1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-12-1998

Selko v. Home Ins Co

Precedential or Non-Precedential:

Docket 96-1702

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Recommended Citation

"Selko v. Home Ins Co" (1998). 1998 Decisions. Paper 44.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/44
Filed March 12, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 96-1702 

WILLIAM SELKO, 

 Appellant 

v. 

HOME INSURANCE COMPANY, 

 Appellee 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. Civil Action No. 95-cv-07653) 

Argued May 5, 1997 

BEFORE: STAPLETON, LEWIS and CAMPBELL* 

Circuit Judges. 

(Opinion Filed March 12, 1998) 

Jeremy T. Ross (Argued) 

Schiffman & Ross 

1650 Market Street 

50th Floor 

Philadelphia, PA 19103-7301 

Attorney for Appellant 

_________________________________________________________________ 

*Honorable Levin H. Campbell, Senior United States Circuit Judge for 

the First Circuit, sitting by designation. 
 James W. Christie (Argued) 

 Christie, Pabarue, Mortensen & 

 Young 

 1880 JFK Boulevard 

 10th Floor 

 Philadelphia, PA 19103 

 Attorney for Appellee 

OPINION OF THE COURT 

CAMPBELL, Senior Circuit Judge. 

William Selko ("Selko"), who is the assignee of his former 

attorney's professional liability policy, appeals from the 

district court's grant of summary judgment denying 

recovery on this policy against Home Insurance Company 

("Home"). 

I. 

In 1982, at age 18, Selko was the passenger in a car that 

struck a telephone pole. The accident rendered him a 

quadriplegic. He and his father engaged Stephen R. 

Signore, Jr., a Pennsylvania attorney, who has since been 

disbarred, to represent him in obtaining compensation for 

his injuries. Signore prepared and Selko executed a power 

of attorney authorizing Signore to collect all sums due to 

Selko arising from the accident and to deposit them in 

banks and other depositories. Also included was an 

investment clause, giving Signore the authority 

 [t]o invest in my name, in any stock, shares, bonds, 

 securities or other property, real or personal, and to 

 vary such investments as he may, in his absolute 

 discretion deem best, and to vote at meetings of any 

 corporation or company and to execute any proxies or 

 other instruments in connection therewith. 

Signore stated in a deposition that he prepared the power 

of attorney in light of his discussion with Selko's father, 

during which Signore stated "that there were going to be a 

lot of no-fault checks and people that had to be paid and 

 2 
checks were going to have to be signed and whatever . . . . 

[The father replied] you know, well, why don't you take care 

of all that?" 

Between 1982 and 1991, Signore collected various sums 

on Selko's behalf from settlements and insurance claims. 

From these recoveries, Signore invested $300,000 without 

Selko's prior knowledge or further approval in real estate 

ventures of his own. Signore placed the collected sums in 

the bank account of a shell company wholly owned by him 

called Innovative Concepts, Inc. ("ICI"). He then caused ICI 

to issue "participation bonds" in Selko's name for the stated 

amounts as evidence of "loans" by Selko to ICI. The bonds, 

at least those of record, called for repayment of the original 

sum, together with accrued interest at ten percent per 

annum, after five years. (These bonds were due, 

respectively, in 1994, 1995, and 1996.) The monies for 

which the bonds were issued, consisting of Selko's 

$300,000 as well as sums from other purported lenders, 

were then used to purchase interests in Signore's sole 

name in real estate ventures. Selko's ICI participation 

bonds were "secured" by Signore's personal pledges of his 

real estate interests and by Signore's personal guarantees. 

ICI and Signore later defaulted on the bonds when they 

became due, beginning in 1994, and in 1995 Signorefiled 

for bankruptcy. 

