2013 VT 34


Vincent v. DeVries (2012-026)
 
2013 VT 34
 
[Filed 24-May-2013]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 

2013 VT 34

 

No. 2012-026

 

Leland Vincent


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Franklin Unit,


 


Civil Division


 


 


Douglas DeVries


October Term, 2012


 


 


 


 


Robert
  A. Mello, J.


 

Robert F. O’Neill and Navah C. Spero of Gravel & Shea
PC, Burlington, for Plaintiff-Appellee.
 
Thomas F. Heilmann and William L. Gagnon of Heilmann, Ekman
& Associates, Inc.,
  Burlington, for Defendant-Appellant.
 
 
PRESENT:  Reiber, C.J., Dooley, Skoglund, Burgess and
Robinson, JJ.
 
 
¶ 1.            
ROBINSON, J. This case involves a jury award of emotional
distress and economic damages in a legal malpractice action.  Defendant
challenges the damages award on the grounds that emotional distress damages are
not available in a legal malpractice case and that the award of economic
damages equal to the amount plaintiff paid to settle the underlying case was
improper because plaintiff failed to establish that the underlying settlement
was reasonable.  We reverse as to the award of emotional distress damages
and affirm as to the economic damages award.
¶ 2.            
The facts of the underlying case that gave rise to this malpractice
action are summarized in our three opinions involving that case.  See Wetherby
v. Vincent, No. 2007-276 (Vt. Mar. 26, 2008) (unpub. mem.); Wetherby v.
Vincent, No. 2005-417 (Vt. Oct. 3, 2006) (unpub. mem.); Wetherby v.
Vincent, No. 2004-014 (Vt. Sept. 1, 2004) (unpub. mem.)  In May 2003,
plaintiff Leland Vincent—then eighty-two—and his older sister signed a contract
to sell their home for $52,000 to buyers.  Shortly before the scheduled
closing, after plaintiff’s sister had died, plaintiff refused to go through
with the sale.  On July 31, 2003, buyers sued for specific performance on
the contract.  Defendant, attorney Douglas DeVries, represented plaintiff,
the seller, who was the defendant in that suit and is now the plaintiff in this
malpractice case against attorney DeVries.[1]  Before filing any answer or
counterclaim on plaintiff’s behalf, defendant DeVries filed a motion for
summary judgment for plaintiff, arguing that the contract lacked specific terms
and was unsupported by consideration.  The day before the scheduled
September 10, 2003 hearing on buyers’ attachment motion, the parties filed with
the court a stipulation stating that the court could resolve the attachment
issues as well as the merits on the basis of the parties’ summary judgment
pleadings.  Buyers filed a cross-motion for summary judgment arguing
promissory estoppel, and defendant DeVries did not file a further response for
plaintiff by the assigned deadline.  The court granted summary judgment to
buyers on October 3, 2003.
¶ 3.            
Defendant, on plaintiff’s behalf, subsequently filed an answer and a
series of pleadings seeking relief from judgment and a denial of buyers’
summary judgment motion on the ground that plaintiff and his sister had been
induced into signing the contract by buyers’ fraud and misrepresentation. 
In particular, plaintiff testified by affidavit that he was legally blind and
that he signed the agreement only after buyers told him it was not an agreement
to sell his property.  The court ultimately reaffirmed its judgment for
buyers on the ground that the parties’ stipulation authorizing the court to
resolve the merits on the basis of the parties’ summary judgment pleadings
precluded plaintiff from raising new legal issues at that stage.  The
court entered a judgment for specific performance for buyers and subsequently
denied motions for relief from judgment filed on plaintiff’s behalf.  This
Court twice upheld the trial court’s rulings.  See Wetherby v. Vincent,
No. 2007-276 (Vt. Mar. 26, 2008) (unpub. mem.); Wetherby v. Vincent, No.
2004-014 (Vt. Sept. 1, 2004) (unpub. mem.).  
¶ 4.            
In June 2008, on the eve of a hearing on buyers’ motion for the court to
authorize a third party to execute a deed to transfer the property from Vincent
to buyers, plaintiff, then represented by new counsel, entered into a
settlement agreement with buyers that allowed him to keep his home.  The
agreement, which was contingent on approval by the superior court probate
division because plaintiff was subject to a guardianship, required plaintiff to
pay buyers $68,000 plus $35,000 “to reimburse [buyers] for [their] attorney’s
fees and costs.”  In exchange for these payments, the settlement provided
that the superior court’s order requiring specific performance would be null
and void.  
¶ 5.            
Meanwhile, in May 2008, plaintiff brought this legal malpractice action
against defendant, pointing to defendant’s failure to timely file an answer,
affirmative defenses, or a counterclaim in the suit; defendant’s recommendation
that plaintiff sign a stipulation that prevented plaintiff from raising
defenses to buyers’ suit without informing him of the consequences; defendant’s
failure to present appropriate defenses to the summary judgment motion; and
defendant’s failure to inform plaintiff of filings and dispositive orders in
the course of the litigation.  The essence of plaintiff’s complaint is
that defendant had notice of plaintiff’s limitations but failed to recognize
and timely plead meritorious defenses to buyers’ specific performance action. 
Plaintiff also alleges that defendant committed malpractice in advising him not
to accept a pre-suit settlement offer by the buyers that would have allowed him
to rescind the contract to sell his house in exchange for $15,000—considerably
less than buyers ultimately required to allow plaintiff to keep his home. 
In his complaint against defendant, plaintiff sought “damages in an amount to
be determined by the trier of fact together with costs and such other and
further relief as the Court may deem fitting and proper.”  
¶ 6.         Defendant
admitted to the facts underlying plaintiff’s claim that defendant breached a
duty to plaintiff, and put to the jury the issues of causation and
damages.  That required plaintiff to conduct essentially a
trial-within-a-trial to prove that if defendant had not represented plaintiff
negligently in the litigation with the buyers, plaintiff would not have been
ordered to convey his home to buyers in exchange for $52,000.  If
plaintiff won on that issue, he could then prove the damages he suffered as a
result of the breach. 
¶ 7.         In
repeated motions before, during, and after trial, defendant strenuously argued
that, as a matter of law, emotional distress damages are not available in a
