CA: Partnership Law
Facts: Plaintiff’s hired law firm to bring an action against general partners in a real estate partnership. The plaintiff’s received a default judgment against the general partners exceeding $500,000. The partners filed a motion for relief from the default judgment, relief was granted and the award was reduced to $12,850 in compensatory damages and $200,000 in punitive damages. The actual loss that the plaintiffs suffered was $12,850. The plaintiffs contend that but for the negligence of their attorney’s they would have received the original default judgment. The court stated that,
"speculative damages are not damages supporting an action for professional negligence,”
“an award of damages that exceeds actual loss runs afoul of the basic principle that damages are awarded to compensate for loss incurred.”
Issue: Is an attorney liable for negligence where the attorney recovered a judgment for his client that was smaller than what was possible?
Ruling: No. An attorney is not liable when the client has already been made whole for the damages they suffered. The measure of damages is the “difference between the amount of the actual judgment obtained and the judgment which should have been recovered.” In the instant case the actual judgment received was larger than what should have been recovered.
Lesson: A plaintiff must show that the negligence of his attorney caused an actual loss. Just showing that the judgment could have been higher is not enough. The plaintiff must show that the judgment he received does not compensate him for his actual loss. If the judgment exceeds the actual damages that the client had suffered, the attorney cannot be held liable. “A plaintiff who in fact has been made whole is entitled to no more.”