J

- A25036

- 19

NON

- PRECEDENTIAL DECISION

- SEE SUPERIOR COURT I.O.P. 65.37

PITNEY ROAD PARTNERS, LLC T/D/B/A REDCAY COLLEGE
CAMPUSES I

,

Appellant

v.

STEPHEN R. LAZUN :

:

:

:

:

:

:

:

:

:

: IN THE SUPERIOR COURT OF

PENNSYLVANIA

N o. 203 MDA 2019

Appeal from the Order Entered January 25, 2019

i n the Court of Common Pleas of York County Civil Division at No(s): 2012

- SU

- 000711

BEFORE: STABILE, J., McLAUGHLIN, J., and MUSMANNO, J.

MEMORANDUM BY MUSMANNO, J.: FILED JANUARY 13, 2020

Pitney Road Partners, LLC (“Pitney”) t/d/b/a Redcay College Campuses

I, appeals from the Order granting the Motion for summary judgment filed b y

Stephen R. Lazun (“Lazun”), a Pennsylvania attorney w ho formerly

represented Pitney. We reverse and remand for further proceedings

.

The trial court set forth the relevant factual and procedural history

underlying this appeal in its Order granting Lazun’s Motion for summary

judgment, as follows:

[Pitney , a Pennsylvania LLC based in Lancaster, ] alleges that prior to December 16, 2011, it was the owner of Harrisburg Area Community College’s (“HACC” ) Lancaster Campus [,] and
HACC was [Pitney’s] tenant. The parties entered into an original lease agreement in 1999 [,] whereby [Pitney] obtained financing for the construction of the original classroom building on the Campus ( [“] Phase I Project [”] ). As part of its rent, HACC was responsible for paying the debt service [fee] on the financing obtained by [Pitney].J

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- I n 2003, [Pitney] and HACC entered into several new lease agreements whereby [Pitney] agreed to perform expansion and renovation projects on the Lancaster Campus. [Pitney] and HACC agreed to finance the expansion project by refinancing the existing
debt se rvice from the Phase I Project [(hereinafter, the “2003 Refinance”),] and [Pitney] also obtained bond financing. [Pitney] alleges that in the 2003 Refinance, [Pitney] and HACC agreed to equally share all costs associated with refinancing the debt service, as well as all savings derived from the refinancing. [Pitney] and HACC also agreed in the 2003 Refinance that HACC

w ould pay the credit enhancement fee [,] because the fee was an interest expense. [Pitney] alleges that following the 2003 Refinance, the c osts and savings were shared between [Pitney]
and HACC. [ 1 ]

In 2008, [Pitney] retained

... Lazun from the firm Hartman,
Underhill & Brubaker LLP [,] to represent it in the issuance of a

new series of notes, which would be used to refinance the 2003
bond debt on the Lancaster Campus (the [“] 2008 Refinance [”] ). [ Notably, Pitney] alleges that it informed [Lazun] that [Pitney] and
HACC wanted to structure the 2008 Refinance in the same manner

as the 2003 Refinance, including the provisions that the parties would equally share all costs and savings derived from the
refinance [,] and that HACC would be responsible for the credit
enhancement fee.

[Pitney] alleges that [Lazun] performed approximately 130
hours of work between April 18, 2008 and June 25, 2008 [,] on the
2008 Refinance matter [,] without a written engagement agreement. On June 27, 2008, [Pitney and HACC] signed the
2008 Refinance. [ 2 ] [Pitney] alleges that it proceeded with issuing
the new series of notes based upon its belief that [Lazun] had
structured the 2008 Refinance in accordance with the 2003

_________________ __________ ______ ____ _______

1 In 2007, Pitney filed suit against HACC concerning certain expenses it had
incurred rega rding the HACC Lancaster C ampus expansion project. The parties entered into an agreement to arbitrate the dispute , which we will
hereinafter refer to as the “Pitney/HACC Arbitration.”

2 The 2008 Refinance was not a single contract, but rather, was composed of several separate transactional documents , spanning numerous pages

. Additionally, other attorneys and professionals aside from Lazun were involved in drafting some of these document s.J

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Refinance. However, [Pitney] alleges that [Lazun] failed to review
the 2003 Refinance d ocuments and did not structure the 2008 [ Refinance ] documents in the same manner as the 2003 [ Refi nance ] documents [,] when drafting the 2008 Refinance
d ocuments.

