by Mark Bauman | Apr 23, 2023 | Legal Malpractice, Legal News
A unanimous Pennsylvania Superior Court panel reversed a $3.28M legal malpractice verdict against an attorney where Plaintiff-Appelle failed to timely file his claims within the two-year statute of limitations.
In the underlying matter in Lorenzo v. Milner v. Quaglia, Plaintiff-Appelle retained defendant attorney to defend him in foreclosure proceedings relating to commercial property Plaintiff-Appelle owned. A former tenant had vacated and vandalized the property on April 16, 2001, rendering the property un-rentable. Plaintiff-Appelle sought coverage from his insurance carrier. The insurance policy included a suit limitation clause prohibiting lawsuits after two years from the date the damage occurred. Accordingly, the date by which to file a lawsuit under the insurance policy was April 16, 2003. On November 5, 2003, the insurance carrier denied coverage of Plaintiff-Appelle’s claims.
Plaintiff-Appelle subsequently discharged defendant attorney and retained a second attorney who filed suit against Plaintiff-Appelle’s insurance carrier. The suit resulted in a $4 million verdict in favor of Plaintiff-Appelle and against the insurance carrier. The insurance carrier appealed the verdict and the Pennsylvania Superior Court reversed in February 2009.
On January 31, 2011, approximately eight years after the suit limitation clause had expired, Plaintiff-Appelle filed a legal malpractice action against defendant attorney for failure to file a timely claim against his insurance carrier.
Defendant attorney filed a Motion for Summary Judgment on the basis that the alleged breach of duty occurred in 2003, when the suit limitation expired, and that Plaintiff-Appelle’s claims should be barred because the two-year statute of limitations on legal malpractice claims had run. Plaintiff-Appelle argued that the statute of limitations was tolled during the pendency of the Superior Court appeal in the litigation against his insurance carrier. The trial court denied defendant attorney’s motion for summary judgment. At the conclusion of the trial, the jury returned a verdict in favor of Plaintiff-Appelle and against defendant attorney in the amount of approximately $3.28 million. Defendant attorney then filed an appeal to the Pennsylvania Superior Court.
The Pennsylvania Superior Court noted the application of the statute of limitations is a question of law reviewed de novo. Furthermore, Pennsylvania favors strict application of the statutes of limitation. Specifically, in legal malpractice claims the statute begins to run when the attorney breaches his or her duty, and is tolled only when the client, despite the exercise of due diligence, cannot discover such breach. The Court also noted that during the underlying insurance litigation, Plaintiff-Appelle testified that as of July 27, 2006, he was aware that his insurance policy contained a two-year suit limitation. Accordingly, the Court held that even applying the discovery rule, which would have tolled the statute of limitations until July 2008, the statute of limitations had run by the time Plaintiff-Appelle commenced suit three years later in 2011. In a footnote, the Court specifically rejected Plaintiff-Appelle’s argument that he could not file a legal malpractice action until the underlying litigation was finally resolved through the appeal process and reaffirmed Pennsylvania law that the statute of limitations is not tolled in legal malpractice actions until all appeals in the underlying actions have been exhausted.
by Mark Bauman | Apr 21, 2023 | Legal Malpractice, Legal News
In Sklodowsky v. Lushis, the Appellate Division of the Superior Court of New Jersey recently had the opportunity to reexamine the application of the entire controversy doctrine to legal malpractice actions.
John F. Lushis, Jr., Esquire represented Paul G. Sklodowsky in the potential sale of real property. An agreement of sale was entered with American Developers of New Jersey, Inc. (“ADNJ”). When ADNJ learned that Sklodowsky was attempting to sell the property without the consent of his wife, it refused to complete the sale.
On October 7, 2004, Sklodowsky filed suit against ADNJ, seeking to retain its $85,000 deposit as liquidated damages. ADNJ filed a counterclaim against Sklodowsky, and filed a third-party complaint against Lushis. Lushis moved for summary judgment which was granted.
On October 22, 2007, Sklodowsky filed a complaint against Lushis for professional negligence, breach of contract, and breach of fiduciary duty. However, the complaint was not served and was eventually dismissed without prejudice pursuant to New Jersey Rule of Court 1:13-7 for lack of prosecution.
In a third action, a partner of Lushis filed suit against Sklodowsky in federal court to collect payment for their prior legal services. Sklodowsky filed a counterclaim against the plaintiff and a third-party complaint against Lushis for professional negligence. A motion to dismiss Sklodowsky’s claims was granted on the basis of improper joinder and the professional negligence claim was dismissed without prejudice.
Finally, on November 4, 2009, Sklodowsky filed the lawsuit at issue in the appeal against Lushis, again alleging professional negligence with regard to the failed transaction. Lushis filed a motion to dismiss based on the entire controversy doctrine which was granted by the trial court.
In New Jersey, the entire controversy doctrine, adopted as Rule 4:30A, requires the joinder of “all causes, claims, and defenses related to a controversy.” Omitted claims are precluded. Prior to 1997, New Jersey courts interpreted the entire controversy doctrine as requiring a litigant who believed that his or her attorney was negligent to join his or her attorney in the underlying lawsuit that gave rise to the claim. Joinder was required even if the attorney continued to represent the litigant.
