### 1998 D e c i sion s O p inion s of the U nit e d

S t a t e s C our t of Appe al s for the Thir d C ir c uit

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D ock e t 96-1702

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. e du/thir dc ir c uit_1998/44Filed 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 f rom the district court's grant of summary judgment denying recovery on this policy against Home Insurance Comp any ("Home").

I.

In 1982, at age 18, Selko was the passenger in a ca r 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 sinc e been disbarred, to represent him in obtaining compensati on 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 person al, and to vary such investments as he may, in his abso lute discretion deem best, and to vote at meeting s of any corporation or company and to execute any pr oxies 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 pa id and

2checks 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 su ms on Selko's behalf from settlements and insurance cl aims. From these recoveries, Signore invested $300,000 wi thout Selko's prior knowledge or further approval in real estate ventures of his own. Signore placed the collected s ums in the bank account of a shell company wholly owned by him called Innovative Concepts, Inc. ("ICI"). He then c aused 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 t he 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 lende rs, were then used to purchase interests in Signore's s ole name in real estate ventures. Selko's ICI participa tion bonds were "secured" by Signore's personal pledges of his real estate interests and by Signore's personal gua rantees. ICI and Signore later defaulted on the bonds when t hey became due, beginning in 1994, and in 1995 Signoref iled for bankruptcy.

According to Selko, he did not learn that his perso nal injury proceeds were being utilized in this manner until he made inquiry of Signore in 1991. After Signore resp onded with some information, Selko wrote Signore on May 9
, 1991, expressing concern about the investments' "illiquidity." Selko's letter also stated that he b elieved he should "diversify and reduce my 100 percent exposur e to the vagaries of the local real estate market." With out replying right away, Signore continued to invest in the fashion described above. After further inquiries, S ignore again responded to Selko on October 30, 1991. Reass uring him about the investments, Signore said that, for t he "long term," they were sustaining a very fair return. Fur ther correspondence between Selko and Signore led to Sig nore's assurances to work with Selko and "get for you some liquidity as soon as possible." (A building sale or

3replacement of Selko by another investor were menti oned

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

Selko later sought and received guidance from a ret ired attorney, Guy Gabrielson, who met with Signore in J uly of 1992. Gabrielson reported to Signore his understand ing of that meeting in a letter dated July 17, 1992. In th e letter, Gabrielson indicated the time was ripe to relieve S ignore's office of further responsibilities. Gabrielson also said he believed Selko would like to divest himself as rapi dly as possible of the real estate investments so that he could begin to diversify his investments under the guidan ce of an investment advisor, and that Gabrielson would advis e Selko to do so. Signore testified in his deposition that he understood at about this time that he was being rel ieved of his representation of Selko.

Gabrielson's letter was quickly followed by a lette r from Selko to Signore dated July 20, 1992, requesting th at Selko receive "any part, or preferably all, of my interes t payments currently" from the ICI participation bonds, and st ating

that he wished to divest himself of all bonds as ra pidly as possible beginning with the last to mature. Signore was asked to make checks either for interest or princip al payable to Selko's order and send them to him, so t hat he could begin the process of diversifying his portfol io 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 principa l 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 pro secute the automobile accident claim, to remit the same to Selko. Any further funds received on Selko's behalf were t o 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 furt her

4communication occurred between Signore and Selko un til

more than two years later, in September of 1994. In that month, the earlier of Selko's ICI participation bon ds 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 acti on 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 assi gned to Selko all his rights against Home under a policy of professional liability insurance he had purchased f or his law firm in April of 1994.

On October 12, 1994, a few days after Selko sued hi m, Signore promptly notified Home of Selko's malpracti ce action against him. Home refused to defend or indem nify Signore under the policy, asserting, among other de fenses, that, when applying for the policy, Signore had kno wn of but had not disclosed the existence of Selko's pote ntial claim for breach of professional duty. Under the te rms of the policy, Home agreed to pay damages on behalf of the insured for an act, error, or omission happening pr ior to the effective date of the policy only if before suc h date "the
Insured had no basis to believe that the Insured ha d breached a professional duty . . . ."1 In declinin g liability, Home relied on this clause, and also on Signore's n egative answer to a question in the policy application aski ng,

"11.d. does any lawyer named in (question) 5 (a) know of any circumstances, acts, errors or omissi ons 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 tha t prior to the

effective date of this policy

* * *

the insured had no basis to believe that the insure d had breached a professional duty . . . ."