According to Selko, he did not learn that his personal 

injury proceeds were being utilized in this manner until he 

made inquiry of Signore in 1991. After Signore responded 

with some information, Selko wrote Signore on May 9, 

1991, expressing concern about the investments' 

"illiquidity." Selko's letter also stated that he believed he 

should "diversify and reduce my 100 percent exposure to 

the vagaries of the local real estate market." Without 

replying right away, Signore continued to invest in the 

fashion described above. After further inquiries, Signore 

again responded to Selko on October 30, 1991. Reassuring 

him about the investments, Signore said that, for the "long 

term," they were sustaining a very fair return. Further 

correspondence between Selko and Signore led to Signore's 

assurances to work with Selko and "get for you some

liquidity as soon as possible." (A building sale or

 3 
replacement of Selko by another investor were mentioned 

as possible ways to do this if the market improved.) 

Selko later sought and received guidance from a retired 

attorney, Guy Gabrielson, who met with Signore in July of 

1992. Gabrielson reported to Signore his understanding of 

that meeting in a letter dated July 17, 1992. In the letter, 

Gabrielson indicated the time was ripe to relieve Signore's 

office of further responsibilities. Gabrielson also said he 

believed Selko would like to divest himself as rapidly as 

possible of the real estate investments so that he could 

begin to diversify his investments under the guidance of an 

investment advisor, and that Gabrielson would advise Selko 

to do so. Signore testified in his deposition that he 

understood at about this time that he was being relieved of 

his representation of Selko. 

Gabrielson's letter was quickly followed by a letter from 

Selko to Signore dated July 20, 1992, requesting that Selko 

receive "any part, or preferably all, of my interest payments 

currently" from the ICI participation bonds, and stating 

that he wished to divest himself of all bonds as rapidly as 

possible beginning with the last to mature. Signore was 

asked to make checks either for interest or principal 

payable to Selko's order and send them to him, so that he 

could begin the process of diversifying his portfolio into 

investments other than real estate. 

On July 20, 1992, Selko also revoked Signore's 1982

power of attorney, substituting in its place a far more 

limited power of attorney. The new power contained no 

investment authority but merely authorized Signore to 

claim, demand and receive "any interest or principal 

payments which may be due or payable to me in 

investments heretofore made" under the old power of

attorney and, after deduction of sums needed to prosecute 

the automobile accident claim, to remit the same to Selko. 

Any further funds received on Selko's behalf were to be 

deposited in a bank or other depository institution. 

Signore neither acknowledged nor took any action to

comply with the Selko's requests of July 20, 1992. He 

did not remit any interest nor did he take steps to

liquidate Selko's investments as requested. No further 

 4 
communication occurred between Signore and Selko until 

more than two years later, in September of 1994. In that 

month, the earlier of Selko's ICI participation bonds became 

due. A new attorney representing Selko made demands

upon Signore for payment. When no payment was 

forthcoming, Selko commenced a legal action in the state 

court against Signore, seeking damages for legal 

malpractice and breach of fiduciary duty. This action was 

settled on July 31, 1995. The settlement agreement 

provided for entry of judgment against Signore for 

$443,585.50. As part of the agreement, Signore assigned to 

Selko all his rights against Home under a policy of

professional liability insurance he had purchased for his 

law firm in April of 1994. 

On October 12, 1994, a few days after Selko sued him, 

Signore promptly notified Home of Selko's malpractice 

action against him. Home refused to defend or indemnify 

Signore under the policy, asserting, among other defenses, 

that, when applying for the policy, Signore had known of 

but had not disclosed the existence of Selko's potential 

claim for breach of professional duty. Under the terms of 

the policy, Home agreed to pay damages on behalf of the 

insured for an act, error, or omission happening prior to 

the effective date of the policy only if before such date "the 

Insured had no basis to believe that the Insured had 

breached a professional duty . . . ."1 In declining liability, 

Home relied on this clause, and also on Signore's negative 

answer to a question in the policy application asking, 

 "11.d. does any lawyer named in (question) 5(a) know 

 of any circumstances, acts, errors or omissions that 

_________________________________________________________________ 

1. Signore's professional liability policy ran from April 20, 1994 through 

April 20, 1995. Its Coverage section provided that to be covered, an act, 

error, or omission had to occur 

 "(aa) during the policy period or 

 (bb) prior to the policy period provided that prior to the 

effective date 

 of this policy 

* * * 

the insured had no basis to believe that the insured had breached a 

professional duty . . . ." 

