Insurance Claim – Malpractice

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WI Court of Appeals – District III

Case Name: Dow Family, LLC, et al. v. Sawyer County Abstract & Title Co., Inc., et al.

Case No.: 2017AP993

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Insurance Claim – Malpractice

Dow Family, LLC (“Dow Family”), appeals a summary judgment entered in favor of CNA Insurance Company (“CNA”) and William Sullivan (“Sullivan”). In 2009, Dow Family’s principal, C. Thomas Dow (“Dow”), purchased certain real estate, commercial interests, and other property from Sullivan.1 Dow Family later discovered an unsatisfied mortgage on one of the condominium units Dow had purchased. It incurred expenses in litigating and ultimately settling a subsequent foreclosure action regarding that

mortgage. Dow Family contends its claim for legal malpractice against CNA’s insured, and its various claims against Sullivan, were improperly dismissed by the circuit court based on the court’s conclusion that Dow Family had failed to submit evidence creating a triable issue as to its damages.

We reject Dow Family’s arguments and affirm. First, we conclude the proper measure of damages in a legal malpractice lawsuit such as this one requires us to compare the former client’s position now against the position the client would have been in but for the alleged negligence. Dow Family avers Dow would not have entered into the purchase transaction had he known of the existence of the unsatisfied mortgage. Thus, for purposes of proving damages, Dow Family must submit some evidence that the assets it acquired in the transaction are worth less than the total amount it spent to obtain those assets—in other words, that it is in a worse position than it would have been had it walked away from the transaction.

Based on our review of the record and the parties’ arguments, we conclude Dow Family has failed to present sufficient evidence on this point. Contrary to Dow Family’s arguments, the circuit court properly determined the transaction was not an arm’s-length deal. As a result, the purchase price of the property interests Dow Family acquired does not establish their fair market values. Dow Family has failed to put in other evidence of value at the time of purchase to rebut CNA’s submissions showing that the value of the assets Dow Family acquired exceeds the total amount it spent to procure those assets, including the amount spent in connection with satisfying the remaining mortgage. Consequently, there is no issue to try in that regard.

We also reject Dow Family’s arguments seeking to reverse the grant of summary judgment in Sullivan’s favor. Although Sullivan has not filed a response brief in this appeal, Dow Family’s briefing on this point is insufficient because it does not reflect any legal reasoning and the arguments are supported only by general statements without citation to legal authority. We affirm the circuit court in all respects.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.