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TX: Collectibility, An Essential Element of Legal Malpractice Actions

Webb v. Brad Stockford, Texas Court of Appeals, January 10, 2011. 

Facts: Plaintiffs filed an action for malpractice against the Defendant attorney for allegedly mishandling their suit against a seller and his real estate agent in connection with plaintiffs’ purchase of their house. 

The Defendant attorney contended, among other things, that the malpractice suit ought to be dismissed because plaintiffs could not establish collectibility of any judgment they might have received in the underlying suit, and therefore, could not establish any damages in the malpractice action. 

Issue: Were plaintiffs required to establish collectibility of any underlying judgment to proceed with their malpractice suit against their former counsel? 

Ruling: Yes.

The plaintiff must prove the final judgment in the underlying case would have been collectible on or after the date it was first signed. Additionally, if the evidence concerning collectibility relates to a date prior to the final judgment in the underlying case, the evidence must also show a reasonable probability that the defendant’s financial condition did not change during the time before a judgment was signed in a manner that would have adversely affected collectibility.

Here, the Court ruled that plaintiffs had failed to show "collectibility" because they failed to show seller still had the sales proceeds, or any other evidence of seller’s solvency, i.e. "current income, profits, or access to finances."  

Lesson: In Texas, plaintiff must go one step further after showing that he or she would have prevailed in the underlying action but for the negligence of the attorney.  Plaintiff must then establish damages by showing that any judgment obtained in the underlying action was, in fact, collectible from one or more of the underlying defendants.

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Posted in: Damages, Texas