In the Supreme Court of Ohio

Transcription

1 No In the Supreme Court of Ohio ENVIRONMENTAL NETWORK CORPORATION, ET AL., Plaintiffs-Appellees, V. GOODMAN WEISS MILLER LLP, Defendant-Appellant. ON DISCRETIONARY APPEAL FROM THE COURT OF APPEALS, EIGHTH APPELLATE DISTRICT CUYAHOGA COUNTY, OHIO CASE NO. CA REPLY BRIEF OF APPELLANT, GOODMAN WEISS MILLER LLP Richard A. Simpson (adnutted pro hac vice) (Counsel of Record) ROSS, DIXON & BELL, LLP 2001 K Street, N.W. Washington, D.C Telephone: (202) Facsimile: (202) rsimpson@rdblaw.com Monica A. Sansalone ( ) GALLAGI3ER SHARP Sixth Floor - Bulkley Building 1501 Euclid Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) msansalone@gallaghersharp.com Attomeys for Appellant, Goodman Weiss Miller LLP M L ME FFS CLERK OF COUpT SUPREME U UST df OHIO

2 TABLE OF CONTENTS TABLE OF AUTHORITIES... ii 1. INTRODUCTION... 1 II. ARGUMENT... 2 A. Vahila Did Not Eliminate In All Circumstances the Requirement That A Legal Malpractice Plaintiff Prove The Merits Of An Underlying Case... 2 B. ENC Did Not Prove By Any Method That It Would Have Obtained A More Favorable Result If The Underlying Case Had Been Tried To A Conclusion Even A Cursory Review Of The Record Refutes ENC's Contention That It In Fact Proved The Case-Within-The-Case Neither The Trial Court Nor The Court Of Appeals Found That ENC Had Presented Anything More Than "Some Evidence" Of The Merits Of Its Claim... 9 C. Even If ENC Had Adduced Sufficient Evidence To Present A Jury Question Whether It Proved The Merits Of The Underlying Case (Which It Did Not), Reversal Would Be Mandatory Because The Jury Instructions Required Proof Of Only "Some Evidence" Of The Merits Of ENC's Claim...10 III. CONCLUSION CERTIFICATE OF SERVICE i

3 TABLE OF AUTHORITIES STATE CASES Alexander v. Turtur & Associates., Inc. (Tex.2004), 146 S.W.3d Cunningham v. Hildebrand (2001), 142 Ohio App.3d 218, 755 N.E.2d 384, discretionary review declined (2001), 92 Ohio St.3d 1445, 751 N.E.2d , 5 Krahn v. Kinney (1989), 43 Ohio St.3d 103, 538 N.E.2d , 3 Vahila v. Hall 77 Ohio St.3d 421, 1997-Ohio-259, 674 N.E.2d passim DOCKETED CASES Environmental Network Corp. v. Goodman Weiss Miller LLP 8th Dist. No , 2007-Ohio Lewis v. Keller 8th Dist. No , 2004-Ohio Nu-Trend Homes, Inc. v. Law Offices ofdelibera Lyons & Bibbo 10th Dist. No. OIAP-1137, 2003-Ohio Ruble v. Kaufman 8th Dist. No , 2003-Ohio TREATLSES 4 Mallen & Smith, Legal Malpractice (2007 ed.), Section Mallen & Smith, Legal Malpractice (2007 ed.), Section ii

