B. Applicable Law
Before determining whether Jacobsen has stated a claim, this Court must
determine what state's law applies. "When deciding state-law claims under
diversity or supplemental jurisdiction, federal courts apply the
choice-of-law rules of the jurisdiction in which they sit." Ideal
Electronic Security Co., Inc. v. International Fidelity Ins. Co.,
129 F.3d 143, 148 (D.C. Cir. 1997). In resolving choice of law
questions, the District of Columbia employs a governmental interests
approach, which balances the competing interests of the jurisdictions.
Estrada v. Potomac Elec. Power Co., 488 A.2d 1359, 1361 n. 2 (D.C.
1985). To determine the jurisdiction with the greater interest, the Court
considers four factors: (i) the place of the injury, (ii) the place where
the conduct occurred, (iii) the domicile of the parties, and (iv) the
place where the relationship between the parties is centered. Myers v.
Gaither, 232 A.2d 577, 583 (D.C. 1967). See also Estrada, 488 A.2d at
1361 n. 2 (citing Restatement (Second) of Conflicts § 145).
In applying these factors to the instant facts, this Court finds that
out of the three jurisdictions that have an interest in this case, the
District of Columbia has the greatest interest. While the place where
Jacobsen's injury would have occurred was California, where he lived, and
certain conduct allegedly causing the injury, specifically advice given
via telephone, occurred in Pennsylvania, where defendants reside and
practice law, the District of Columbia has the most substantial
relationship to Jacobsen's claims. The District, which was the locus of
both Cicippio actions, can fairly be said to be the place where the
relationship between the parties was centered. Defendant Oliver was twice
admitted to the District pro hac vice, and defendants made numerous court
filings and appearances in the Cicippio cases, including representing
Jacobsen at his trial in this Court. Jacobsen and defendants met in the
District to discuss the case, and as defendants concede, "the final key
conversation — when Jacobsen agreed not to pursue individuals as
defendants — took place in the courthouse in Washington, DC."
(Def.'s Mem. at 13.) Furthermore, as plaintiff argues, the action
necessary to correct an alleged omission of not joining an "agency or
instrumentality" of Iran would have been to file an amended complaint in
the District. (Plaintiffs' Memorandum in Opposition to Defendants' Motion
to Dismiss for Failure to State a Claim for which Relief May Be Granted
at 8 [hereinafter "Pl.'s Opp."].)
In reaching this conclusion, the Court finds the case cited by
plaintiff, David B. Lilly Co. Inc. v. Fisher, 18 F.3d 1112 (3d Cir.
1994), to be instructive, since it, like the instant case, involved
"relational strands span[ning] several states." Id. at 1120.
Nonetheless, the Third Circuit concluded that locations where allegedly
negligent attorneys performed their legal work structuring a transaction
(i.e., Washington, D.C. and New York) had "little relationship to either
the alleged legal malpractice or the parties." Id. Instead, the court
found significance in the "purpose of the relationship" between the law
firm and its client, which was to facilitate an acquisition of a Delaware
corporation and concluded ultimately that Delaware had the most
significant relationship to the malpractice claim and the parties. Id.
Here, the purpose of the relationship was to bring an action under the
FSIA in the District, and thus, the District has the most significant
relationship to Jacobsen's claims.
Moreover, while Pennsylvania admittedly has an interest in regulating
the conduct of its attorneys, the District has a compelling and
overriding interest in regulating the conduct of attorneys who practice
within its borders. See Crossland Savings FSB v. Rockwood Insurance Co.,
692 F. Supp. 1510, 1512 (S.D.N.Y. 1988) (holding that interest of New
York in regulating conduct within its borders outweighs interest of Texas
in regulating professionals licensed to practice in Texas) (citing, inter
alia, Machleder v. Diaz, 801 F.2d 46, 52 (2d Cir. 1986)). Moreover, even
if Pennsylvania's interest is equal to that of the District, the
District's laws are to be applied in accordance with this Circuit's
conflict of law principles. "`Where each state would have an interest in
application of its own law to the facts, . . . the law of the jurisdiction
with the stronger interest will apply.' . . . `If the interests of the
two jurisdictions in the application of their law are equally weighty,
the law of the forum will be applied.'" Williams v. First Government
Mortgage & Investors Corp., 176 F.3d 497, 500 (D.C. Cir. 1999) (citing
Bledsoe v. Crowley, 849 F.2d 639, 641, 641 n. 1 (D.C. Cir. 1988)).