[Pitney] claims that as a result of [Lazun’s] failure to
exercise due diligence and care, [Pitney] was required to pay half
of all the costs of the 2008 Refinance, but was not able to share

i n half of all the savings, resulting in [Pitney] being deprived of over $350,000 in additional savings. [Pitney] alleges that it, not HACC, was also forced to pay the credit enhancement fee [,] in the
amount of $508,876.

On February 17, 2012, [Pitney] fil ed a P raecipe for writ of

summons in legal malpractice. On March 19, 2012, [Pitney] filed

a C omplaint [,] which alleged a single count of professional negligence against [Lazun,] alleging [, in sum ,] that he failed to
draft the 2008 Refinance d ocuments as [Pitney] wished

....

Order and Opinion , 11/8/18, at 2

- 4 ( footnote s added, some capitalization

altered).

Of particular importance to the instant appeal is a letter dated December

4, 2008 (hereinafter the “ 2008 Letter”) . Stuart Savin (“Savin”), the HACC

Dean and Campus Vice President, sent the 2008 Letter to Robert Redcay

(“Redcay”)

, the president of Pitney, in response to a letter that Redcay had

sent to HACC

. The 2008 Letter disputed Redcay’s assertion in his letter that

HACC owed Pitney additiona l rent payments to compensate Pitney forJ

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increased interest costs

. 3 The 2008 Letter referenced and cited provisions of

certain 2008 Refinance documents.

Following the 2008 Refinance

, in 2010, arbitration hearings commenced

in the Pitney/HACC Arbitration

. On September 29, 2011, the arbitration panel

entered a final arbitration award, ruling that the operative 2008 Refinance

documents , which Pitney alleges were drafted by Lazun, did not require HACC

to share with Pitney the savings derived from the 2008 Re finance

, or to pay

the credit enhancement fee ( hereinafter, the “ 2011 arbitration award”).

According to Pitney, it was not until the 2011 arbitration award that it became

aware of Lazun’s purported negligence in connection with the 2008 Refinance.

On Jun e 7, 2012, Lazun filed Preliminary Ob jections to Pitney’s

Complaint , which the trial court later denied

. Lazun subsequently filed an

Answer and New Matter, to which Pitney filed a Reply.

On May 4, 2018, Lazun filed a Motion for summary judgment asserting,

inter alia , that Pitney’s cause of action was barred by the applicable two

- year

statute of limitations. 4 Pitney filed an Answer in opposition, asserting that the

_________________ __________ ______ ____ _______

3 Specifically, Savin stated that “[c]ontrary to your contentions, no additional rent is required for the period of July, 2008 through September, 2008.” Savin went on to explain that this was because “ Pitney and HACC had expressly agreed what the rent was to be” for this time.

4 The statute of limitations for claims sounding in legal malpractice is two

years. See Wachovia Bank, N.A. v. Ferretti

, 935 A.2d 565, 571 (Pa. Super.
2007 ) ( citing 42 Pa.C.S.A. § 5524(3) ). Pitney did not claim breach of contract,
which has a four

- year statute of limitations. See id.J

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statute of limitations was tolled until September 29, 2011, i.e.

, the date of the

arbitration award , which was the first time that Pitney reasonably could have

discovered Lazun’s negligence in connection with the 2008 Refinance. Lazun

filed a Reply Brief, wherein he countered that the statute of limitations had

not been tolled . Lazun further claimed that even if it was , it was tolled only

until December 4, 2008, i.e. , the date of the 2008 Letter , at which time Pitney

knew

, or should have reasonably known

, that there was a problem with the

2008 Refinance documents, which implicated Lazu n’s representation of Pitney

.

By an Order and Opinion entered on November 8, 2018 , the trial court

granted Lazun’s Motion for summary judgment

. In sum, the court agreed with

Lazun’s above

- mentioned claim concerning the 2008 Letter putting Pitney on

notice

. Pitney timely filed a Notice of Appeal, 5 followed by a court

- ordered

Pa.R.A.P. 1925(b) Concise Statement of errors complained of on appeal.

