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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

PASQUALE SCARAMUZZA : CIVIL ACTION

:

v. :

: NO. 04-1270

ANTHONY J. SCIOLLA, JR., et al. :

MEMORANDUM

Baylson, J. March 3, 2006

I. Introduction

This legal malpractice action arises out of the handling of the defense of underlying 

litigation against Plaintiff Pasquale Scaramuzza (“Scaramuzza”) by Scaramuzza’s trial counsel,

Defendants Anthony J. Sciolla, Jr., Esq. (“Sciolla”) and the law firm of Jaffe, Friedman,

Schuman, Sciolla & Applebaum, P.C. (“Jaffe Friedman”) (together, “Defendants”). Currently

before the Court is Defendants’ Motion for Summary Judgment (Doc. No. 40). For the following

reasons, the Court will grant Defendants’ Motion.

II. Factual and Procedural Background

At all relevant times, Scaramuzza was the president, director, and sole shareholder of

Personal Surplus Lines, Inc. (“Personal Surplus”), a company operating in the insurance industry. 

Sciolla was a partner in the law firm of Jaffe Friedman.

A. The Lincoln General Litigation

1. Contractual Relationship Among Scaramuzza, 

Personal Surplus, and Lincoln General

The relevant facts start with the case of Lincoln General Insurance Company v. Personal

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 1 of 25
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Surplus Lines, Inc. and Pasquale Scaramuzza, (the “Lincoln General Litigation”), No. 98-02859,

in the Court of Common Pleas of Montgomery County, Pennsylvania. The plaintiff, Lincoln

General Insurance Company (“Lincoln General”), alleged breach of a brokerage agreement with

Personal Surplus, an insurance broker which processed policies written by retail agents, whereby

Personal Surplus agreed to solicit retail brokers and agents’ business and bind risks for Lincoln

General’s private passenger automobile insurance business in all states where Lincoln General

was licensed to write such insurance. 

Under the terms of the brokerage agreement, which was admitted into evidence at trial,

Personal Surplus was responsible for collecting, accounting for, and paying all premiums on the

insurance business that it wrote for Lincoln General, even if it did not collect the premium from

the policy holder. Premiums collected by Personal Surplus were the property of Lincoln General,

and Personal Surplus held such premiums as a trustee for Lincoln General. Personal Surplus

could only be relieved of its responsibility to pay premiums to Lincoln General if Personal

Surplus notified Lincoln General within thirty days of the premium billing that it was unable to

collect such premiums. Scaramuzza signed the brokerage agreement in his official capacity as

President of Personal Surplus. See Trial Transcript at 12-13.

As an inducement to Lincoln General to enter into the brokerage agreement, Personal

Surplus executed a Guaranty and an Assignment, which were admitted into evidence at trial. 

First, the Guaranty specified that “Pasquale J. Scaramuzza, individually” was a broker and “an

agent for Lincoln General Insurance Company.” Defendants’ Motion for Summary Judgment,

Exhibit D. By executing the Guaranty, the corporate entity of Personal Surplus agreed to

guarantee the full performance by agent Scaramuzza of all terms and conditions of the brokerage

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agreement. Id. at 1-4. At the same time as Personal Surplus executed the Guaranty, Scaramuzza

and Personal Surplus executed an Assignment. It provided that Scaramuzza assigned his right to

compensation due from Lincoln General under the brokerage agreement to Personal Surplus, and

Personal Surplus agreed to hold Scaramuzza “harmless from any liability arising from the

performance or non-performance of said contract.” See Assignment, Plaintiff’s Complaint

Exhibits at 215.

2. The Lincoln General Complaint

Lincoln General included in its Complaint two counts alleging Scaramuzza’s personal

liability (i.e., Count III on the grounds of breach of fiduciary duty, and Count V for unjust

enrichment). Regarding the alleged breach of fiduciary duty, Lincoln General claimed that

Scaramuzza owed a fiduciary duty to Lincoln General with respect to the premiums for the

business that he obtained for Lincoln General. In breach of this fiduciary duty, Scaramuzza

allegedly failed or refused to hold unearned premiums in trust or to return unearned premiums to

insurance premium finance companies. Lincoln General further alleged that Scaramuzza failed

to return unearned premiums in order to receive interest on the retained money. Regarding the

unjust enrichment count, Lincoln General claimed that Personal Surplus and Scaramuzza, acting

jointly and severally, had been unjustly enriched by wrongfully withholding gross unearned

insurance premiums which belonged to insurance premium companies.

Personal Surplus and Scaramuzza were originally represented by John Prodoehl, Esquire.

However, they became dissatisfied with his services and retained Sciolla and Jaffe Friedman to

represent them at trial.

 

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3. The Trial

The Lincoln General Litigation was tried without a jury before Judge Moore of the Court

of Common Pleas of Montgomery County, Pennsylvania in February of 2003. The trial lasted

less than one day. 

