baumgartner’s failure to meet the accepted standards of skill and care at the
time the services were provided to Holly and Dawson Labair caused
injuries and damages to the Labairs?
ANSWER: [ ] Yes [ X ] No
If your answer to QUESTION NO. 2 is “No,” then skip QUESTION
NO. 3 and proceed to QUESTION NO. 4. If your answer to QUESTION
NO. 2 is “Yes,” then proceed to QUESTION NO. 3.
[The jury then skipped Question No. 3, which inquired what damages the
Labairs would have recovered from a jury verdict against Dr.
Baumgartner.]
QUESTION NO. 4:
Have the Labairs proven by a preponderance of the evidence that
Holly and Robert Labair lost the opportunity to recover a settlement from
Dr. Baumgartner as a result of Steve Carey’s and the Carey Law Firm’s
admitted negligence and failing [sic] to file a timely medical malpractice
claim against Dr. Baumgartner?
ANSWER: [ ] Yes [ X ] No
If your answer to QUESTION NO. 4 is “No,” then skip QUESTION
NO. 5 and proceed to QUESTION NO. 6. If your answer to QUESTION
NO. 4 if [sic] “Yes,” then proceed to QUESTION NO. 5.
The jury then skipped to Question No. 6, which is not at issue on appeal.
¶9 During deliberations, the jury asked the District Court for clarification of Question
No. 4: “In regards to question 4 on the questionare [sic] are we to consider whether the
Labairs would have settled or did they just lose the opportunity?”
¶10 The District Court discussed the jury’s question with counsel for both parties and
suggested that the jury be given a new instruction, which read as follows:
5
In response to your question, attached hereto,
You are instructed that the Labairs did lose the opportunity to settle with
the dismissal of the underlying case.
The question of 4 is would they have settled.
If your answer is yes, go to question no. 5.
If your answer is no go to question no. 6.
¶11 In accord with M. R. Civ. P. 51(c), the Labairs made a timely and specific
objection to the District Court’s proposal, arguing that “all we have to prove is that we
could have secured a settlement, and the moment Dr. Baumgartner said he would have
settled, we proved that.” The District Court disagreed, explaining:
[T]he settlement value has been established, but the question remains . . .
would the Labairs have taken the settlement? And I don’t know how we
get around that question for them. . . . I don’t know that, from listening to
Mr. Carey’s testimony, that they would have settled . . . .
¶12 The District Court then gave the jury the new instruction, which was identified as
Instruction No. 36. With this additional instruction, the jury answered “No” to Question
No. 4, apparently indicating that the Labairs would not have settled the underlying
medical malpractice claim. After the jury was discharged, the Labairs orally renewed
their objection to Instruction No. 36:
The Montana Supreme Court did not lay the burden on the plaintiffs of
whether they would have settled. There was no way for the plaintiffs to
give that testimony if they would have settled without knowing the
amount. . . . We believe that this instruction to the jury is a reversible error,
your Honor.
Carey countered that the Labairs’ willingness to settle was an element of proof implied
by our holding in Labair I:
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[T]he Labairs bore the burden from the beginning, at least since the
Supreme Court’s decision to prove both that there could have been a
settlement and the value of that settlement. It’s a failure of proof on the
part of the plaintiffs’ case, and they had all the opportunity in the world to
provide that proof to this court and to this jury, and they failed to do it.
¶13 The District Court decided to let the jury’s verdict stand, but noted “Dr.
Baumgartner’s testimony is that he would have only agreed for a minimal settlement on
his part,” implying the Labairs also failed to show a potential settlement value that would
have been agreeable to both sides. The District Court formally entered judgment on
September 22, 2015, from which the Labairs appeal.
STANDARD OF REVIEW
¶14 We review a district court’s selection of jury instructions for abuse of discretion.
Cechovic v. Hardin & Assocs., 273 Mont. 104, 116, 902 P.2d 520, 527 (1995). Taken in
their entirety, “jury instructions must fully and fairly instruct the jury regarding the
applicable law.” Goles v. Neumann, 2011 MT 11, ¶ 9, 359 Mont. 132, 247 P.3d 1089.