In Olds v. Donnelly, 150 N.J. 424, 441 (1997), the New Jersey Supreme Court relaxed the application of the entire controversy doctrine to legal malpractice actions, finding that the “risk of the disclosure of privileged information and the generally adverse effects on the attorney-client relationships outweigh any benefit from requiring a client to assert a malpractice claim in the pending lawsuit.”
The trial court reasoned that the entire controversy doctrine applied despite Olds because Olds concerned the joinder of parties rather than the joinder of claims. The trial court felt that dismissing the claim was consistent with the purposes of the entire controversy doctrine.
The Appellate Division reversed, finding that the reasoning inherent to Olds applied. It stated that “[a]pplying the entire controversy doctrine in such a case can chill a client’s relations with his or her attorney and cause the client’s and the attorney’s interests to diverge, potentially prejudicing them both.”
The purpose of the entire controversy doctrine, according to the Appellate Division, is to 1) prevent piecemeal decisions, 2) promote fairness to the parties, and 3) advance the goal of judicial efficiency. While acknowledging that its decision did not prevent piecemeal decisions or promote judicial efficiency, the Appellate Division held that fairness to the parties was paramount and prevented dismissal. The court relied heavily on the fact that requiring Sklodowsky to sue Lushis in the underlying case “would have resulted in a divergence of their respective interests” which “would have further compromised an already strained attorney-client relationship.”
Lushis did not show that the passage of time had prejudiced his interests in defending against Sklodowsky’s claims. The court further held that the previously dismissed actions were not relevant because they were dismissed without prejudice. Finally, it is important to note that the statute of limitations for legal malpractice claims in New Jersey is six years. Therefore, Sklodowsky’s claim was not barred on statute of limitations grounds.
by Mark Bauman | Apr 20, 2023 | Legal Malpractice, Legal News
In the court’s opinion of August 6, 2010, Judge Kent H. Albright refused to recognize a conflict of interest existing between Defendant-insurance company and its appointed attorney when Defendant invoked a reservation-of-rights clause to potentially limit the coverage provided in a defamation suit brought against Plaintiff-insured.
Upon being served with a complaint for a defamation action, of which included counts of punitive damages, Plaintiff submitted a copy to Defendant, her insurer. Because Plaintiff’s policy with Defendant excluded coverage for defamation, intentional acts, and punitive damages, Defendant issued to Plaintiff a notice reserving its right to provide coverage for these claims. Nevertheless, pursuant to its policy with Plaintiff, Defendant agreed to investigate the defamation lawsuit through its own appointed attorney. Concerned that Defendant’s reservations to provide coverage would create a conflict of interest between Defendant and the appointed attorney, Plaintiff retained her own private counsel and requested that Defendant pay for the respective legal services. When Defendant refused this request, Plaintiff brought suit against Defendant seeking both Declaratory Judgment and a Preliminary Injunction.
In her motion for a Preliminary Injunction, Plaintiff’s privately retained counsel acknowledged that there existed “no controlling Pennsylvania case law” on which to grant Plaintiff injunctive relief. Rather, counsel petitioned the court to create a new law regarding the alleged conflict of interest. The court denied this request, holding first that Plaintiff had failed to establish the “essential prerequisites” of a preliminary injunction set forth in Summit Towne Centre, Inc. v. Shoe Show of Rocky Mount, Inc., 828 A.2d 995, 1001 (Pa. 2003).
Citing to Canoe Rental Inc. v. Tinicum Twp., 110 F.R.D. 166, 170 (E.D. Pa. 1986), the court then added that no conflict of interest existed between Defendant and its appointed attorney, stating that “once engaged in an attorney-client relationship with the insurer’s insured, the lawyer is ethically bound to advocate exclusively on behalf of the insured client, regardless of who hires him or her or pays for the costs of the insured’s representation.” Despite Defendant’s control over the hiring and firing of its appointed counsel, the court further disclaimed the existence of a conflict, stating that Defendant did not exercise control over the “decision-making or judgments made” regarding Plaintiff’s defense. Finally, Plaintiff’s reliance on Pennsylvania Rule of Professional Conduct 1.7, which prohibits the representation of clients under concurrent conflicts of interest, was also found to be incorrect, since Plaintiff was found the sole client of Defendant’s appointed counsel.
by Mark Bauman | Apr 19, 2023 | Legal Malpractice, Legal News
A client who sues its lawyer for legal malpractice may sue in any county in which the law firm regularly conducts business regardless of whether it has an office in that venue. Zampana-Barry v. Donaghue, 246 EDA 2006 (March 8, 2007).
A client sued his lawyer and his lawyer’s law firm for legal malpractice for mishandling of a personal injury suit against K-Mart Corporation. The client alleged that her lawyer failed to protect her right to proceed against K-Mart after K-Mart filed for bankruptcy. As a result, the client’s claim against K-Mart was dismissed on summary judgment.