Pitney now presents the following issue for our review: “Should the trial

court’s [O]rder granting summary judgm ent in favor of Lazun on the basis of

the discovery rule be reversed[,] where reasonable minds could disagree

about whether the [] 2008 [L] etter put Pitney on notice of Lazun’s

malpractice?” Brief for Appellant at 2.

_________________ __________ ______ ____ _______

5 The trial court allowed reconsideration of the November 8, 2018 Order, which granted Lazun’s Motion for summary judgment. By an Order entered on January 25, 2019 , the trial cour t declined to dis turb the November 8, 2018 Order; Pitney timely filed a Notice of Appeal from the former Order.J

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We apply the following standard in rev iewing the grant of a motion for

summary judgment:

[S]ummary judgment is only appropriate in cases where there are

no genuine issues of material fact and the moving party is entitled

to judgment as a matter of law. Pa.R.C.P. 1035.2(1). When considering a motion for summary judgment, the trial court must
take all facts of record [,] and reasonable inferences therefrom [,]

in a light most favorable to the non

- moving party [,] and must
resolve all doubts as to the existence of a genuine issue of material
fact against the moving party. An appellate court may reverse a grant of summary judgment if there has been an error of law or

an abuse of discretion. Because the claim regarding whether
there are genuine issues of material fact is a question of law, ou r standard of review is de novo and our scope of review is plenary.

Nicolaou v. Martin

, 195 A.3d 880, 891

- 92 (Pa. 2018) (some citations

omitted)

. “ Only when the facts are so clear that reasonable minds could not

differ can a trial court properly enter summary judgment.” Straw v. Fair

,

187 A.3d 966, 982 (Pa. Super. 2018) (citation omitted).

S ummary judgment may properly be entered in favor of a defendant

when the plaintiff’ s cause of action is barred by the statute of

limitations. Brooks v. Sagovia

, 636 A.2d 1201, 1202 (Pa. Super. 1994) . “I t

is the duty of a party asserting a cause of action to use all reasonable diligence

to be properly inf ormed of the facts and circumstances upon which a potential

right of recovery is based and to institute suit within th e prescribed statutory

period.” Booher v. Olczak , 797 A.2d 342, 345 (Pa. Super. 2002). “The

requirement of reasonable diligence is not an absolute standard but, rather,

is what is expected from a party who has been given reason to inform himself

of the facts upon which his right of recovery is premised.” Saksek v. JanssenJ

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-

Pharm., Inc.

, 2019 Pa. LEXIS 6480, at *15 (Pa. 2019) (citation and quotation

marks omitted). Moreover, “the trigger for the accrual of a legal malpractice

action, for statute of limitations purposes, is not the realization of actual loss,

but the occurrence of a breach of duty. ” Commc’ns Network Int’ l v.

Mullineaux , 187 A.3d 951, 960 (Pa. Super. 2018) (citation omitted)

(collecting cases and explaining the “occurrence rule”).

However, the s tatute of limitations may be tolled pursuant to the

“discovery rule,” upon which Pitney relies. This rule

provides that where the existence of the injury is not known to the complaining party and such knowledge cannot reasonably be ascertained within the prescribed statutory period, the limitations period does not begin to run until the discovery of the injury is reasonably possible. The statute begins to run in such instances
when the injured party possesses sufficient critical facts to put him

on notice that a wrong has been committed and that he need investigate to determine whether he is entitled to redress. The party seeking to invoke the discovery rule bears the burden of establishing the inability to know that he or she has been injured by the act of another despite the exercise of reasonable diligence

.

Id. at 961 (citation and emphasis omitted) ; see also id. ( explaining that “ the

statute of limitations in a legal malpractice claim 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 the injury or its cause.” (citation

and emphasis omitted))

.

The Pennsylvania Supreme Co urt has further explained that

Pennsylvania’s formulation of the discovery rule represents a more narrow approach and places a greater burden on plaintiffs than other jurisdictions [,] because the commenc ement of the limitations period is grounded on “ inquiry notice ” that is tied toJ

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actual or constructive knowledge of at least some form of significant harm and of a factual cause linked to another’ s conduct, without the necessity of notice of the full extent of the injury, the fact of actual negligence, or precise ca use.