Lincoln General called only two witnesses. First, Lincoln General Executive Vice

President and General Manager Gary Orndorff testified as to the business relationship between

Personal Surplus and Lincoln General; Personal Surplus’ guaranty of Scaramuzza’s performance;

the details surrounding Personal Surplus’ failure to pay Lincoln General outstanding premiums;

and the outstanding moneys owed to Lincoln General. See Trial Transcript at 10-19. Second,

Lincoln General presented the testimony of expert accountant Dennis Houser. Houser testified as

to the nature of his audit; the details of financial reporting of moneys owed to Lincoln General;

and the amounts of the outstanding moneys owed to Lincoln General. See Trial Transcript at 25-

36. Cross-examination of these witnesses was limited in substantial part to (1) the technical

details of the financial reporting of moneys owed to Lincoln General, and (2) whether the data

supplied to Mr. Houser and upon which he based his conclusions was flawed. See Trial

Transcript at 20-24; 36-53.

Following that testimony, there was considerable discussion about Defendants’ failure to

respond to Lincoln General’s requests for admission – which failure Mr. Sciolla attributed to

former counsel John Proedohl. Lincoln General moved for the Court to admit its requests for

admissions and, due to lack of response, deem admitted the items concerning the accuracy of the

amount of moneys owed to Lincoln General. See Trial Transcript at 58-84. After the Plaintiff

rested, Defendants did not make any motions of any kind.

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 4 of 25
 Scaramuzza also presented very brief and marginally relevant testimony from Mr. Lee 1

Krinksy, a marketing manager with Arizona Premium Finance Company, who testified, in

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Defendants offered the testimony of Mr. Scaramuzza. Scaramuzza testified as to the

nature of Personal Surplus’ business; Personal Surplus’ relationship to Lincoln General; and the

relevant premium collection and reporting processes. Scaramuzza testified at length as to why he

believed the results of Mr. Houser’s accounting calculations were incorrect (stating the belief, in

essence, that Lincoln General had not followed proper recording procedures and had provided

Mr. Houser with incorrect figures). See Trial Transcript at 85-109. At one point, Scaramuzza

admitted he would be personally liable if his customers did not pay Personal Surplus.

Q. What happens to the funds that have been paid in at that

point?

A. Well, if all we received as 15%, there is not enough money

there to pay anything. If I received $1,000 of the $2,000,

let’s say, I would have to send 85% of that $1,000 up to

Lincoln, and I would also have to pay – even though I did

not collect the money, I would also have to pay an

additional $850, because it was on their sheets.

Q. That the policy was $2,000?

A. That’s correct, so that means I’m out $850 at that point in

time.

Q. How is that made up?

A. At some point in time, hopefully they cancelled the policy

and then they would issue me a credit. However, they paid

me in credits, I paid them in check.

See Trial Transcript at 96-97.

Cross-examination of Scaramuzza discussed the agreements that bound Personal Surplus

to pay premium amounts to Lincoln General. See Trial Transcript at 110-123.1

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essence, to the “ongoing relationship of how Arizona Premium was paid on a timely basis” by

Personal Surplus and the use of “net-in, net-out” accounting. See Trial Transcript at 136-142. It

is relevant to note that the Brokerage Agreement dated May 30, 1995, Exhibit C to Defendants’

Motion for Summary Judgment, is between Lincoln General and Personal Surplus and is signed

by Scaramuzza on behalf of Personal Surplus. This agreement does not contain any personal

obligation by Scaramuzza. The Guaranty is also dated May 30, 1995, Exhibit D to Defendants’

Motion for Summary Judgment, but is between Scaramuzza, individually, defined as “broker,”

and Lincoln General, and as noted in the text above, obligates Personal Surplus to guarantee the

performance of Scaramuzza as broker. Although this document does not specifically obligate

Scaramuzza individually, its entire premise is based on the fact, which was established by the

evidence referenced in the text above, that Scaramuzza had personal liability to Lincoln General.

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There was limited evidence or argument presented at trial on the issue of Scaramuzza’s

personal liability or Scaramuzza’s status as an agent of Lincoln General. Lincoln General’s Trial

Memorandum referenced the Guaranty dated May 30, 1985 obligating Personal Surplus to

Lincoln General. At the outset of the trial, Lincoln General’s counsel was asked by the court,

“Are you pursuing the corporation and the individual at this point,” and she responded: “Yes,

because there were guaranties between the two.” See Trial Transcript at 4-5. Later, it was

established that Personal Surplus had signed a Guaranty for performance of the obligations of the

brokerage agreement by Scaramuzza individually as an agent of Lincoln General Insurance

Company. In addition, Mr. Orndorff testified that “[u]nder the terms of [the brokerage

agreement], the agent is responsible for all earned premiums, whether they collect it or not, to the

company.” See Trial Transcript at 18-19.

4. The Judgment

Judge Moore took the matter under advisement and later found in favor of Lincoln

General. After the adverse verdict, Sciolla and Jaffe Friedman filed an amended post-trial motion

on behalf of their client, but did not argue that Lincoln General failed to advance sufficient

evidence to sustain the allegations brought against Scaramuzza individually. By an order dated

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 The parties appear to be in disagreement about Scaramuzza’s intent to pay the judgment. 2

Defendants posit that Scaramuzza is unable to pay and does not intend to pay any part of the

judgment. Scaramuzza, on the other hand, maintains that he plans to pay the judgment when

able.