4 I. INTRODUCTION This appeal presents the Court with diametrically opposed and irreconcilable interpretations of Vahila v. Hall, 77 Ohio St.3d 421, 1997-Ohio-259, 674 N.E.2d In one view - that of Appellant, Goodman Weiss Miller LLP ("GWM") - Vahila holds that a legal malpractice plaintiff is not always required to prove the merits of an underlying case, but does not eliminate the need for such proof in all cases; rather, proof of the merits is required when, as here, the nature of the harm allegedly sustained logically demands it. In the other view - that of Appellees, Environmental Network Corporation, Environmental Network and Management Corporation and John J. Wetterich (collectively, "ENC") - Vahila means that a legal malpractice plaintiff is never required to prove that he would have prevailed in an underlying case; ENC contends that, regardless of the circumstances, "proving causation requires, at most, some evidence of the merits of the underlying claim." ENC Br. at 20 (emphasis sic). Thus, the parties' briefs squarely present the issue this Court granted review to decide: Whether in a legal malpractice case in which the plaintiff contends he would have achieved a better result in underlying litigation but for his attorney's malpractice, the plaintiff must prove he in fact would have obtained a better result, and what that result would have been, to establish the proximate cause and damages elements of the malpractice case. The purely legal issue presented is subject to de novo review. And, unless this Court accepts ENC's strained reading of Vahila, GWM is entitled to judgment as a matter of law. In a transparent effort to color the Court's consideration of this important legal issue, ENC devotes nearly half of its brief to an extended and overblown discussion of alleged negligence in the handling of the underlying case. That discussion is, of course, completely irrelevant. As is appropriate in the Supreme Court, the Court has not been asked to review those factual findings.

5 Instead, GWM raises only the critical issue of law described above, which is applicable to all legal malpractice cases. As to that issue, ENC's position, if accepted by this Court, would perniit a legal malpractice plaintiff to prevail without proving, by any method, that the alleged malpractice in fact caused any harm whatsoever to plaintiff. No other jurisdiction permits recovery under such circumstances. ENC again seeks to divert attention from the legal issue presented by asserting that it in fact proved the case-within-the-case. In reality, at all stages of the litigation, ENC contended that it needed to present only "some evidence" of the merits of its claims. Even a cursory review of the record reveals that ENC did no more than what it set out to do - that is, to present "some evidence." Moreover, neither the trial court nor the Eighth District Court of Appeals held that ENC had proven the merits of the underlying claim. Instead, the trial court accepted ENC's erroneous contention that it was required to present only "some evidence," and instructed the jury, entered judgment, and denied GWM's post-trial motions solely on that basis. Likewise, the Eighth District Court of Appeals affirmed on the ground that ENC had presented "some evidence" of the merits of its claims, and that nothing more was required. II. ARGUMENT A. Vahila Did Not Eliminate In All Circumstances the Requirement That A Le al Malpractice Plaintiff Prove The Merits Of An UnderlyinE Case. Vahila is the leading Ohio case regarding proximate causation and damages in legal malpractice actions. Building on its earlier decision in Krahn v. Kinney (1989), 43 Ohio St.3d 103, 538 N.E.2d 1058, this Court in Vahila held that a legal malpractice plaintiff is not always required to prove the merits of an underlying claim in order to establish the proximate cause and damages elements of a legal malpractice claim. This holding represented a significant change

6 from some prior law, which made proof of the merits of the underlying proceedings a requirement for recovery in all cases. The critical fact in both Krahn and Vahila was that the type of harm that the plaintiff claimed to have suffered as a result of the alleged malpractice had nothing to do with the merits of the plaintiff s claims in the underlying action. Specifically, the Krahn plaintiff alleged that her attorney failed to advise her of a plea agreement offer by the prosecutor, that she would have accepted the offer if it had been conveyed, and that the ultimate result of the proceedings was less favorable to her than the plea offer. Likewise, in Vahila the plaintiff allegedly suffered harm because the defendant attomey failed to disclose all of the legal consequences and other matters surrounding various plea agreements and civil settlements into which the plaintiff had entered. Under those respective circumstances, each of Krahn and Vahila held that the legal malpractice plaintiff could recover, without proving that he or she would have been successful in the underlying proceedings. The Court so held because in both Vahila and Krahn the outcome of the underlying proceedings would not change the harm allegedly caused by the malpractice. In other words, the merits of the underlying cases in Vahila and Krahn were immaterial to whether the alleged malpractice in fact harmed the legal malpractice plaintiff. hi the course of explaining its important holding in this regard, the Vahila Court included the dictum that has generated such confusion in Ohio law and has led to absurd results like that in this case. The Court stated: We are aware that the requirement of causation often dictates that the merits of the malpractice action depend upon the merits of the underlying case. Naturally, a plaintiff in a legal malpractice case may be required, depending on the situation, to provide some evidence of the merits of the underlying claim. See * * * Krahn, 43 Ohio St.3d at 106, 538 N.E.2d at However, we cannot endorse a blanket proposition that requires a plaintiff to prove, in every instance, that he or she would have been successful in the underlying matter. 77 Ohio St.3d at (emphasis added).

