Legal Malpractice and Collateral Estoppel: When Arbitration Awards Don't Bind Subsequent Litigation Over Contract Interpretation

Continental Holdings sued its former counsel for malpractice after arbitrators denied benefit-of-the-bargain damages in a breach of contract action involving a geophysical services vessel charter, arguing the lawyers failed to meet the burden of proof on lost profits. The Eastland Court of Appeals affirmed summary judgment for the defense lawyers, holding that a limitation-of-liability provision in the underlying contract precluded recovery of direct profits damages regardless of counsel's performance, and that Continental waived any collateral estoppel argument by raising it for the first time in a motion for rehearing.