 At the same time that Scaramuzza brought suit against Sciolla and Jaffe Friedman in 3

Montgomery County, Scaramuzza and Personal Surplus brought a malpractice action against

John Prodoehl, Esq., in the Court of Common Pleas for Delaware County. The allegation against

Prodoehl is based upon Prodoehl’s failure to timely and properly answer requests for admission

in the underlying Lincoln General Litigation. When this action advanced in federal court,

Scaramuzza was removed as an individual plaintiff from the action against Prodoehl, and that

case proceeded with Personal Surplus as the sole plaintiff. The Prodoehl action is still pending,

and the damages demanded by Personal Surplus are the amount of the Lincoln General Litigation

judgment ($477,556.12) plus interest – the same damages which form the basis for the case sub

judice.

Were this Court inclined to deny Defendants’ motion and allow the instant case to

proceed to trial, the Court would need to examine the question of a potential double recovery

based on the damages claimed in the Prodoehl state court action. Because the Court will grant

Defendants’ Motion, however, there is no need to reach this issue.

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May 7, 2003, Judge Moore entered a final Amended Judgment against both Personal Surplus and

Scaramuzza individually in the amount of $477,556.12 (representing the outstanding moneys

owed plus substantial interest). There was no opinion by Judge Moore. There was no appeal.

To this date, neither Personal Surplus nor Scaramuzza have satisfied the judgment.2

 B. The Malpractice Action Against Sciolla and Jaffe Friedman in this Court

Scaramuzza subsequently brought this legal malpractice action against Sciolla and Jaffe

Friedman. Scaramuzza seeks to recover from Sciolla and Jaffe Friedman the amount for which

3

Scaramuzza is liable pursuant to the Lincoln General Litigation.

In short, the Complaint asserts that Defendants committed malpractice by failing to argue

in post-trial motions that Lincoln General did not advance sufficient evidence to sustain the

allegations brought against Scaramuzza personally. Sciolla filed a “Brief in Support of [the

Defendants’] Motion for New Trial,” in which he wrote: “The relationship between [Lincoln

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 7 of 25
 The Stipulation reads, in pertinent part:

4

6. During the trial of the Lincoln General Litigation, Sciolla did

not move the Court for a compulsory nonsuit/directed verdict

based on the contention that Lincoln General failed to introduce

any evidence against Scaramuzza to sustain the allegations

contained in Count III and Count V of the complaint.

7. Sciolla filed a post-trial motion, but Sciolla did not assert that

Lincoln General had failed to introduce any substantive evidence to

sustain the allegations contained in Count III and Count V of the

complaint.

8. Sciolla filed an amended post-trial motion, but Sciolla did not

assert that Lincoln General had failed to introduce any substantive

evidence to sustain the allegations contained in Count III and

Count V of the complaint.

9. By virtue of the attorney/client relationship existing between

Scaramuzza and Jaffe Friedman and Sciolla, the standard of care

required Jaffe Friedman and Sciolla to move the Court for a

compulsory nonsuit/directed verdict based on the contention

Lincoln General failed to introduce any evidence against

Scaramuzza to sustain the allegations contained in Count III and

Count V of the complaint.

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General and Personal Surplus] was based on a contract that has been accepted [into evidence],

along with a Guaranty by [Scaramuzza].” The Guaranty to which Sciolla referred states:

Whereas to induce [Lincoln General] to enter said Brokerage

Agreement (hereinafter referred to as the ‘Agreement’) Personal

Surplus Lines, Inc. (hereinafter referred to as ‘Guarantor’) has

agreed to guarantee the faithful performance of all the terms and

conditions of the Brokerage Agreement.

In his malpractice Complaint, Scaramuzza argues that according to the explicit terms of the

Guaranty, Personal Surplus – and not Scaramuzza – was the guarantor, a fact that Sciolla

allegedly failed to understand or comprehend.

In this Court, the parties subsequently stipulated to 1) the existence of the attorney-client

relationship between Scaramuzza and Defendants, 2) the standard of care applicable to

Defendants, and 3) the breach of that standard of care by Defendants.

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10. By virtue of the attorney/client relationship existing between

Scaramuzza and Jaffe Friedman and Sciolla, the standard of care

required Jaffe Friedman and Sciolla to move the Court to dismiss

the claims set forth in Count III and Count V by filing post-trial

motions based upon the contention Lincoln General failed to

introduce any substantive evidence to sustain the allegations

contained in Count III and Count V of the complaint.

11. Jaffe Friedman and Sciolla deviated from the standard of care

by not moving the Court for a compulsory nonsuit/directed verdict

based upon the contention Lincoln General failed to introduce any

evidence against Scaramuzza to sustain the allegations contained in

Count III and Count V of the complaint.

12. Jaffe Friedman and Sciolla deviated from the standard of care

by not moving the Court to dismiss the claims set forth in Count III

and Count V by filing post-trial motions based upon the contention

Lincoln General failed to introduce any substantive evidence to

sustain the allegations contained in Count III and Count V of the

complaint.

See Joint Stipulation Regarding Standard of Care filed July 29, 2005 (Doc. No. 39).

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C. Dispositive Motions

Following a prolonged and contentious discovery period (during which the Court issued

several discovery orders), the parties each moved for summary judgment. 