5could [emphasis added] result in a professio nal liability

claim against any attorney of the firm, or i ts predecessor.

Home continued to deny coverage under the policy wh en Selko, pursuant to the settlement with Signore and the assignment of the policy, later sought indemnificat ion for the losses he had sustained because of Signore's wrongdoing.2 Selko then brought the present diversi ty action in the district court against Home. After di scovery, 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 a dmitting that, when applying for the policy, Signore already knew he had breached his professional duty to Selko. For th is 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 busin ess transaction with a client or acquire an ownership i nterest
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 S elko's funds in his personal real estate ventures clearly violated Rule 1.8(a). Signore did not advise Selko for two y ears where his money was invested and of Signore's perso nal financial involvement. Signore, moreover, did not h onor his client's wishes, expressed in May 1991, to diversif y, but
instead increased the investment. The court found t he investment authorization in the 1982 power of attor ney fell short of being adequate written disclosure under Ru le 1.8(a). The court concluded that when Signore appli ed for malpractice insurance in April of 1994, "he clearly had a

___________________________________________________ ______________

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

6basis to believe that a claim of malpractice could be

brought against him."

In reaching this conclusion, the district court rel ied particularly upon a Wisconsin case, Logan v. Northw estern Nat'l Cas. Co., 424 N.W.2d 179 (Wis. 1988). As the district court explained, the Logan court "held that determi ning
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.' " Sel ko 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 hav e known,' because it potentially gives insurers a wind fall to deny coverage in many cases and ultimately defeat s the purpose of the contract."

Id. The district court determined, on the basis of Signore's deposition testimony, that there was no genuine iss ue 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 insuranc e 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]otwithstand ing 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 affirma tive burden of proving that Signore had a "basis to beli eve" that he had breached a professional duty. Viewing the ev idence 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 infin ding that Signore made additional investments of Selko's money

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

points to portions of Signore's deposition indicati ng that
Selko's monies were invested in real estate as earl y as the mid-1980's and that later participation bonds were replacements of former ones that cannot be found. B y 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, empo wered him to make the real estate investments in question . Selko concludes that the evidence is, at best, conflictin g whether Signore ever subjectively knew he had violated any ethical duty to Selko.

By the same token, Selko denies that Signore knew o f any potential malpractice claim against him. He arg ues 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 t o a case from the Eastern District of Missouri indicating th at evidence "clearly reflect[ing] dissatisfaction" is a necessary prelude to invocation of the "basis to believe" exc lusion. General Accident Ins. Co. v. Trefys, 657 F. Supp. 1 64, 167 (E.D. Mo. 1987). Selko further argues that, if Sign ore had any inkling of a pending claim, he would not -- as he did -- have switched malpractice carriers in April of 1 994. In the years previous, Signore had continuously obtain ed malpractice insurance from another company, Selko s ays. Presumably, the "basis to believe" exclusion (or co mparable proviso) would not have been a defense available to his earlier carrier, since the clause would only bar cl aims based on conduct prior to the issuance of a policy.

IV.

Perhaps the crucial issue in this appeal is the pro per construction of the clause in the Home policy "that prior to the effective date of this policy . . . (2) the Ins ured had no

8basis to believe that the Insured had breached a

professional duty . . . ." We turn to that first. B ecause Pennsylvania law governs, we ask how the Pennsylvan ia courts would read that clause; but as there is no a pplicable Pennsylvania precedent we must construe the clause without direct guidance, looking at its language, t he 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 f ails to support Home's burden of proving beyond genuine dis pute that Signore actually knew or believed when he appl ied for professional responsibility coverage in April of 19 94 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 s ubjective interpretation, and that, in any case, a correct understanding of the "basis to believe" clause is t o be found
in recent federal district court decisions from the Western and Eastern Districts of Pennsylvania. These decisi ons held, in essence, that the "basis to believe" claus e requires a determination of whether the insured was subjecti vely

aware of facts that would have led a reasonable att orney to believe that he had breached a professional duty. W e agree with this "mixed" formulation and hold that, howeve r Logan is understood, the district court cases have correc tly 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 expir ed, having misled his client into thinking that he was diligen tly pursuing the matter. The district court said, inter alia,

Stegenga argues that he did not know, subjec tively, that his actions might give rise to liabilit y. The insurance contract, he argues, disallows cov erage only if he was actually aware of the legal conseq uences of his actions. Such an interpretation is manif estly inconsistent with the plain language of the policy.