Nicolaou

, 195 A.3d at 892 (citation s and some quotations omitted). T he

applicability of the discovery rule may be resolved “ at the summary judgment

stage where reasonable minds c ould not differ on the subject.” Wilson v. El

Daief

, 964 A.2d 354, 361

- 62 (Pa. 2009) (emphasis added) ; see also

Gleason v. Borough of Moosic , 15 A.3d 479, 485 ( Pa. 2011)

.

Importantly here, t his Court, interpreting Nicolaou

, supra , recently

observed that the Supreme “ Court emphasized the jury’s prerogative

, under

the discovery rule, to decide whether a plaintiff’ s efforts to investigate a

defendant were sufficiently reasonable to toll the statute of limitations. ” Rice

v. Diocese of Altoona

- Johnstown , 212 A.3d 1055, 1059 (P a. Super. 2019);

see also Nicolaou

, 195 A.3d at 894 ( stating that the determination of

whether a plaintiff exercised reasonable diligence relevant to the application

of t he discovery rule is generally a question for the jury ); Fine v. Checcio

,

870 A.2d 850, 858 (Pa. 2005) (holding that becau se application of the

discovery rule “ involves a factual question as to whether a party was able, in

the exercise of reasonable diligence, to know of his injury and its cause,

ordinarily, a jury is to decide it.” ).

In the instant case , t he trial court explained its reasons for determining

that the discovery rule was of no avail to Pitney as follows :J

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- We believe that this case is similar to the [Superior Court’s
decision in Robbins & Seventko Orthopedic Surgs. v. Geisenberger

, 674 A.2d 244 ( Pa. Super. 1996) ]. In Geisenberger , plaintiffs retained d efendants ’ law firm to incorporate its practice and to prepare and file an employee pension plan with the IRS. [ Id. ] at 244. Defendant John Gibbel submitted pension plan forms to the IRS in September 1977. Id. That same month, p laintiff received the pension plan forms back
with instructions that they be resubmitted. Id. On October 17, 1978, d efendant S.R. Zimmerman, III [,] sent an amended pension plan with an application for determination to the IRS. Id.

On May 4, 1983, “ [ p laintiffs] were informed by the IRS that the pension plan had failed to qualify, and that deductions made to it in 1976, 1977, 1978, and 1979 were disallowed. ” Id.
Plaintiffs’ new counsel filed an administrative appeal with the IRS.
Id. On October 8, 1986, p laintiffs and the IRS reached a
settlement agreement whereby the IRS accepted amendments to the plan for 1978 and 1979, but refused to accept amendments relating back to 1976 and 1977. Id. Plaintiffs also submitted a
Form 870

- AD Waiver of Restriction on Assessment and Collection.
Id. On September 22, 1986, p laintiffs received notice that the
IRS accepted the Form 870

- AD Waiver [,] and the case relating to the tax years 1976 through 1979 was closed. Id.

Defendants were originally notified of the problem through
a letter from the IRS dated February 24, 1986. Id. “ On April 15, 1986, [d efendants] informed the [p laintiffs] that they believed the
IRS’ s objections to the plan were simple to amend.” Id. Plaintiffs
hired ano ther firm to amend the plan in January 1987. Id. On January 21, 1988, plaintiffs’ new firm, Dechert, Price, and Rhoads,
contacted d efendants and informed them that p laintiffs were precluded from amending and resubmitting the plan because they
filed the w aiver form. Id.

On December 12, 1988, p laintiffs issued a writ of summons against d efendants and filed a complaint on December 22, 1989.
Id. Plaintiffs alleged that defendants “ were negligent in preparing and filing the employee pension plan with the I RS for the 1976
and 1977 tax years.” Id. Defendants filed a motion for summary judgment arguing that plaintiff’ s action was barred by the statute
of limitations [,] and the trial court agreed, granting defendant’ s motion. Id. at 245

- 46.J

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- It was noted by the Superior Court that “ the trial court agreed with the [p laintiffs] that the statute of limitations was tolled during its administrative appeal with the IRS.” Id. at 246. The trial court initially “ concluded that the statute began to accrue on Septembe r 22, 1986, when the IRS informed the [p laintiffs]
that it had accepted their waiver.” Id. The trial court granted summary judgment because p laintiffs failed to bring the malpractice suit within two years of the date of September 22, 1986, as they did no t file their complaint until 1989. Id.