legal malpractice case such as this.  Defendant also argued that because
specific performance was the only remedy available under the contract plaintiff
signed to sell his property to buyers, plaintiff was not at risk of a judgment
for damages to buyers.  Nor was plaintiff subject to any potential
attorney’s fee award in connection with the judgment for specific performance
that the court awarded to buyers.  Given these facts, defendant argued,
there was no evidence that it was reasonable for plaintiff to agree to a
settlement requiring him to pay $103,000 above and beyond the $52,000 purchase
price for the house that he forfeited by keeping the house.  The
settlement agreement was thus an improper basis for gauging plaintiff’s
economic damages.  Defendant filed motions for judgment as a matter of law
on both of these issues, which the court denied.
¶ 8.         The
jury returned a verdict for plaintiff, awarding a total of $183,000 in damages
comprising $103,000 in economic damages—representing what plaintiff paid to
settle the underlying case and retain his home—and $80,000 in emotional
distress damages.  
¶ 9.         Defendant
appeals, challenging the trial court’s denial of his motions for judgment as a
matter of law on the issues of emotional distress and economic damages. 
We review a denial of a motion for judgment as a matter of law de novo,
considering the evidence “in the light most favorable to the nonmoving party,
excluding the effect of modifying evidence.”  J.A. Morrissey, Inc. v.
Smejkal, 2010 VT 66, ¶ 8, 188 Vt. 245, 6 A.3d 701.  “Judgment as a
matter of law is appropriate where there is no legally sufficient evidentiary
basis for a reasonable jury to find for [the nonmoving] party on that
issue.  Thus, we will reverse the trial court's denial of a motion for
judgment as a matter of law only where no evidence exists that fairly and
reasonably supports the jury’s verdict.”  Id.  (quotations and
citations omitted).
I.     Emotional
Distress Damages
¶ 10.        
On appeal, defendant reiterates his argument that, as a matter of law,
emotional distress damages are not available in this legal malpractice
case.  We have never decided the question; the closest we have come was a
case relied upon by plaintiff in which we suggested that under certain
exceptional circumstances, emotional distress damages might be available for
legal malpractice.  Fitzgerald v. Congleton, 155 Vt. 283, 292 n.7,
583 A.2d 595, 600 n.7 (1990).  In Fitzgerald, we considered a legal
malpractice claim against a lawyer who represented a mother in a case in which
the State had alleged that her child was in need of supervision.  As a
result of the defendant lawyer’s negligent representation, the mother alleged,
she lost custody of her child for a period of time.  The mother filed her
claim more than three years after discharging the lawyer, and the issue on
appeal was whether the trial court erred by applying the three-year rather than
the six-year statute of limitations and dismissing her legal malpractice
claim.  We concluded that to the extent that the mother sought damages for
economic losses, her claim was governed by the six-year statute of limitations,
but that her claim for damages for the emotional distress suffered as a result
of defendant’s negligent representation was barred by the three-year statute of
limitations.  Id. at 293, 583 A.2d at 601.  In arriving at the
conclusion that emotional distress damages were injuries to the person subject
to the three-year statute of limitations, we assumed without deciding that
these damages were actually available in attorney malpractice, and we noted,
“Absent physical contact, one may recover for negligently caused emotional
distress only when the distress is accompanied by substantial bodily injury or
sickness.  Accordingly, one must show some physical effect of any claimed
emotional injury—some bodily hurt—in order to prevail.”  Id.
(quotation omitted).  
¶ 11.        
Our discussion in Fitzgerald reflected an assumption, at least
for the purposes of our statute-of-limitations analysis, that the plaintiff
could make a claim for emotional distress in connection with a malpractice
action against her lawyer;  but we did not expressly so hold, and did not
define the contours or limitations of a claim for emotional distress damages in
a legal malpractice case other than to state that notwithstanding the
requirement of bodily hurt as a predicate to emotional distress damages, “we do
not necessarily foreclose the possibility of allowing for emotional-distress
damages absent physical manifestations under special circumstances where the
nature of the tortious act guarantees the genuineness of the claim.”  Id.
at 292 n.7, 583 A.2d at 600, n.7.
¶ 12.        
In the limited number of cases before this Court regarding the
availability of emotional distress damages for negligence in the absence of
physical injury, we have reaffirmed this general rule.  See Goodby v.
Vetpharm, Inc., 2009 VT 52, ¶ 11, 186 Vt. 63, 974 A.2d 1269 (“We are
not persuaded that a special exception to recover noneconomic damages for the
loss of companion animals occasioned by negligence, damages not entirely
distinct from human grief and anguish attending the negligent destruction of
other personally important property, both sentient and nonsentient, should be
undertaken outside of the legislative arena.”); Pearson v. Simmonds
Precision Prods., Inc., 160 Vt. 168, 173-74, 624 A.2d 1134, 1137 (1993)
(denying plaintiff recovery for emotional distress damages for employer’s
negligent misrepresentation and negligent failure to disclose because only
damages for pecuniary injuries are available for those torts); cf. Cooper v.
Cooper, 173 Vt. 1, 14, 783 A.2d 430, 441 (2001) (allowing damages for
emotional distress where acts supporting breach of fiduciary duty by cotenant
were intentional).[2]
¶ 13.        
Although in Fitzgerald we recited the general rule that absent
physical impact emotional distress damages are only recoverable in cases of
ordinary negligence when the distress is accompanied by substantial bodily
injury or sickness, we then said in a footnote:
By
this statement, we do not necessarily foreclose the possibility of allowing for
emotional-distress damages absent physical manifestations under special
circumstances where the nature of the tortious act guarantees the genuineness
of the claim.  See W. Keeton, Prosser and Keeton on Torts § 54, at 362
(5th ed. 1984) (discusses actions for negligent transmission of a message,
especially one announcing death, and negligent mishandling of corpses).
 
