Baldridge v. Lacks

Brief Fact Summary. Plaintiff testified that her attorney failed to adequately investigate in a divorce settlement and negligently encouraged her to settle. Plaintiff brought a malpractice suit against the attorney and his law partners.

Synopsis of Rule of Law. The desire for the peaceful resolution of marriage dissolution cases and the policy against revisiting settled cases is not sufficient to disallow a malpractice action in a divorce settlement where the attorney was negligent.

Facts. Plaintiff retained defendant Lacks to represent her in the dissolution of her marriage to Kenneth Baldridge. Plaintiff testified that Lacks told her that Baldridge was attempting to prove his entire net worth was composed of non-marital assets because it was attributable to the original million dollars he had prior to the marriage. She testified Lacks advised her to settle because if Baldridge were successful, or if the postnuptial agreement was found valid, she could walk away with nothing. Lacks negotiated a settlement with Baldridge’s attorneys, then advised plaintiff that her options were to risk receiving nothing or to settle. Prior to a hearing for temporary support, Lacks allegedly informed plaintiff that Baldridge had offered one million dollars and a condominium in Florida, and that she should take the offer and run. A dissolution hearing was held during which an oral agreement was dictated into the record and plaintiff testified that she understood the property
she would receive under the settlement was her share of the marital property and all she would receive. She also testified that she was aware Baldridge may have as much as fifteen million dollars in property and that she was waiving any rights to it. She further testified that she understood if the divorce proceeded to trial the court could give her substantially more. The court later found that the settlement agreement was not unconscionable and entered a decree of dissolution. In a later action for damages for legal malpractice, the trial court entered judgment for plaintiff in the amount of $6,84,926. An amended judgment remitted the amount to $2,424,966. Defendants appealed.

Issue. Did the trial court err in denying defendant’s motion for a directed verdict because litigants should not be allowed to file malpractice lawsuits which challenge the adequacy of previous settlements?

Held. Attorneys are not granted immunity from civil liability cases such as this where the clients have settled, even without a showing of affirmative misrepresentation or fraud by the attorney.
After the dissolution, plaintiff’s ex-husband suggested to her that she had gotten a bad settlement. At trial plaintiff’s expert testified that Lacks failed to meet the standard of care in regard to the duty to ensure the client has the facts necessary to make a decision as to whether a settlement proposal is acceptable, fair, and equitable because Lacks failed to engage in discovery, trace assets, and know the extent of the marital and nonmarital assets. Defendant’s expert testified that an attorney’s paramount duty is to do what the client tells him, and therefore, Lack’s discovery was sufficient because plaintiff instructed him to settle.

Defendant’s claim that public policy dictates that settlements, once consummated, should not be lightly undone. They also point to Missouri law, which encourages the peaceful settlement of disputes. The Court agrees that settled cases should not be readily revisited, particularly in marriage resolution cases, which seek to promote amicable settlement of disputes. Nonetheless, this consideration must be balanced against the common law right of a client to maintain an action seeking civil liability for negligence. Damages may be proven through expert testimony of what the plaintiff would have received. A new trial must be granted in this case due to an erroneous jury instruction permitting a finding of negligence solely on defendant’s failure to advise plaintiff of the nature and extent of the marital estate.

Discussion. The court acknowledged the public policy argument for the peaceful settlement of disputes and that settled cases should not be readily revisited. Nonetheless, the court did not find that such a policy disallowed malpractice suits under such facts when a showing of negligence is made based upon common law civil liability.