Summary Judgment Granted on Claim of Legal Malpractice Arising out of Underlying Qui Tam Action

July 1, 2002

Robert M. Scherk and Scott J. Loeding of Murchison & Cumming's San Diego office successfully moved for summary judgment in a legal malpractice case where the plaintiff sued six sets of attorneys in connection with two underlying lawsuits, one in which she was a plaintiff and one in which she was a defendant.

In the underlying Qui Tam, or federal whistle blower action, plaintiff retained a prominent San Diego law firm to prosecute a Qui Tam action on her behalf arising out of what she claimed were fraudulent billings to Medicare being made by a group of doctors for whom she formerly worked. Prior to plaintiff retaining our clients and two other attorneys to continue her representation in the Qui Tam action, she had entered into both a contingency and an hourly agreement with a private investigator to assist her in obtaining information necessary to succeed in the Qui Tam action. When their personal and professional relationship went sour, plaintiff claims to have fired the investigator, but he said that he continued to perform services on her behalf and was at least partially responsible for the successful outcome of the Qui Tam case.

After the Qui Tam action was settled by our clients for $2,000,000.00, with 29 percent of that amount being awarded to the plaintiff, she was subsequently sued by the investigator for breach of contract for not having paid the various bills he had submitted to her and for not honoring their contingency agreement. Although plaintiff could have settled the breach of contract action against her for somewhere between $25,000.00 and $50,000.00, she chose not to do so and that matter proceeded to trial resulting in a judgment in favor of the investigator and against plaintiff in the sum of approximately $230,000.00. Plaintiff, thereafter, unsuccessfully appealed that ruling and has filed two personal bankruptcies.

Almost four years after the Qui Tam action was settled and almost three years after the breach of contract judgment against plaintiff, she filed her complaint for legal malpractice naming the four attorneys who represented her in the Qui Tam action and three additional sets of attorneys who defended her in the breach of contract action. Plaintiff's claims against her Qui Tam attorneys, including our clients, were that the Qui Tam statute provided for the Qui Tam defendant to pay reasonable costs in connection with either the settlement of the Qui Tam action or a verdict in favor of a plaintiff in a Qui Tam action and that her attorneys should have ensured that the investigator's fees were paid at the time the Qui Tam action was settled. Plaintiff also claimed that despite waiting almost three years after the judgment against her in the breach of contract action before filing her legal malpractice case, that she did not discover the relevant Qui Tam statute until doing some legal research on her own in a law library during the appeal of the breach of contract judgment against her. As such, plaintiff claimed her legal malpractice action was timely filed.

Plaintiff claimed special damages in the amount of approximately $450,000.00, including the $230,000.00 breach of contract judgment against her, interest on that judgment, attorneys fees to appeal that judgment, bankruptcy attorney fees and costs, as well as other miscellaneous damages.

The defense argued in the Motion for Summary Judgment that there was an abundance of evidence that plaintiff's claim for legal malpractice was barred by the statute of limitations contained within C.C.P. Section 340.6 and that plaintiff could not produce evidence establishing any triable issue of fact as to causation. Plaintiff could not prove, or even raise, a triable issue to suggest that her investigator's claim for fees and costs had been out in the open when the Qui Tam action was settled or that the Qui Tam defendant would have or could have paid any more to settle the case so that the investigator's fees would have been satisfied.

The court granted the summary judgment motion because plaintiff could not establish causation and as a result ruled that it did not need to reach the issue of whether plaintiff's complaint was barred by the statute of limitations.