155 Vt. at 292
n.7, 583 A.2d at 600 n.7.
 
¶ 14.        
The two types of special circumstances identified in the footnote as
exceptions to the general rule—mishandling of bodily remains and negligent
transmission of a message announcing death—are long established.  See,
e.g., Christensen v. Superior Court, 820 P.2d 181, 204 (Cal. 1991)
(funeral home owed duty to close family members of decedents whose remains were
mishandled and could be liable for damages associated with mental anguish of
those families); Blackwell v. Dykes Funeral Homes, Inc., 771 N.E.2d 692,
697 (Ind. Ct. App. 2002) (family members could sue for emotional distress
damages where funeral home lost cremated remains of child); Gammon v.
Osteopathic Hosp. of Me. Inc., 534 A.2d 1282, 1283 (Me. 1987) (son could
sue for negligent infliction of emotional distress where defendant sent him bag
that was supposed to contain his father’s personal effects but which in fact
included “bloodied leg, severed below the knee and bluish in color”); Johnson
v. State, 334 N.E.2d 590, 591 (N.Y. 1975) (state hospital breached duty
when it incorrectly notified daughter that her mother had died and sent bodily
remains of another person to her, and daughter could recover for emotional
distress from breach); Carney v. Knollwood Cemetery Ass’n, 514 N.E.2d
430, 435-36 (Ohio Ct. App. 1986) (decedent’s sister and grandchildren had
standing to pursue claim against cemetery for dumping decedent’s remains behind
cemetery); but see Jobin v. McQuillen, 158 Vt. 322, 328-29, 609 A.2d
990, 993-94 (1992) (citing case law “involving the negligent mishandling of
family members’ corpses,” but rejecting view that ordinary negligence in
handling of decedent’s body can support claim for emotional damages).
¶ 15.        
Although the general rule precluding emotional distress damages in
ordinary negligence claims without physical impact is longstanding,
well-established, and almost universally embraced, the rationales underlying
the rule are less clear and, arguably, not entirely compelling.  Some
courts have explained that “the law looks with disfavor upon [emotional
distress] damages because the proof of their existence often lies wholly within
the one who claims to have suffered, and their allowance would open the door to
fraud.”  Bowman v. Doherty, 686 P.2d 112, 118 (Kan. 1984). 
But these courts do not explain why a claim of emotional distress by one who
has experienced a physical impact of some sort is significantly more reliable,
and they fail to deal squarely with the myriad cases in which common sense and
compelling evidence confirm the likely validity of a claim of emotional
distress in response to a particular act of negligence—as in the
mishandled-bodily-remains cases noted above.  
¶ 16.        
Some courts also point to the lack of foreseeability of emotional injury
as a result of negligence unaccompanied by physical harm as a basis for
excluding damages for such injury.  See id.; see also Douglas v. Delp, 987
S.W.2d 879, 885 (Tex. 1999) (“The foreseeable
result of an attorney's negligence, [in contrast to that of a physician’s
negligence], typically extends only to economic loss.”).  But it is not
hard to think of a host of situations in which the likelihood that a person’s
negligence will lead to substantial emotional distress is high.  See
Restatement (Third) of Torts: Liability for Physical and Emotional Harm
§ 47 cmts. b, i (2012) (“[F]oreseeability cannot appropriately be employed
as the standard to limit liability for emotional harm.”).  
¶ 17.        
Perhaps because a flat-out, no-emotional-distress-damages rule in cases
not involving physical impact is broader than its rationales would support,
courts have carved out or expanded the exceptions to the general rule—such as
the exception for mishandling bodily remains described above. 
Acknowledging the “extensive criticism aimed at the artificial devices used by
courts to protect against fraudulent claims and against undue burden on the
conduct of defendants,” the Maine Supreme Court recognized that “[t]he analyses
of commentators and the developing trend in caselaw encourage us to abandon
these artificial devices in this and future tort actions and to rely upon the
trial process for protection against fraudulent claims.”  Gammon,
534 A.2d at 1285; see Restatement (Third) Torts: Physical & Emotional Harm
ch. 8, scope note (“[C]ourts have become more comfortable permitting recovery
for negligently inflicted emotional harm. . . .  Some
courts have expanded recovery for negligently inflicted emotional harm when the
reasons given . . . for restricting it do not apply.  Thus,
courts have been more sympathetic to liability when the circumstances are such
that any reasonable person would suffer serious emotional harm, when the
severity of the harm or the effect of the harm limits the victim’s activities
of daily life, and when the scope of liability is sufficiently
limited.”).  
¶ 18.        
The D.C. Court of Appeals recognized this evolution in the law in a
thoughtful and thorough survey of the law concerning emotional distress damages:
[A]
number of courts around the country have held that a defendant has a duty to
avoid causing emotional distress to a plaintiff if the defendant has undertaken
an obligation to benefit the plaintiff and if that undertaking, by its
nature, creates not only a foreseeable, but an especially likely, risk that the
defendant's negligent performance of the obligation will cause serious
emotional distress. 
 