In Plaintiff’s Motion for Summary Judgment, Scaramuzza contended that the record can

support no conclusion other than that the Defendants’ admitted negligence was the proximate

cause of Scaramuzza’s being found liable. He asserted, due to the lack of evidence to sustain the

counts against Scaramuzza individually, there would have been no possible result other than

judgment in favor of Scaramuzza as an individual if Defendants had acted within their duty of

care. In other words, Scaramuzza asserted that if Sciolla had moved for nonsuit, the judge would

have granted it. In support of his motion, Scaramuzza attached an unsworn expert report, in

which Professor Larry Bocchino opined that “a Motion for Nonsuit or Motion for a Directed

Verdict, timely made, would, on any reading of the transcript, have resulted in the granting of

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The expert report was unsworn and under Third Circuit law was insufficient to create an 5

issue of fact. Fowle v. C & C Cola, 868 F.2d 59, 67 (3d Cir. 1989) (citing Adickes v. S.H. Kress

& Co., 398 U.S. 144, 158 b.17 (1970); Fed R. Civ. P. 56(e)). Nonetheless, as the discussion

below shows, even if the expert report were considered on the merits, it would be insufficient to

warrant relief for the Plaintiff.

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either motion, thereby relieving Mr. Scaramuzza of liability for the judgment against him that

was obtained by [Lincoln General].” See Bocchino Expert Report at 5. Scaramuzza asserts that 5

this opinion conclusively establishes that he would have prevailed “but for” Defendants’ failures,

and that Defendants’ conduct was therefore the proximate cause of Scaramuzza’s injury.

In Defendants’ Motion for Summary Judgment, Sciolla and Jaffe Friedman contended

that Scaramuzza had failed to adduce any record evidence establishing that Scaramuzza would

have succeeded in the underlying litigation but for the negligence of Defendants (i.e., that the

state court entered judgment against Scaramuzza for no reason other than the omissions of the

Defendants). Defendants asserted the evidence was sufficient to find Scaramuzza liable, and that

if a motion a nonsuit had been filed, it would have been denied.

In support of their position, Defendants relied in part on answers provided by Scaramuzza

to Defendants’ Contention Interrogatories – namely, those stating that “plaintiff has no obligation

to speculate regarding the outcome of the Lincoln General litigation if the defendants had

conformed to their conduct to professional standards. . . .” More specifically, Defendants argued

that (1) Lincoln General produced sufficient evidence – e.g., the Guaranty – to provide a basis for

imposing judgment against Scaramuzza individually, and (2) there is nothing in the record of the

underlying trial to support Scaramuzza’s claim that if his counsel had moved for him to be

dismissed individually the court would have granted that relief. 

Finally, Defendants posited that Scaramuzza has not met his burden to prove recoverable

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The Court also denied Plaintiff’s motion to amend his complaint to add categories of 6

damages because the discovery period had closed, and it was simply too late in the litigation to

reopen discovery on new factual claims that could have been raised much earlier in the litigation.

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damages because he has not paid the judgment rendered in the underlying action.

The Court held oral argument concerning the parties’ cross-motions for summary

judgment on November 7, 2005. The parties reiterated their basic positions. Regarding the

above-referenced interrogatory answers relied upon by Defendants, Scaramuzza argued that they

were provided early in the discovery period, and requested leave to amend his relevant answers

to more directly respond to the question of the existence of proximate cause. In an Order dated

November 8, 2005, (Doc. No. 57), the Court granted Scaramuzza leave to amend his answers to

Defendants’ Contention Interrogatories in more detail (including citations), and requested

supplemental briefing from the parties. Scaramuzza thereafter averred in supplemental

interrogatory responses that “if Jaffe Friedman and Sciolla had made appropriate, timely motions

during and after trial, the state court would have dismissed Counts III and V against Scaramuzza

and with the dismissal, no basis would have existed for imposing a judgment against Scaramuzza

personally.” As discussed below, the court finds this answer was conclusory and failed to

delineate relevant facts and law, as the Order of November 8, 2005 required.6

After careful consideration of the parties’ supplemental briefing, the Court issued an

Order dated December 30, 2005 (Doc. No. 65). The Court concluded that under Pennsylvania

law, Scaramuzza must prove that he would have prevailed in the underlying action in the absence

of Defendants’ negligence, and stated that the expert report alone is not a sufficient or proper

basis for summary judgment. Accordingly, the Court denied Plaintiff’s Motion for Summary

Judgment. The Court, however, agreed to consider the expert report as a part of his briefing in

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 11 of 25
 Scaramuzza also devotes multiple pages to a new, highly dubious argument that 7

Defendants are liable simply on the basis of application of the doctrine of res ipsa loquitor. 

Under Pennsylvania case law, however, there is no valid res ipsa loquitor theory of legal

malpractice, see, e.g., Gans v. Mundy, 762 F.2d 338, 341 (3d Cir. 1985); Thompson v. Glenmede

Trust Co., 1996 U.S. Dist. LEXIS 16248, *15 (E.D. Pa. 1996). Scaramuzza therefore cannot rely

upon this argument to overcome Defendants’ Motion for Summary Judgment. Accordingly, the

Court will not address this argument any further in this Memorandum. 

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opposition to Defendant’s Motion for Summary Judgment. In addition, the Court ordered

supplemental briefing on the issue of whether this Court may determine, as a matter of law,

whether Scaramuzza would have been successful in the underlying litigation if Scaramuzza’s

trial counsel had not been negligent. 

