J-A26012-14

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

HEIDI M. REYNOLDS, IN THE SUPERIOR COURT OF

PENNSYLVANIA

Appellant

v.

STEVEN D. STAMBAUGH AND 

STAMBAUGH LAW, PC,

Appellees No. 1889 MDA 2013

Appeal from the Order Entered October 16, 2013

In the Court of Common Pleas of York County

Civil Division at No(s): 2010-SU-006752-81

HEIDI M. REYNOLDS, IN THE SUPERIOR COURT OF

PENNSYLVANIA

Appellant

v.

STEVEN D. STAMBAUGH AND 

STAMBAUGH LAW, PC,

Appellees No. 1890 MDA 2013

Appeal from the Order April 8, 2013

In the Court of Common Pleas of York County

Civil Division at No(s): 2010 SU 6752 81

BEFORE: BOWES, MUNDY, and JENKINS, JJ.
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MEMORANDUM BY BOWES, J.: FILED FEBRUARY 05, 2015

Heidi Reynolds (“Plaintiff”) appeals from the October 16, 2013 order 

granting preliminary objections and dismissing this legal malpractice action.1 

After careful review, we reverse and remand. 

On December 22, 2010, Plaintiff instituted this lawsuit against 

Appellees Steven D. Stambaugh and Stambaugh Law, PC (collectively 

“Stambaugh”). Preliminary objections were filed to the first complaint, the 

first amended complaint, and the second amended complaint.2 In each 

instance, the preliminary objections were granted, but Plaintiff was also 

accorded leave to amend. After Plaintiff filed her third amended complaint, 

which she incorrectly refers to as a second amended complaint, Stambaugh 

again filed preliminary objections in the nature of a demurrer. He averred 

____________________________________________

1

 Although Plaintiff also appealed from an April 8, 2013 order sustaining 

preliminary objections to an amended complaint, that order expressly stated 

that the dismissal was granted without prejudice. In that order, Plaintiff also 

was afforded twenty days to amend the complaint, which action she 

undertook. Subject to exceptions that are inapplicable herein, this Court has 

jurisdiction only over final orders. Pa.R.A.P. 341(a) (“an appeal may be 

taken as of right from any final order of an administrative agency or lower 

court”). A final order is an order that disposes of all claims and of all 

parties, or is expressly defined as a final order by statute or the ordering 

court. Pa.R.A.P. 341(b). Since the April 8, 2013 order did not dispose of this 

case and allowed Plaintiff to proceed by amending her complaint, it is not 

final and appealable. Hence, we quash the appeal filed from that order. We 

consider the merits of the dismissal of this case in the appeal from the final 

order entered herein on October 16, 2013, which dismissed this action with 

prejudice. 

2 Each complaint had a certificate of merit affixed to it. 
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that Plaintiff had failed to plead a viable cause of action since she settled the 

underlying lawsuit and had no ascertainable damages due to his purported 

malpractice. On October 16, 2013, those preliminary objections were 

granted without leave to amend, and the action was dismissed. The 

propriety of this final order is the subject of our review.

We now recite the relevant facts as set forth in the final complaint as 

well as its accompanying exhibits. On June 11, 2008, Plaintiff hired 

Stambaugh to represent her in connection with a slip-and-fall accident that 

occurred on October 29, 2006. Plaintiff tripped on steps leading to premises 

located at 139 N. Market Street, Mount Joy, Pennsylvania. As a result of the 

fall, Plaintiff sustained three fractures to her right foot, required surgery, and 

developed a Methicillin-resistant Staphylococcus aureus (“MRSA”) infection 

from that surgery. Plaintiff underwent another surgery and additional 

medical procedures due to the MRSA infection. 

The owners of 139 N. Market Street were Michael and Kelly Groff. 

They had hired Doug Lamb Construction Inc. (“Lamb”) to replace a front 

retaining wall and brick sidewalk with concrete. Lamb completed the job 

just prior to Plaintiff’s accident. Lamb allegedly created a dangerous 

condition that caused Plaintiff’s fall in that Lamb changed the rise of the 

Groffs’ stairs in the following manner. The rise of the bottom step was four 

inches whereas the rise of the remaining steps was ten inches. Plaintiff fell 

after she tripped on the bottom step. 
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Plaintiff alleged in her complaint filed herein that when Plaintiff hired 

Stambaugh on June 11, 2008, Stambaugh agreed to prepare and prosecute 

a premises liability action against the Groffs, “their general contractor 

Doug Lamb Construction, Inc.,” as well as any other party responsible for 

Plaintiff’s injuries secondary to the fall. Complaint, 4/29/13, at ¶ 8; see 

also id. at 16. Stambaugh represented that he would contact an engineer 

to provide a professional opinion as to whether the construction that was 

completed by Lamb just before the fall was dangerous. 