 5 
 could [emphasis added] result in a professional liability 

 claim against any attorney of the firm, or its 

 predecessor. 

Home continued to deny coverage under the policy when 

Selko, pursuant to the settlement with Signore and the 

assignment of the policy, later sought indemnification for 

the losses he had sustained because of Signore's 

wrongdoing.2 Selko then brought the present diversity 

action in the district court against Home. After discovery, 

both Selko and Home moved for summary judgment, and

the court allowed Home's motion but denied Selko's. This 

appeal followed. 

II. 

In granting summary judgment to Home, the district 

court construed Signore's deposition testimony as admitting 

that, when applying for the policy, Signore already knew he 

had breached his professional duty to Selko. For this 

reason, the policy's basis to believe exclusion was held to 

bar recovery. The district court noted that Rule 1.8(a) of the 

Pennsylvania Rules of Professional Conduct provided, in 

essence, that a lawyer shall not enter into a business 

transaction with a client or acquire an ownership interest 

adverse to a client without full written disclosure of the 

transaction and terms. Additionally, the client is to be 

advised and given a reasonable opportunity to seek the 

advice of independent counsel. 

The court determined that Signore's investment of Selko's 

funds in his personal real estate ventures clearly violated 

Rule 1.8(a). Signore did not advise Selko for two years 

where his money was invested and of Signore's personal 

financial involvement. Signore, moreover, did not honor his 

client's wishes, expressed in May 1991, to diversify, but 

instead increased the investment. The court found the 

investment authorization in the 1982 power of attorney fell 

short of being adequate written disclosure under Rule 

1.8(a). The court concluded that when Signore applied for 

malpractice insurance in April of 1994, "he clearly had a 

_________________________________________________________________ 

2. Signore filed for bankruptcy in 1995 and was disbarred by consent. 

 6 
basis to believe that a claim of malpractice could be 

brought against him." 

In reaching this conclusion, the district court relied 

particularly upon a Wisconsin case, Logan v. Northwestern 

Nat'l Cas. Co., 424 N.W.2d 179 (Wis. 1988). As the district 

court explained, the Logan court "held that determining 

whether an insured had a `basis to believe' must be tested 

by whether the insured knew or believed that he had

committed a breach of his professional duty.' " Selko v. 

Home Ins. Co., No. 95-7653, 1996 WL 397483, at *3 (E.D. 

Pa. July 10, 1996) (citing Logan, 424 N.W.2d at 186). The 

district court went on to say, 

 "In adopting this standard, the Logan court rejected an 

 objective standard, i.e. `knew or should have known,' 

 because it potentially gives insurers a windfall to deny 

 coverage in many cases and ultimately defeats the 

 purpose of the contract." 

Id. The district court determined, on the basis of Signore's 

deposition testimony, that there was no genuine issue of 

fact over whether Signore had a basis to believe he had 

breached his professional duty owed to Signore. 

III. 

On appeal, Selko accepts the Logan standard adopted by 

the district court, which tests whether an insurance 

applicant had a "basis to believe" he had breached a 

professional duty by whether he knew or believed he had 

done so. However, Selko argues that "[n]otwithstanding the 

district court's avowed acceptance of this standard, it 

wholly failed to apply it in practice." 

According to Selko, Home failed to meet its affirmative 

burden of proving that Signore had a "basis to believe" that 

he had breached a professional duty. Viewing the evidence 

most favorably to himself, Selko contends that, at very 

least, a genuine issue of fact exists as to whether Signore 

knew or believed he had committed a breach of any 

professional duty when he applied for the policy. 

Selko insists, moreover, that the court erred infinding 

that Signore made additional investments of Selko's money 

 7 
after receiving Selko's letter dated May 9, 1991. Selko 

points to portions of Signore's deposition indicating that 

Selko's monies were invested in real estate as early as the 

mid-1980's and that later participation bonds were 

replacements of former ones that cannot be found. By the 

time Selko complained of "illiquidity" in 1991, it was 

supposedly beyond Signore's power to do more than 

continue the earlier investments. 

