MI: Family law
Facts: Plaintiff entered into a 1990 separation agreement with her former husband in which she was entitled to half of the marital estate, as part of the property settlement agreement. Plaintiff terminated her attorney for the separation agreement and hired another attorney feeling she was not treated fairly. The new attorney eventually discovered that her husband had hidden assets. The plaintiff sued her former attorney, the one that drafted the 1990 separation agreement, for legal malpractice. The legal malpractice case settled. While the legal malpractice case was ongoing however, plaintiff pursued a case of fraud against her husband. She was eventually successful in the fraud case against her husband and a jury awarded her $3.1 million in damages. Husband sought for the damages to be offset by the previous legal malpractice settlement. The trial court agreed. Plaintiff appealed.
Issue(s): Can a settlement from a legal malpractice claim stemming from an attorney’s failure to investigate in an underlying property division settlement be used to offset a subsequent fraud claim against the spouse that hid the assets the attorney failed to find?
Ruling(s): Yes, a settlement from a legal malpractice case may be used to offset a subsequent judgment against a different party, in order to prevent the plaintiff from double recovery for the same set of facts. Attorney’s fees will not be deducted as they are considered part of the settlement.
Lesson: The essence of a legal malpractice case, like tort cases in general, is to make the victim whole again. Here, by deducting the settlement in the legal malpractice case from the judgment against the former husband, the court prevented a double recovery/windfall for the plaintiff.
Posted in: Michigan