On June 13, 2008, Stambaugh sent pictures of the accident scene to 

an expert witness, Lawrence C. Dinoff, A.I.A, NCARB, of Robeson Forensic, 

Inc. In a cover letter, Stambaugh indicated a desire to discuss the matter 

with that expert as to “whether we would be able to bring a claim against 

the contractor [, i.e., Lamb] regarding the slope of the sidewalk.” Id. at ¶ 

18. Stambaugh failed to retain Mr. Dinoff or any other expert witness to 

evaluate the merits of Plaintiff’s case against Lamb. Id. at ¶ 19. 

Stambaugh did not institute an action on Plaintiff’s behalf until the last 

day of the applicable statute of limitations, October 29, 2008. He did not 

name Lamb as a defendant, and he never served the writ of summons on 

the Groffs, who were the only named defendants. While the writ of 

summons was reissued, it was never delivered to the sheriff’s office. From 

June 2008 through March 2010, Plaintiff diligently requested information 

about the status of her case. Stambaugh’s paralegal in charge of the matter 
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repeatedly gave Plaintiff inaccurate accounts of the events and progress of 

the underlying action. 

On March 17, 2010, Plaintiff hired another lawyer, John D. Zervanos of 

Solff & Zervanos (“Zervanos”). It took nearly sixty days for Zervanos to 

obtain the file from Stambaugh. On June 1, 2010, Zervanos entered his 

appearance on Plaintiff’s behalf in the lawsuit, he achieved service of the writ 

of summons on the Groffs on June 21, 2010, and he filed a complaint on 

July 28, 2010. Zervanos deposed Stambaugh and discovered that the 

paralegal in question “had been fired for mishandling and even fabricating 

case related documents to disguise the actual conduct” of Stambaugh’s 

cases, including that of Plaintiff. Id. at ¶ 32(a). Additionally, the paralegal 

“repeatedly made false and misleading statements to Plaintiff, to conceal 

omissions by [Stambaugh] in competently and diligently prosecuting 

Plaintiff’s claim in the Underlying Action.” Id. at ¶ 34. 

The Groffs filed preliminary objections alleging that Plaintiff failed to 

timely effectuate service of process and seeking dismissal of the lawsuit. 

While the trial court overruled those objections, it recognized that there was 

a substantial ground for a difference of opinion on that matter and certified 

the order for interlocutory review. The Groffs appealed. Zervanos informed 

Plaintiff that it would take approximately eighteen months to litigate the 

appeal and that the Superior Court could determine that the writ was not 
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timely served, which would mean that the underlying case would be 

dismissed. 

On December 30, 2011, Zervanos called Plaintiff to report that 

settlement discussions were progressing and that “strangely, an attorney for 

Stambaugh” also was participating in settlement negotiations. Id. at ¶ 38. 

At that time, neither Zervanos nor Plaintiff was aware that the Superior 

Court had entered an order dismissing the interlocutory appeal. 

On January 10, 2012, Zervanos conveyed that the Groffs had offered 

$17,000 to settle the case and a verbal accord was reached. On January 30, 

2012, Zervanos became aware of the dismissal of the appeal, and Plaintiff 

refused to execute a written agreement. On January 31, 2012, “Stambaugh, 

through counsel immediately threatened to enforce the settlement” as to 

Plaintiff. Id. at ¶ 41. Stambaugh then attempted to be included within the 

parties released by Plaintiff by offering an additional $1,000. Plaintiff 

refused to release him based on her belief that his malpractice had forced 

her to settle her case for less than it was worth, and the release in question 

expressly excludes Stambaugh from its parameters. 

In the present lawsuit, Plaintiff averred that Stambaugh was negligent 

in two respects: for failing to name Lamb as a defendant in the underlying 

action and due to his failure to attempt service of the writ of summons on 

the Groffs. She claimed that, as a result of Stambaugh’s misfeasance in the 

handling of her lawsuit, “Plaintiff sustained a significant diminution in [the] 
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value of her claims.” Id. at ¶ 44. Plaintiff’s complaint had two counts:

“Count I—Professional Negligence/Malpractice,” and “Count II—Breach of 

Fiduciary Duty.” Id. at (unnumbered pages) 7, 8. 

