In Manveen Saluja, M.D. v Honigman Miller Schwartz And Cohn LLP, et al, the Michigan Court of Appeals concluded that in a non-litigation context, where a lawyer’s alleged negligent advice led to an inappropriate settlement with a government regulatory agency, it is still necessary for a plaintiff-client to prove causation by demonstrating a “better outcome” “would have” occurred but for the negligence of the attorney.
Plaintiff doctor had a colleague (Dr. Kumar) who requested medical treatment for her mother (“M”), an elderly woman who lived in India. Plaintiff wrote prescriptions for fentanyl, a schedule II controlled substance, for M, knowing Dr. Kumar would obtain and deliver the drugs to India for his mother. During a six-year period, over 285 fentanyl patches were prescribed.
In 2012, Plaintiff received a call that DEA agents were at her office investigating. Plaintiff called Defendant law firm and talked with Defendant attorney Sprecher. After Sprecher briefly talked with a DEA agent, plaintiff was advised by Sprecher to comply with the investigation. After reviewing M’s file, a DEA agent explained in “an intimidating manner” that a $5,000 fine plus jail time exists for the offense. Plaintiff was then handed a form to sign, allegedly being told to sign it or go to jail. Plaintiff did not call Defendants. After signing the form, Plaintiff voluntarley surrendered her controlled substances privileges and had to surrender her DEA Certificate of Registration. Days later, local DEA offered to partially reinstate plaintiff’s privileges, but restricting her right to order certain controlled substances for three years. Her new lawyer (not Defendants) negotiated the restriction down to two years. A dissatisfied plaintiff contacted the DEA office in Washington D.C. Consequently, the local DEA withdrew the two year deal, but her new counsel later reinstated the three year restriction.
Plaintiff filed a legal malpractice suit, asserting defendants should have advised her she was not required to sit for the DEA interview and she should not have signed a voluntary release of her DEA privileges – the key bargaining chip needed to strike a better deal and achieve a better outcome that what was obtained.
Defendants moved for summary dismissal on the issue of causation. Defendants argued plaintiff could not offer evidence showing the actual negotiated outcome “would have” been “better” had plaintiff been given the purported correct advice. The motion was granted and the case summarily dismissed.
The Michigan Court of Appeals Decision
In affirming, the Saluja panel recognized the requirement of establishing a “suit with a suit” to show causation in legal malpractice — that is, that a plaintiff “would have been successful in the underlying suit.” However, because of no underlying litigation, the court applied an analogous rule: “plaintiff had to offer evidence that but for the malpractice, she would have received a better outcome than the one she received from the DEA”.
Plaintiff primarily relied upon expert testimony to establish causation. The expert testified at deposition if attorney Sprecher had provided “competent advice” – postponing the interview with DEA agents to allow an attorney to be present – “plaintiff never would have voluntarily surrendered her DEA registration.” Possessing the registration “was crucial” because “the registration represented a bargaining . . . ‘chip.’” By retaining that “chip,” there was a “good chance” plaintiff “would have kept her registration intact” instead of receiving a three-year restricted license on her ability to prescribe controlled substances. The expert stated that “good chance” meant “more probably than not and to a legal degree of certainty.”
However, the Saluja panel ruled the trial court correctly held the expert’s “testimony was inadequate to prove causation because it was too speculative.” Even though the expert “opined at . . . that plaintiff would have gotten through this encounter with the DEA with her license fully intact, he admitted, ‘I don’t know that [for sure].’” It was also “telling” he could not “specifically identify what plaintiff’s outcome with the DEA would have been” had attorney Sprecher given plaintiff the alleged proper advice. In particular, the court noted plaintiff failed to present testimony from any “pertinent decision makers” at the DEA to show how negotiations “would have been different had plaintiff not initially voluntarily surrendered her registration.” Accordingly, the expert’s “mere opinion that the outcome would have been different, without any supporting evidence, amounts to nothing more than mere conjecture and speculation” — inadequate to show causation.
In so ruling, the Saluja panel principally relied on another legal malpractice case, Pontiac School Dist v Miller, Canfield, Paddock & Stone, 221 Mich App 602; 563 NW2d 693 (1998), where the “suit within a suit” concept was not applied because of the non-litigation nature of the asserted malpractice. In Pontiac, plaintiff sued its attorneys for recommending a bond offering that allegedly required payment of excessive interest and insurance costs. Expert testimony posited the view that an alternative bond structure would have saved over forty-nine million dollars and, further, if the proper advice had been rendered, “a reasonably informed board of education would have adopted” the alternative proposal. However, no evidence was presented that the decision-makers — the board members — “would have” accepted the alternative proposal if the advice had been given, thereby making the expert’s opinion speculative.
Likewise, the Saluja court determined that, absent testimony from the “pertinent decision-makers” from the DEA showing what they “would have” decided if the supposed proper advice had been rendered, the expert’s subjective belief on this point was nothing more than conjecture on a possible outcome. Accordingly, summary dismissal by the trial court was affirmed.
Significance of Decision
The case is significant for lawyer defendants sued for conduct springing from a non-litigation negotiation/settlement/transactional context. Although the “suit within a suit” concept may not directly apply, a plaintiff is not relieved from the burden to establish that a defendant attorney’s actions were the necessary factual cause of an injury and that actual damages resulted from those actions — namely, that but for the conduct of the attorney, plaintiff “would have” obtained a “better” outcome. Saluja requires that, in non-litigation circumstances, a plaintiff must show the “pertinent decision-makers” on the other side of the negotiation/settlement/ transaction “would have” agreed to the “better outcome” if the proper advice by the attorney had occurred.
Without showing the difference between the negotiation position truly lost (the “better outcome” that “would have” been accepted) and the position a plaintiff actually obtained, any claim of a causal link to actual damages should be considered speculative. The case also demonstrates that expert testimony, discussing probable or likely outcomes, without a factual basis of what “would have” occurred, is legally insufficient to show causation and will be considered conjecture.