9True, the condition, set forth in the polic y-- that the

Insured "have no basis to believe" -- disall ows coverage where the insured is subjectively aware of c ertain facts. There is no language, however, indicating th at the insured must have been subjectively aware th at these facts might give rise to liability. As long as the insured is subjectively aware of facts that, under a n objective "reasonable person" standard would be seen a s possibly giving rise to liability, he will n ot be covered for liability resulting from those incidents [citing Logan].

* * *

This, of course, makes perfect sense because otherwise, one would only need to [ ] make c ertain he was ignorant of his duties in order to be in sured 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 insur ed to disclose those facts known only to him, so t hat 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. 19 93), and in Home Ins. Co. v. Powell, No. 95-6305, 1996 WL 26 9496 (E.D. Pa. May 20, 1996). Most recently, Judge Cohil l of the Western District of Pennsylvania wrote comprehensiv ely to the same effect, specifically rejecting the distric t court's view in this case that a purely subjective measure applies. Mt. Airy Ins. Co. v. Thomas, 954 F. Supp. 1073, 107 9 (W.D. Pa. 1997).

The above cases, decided in federal courts in Pennsylvania by judges familiar with that state's l aw, are of course neither binding on the Pennsylvania courts n or upon ourselves. We find their reading of the disput ed 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) (langua ge of contract is primary consideration in interpreting a n

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

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 mea ning).

Selko would construe the language "provided . . . t he
insured had no basis to believe that the insured ha d breached a professional duty" as if it were written
, "provided . . . the insured neither knew nor believ ed that the insured had breached a professional duty." Ther e is, however, a significant difference in meaning betwee n these two formulations. The latter wording, had it been incorporated into the policy, would, indeed, have i ndicated that the insured's own knowledge and belief were th e touchstones. But the actual policy language is diff erent. Its phraseology -- that "the insured had [no basis to b elieve]" -- refers, it is true, to the factual predicate pos sessed 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 me ant to stand or fall on the individual insured's subjectiv e 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 p ointed to an objective criterion.

Hence, we agree with Stegenga that the plain langua ge of the exclusion calls for a two-stage analysis. First , it must

be shown that the insured knew of certain facts. Se cond, 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 reasonabl e lawyer in possession of such facts would have had a basis to believe that the insured had breached a professiona l duty.3

___________________________________________________ ______________

3. We recognize that, in Pennsylvania as well as el sewhere, exclusions are strictly construed against the insurer, as are ambiguities in the policy. Standard Venetian Blind Co. v. American Emp ire Ins. Co., 469 A.2d 563, 566 (Pa. 1983); First Pa. Bank v. Nat'l U nion Fire Ins. Co., 580 A.2d 799, 802 (Pa. Super. Ct. 1990). Clear policy l anguage, however, is to be given effect, Standard Venetian Blind Co., 46 9 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,

11That the insured denies recognizing such a basis on

grounds of ignorance of the law, oversight, psychol ogical difficulties, or other personal reasons is immateri al.

This construction does not relieve the insurer of i ts 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 uniqu ely unaware of ethical and fiduciary principles that al l lawyers would know or that he did not understand the implic ations of conduct and events that any reasonable lawyer wo uld have grasped.

Selko argues that to interpret the provision in thi s manner is unfair to a victimized client such as him self who has no other redress but his defalcating attorney's professional liability insurance. However, the excl usionary clause in question addresses only misconduct during the period prior to the effective date of the policy. I t is reasonable for the insurer to refuse coverage for c laims based on preexisting but undisclosed misconduct by an insured attorney. Nor is it unreasonable to tie suc h an exclusion to an even-handed "reasonable attorney" assessment, rather than to speculation concerning t he 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, coverag e 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 att orney to foresee a claim.