C. Is There Compensable Injury?
Defendants argue that punitive damages cannot be assessed as a matter
of public policy against "someone who has not acted in an outrageous
manner, unless doing so will deter others from engaging in like conduct."
(Def.'s Mem. at 16.) Plaintiff responds that he is not prohibited from
recovering as compensatory damages in a legal malpractice case for the
loss of what would have been available as punitive damages in the
underlying case. (Pl.'s Opp. at 21.)
This issue — that of so-called "lost punitives" — is a
matter of first impression in this jurisdiction, but is one as to which
courts disagree. Compare Haberer v. Rice, 511 N.W.2d 279 (S.D. 1994) (in
legal malpractice action against former attorney, a client can recover
what would have been punitive damages in underlying action); Merenda v.
Superior Court, 3 Cal.App.4th 1 (Cal.Ct.App. 1992) (same); Scognamillo
v. Olsen, 795 P.2d 1357 (Colo.App. 1990) (same); Ingram v. Hall, Roach,
Johnston, Fisher & Bollman, 1996 W.L. 54206 (N.D.Ill. 1996) (same); Hunt
v. Dresie, 740 P.2d 1046 (Kan. 1987) (same) with Capetta v. Lippman,
913 F. Supp. 302 (S.D.N.Y. 1996) (in legal malpractice action against
former attorney, a client cannot recover what would have been punitive
damages in underlying action); Summerville v. Lipsig, 704 N.Y.S.2d 598
(N.Y.App. Div. 2000) (same) (citing Capetta); Piscitelli v. Friedenberg,
87 Cal.App.4th 953, 979-983 (Cal.Ct.App. 2001) (same) (taking issue with
decision in Merenda); Ferguson v. Lieff, Cabraser, Heimann & Bernstein
LLP, 95 Cal.App.4th 154, 166 (Cal.Ct.App. 2002) (same) (citing
By statute, this Court has no authority to certify this issue to the
District of Columbia Court of Appeals, see D.C. Code § 11-723, and
thus, it must attempt to predict how the issue would be resolved by that
court.*fn3 Both Jacobsen and defendants argue for positions based on
legitimate but competing policy considerations: Jacobsen argues that he
can only be made "whole" if he can recover the entire value of the claim
lost, which must include an
amount for punitive damages, while defendants
argue that collection of such "lost punitives" from attorneys runs
counter to the deterrent and punitive purposes of punitive damages.
Based on a consideration of the case law and commentary, this Court
concludes that the approach advocated by plaintiff is preferable, and
therefore, Jacobsen may sue to recover as compensatory damages those
damages that would have been available as punitive damages in his
underlying action. In their treatise on legal malpractice, Richard E.
Mallen and Jeffrey M. Smith support such a view:
Attorneys can be liable for exemplary or punitive
damages lost or imposed because of their negligence.
If the client should have recovered exemplary damages
in the underlying action but for the attorney's
wrongful conduct, then such a loss should be
recoverable in the malpractice action as direct
Ronald E. Mallen & Jeffrey M. Smith, 3 Legal Malpractice § 20.7, at
136-137 (5th ed. 2000). Professor Monroe H. Freedman also endorses this
position. See Monroe H. Freedman, Caveat Lector: Conflicts of Interest of
ALI Members in Drafting the Restatements, 26 Hofstra L. Rev. 641, 652
(1998) (citing as support the language of section 75 of the Restatement
(Third) of The Law Governing Lawyers: "A lawyer . . . is liable for
injury of which the lawyer's breach of a duty of care was the legal
cause, as determined under generally applicable principles of causation
and damages." Restatement (Third) of The Law Governing Lawyers § 75,
at 60 (Tentative Draft No. 8, 1997)). See also John J. Kircher &
Christine M. Wiseman, 2 Punitive Damages: Law and Practice § 17:8 (2d
ed. 2000) ("Of course, in a legal malpractice action, punitive damages
are recoverable as an element of compensatory damages if, as a result of
the attorney's negligence, the plaintiff suffers an award or is prevented
from recovering an award against a defendant in the underlying action.")