In granting Stambaugh’s preliminary objections, the trial court 

concluded that Plaintiff did not suffer any loss from Stambaugh’s 

malpractice. It reasoned that Plaintiff “voluntarily chose to settle and 

dismiss her underlying action in exchange for a general release of any and 

all claims in the sum of $17,000.00. As such, Plaintiff has not pled, nor can 

she plead, the requisite element of damages.” Trial Court Opinion, 

10/17/13, at 5. It noted that Plaintiff set forth that she settled for less than 

her case was worth due to a reasonable belief that the Superior Court would 

eventually reverse the trial court’s conclusion that her case could proceed 

despite the significant delay in service of process. The court ruled, “A 

settlement based on the possibility of a later adverse appellate decision 

cannot support a malpractice action. Such reasoning would require the 

Court to speculate far beyond normal boundaries.” Id. at 5-6. The court 

also concluded that Plaintiff failed to aver that she had a viable cause of 

action against the contractor. 

On appeal, Plaintiff raises these contentions:

[1.] Whether Reynolds set forth a cognizable claim for damages 

when she settled the underlying action for diminished value 

secondary to Appellees’ legal errors?

[2.] Whether Reynolds pleaded a cognizable "case-within-thecase" for Appellees' failure to timely serve the underlying 
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action's Defendant and join an indispensable party in the 

underlying action?

[3.] Whether Reynolds pleaded a cognizable breach of fiduciary 

duty?

Appellant’s brief at 9. 

Initially, we outline our standard of review.

As a trial court's decision to grant or deny a demurrer involves a 

matter of law, our standard for reviewing that decision is 

plenary. Preliminary objections in the nature of demurrers are 

proper when the law is clear that a plaintiff is not entitled to 

recovery based on the facts alleged in the complaint. Moreover, 

when considering a motion for a demurrer, the trial court must 

accept as true all well-pleaded material facts set forth in the 

complaint and all inferences fairly deducible from those facts.

Little Mountain Community Ass'n, Inc. v. Southern Columbia Corp., 

92 A.3d 1191, 1195 (Pa.Super. 2014) (citation omitted). A demurrer can be 

granted “only in cases in which it is clear and free from doubt that the 

pleader will be unable to prove facts legally sufficient to establish the right to 

relief. If any doubt exists as to whether a demurrer should be sustained, it 

should be resolved in favor of overruling the preliminary objections.” Id. 

(citation omitted). 

In order to pursue a legal malpractice action, the plaintiff initially must 

prove that he had a cause of action in the underlying lawsuit and that the 

defendant in the legal malpractice case was negligent in prosecuting that 

proceeding. Sokolsky v. Eidelman, 93 A.3d 858 (Pa.Super. 2014). Thus, 

we look at the prior action litigated by the attorney to determine whether 

the plaintiff has a present lawsuit against the attorney. The plaintiff in the 
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legal malpractice action also must prove that he would have recovered a 

judgment in the underlying action. Id. To summarize, the plaintiff in the 

legal malpractice case must establish that the lawyer negligently handled the 

underlying lawsuit and that the negligence was the proximate cause of loss 

to the plaintiff. Id. The legal malpractice cause of action is articulated as 

having three elements: the plaintiff hired the attorney or some other 

grounds for a duty inuring to plaintiff’s benefit; the lawyer’s failure to 

exercise ordinary skill and knowledge; and that such failure proximately 

caused damages to the plaintiff. Id. These damages must be actual rather 

than speculative. Id.

In this case, it is uncontested that Plaintiff hired Stambaugh to 

represent her in the underlying lawsuit. She averred that Stambaugh failed 

to exercise ordinary skill and knowledge in two respects. First, he failed to 

sue Lamb, which allegedly created the hazardous condition that caused her 

fall. Second, he did not make any effort to serve the writ against the Groffs, 

thereby creating the possibility that her case would be dismissed even if she 

recovered a verdict against them. We first address whether her allegations 

supported the second element of her cause of action, which pertains to the 

establishment of the case within this case. While this analysis involves 

Plaintiff’s second contention on appeal, we address it first since it impacts 

upon our discussion of the damages aspect of her cause of action and 
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whether she can recover herein after she settled the personal injury lawsuit 

against the Groffs. 