Hedgepeth v. Whitman Walker
Clinic, 22 A.3d 789, 802 (D.C. App. 2011).  That court endorsed claims
for serious emotional distress damages in the absence of physical impact under
limited circumstances:
We
hold that a plaintiff may recover for negligent infliction of emotional
distress if the plaintiff can show that (1) the defendant has a relationship
with the plaintiff, or has undertaken an obligation to the plaintiff, of a
nature that necessarily implicates the plaintiff's emotional well-being, (2)
there is an especially likely risk that the defendant's negligence would cause
serious emotional distress to the plaintiff, and (3) negligent actions or
omissions of the defendant in breach of that obligation have, in fact, caused
serious emotional distress to the plaintiff.
 
Id. at
810-11.
 
¶ 19.        
On this basis, modern courts have expanded the “mishandling bodily
remains” line of cases to include a host of other types of special
relationships or undertakings that are “fraught with the risk of emotional
harm.”  Restatement (Third) Torts: Physical & Emotional Harm § 47
cmt. b.; see, e.g., Hedgepath, 22 A.3d 789 (damages for emotional
distress available where doctor negligently informed patient that he was HIV
positive when he was not); Nome Commercial Co. v. Nat’l Bank of Alaska,
948 P.2d 443, 453 (Alaska 1997) (contractual relationship can be basis for
emotional damages where contracts are “highly personal and laden with emotion
such as contracts to marry, to conduct a funeral, to sell a sealed casket, to
conduct a cesarean birth, [or] to surgically rebuild a nose” (quotation
omitted)); Larsen v. Banner Health Sys., 81 P.3d 196, 202-06 (Wyo. 2003)
(mother could recover for emotional harm resulting from hospital switching
babies, which went undiscovered for forty-three years).  “These
relationships frequently involve an abuse of power or a position of actual or
apparent authority.”  Restatement (Third) of Torts: Liability for Physical
& Emotional Harm § 47 Reporter’s Notes, cmt. d (Tentative Draft No. 5,
2007).
¶ 20.        
How do these considerations play out in the context of claims for
emotional distress damages in legal malpractice actions?  The vast
majority of jurisdictions do not allow recovery of emotional distress damages
in legal malpractice cases where the claim of malpractice is not premised on
intentional acts, physical injury, or particularly egregious conduct. 
See, e.g., Boros v. Baxley, 621 So. 2d 240, 244 (Ala. 1993) (“There can be no recovery for emotional distress, where
[the legal malpractice] does not involve any affirmative wrongdoing but merely
neglect of duty, and the client may not recover for mental anguish where the
contract which was breached, was not predominately personal in nature.”
(quotations omitted)); Reed v. Mitchell & Timbanard, P.C., 903 P.2d
621, 626 (Ariz. App. Div. 1995) (“We hold that simple legal malpractice
resulting in pecuniary loss which in turn causes emotional upset, even with
physical symptoms, will not support a claim for damages for emotional
distress.”); Aller v. Law Office of Carole C. Schriefer, P.C., 140 P.3d
23, 26-27 (Colo. Ct. App. 2005) (“emotional distress or other non-economic
damages resulting solely from pecuniary loss are not recoverable in a legal
malpractice action based on negligence” (quotations omitted)); Lickteig v.
Alderson, Ondov, Leonard & Sween, P.A., 556 N.W.2d 557, 561-62 (Minn.
1996) (emotional distress damage award improper where lawyer’s conduct was
merely negligent and not willful, wanton or malicious); Selsnick v. Horton,
620 P.2d 1256, 1257 (Nev. 1980) (damages for emotional distress not available
in legal malpractice suit premised upon ordinary negligence, with no allegation
of extreme and outrageous conduct); Akutagawa v. Laflin, Pick & Heer,
P.A., 2005-NMCA-132, ¶ 25, 126 P.3d 1138 (“[E]motional distress
damages alone are not compensable in a legal malpractice case where, as here,
there are no allegations of intentional infliction of emotional distress or
some heightened level of culpability resulting in severe distress such that no
reasonable person could be expected to endure.”); Gautam v. De Luca, 521
A.2d 1343, 1348 (N.J. Super. App. Div. 1987) (“[E]motional distress damages
should not be awarded in legal malpractice cases at least in the absence of
egregious or extraordinary circumstances.”); Dombrowski v. Bulson, 971
N.E.2d 338, 340, 340-41 (N.Y. 2012) (finding “no compelling reason to depart
from the established rule limiting recovery in legal malpractice actions to
pecuniary damages” even where client’s alleged wrongful loss of liberty as
result of criminal defense lawyer’s negligence); Hilt v. Bernstein, 707
P.2d 88, 94-96 (Or. Ct. App. 1985) (plaintiff not entitled to emotional
distress damages in legal malpractice claim where she was not alleging
intentional or reckless conduct, and where legal interest that was compromised—financial
loss—did not rise to level of claims such as unlawful disinterment of remains
