2002 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-2-2002

Intl Land v. Fausto

Precedential or Non-Precedential: Non-Precedential

Docket No. 01-2386

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Recommended Citation

"Intl Land v. Fausto" (2002). 2002 Decisions. Paper 370.

http://digitalcommons.law.villanova.edu/thirdcircuit_2002/370
 NOT PRECEDENTIAL 

 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 NO. 01-2386 

 

 INTERNATIONAL LAND ACQUISITIONS, INC. 

 Appellant 

 v. 

 NICHOLAS M. FAUSTO, ESQUIRE 

 

 On Appeal From the United States District Court 

 For the Eastern District of Pennsylvania 

 (D.C. Civil Action No. 99-cv-05308) 

 District Judge: Honorable Robert F. Kelly 

 

 Submitted Pursuant to Third Circuit LAR 34.1(a) 

 June 28, 2002 

 BEFORE: AMBRO, STAPLETON and CUDAHY,* Circuit Judges, 

 (Opinion Filed: July 2, 2002) 

 

 

 OPINION OF THE COURT 

______________________________________________________________________ 

*Honorable Richard D. Cudahy, United States Circuit Judge for the Seventh Circuit, 

sitting by designation. 

 STAPLETON, Circuit Judge: 

 Plaintiff/Appellant International Land Acquisition ("ILA") brought this 

legal malpractice diversity action against Defendant/Appellee Nicholas A. Fausto. 

According to ILA, Fausto negligently represented ILA’s interest in a state court case 

involving a judgment by confession. The District Court held a jury trial in the 

malpractice case. At the close of ILA’s case, Fausto moved for judgment as a matter of 

law under Rule 50, which the District Court granted. ILA appeals that decision and the 

District Court’s refusal to admit into evidence the state court’s opinion declining to 

reopen the confessed judgment. 

 I. 

 ILA executed a Surety Agreement for a promissory note that provided in 

part: 

 Surety, and each of them if more than one, hereby irrevocably 

 authorizes and empowers any attorney or Prothonotary or 

 Clerk for any court of record, with or without declaration 

 filed, to appear for and confess judgment against Surety, or 

 any of them, for such sums for which Surety is or may 

 become liable to Lender . . . . 
Supp. App. at 177. Pursuant to that provision, on May 9, 1996, Madison Bank confessed 

judgment against ILA in the amount of $200,000. 

 In May or June of 1996, ILA hired Fausto to file a petition to strike or open 

the judgment on the grounds that the signatures to the Surety Agreement were not 

authorized or were obtained by fraud. On September 30, 1996, Fausto filed the petition 

with the Court of Common Pleas, Montgomery County, Pennsylvania on ILA’s behalf. 

Madison Bank filed a response on October 28, 1996. On November 1, 1996, the state 

court entered an order directing discovery to be conducted within sixty days. On 

December 3, 1996, following oral argument on the petition, the state court entered an 

order denying the petition. 

 On December 13, 1996, Fausto filed a motion for reconsideration on behalf 

of ILA. On January 6, 1997, the state court granted the motion for reconsideration and 

granted ILA an additional sixty days to conduct discovery. 

 The state court again denied the petition to reopen and ILA timely filed a 

notice of appeal. Pursuant to Pennsylvania Rule of Appellate Procedure 1925, on 

November 28, 1997, the Court of Common Pleas filed an opinion in response to ILA’s 

"statement of matters complained of." 

 The state court first observed that it could only strike a confessed judgment 

"where there is a fatal defect or irregularity that appears on the face of the record, and, 

the confession of judgment clause and Complaint must be read together to determine if 

such defects exist." App. at 39 (citing Parliament Industries Inc. v. William H. Vaughan 

& Co., Inc., 459 A.2d 720 (Pa. 1983)). The court found that because "ILA failed to 

allege the existence of any defects present in either the confession of judgment clause or 

in the Complaint itself, it is clear that this Court properly denied their Petition to Strike.

App. at 40. 

 With regard to the petition to open the confessed judgment, the state court 

noted that a court should only open a confessed judgment "when the petitioner acts 

promptly, alleges a meritorious defense, and presents sufficient evidence that the defense 

creates an issue for the jury." The court stated: 

 In the instant case, [ILA] did not file its Petitition to 

 Open until more than four and one-half months had passed 

 following entry of judgment, and at no point, either in the 

 petition or at oral argument, did [ILA] provide an explanation 

 for the lengthy delay. In fact, upon specific questioning by 

 the undersigned as to the reason for the delay, counsel for 

 [ILA] stated only that he had "no response." As such it is 

 clear that [ILA’s] Petition to Open was properly denied as it 

 failed to satisfy or even address the first prerequisite to 

 opening a confessed judgment, thereby rendering moot any 

 alleged issues of material fact raised on appeal. 