Selko further complains that Signore never conceded in 

his deposition that he had actual knowledge of 

Pennsylvania's Professional Rule of Responsibility 1.8. 

According to Selko, Signore believed that the power of 

attorney, with its broad investment provision, empowered 

him to make the real estate investments in question. Selko 

concludes that the evidence is, at best, conflicting whether 

Signore ever subjectively knew he had violated any ethical 

duty to Selko. 

By the same token, Selko denies that Signore knew of 

any potential malpractice claim against him. He argues that 

by granting him another, albeit more limited, power of 

attorney in 1992, Selko showed that he harbored no 

thoughts of a claim against him. Selko also cites to a case 

from the Eastern District of Missouri indicating that 

evidence "clearly reflect[ing] dissatisfaction" is a necessary 

prelude to invocation of the "basis to believe" exclusion. 

General Accident Ins. Co. v. Trefys, 657 F. Supp. 164, 167 

(E.D. Mo. 1987). Selko further argues that, if Signore had 

any inkling of a pending claim, he would not -- as he did 

-- have switched malpractice carriers in April of 1994. In 

the years previous, Signore had continuously obtained 

malpractice insurance from another company, Selko says. 

Presumably, the "basis to believe" exclusion (or comparable 

proviso) would not have been a defense available to his 

earlier carrier, since the clause would only bar claims 

based on conduct prior to the issuance of a policy.

IV. 

Perhaps the crucial issue in this appeal is the proper 

construction of the clause in the Home policy "that prior to 

the effective date of this policy . . . (2) the Insured had no 

 8 
basis to believe that the Insured had breached a 

professional duty . . . ." We turn to that first. Because 

Pennsylvania law governs, we ask how the Pennsylvania 

courts would read that clause; but as there is no applicable 

Pennsylvania precedent we must construe the clause 

without direct guidance, looking at its language, the 

decisions from other courts to the extent helpful, and 

Pennsylvania's rules of construction. 

As noted, Selko points to language in Logan, supra,

suggesting the "basis to believe" provision should be read 

subjectively. So read, Selko contends, the record fails to 

support Home's burden of proving beyond genuine dispute 

that Signore actually knew or believed when he applied for 

professional responsibility coverage in April of 1994 that he 

had breached a professional duty. 

Home disagrees that Signore's subjective belief is key. It 

argues that Logan does not dictate an exclusively subjective 

interpretation, and that, in any case, a correct 

understanding of the "basis to believe" clause is to be found 

in recent federal district court decisions from the Western 

and Eastern Districts of Pennsylvania. These decisions 

held, in essence, that the "basis to believe" clause requires 

a determination of whether the insured was subjectively 

aware of facts that would have led a reasonable attorney to 

believe that he had breached a professional duty. We agree 

with this "mixed" formulation and hold that, however Logan 

is understood, the district court cases have correctly 

tracked the meaning of the language. 

The first of these decisions was Home Ins. Co. v. 

Stegenga, No. 90-275 (W.D. Pa. July 3, 1991), aff'd (3d Cir. 

Feb. 3, 1992). There an attorney neglected to bring a 

lawsuit before the statute of limitations had expired, having 

misled his client into thinking that he was diligently 

pursuing the matter. The district court said, inter alia, 

 Stegenga argues that he did not know, subjectively, 

 that his actions might give rise to liability. The 

 insurance contract, he argues, disallows coverage only 

 if he was actually aware of the legal consequences of 

 his actions. Such an interpretation is manifestly 

 inconsistent with the plain language of the policy. 

 9 
 True, the condition, set forth in the policy-- that the 

 Insured "have no basis to believe" -- disallows coverage 

 where the insured is subjectively aware of certain facts. 