When a jury instruction is based on a district court’s conclusion of law, we apply a
plenary review standard. W. Sec. Bank v. Eide Bailly LLP, 2010 MT 291, ¶ 18,
359 Mont. 34, 249 P.3d 35.
DISCUSSION
¶15 Did the District Court err in instructing the jury to decide whether the plaintiffs
would have settled the medical malpractice claim underlying their legal malpractice
suit?
¶16 Legal malpractice is a type of professional negligence consisting of four essential
elements: (1) a duty owed by the attorney to the client, (2) a breach of that duty,
(3) causation, and (4) damages to the client. Labair I, ¶ 17. Because Labair I established
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the first three elements of the Labairs’ claim against Carey, the sole issue on remand was
damages.
¶17 It is well established that a plaintiff in a legal malpractice case “‘must show by a
preponderance of the evidence what injuries he suffered’” as a result of the malpractice.
Labair I, ¶ 43 (quoting Lieberman v. Emp’rs Ins. of Wausau, 84 N.J. 325, 342, 419 A.2d
417, 426 (N.J. 1980)). Ultimately, the plaintiff must prove that damages are not
speculative, but have a sufficient basis in fact. Labair I, ¶ 45 (citing Merzlak v. Purcell,
252 Mont. 527, 530, 830 P.2d 1278, 1280 (1992)). The method by which the plaintiff
proves those injuries is generally left to the discretion of the trial court. Labair I, ¶ 43
(citing Lieberman, 419 A.2d at 427). In cases like the present, proving damages requires
a plaintiff to effectively prosecute a “suit within a suit,” wherein the claim underlying the
legal malpractice must be proven by a preponderance of the evidence in order to show the
legal malpractice caused actual harm. Stott v. Fox, 246 Mont. 301, 305, 805 P.2d 1305,
1307 (1990); Richards v. Knuchel, 2005 MT 133, ¶ 18, 327 Mont. 249, 115 P.3d 189,
overruled on other grounds by Labair I, ¶ 23. The jury in such a case must determine
whether a reasonable jury considering the underlying claim could find for the plaintiff.
Labair I, ¶ 26 (citing Richards, ¶ 18).
¶18 We acknowledged in Labair I the difficulty of prescribing the particular types of
evidence and presentation that a legal malpractice “suit within the suit” would require.
“Different types of legal malpractice cases will require different types of evidence and
presentation.” Labair I, ¶ 44. We also noted the Labairs’ claim against Carey presents a
unique case in that the Labairs lost not only the right to sue Dr. Baumgartner and recover
8
a verdict for medical malpractice, but they also lost the opportunity to pursue a pretrial
settlement. Labair I, ¶ 31. Because the lost possibilities of securing either a verdict or a
settlement were each potential injuries, we remanded the case to determine whether the
Labairs could prove it was more probable than not that they would have recovered a
verdict or a settlement. Labair I, ¶ 45.
¶19 On remand, the District Court rightly instructed the jury that the Labairs could not
recover for the loss of both a verdict and a settlement. To recover the value of a verdict
in the underlying claim, the Labairs would need to prove each element of their underlying
claim against Dr. Baumgartner by a preponderance of the evidence. Even if the Labairs
failed to prove that they would have recovered a verdict against Dr. Baumgartner,
however, the lost possibility of a pretrial settlement with Dr. Baumgartner remained a
distinct injury for which the Labairs could recover damages.
¶20 In answering Questions 1 and 2 of the special verdict form, the jury concluded the
Labairs proved Dr. Baumgartner breached the standard of care, but that they failed to
prove that this breach caused damages. As a result, the Labairs are not entitled to
damages that would be recoverable from a verdict in the underlying claim against Dr.
Baumgartner. The Labairs do not allege any error in the District Court’s instruction on
the question of verdict damages. The sole question on appeal is whether the Labairs
satisfied their burden of proving the lost opportunity for a pretrial settlement in the
underlying claim. Consequently, the crux of this case is the scope of the Labairs’ burden
of proof for the lost opportunity to settle.
