An Iowa company is suing its lawyers for allegedly botching settlement negotiations in lawsuits tied to a 2014 traffic accident. (Photo via Canva)
One of Iowa’s largest nursing home corporations is suing its lawyers for allegedly botching settlement negotiations in lawsuits tied to a 2014 traffic accident.
ABCM Corp., which operates more than 60 care facilities in Iowa, is suing the Fudge Broadwater law firm of Florida in U.S. District Court for the Southern District of Iowa, alleging legal malpractice.
The lawsuit stems from an August 2014 accident near Mason City that involved a truck owned by ABCM. The truck was driven by an ABCM employee who was later found to be under the influence of drugs or alcohol at the time of the accident.
The accident injured three people — Anne Grady, Rolland Williamson and Vonn Aaron — who each filed a lawsuit against ABCM. The plaintiffs alleged ABCM was negligent in hiring the driver and failed to conduct a background check that would have revealed a prior conviction for drunken driving.
Court records indicate that at the time of the accident, the ABCM driver admitted to smoking marijuana that day, had a marijuana pipe on him with residue still in the pipe, and was carrying a plastic bag with a white powder residue. The driver was later convicted of causing serious injury in an accident as a result of driving while impaired.
ABCM hired Fudge Broadwater as legal counsel to assist with its defense in the three civil cases. At the time, ABCM had two insurance policies that each provided up to $1 million in coverage.
ABCM alleges that although it was unaware of this fact at the time of mediation in 2017, all three claims against the company could have been settled for $2.3 million had a “strategic settlement approach” been implemented.
At the conclusion of mediation, only the claims of Aaron and Williamson were settled, with the Grady case left unresolved. According to ABCM’s newly filed lawsuit, Fudge Broadwater failed to tell ABCM that it should object to any settlement that didn’t encompass all three claims. ABCM says it now realizes that the amounts paid to settle the Aaron and Williamson claims were unreasonable.
ABCM also alleges that it now realizes the unresolved Grady case, which involved a claim of traumatic brain injury, actually posed more of a liability threat to the company than the other two claims.
Had the Grady case been settled first, leaving ABCM with less insurance coverage to pay any settlement amount, Williamson’s and Aaron’s own insurance would have kicked in, providing additional financial incentive for those two individuals to settle their claims.
With one of ABCM’s insurers having paid the full $1 million toward the settlement of the Aaron and Williamson claims, ABCM itself had to pay the costs associated with defending itself against Grady’s claim. According to ABCM, it also had to spend its own money to settle the Grady case for what it now calls an unreasonable amount.
The lawsuit seeks unspecified compensatory damages, interest, fees and other costs.
Fudge Broadwater representatives did not respond to calls from the Iowa Capital Dispatch seeking comment.
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