or infringement of custody of child, for which emotional distress damages are
allowed even without physical injury); Douglas, 987 S.W.2d at 885 (“[W]hen a plaintiff's mental anguish is a
consequence of economic losses caused by an attorney's negligence, the
plaintiff may not recover damages for that mental anguish.”); see also 3 R.
Mallen & J. Smith, Legal Malpractice § 21:11 (2013 ed.) (“With some
jurisdictional exceptions, the rule is that damages for emotional injuries are
not recoverable if they are a consequence of other damages caused by the
attorney’s negligence or a fiduciary breach that was not an intentional
tort.”).  
¶ 21.        
However, following the general trend of narrowing the bar against
damages for emotional injury in the absence of physical impact, some courts
have concluded that emotional distress damages are recoverable “if the lawyer
is contracted to perform services involving deeply emotional responses in the
event of a breach.”  Miranda v. Said,
No. 11-0552, 2012 WL 2410945, *4 (Iowa Ct. App. June 27, 2012).  Courts
have applied this exception in cases in which the
legal malpractice leads to a loss of liberty or of one’s child, as contrasted
with purely pecuniary loss.  See, e.g., Lawson v. Nugent, 702 F.
Supp. 91, 95 (D.N.J. 1988) (holding that where plaintiff’s relationship with
attorney was predicated upon liberty interest, rather than purely economic
interest, plaintiff was entitled to seek damages for emotional distress
resulting from twenty extra months of confinement in maximum security
penitentiary); Christensen, 820 N.W. at 159 (allowing claim for
emotional distress damages where defendant immigration lawyer’s negligence
caused plaintiff’s to leave country without right of reentry, forcing
separation from their children for at least ten years); Person v. Behnke, 611
N.E.2d 1350, 1353-54 (Ill. 1993) (allowing claim for noneconomic damages
resulting from plaintiff’s loss of contact with children for over five years); Miranda,
2012 WL 2410945, at *4; McEvoy v. Helikson, 562 P.2d 540, 544 (Or. 1977) (plaintiff could be entitled
to damages for “anguish and mental (suffering) due to the loss of his minor
child” (quotation omitted)), superseded by rule on other grounds as
recognized in Moore v. Willis, 767 P.2d 62 (Or. 1988)); see also
Restatement (Third) of the Law Governing Lawyers § 53 cmt. g (“[E]motional-distress
damages are ordinarily not recoverable when a lawyer’s misconduct causes the
client to lose profits from a commercial transaction, but are ordinarily
recoverable when misconduct causes a client’s imprisonment.  The law in
some jurisdictions permits recovery for emotional-distress damages only when
the defendant lawyer's conduct was clearly culpable.”).[3]
¶ 22.        
If, in fact, emotional distress damages are available in legal
malpractice claims, the question remains whether the threatened loss of one’s
home is the kind of deeply personal injury—like a loss of liberty or separation
from one’s child—that can support a claim for emotional distress damages in a
legal malpractice case.  Other courts that have considered the question
have generally concluded that it cannot.  The Maine Supreme Court
considered the question in a case factually similar to this one.  See Garland,
2009 ME 86, ¶¶ 24-27.  In Garland, the plaintiffs alleged that
their attorney negligently failed to present evidence that would have defeated
their neighbors’ adverse possession claim.  Without their input or
approval, the attorney also allowed the court to consider the case on remand
from an appeal without a new hearing, on the basis of the prior record which
was inadequate to defeat the adverse possession claim.  As a result of
losing the property, one plaintiff was “devastated,” describing the situation
as “one of the greatest losses” he had ever experienced.  Id.
¶ 10.  The Maine Supreme Court reversed the trial court’s award of
emotional distress damages to the devastated plaintiff.  The court
acknowledged that it had previously allowed recovery of damages for severe
emotional distress, but noted that all the prior cases involved, in addition to
economic loss, “egregious actions on the part of the defendant attorney, harm
to the plaintiff’s reputation, or other personal losses such as the
deterioration of the plaintiff's marriage.”  Id. ¶ 24
(citations omitted).  The court continued, “We have never allowed the
recovery of emotional distress damages in legal malpractice actions that
involve only an economic loss and no egregious conduct by the attorney.”  Id.
¶ 24.  Considering whether the loss of their beloved property was
merely “economic,” the court wrote:
The
Garlands contend that the loss of the land was more than just an economic loss
to them, but their loss in this case is not analogous to the personal losses
for which plaintiffs have previously recovered.  Although land is unique
for many purposes, an ownership interest in land is economic, not personal.
 
