Florida 4th DCA affirms $2 million dollar punitive damages award against Florida law firm in legal malpractice/breach of fiduciary duty lawsuit

Hello and welcome to this Ethics Alert blog  which will discuss the recent opinion of Florida 4^th District Court of Appeal affirming a $2 million dollar punitive damages award against a Florida law firm.  The case is Young v. Becker & Poliakoff, P.A. — So.3d —, 2012 WL 1859108 (Fla. 4 DCA May 23, 2012) and the opinion is at:  https://www.4dca.org/opinions/May%202012/05-23-12/4D09-4869.rehg.op.pdf

According to the opinion, the law firm of Becker & Poliakoff was sued by Young for legal malpractice and breach of fiduciary duty which ultimately resulted in a jury verdict awarding $394,000.00 in compensatory damages and $4.5 million dollars in punitive damages.  Young appealed the trial court’s order remitting the jury’s punitive damages award from $4.5 million to $2 million, or alternatively, granting a new trial on punitive damages.  The law firm cross-appealed and argued that it was entitled to a directed verdict on legal malpractice and a new trial because of the trial court’s limitation on cross-examination of a witness.

The legal malpractice lawsuit was filed by Young based upon allegations related to the law firm’s handling of her federal employment discrimination suit against BellSouth Telecommunications (BellSouth).  The discrimination lawsuit was filed on May 1, 2001 by Thomas Romeo, an associate with the law firm, on behalf of Young and twelve other BellSouth employees.   At that time, the law firm was engaged in settlement negotiations on behalf of Young and several other plaintiffs in a separate action against BellSouth, which was styled Jackson v. BellSouth Telecommunications, 372 F.3d 1250 (11th Cir. 2004).  The Jackson case was filed against the law firm of Ruden, McClosky, Smith, Schuster & Russell, P.A. (Ruden) for alleged misconduct arising out of their settlement of a prior employment discrimination lawsuit against BellSouth, styled Adams v. BellSouth Telecommunications.

In the original Adams litigation, Ruden represented the plaintiffs (including Young) and negotiated a settlement for them.  In the later filed Jackson case, the plaintiffs alleged that Ruden, while negotiating the settlement in Adams, made an improper side deal with BellSouth and entered into undisclosed agreements that were unlawful and unethical.  Young was among the several plaintiffs in the Jackson case who hired the law firm to represent them against BellSouth and Ruden.

The law firm settled the Jackson case in the summer of 2002 for $8 million and received $2,927,540.00 for its fees and costs; however, before the case was settled, and while settlement negotiations were underway, Thomas Romeo and the law firm were hired by Young and twelve other plaintiffs to file a separate federal lawsuit on their behalf against BellSouth for alleged continuing discrimination.  Unknown to Young (but apparently known to the law firm), this new lawsuit was dismissed because of the expiration of the statute of limitations and this created a conflict of interest for the law firm while settling the Jackson case.  This alleged conflict formed the basis of Young’s claims of legal malpractice and breach of fiduciary duty.

In the malpractice lawsuit, Young alleged that the law firm intentionally delayed telling her about the dismissal of her case until after the Jackson case was settled.  The jury found that the law firm knew that the case had been dismissed, but withheld that information from Young so they could settle the Jackson case and secure the $2.9 million fee and cost reimbursement in that case.  The jury returned a verdict for Young of $394,000.00 in compensatory damages which consisted of $144,000.00 in past lost wages and $250,000.00 in damages for “pain and suffering, mental anguish, or loss of dignity.”  The jury also awarded $4.5 million in punitive damages against the law firm; however, the trial court remitted the punitive damages to $2 million, finding that the amount was not supported by evidence that the law firm had insufficient financial resources to comply with such a verdict without facing bankruptcy.  Young rejected the remittitur/new trial order and filed the appeal.

According to the opinion, Thomas Romeo, a former law firm associate who had been disbarred in 2003, testified at the malpractice trial.  Counsel for the law firm sought to introduce the disbarment and details of the disbarment prior to beginning his cross-examination.  The law firm’s lawyer argued that since Romeo was a key witness at the trial, his credibility was “squarely at issue” and the lawyer should be allowed to impeach Romeo’s credibility with evidence of his disbarment.  The trial court found that evidence of the disbarment was not admissible, relying on Tormey v. Trout, 748 So.2d 303, 306 (Fla. 4th DCA 1999) wherein the 4th DCA held that cross-examination of the defendant’s medical expert regarding administrative discipline was an improper attack on his credibility.  The law firm cross-appealed the denial of the directed verdict and this exclusionary ruling by the trial court.

The opinion found that the trial court’s exclusion of the testimony was correct and that Romeo’s testimony that he was not currently practicing law did not open the door to evidence of his disbarment since his testimony:

“was not misleading to the jury; he never represented to the jury, expressly or impliedly, that he was a lawyer in good standing, and he did not testify about legal issues as an expert witness. Romeo testified merely as a fact witness concerning his recollection of events surrounding the Young v. BellSouth case.  He referred to areas of discrimination law and procedures only to explain why he filed certain claims and took particular actions during the relevant time period. The fact that he was disbarred at a later date for unrelated reasons was irrelevant and unfairly prejudicial.  The trial court ruled appropriately and did not abuse its discretion in disallowing this evidence.”

The opinion affirmed the trial court’s order for remittitur or new trial based on the “economic castigation or bankruptcy” ground relied on by the trial court and found no error in the trial court’s denial of the law firm’s motion for directed verdict and the ruling on the proffered disbarment impeachment evidence.

Bottom line:  This case is a bit scary on multiple levels, including the large amount of punitive damages (even after the remittitur) and the potential serious Bar rule violations.  The opinion also found that evidence of the disbarment of a “fact witness” is not admissible (presumably proffered as an admissible prior bad act) if the testimony of that witness is not misleading or a misrepresentation…

…be careful out there.

As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

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