(citing Scognamillo, supra).
The Court is not persuaded by the logic of defendant's leading case,
Piscitelli, 87 Cal.App. 4th at 979-983, where an award of punitive
damages was overturned, because "punitive damages are not compensation
for injury," but are "`private fines levied by civil juries to punish
reprehensible conduct and to deter its future occurrence.'" Id. at 981
(citation omitted). Piscitelli found the Merenda Court's reasoning
"flawed" when "characteriz[ing] a punitive damage claim as a `loss' for
which a legal malpractice plaintiff may be compensated in order to make
her `whole'." Id. While it is true that the purpose of punitive damages
is not to compensate victims, but rather is to punish bad actors and
deter future wrongdoing, as Professor Freedman points out, "[t]he issue
is not the purpose of punitive damages, but the purpose of compensatory
damages, which is to give the client what she lost because of the
lawyer's negligence. . . . Essentially, as a result of the lawyer's
negligence, the punitive damages recoverable from the original tortfeasor
become compensatory damages recoverable from the lawyer." 26 Hofstra L.
Rev. at 653. For, as the Supreme Court of Kansas recognized in Hunt, a
negligent attorney's liability "include[s] damages called punitive
damages from the vantage point of th[e underlying lawsuit.] From the
vantage point of [the malpractice] lawsuit, . . . all the damages are
simply those which proximately resulted from [the] attorneys'
negligence." 740 P.2d at 1057.
While allowing recovery of so-called "lost punitives" against attorneys
does not directly punish the wrongdoer, it may, at least in an indirect
way, further the goal of deterrence. Attorneys who appreciate
that they will be liable in malpractice actions for "lost punitives" will
be motivated to exercise reasonable care in investigating or defending
punitive damages claims. See Hunt, 740 P.2d at 1057 ("[If such claims are
not allowed], then any attorney representing a client who might be
assessed punitive damages in a lawsuit could rest easy, secure in the
knowledge that any improper handling of the suit, even intentional
actions, could not subject the attorney to any malpractice liability at
all."). Moreover, permitting recovery of punitive damages as compensatory
damages in a legal malpractice action is consistent with this
jurisdiction's law regarding damages for negligence —
"[t]he normal measure of tort damages is the amount which compensates the
plaintiff for all of the damages proximately caused by the defendant's
negligence." Haymon v. Wilkerson, 535 A.2d 880, 885 (D.C. 1987).
D. Has Jacobsen Stated a Claim for Negligence?
Defendants also move to dismiss on the grounds that plaintiff cannot
prove negligence, because the harm was not "reasonably foreseeable"
(Def.'s Mem. at 14), since "only the deadline [of July 20, 2000, the date
established by Congress in Victims of Trafficking and Violence Protection
Act of 2000 guaranteeing compensation] gives rise to injury." (Reply
Brief in Support of Motion to Dismiss at 5 [hereinafter "Def.'s Rep."].)
Defendants, however, misconstrue Jacobsen's argument: the gravamen of his
complaint is not — as defendants claim — that "the Firm did
not obtain a judgment for punitive damages against some party by July
20, 2000." (Id.) Indeed, the Complaint makes clear that Jacobsen's claim
is much broader in scope:
The Murphy Oliver Defendants' failure to name agents
and instrumentalities of Iran as defendants, which
precluded David Jacobsen's ability to secure a
substantial and uncontested award of punitive damages
in his favor, was a breach of [defendants'] duty to
exercise reasonable care, skill, and diligence. . . .
Solely as the proximate result of the [defendants']
negligence, Plaintiff David Jacobsen has been damaged
in the sum of $300,000,000, plus interest.
(Complaint at ¶¶ 52-53.) Thus, at this stage, taking as true
plaintiff's allegations, this Court cannot conclude that Jacobsen has
failed to allege a claim of negligence based on lack of foreseeability.
Therefore, defendants' motion to dismiss on this ground is denied.