A petition expected this week will ask the California Supreme Court to settle a renewed debate in the legal malpractice sphere over the level of evidence required to bring a claim against an attorney following a settlement, known as “settle and sue.”
In a case decided in June, Masellis v. Jensen, a state appeals court considered whether a settle and sue plaintiff was held to a more demanding standard of proof than preponderance of the evidence, after a jury found that but for an attorney’s negligence, her client would have obtained a more favorable recovery.
This area of legal malpractice lawsuits involves a plaintiff who settles an underlying suit then alleges that their former attorney’s malpractice caused them to settle for less, or to settle when they would’ve recovered more money at trial.
The California Court of Appeal, Fifth District disagreed with attorney Krista Jensen’s contention that precedent required her former client to prove with “legal certainty” that she would have fared better.
“We conclude the applicable standard of proof for the elements of causation and damages in a ‘settle and sue’ legal malpractice action is the preponderance of the evidence standard,” Donald R. Franson Jr. wrote for the court.
California’s attorneys are split over the importance and interpretation of the recent decision.
William Lapcevic, whose firm DiBenedetto & Lapcevic LLP represented Jensen, said he believes there’s a split between appellate districts on the evidence standard, and Jensen plans to petition the state high court for review this week.
In the 2012 Filbin v. Fitzgerald decision, the First District held that plaintiffs had to prove with “legal certainty” that they would’ve fared better if not for the attorney’s malpractice, Lapcevic said.
Much of the current confusion in California could stem from the language courts have used to describe these suits, said Vincent R. Johnson, a professor at St. Mary’s University School of Law.
In a paper cited liberally by the Masellis court, Johnson examined precedential opinions dating to 1995 and concluded that courts had been expansive in their language, causing confusion among judges and juries alike by using the term “legal certainty” when evidence fell short of establishing certainty of causation.
In many cases, those courts went beyond what California law holds, Johnson said.
Higher Level of Inquiry?
In these lawsuits, there should be a higher level of inquiry, beyond preponderance of the evidence, for plaintiffs to demonstrate damages, said James A. Murphy of Murphy Pearson Bradley & Feeney in San Francisco.
The opinion in Filbin articulated the gatekeeper role that courts must play in settle and sue cases, by requiring a plaintiff to demonstrate to a legal certainty that they were damaged by a lawyer’s malpractice, before they can get before a jury to show, by a preponderance of the evidence, the amount of that damage, Murphy said.
Filbin essentially said the case shouldn’t have gone to trial, because the initial claim—that the lawyer’s negligence caused damages—was speculative, he said.
For plaintiff’s attorney David Parker of Parker Mills LLP in Los Angeles, it’s the pretrial application of “legal certainty” that makes the Masellis decision such a critical one.
“Legal certainty is a sound bite that other courts have used to resolve cases without thought, and the same mistake gets used over and over again,” Parker said. “What’s so pernicious about the legal certainty standard is it’s used to prevent cases from going to trial.”
If the term legal certainty in Filbin means a special evidentiary burden on plaintiffs in certain types of legal malpractice cases, that view is rejected in Masellis, Parker said.
According to Mark Schaeffer of Nemecek & Cole in Encino, the Fifth District’s opinion did nothing to disturb the status quo, and many around the state are misinterpreting both opinions on settle and sue.
Cases that mention legal certainty didn’t talk about the burden of proof, Schaeffer said—it was understood that the burden was preponderance of evidence.
Winning these suits is “a very narrow needle to thread,” said Buchalter APC’s Harry W.R. Chamberlain II. That makes Masellis a rarity, but controversy over language like legal certainty is simply semantics.
Preponderance of evidence is a difficult standard in legal malpractice, and certain cases reference legal certainty because the nature of the claim results in a particularly difficult burden of proof, he said.
The starting point for evaluating causation in any legal malpractice is Viner v. Sweet from 2003, Chamberlain said. In that case, the California Supreme Court held that a legal malpractice plaintiff must always prove “but for” causation, regardless of the type of claim asserted.
Courts have focused on the necessity of nonspeculative proof that a better outcome would have resulted but-for the attorney’s malpractice, Chamberlain said.
Putting the cases in context, they all amount to the same thing, he said: A plaintiff has to prove causation and damages based on nonspeculative evidence.
Reconciliation, High Court Potential
Reconciling both preponderance of evidence and legal certainty is possible, according to Kenneth C. Feldman of Lewis Brisbois Bisgaard & Smith LLP in Los Angeles.
It remains to be seen how courts will use the Fifth District opinion, but Feldman says he anticipates plaintiffs’ lawyers will try to use it to their benefit.
While he doubts any court will directly state the evidence level is not preponderance of evidence, future appeals courts could clarify the question, concluding that speculation can’t take the place of admissible evidence. In that case, preponderance of evidence is legal certainty, as long as speculative evidence isn’t included, Feldman said.
Johnson, the legal professor, thinks the issue is important enough for the state high court to address it.
“The body of case precedent at the court of appeal level is extensive enough that it’s fair to say there is a serious ambiguity in the law, and that it would be a very wise expenditure of the California Supreme Court’s time, to clear up this issue,” Johnson told Bloomberg Law.
Masellis resolves the ambiguity by concluding that legal certainty is referring to the degree of certainty inherent in the applicable burden of proof, which is preponderance of the evidence, Johnson said.
Regardless of intention, the language is important. Legal certainty sounds like a more demanding standard, and it would therefore be wise for the high court to abandon that term, he said.
In the event of state supreme court review, Murphy, the San Francisco attorney in favor of a higher evidence standard, thinks it could reverse the Fifth District’s decision, and explicitly rule that a plaintiff can’t prove the amount of damage to a jury—by preponderance of the evidence—without first establishing the existence of damage to a legal certainty.
“I could see the Supreme Court adopting Filbin reasoning,” Murphy said. “The Masellis opinion exposes lawyers in every settlement to claims like this, and there needs to be some clarification, whether from the Supreme Court or another court as to what’s required to bring those claims.”