9
¶21 The Labairs argue Labair I never required them to prove that they would have
actually settled with Dr. Baumgartner. Instead, the Labairs interpret Labair I as imposing
the more limited burden of proving the likelihood of a settlement and the value of a
potential settlement, both of which they established through expert testimony. Carey
counters it would be improper to relieve the Labairs of the burden of proving they would
have settled with Dr. Baumgartner. While Carey’s negligence undoubtedly deprived the
Labairs of the opportunity to settle, Carey argues it is still possible that the Labairs would
have refused to settle if the opportunity presented itself. Carey maintains that if the
Labairs would have refused to settle, the lost opportunity to settle would not be an actual
injury.
¶22 As stated in Labair I, the Labairs’ burden on remand was as follows: “At trial, the
Labairs must establish that it is more probable than not that they would have recovered a
settlement or a judgment against Dr. Baumgartner but for Carey’s negligence, as well as
the value of the lost settlement and/or judgment.” Labair I, ¶ 41 (emphasis added). We
did not hold the Labairs had to prove they would have settled. Instead, the Labairs were
required to prove a settlement was more probable than not. The Labairs clearly satisfied
this burden through expert testimony establishing that settlements occur in 90% of cases
similar to theirs. That testimony was bolstered by Carey’s expert, who estimated that
95% of medical malpractice cases settle.
¶23 The Labairs also satisfied their burden of proving the likely value of the lost
opportunity to settle. The Labairs’ settlement expert estimated the likely settlement value
would fall between $500,000 and $750,000. Although Carey’s expert testified to a much
10
lower range of settlement values, between $100,000 and $300,000, the jury could weigh
this conflicting testimony and determine a value for the lost opportunity. Thus, the
Labairs’ evidence was sufficient to satisfy the two-part burden we outlined in Labair I.
When the jury asked for clarification of this burden, however, the District Court
effectively added a new element: whether the Labairs would have actually accepted a
settlement. Moreover, the District Court added this element to the burden of proof after
both parties had rested and the case was in the jury’s hands. Because the District Court’s
instruction did not fairly instruct the jury on the law of the case we established in
Labair I, we conclude that the instruction was an abuse of discretion that demands a new
trial.
¶24 Carey maintains this additional element is a logical extension of Labair I, because
the Labairs’ willingness to accept a settlement is a prerequisite to actually recovering a
settlement. We stated in Labair I, however, that the Labairs simply needed to prove it
was more probable than not that they would have recovered a settlement. We did not
hold that the Labairs must show they were willing to settle and therefore would have
actually recovered a settlement. If we adopted such a rule, it stands to reason that the
Labairs must also prove Dr. Baumgartner would have been willing to settle, because a
settlement requires the assent of both parties. But it would be impossible to replicate the
give-and-take of settlement negotiations with Dr. Baumgartner now that he is shielded
from liability by Carey’s negligence. Indeed, Dr. Baumgartner has no incentive to settle
now that the Labairs’ claim against him is time-barred. Carey should not be shielded
11
from liability simply because his own negligence makes it impossible to prove today
what the parties would have done in settlement negotiations years ago.
¶25 The appropriate burden of proof is the one we established in Labair I. The Labairs
must prove two elements to recover for the lost opportunity to settle with Dr.
Baumgartner: (1) that they more probably than not would have recovered a settlement
with Dr. Baumgartner, and (2) the likely range of value of the lost settlement. We note
that neither Question No. 4 of the special verdict form nor Instruction No. 36 clearly
posed this first element as a question for the jury. Question No. 4 asked whether the
Labairs had “proven by a preponderance of the evidence that Holly and Robert Labair
lost the opportunity to recover a settlement from Dr. Baumgartner as a result of Steve
Carey’s and the Carey Law Firm’s admitted negligence.” This determination, however,
was established as law of the case by virtue of our conclusion in Labair I that the Labairs
did in fact lose the opportunity to settle. Instruction No. 36 corrected this error, but then
proceeded to direct the jury to answer the subjective question of whether the Labairs
would have actually settled, when Labair I required only that they answer the objective
question of whether it was more probable than not that they would have recovered a
settlement. At this stage, the threshold question for the jury should have been whether
the Labairs had proven that they more probably than not would have recovered a
settlement.