The Superior Court agreed with the trial court that the motion for summary judgment should have been granted, but disagreed with the trial court that the statute of limitations was tolled during the administrative a ppeal with the IRS. The Superior Court held that the proper accrual date was actually May 4, 1983,

“ when the IRS notified the [ p laintiffs] that the deductions for the pension plan were disallowed.” Id. The Court held that plaintiffs

“ acquired knowledge of the harm on May 4, 1983, when the IRS notified them that the pension deduction was disallowed.” Id

. at
377.

In the present case, the record shows that on December 4, 2008, a representative from HACC sent [the 2008 ] L etter to [Pitney,] which indicated a disagreement between the parties over the amount of rent that was to be paid under the 2008 Refinance.
The [2008] L etter references provisions from the 2008 Refinance Agreement that [Pitney and HACC] signed. [Pitney’s] C omplaint alleges that [Lazun] had a duty to structure the 2008 Refinance
in the same manner as the 2003 Refinance [,] to ensure that [Pitney] and HACC would equally share in all the savings and that
HACC would pay the credit enhancement fee.

We find that upon receiving [t he 2008] L etter, [Pitney] reasonably should have been aware that there was an issue with the 2008 Refinance Agreement [,] and should have pursued some type of action to discover the extent of the injury. [Pitney] has
failed to indicate in its brief that it attempted to review the
documents after receiving this [2008 L] etter. We believe a review
of the documents would have revealed that the 2003 Refinance
and the 2008 Refinance were not structured in a similar manner [,]
and should have alerted [Pitney] that there was an issue with the agreement. We find that [Pitney] should have been alerted of an issue upon receiving [the 2008] L etter

....J

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- We do not agree with [Pitney] that the statute of limitations
should be tolled until after the [ Pitney/HACC Arbitration] p anel
issued its [ 2011 arbitration] award

... . The Geisenberger Court expressly rejected an argument made by a ppellants in that case
that the statute of limitations should be tolled while an appeal to an underlying action is pending. [ See G eisenberger

, ] 67 4 A.2d
at 376. Pennsylvania law requires us to determine when the
breach occurred and whether the p laintiff would have been unable to discover the injury [,] even exercising due diligence [,] until after the statute of limitations had passed.

In the present matter, we find that [Pitney] has failed to
demonstrate that it acted diligently in discovering the injury in this

matter. Therefore, we find that the discovery rule should only be extended to December 4, 2008

... .

Because [Pitney] did not fi le its C omplaint until March 19, 2012, we find that it is beyond the two [

- ] year statute of limitations and, therefore, [Lazun] is entitled to judgment as a matter of law.

Order and Opinion , 11/8/18, at 13

- 17 ( some capitalization altered, footnote

citation move d to body)

.

Pitney argues, to the contrary, that the trial court improperly applied

the discovery rule

, and u surped the role of the jury

, where the evidence was

far from clear that Pitney sh ould have reasonably discovere d that Lazun may

have committe d malpractice in connection with his work on the 2008

Refinance

, prior to the 2011 arbitration award

. See Brief for Appellant at 2 2

-

24, 28

- 34 (relying heavily upon Nicolaou

, supra )

. Pitney argues that the

trial court erred in finding, as a matter of law, that the 2008 Letter should

have put Pitney on notice of Lazun’s alleged malpractice:

Pitney’ s claims [against Lazun] are based on two specific failures by Lazun with respect to the 2 008 Refinance: his failure to ensure that the transaction documents required HACC to pay the upfront
credit enhancement fee [,] and his failure to ensure that HACC wasJ

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-

required to split any interest savings derived from the 2008
Refinance with Pitney.

* * *

The [] 2008 [L] etter cited by the trial court as the sole basis for holding that Pitney knew or should have known [,] prior to 2011 [,] of Lazun’s negligence had nothing to do with sharing interest rate savings or the upfront letter of credit fee. The tr ial court held that
this [2008 L] etter put Pitney on notice of “issues” with the “2008
Refinance Agreement” drafted by Lazun. But this letter had nothing to do with any “issues” with the 2008 Refinance at all. [FN] Rather, the letter dealt with the questi on of the amount, if any, of additional rent HACC was required to pay during a short three

month period from July to September 2008.