The lawyer’s office is located in Philadelphia County but the client sued in Philadelphia County. The lawyer and his firm sought to have the case transferred to Delaware County alleging that venue was improper since they did not regularly conduct business in Philadelphia County. The trial court disagreed and found, after applying the quality-quantity test established by the Pennsylvania Supreme Court in Purcell v. Bryn Mawr Hospital, 525 Pa. 237, 579 A.2d 1282 (1990), that the law firm performed acts in sufficient quality and quantity to establish venue in Philadelphia County.
The Superior Court reviewed the evidence relied on by the trial court and agreed that venue was proper in Philadelphia County. The evidence included statements made by the lawyer that the purpose of the law firm was to perform legal services and that 3-5% of the firm’s revenue came from representing clients in Philadelphia County in both state and federal courts. The Superior Court disagreed with the lawyer’s contention that since his office was located in Delaware County venue was improper in Philadelphia. It found that the fact that venue is present in Delaware County does not negate the existence of venue in Philadelphia County. It also found that the acts performed by the lawyer and his firm in Philadelphia were not incidental but, rather, were essential to the law firm’s existence.
by Mark Bauman | Apr 18, 2023 | Legal Malpractice, Legal News
In Saffer v. Willoughby, 143 N.J. 256 (1996), the Supreme Court of New Jersey said that a negligent attorney in a legal malpractice action is responsible for the legal expenses and attorneys’ fees incurred by a wronged client in prosecuting the legal malpractice action against the negligent attorney. This case made New Jersey the only state to permit such fee switching in legal malpractice cases.
Eight years after Saffer, attorneys are still arguing over how magnanimous the justices meant to be when drafting their opinion in Saffer. A new appeal could provide this response. An attorney who won a $118,000 settlement for a legal malpractice client is asking the Appellate Division to order the negligent attorney to pay his hourly fees totaling $105,000, not just the $38,000 fee due under the contingency agreement. As a fallback, if the appeals court only provides him with the contingency fee, this attorney wants an enhancement similar to bonuses courts have awarded in employment discrimination cases to plaintiffs’ lawyers willing to tackle hard cases that advance societal goals. The attorney for the negligent attorney is cross appealing in an attempt to get the courts to repeal the fee shifting doctrine of Saffer.
Over the years, lower courts have expressed the view that some of the rules governing fee shifting in legal malpractice cases don’t appear to be logical, but those tribunals have said, in effect, that those rules have been set forth by the Supreme Court and we’re stuck with them. A Constitutional argument has also been raised on behalf of negligent attorneys. It has been argued that fee shifting violates the 14th Amendment’s Equal Protection clause because it singles out negligent lawyers as opposed to other professions. Attorneys hope that the New Jersey Supreme Court will revisit this issue and clarify the Saffer opinion.
by Mark Bauman | Apr 17, 2023 | Legal Malpractice, Legal News
The Pennsylvania Superior Court, in a matter of first impression, has held that the negligence of a client may be raised as an affirmative defense in a legal malpractice action that is based upon negligence. Gorski v. Smith, 812 A.2d 683 (Pa. Super. 2002), appeal denied, 579 Pa. 692, 856 A.2d 834 (2004).
The Gorskis were real estate developers who sued their lawyer in relation to services provided in a significant real estate transaction. It was alleged that the attorney was negligent in drafting a land sale agreement and in the litigation that subsequently arose when the Gorskis sought rescission of the agreement. The Gorskis also sued for breach of contract alleging that the attorney breach his contractual duty to adequately represent them. At trial, the jury found that the lawyer was negligent. The jury did not find that the lawyer had breached any contractual obligation and found that the Gorskis were contributorily negligent in relation to the creation of the land sale deal with the buyer. While contributory negligence will be a complete bar to a plaintiff’s recovery, the trial court entered judgment notwithstanding the verdict in favor of Plaintiff. Cross appeals were filed.
The Superior Court, after analyzing cases from other states, agreed with many other jurisdictions that in a legal malpractice action based on negligence, the negligence of a client, if proven at trial, may be considered by a jury in awarding damages. The Superior Court next considered whether a finding of contributory negligence would operate as a complete bar to recovery. Finding that the comparative negligence principles do not apply to cases other than those for bodily injury or injury to property, it held in accordance with prior precedent that contributory negligence of a client may be a complete bar to recovery. However, it also held that a client cannot be deemed contributorily negligent for failing to anticipate or guard against his or her attorney’s negligence in the performance of legal services within the scope of the attorney’s representation of the client. It also stated that a client can be contributorily negligent where the client has withheld or misrepresented information that is essential to the attorney’s representation of the client.
In this case, the Superior Court found that the Gorskis specifically relied on their lawyer to review the contract and to ensure that the contract legally accomplished what the Gorskis sought. Further, the lawyer gave the Gorskis legal advice on the legal meaning and operation of contractual language. Because the advice was erroneous, the Gorskis could not have been contributorily negligent for relying on it.
