§41.6 Punitive Damages

The Case: Metcalfe v. Waters , 970 S.W.2d 448 (Tenn. 1998).

The Basic Facts: Defendant lawyer was sued for multiple violations of the standard of care in his handling of a personal injury case. He did not tell his clients the truth about the status of their case, saying, for instance, that it was still pending when in fact it had been dismissed.

The Bottom Line:

• "In the present case, the Court of Appeals reversed the jury's award of punitive damages, finding that Waters' malpractice amounted to negligence and not intentional, fraudulent, malicious, or reckless conduct. The court further stated that Waters' conduct in concealing and lying about his malpractice, although 'egregious,' was not contemporaneous with the underlying malpractice and was therefore, under Hodges, relevant only to the amount of, but not the liability for, punitive damages. We disagree with both conclusions." 970 S.W.2d at 451.
• "A majority of jurisdictions have recognized that punitive damages may be proper in a legal malpractice case. [Annotation,Allowance of Punitive Damages Against Attorney For Malpractice, 13 A.L.R. 4th 95 (1982 & Supp. 1997)]; see also Elliott v. Videan, 791 P.2d 639, 644 (Ariz. Ct. App. 1989) ('punitive damages have historically been awarded against attorneys for legal malpractice'). As in any case involving punitive damages, however, the plaintiff must prove that the defendant engaged in the requisite culpable conduct. The Alabama Supreme Court has said, for instance, that "some showing of fraudulent, malicious, willful, wanton, or reckless behavior or inaction must be made to support a claim for punitive damages in a legal malpractice case." Boros v. Baxley, 621 So.2d 240, 245 (Ala. 1993). Other courts have used similar terms in describing the culpable conduct for an award of punitive damages in a legal malpractice case." Id. (footnote omitted).
• "We join these jurisdictions in recognizing that punitive damages may be awarded in a legal malpractice claim, provided the culpable conduct established in Hodges, supra, i.e., intentional, fraudulent, malicious, or reckless, is proven by clear and convincing evidence. In this regard, we disagree with the intermediate court's conclusion that Waters' conduct was merely negligent. In addition to failing to prosecute the Metcalfes' claim, Waters' failed to keep them informed about the status of their lawsuit, failed to prepare when the case was set for trial, failed to re-file the case properly after taking a nonsuit, failed to pay the filing fee, failed to issue summons properly, failed to appear when the case was set a second time for trial, failed to file a notice of appeal, and failed to take any actions in an effort to preserve the Metcalfes' right of appeal. Given Waters' repeated transgressions and callous disregard for the rights of his clients, there was overwhelming evidence from which the jury could find, at a minimum, reckless conduct, that is, conduct constituting a gross deviation from the applicable standard of care. See, e.g., Patrick v. Ronald Williams P.A., 402 S.E.2d 452, 460 (N.C. Ct. App. 1991) ('repeated course of conduct which constituted a callous or intentional indifference to the plaintiff's rights' stated a claim for punitive damages)." Id. at 451-52.
• "We also disagree with the conclusion that punitive damages were improper because Waters' malpractice was not contemporaneous with his efforts to lie about and conceal his wrongdoing. Although the Court of Appeals correctly observed that the concealment of wrongdoing is listed among the factors in Hodges that may be considered in determining the amount of punitive damages, nothing in Hodges precludes the factor from being considered with regard to a defendant's liability for punitive damages. Indeed, other factors listed among those for consideration with respect to the amount of punitive damages are also necessarily considered with respect to the threshold liability issue; for instance, the 'nature and reprehensibility of the defendant's wrongdoing.' Hodges, 833 S.W.2d at 901. A close reading of Hodges, in fact, indicates that only evidence of a defendant's net worth or financial condition is deemed inadmissible in determining a defendant's liability for punitive damages. Id. at 901-902." Id.
• "Finally, we believe that limiting consideration of a defendant's efforts to conceal his or her wrongdoing is inconsistent with the purpose of punitive damages: to punish egregious acts and deter others from committing the same or similar acts. As other courts have recognized, an attorney's concealment of wrongdoing and/or misrepresentations affecting the client's case relate directly to the punitive damages issue. See, e.g., Houston v. Surrett, 474 S.E.2d 39, 41 (Ga. Ct. App. 1996) ('an attorney's concealment and misrepresentation of matters affecting his client's case will give rise to a claim for punitive damages.'); Asphalt Engineers, Inc. v. Galusha, 770 P.2d 1180 (Ariz. Ct. App. 1989) ('the record also supports an inference that [the attorney] attempted to cover up his misconduct.'). In sum, the harm resulting from the original wrongdoing, as in the present case, may be exacerbated by intentional, fraudulent, malicious, or reckless efforts that prevent the plaintiff from taking immediate corrective action." Id.

Other Sources of Note: Roy v. Diamond, 16 S.W.3d 783 (Tenn. Ct. App. 1999) (punitive damages award affirmed against lawyer for malpractice in handling an estate); Jessup v. Tague, NO. E2002-02058-COA-R3CV, 2004 WL 2709203 (Tenn. Ct. App. Nov 29, 2004) (punitive damages not warranted in case arising out of family law matter).