Supreme Court
Henry S. Miller Com. Co. v. Newsom, Terry & Newsom, LLP
- Case number: 22-1143
- Legal category: Attorneys
- Subtype: Legal Malpractice
- Set for oral argument: October 3, 2024
Case Summary
In this case, the issues are the propriety of an assignment of a legal-malpractice claim and whether a jury instruction impermissibly commented on the weight of the evidence.
HSM is a real estate broker. Its former employee negotiated the purchase of nine commercial properties on behalf of a client. During the negotiations, the employee represented to the seller that the buyer was the beneficiary of a multimillion-dollar trust, that he had verified the buyer’s financial means, and that the transactions would close imminently. But after the closing date was rescheduled multiple times, the buyer disappeared. The properties were either deeded to banks in lieu of foreclosure or sold at a loss.
Lawyer Steven Terry represented HSM and its employee in the seller’s subsequent lawsuit. Despite knowing that the buyer could be held at least partly responsible for the seller’s damages, Terry initially did not try to find him or designate him as a responsible third party. Terry claims that he suspected the buyer of being a con man and did not want to help the seller develop facts showing that HSM’s employee had lied. Terry later changed his mind and moved to designate the buyer as an RTP shortly before trial. The seller objected to the motion’s untimeliness. The trial court denied the motion and ultimately rendered judgment on the jury’s verdict for the seller.
In the aftermath, HSM sued Terry for legal malpractice, alleging that he was negligent in failing to timely designate the buyer as an RTP and in stipulating that HSM was responsible for the employee’s conduct. Around the same time, the seller filed an involuntary bankruptcy petition against HSM. The reorganization plan approved by the bankruptcy court assigned part of HSM’s malpractice claim to the seller and also gave the seller the right to veto any settlement between HSM and Terry.
This appeal arises from the second trial of the legal-malpractice suit. The trial court rendered judgment on the jury’s verdict for HSM, awarding it $15 million in actual and exemplary damages. A split panel of the court of appeals reversed and remanded for a third trial. The majority held that language in a jury instruction on designating RTPs constituted an impermissible comment on the weight of the evidence about the buyer’s responsibility. Terry also reurged his challenge, rejected by the court in the first appeal, that HSM’s recovery is barred because the assignment of its malpractice claim and settlement-veto power to the seller is impermissible under Supreme Court caselaw. The court declined to reconsider that holding.
HSM and Terry filed cross-petitions for review, which the Supreme Court granted.
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