¶26 Because both parties’ experts testified that a settlement was more probable than
not, the Labairs argue judgment as a matter of law is appropriate on this threshold
question. We agree. “Judgment as a matter of law is properly granted only when there is
12
a complete absence of any evidence which would justify submitting an issue to a jury.”
Martin v. BNSF Ry. Co., 2015 MT 167, ¶ 8, 379 Mont. 423, 352 P.3d 598 (citing Weber
v. BNSF Ry. Co., 2011 MT 223, ¶ 16, 362 Mont. 53, 261 P.3d 984). When considering
whether judgment as a matter of law is proper, we view evidence in the light most
favorable to the party opposing such judgment. Martin, ¶ 8 (citing Weber, ¶ 16). By the
lowest estimate presented at trial, the probability of settlement was 90%. The only
evidence that comes close to contradicting this estimate is testimony from Carey’s expert,
who stated that the Labairs’ specific claim “had a better-than-even chance of settlement if
they would have been willing to accept” a settlement. Setting aside the fact that this
testimony is couched in the Labairs’ willingness to settle, which we have held is not
dispositive of their recovery, the testimony nonetheless shows that a settlement was more
probable than not. Even considering this evidence in the light most favorable to Carey,
the only reasonable conclusion is that the Labairs more probably than not would have
recovered a settlement. Thus, we conclude that the Labairs are entitled to judgment as a
matter of law on this first element of settlement damages.
¶27 In the new trial, the District Court need not revisit the question of whether Dr.
Baumgartner’s treatment of Holly and Dawson Labair failed to meet accepted standards
of care, as the jury here answered that question in the affirmative. In addition, the
District Court need not revisit the question of damages for a lost opportunity to recover a
verdict. As explained above, the jury already resolved that question in Carey’s favor, and
the Labairs do not allege the District Court erred in instructing the jury on that question.
See supra ¶ 20. Instead, the new trial will address damages for the lost opportunity to
13
settle with Dr. Baumgartner. Because the Labairs are entitled to judgment as a matter of
law on the first element of settlement damages, the only remaining evidentiary burden
borne by the Labairs is showing the likely range of value of a settlement.
CONCLUSION
¶28 For the foregoing reasons, we vacate the judgment of the District Court and
remand for a new trial on the question of the value of the lost opportunity to settle.
/S/ PATRICIA COTTER
We Concur:
/S/ MIKE McGRATH
/S/ MICHAEL E WHEAT
/S/ JAMES JEREMIAH SHEA
Justice Beth Baker, concurring.
¶29 I concur with the Court’s disposition of this appeal based on the law of the case
established in Labair I. I do not conclude from this disposition, however, that a plaintiff
in every legal malpractice case is relieved from the burden of proving that she would
have accepted a settlement. It is not necessary for us to decide that here, and I do not
interpret today’s decision to settle that question as a matter of law.
/S/ BETH BAKER
Justice Laurie McKinnon, dissenting.
¶30 I respectfully dissent from the Court’s decision to reverse and remand for a new
trial. In my opinion, the Court has rewritten LaBair I; changed the law of the case, to the
14
extent the law of Labair I could reasonably be discerned; and conflated burdens of proof
for causation and damages. The District Court labored onerously in its commitment to
follow and understand our decision in LaBair I. The court’s instruction that the Labairs
must show that they would have actually settled is a correct statement of the law of
negligence. However, regardless of the correctness of the instruction, when examining
the context of the entire record—the jury instructions as a whole; the Special Verdict
form (to which no objection was made); and, in particular, our confusing reasoning in
Labair I—I cannot find that the District Court abused its discretion when it instructed the
jury that for the Labairs to recover the jury must find they “would have settled.”