7 ENC based its entire case on the premise that this admittedly imprecise "some evidence" language means that a legal malpractice plaintiff is never required to prove the merits of the underlying case. ENC's position is that "not always" requiring that proof means "never" requiring that proof. But ENC's tortured reading of Vahila cannot withstand analysis. First, contrary to ENC's contention that Vahila represents a sharp break with Krahn and all prior law, the Vahila syllabus describes that decision as "follow[ing]" Krahn. Notably, in the same passage in which the "some evidence" language appears, the Court stated that a plaintiff is not required "in every instance, [to prove] that he or she would have been successfixl in the underlying matter." 77 Ohio St.3d at 428 (emphasis added). The obvious implication of that statement is, of course, that in some circumstances a plaintiff must prove "that he or she would have been successful in the underlying [claun]." Id. It would take far more than a snippet of dictum to signal that this Court had eliminated in all circumstances the requirement that a legal malpractice plaintiff prove the merits of an underlying case, thereby making Ohio a minority of one. Second, ENC's contention that "the lower court cases applying Vahila's causal connection nexus are uniform in their endorsement of requiring some evidence of the merits of the underlying case to prove causation but never requiring a legal malpractice plaintiff to prove the case-within-the-case," ENC Br. at 23, is dead wrong. In Cunningham v. Hildebrand (2001), 142 Ohio App.3d 218, 755 N.E.2d 384, discretionary review declined (2001), 92 Ohio St.3d 1445, 751 N.E.2d 483, for example, the jury instructions required the plaintiff to prove what the result of the underlying case would have been, by showing either that he would have won a recovery at trial or that he would have obtained a payment in settlement. Specifically, the

8 pertinent jury instrnction, which GWM quoted in its opening Merit Brief ("GWM Br") (at 26), included the express requirement that "Plaintiff must prove what the amount of his recovery probably would have been." 142 Ohio App.3d at 225. In contrast, here the trial court totally eviscerated its preponderance of the evidence instruction when it directed the jury to "take into account all evidence you have heard to determine whether there exists some evidence of the merits of plaintiffs' claim in the underl[ying] litigation." Tr., Vol. X at 2273, Supp. at 485 (emphasis added). The trial court did not require ENC to prove by a preponderance of the evidence "what the amount of [its] recovery probably would have been," or indeed that it suffered any harm whatsoever as a result of the alleged malpractice. Third, the cases in which the legal malpractice plaintiff fails to present any evidence of the merits of the underlying case also do not support ENC's contention. Where a plaintiff s claim has no merit whatsoever, the result is the same whether a court requires only "some evidence" or instead utilizes the traditional proximate causation standard of requiring the plaintiff to prove, by a preponderance of the evidence, that he would have prevailed. See Lewis v. Keller, 8th Dist. No , 2004-Ohio-5866, at 13 ("Vahila does not always require [a showing of likelihood of success on the merits], but the circumstances here reasonably demand it"); Ruble v. Kaufman, 8th Dist. No , 2003-Ohio-5375, at 44 (underlying case had no merit whatsoever); Nu-Trend Homes, Inc. v. Law Offices of DeLibera Lyons & Bibbo, 10th Dist. No. 01AP-1137, 2003-Ohio-1633, at 63 (legal malpractice plaintiff's underlying claim was not even colorable). In all of these decisions, the plaintiff's underlying claim had no merit, and so could not support a legal malpractice claim even under the "some evidence" formulation.

