Ambra v. Awad, 2010 NY Slip Op, Supreme Court of New York, Nassau County, April 13, 2010.
Facts: Plaintiff filed suit against the defendant attorneys after entering into a settlement in the underlying personal injury action. In the course of discovery in the underlying matter, defendant disclosed that it had liability insurance of $1 million, but did not disclose its’ excess policy limit of $5 million. The jury awarded damages in the sum of of $2,020,000. Defendant’s excess carrier, however, disclaimed coverage on the basis of late notice. Plaintiff eventually agreed to settle for $1,000,000 and then brought the instant action against his former attorneys.
Specifically, plaintiff argued that his attorneys committed malpractice by (1) incorrectly advising that the defendant’s resources were insufficient to cover the jury verdict in the underlying matter; and (2) coercing him into accepting an inadequate settlement.
The defendant attorneys argued that (1) plaintiff was barred from pursuing his suit because he implicitly ratified the underlying settlement by waiting over two years to challenge it; (2) was not coerced to accept the settlement; (3) was provided with correct information with regard to defendant’s ability to pay in the underlying action; and (4) the recommendation to settle represented one of several reasonable courses of action.
The defendant attorneys filed a motion for summary judgment, and plaintiff argued that it must be denied because the attorneys’ contentions were not supported by expert opinion.
Issue: Can plaintiff enter into a settlement in the underlying action and then sue his former attorneys for malpractice?
Ruling: Yes. Initially, the Court noted that the absence of expert opinion does not preclude summary judgment for the defendant attorneys. With respect to the issue of whether plaintiffs’ decision to settle the underlying matter bars the present action, the Court reasoned:
To the extent that [plaintiff’s] implicit ratification of the settlement, if any, is inconsistent with his present position that the settlement was detrimental to him, that inconsistency is not a bar to the present action, but rather a factor to be considered in connection with the other evidence. Insofar as this action was timely commenced in accordance with the applicable statute of limitations…any purported delay in seeking relief on the part of plaintiff is not a basis for dismissal.
The Court then noted that the defendant attorneys’ advice could only be considered to be "reasonable" if it was based on sufficient and accurate information, and if plaintiff was afforded the opportunity to choose among fairly presented alternatives. In that regard, the Court took into account one of the attorney’s affidavits to the effect that plaintiff was advised of all potential options including post-trial motions, excess coverage litigation, and collection of the judgment.
In rendering its decision, the Court further noted that plaintiff had been under no time pressure to accept the settlement in the underlying litigation, and that plaintiff’s prior refusal of a $750,000 settlement offer recommended by his attorneys suggested generally that he was not unduly influenced by counsel.
Nevertheless, the Court allowed the action to proceed and ordered an evidentiary hearing to determine exactly what information was known or communicated to plaintiff to warrant settlement on the basis that the defendant in the underlying action was a collection risk. The Court specifically noted plaintiff’s right to recover from his former attorneys in the event their failure to investigate or communicate material information with regard to collecting on the underlying judgment influenced plaintiff’s decision to enter into the settlement.
Lesson: A settlement in the underlying action is not necessarily a bar to a subsequent professional negligence suit in New York.
Posted in: New York