¶31 Our decision results from our efforts in Labair I to create an injury and fashion a
remedy which was not only novel and unique, but distanced this Court from the mainstay
of authority provided by other jurisdictions. In Labair I, we recognized, for the first time
and devoid of any authority, that a loss of opportunity to settle a claim can be an injury.
Although we cited as authority for creating this new injury Jenkins v. St. Paul Fire &
Marine Ins. Co., 422 So.2d 1109, 110 (La. 1982), stating “[o]ther jurisdictions have
similarly recognized that the loss of the opportunity to bring a claim can constitute prima
facie evidence of an injury,” Labair I, ¶ 32, (emphasis added), Jenkins considered only
the lost opportunity to bring a claim and not the lost opportunity to settle a claim. It is
well established that the loss of opportunity to bring a claim is a recognizable cause of
action in legal malpractice cases which, within the framework of a “suit within a suit,” is
a compensable injury if causation is demonstrated. However, there is no authority
recognizing a right to settlement and injuries resulting from a loss of settlement
15
opportunity.1 Nonetheless, while we recognized a distinction in the type of injury
between a lost opportunity to bring a claim and a lost opportunity to settle a claim, we
failed to appreciate a distinction in causation and damages between the injuries and to
instruct the trial court on remand accordingly. Had we done so, we might have seen the
fallacy of our reasoning in allowing the pursuit of a claim for loss of opportunity to settle.
The court, counsel, and the jury had the misfortune of laboring under our guidance in
Labair I. In my opinion, despite the unmanageability of Labair I, the jury recognized and
dealt with the salient issue in these proceedings—that the Labairs were not interested in
settling their claim. I would not prolong the agony of this case and add another layer of
poorly reasoned precedent by finding an abuse of discretion on the part of the trial court.
¶32 Settlements result from a multitude of unique factors, including the mental
disposition of the parties, which are difficult to account for when considering causation
and damages. Preliminarily, in my opinion, “[t]here is “no ‘right’ to a settlement, which
is an extra-judicial action of the parties taken for any number of reasons, some of which
are completely unrelated to a claim’s validity.” Labair I, ¶ 63 n. 1 (J. Rice, concurring).
The District Court’s misfortunes stem from our creation in Labair I of a stand-alone
injury of a loss of settlement potential, and our statements implying that causation for
1
Jenkins simply does not stand for the proposition we cited it for: recognition of a loss of
settlement of a claim; Jenkins concerns the loss of opportunity to bring a claim. Spencer, also
cited in Labair I, ¶ 32, was decided within the context of a criminal matter and the loss of
opportunity to bring a post-conviction proceeding. It likewise is not authority for the creation of
a loss of opportunity to settle in a medical malpractice action. Jenkins, which followed the
majority line of cases, recognized that the “suit within the suit” would necessitate examining the
success of the underlying court action in the post-conviction proceedings, a matter which is more
easily susceptible to a causation analysis than the likelihood of settlement in a medical
malpractice action.
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such a claim has already been established by Carey’s admission of duty and breach of
that duty. Furthermore, we conflated causation for these two distinct injuries. In Labair
I, we held that “Carey was the cause-in-fact of the Labairs’ loss of their medical
malpractice case . . . ;” Labair I, ¶ 39 n. 5: that is, that Carey was the cause-in-fact of the
Labairs’ loss of the opportunity to bring a claim. It does not follow, however, that such a
conclusion is equally dispositive of a lost opportunity to settle. There is little question
that by hiring a lawyer and pursuing a medical malpractice action, the Labairs intended to
bring a claim; however, the same cannot be said regarding an intention to settle a claim,
especially when there was evidence indicating the Labairs were not interested in settling.2
The jury and the District Court, in contrast to this Court in Labair I and here, appreciated
these distinctions. While the Labairs’ counsel protested and argued that another burden
was being placed upon the Labairs, the court’s instruction that the Labairs would have
actually accepted a settlement was consistent with the law of causation and damages.
