by Robert Ambrogi - Editor
BullsEye Newsletter: April 2007
A prominent lawyer’s suit against an expert
witness backfired, when the expert won an $11 million verdict
against his firm for malicious prosecution. Last month, the Montana
Supreme Court affirmed the verdict, finding that the law firm
had acted reprehensibly when it sued the expert without adequate
grounds.
"Abusive conduct toward an individual which causes the type of harm at
issue here merits considerable punishment regardless of the setting in which
it takes place," the Supreme Court said. "However, the fact that
[the firm] utilized the judicial system as a tool to accomplish intimidation
and oppression makes this behavior uniquely egregious."
The expert, W. Steve Seltzer, is a professional art valuation
expert and authenticator of Western American artwork. In late
2000, an art auction house retained him to render his opinion
on the authenticity of a watercolor painting owned by Steve Morton.
Morton’s painting, Lassoing a Longhorn, bore a
signature indicating that it was the work of noted Western artist
Charles M. Russell. Seltzer, however, concluded the painting
was actually the work of his grandfather, Olaf Carl Seltzer,
also a well-known Western artist.
Russell and O.C. Seltzer were contemporaries and friends in Montana
in the late 1890s. O.C. Seltzer was a protégé of
Russell and both painted similar types of cowboy scenes. Over
time, however, Russell's paintings had come to be more highly
valued than those of O.C. Seltzer.
When Morton contacted the auction house about selling the painting,
he was told it would likely "fetch a record price" and
that its value could be $650,000. A partner in the auction house,
however, suspected the painting was not by Russell but by O.C.
Seltzer. He brought in the expert Seltzer to give his opinion.
Seltzer, who the court described as the world's foremost expert
on the works of O.C. Seltzer and also an expert on the works
of Russell, immediately concluded that the work was clearly not
Russell's but was, in fact, painted by O.C. Seltzer.
In light of Seltzer's opinion, the auction house consulted with
a second expert, the premier authority on the works of Russell
and also an authority on O.C. Seltzer. Her opinion confirmed
Seltzer's that the painting was plainly the work of O.C. Seltzer.
With these expert opinions in hand, the auction house notified
Morton it could not sell the painting as an authentic Russell.
Threats, Then Litigation
Morton responded by hiring Dennis A. Gladwell.
In April 2002, Gladwell sent Seltzer a letter demanding that
he recant his opinion about the authenticity of the painting.
The letter further demanded that Seltzer agree to compensate
Morton for the painting's loss in value due to Seltzer's "defamatory
remarks" and pay him an additional $50,000 for his "time,
expense, embarrassment, grief and anxiety."
"We expect immediate cooperation," Gladwell wrote, "or litigation
will be filed without any further discussion. And, given the opportunity afforded
you to rectify this wrong, and your refusal to do so, punitive damages will
be requested."
When Seltzer did not respond to that letter or to a second one
a month later, Gladwell filed a lawsuit against him in Montana
federal court. The suit, filed in the names of Morton and his
brother Frank, alleged defamation, intentional interference with
business relations and other grounds. It sought damages and injunctive
and declaratory relief.
Seltzer moved for summary judgment, submitting the affidavits
of 10 art experts that the painting was not an authentic Russell.
Morton, with no expert witness who could testify to the contrary,
acknowledged that he could not prevail in the case. Seven months
after filing the complaint, Morton agreed to dismiss it with
prejudice.
Seltzer then filed his own suit against the Mortons alleging
malicious prosecution and abuse of process. In the course of
discovery, it was learned that Frank Morton had never authorized
adding his name to the original lawsuit against Seltzer, so he
was dismissed. Discovery also revealed that Morton's lawyers
had withheld key documents from discovery in the first lawsuit,
ones which tended to show Morton's acceptance that the painting
was not by Russell.
At trial, the jury found in favor of Seltzer, awarding $1.1 million
in compensatory damages and punitive damages in the amount of
$100,000 against Morton, $150,000 against Gladwell, and $20 million
against his law firm. The trial court reduced the punitive damages
award to $9.9 million. Both sides appealed.
'Instrument of Coercion'
On these facts, the Montana Supreme Court had
little difficulty concluding that Morton and his lawyers had
abused the legal process in bringing their lawsuit against Seltzer.
The defendants used the suit, the court said, "as an instrument
of coercion, rather than a legitimate means to resolve a genuine
dispute."
On top of that, the court said, the defendants further abused
the legal process by intentionally withholding relevant documents
during discovery.
The court also affirmed the awards of compensatory and punitive
damages in the case. Regarding the compensatory damage award
of $1.1 million, the court rejected defendants' assertion that
the award was solely for emotional distress or was intended as
punishment.
"Seltzer not only presented evidence of emotional distress
resulting from Defendants' acts," the court noted, "he
also presented evidence that his personal and professional reputation
was harmed and that he incurred substantial expense in defending
himself."
As to the award of punitive damages, the Supreme Court concluded
that the defendants' conduct was "highly reprehensible,"
explaining, "This conduct evinced an indifference to and
a reckless disregard of Seltzer’s financial, psychological
and physical well-being, as well as his personal and professional
reputation."
The decision is Seltzer v. Morton, 2007 MT 62 (March
12, 2007).
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