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MI: Appellate Division Rejects Attempt to Settle and Sue

Hall v. Cohen, Michigan Court of Appeals, February 18, 2010

Facts:  The defendant attorney represented plaintiff in a matrimonial matter, and after settlement of the matrimonial action, plaintiff brought suit against her attorney for malpractice.  The trial court granted summary judgment in favor of the defendant attorney, and granted the attorney’s counterclaim for unpaid legal fees.  Plaintiff appeals.

Issue:  Can Plaintiff sue for malpractice after consenting to a settlement in the underlying matrimonial action? 

Ruling:  No.  The Court first set forth the standard for pursuing a malpractice action after settlement in the underlying matter:

When a settlement is compelled by the mistakes of the plaintiff’s attorney, the attorney may be held liable for causing the client to settle for less than a properly represented client would have accepted…Additionally, a cause of action for legal malpractice may be raised when it can be shown that the client’s consent to the settlement was compelled because prior misfeasance or nonfeasance by the attorney left no other recourse.

In applying that standard to the facts of this case, the Court noted that Plaintiff’s statements under oath at the settlement hearing indicate that she "knowingly and voluntarily" entered into the agreement.  Further, Plaintiff was unable to demonstrate that her attorney’s alleged failure to enforce prejudgment orders, or her alleged threat to withdraw from the action, caused her to settle.  Accordingly, the Appellate Division affirmed the trial court’s decision to dismiss Plaintiff’s complaint and award payment of outstanding legal fees.

Lesson:  Where Plaintiff knowingly and voluntarily settles her action, and cannot present any factual basis upon which the Court can conclude that her decision to settle was the result of her attorney’s professional negligence, Plaintiff may not "settle and sue."

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Posted in: Michigan, Proximate Cause