Id. ¶ 25 (citations
omitted).  
¶ 23.        
  Similarly, in Crone v. Nestor, an Iowa appellate court held that an attorney’s
representation of a plaintiff in a divorce proceeding “was not the sort of
contractual relationship that carried with it a deeply emotional response in
the event of a breach” that would permit plaintiff to support a claim for
emotional distress damages without a showing of physical manifestations. 
No. 09-0231, 2010 WL 3324923, *5 (Iowa App. Aug. 25,
2010).  In Crone, the plaintiff alleged that her divorce attorney
committed legal malpractice by failing to ensure that her ex-husband followed
through on his obligations to establish a trust to pay off the mortgage on the
house she was awarded in the event of the ex-husband’s death.  Id.
at *1.  The ex-husband did not set up the trust and died before the
mortgage was paid in full, as a result of which the plaintiff lost the house in
a foreclosure.  Id.  The plaintiff claimed emotional distress
damages.  Id.  The court noted what it labeled the majority
view that “emotional distress is not a reasonably foreseeable consequence of
and does not naturally ensue from an act of legal malpractice,” and observed
that the nature of the representation was not of the sort that triggered an exception
for peculiarly personal subject matters and denied such damages.  Id.
at *4 (quotation omitted).
¶ 24.        
Likewise, a Louisiana appeals court considered
a case in which an attorney’s negligence in failing to advise the client of the
consequences of a “simulated sale” ultimately led to the client’s losing the
property in foreclosure.  Richards v. Cousins, 550 So. 2d 1273,
1274 (La. Ct. App. 1989).  The
court affirmed the trial court’s denial of damages for mental anguish and
emotional distress resulting from the plaintiffs’ loss of their home and many
household possessions on the ground that those losses were “strictly
pecuniary.”  Id. at 1278.  See also McClain v. Faraone, 369 A.2d 1090,
1094-95 (Del. Super. Ct. 1977) (denying claim for emotional distress damages
where attorney’s negligent failure to properly search title led to foreclosure
and loss of client’s home); Perkio v. Prunier, 436 A.2d 72, 74 (N.H.
1981) (citing case holding that damages for mental distress are not generally
available in contract action to affirm trial court’s exclusion of emotional
distress damages in malpractice case against lawyer who negligently represented
that property was free of encumbrances).  
¶ 25.        
In light of the above considerations, we conclude that the trial court
erred in awarding damages for plaintiff’s emotional distress in this
case.  Assuming without deciding that Vermont law follows the modern trend
of allowing damages under certain circumstances for serious emotional distress
in legal malpractice claims and that the evidence in this case could support a
finding of sufficiently serious emotional anguish to support such a claim,[4] we conclude that the subject of
defendant’s representation of plaintiff was not of such a personal and
emotional nature that it would support an exception to the general rule
disallowing recovery of emotional distress damages in the absence of either
physical impact or substantial bodily injury or sickness.  In many ways,
this case is less compelling than the loss-of-home cases cited above; plaintiff
here did not lose his home but, rather, faced a threatened loss of his home
which he ultimately avoided by settling the case.  We do not mean to
suggest that the anxiety associated with the threatened loss of one’s home
cannot be profound.  But in contrast to the loss of liberty or one’s
child—very significant losses for which there may be no adequate measure of
pecuniary damages, and in connection with which serious emotional distress can
be readily expected—what plaintiff ultimately lost in this case was
money.  We consider plaintiff’s losses in this case to be economic, and
reverse the trial court’s award of emotional distress damages to plaintiff.[5]
II.  Economic Damages
 
¶ 26.        
“The measure of damages for malpractice is ‘all damages proximately
caused by the wrongful act or omission.’ ”  Bloomer v. Gibson,
2006 VT 104, ¶ 27, 180 Vt. 397, 912 A.2d 424 (quoting 3 R. Mallen & J.
Smith, Legal Malpractice § 20.4, at 13 (2006 ed.)).  “Such damage may
include, for example, the expense of rectifying the malpractice, even when that
rectification is ultimately achieved through a settlement.”  Motz v.
Jackson, No. C-990644, 2001 WL 725683, at *4 (Ohio Ct. App. June 24, 2001)
(evaluating evidence of additional attorneys’ fees incurred as result of
malpractice and of change in value of case as result of attorneys’
malpractice—settlement client actually reached as compared to settlement client
would have reached in absence of malpractice); see 4 J. Mallen & J. Smith,
Legal Malpractice § 33:33 (2013 ed.) (when lawyer’s negligence forces
client into disadvantageous settlement, “damages are calculated based on the
difference between the actual settlement amount and the proper settlement
amount, or what the result should have been through judicial resolution, absent
malpractice”); Restatement (Third) of the Law Governing Lawyers § 53 cmt.
b (“In a lawyer-negligence or fiduciary-breach action brought by one who was
the plaintiff in a former and unsuccessful civil action, the plaintiff usually
seeks to recover as damages the damages that would have been recovered in the
previous action or the additional amount that would have been recovered but for
the defendant’s misconduct.”); Bloomer, 2006 VT 104, ¶ 27 (“If
plaintiff had incurred legal fees to correct the adverse consequences of
defendant’s malpractice, those fees might be recoverable because they were
‘caused by the wrongful act or omission.’ ”). 
¶ 27.        
We agree with defendant and the trial court that when a claim for
malpractice damages is predicated on the difference between the settlement
actually reached and the resolution that would have been reached in the absence
of the malpractice, the settlement must be reasonable.  Cf. DiGregorio
v. Champlain Valley Fruit Co., 127 Vt. 562, 566, 255 A.2d 183, 186 (1969)
(adopting “reasonable settlement” requirement in context of indemnity claim by
retailer against wholesaler for damages to consumer injured by banana with thermometer
in it).   
¶ 28.        
The plaintiff has the burden of showing all elements of a legal
malpractice case, including damages.  See Clayton v. Unsworth, 2010
VT 84, ¶ 17, 188 Vt. 432, 8 A.3d 1066 (identifying elements of legal
malpractice claim to be proven by plaintiff); see also Bourne v. Lajoie,
149 Vt. 45, 53, 540 A.2d 359, 364 (1987) (rejecting plaintiff’s claim that
defendant attorney’s negligent drafting of deed caused her damages by
preventing her from selling affected parcels in absence of affirmative evidence
of actual offer from prospective purchaser that she was unable to
pursue).  Accordingly, plaintiff must present prima facie evidence of the
reasonableness of the agreement.  See Associated Ins. Servs., Inc. v.
Garcia, 307 S.W.3d 58, 69 (Ky. 2010) (“[T]he best approach is to allow the
prejudgment settlement [between the injured party and the insured that assigned
its rights against the insurer to the injured party], but to require some
assessment of the reasonableness of the award.  The plaintiff has the
burden of presenting prima facie evidence of the settlement’s reasonableness
insofar as it purports to establish liability.  The defendant retains a
full[] panoply of defenses with which to rebut this presumption: fraud, collusion,
unreasonableness, etc.”).  
¶ 29.        
Ultimately, the question of whether a settlement is reasonable is for
the jury. Boston & M.R.R. v. Howard Hardware Co., 123 Vt. 203, 210,
186 A.2d 184, 190 (1962) (“It was for the jury to determine whether the settlement
was reasonable, prudent and reached in good faith.  In deciding this issue
the jury should have considered the likelihood of recovery . . . and
the reasonableness of the amount paid to compromise the claim.”).
¶ 30.        
At the trial below, plaintiff’s economic damage claim was predicated
solely on the $103,000 settlement plaintiff entered into to void the court
order requiring him to transfer his property to buyers for $52,000. 
Accordingly, the court instructed the jury on economic damages as follows:
You
must award [plaintiff] an amount of money that you believe will put him as
nearly as possible in the position he would have occupied if the legal
malpractice had not happened.  Because [plaintiff] settled his case with
the [buyers], you must find that the settlement with the [buyers] was a
reasonable settlement before you can award any damages against [defendant] on
account of that settlement.  In making this determination, you should
consider whether a reasonable person in similar circumstances would have agreed
to the settlement.  
 