In the supplemental briefing, Defendants argue that (1) the Court can determine as a

matter of law whether or not Scaramuzza would have been found liable in the underlying

litigation if Defendants’ had not been negligent, and (2) Scaramuzza would indeed have been

found individually liable by a reasonable factfinder even if Defendants had not been negligent,

because the evidence presented during the underlying action established that Scaramuzza was

individually liable to Lincoln General. In a response lacking of record citations, Scaramuzza

decries those conclusions as “specious” and “disingenuous,” and contends that absolutely

nothing in the record of the underlying case supports the contention that Scaramuzza was

individually liable.7

III. Jurisdiction

The Court has jurisdiction over Scaramuzza’s complaint pursuant to 28 U.S.C. §

1332(a)(1). Scaramuzza is a resident of Florida. Sciolla and Jaffe Friedman are residents of

Pennsylvania. The amount in controversy exceeds $75,000. Venue is appropriate under 28

U.S.C. § 1391(a).

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 12 of 25
This diversity action is governed by substantive Pennsylvania state law. When

ascertaining Pennsylvania law, the decisions of the Pennsylvania Supreme Court are the

authoritative source. See State Farm Mut. Auto. Ins. Co. v. Coviello, 233 F.3d 710, 713 (3d Cir.

2000). If the Pennsylvania Supreme Court has not yet passed on an issue, then this court will

consider the pronouncements of the lower state courts. Id.

IV. Standard of Review

Summary judgment is appropriate “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to a judgment as a

matter of law.” FED. R. CIV. P. 56(c). An issue is “genuine” if the evidence is such that a

reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). A factual dispute is

“material” if it might affect the outcome of the case under governing law. Id. 

A party seeking summary judgment always bears the initial responsibility for informing

the district court of the basis for its motion and identifying those portions of the record that it

believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett,

477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Where the non-moving party bears

the burden of proof on a particular issue at trial, the moving party’s initial burden can be met

simply by “pointing out to the district court that there is an absence of evidence to support the

non-moving party’s case.” Id. at 325. After the moving party has met its initial burden, “the

adverse party’s response, by affidavits or as otherwise provided in this rule, must set forth

specific facts showing that there is a genuine issue for trial.” FED. R. CIV. P. 56(e). Summary

judgment is appropriate if the non-moving party fails to rebut by making a factual showing

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“sufficient to establish the existence of an element essential to that party’s case, and on which

that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. Under Rule 56, the

Court must view the evidence presented on the motion in the light most favorable to the

opposing party. Anderson, 477 U.S. at 255. 

V. Discussion

To succeed on a claim of legal malpractice, a plaintiff must demonstrate all of the

following three basic elements:

1) employment of an attorney or other basis for duty;

2) the failure of the attorney to exercise ordinary skill and knowledge; and

3) that such negligence was the proximate cause of damage to the plaintiff.

Kituskie v. Corbman, 552 Pa. 275, 714 A.2d 1027, 1029 (Pa. 1998). As discussed supra, the

parties have stipulated to the first and second elements. 

Regarding the third prong, a plaintiff must prove that “but for” the attorney’s alleged

error, the plaintiff would not have been harmed. See Duke & Co. v. Anderson, 275 Pa. Super.

65, 74, 418 A.2d 613, 618 (Pa. Super. 1980) (stating that it is the plaintiff’s burden to establish

that, “but for the negligence complained of, the client would have been successful in the

prosecution or defense of the action in question”); Myers v. Siegle, 2000 Pa. Super. 136, 751

A.2d 1182, 1185 (Pa. Super. 2000) (“[T]o prove actual injury, appellant must demonstrate that

she would have prevailed in the underlying action in the absence of appellees’ negligence.”);

Trauma Serv. Group, P.C. v. Hunter, MacLean, Exley & Dunn, P.C., 2000 U.S. Dist. LEXIS

3712 (E.D. Pa. 2000) (“[O]ne of the elements a plaintiff must prove in bringing a legal

malpractice claim is . . . that he would have prevailed in the underlying action but for the

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attorney’s negligence.”). A wealth of case law supports this basic principle. See Attorney’s

Liability for Negligence in Preparing or Conducting Litigation, 45 A.L.R.2D 5 (2006).

In order to grant summary judgment to Defendants, therefore, the Court must determine, 

as a matter of law, that Scaramuzza would have been found individually liable in the underlying

litigation even if Defendants had not been negligent. Stated conversely, the Court must deny

Defendant’s motion if it concludes that Scaramuzza could not have been found individually

liable if Defendants had met their standard of care and brought an appropriate post-trial motion.

A. Deciding a “Case Within a Case”

As a threshold matter, the Court must determine whether it may properly decide as a

matter of law at the summary judgment stage whether Defendants’ breach of duty was the “but

for” cause of Scaramuzza’s individual liability, or whether this disputed issue must be submitted

to a jury. Although the U.S. Court of Appeals for the Third Circuit has not expressly ruled on

this question, the Court finds persuasive authority sufficiently establishes that this Court may

decide the issue itself.

A legal malpractice lawsuit arising out of the conduct of underlying litigation involves a

“case within a case.” See, e.g., Graham v. Liberty Mut. Group, 1998 U.S. WL 961376 (E.D. Pa.

1998) (holding that the proceeds of a legal malpractice claim are subject to subrogation under the

Pennsylvania Workers Compensation Act, “The Supreme Court of Pennsylvania recently

explained that a legal malpractice action is ‘distinctly different from any other type of lawsuit

brought in the Commonwealth’ because it ‘requires the plaintiff to prove that he had a viable

cause of action against the party he wished to sue in the underlying case and that the attorney he

hired was negligent in prosecuting or defending that underlying case (often referred to as proving

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a ‘case within a case’).") (citing Kituskie v. Corbman, 714 A.2d 1027, 1030 (Pa. 1998)).

