South Carolina Lawyer
SC Lawyer, September 2008, #5.
If Someone Must Pay
South Carolina LawyerSeptember 2008If Someone Must Pay . . . "If someone has to go to jail, make sure it's the client, not you." - An old joke about criminal defense practice, but one that can also be applied to civil litigation. If someone must pay damages, make sure it's your client, not you.
The S.C. Supreme Court's recent decision in Ex Parte Gregory, 2008 WL 2404207 (June 16, 2008) (#26504), provides some important insights into the award of sanctions against lawyers for frivolous litigation and about the exercise of professional judgment.
In 1999 Jerry Bittle sustained a brain injury in an automobile accident. His mother, Annie Melton, retained attorney Gerald Malloy to represent Bittle's interests. In 2001 a settlement agreement was reached with Bittle to receive $14,868.97. A few months later Melton and Bittle went to Malloy's office to conclude the settlement. Bittle endorsed the settlement check. Malloy's secretary said that Bittle would not receive this check, but would receive another check later.
Over the next several years Melton called and visited Malloy's office several times to determine when she and Bittle would receive their settlement check. Melton also sought the assistance of a North Carolina attorney. However, neither Melton nor the North Carolina attorney was able to reach Malloy.
Melton testified that she thought that Malloy had kept or spent the settlement proceeds. However, she also admitted that she knew that there was not enough money available from the settlement to pay all the medical bills.
In January 2004 Melton retained Gregory. Gregory talked with the insurance adjuster who handled the claim and learned that the settlement check was cashed in August 2001. Gregory also learned that Malloy had not responded to a number of telephone calls from Melton or to an inquiry from the North Carolina attorney. However, Gregory did not attempt to contact Malloy about the matter, nor did he try to obtain a copy of Malloy's file in the case.
Gregory advised Melton to file a grievance against Malloy in the hope that the grievance would "shake [the money] loose" from Malloy. In June Melton terminated Malloy's services and retained Gregory to represent her to recover the settlement proceeds. Gregory associated attorney J. Leeds Barroll as co-counsel in the matter. Barroll researched causes of action and drafted the complaint. He asked Gregory whether he should contact Malloy but Gregory stated that he did not think it would "do any good." Barroll also concluded that they had to file quickly because the statute would run soon. Because Malloy had not responded to Melton's requests for information about the settlement funds...