[FN] There is no single “2008 Refinance Agreement [,] ” as the [trial] court repeatedly suggested in its Opinion. Rather, t he 2008 Refinance was a complex transaction
that involved 42 different documents [,] comprising hundreds of pages. This misstatement by the trial court is not a simple matter of semantics. The trial court’s repeated references to the “2008 Refinance Agree ment” demonstrate[s] that the trial court failed to appreciate the complexity of the transaction and the
documents associated with it. This is a critical reason that a jury, rather than the court, should be permitted to determine whether Pitney knew or sh ould have known of Lazun’s negligence.

Brief for Appellant at 29

- 30 (footnote in original, citations to record omitted)

.

Pitney further asserts that

, in the letter that Redcay/ Pitney had sent to

HACC prior to HACC’s responsive 2008 Letter,

Pitney was telling HACC that [HACC] was obligated to pay additional interest expenses [as part of HACC’s rent] , which has nothing to do with Lazun’s failure to make sure interest savings were shared equally[; i]ndeed, the provision relied upon by HACC

in t he [] 2008 [L]et ter[] was not written by Lazun.J

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I d. at 32 (footnote moved)

. Pitney argues that it has “never alleged[] that

Lazun did anything wrong with respect to the rent provisions[,]” and there is

“no reason that HACC’s refusal to honor its rent ob ligations should have

triggered a complete investigation by Pitney into Lazun’s work.” Id. at 32

-

33

. Pitney urges that “[a] jury could certainly find that HACC’s short payments

of rent for a period of time in 2008 and 2009 was not a ‘clue’ that should ha ve

triggered an inquiry into Lazun’s work.” Reply Brief for Appellant at 14.

Finally, Pitney argues that

[t] he trial court’s holding [,] that the 2008 [L] etter concerning the

amount of HACC’ s rent triggered a duty by Pitney to scour the hundreds of pages of complex financing documents associated with the 2008 Refinance for potential negligence by Lazun on
unrelated issues [,] is contrary to law which

... requires an attorney representing a client in a transaction to fully understand all the
documents and to explain them to the client. The law certainly does not require transactional clients to hire one lawyer after another to check on the work of the prior attorney.

Brief for Appellant at 42

- 43 ; see also id. at 42 (collecting cases)

.

We are persuaded by Pitney’s arguments . U nlike the trial court, we

cannot de termine that the record , viewed in a light most favorable to Pitney,

is so clear that “ reasonable minds c ould not differ on the subject[,] ” Wilson

,

supra , i.e.

, as to whether the 2008 Letter should have reasonably put Pitney

on notice of Lazun’s alleged malpractice concerning the 2008 Refinance. T he

trial court thus erred in usurping the province of a jury to make a finding

concerning this matter regarding the 2008 Letter

. See Nicolaou

, 195 A.3d

at 894

- 95 (holding that because there was a genuine issue of material factJ

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-

and reasonable minds could differ as to whether the plaintiff exercised

reasonable diligence in determining the cause of her injury, Pennsylvania’s

general ru le that the issue should be submitted to the jury applied in the

case) ; Rice

, supra (s tating that the Nicolaou “ Court emphasized the jury’s

prerogative , under the discovery rule, to decide whether a plaintiff’ s efforts to

investigate a defendant were sufficiently reasonable to toll the statute of

limitations.” (emphasis added)). 6 Moreover, we determine that

Geisenberger is inapposite to this appeal. See Brief for Appellant at 36

- 40

(discussing and distinguishing Geisenberger ).

Based on the foregoing, we reverse the trial court’s Order granting

Lazun’s Motion for summary judgment and remand for further proceedings.

Order reversed; case remanded for further proceedings; Superior Court

jurisdiction relinquished.

_________________ __________ ______ ____ _______

6 The Rice Court held that because reasonable minds could differ as to whether the plaintiff exercised due diligence in a case involving alleged sexual molestation by a priest, as well as the alleged cover

- up by the Diocese, under
Nicolaou , the issue was for the jury to decide ; this Court t hus reversed the trial court’s grant of judgment on the pleadings in favor of the Diocese

. Rice

, 212 A.3d at 1066 ; see also id. (emphasizing that “[t]o find the discovery rule inapplicable here, we would need to engage in the fact

- finding and inference

drawing functions that Nicolaou teaches are preserved for the jury.” (citation and quotation marks omitted)).J

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-

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 1/13/2020