 Nevertheless, this Court will briefly address [ILA’s] 

 contention that it has a meritorious defense which warrants 

 opening the confessed judgment . . . In the instant case, 

 [ILA] did allege the existence of a meritorious defense, i.e., 

 that the signatures on the Surety Agreement were not made 

 by officers of the [ILA], and that those who signed the 

 Agreement were not authorized to do so. However, despite 

 several Orders directing that discovery be conducted 

 regarding [ILA’s] Petition, and [ILA’s] own 

 acknowledgment that discovery was necessary to support the 

 factual allegations therein, [ILA] appeared before this Court, 

 notwithstanding said Orders and over 15 months after 

 judgment was confessed, without having conducted any 

 discovery and without offering one shred of evidence in 

 support of its alleged defense. Incredibly, upon the 

 undersigned’s questioning as to why no evidence was 

 presented, counsel for [ILA] again had "no response." 

App. at 42-43 (emphasis in original). On appeal, the Superior Court affirmed the trial 

court essentially for the reasons provided by it. 
 II. 

 ILA filed this suit against Fausto claiming Fausto was negligent in failing 

to get the confessed judgment open, and that it would have been able to defeat Madison 

Bank’s claim on the merits if Fausto had not been negligent. 

 The District Court held a trial and ILA presented three witnesses, Robert 

Tassio, the Secretary of ILA, Robert Glinski, counsel to ILA, and Donald Wellington, 

President of ILA. 

 During direct, Tassio testified that the Court of Common Pleas had denied 

the petition to strike or reopen. When he was asked to explain why the petition had been 

denied, the District Court sustained an objection and suggested that the parties could 

stipulate as to the reasoning behind the state court’s decision to deny the petition to open 

the confessed judgment. ILA then attempted to have Tassio read a portion of the 

decision. Specifically, ILA requested that Tassio read the portion quoted above that 

contains the court’s finding that Fausto had "no response" to its questioning about the 

delay in filing the petition and the delay in taking discovery. Fausto’s counsel again 

objected. The following interchange took place: 

 Mr. Bredt (ILA’s counsel): Q: Mr. Tassio, could you 

 take a look at that opinion, please. And beginning at the 

 bottom of Page 5, could you read what the court has stated 

 there? 

 Mr. Lefco (Fausto’s counsel): Objection, your Honor. 

 The Court: Why? This isn’t the same as what he was 

 asking him before. 

 Mr. Lefco: Well your Honor, this I that’s a 

 hearsay this is a hearsay declaration, this is an out-of-court 

 statement by persons being offered for the truth of the matter 

 stated. 

 It doesn’t matter for purposes I would submit of 

 this case, what the court said, other than the fact that Mr. 

 Fausto’s the petition that he filed on behalf of ILA was 

 denied. 

 Mr. Bredt: May I respond, your Honor? 

 The Court: Yes. 

 Mr. Bredt: This is a public record. This is 

 The Court: What’s that mean 

 Mr. Bredt: Well 

 The Court: this is a public record? 

 Mr. Bredt: Its an opinion of the court. He got it I 

 mean anybody could get this opinion, it is a public record 

 and it is a hearsay exception. 

 The Court: Sustained objection sustained. 

Supp. App. at 47-48. Later, the following conversation took place at a side bar: 

 Mr. Bredt: Okay. We’re going to stipulate that the 

 Common Pleas Court of Montgomery County denied the 

 petition to open and strike it and that the reason they did it, 

 was because, one, it was filed late, four and a half months 

 after the judgment and, two, that the defendant Mr. Fausto 

 on behalf of the defendant did not present any meritorious 

 evidence. 

 Mr. Lefco: Well, I won’t stipulate that Mr. Fausto did 

 or didn’t, but I’ll stipulate that ILA didn’t and then you can 

 argue that your know that was his job. 

 Mr. Bredt: That’s fine. 

Supp. App. at 153. Mr. Bredt presented this stipulation to the jury. 

 Mr. Bredt: It has been stipulated that the Montgomery 

 County Common Pleas Court denied the petition to open or 

 strike judgment, that Mr. Fausto filed on behalf of 

 International Land, that the reasons for the denial were 
 twofold, one, it was filed four and a half months after the 

 judgment was taken and, therefore, it was filed too late and, 

 second of all, the defendant did not present any evidence in 

 support of its alleged meritorious defense. 

 Mr. Lefco: When you say, the defendant, you mean, 

 ILA? 