In order to determine whether counsel was negligent, the underlying litigation must be

replicated via a careful review of the record of the underlying trial. In this case, where the

relevant underlying proceeding was decided by a court sitting without a jury, then the “case

within a case” of the legal malpractice action should also be decided by a court rather than a jury. 

The Court finds this appropriate in the present case where the facts of the underlying trial were

not in serious dispute, and Scaramuzza’s personal liability was presented as an issue of law, but

also not disputed under all of the testimony. Although not binding authority, a well-reasoned

explanation of this doctrine is found in Harline v. Barker, 912 P.2d 433, 440 (Utah 1996). In

Harline, the court rejected the contention that only a jury sitting in the malpractice action should

decide what a reasonable judge should have done in the underlying suit. Rather, the court

emphatically concluded:

We see no reason why a malpractice plaintiff should be able to

bootstrap his way into having a lay jury decide the merits of the

underlying ‘suit within a suit’ when . . . only an expert judge could

have made the underlying decision. It is illogical, in effect, to

make a change in the law's allocation of responsibility between

judge and jury in the underlying action when that action is revisited

in legal malpractice actions and thereby distort the ‘suit within a

suit’ analytic model. To so proceed ignores and, in some cases,

contradicts the public policy goals which prompted the initial

assignment of decision-making authority respectively to judges and

to juries on specific issues. There is no basis for abrogating those

public policy goals simply because the matter arises in a legal

malpractice context. Nor do we agree with the implication . . . that

a judge sitting in a malpractice case would be any less objective

than a jury in determining what a reasonable judge should have

done in the underlying case. We simply do not see the logical

connection between ensuring an objective determination of how

the underlying case should have come out and the identity of the

arbiter who makes that objective determination. 

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 16 of 25
 The Court notes that in his supplemental briefing, Scaramuzza does not dispute these 8

guiding principles. Rather, Scaramuzza posits that “the standard of care in a professional

malpractice action is a question of fact” which, the Court infers, Scaramuzza believes the Court

should submit to a jury. The Court is not persuaded, because the parties have already stipulated

to the standard of care and the breach of that standard by Defendants. The standard of care is

therefore not a disputed factual issue. As discussed above, the determination bearing upon the

relevant question of proximate cause is one that would have been decided exclusively by the

court in the underlying action in response to a motion for directed verdict if it had been made

during the trial and/or in a post-trial motion.

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Harline, 912 P.2d at 440.

Federal court decisions are in accord with this principle. Recently, for example, Judge

Caldwell in the Middle District of Pennsylvania concluded that a decision which the court in the

underlying action would have made (i.e., concerning ruling on a motion for judgment as a matter

of law, had such motion been properly brought), was appropriately an issue for the court in the

legal malpractice action. See Harsco Corp. v. Kerkam, Stowell, Kondracki & Clark, P.C., 965 F.

Supp. 580, 584 (M.D. Pa. 1997) (granting summary judgment for defendants on the issue of

proximate cause after finding that plaintiff cannot prevail on an essential element of its legal

malpractice claim because it can not show the defendant’s procedural error was a proximate

cause of the verdict against it in the underlying trial, and therefore concluding that “since [the]

motion [at issue] presents a question of law, we will simply review it ourselves under the

applicable legal principles to see if it would have been granted if there had been no . . .

difficulties”). See also, e.g., Ocean Ships, Inc. v. Stiles, 315 F.3d 111, 118 (2d Cir. 2002) (where

the issue was whether, but for the defendant’s failure to perfect an appeal, an appeals court would

have reversed a legal ruling concerning jurisdiction, stating that “what is required is that the

judge determine what the appellate court would have done, using the same standards that the

appellate court would have applied.”)

8

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Here, the breach of duty by Defendants was the failure to file an appropriate post-trial

motion that would have, if granted, relieved Scaramuzza of individual liability. That motion for

judgment as a matter of law or “nonsuit” would clearly have been decided by the judge in the

underlying action. In this malpractice action, therefore, this Court may properly consider the

“case within a case” and decide if Scaramuzza would have been held not individually liable in

the underlying action if defendants had moved for nonsuit on the basis of insufficient evidence. 

If the answer is “yes,” then Defendants’ Motion for Summary Judgment must be denied. If the

answer is “no,” Defendants’ Motion for Summary Judgment must be granted.

B. Scaramuzza’s Potential Individual Liability

Generally speaking, granting a motion for nonsuit is proper only if, viewing the evidence

in the light most favorable to the plaintiff, and then giving the plaintiff the benefit of all

reasonable inferences arising from that evidence, the court determines that a factfinder could not

reasonably conclude that the disputed element(s) of the cause of action had been established. 

Duke & Co. v. Anderson, 275 Pa. Super. 65, 66, 418 A2d 613, 614 (Pa. Super. 1980) (citing

Watkins v. Sharon Aerie No. 327 F. O. E., 423 Pa. 396, 223 A.2d 742 (Pa. 1966); Herman v.

Horst, 255 Pa. Super. 232, 234, 386 A.2d 594, 595 (Pa. Super. 1978)). 