 There is no language, however, indicating that the 

 insured must have been subjectively aware that these 

 facts might give rise to liability. As long as the insured 

 is subjectively aware of facts that, under an objective 

 "reasonable person" standard would be seen as 

 possibly giving rise to liability, he will not be covered 

 for liability resulting from those incidents [citing 

 Logan]. 

 * * * 

 This, of course, makes perfect sense because

 otherwise, one would only need to [ ] make certain he 

 was ignorant of his duties in order to be insured for 

 violating them. No-one, not the insurer and not the 

 insured, knows ahead of time what facts will give rise 

 to liability. In order to properly allocate the risk, the 

 policy sensibly puts the burden on the insured to 

 disclose those facts known only to him, so that the 

 costs of the risk can be evaluated with all the relevant 

 information accessible to all parties. 

Id. at 4-6 (emphasis in original). The analysis in Stegenga 

was endorsed in Home Ins. Co. v. Thorp, No. 95-951 (W.D. 

Pa. July 17, 1992), aff'd, 993 F.2d 877 (3d Cir. 1993), and 

in Home Ins. Co. v. Powell, No. 95-6305, 1996 WL 269496 

(E.D. Pa. May 20, 1996). Most recently, Judge Cohill of the 

Western District of Pennsylvania wrote comprehensively to 

the same effect, specifically rejecting the district court's 

view in this case that a purely subjective measure applies. 

Mt. Airy Ins. Co. v. Thomas, 954 F. Supp. 1073, 1079 (W.D. 

Pa. 1997). 

The above cases, decided in federal courts in 

Pennsylvania by judges familiar with that state's law, are of 

course neither binding on the Pennsylvania courts nor 

upon ourselves. We find their reading of the disputed policy 

language, however, to be persuasive and to comport with 

our understanding of its plain meaning. See Bateman v. 

Motorists Mut. Ins. Co., 527 Pa. 241 (1991) (language of 

contract is primary consideration in interpreting an 

 10 
insurance contract); O'Brien Energy Sys. v. American 

Employers' Ins. Co., 427 Pa. Super. 456, 491 (1993), appeal 

denied, 537 Pa. 633 (1994) (policy language should be 

construed in accordance with plain and ordinary meaning). 

Selko would construe the language "provided . . . the 

insured had no basis to believe that the insured had 

breached a professional duty" as if it were written, 

"provided . . . the insured neither knew nor believed that 

the insured had breached a professional duty." There is, 

however, a significant difference in meaning between these 

two formulations. The latter wording, had it been 

incorporated into the policy, would, indeed, have indicated 

that the insured's own knowledge and belief were the 

touchstones. But the actual policy language is different. Its 

phraseology -- that "the insured had [no basis to believe]" 

-- refers, it is true, to the factual predicate possessed by 

the insured. But it measures that predicate by the 

impersonal standard of a "basis to believe," not by what the 

insured knew or believed. Had the provision been meant to 

stand or fall on the individual insured's subjective 

assessment of the known facts, it could easily have used 

the words "knew" or "believed," as indicated above. Instead, 

by using the words "basis to believe," the policy pointed to 

an objective criterion. 

Hence, we agree with Stegenga that the plain language of 

the exclusion calls for a two-stage analysis. First, it must 

be shown that the insured knew of certain facts. Second, in 

order to determine whether the knowledge actually 

possessed by the insured was sufficient to create a "basis 

to believe," it must be determined that a reasonable lawyer 

in possession of such facts would have had a basis to 

believe that the insured had breached a professional duty.3 

_________________________________________________________________ 

3. We recognize that, in Pennsylvania as well as elsewhere, exclusions 

are strictly construed against the insurer, as are ambiguities in the 

policy. Standard Venetian Blind Co. v. American Empire Ins. Co., 469 

A.2d 563, 566 (Pa. 1983); First Pa. Bank v. Nat'l Union Fire Ins. Co., 580 

A.2d 799, 802 (Pa. Super. Ct. 1990). Clear policy language, however, is 

to be given effect, Standard Venetian Blind Co., 469 A.2d at 566; and 

courts should not "torture the language to create" ambiguities but 

should read policy provisions to avoid it, Niagara Fire Ins. Co. v. 