We agree with Plaintiff that she did have a cause of action against 

Lamb. See Appellant’s brief at 21-22.3 As noted by Plaintiff, Lamb was 

responsible for creating the condition that caused her to fall, and she 

specifically set forth in her complaint that Stambaugh agreed to sue both the 

contractor Lamb and the owners of the premises. In Longwell v. 

Giordano, 57 A.3d 163, 170-71 (Pa.Super. 2012), we noted that 

One who on behalf of the possessor of land erects a 

structure or creates any other condition thereon is 

subject to liability to others upon or outside of the 

land for physical harm caused to them by the 

dangerous character of the structure or condition 

after his work has been accepted by the possessor, 

under the same rules as those determining the 

liability of one who as manufacturer or independent 

contractor makes a chattel for the use of others.

Gresik v. PA Partners, L.P., 989 A.2d 344, 348 (Pa.Super. 

2009), affirmed on other grounds, Gresik v. PA Partners, L.P.,

33 A.3d 594 (Pa. 2011) (quoting Restatement (Second) of Torts 

§ 385).

As the liability of a servant or an independent 

contractor who erects a structure upon land or 

otherwise changes its physical condition is 

____________________________________________

3

 In her brief, Plaintiff refers to Lamb as an indispensable party. However, 

the proper inquiry is whether Lamb was subject to liability and should have 

been a named defendant. Given the facts as pled, there was a sufficient 

basis to conclude that Lamb was a potential defendant and that Stambaugh 

should have pursued the inquiry as to Lamb’s liability. Plaintiff, at trial, will 

be required to produce sufficient evidence that Lamb was subject to liability 

for the condition leading to her fall. 
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determined by the same rules as those which 

determine the liability of a manufacturer of a chattel, 

it follows that such a servant or contractor who turns 

over the land with knowledge that his work has 

made it dangerous in a manner unlikely to be 

discovered by the possessor is subject to liability 

both to the possessor, and to those who come upon 

the land with the consent of the possessor or who 

are likely to be in its vicinity.

Id. at 350 (quoting Restatement (Second) of Torts § 385 cmt. c.) 

(emphasis added).

We emphasize that we are reviewing the grant of a demurrer. At this 

juncture, the allegations in the complaint must be accepted as true. There 

were sufficient facts pled in the final complaint to conclude that Lamb did 

create a dangerous condition due to the difference in the rise of the steps. 

Lamb was subject to liability under the above theory since, according to the 

complaint filed herein, it created the condition just prior to Plaintiff’s fall and 

the Groffs would have been unlikely to discover the defect. Moreover, in her 

complaint, Plaintiff specifically averred that Stambaugh agreed to prepare 

and prosecute a premises liability action against the Groffs as well as “their 

general contractor Doug Lamb Construction, Inc.” Complaint, 4/29/13, at ¶ 

8; see also id. at 16. Thus, Stambaugh expressly agreed to sue Lamb. 

That Stambaugh agreed to sue Lamb also is evidenced by the letter he 

sent to secure the services of an expert witness on the defect question. 

Stambaugh, by that action, admitted that Lamb was a potential defendant 

herein. According to the complaint, Stambaugh simply abandoned the 
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matter and failed to secure the services of the expert to explore whether the 

lawsuit could be pursued against Lamb. Simply put, if accepted as true, the 

allegations in the complaint set forth a sufficient basis for concluding that 

Stambaugh was negligent for not securing an expert witness to ascertain 

whether were grounds for naming Lamb as a defendant in the underlying 

lawsuit. Plaintiff must be accorded an opportunity to prove this allegation by 

presenting proof as to this aspect of her case. It was not incumbent upon 

her, at this point in the proceedings, to procure an expert witness on the 

subject matter. 

Stambaugh claims that, in her amended complaint filed on October 22, 

2012, Plaintiff admitted that Lamb built the stairs in accordance with the 

local code. Stambaugh asserts that this averment constituted a judicial 

admission that Lamb was not subject to liability in the underlying action. 

First, we note that at no point in her pleadings did Plaintiff concede that she 

did not have a viable claim against Lamb. In her second amended 

complaint, Plaintiff alleged “D. Lamb Construction was the construction 

contractor hired by the Groff’s [sic] to replace the Groff’s front retaining wall 

and existing brick sidewalk with the poured concrete, the walkway to which 

the specifications were provided by the [Mount Joy] Borough.” Second 

Amended Complaint, 10/22/12, at ¶ 10. 