Accordingly, the question before the Court is whether, based on the record of the

underlying trial, the judge properly concluded that Scaramuzza was subject to individual liability,

or, if a motion for nonsuit had been made, would have had to grant the motion for nonsuit. As

discussed above, Defendants contend that there is evidence in the trial record sufficient to confer

individual liability on Scaramuzza regardless of Defendants’ negligence (i.e., even if Defendants

had properly moved for nonsuit). In return, Scaramuzza relies on the expert report which

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 18 of 25
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concludes that Defendants’ motion, if made, would have been granted. 

After a thorough review of the record, the Court finds that there was competent evidence

introduced during the underlying trial that tends to establish Scaramuzza, individually, was an

agent of Lincoln General. The Guaranty to the Brokerage Agreement (both of which documents

were admitted into evidence) executed by Personal Surplus and Lincoln General explicitly

recognized that “Pasquale J. Scaramuzza, individually” was a broker and “an agent for Lincoln

General Insurance Company.” Defendant’s Motion for Summary Judgment, Exhibit D

(emphasis added). The trial judge was clearly aware that, on this basis of the Guaranty, Lincoln

General was pursuing a judgment against Scaramuzza individually: indeed, the judge explicitly

asked Lincoln General’s counsel whether she was “pursuing the corporation and the individual at

this point,” and counsel responded “yes, because there were guaranties between the two.” See

Trial Transcript at 4-5. 

By executing the Guaranty, the corporate entity, Personal Surplus, agreed to guarantee the

full performance by individual agent Scaramuzza of all terms and conditions of the brokerage

agreement. In return for executing the Guaranty, Scaramuzza and Personal Surplus also executed

an Assignment. Plaintiff’s Complaint Exhibits at 215. It provided that Scaramuzza assigned his

right to individual compensation due from Lincoln General under the brokerage agreement to

Personal Surplus, and Personal Surplus agreed to hold Scaramuzza harmless from any liability

arising from the performance or non-performance of the brokerage agreement. Indeed, even

Scaramuzza’s own expert report acknowledges that “[t]he Guaranty agreement clearly sets out

that [Personal Surplus] is guarantor for the performance of the agreement by Mr. Scaramuzza.” 

See Bocchino Expert Report at 4-5 (emphasis added).

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 19 of 25
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The record thus tends to establish that Scaramuzza fulfilled dual roles: for corporate and

managerial purposes, he served as President of Personal Surplus, and insurance sales purposes,

he served, individually, as an agent for Lincoln General. Evidence in the record also established

that liability for the premiums rests with the agent: Lincoln General CFO Gary Orndorff

unambiguously testified that “[u]nder the terms of [the brokerage agreement], the agent is

responsible for all earned premiums, whether they collect it or not, to the company.” See Trial

Transcript at 18-19. The mere fact that Scaramuzza was also President of Personal Surplus, the

agency through which he happened to conduct business, does not, by itself, insulate Scaramuzza

from individual liability. Indeed, these contracts do not, as Scaramuzza appears to suggest, even

absolve Scaramuzza of individual liability to Personal Surplus; rather, they merely provided

agent Scaramuzza with possible means of reimbursement from Personal Surplus to the extent of

any potential individual liability for non-performance of obligations to Lincoln General.

As an individual agent of Lincoln General, Scaramuzza owed a fiduciary obligation to

Lincoln General. This duty included, as a matter of law, the obligation to account for and remit

to Lincoln General funds representing premium payments. Nat’l Bank v. Ins. Co., 104 U.S. 54,

70-71 (1881). In Pennsylvania, every insurance agent and broker is made specifically responsible

in a fiduciary capacity for all funds received or collected as insurance agent or broker. See, e.g.,

In Re McCormick, 70 B.R. 49, 50 (Bankr. W.D. Pa. 1987) (finding a person who was an

individual agent for an insurance company and the president of his insurance agency individually

liable for collected funds even if his actions were taken for the benefit of the insurance agency of

which he was president). Accordingly, any failure by Scaramuzza individually to account for and

remit the funds representing premiums due Lincoln General was potentially a breach of

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 20 of 25
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Scaramuzza’s fiduciary duty and a source of individual liability.

C. Scaramuzza’s Arguments to the Contrary

Scaramuzza has failed to demonstrate any persuasive evidence in the underlying trial

record that would definitively excuse Scaramuzza from individual liability. 

1. Expert Report

First, the Court has considered Professor Bocchino’s expert report and is not persuaded

that it establishes that Scaramuzza would necessarily have prevailed had Defendants

appropriately moved for nonsuit. The expert report itself consists of legal conclusions and is not

evidence. The report is not part of the underlying trial record, and therefore does not control or

dictate the outcome of the Court’s determination of the “case within a case,” which must be

based on the evidence available to the original factfinder in the underlying action. Furthermore,

the expert report includes only five sentences related to dispositive motion practice (a large part

of the report is addressed towards a conflict of interest of Defendants’ representing both Personal

Surplus and Scaramuzza, a question not presently at issue); it contains merely one conclusory

paragraph which does not provide an explanation of any detail or discuss any specific evidence

admitted at trial. The expert report plainly contradicts the trial record (See Trial Transcript at 18-

19, 96, discussed above) when it states, “there is simply no evidence of individual liability on the

part of Mr. Scaramuzza to LGIC [Lincoln General] presented by [Lincoln General] in the trial of

this matter.”