A case such as this is painful, in that it may leav e a malpractice victim without an effective remedy. But courts

___________________________________________________ ______________

Pepicelli, Watts and Youngs, P.C., 821 F.2d 216, 22 0 (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 w e adopt is not merely one of several possible interpretations but is, in our view, the interpretation plainly signaled by the contract lan guage.

12cannot conscientiously rewrite an insurance contrac t

between a defalcating attorney and his insurer in o rder to furnish coverage for the wronged assignee. Where st ates have decided, on policy grounds, to guarantee insur ance coverage, e.g. for motor vehicle injuries, they hav e done so by comprehensive legislation requiring specific kin ds of insurance as a condition to licensure and by regula ting policy language. No such legislation applies here.

V.

Applying the above interpretation of the Home polic y, we hold that the only reasonable interpretation of thi s record is that a reasonable attorney in Signore's shoes wo uld have realized in April 1994, when Signore applied for th e insurance, that he had a basis to believe that he h ad breached a professional duty to Selko. Selko, we no te, concedes in his appellate brief that Signore breach ed his common law fiduciary and professional duties under the 1982 power of attorney and the lawyer-client relati onships 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 underlyi ng the breach were all fully known to Signore when he appl ied 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 liabi lity claim against any attorney of the firm." [Emphasis suppli ed.]

We disagree with appellant's suggestions that Signo re's misconduct was merely marginal. To the contrary, it was egregious. Without meaningful explanation to and ap proval from his injured, youthful client, he loaned his cl ient'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 lo ans were evidenced by five year bonds bearing ten percent in terest that was not, however, payable until the bonds' mat urity. As events were to prove, the bonds were risky in th e extreme; they were unsecured by mortgages or meanin gful

13collateral. As Signore conceded, he did not disclos e these

transactions in writing to his client prior to rece iving 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 cle arly subordinated his client's interests to his own gree d. Had Signore's real estate ventures succeeded, Signore w ould have profited while Selko would, at best, have reco vered 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 approva l, 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 t his by the broad general investment clause in the power of attorney is obviously without merit. The chief purp ose of the power, as Signore's own deposition attested, wa s to enable Signore to collect and administer Selko's mu ltisourced recoveries. The investment clause cannot be read to authorize Signore to gamble with his client's mo ney or utilize the money in ways that put his own interest s ahead of Selko's. The district court, moreover, correctly took account of Signore's violation of Rule 1.8(a) of th e Pennsylvania Rules of Professional conduct disallow ing business transactions between lawyer and client wit hout 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 sat isfied. Signore conceded, however, that these discussions w ere after the fact of the investments. Moreover, his re collection of what was said, and when, was so conclusory, blur red, and inconsistent as to render the testimony virtual ly meaningless. In his own deposition, Selko flatly de nied that

14Signore ever told him of the real estate investment s prior to

1991, and even Signore admitted that he never provi ded
written information until after the monies were loc ked into the "participation bonds" and so beyond withdrawal.

There is nothing, moreover, to the argument that Si gnore 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 str ongly indicated to a reasonable attorney that Selko was u nhappy -- and would soon be even more unhappy. Selko had consulted another lawyer in 1992, had criticized th e investments, had relieved Signore, had eliminated S ignore's investment authority, and had specifically asked hi m to return his money. Almost two years had then elapsed without response and without return of any money. S ignore stated in a subsequent letter that, during this per iod, the

real estate market had "slowed to a crawl" and valu es were either "down or . . . stagnant." It was plainly app arent by April of 1994 that Selko's entire $300,000 was in i mminent peril. Signore and ICI in fact defaulted on the bon ds only four months later. In these circumstances, a reason able attorney in Signore's shoes would have realized tha t he had a dissatisfied client who would undoubtedly take fu rther legal action absent a miraculous and unlikely turna round
in the real estate market.

Since this case arises on summary judgment, the ultimate question boils down to whether, viewing th e record most favorably to plaintiff, a reasonable fact find er might find that, seen through the lens of what a reasonab le lawyer would have believed, Signore was without bas is to believe that he had breached a professional duty.

To state this question is to answer it. We do not s ee how it could reasonably be found on this record, even w hen viewed most favorably to plaintiff, that a reasonab le 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. 19 96)

15(court of appeals may affirm on any ground supporte d by

record).

So ordered.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

16