This averment could be construed to suggest, as argued by 

Stambaugh, that Lamb constructed the sidewalk in accordance with the local 
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building code. On the other hand, as noted by Plaintiff in her reply brief, the 

averment can be read as outlining that Lamb was hired to perform the 

construction in accordance with code supplied by the borough. However, the 

averment does not admit that Lamb actually fulfilled that aspect of the 

contract work and built the stairs to borough code. Appellant’s reply brief at 

4 (“The mere fact that the Mount Joy Borough provided the specifications 

does not connote that D. Lamb complied therewith as Appellees argue.”). 

Additionally, merely because a structure complies with a local building 

code does not mean that it is not dangerous and that the entity that 

constructed the compliant structure is not subject to liability for creating a 

dangerous condition. Therefore, any purported admission that the sidewalk 

met borough code was not a concession that Lamb was not subject to 

liability for creating a dangerous condition by building stairs with differing 

rises. While a court may utilize a defendant’s breach of local building code 

to create a duty, Restatement (Second of Torts) § 286,4a contractor who 

____________________________________________

4

 That section states:

The court may adopt as the standard of conduct of a reasonable 

man the requirements of a legislative enactment or an 

administrative regulation whose purpose is found to be 

exclusively or in part

(a) to protect a class of persons which includes the 

one whose interest is invaded, and

(Footnote Continued Next Page)
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creates a dangerous condition is not absolved of liability due to his 

compliance with local building codes. 

Restatement (Second) of Torts § 288C provides: “Compliance with a 

legislative enactment or an administrative regulation does not prevent a 

finding of negligence where a reasonable man would take additional 

precautions.” See also id. at comment a (“Where . . . [an] ordinance . . . is 

found to define a standard of conduct for the purposes of negligence actions, 

as stated in §§ 285 and 286, the standard defined is normally a minimum 

standard. . . . This . . . administrative minimum does not prevent a finding 

that a reasonable man would have taken additional precautions[.]”).

Pennsylvania law is in accord with these precepts. Berkebile v. Brantly

Helicopter Corp., 281 A.2d 707, 710 (Pa.Super. 1971) (en banc) (holding 

“[c]ompliance with a law or administrative regulation relieves the actor of 

negligence per se, but it does not establish as a matter of law that due care 

was exercised.”); McKenzie v. Cost Brothers, Inc. v. Dickerson 

Structural Concrete Corp., 409 A.2d 362 (Pa. 1979) (industry standards 

(Footnote Continued) _______________________

(b) to protect the particular interest which is 

invaded, and

(c) to protect that interest against the kind of harm 

which has resulted, and

(d) to protect that interest against the particular 

hazard from which the harm results.

Restatement (Second of Torts) § 286. 
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are not conclusive factors in determining negligence, but merely provide 

some evidence of the appropriate standard of care). 

Additionally, we agree with Plaintiff that she sufficiently pled a 

negligence claim against Stambaugh with respect to his failure to achieve 

service of the writ on the Groffs. He filed the writ on October 29, 2008, and 

never obtained service upon the Groffs for a period of eighteen months. 

Zervanos was able to serve the writ twenty-one days after entering his 

appearance in the case, on June 21, 2010. By that time, twenty months had 

lapsed since the filing of the writ and the expiration of the statute of 

limitations. In light of this delay, the Groffs unquestionably had valid 

grounds for seeking dismissal of the lawsuit filed against them. 

As we noted in Englert v. Fazio Mechanical Services, Inc., 932 

A.2d 122, 124 (Pa.Super. 2007) (emphasis added), “It is well settled in this 

Commonwealth . . . that service of original process completes the 

progression of events by which an action is commenced.” See Lamp v. 

Heyman, 366 A.2d 882 (Pa. 1976). Even when a lawsuit is commenced 

within the statutory limits, “the statute of limitations is tolled only if the 

plaintiff then makes a good faith effort to effectuate service.” Englert, 

supra at 124. A plaintiff must make reasonable efforts to obtain service in 

order to avoid dismissal based upon the applicable statute of limitations. Id. 