Finally, the expert report contains conflicting statements that cannot be reconciled

because the report fails to fully address the evidence admitted at trial. Specifically, although the

expert report summarily concludes that “a Motion for Nonsuit of Motion for a Directed Verdict,

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 21 of 25
 In passing, Scaramuzza also attempts to gain traction out of the fact that his insurance 9

broker license had apparently been revoked. The Court infers that Scaramuzza is arguing that he

could not have been an “agent” of Lincoln General unless he was a “licensed agent.” The Court

is unpersuaded for two reasons. First, the only fact in evidence is that, for some unknown reason,

Scaramuzza was not licensed at the time of the underlying trial. The evidence at trial supports a

finding that Scaramuzza was licensed at the time he was binding coverage for Lincoln General. 

Indeed, testimony concerning the reasons surrounding Scaramuzza’s suspended license was

objected to at trial, and the objection was sustained. Thus, there is no competent evidentiary

basis in the underlying trial record for Scaramuzza’s argument. Second, Scaramuzza’s argument

cites no authority and ignores basic principles of agency law.

-22-

timely made, would, on any reading of the transcript, have resulted in the granting of either

motion, thereby relieving Mr. Scaramuzza of liability for the judgment against him that was

obtained by [Lincoln General],” it also explicitly acknowledges that “[t]he Guaranty agreement

clearly sets out that [Personal Surplus] is guarantor for the performance of the agreement by Mr.

Scaramuzza.” The expert report makes not attempt to reconcile such inconsistency. See

Bocchino Expert Report at 4-5 (emphasis added). Due to these concerns, the expert report does

not dictate any specific outcome here. 

2. Other Evidence in the Record

Second, beyond the expert report, Scaramuzza has repeatedly failed to indicate any record

evidence that tends to excuse him from individual liability. This Memorandum has reviewed

above substantial evidence in the record where Lincoln General introduced testimony that

Scaramuzza was individually liable, and Mr. Scaramuzza’s own testimony admitted his

individual liability. Nonetheless, Scaramuzza relies primarily on repetition of bare assertions

that lack support or foundation. Even when the Court allowed Scaramuzza to supplement his 9

original answers to Defendants’ interrogatories (i.e., “Plaintiff has no obligation to speculate

regarding the outcome of the Lincoln General Litigation if the Defendants had conformed their

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 22 of 25
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conduct to professional standards imposed upon lawyers in Pennsylvania”), Scaramuzza merely

restated his unsupported, conclusory mantra (i.e., “if Jaffe Friedman and Sciolla had made

appropriate, timely motions during and after trial, the state court would have dismissed Counts III

and V against Scaramuzza and with the dismissal, no basis would have existed for imposing a

judgment against Scaramuzza personally”) without including any record citations or making any

attempt to resolve or explain the disparity between his original and supplemental answers. This

is neither sufficient evidence nor persuasive argument. “A party cannot create a genuine issue of

fact sufficient to withstand summary judgment simply by contradicting his or her own previous

sworn statement (by, say, filing a later affidavit that flatly contradicts the party’s earlier sworn

deposition) without explaining the contradiction or attempting to resolve the disparity.” 

Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 806 (1999).

D. Summary

Stated succinctly, (1) the relevant contracts constitute evidence tending to show that

Scaramuzza was an individual agent of Lincoln General, and (2) Scaramuzza has failed to

demonstrate any persuasive evidence in the underlying trial record that would definitively excuse

Scaramuzza from individual liability. Furthermore, there is no persuasive evidence in this “case

within a case” to support Scaramuzza’s claims (1) that there was no basis for imposing a

judgment against Scaramuzza personally, and (2) that if his counsel had moved for him to be

dismissed individually the court would have granted the requested relief.

Accordingly, the Court finds that a reasonable factfinder (i.e., the judge in the underlying

action) could therefore conclude from evidence in the record of this “case within a case” that

Scaramuzza acted individually as an agent for Lincoln General, owed duties to Lincoln General,

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 23 of 25
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and could be held individually liable to Lincoln General for non-performance of his obligations. 

Moreover, the Court concludes that Scaramuzza has failed to established, based on record

evidence, that the judge in the underlying action would necessarily have granted the motion for

nonsuit. Defendants are therefore entitled to a grant of summary judgment.

VI. Conclusion

For the foregoing reasons, Defendants’ Motion for Summary Judgment will be granted.

An appropriate Order follows.

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 24 of 25
UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

PASQUALE SCARAMUZZA : CIVIL ACTION

:

v. :

: NO. 04-1270

ANTHONY J. SCIOLLA, JR., et al. :

ORDER

AND NOW, this 3 day of March, 2006, it is hereby ORDERED as follows: rd

1. Defendants’ Motion for Summary Judgment (Doc. No. 40) is GRANTED.

2. Plaintiff’s Complaint is DISMISSED with prejudice.

3. The Clerk shall mark this case closed for statistical purposes.

BY THE COURT:

 /s/ MICHAEL M. BAYLSON 

Michael M. Baylson, U.S.D.J.

A:\04-1270, Scaramuzza v. Sciolla et al, Mem and Order Def MSJ.wpd

Case 2:04-cv-01270-MMB Document 69 Filed 03/03/06 Page 25 of 25