Defendant did not object to this charge.[6]  
¶ 31.        
On appeal, defendant argues that, as a matter of law, plaintiff failed
to produce any evidence to support the objective reasonableness of the
settlement.  In particular, defendant argues that plaintiff faced no
exposure for attorney’s fees under the purchase and sale agreement and
therefore the $35,000 of the settlement that was allocated to the Wetherbys’
attorney’s fees was strictly voluntary and not a reasonable compromise of a
disputed claim; that plaintiff effectively paid $155,000 to remain in the
house—the $52,000 purchase price that he forewent plus the $103,000 that he
paid out of pocket—when there was no evidence that the property was worth
anything near that amount and the 2003 town tax assessment was $52,900; and
that plaintiff offered no rationale for the amount of the settlement but
instead relied entirely on buyer’s objected-to testimony on
cross-examination—after plaintiff had rested his case—regarding buyers’
settlement demands.
¶ 32.        
Plaintiff points to evidence that the probate court reviewed and
approved the settlement, as well as evidence that the settlement resulted from
arm’s-length negotiations between buyers’ attorney and plaintiff’s attorney,
and argues that the settlement amount was reasonable because it was what was
required to restore plaintiff to the position he would have been in—living in
his lifelong home—had defendant not committed malpractice.  
¶ 33.        
The evidence potentially related to the reasonableness of the settlement
presented to the jury in plaintiff’s case, before defendant’s motion for
judgment as a matter of law, consisted of the following:
·                                
Plaintiff gave up a payment from the buyers in the amount of
 $52,000 and paid  $103,000 out of pocket to settle his case and keep
his house.  
·                                
Plaintiff’s two guardians participated in the settlement and the probate
court had to approve it.  
·                                
Before the lawsuit, buyers offered to settle their claims and allow
plaintiff to keep his house in exchange for $15,000; plaintiff offered to
settle by paying $1,000.  
·                                
The only way to keep plaintiff in his house was to pay the settlement
and the guardians supported paying whatever it took to keep plaintiff in his
home; and, to plaintiff, the home was worth more than his life savings.  
·                                
The settlement resulted from continuous negotiations between plaintiff’s
lawyer and buyers’ lawyer over a long period of time.  
·                                
The town-assessed value of plaintiff’s property was around $52,700.
 
¶ 34.        
The question before us is whether this evidence is sufficient to support
a prima facie case that the $103,000 settlement reached by plaintiff and
buyers, which formed the basis for the jury’s economic damage award of
$103,000, was reasonable.[7]

¶ 35.        
We conclude that plaintiff satisfied his burden.  Although the
evidence is admittedly thin, the jury could reasonably conclude that a
settlement agreement negotiated at arm’s length over a period of time between
plaintiff’s lawyer and opposing counsel, approved by plaintiff’s guardians, and
reviewed and approved by the probate court was a reasonable settlement. 
Given this evidence, plaintiff was not required to establish the market value
of his property to prove the reasonableness of the settlement.
¶ 36.        
Moreover, although a settlement substantially out of sync with the
actual market value of the property would not be objectively reasonable, a jury
could reasonably conclude that the decision to pay a modest premium over market
value in circumstances like this—to avoid the costs and risks of moving a
vision-impaired octogenarian from his lifetime home in the final years of his
life—was entirely reasonable.  
¶ 37.        
This does not mean that plaintiff was entitled as a matter of law to
reimbursement of the full $103,000 he paid to keep his home.  Defendant
was free to offer evidence and argument that this sum was excessive relative to
the actual value of the property, and that plaintiff was not entitled to
recover the full amount.  But we cannot say that the evidence presented
was insufficient to allow the jury to award the full $103,000.
The award of damages for
plaintiff’s emotional distress is reversed, and the award of damages for his
economic damages is affirmed.  
 