9 Fourth, ENC raises yet another irrelevant point by professing a lost settlement opportunity, when there was absolutely no evidence of one in this case. t ENC made no claim, either before or during the malpractice trial, that were it not for alleged malpractice, it would have negotiated a more favorable settlement. ENC did not present any evidence that the other parties would have agreed to a more favorable settlement but for the alleged malpractice; to the contrary, the only evidence regarding the settlement actually obtained was from GWM's expert, who opined that the settlement "was not only reasonable but was exceedingly beneficial to ENC, ENMC and Mr. Wetterich." Tr., Vol. IX at 1983, Supp. at 465. There is not a shred of evidence in the trial record that ENC could have obtained a more favorable settlement or that the settlement it obtained was somehow inadequate; this no doubt explains why ENC's discussion of its imaginary lost settlement opportunity is utterly devoid of citations to the record. This case presents the quintessential circumstance in which a legal malpractice plaintiff must prove the merits of the underlying case; otherwise, Ohio law has no proximate cause or non-speculative damages requirement: ENC's only damage theory was that it would have achieved a better result ifthe underlying case had been tried to a conclusion. ENC never contended that it suffered any harm unrelated to what the outcome of the underlying case would have been. Consequently, this case falls far outside the class of cases in which Vahila held that proof of the merits of the underlying case is not required. Finally, although this Court should adopt the case-within-the-case doctrine as the standard for proving causation in circumstances such as those here, ENC is wrong when it asserts that the Court must do so for GWM to prevail. GWM's central point is that ENC should have 1 To the extent proof of a lost settlement opportunity is sufficient to prove proximate cause and damages, courts rightly require non-speculative proof of a specific lost settlement opportunity. Mere second-guessing of the wisdom or merits of a settlement is not permitted. 4 Mallen & Smith, Legal Malpractice (2007 ed.) , Section

10 been required to prove, by some method, that it would have obtained a better result if the underlying case had been tried to a conclusion. As explained in GWM's opening Merit Brief (at 32), the case-within-the-case method "is the accepted and traditional means" of providing such proof.z 4 Mallen & Smith, Legal Malpractice (2007 Ed.) , Section 33.9 (footnote omitted). However, in certain circumstances, a handfal of jurisdictions have permitted a legal malpractice plaintiff to prove proximate cause by presenting expert testimony of what the result would have been but for the alleged malpractice.3 And, in a case involving facts remarkably similar to those here, the Texas Supreme Court held that the plaintiff was required to present both the case-within-the-case and expert testimony. Alexander v. Turtur & Assoc., Inc. (Tex.2004), 146 S.W.3d 113, 120. ENC's fatal failing is that it did not prove (or even attempt to prove) by any method that it would have obtained a better result at trial. B. ENC Did Not Prove By Any Method That It Would Have Obtained A More Favorable Result If The Underlvin2 Case Had Been Tried To A Conclusion. ENC now pretends that it satisfied the very staudard that it convinced the trial court does not apply. This belated post-trial assertion by ENC does not withstand objective analysis either. 2 ENC relies on a sentence taken from the passage of the Note this Court quoted in Vahila to argue that the case-within-the-case method imposes too high a burden on the legal malpractice plaintiff. ENC Br. at 21. hi fact, however, the quoted sentence sets up a straw man when it asserts that a "standard of proof that requires a plaintiff to prove to a virtual certainty that, but for the defendant's negligence, the plaintiff would have prevailed in the underlying action, in effect immunizes most negligent attorneys from liability." Id. (emphasis added). Of course, GWM has never contended that a plaintiff must prove the underlying case "to a virtual certainty." Preponderance of the evidence is the applicable standard. Courts throughout the country routinely endorse the wisdom and fairness of requiring a legal malpractice plaintiff to prove, by a preponderance of the evidence, that he would have prevailed in an underlying case where, as here, plaintiff's damages theory logically requires such proof. 3 Such a departure from the case-within-the-case method generally has been permitted ornly where specific circumstances make it unfair to require the plaintiff to prove the full underlying case, such as where the attorney's negligence resulted in evidence being lost. See GWM Br. at 33.