Where a party does nothing to ensure that service is effectuated, the statute 

of limitations is not tolled. Id. 
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Herein, the allegations in the complaint establish wholesale inaction by 

Stambaugh. He simply did nothing to seek service of the writ, which was 

filed on the last day of the applicable statute of limitations, even though 

Stambaugh was hired months before the statute expired. While the writ was 

re-issued numerous times, no steps were taken to serve it; it was not even 

taken to the sheriff’s office. The Groffs unquestionably had a strong case for 

dismissal of the underlying suit based upon the statute of limitations. While 

the trial court in that lawsuit exercised remarkable lenity by allowing the 

case to proceed against the Groffs, it also recognized its ruling was legally 

tenuous since it permitted interlocutory review of that order. Hence, we 

concur that the Plaintiff set forth a valid legal malpractice claim that 

Stambaugh’s neglect to perform any action to effectuate service of the writ 

on the Groffs created a legal basis for dismissal of the underlying lawsuit. 

We now address the question of whether Plaintiff’s settlement of the 

other action precludes her from establishing in this matter that she suffered 

damages due to Stambaugh’s negligence. As noted, Plaintiff averred that 

she settled the action for substantially less than it was worth both based 

upon the risk she faced that her claim against the Groffs would ultimately be 

dismissed, even if she prevailed against them at a jury trial, and upon the 

fact that she could not proceed against Lamb. Stambaugh’s position was 

and is that, when she settled, Plaintiff still could have proceeded to trial 

against the Groffs since their preliminary objections had been overruled by 
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the trial court in the other action. Stambaugh averred and now claims on 

appeal that the question of whether Plaintiff sustained damages was too 

speculative to submit to the jury. 

While the trial court agreed with Stambaugh’s contention, we do not. 

Given the articulated law regarding service of process and Stambaugh’s 

utter failure to undertake any action to achieve such service, there was a 

virtually inevitable likelihood that, after final judgment, this Court would 

have reversed the trial court’s refusal to dismiss this case against the Groffs 

based upon lack of service before the expiration of the statute of limitations. 

While Stambaugh insists that, given the trial court’s refusal to dismiss 

the case against the Groffs, the Plaintiff could have proceeded against the 

Groffs and obtained a damages award, we note the following. Lamb had not 

been joined as a defendant. Thus, the fact that Plaintiff could have gone to 

trial against the Groffs does not obviate the fact that the Groffs could have 

assigned blame to Lamb for the defect in the steps. Thus, Plaintiff was 

confronted with a risk of not recovering against the Groffs, aside from the 

statute-of-limitations question. 

Accepting as true Plaintiff’s articulated facts in the complaint about her 

broken foot, contraction of MRSA, and subsequent surgeries, as well as 

exhibits regarding her medical costs, the settlement sum is far less than the 

amount of her damages from the fall. We do not agree that it was 

speculative that the Plaintiff could have recovered significantly in excess of 
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$17,000 had she not faced a risk of dismissal as to the Groffs and an 

inability to recover against Lamb. Therefore, we do not view her damages 

claim as speculative merely because she could have gone to trial against the 

Groffs. We concur that the facts as set forth in the complaint present a 

viable claim that Plaintiff settled her case for a diminished value due to 

Stambaugh’s malpractice. 

We now address whether the Plaintiff was precluded from recovering in 

this lawsuit due to her settlement of the underlying action. This question 

pertains to application of the Supreme Court’s decision in Muhammad v. 

Strassburger, McKenna, Messer, Shilobod and Gutnick, 587 A.2d 1346 

(Pa. 1991). Therein, the defendant law firm in a legal malpractice case 

represented the plaintiffs in a medical malpractice lawsuit following the 

death of the plaintiffs’ child. The defendant law firm negotiated a settlement 

of the medical malpractice case, and the settlement offer was verbally 

accepted by the plaintiffs. The wife changed her mind about the settlement 

before signing a written accord, but the agreement was subsequently 

enforced by the trial court in the medical malpractice case. The plaintiffs 

filed a legal malpractice case against the law firm that negotiated the 

medical-malpractice settlement. The legal malpractice case was dismissed, 

and our Supreme Court affirmed that dismissal. 

The Muhammad Court concluded that the plaintiffs had failed to state 

of cause of action against the law firm. The Court ruled that it would “not 
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permit a suit to be filed by a dissatisfied plaintiff against his attorney 

following a settlement to which that plaintiff agreed, unless that plaintiff can 

show he was fraudulently induced to settle the original action.” Id. at 1348. 

It held that a legal malpractice action is not viable against an attorney 

“based on negligence and/or contract principles when that client has agreed 

to a settlement. Rather, only cases of fraud should be actionable.” Id. 

