The Business Court dismissed a legal malpractice claim right before Thanksgiving last week in Inland American Winston Hotels, Inc. v. Winston, 2010 NCBC 19. Judge Tennille found Plaintiff’s expert, a Duke Law School professor, to be incompetent to testify to the Defendant lawyer’s alleged breach of his duty of care.
The claimed malpractice concerned the lawyer’s work on a commercial real estate transaction by which the Plaintiff acquired an entity from the Defendant and by which an entity controlled by the Plaintiff was substituted as the purchaser under an option. The alleged breach of fiduciary duty (a form of professional malpractice) was the lawyer’s role in a change of the identity of the purchaser under the option.
Expert testimony is necessary in almost all cases to prove professional negligence, and Judge Tennille found the professor to lack the "requisite experience" to supply the required expert testimony, observing that he came up short on a number of grounds:
- He hadn’t been licensed to practice law for more than 25 years;
- He had never been licensed to practice law in North Carolina; and
- He had never conducted any real estate transaction "as a lawyer or represented any individual, partnership, joint venture, LLC, or corporation in any real estate transaction. "
Op. ¶37. Another factor contributing to the dismissal of the claims against the lawyer was the expert shooting himself in his own foot at his deposition, when he gave up any assertion that he was an expert in the sphere of real estate transactions:
- He testified he did not "consider himself to be an expert in the practice of real estate development or the practice of law related to real estate developments."
- He admitted that he did "not know everything that a real estate lawyer does in representing a developer, putting together deals, and seeing them through to closing," and he conceded that he did "not know for sure . . .what the standard of care is for written engagement letters for an attorney handling the type of transaction at issue in this case."
The professor was undoubtedly an expert in the field of legal ethics, which he teaches at Duke. He formed his opinion that the Defendant lawyer had been negligent based on what he saw as violations of the North Carolina Rules of Professional Responsibility, but the Court observed that "North Carolina appellate courts repeatedly have rejected the use of the Rules of Professional Conduct to establish attorney liability." Op. ¶39.
The takeaways from this opinion are: if you are pursuing a malpractice claim in the Business Court against a lawyer, you need an expert witness who has been practicing in the field of the alleged malpractice in North Carolina, not a law school professor without that background. And have your expert be sure about the applicable standard of care.
This is the second significant opinion to come out of the Inland American lawsuits. The first concerned the enforceability of agreements to agree, which I wrote about in March 2009.