Somma v. Gracey

Citations: 15 Conn. App. 371; 544 A.2d 668; 1988 Conn. App. LEXIS 285Docket: 5120

Court: Connecticut Appellate Court; August 2, 1988; Connecticut; State Appellate Court

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The defendants appeal a jury verdict favoring the plaintiffs in a legal malpractice case, arguing that the trial court improperly submitted certain negligence claims to the jury and denied their motion for judgment notwithstanding the verdict. In their cross appeal, the plaintiffs contend that the trial court incorrectly instructed the jury on reducing the damage award for comparative negligence and allowed a reduction in the award to Raymond Somma without evidence of an agency relationship with Edward Somma. The court found no errors in either appeal. 

The case relates to the sale of a family-owned business, Grodel, Inc., which was established by the plaintiffs' father in 1941. Edward Somma began working at the tool shop at age fourteen and continued until 1944, after which he served in the Navy and attended college. Upon returning in 1950, he and his brother Raymond, who joined in 1952, operated the business until their father's death in 1960, after which Edward became president and Raymond vice-president. The brothers sold the company in 1963 with legal representation from Reid and Riege, a firm they had previously consulted for estate matters.

Subsequently, the plaintiffs faced challenges with a sign-making company they established and dissolved before purchasing another business, again with Reid and Riege's help. Edward sold his interest in this business without representation but later repurchased Grodel, Inc. with Raymond. In 1978, the brothers, owning 90% of Grodel, engaged Reid and Riege, specifically Jerome Gracey, to assist in selling the company. The sale was finalized on October 4, 1978, for $2,182,000, with structured payments including an upfront amount, promissory notes, and a consulting contract for Edward.

Purchasers secured their acquisition of Grodel, Inc. by pledging the stock received and obtaining guarantees from THFIT, Inc., a trust associated with the purchasers. After an initial payment on the promissory notes, the buyers defaulted, leading to plaintiffs not regaining their stock due to the company's bankruptcy, resulting in significant financial loss. The plaintiffs filed a malpractice action against the defendants, who claimed the trial court erred by submitting three negligence issues to the jury: (1) failure to adequately investigate the buyers, (2) failure to audit or request sufficient financial information about the buyers and their guarantees, and (3) failure to advise against accepting nonnegotiable promissory notes. The court found that sufficient expert testimony was presented, demonstrating both a breach of the professional standard of care and a direct link to the plaintiffs' losses. Two expert witnesses confirmed the defendants' negligence regarding the nonnegotiable security note and lack of investigation. The court noted that even weak evidence can be submitted to a jury. The defendants also contended that their motion for judgment notwithstanding the verdict should have been granted, arguing that the buyers' actions were an intervening cause of their liability; however, the court disagreed.

The trial court's denial of the defendants’ motion for judgment notwithstanding the verdict is reviewed with limited scope, focusing on evidence and reasonable inferences favoring the trial's successful parties. The concurrence of the judge and jury, who observed the witnesses, carries significant weight. The defendants must demonstrate that the jury's conclusion was unreasonable and legally unsound. They argue that the buyers' actions constituted a superseding cause; however, the Restatement of Torts indicates that such actions can only be deemed a superseding cause if the defendants did not foresee the likelihood of a third-party tort arising from their negligent conduct. In this case, the buyers' criminal actions were anticipated by the defendants, who acknowledged the insufficiency of security measures that could lead to theft, thus ruling out the buyers' actions as a superseding cause. The trial court's decision to deny the motion is upheld.

Additionally, the plaintiffs contend that the trial court wrongly instructed the jury on comparative negligence, claiming insufficient evidence to support this defense's submission. Before addressing this claim, a novel issue arises: whether comparative negligence can be raised in legal malpractice actions. Other jurisdictions have typically allowed this defense in malpractice suits, drawing parallels with its acceptance in medical malpractice cases.

Legal malpractice actions can utilize the defense of comparative negligence, as confirmed by case law including Hansen v. Wightman and Shuster v. Buckley. The relevant statute, General Statutes 52-572h (b), states that damages in negligence claims are reduced by the claimant's share of negligence. Both legal malpractice and other negligence claims are treated similarly under the law. 

In this particular case, the plaintiffs alleged the defendants' negligence in failing to investigate buyers and advising against proceeding with a deal lacking adequate security. Expert testimony supported the plaintiffs' claims of negligence. However, the defendants argued they were not obligated to investigate the buyers, asserting it was the plaintiffs' responsibility. Testimony indicated that the defendants informed the plaintiffs they should conduct a more thorough investigation.

The court highlighted that an attorney-client relationship exists when the attorney's advice is sought, obligating the attorney to act with fidelity to the client. However, this duty does not extend to the client’s general business matters. Given the evidence, the jury could determine whether the defendants had a duty to investigate buyers. If they did not, the plaintiffs’ negligence in failing to conduct the investigation could be partially responsible for their losses. Conversely, the jury could find the defendants negligent for not advising the plaintiffs against the deal.

The court also addressed a claim by plaintiff Raymond Somma, who argued that he could not be held comparatively negligent since he was not involved in hiring the defendants. The court concluded that the issue of agency was irrelevant, as the case was tried on the premise that both plaintiffs were negligent for failing to investigate adequately. The jury's finding of comparative negligence was therefore upheld, and the defendants were not required to plead agency. The court found no error in the proceedings, with concurrence from other judges.