¶33 It is thus painfully apparent that the issues in the current appeal arise from our
inconsistencies and incorrect reasoning regarding causation and damages in Labair I. We
stated in Labair I that “[u]nder circumstances such as this—where duty and breach are
admitted, and an untimely filing caused the loss of a claim with some value—legal
causation can be decided as a matter of law.” Labair I, ¶ 36. Despite our conclusion that
causation was established as a matter of law, Labair I, ¶ 36, and fact, Labair I, ¶ 39 n. 5,
we remanded for the Labairs to establish, within the context of a “suit within a suit”
2 Indeed, Holly Labair testified that she “absolutely [did] not” bring this lawsuit against Dr.
Baumgartner for the money. And Carey testified that Robert Labair told him “on more than one
occasion that he wanted to kill Dr. Baumgartner.”
17
analysis, that “it is more probable than not that they would have recovered a settlement or
a judgment against Dr. Baumgartner but for Carey’s negligence, as well as the value of
the lost settlement and/or judgment.” Labair I, ¶ 41 (emphasis added). It makes no sense
to, first, remove from determination by a jury the question of causation, finding it
established as a matter of law and leaving nothing but the amount of damages to be
ascertained by a jury. It is, second, inconsistent to next remand for causation to be
established—“they would have recovered a settlement . . . but for Carey’s
negligence . . . .” Labair I, ¶ 41. Our use of “but for” language relates to causation,
which, after examining our precedent discussing “proximate cause” within the context of
a legal malpractice action, we concluded was the appropriate test to be applied. Labair I,
¶ 21 (“We take this opportunity to clarify our previous legal malpractice jurisprudence
and reconcile the causation analysis with this Court’s decision in Busta . . . .”).
Nonetheless, we simultaneously established causation as a matter of law, Labair I, ¶ 36,
while remanding for the jury to determine causation in the context of a “suit within a
suit.” Labair I, ¶ 41. Significantly, with respect to this inconsistency, we fail to
distinguish between causation and damages respecting loss of opportunity to bring a
claim and that of a loss of opportunity to settle a claim.
¶34 Today, the Court rewrites Labair I, in favor of the Labairs, to definitively
conclude that causation regarding the loss of opportunity to settle a claim, in addition to
causation to bring a claim, was established in Labair I as a matter of law. The Court
enters judgment as a matter of law on duty, breach, and causation, leaving only the
amount of damages to be determined by a jury. First, as already seen, we were
18
inconsistent in Labair I regarding causation and, in particular, its relationship to damages.
Second, we failed to appreciate a distinction in causation between the two types of
injuries. There is no question that by hiring a lawyer and pursuing a medical malpractice
action, the Labairs intended to bring a claim which they lost the opportunity to pursue.
However, the same cannot be said for an intention to accept and settle a claim, which
must first be demonstrated before the Labairs can receive damages as compensation for
the injury of a lost opportunity to pursue settlement. Accordingly, in establishing a new
“two-part burden” we have changed the law of the case by removing the requirement that
the Labairs demonstrate they would have accepted a settlement and that “but for” Carey’s
negligence they lost the opportunity to settle. Instead, we include what was omitted in
Labair I by concluding “[t[his determination, however, was established as law of the case
by virtue of our conclusion in Labair I that the Labairs did in fact lose the opportunity to
settle.” Opinion, ¶ 25. Thus, the only remaining element the Labairs must establish is
the “likely range of value of a settlement.” Opinion, ¶ 27. (See also Opinion, ¶ 26; “thus
we conclude that the Labairs are entitled to judgment as a matter of law on this first
element [but for causation] of settlement damages.”) We arrive at this conclusion despite
the jury having found that Carey’s failure to file a claim was not the cause of the Labairs’
injuries, both for the loss of opportunity to bring a claim and the loss of opportunity to
settle a claim. This leaves us with the unbelievable and astounding proposition that, in a
negligence action, this Court may remove from consideration by a jury nearly the entire
action—duty, breach, causation, and damages—leaving only the amount of damages to
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be determined by the jury. While we may not have stated this clearly in Labair I, we do
so, unfortunately, here. The Court’s reasoning, at the very least, is unprecedented.
