Before a lawyer files a lawsuit, there has to be a justifiable, legal reason to do so. Picture yourself as the client in this situation:
An attorney you have been referred to is aware that no provable, underlying reason to file that suit exists, yet states, “They aren’t going to want to spend money on defending it, and will pay us to go away.”
Just how much trouble could you be in if the defendant takes the case to trial and you lose? What impact can a baseless lawsuit have on your life?
Purchased 2011 Nissan Leaf from a pawn shop
In December of 2016 “Teddy” purchased an all-electric 2011 Nissan Leaf “as is” from a pawn shop for $6,000.
Asking no questions about the vehicle – you read correctly, no questions about the vehicle at all, none, zip, nada — Teddy used his debit card to make one cash payment and the car was delivered the next day to him in a Southern California city where summer temperatures can reach 115 degrees.
“When the Leaf arrived and I began to drive it, the power gauge revealed my battery to be very weak. I called the seller, explaining that something was wrong, but they told me the car was purchased with no warranty. That was when my nightmare started,” he told us.
You might be thinking, “Well, surely he did some research on the vehicle before buying it, right?” Wrong. For if Teddy had performed any kind of due diligence before saying goodbye to $6,000, he would have discovered that in 2013 Leaf batteries began to fail in hot climates and were replaced with one more heat tolerant. The car was also the subject of a major class action against Nissan.
He would have learned that, for a while, Nissan was offering owners a replacement battery and extended favorable pricing of a new, improved one for several years.
Had he taken the vehicle to a Nissan dealer to be inspected, he would also have been told that by 2016 it would cost him $8,000 to buy a new battery.
So why did he not? Famous last words: “The price was great!”
Looking for someone to blame, the legal insurance program offered by his employer referred him to attorney “Elliot.”
“We’ll sue for misrepresentation!”
In their first meeting, Elliott confirmed that his fees would be paid by the legal insurance and off to the races he went, soon billing $10,000, filing suit against the pawn shop in early 2017 and leaving Teddy with the impression that, even if the seller had made no misleading statements – and had no reason to know of the Leaf’s condition — they would settle instead of defending the baseless suit.
Then, the attorney had no further communication with Teddy who was referred to our office by his legal insurance, bringing “The only thing Elliot’s office had in my file - a copy of the five-page lawsuit.”
Searching his county’s Superior Court’s website, we found the suit, as well as the fact that his lawyer was fined by the court for refusing to appear at a Show Cause Hearing. He did not have the lawsuit served on the defendant and ignored a court order to do so. This guy’s online reviews should have scared Teddy away, but once again, he did no research.
“Teddy,” we asked, “How could you go along with this if you knew the seller did nothing wrong?” “I trusted the lawyer, thinking he knew more than me. I mean, he’s a lawyer, after all! I just wanted my money back.”
Lacking probable cause can lead to malicious prosecution
Before a lawsuit is filed, the person bringing it and their lawyer must have reasonable grounds –probable cause – to think it is legitimate and has a chance of winning. When you know that probable cause does not exist, this is Malicious Prosecution.
If a suit is filed in bad faith where your purpose is to extort money from the defendant, we call this Abuse of Process.
The consequences for Teddy could be serious if the matter went to court and he lost, as the pawn shop could recover their attorney fees from him.
Employment background check would discover the suit
“When the suit is discovered in an employment background check, any employer would question his lack of good judgment and apparent immaturity in failing to exercise due diligence before buying the vehicle,” Santa-Maria, California-based private investigator Riley Parker commented.
He concluded, “Teddy bought a pig in a poke, got into a mess and his solution is to sue somebody. Would you want someone like this working in your company?”