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12/30/2013

Denver Attorneys Publish Article Regarding Causation in Transactional Malpractice Cases

Partners John Palmeri and Franz Hardy and associate Nicole Salamander Irby of Gordon & Rees’s Denver office wrote an article published in the December 2013 issue of The Colorado Lawyer. In the article, titled “Better Deal or No Deal: Causation in Transactional Malpractice Cases,” the authors analyze evidentiary issues and the standard of proof for professional negligence cases arising from a transaction.

Courts have been asked whether the “case within a case” analysis applies to claims involving transactional negligence; that is, whether a plaintiff must prove that an excluded or unfavorable term in the underlying agreement would have been accepted by the other negotiating party if the professional had acted in accordance with his or her duty.  The majority of courts that have addressed this issue determined that the “case within a case” standard does apply to transactional malpractice claims.  In a recent opinion, the Colorado Supreme Court held causation requires proof that a plaintiff would have obtained a better deal, or would have been better off walking away from the deal, but for the professional’s alleged negligence.  Courts refer to these standards as “better deal” and “no deal.” 

Evidentiary considerations when proving (or disproving) “better deal” and “no deal” include evidence of the underlying negotiation, expert testimony regarding market conditions, and proof of an alternate viable purchaser or seller.  For more on application of these standards and evidentiary considerations, please see the attached article.

Franz Hardy
John M. Palmeri


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