Pepicelli, 

 11 
That the insured denies recognizing such a basis on

grounds of ignorance of the law, oversight, psychological 

difficulties, or other personal reasons is immaterial. 

This construction does not relieve the insurer of its 

burden to prove that the necessary underlying facts were 

actually known to the insured. But the insured may not 

successfully defend on the ground that he was uniquely 

unaware of ethical and fiduciary principles that all lawyers 

would know or that he did not understand the implications 

of conduct and events that any reasonable lawyer would 

have grasped. 

Selko argues that to interpret the provision in this 

manner is unfair to a victimized client such as himself who 

has no other redress but his defalcating attorney's

professional liability insurance. However, the exclusionary 

clause in question addresses only misconduct during the 

period prior to the effective date of the policy. It is 

reasonable for the insurer to refuse coverage for claims 

based on preexisting but undisclosed misconduct by an 

insured attorney. Nor is it unreasonable to tie such an 

exclusion to an even-handed "reasonable attorney" 

assessment, rather than to speculation concerning the 

individual attorney's subjective understanding. The latter 

approach, by rewarding the attorney who is ignorant of the 

law, or by encouraging disingenuous, after-the-fact

justifications, could result in totally capricious and 

unpredictable outcomes. Under the mixed standard we

believe the Pennsylvania court would adopt, coverage does 

not turn on psychoanalysis, yet the attorney is not made 

accountable for matters he did not know about, nor for 

known matters that would not cause a reasonable attorney 

to foresee a claim. 

A case such as this is painful, in that it may leave a 

malpractice victim without an effective remedy. But courts 

_________________________________________________________________ 

Pepicelli, Watts and Youngs, P.C., 821 F.2d 216, 220 (3d Cir. 1987) 

(quoting St. Paul Fire & Marine Ins. Co. v. United States Fire Ins. Co., 

655 

F.2d 521, 524 (3d Cir. 1981)). The mixed standard we adopt is not 

merely one of several possible interpretations but is, in our view, the 

interpretation plainly signaled by the contract language. 

 12 
cannot conscientiously rewrite an insurance contract 

between a defalcating attorney and his insurer in order to 

furnish coverage for the wronged assignee. Where states 

have decided, on policy grounds, to guarantee insurance 

coverage, e.g. for motor vehicle injuries, they have done so 

by comprehensive legislation requiring specific kinds of 

insurance as a condition to licensure and by regulating 

policy language. No such legislation applies here. 

V. 

Applying the above interpretation of the Home policy, we 

hold that the only reasonable interpretation of this record 

is that a reasonable attorney in Signore's shoes would have 

realized in April 1994, when Signore applied for the 

insurance, that he had a basis to believe that he had 

breached a professional duty to Selko. Selko, we note, 

concedes in his appellate brief that Signore breached his 

common law fiduciary and professional duties under the 

1982 power of attorney and the lawyer-client relationships 

by making unsuitable real estate investments and by failing 

to give Selko the necessary information to make any

informed decision in the matter. The facts underlying the 

breach were all fully known to Signore when he applied to 

Home for professional responsibility insurance. The facts 

known to Signore would, additionally, have caused a

reasonable attorney to answer "yes" rather than "no" to the 

question in the insurance application asking if the

applicant knew "of any circumstances, acts, errors, or 

omissions that could result in a professional liability claim 

against any attorney of the firm." [Emphasis supplied.] 

We disagree with appellant's suggestions that Signore's 

misconduct was merely marginal. To the contrary, it was 

egregious. Without meaningful explanation to and approval 

from his injured, youthful client, he loaned his client's 

monies to himself (ICI being wholly owned by him), using 

the funds to buy for himself partnership positions in 

various real estate ventures. These unauthorized loans were 

evidenced by five year bonds bearing ten percent interest 

that was not, however, payable until the bonds' maturity. 