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Associate
  Justice

 





[1]
 In this opinion, we identify the parties in this case with reference to
their status in this case rather than in the underlying case: plaintiff
Leland Vincent and Defendant Douglas DeVries.   


[2]  One recognized exception to the
general rule disallowing damages for emotional injury resulting from ordinary
negligence involves the tort of negligent infliction of emotional distress
(NIED).  In order to recover for NIED, a plaintiff who has not suffered a
physical impact must show that the plaintiff “(1) . . . was within
the ‘zone of danger’ of an act negligently directed at [plaintiff] by
defendant, (2) . . . was subjected to a reasonable fear of immediate
personal injury, and (3) . . . in fact suffered substantial bodily
injury or illness as a result.  Brueckner v. Norwich Univ., 169 Vt.
118, 125, 730 A.2d 1086, 1092 (1999).  Plaintiff in this case does not
purport to rely on a claim of NIED but, rather, seeks damages for emotional
distress resulting from defendant’s legal malpractice and the court’s order
requiring him to convey his home on the basis of a distinct legal theory, as
set forth below.  Our analysis does not turn on the above factors.
 


[3]  Most of the cases relied-upon by
plaintiff clearly fall within the above exceptions to the general rule that
damages are not recoverable for emotional injury from legal malpractice. 
Several do not.  In a California case relied upon by plaintiff, the court
affirmed an award of emotional distress damages against insurance defense
counsel who breached their duty to insured client in order to protect the
interests of the insurance carrier.  Betts v. Allstate Ins. Co.,
201 Cal. Rptr. 528, 546 (Ct. App. 1984).  In so doing, the court followed
the general law in California which, in contrast to the majority rule, allows
emotional distress damages for serious emotional injury in the absence of
physical impact with no further showing.  See Molien v. Kaiser Foundation
Hosps., 616 P.2d 813, 817-21 (Cal. 1980).  Likewise, a Louisiana court
relied on “general tort principles” in allowing emotional distress recovery for
a plaintiff’s humiliation and embarrassment resulting from an IRS lien on the
plaintiff’s property.  Henderson v. Domingue, 626 So. 2d 555, 559
(La. Ct. App. 1993).  The Henderson court apparently distinguished
a prior opinion holding that emotional distress damages are not available in a
legal malpractice claim when the plaintiff’s losses are strictly pecuniary on
the basis of the gravity of the plaintiff’s emotional distress.  Id.
at 559.  Finally, the Maine Supreme Court did conclude that a plaintiff
who had temporarily lost his license to train horses as a result of defendant
lawyer’s malpractice could recover emotional distress damages, Salley v.
Childs, 541 A.2d 1297, 1300 (Me. 1988),
but later limited the scope of that decision by tying its holding to the
reputational harm the plaintiff in Salley had suffered.  Garland
v. Roy, 2009 ME 86, ¶¶ 24-27, 976 A.2d 940.  See also dePape v. Trinity Health Sys., Inc., 242 F. Supp. 2d 585, 615-16 (N.D. Iowa 2003) (recognizing
general rule that emotional distress damages are not recoverable in legal
malpractice claims, but concluding that case was exceptional because of particular foreseeability of harm to plaintiff as
result of attorney’s conduct).
 


[4]  Most cases allowing damages for
emotional injury in the absence of physical impact require that the emotional
injury be serious.  See Restatement (Third) of Torts § 47 cmt. l
(“The rule [allowing emotional distress damages arising from specified special
relationships] applies only when the person seeking recovery has suffered serious
emotional harm. In addition, the actor’s conduct must be such that would cause
a reasonable person to suffer serious emotional harm.”).  Wholly apart
from our conclusion that the nature of plaintiff’s loss in this case is
pecuniary, we have serious doubts about whether the evidence in this case
supports a finding of sufficiently serious emotional injury to warrant
emotional distress damages. 
 


[5]
 Plaintiff argues that this case falls under a separate exception—recognized
by some courts—that allows the award of emotional distress damages when an
attorney’s errant conduct is egregious.  Here, the court never instructed
the jury that it needed to find that defendant’s conduct was egregious;
plaintiff neither requested that it do so nor objected to its
instruction.  Plaintiff cannot now rest his legal argument on a factual
predicate—egregiousness—that is not supported by the jury’s verdict. 
Moreover, we conclude that the evidence in this case would be legally insufficient
to support a finding of egregiousness. 


[6]
 Plaintiff did object and argues against the requirement that the
settlement be reasonable.  We agree with the trial court that plaintiff
would not be entitled to recover damages from defendant for sums unreasonably
paid to avoid transferring his home.


[7]
 We agree with defendant that plaintiff faced no liability to pay buyers’
attorney’s fees, so if the settlement represented a reasonable sum to discharge
plaintiff’s obligation to convey his property in exchange for $52,000 plus
$35,000 for attorney’s fees on top of that, it would have been an unreasonably
generous settlement and could not properly be included in plaintiff’s damages
claim against defendant.  (Ironically, plaintiff could have made a claim
against defendant for his own attorney’s fees resulting from defendant’s
negligence but did not do so.)  However, the issue presented to the jury
was the reasonableness of the total settlement.  If plaintiff’s payment of
$103,000 to settle the case was reasonable, then the fact that buyers requested
that $35,000 be allocated directly to buyers’ attorneys does not defeat the
damage award. 
 



