## Facts

- Tidewater Capital Corporation made a $2.4 million loan to Galaxy-Wide Products, Inc., to be secured by Galaxy’s customer contracts.
- Lyle, Siegel, Croshaw & Beale, P.C. (and a successor firm) represented Tidewater in structuring and perfecting the security interest.
- Partner Lawrence R. “Larry” Siegel reviewed contracts described as representative of the collateral and concluded the contracts were “accounts receivable,” directing perfection on that basis.
- The collateral’s proper classification under U.C.C. Article 9 affected the steps required to perfect Tidewater’s security interest.
- Tidewater later alleged the firm negligently failed to perfect an enforceable, properly perfected security interest, leaving Tidewater unprotected when Galaxy encountered financial trouble.
- Siegel simultaneously served Tidewater as its president, a director, and a 50% shareholder, in addition to acting as an attorney in the transaction.
- The firm contended Tidewater’s claim was barred by contributory negligence because Siegel’s knowledge and conduct, as a corporate officer, could be imputed to Tidewater.

## Issues

1. Whether contributory negligence is available as a defense in a Virginia legal malpractice action.
2. Whether Siegel’s knowledge and conduct could be imputed to Tidewater given his dual role as attorney and corporate officer, creating a contributory-negligence jury issue.
3. Whether the trial court erred by striking the firm’s evidence and entering judgment for Tidewater instead of submitting disputed negligence issues to a jury.
4. Whether expert testimony was required on the standard of care and whether exclusion of defense expert testimony was error in a technically complex malpractice case.
5. Whether a purported admission made during settlement negotiations was admissible to prove liability.
6. Whether Tidewater’s tax returns were discoverable and relevant to damages.

## Decision

- The Supreme Court of Virginia reversed the trial court’s judgment and remanded for further proceedings.
- The Court held contributory negligence is an available defense in legal malpractice actions because attorney-negligence claims follow ordinary negligence principles.
- The Court held Siegel did not act solely as counsel; as Tidewater’s president, director, and 50% shareholder, his knowledge and actions could be imputed to Tidewater.
- Viewing the evidence in the light most favorable to the firm, the Court found a jury issue existed on whether Tidewater’s claim was barred by contributory negligence; striking the defense evidence and entering judgment for Tidewater was error.
- The Court stated expert testimony is generally required to establish the standard of care in highly technical professional-negligence matters and found the handling of expert evidence contributed to the need for a jury trial.
- The Court ruled the alleged settlement-negotiation admission was improperly admitted.
- The Court ruled Tidewater’s tax returns were relevant to damages and should have been discoverable.

## Legal Principles

- Legal malpractice in Virginia is a negligence action governed by ordinary negligence principles; contributory negligence may bar recovery.
- When an attorney also acts as a corporate officer or agent in the same matter, the officer’s knowledge and conduct may be imputed to the corporation, supporting a contributory-negligence defense.
- On a motion to strike, the evidence and reasonable inferences must be viewed in the light most favorable to the nonmoving party; if reasonable persons could differ on negligence, the issue is for the jury.
- In technically complex malpractice claims, expert testimony is ordinarily required to establish the applicable standard of care and breach, absent matters obvious to lay experience.
- Statements from settlement negotiations are generally inadmissible to prove liability when offered as substantive proof in a negligence trial.
- Tax returns may be discoverable when directly relevant to the plaintiff’s damages claim.

## Conclusion

The Supreme Court of Virginia held that contributory negligence is a valid defense to legal malpractice and that, where a lawyer’s dual role as corporate officer permits imputation of knowledge to the client, disputed negligence questions must be decided by a jury; it also required proper handling of expert evidence, excluded an asserted settlement-related admission, and permitted discovery of tax returns relevant to damages.


Lyle, Siegel, Croshaw & Beale, P.C. v. Tidewater Cap. Corp., 249 Va. 426, 457 S.E.2d 28 (Va. 1995)