11 ENC has insisted at all stages of this case that Vahila "disavow[ed] any requirement of compelling a plaintiff, under any circumstance, to demonstrate by specific proof what result a legal malpractice plaintiff should have obtained if the underlying case had been tried to completion," ENC Br. at 23 (emphasis added), and that such a requirement would impose improper burdens, cost, and complexity. Id. at Yet, ENC now contends, after trial, that the evidence it adduced at trial met this standard. But no reasonable person could conclude that the evidence presented in this case was sufficient for a jury to find that ENC in fact would have prevailed in the underlying case or what the amount of its net recovery would have been. That is why neither the trial court nor the Eighth District Court of Appeals held that ENC in fact proved the case-within-the-case, and why both courts instead held that ENC had proved only what it set out to prove, that its claims had "some merit." Under the proper standard for proving proximate cause and damages, ENC did not present sufficient evidence to get to ajury, and GWM therefore is entitled to judgment as a matter of law. 1. Even A Cursory Review Of The Record Refutes ENC's Contention That It In Fact Proved The Case-Within-The-Case. ENC's contention in its brief to this Court that, although purportedly not required to do so, it in fact proved the case-within-the-case, cannot withstand even minimal scrutiny; ENC did not even attempt to do so. Rather than present the full plaintiff's case that would have been presented at trial of the underlying lawsuit, ENC presented only summary testimony by Mr. Wetterich about the nature of ENC's claims, some of the relevant documents, and what he (a non-expert) thought about ENC's claims. The only other evidence ENC presented consisted of demonstrative exhibits prepared by GWM and statements made by GWM's lawyers about what

12 they hoped to prove at trial in the underlying case, which of course are not competent evidence of the merits of ENC's underlying case. Moreover, ENC's own expert witness, Dr. Boles, agreed that the ultimate resolution at trial would have depended on the viability not only of ENC's own claims, but also of the claims made against it by other parties. Yet, Dr. Boles admitted that he assumed the viability of ENC's claims; acknowledged that he made no evaluation of those claims or of the competing claims inade by Waste Management and TNT against ENC; and stated that he had no independent 53, , , Supp. at , In fact, the only expert testimony concerning the likely outcome of the case if it had been tried to conclusion was that of Mr. Karp, GWM's expert, who opined that ENC could not have obtained a positive net recovery after a full trial on the underlying claim. See id., Vol. IX at 1996, Supp. at 478 ("So you end up with nothing. There is no way they're going to get any money in their pocket."). 2. Neither The Trial Court Nor The Court Of Appeals Found That ENC Had Presented Anything More Than "Some Evidence" Of The Merits Of Its Claim. At every turn, ENC urged the trial court to hold that it was not required to prove that it would have prevailed at a trial of the underlying case, and that instead it could meet its burden of proof by presenting merely "some evidence" of the merit of its claims. And, at every turn, the trial court accepted this erroneous legal proposition. In denying GWM's motion for directed verdict, in refusing GWM's proffered jury instructions, and in denying GWM's motion for judgment notwithstanding the verdict, the trial court accepted ENC's "some evidence" standard and rejected the proper standard tendered by GWM and required by Vahila. As a result, the jury was not asked to fmd, and did not find, that ENC would have won a verdict after a complete trial and would have achieved a net recovery greater than the negotiated settlement. opinion about the case's likely outcome if it had been tried to conclusion. Tr., Vol. V at

