Justices asked to take legal malpractice case

Michael W. Hoskins
January 1, 2008
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The Indiana Supreme Court is being asked to take a legal malpractice case in which an Indianapolis law firm got hit with an $18 million verdict two years ago.

Attorneys representing law firm Fillenwarth Dennerline Groth & Towe filed a petition for transfer with the state's highest court Monday in Frederick W. Dennerline III, et al. v. Jim Atterholt, Insurance Commissioner of the State of Indiana, No. 49A04-0610-CV-557. This move comes following the Indiana Court of Appeals ruling in May that upheld the verdict handed down by a Marion Circuit Court jury in August 2006.

The case stems from a failed health plan that left 8,200 Hoosiers with unpaid medical bills. The jury found the firm liable for failing to notify trustees about growing financial losses in the Indiana Construction Industry Trust, which was created by a dozen construction-related companies to cover non-union employees. During trial, partner Dennerline was shown to have knowledge of the financial woes and the jury determined that amounted to legal malpractice.

On appeal, the firm raised six issues that included preserving error about a legal malpractice expert's testimony, and whether the trial court abused its discretion in ruling on discovery motions and one of the four legal theories used relating to legal-malpractice liability. The majority affirmed on all the issues, but Judge Carr Darden dissented on one issue regarding the jury's finding on Dennerline's 100 percent fault. He noted the insurance department should not receive what he saw as a "windfall" but added the state agency should be able to collect any legal costs, including attorneys' fees and interest, for prosecuting this action and any unsettled claims.

The intermediate appellate court in mid-July denied a rehearing petition, and Hammond-based Eichhorn & Eichhorn, which represents Dennerline and the firm, sent the transfer petition to the appellate clerk's office by certified mail Monday. The clerk's office had not listed it on its docket by this afternoon.

In the 21-page petition obtained by Indiana Lawyer, attorneys urge the justices to consider four questions for transfer: whether the liability claim presented at trial and relied on by the Court of Appeals is preempted by the Employee Retirement Income Security Act and unsupported by evidence; whether the judgment and non-party defendant settlements exceed the provable damages without statutory authorization; whether Dennerline's due process rights were violated by the use of a liquidation proceeding order in establishing the damages amount; and whether the trial court committed reversible error in prohibiting discovery and allowing a witness a week before trial.

Since the verdict, the 45-year-old firm has given the insurance commissioner rights to sue its legal malpractice carrier, ProAssurance and parent company ProNational Insurance, in a separate federal civil suit. Filed in June, that pending case accuses the company of refusing to settle the case and alleges bad faith and breach of contract. The insurance company has filed a motion to dismiss that case because the state courts' appellate review isn't complete and that document points out that a transfer request was coming in the state appeal; the federal judge hasn't issued a decision on that.

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