As events were to prove, the bonds were risky in the 

extreme; they were unsecured by mortgages or meaningful 

 13 
collateral. As Signore conceded, he did not disclose these 

transactions in writing to his client prior to receiving 

inquiry from Selko in 1991 nor does it appear that he made 

any adequate disclosure of any type. By this time, because 

of a falling market, Signore would not or could not disinvest 

although Selko asked him to do so. In his verified 

complaint against Signore, Selko properly described the 

investments, inter alia, as insecure and unsuitable for one 

in Selko's quadriplegic condition. 

In utilizing Selko's funds in this way, Signore clearly 

subordinated his client's interests to his own greed. Had 

Signore's real estate ventures succeeded, Signore would 

have profited while Selko would, at best, have recovered his 

money after five years with accrued interest at ten percent 

per annum -- a rate little higher than conventional, safe 

investments would have paid on an annual basis. In a 

nutshell, without consultation and informed approval, 

Signore used his client's money to finance his own losing 

gamble in the real estate market. 

Signore's contention that he was authorized to do this by 

the broad general investment clause in the power of

attorney is obviously without merit. The chief purpose of 

the power, as Signore's own deposition attested, was to 

enable Signore to collect and administer Selko's multisourced recoveries. The investment clause cannot be read 

to authorize Signore to gamble with his client's money or 

utilize the money in ways that put his own interests ahead 

of Selko's. The district court, moreover, correctly took 

account of Signore's violation of Rule 1.8(a) of the 

Pennsylvania Rules of Professional conduct disallowing 

business transactions between lawyer and client without 

full written disclosure. See Rizzo v. Haines, 555 A.2d 58, 67 

(Pa. 1989). 

It is true that, in Signore's deposition testimony, he said 

he had discussed the real estate investments in the 1980's 

with Selko or Selko's father, and they appeared satisfied. 

Signore conceded, however, that these discussions were 

after the fact of the investments. Moreover, his recollection 

of what was said, and when, was so conclusory, blurred, 

and inconsistent as to render the testimony virtually 

meaningless. In his own deposition, Selko flatly denied that 

 14 
Signore ever told him of the real estate investments prior to 

1991, and even Signore admitted that he never provided 

written information until after the monies were locked into 

the "participation bonds" and so beyond withdrawal.

There is nothing, moreover, to the argument that Signore 

could not be expected to have known of Selko's 

dissatisfaction. When seeking insurance in April of 1994, 

Signore was well aware of facts that would have strongly 

indicated to a reasonable attorney that Selko was unhappy 

-- and would soon be even more unhappy. Selko had 

consulted another lawyer in 1992, had criticized the 

investments, had relieved Signore, had eliminated Signore's 

investment authority, and had specifically asked him to 

return his money. Almost two years had then elapsed

without response and without return of any money. Signore 

stated in a subsequent letter that, during this period, the 

real estate market had "slowed to a crawl" and values were 

either "down or . . . stagnant." It was plainly apparent by 

April of 1994 that Selko's entire $300,000 was in imminent 

peril. Signore and ICI in fact defaulted on the bonds only 

four months later. In these circumstances, a reasonable 

attorney in Signore's shoes would have realized that he had 

a dissatisfied client who would undoubtedly take further 

legal action absent a miraculous and unlikely turnaround 

in the real estate market. 

Since this case arises on summary judgment, the 

ultimate question boils down to whether, viewing the record 

most favorably to plaintiff, a reasonable fact finder might 

find that, seen through the lens of what a reasonable 

lawyer would have believed, Signore was without basis to 

believe that he had breached a professional duty. 

To state this question is to answer it. We do not see how 

it could reasonably be found on this record, even when 

viewed most favorably to plaintiff, that a reasonable lawyer 

would have had no "basis to believe" that a breach of 

professional duty had occurred. 

There is no need to proceed further. We affirm the 

judgment below. See Central Penn. Teamsters Fund v. Peat 

Marwick Main S. Co., 85 F.3d 1098, 1107 (3d Cir. 1996) 

 15 
(court of appeals may affirm on any ground supported by 

record). 

So ordered. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 16