13 Nor did the trial court ever hold that plaintiffs had presented sufficient evidence to satisfy the correct legal standard. Rather, the trial court concluded only that "[b]ased on the abundance of testimony and documentary evidence presented by Plaintiffs at trial, Plaintiffs clearly provided `some evidence of the merits of the underlying claim' in satisfaction of Vahila." Order and Decision on 7NOV Motion at 14, GWM Br. at A-36. Likewise, ENC contended in the court of appeals that "[t]he `causal connection' standard does not, as urged by GWM, require proving the case-within-the-case, but rather burdens the plaintiff with the obligation to produce `some evidence of the merits of the underlying claim."' ENC App. Br. at 2, quoting Vahila v. Hall (1997), 77 Ohio St.3d 421, 428; see also, id. at 14-16, According to ENC, " Vahila is clear: depending upon the circumstances, the Supreme Court of Ohio requires, at most, some evidence of the merits of the underlying claim." Id. at 19. The court of appeals adopted the standard urged by ENC and held that ENC had satisfied it: "The trial court did not err in requiring appellees to merely provide some evidence of the merits of the underlying claim. Appellees clearly met that burden at trial[.]" Joumal Entry and Opinion, 2007-Ohio-831, at 30, GWM Br. at A- 17 (emphasis added). C. Even If ENC Had Adduced Sufficient Evidence To Present A Jury Question Whether It Proved The Merits Of The Underlying Case (Which It Did Not), Reversal Would Be Mandatory Because The Jury Instructions Required Proof Of Only "Some Evidence" Of The Merits Of ENC's Claim. Not only did ENC fail to make the necessary proof at trial, but also the jury instruction erroneously set forth the mere "some evidence" standard. As discussed above, ENC did not present sufficient evidence to permit a jury to find that, absent the alleged malpractice, a full trial of the underlying case would have resulted in a verdict in its favor and a net recovery in excess of the settlement, whether by proving the case-within-the-case, through expert testimony or in any other way. Yet, even ifenc had presented sufficient evidence to raise a jury question -10-

14 concerning whether it had done so, reversal nevertheless would be mandatory, because the court's instructions to the jury required it to find only "some evidence" of the merits of ENC's claims. With particular respect to the element of causation, the trial court instracted the jury: [P]laintiffs must establish by a preponderance of the evidence that there is a causal connection between the conduct complained of and the resulting damage or loss. However, the requirement of a causal connection dictates that the merits of a legal malpractice action depends upon the merits of the underl[y]ing case and you should take into account all evidence you have heard to detem-tine whether there exists some evidence of the merits of plaintiffs['] claims in the underl[y]ing litigation. Tr., Vol. X at , Supp. at In view of this instruction, it would be impossible to conclude that the jury found that ENC proved that, absent malpractice, a full trial of the underlying case would have resulted in a verdict for ENC in an amount in excess of the settlement. The jury found only that there was "some evidence" of the merits of ENC's claims in the underlying litigation - that's all the proof the jury had, and that's the essential question the jury was asked. III. CONCLUSION Vahila, properly understood, holds that a legal malpractice plaintiff is not always required to prove the merits of an underlying case, but does not automatically eliminate the requirement of such proof in all circumstances. This case presents the quintesseintial circumstance in which such proof must be required, or Ohio will have abandoned any meaningful requirement for proof of proximate cause and non-speculative damages as elements of a legal malpractice claim. Accordingly, the Court should reverse the decision of the Eighth Appellate District Court and direct that judgment be entered for GWM.

15 Richard A. Simpson (admitted pro has vice Counsel of Record ROSS, DIXON & BELL, LLP 2001 K Street, N.W. Washington, D.C Telephone: (202) Facsimile: (202) rsimpson@rdblaw.com Monica A. Satlfaloz^e'( ) GALLAGHERSHARP Sixth Floor - Bulkley Building 1501 Euclid Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) msansalone@gallaghersharp.com Attorneys For Appellant, Goodman Weiss Miller LLP v1

16 CERTIFICATE OF SERVICE A true and correct copy of the foregoing Reply Brief ofappellant, Goodman Weiss Miller LLP, was served via First Class Mail, postage prepaid, this ^=day of February, 2008 upon: Joel L. Levin, Esq. Levin & Associates Co., L.P.A. The Tower at Erieview, Suite East Ninth Street Cleveland, Ohio and James M. Wilsman, Esq. Bonezzi, Switzer, Murphy, Polito & Hupp 1300 East 9th Street, Suite 1950 Cleveland, Ohio