The court premised its ruling on its “strong and historical public policy 

of encouraging settlements[.]” Id. at 1349. It noted that to allow a client 

to proceed to file a legal malpractice case after agreeing to settle the 

underlying lawsuit would “create chaos in our civil litigation system. 

Lawyers would be reluctant to settle a case for fear some enterprising 

attorney representing a disgruntled client will find a way to sue them for 

something that ‘could have been done, but was not.’” Id. It observed that 

permitting a legal malpractice case to proceed when the underlying action 

was settled would both “discourage settlements and increase substantially 

the number of legal malpractice cases. A long-standing principle of our 

courts has been to encourage settlements; we will not now act so as to 

discourage them.” Id. Our High Court concluded that a flood of litigation 

would flow from permitting the settling client to pursue a case against his 

former attorney. This result, it continued, would create massive delays in 

the process of justice by discouraging settlements and creating lawsuits 

when cases do settle. It therefore foreclosed 
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the ability of dissatisfied litigants to agree to a settlement and 

then file suit against their attorneys in the hope that they will 

recover additional monies. To permit otherwise results in 

unfairness to the attorneys who relied on their client's assent 

and unfairness to the litigants whose cases have not yet been 

tried. Additionally, it places an unnecessarily arduous burden on 

an overly taxed court system.

Id. at 1351. 

The Muhammad Court also noted that it would be speculative to 

assume that a jury would have returned a verdict that was more than the 

settlement amount agreed to by the parties in the underlying lawsuit. In 

this respect it opined:

It becomes obvious that by allowing suits such as this, which 

merely “second guess” the original attorney's strategy, we would 

permit a venture into the realm of the chthonic unknown. It is 

impossible to state whether a jury would have awarded more 

damages if a suit had been filed against another potential party 

or under another theory of liability. It is indeed possible that a 

smaller verdict would have been reached or a defense verdict 

ultimately would have been rendered. Thus, sanctioning these 

“Monday-morning quarterback” suits would be to permit lawsuits 

based on speculative harm; something with which we cannot 

agree.

Id. at 587 A.2d at 1352 n.13. 

Muhammad carved out an exception to this rule and concluded that 

there would be recourse for a plaintiff who was fraudulently induced into 

agreeing to settle. Of crucial importance herein, the Court stated that, if 

“the lawyer knowingly commits malpractice, but does not disclose the error 

and convinces the client to settle so as to avoid the discovery of such error, 

then the client's agreement was fraudulently obtained.” Id. at 1351 
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(emphasis omitted). It continued that, while the settlement with the 

defendant in the underlying action would be upheld, “the plaintiff who has 

been defrauded may have redress” in that the Court would “permit him to 

proceed under a theory of fraud against the attorney who represented him in 

the original action.” 

As our High Court clarified in McMahon v. Shea, 688 A.2d 1179 (Pa. 

1997), the Muhammad decision does not absolutely bar a legal malpractice 

lawsuit when the underlying action was settled. Therein, the defendantlawyer negotiated a settlement for the plaintiff-client in a divorce case. The 

settlement agreement was structured so that it failed to terminate alimony 

upon remarriage of the other spouse. The client sued the lawyer when his 

spouse remarried and his alimony obligation continued. Our Supreme Court 

allowed the case to proceed despite the Muhammad decision. The Court 

concluded that the considerations underlying that case were not implicated 

in McMahon since the malpractice case was not premised upon 

dissatisfaction with the amount the attorney obtained in the settlement, but 

on the lawyer’s failure to properly advise the client about the legal 

consequences of the agreement. It expressly limited Muhammad to the 

facts of that case and noted that the purpose of reducing litigation would not 

be served by precluding the malpractice action in question. 

In this case, we first conclude that the exception created in 

Muhammad itself is implicated. Plaintiff alleged that Stambaugh committed 
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malpractice on two accounts. He did not sue Lamb and did nothing to 

achieve service of process against the Groffs. Thereafter, his paralegal 

made various fraudulent representations to the Plaintiff about the status of 

her lawsuit. Plaintiff did uncover the malpractice when she secured the 

services of another lawyer. However, by then, the malpractice had 

significantly diminished her ability to recover damages in the underlying suit. 