¶35 Finally, I would be remiss if I failed to point out that the District Court’s
instruction to the jury that it must find the Labairs actually would have settled was, in
fact, a correct statement of the law. A legal malpractice case is a negligence action that
imposes a standard of care that is both objective and external, rather than that of
individual judgment. “It must be the same for all persons, since the law can have no
favorites; and yet allowance must be made for some of the differences between
individuals, the risk apparent to the actor, his capacity to meet it, and the circumstances
under which he must act.” Restatement (Second) of Torts § 283 cmt. c (1965). The law
of torts attempts to “put an injured person in a position as nearly as possible equivalent to
his position prior to the tort.” Restatement (Second) of Torts § 901 cmt a (1965).
Attorney malpractice is professional negligence. “The proper measure of damage in an
attorney malpractice action is the difference between the client’s recovery and the amount
that would have been recovered by the client except for the attorney’s negligence.”
Merzlak v. Purcell, 252 Mont. 527, 529, 830 P.2d 1278, 1279 (1992). A claim of
malpractice must have resulted in damages. Kane v. Miller, 258 Mont. 182, 187, 852
P.2d 130, 133 (1993).
¶36 In contrast to the duty of care element for a negligence action, we do not impose
an objective standard or “reasonable man” standard when determining whether causation
has been established and damages have been incurred. Hence, the Court is incorrect
when it concludes that the District Court, by requiring the Labairs to establish they would
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have actually settled, imposed an additional, subjective burden of proof upon the Labairs.
Opinion, ¶¶ 24–25. Contrary to the Court’s reasoning, whether the Labairs themselves
did indeed sustain damages is a subjective inquiry which examines the particular
circumstances of the Labairs’ situation. Proof of damages means that the recovering
party has demonstrated that they would have actually recovered; that is, under the
circumstances present here, that they would have accepted the settlement. This is in
accord with jurisdictions that have considered the failure of an attorney to communicate a
settlement offer. See Cannistra v. O’Connor, McGuinness, Conte, Doyle, Oleson &
Collins, 286 A.D.2d 314, 316 (N.Y. App. Div. 2001) (“Here, the plaintiffs failed to
demonstrate that, but for the defendant’s alleged negligence, they would have accepted
the County’s settlement offer and not have sustained any damages.”); Bauza v. Livington,
40 A.D.3d 791 (N.Y. 2007) (“Here, the plaintiffs failed to demonstrate that, but for the
defendant’s alleged negligence, they would have accepted the defendant’s offer of
settlement[.]”). To recover in any negligence action, there is always a requirement that
the damages be the plaintiff’s actual damages which, by their very nature, is not an
objective standard.
¶37 When reviewing a trial court’s instructions to the jury, we consider the instructions
in their entirety, in connection with other instructions given, and the evidence introduced
at trial. Instructions to the jury must fully and fairly instruct the jury regarding the
applicable law. Goles, ¶ 9. Consistent with Labair I, the court instructed the jury
repeatedly that the Labairs had to show they “would have recovered” a judgment or
settlement from Dr. Baumgartner. Consistent with general principles in negligence law
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of causation and damages, the court responded to a specific question from the jury, likely
prompted by their assessment that the Labairs were not interested in settling, that the
Labairs had to demonstrate that they would have accepted a settlement. In my opinion,
this was an accurate statement of the law and was within the court’s broad discretion to
assess whether its response went beyond the parties’ expectations when presenting their
case to the jury. The distinction between “would have settled” and “would have
recovered a settlement” is immaterial and does not warrant reversal and remand for a new
trial. When considered with all the instructions given and the confusing analysis we
provided in Labair I, I cannot fault the District Court and find an abuse of discretion
when it instructed the jury that they must find the Labairs “would have settled” in order
to recover for their lost opportunity to settle. The Labairs received a jury trial on their
claims and the jury found causation did not exist between Carey’s negligence and the
Labairs’ lost opportunity to bring a claim and settle a claim. The Labairs’ substantial
rights have not been prejudiced.
¶38 I dissent from the Court’s decision holding otherwise.
/S/ LAURIE McKINNON
Justice Jim Rice joins in the foregoing dissent.
/S/ JIM RICE
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