Wednesday, July 13, 2005

S.C. Supreme Court issues opinion on attorney's misdeeds as binding client

Koutsogiannis v. BB&T, an opinion released yesterday, arose out of a collection action in which the bank erred in tracking and calculating the payments owed by Koutsogiannis. The bank's error hurt Koutsogiannis's credit and he was unable to close on a very profitable real estate deal.

At trial, Koutsogiannis sought to recover damages based on BB&T's misconduct in handling the loan matter and vicarious liability for the BB&T's Attorney's (outside counsel) misconduct in attempting to collect the debt and preparing the draft order for summary judgment that incorrectly implied Koutsogiannis had been heard on certain counterclaims. As to Attorney, Koutsogiannis asserted Attorney engaged in dilatory tactics which intentionally prolonged the unsuccessful settlement negotiations. With respect to the preparation of the summary judgment order, Koutsogiannis asserted Attorney intentionally sought to deceive the trial court and injure him. At trial, a jury awarded Koutsogiannis $98,000.00.

On appeal, BB&T argued that because a client may not be vicariously liable for the conduct of its outside counsel, the trial court erred by failing to charge the jury on the law of independent contractor. The Supreme Court disagreed, holding that outside counsel's engagement in settlement negotiations and in the preparation of the proposed summary judgment order was clearly within the scope of authority set out to him by BB&T. Any misconduct engaged in by outside counsel during those actions was directly attributable to BB&T.

Of course, normally to hold a principal liable in tort for the acts of an agent, the agent must be a servant. Here, the court focused on the attorney-client relationship. My guess is that the holding in this case is only pertinent to attorney misconduct.

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