Particularly significant is the following. Stambaugh, in derogation of 

his duty to his former client, inserted himself into the settlement 

negotiations between Plaintiff and the Groffs. Plaintiff agreed to settle the 

case for $18,000. She was not aware at that time that the Groffs offered 

$17,000 and that Stambaugh was to contribute $1,000 also be included in 

the release. When Plaintiff changed her mind about settlement, 

Stambaugh threatened to file a petition against his former client to force 

her to sign the written accord with the Groffs so that he could avoid the legal 

malpractice suit through operation of Muhammad. When Plaintiff 

discovered that she would be releasing Stambaugh for $1,000, she refused 

to sign the document. She did sign an accord with the Groffs for $17,000 

but Stambaugh was expressly excluded from coverage in the release. 

Plaintiff settled her case for less than it was worth based after 

egregious malpractice committed by the lawyer who was uninvolved in the 

settlement, and based upon a substantial risk that she would recover 

nothing in the other case due solely to the first attorney’s negligence. This 
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scenario is not ethically or theoretically different from the exception created 

in Muhammad for a negligent attorney who obtains a settlement himself to 

hide and avoid liability for his misfeasance in the underlying lawsuit. Our 

belief that Stambaugh is subject to liability despite the settlement of the 

personal lawsuit is reinforced by his threat to enforce the settlement 

agreement reached by the Groffs and Plaintiff, which he had no standing to 

pursue, as well as by the fact that he tried to obtain a release from liability 

for $1,000. 

Allowing recovery will not create concerns of a flood of litigation since 

the first lawyer committed the malpractice, and a second one obtained the 

settlement that reflected the reduced value of the case caused by the first 

lawyer’s mistakes. The case herein does not involve second-guessing a 

settlement since the attorney who obtained the settlement accord is not the 

one being sued. The Plaintiff is not engaging in speculation about whether 

she could have obtained more money from a jury. Her ability to recover her 

damages in the underlying action was unquestionably impacted by the legal 

malpractice alleged in the complaint. 

A damages award would not be speculative. After it decides whether 

malpractice occurred, a jury in this case can readily assess the value of the 

Plaintiff’s damages from the fall. Indeed, a jury assessing damages is no 

different from a jury in the underlying slip-and-fall determining the amount 

of damages that Plaintiff sustained. As our Supreme Court noted, in a legal 
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malpractice action, “The test of whether damages are remote or speculative 

has nothing to do with the difficulty in calculating the amount, but deals with 

the more basic question of whether there are identifiable damages. Thus, 

damages are speculative only if the uncertainty concerns the fact of 

damages rather than the amount.” Rizzo v. Haines, 555 A.2d 58, 68 (Pa. 

1989) (citation omitted; emphasis in original). Given the nature of the 

malpractice in question, the fact of damages is not speculative. We 

therefore conclude that the trial court erred in granting preliminary 

objections as to the Plaintiff’s cause of action sounding professional 

negligence/malpractice. 

Plaintiff’s final position is that she set forth a viable claim for breach of 

fiduciary duty. “At common law, an attorney owes a fiduciary duty to his 

client; such duty demands undivided loyalty and prohibits the attorney from 

engaging in conflicts of interest, and breach of such duty is actionable.” 

Maritrans GP Inc. v. Pepper, Hamilton & Scheetz, 602 A.2d 1277, 

1283 (Pa. 1992). On appeal, Plaintiff avers that the “failure to perfect 

service and sue the general contractor as a necessary party are themselves 

breaches of fiduciary duties.” We do not view these actions either as 

breaches of Stambaugh’s duty of undivided loyalty to the Plaintiff or as a 

conflict of interest. These lapses involve ordinary negligence/malpractice 

rather than actions taken in derogation of a duty of loyalty to Plaintiff. 
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However, Plaintiff also notes that Stambaugh participated in the 

settlement negotiations, threatened to force Plaintiff to sign the accord with 

the Groffs, which accord concerned a matter wherein he had represented 

Plaintiff, and then he tried to insert himself in the settlement agreement for 

a rather paltry sum. These activities can be viewed as a breach of loyalty to 

the Plaintiff. Even though they occurred after his representation ceased, he 

was engaging in self-interested efforts in an action where he had 

represented Plaintiff and his actions were in direct conflict of his duty of 

loyalty to his client. 

The appeal at 1890 MDA 2013 is quashed. The October 16, 2013 

order is reversed. Case remanded. Jurisdiction relinquished. 

Judge Mundy Concurs in the Result.

Judge Jenkins Concurs in the Result.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 2/5/2015