 Mr. Bredt: Right. And, thirdly, that the Superior Court 

 affirmed the denial of the petition by the Montgomery Count 

 Common Plays Court. 

Supp. App. at 154. 

 At the close of ILA’s case, Fausto moved for judgment as a matter of law 

under Rule 50. He argued that expert testimony was needed to establish both that he was 

negligent in filing the petition four and a half months after the confessed judgment and 

that he could have presented adequate evidence of a meritorious defense. The District 

Court granted the defendant’s motion, holding that "the plaintiff [could not] prevail 

without the testimony of an expert." Supp. App. at 173. 

 III. 

 A. Evidentiary Issue 

 ILA contends that the District Court erred when it decided not to admit into 

evidence the November 28, 1997, Montgomery County Court of Common Pleas opinion 

and that this is important despite the stipulation because the opinion evidenced implied 

admissions of Fausto that he filed the petition late without justification and that he took 

no discovery. 

 According to ILA, there are two reasons why this evidence should have 

been admitted. First, ILA argues that the opinion contains an admission by a party 

opponent, thus making the statement non-hearsay under Rule of Evidence 801(d)(2). 

Second, ILA contends that it attached the state court opinion to its complaint and that the 

defendant’s answer to the complaint acknowledges that the opinion speaks for itself. 

According to ILA, exhibits are permitted to be attached to pleadings and pleadings 

should be admitted into evidence. 

 When the District Court applies the appropriate legal standard, evidentiary 

rulings are subject to the trial judge’s discretion and are therefore reviewed only for abuse 

of discretion. See Abrams v. Lightolier Inc., 50 F.3d 1204, 1213 (3d Cir. 1995). 

Further, pursuant to Federal Rule of Civil Procedure 61, errors in the admission or 

exclusion of evidence cannot be grounds for reversal or a new trial if they constitute 

harmless error. See id. Finally, when a party fails to timely object to the trial court’s 

evidentiary rulings during the proceedings, those rulings are reviewed under the plain 

error standard. See id. Notwithstanding these precepts, to the extent that the District 

Court’s admission or exclusion of evidence was based on an interpretation of the Federal 

Rules of Evidence, we exercise plenary review. See United States v. Furst, 886 F.2d 

558, 571 (3d Cir. 1989). 

 Rule 103(a)(2) of the Federal Rules of Evidence provides that error may 

not be predicated upon a ruling which excludes evidence unless "the substance of the 

evidence was made known to the court by offer or was apparent from the context within 

which questions were asked." Fed. R. Evid. 103(a)(2). Read literally, this rule tends to 

suggest that there is no requirement that the offeror state the grounds relied upon for 

admissibility or that the offer of proof be timely, on the record, or stated with specificity. 

However, this rule has been applied differently in practice. "If in the trial court the 

offeror fails to specify any ground for admissibility, or specifies the wrong ground, he is 

trouble on appeal." Charles Alan Wright and Kenneth W. Graham, Jr., 21 Federal 

Practice and Procedure 5040 at 210 (1977). A failure to advance a ground for the 

admission of evidence relegates the offering party to plain error review on appeal. See 

id.; Fed. R. Evid. 103(d); see also United States v. Gambino, 926 F.2d 1355, 1363 n.6 

(3d Cir. 1991) (noting that objecting to testimony on one ground does not preserve other 

grounds for objection on appeal); United States v. Field, 875 F.2d 130, 134 (7th Cir. 

1989) (holding that under Rule 103(a)(1) "[n]either a general objection to the evidence 

nor a specific objection on other grounds will preserve the issue on review"). 

 At trial, ILA’s sole argument for the admissibility of the state court’s 

decision was that it fell within the public records exception to the hearsay rule, Rule 
803(8). That issue is preserved for review and we review the District Court’s findings 

for an abuse of discretion. For the remaining arguments, we review the District Court’s 

decision for plain error. 

 This record presents a double hearsay issue. First, the opinion is an out of 

court statement offered for the truth of the matter asserted. The state court judge was not 

there to testify as to his recollection of Fausto’s actions in his courtroom. This out of 

court statement thus constitutes hearsay. Second, the court is recording the verbal or 

non-verbal response of Fausto. This is also hearsay that is being offered for the truth of 

what that response is said to admit -- that his filing was untimely and he took no 

discovery. ILA must be able to point to an applicable exclusion or exception for each of 

these levels of hearsay. 

 ILA cannot cure the initial hearsay problem. See Nipper v. Snipes, 7 F.3d 

415, 417 (4th Cir. 1993) ("Rule 803(8)(C), on its face, does not apply to judicial findings 

of fact; it applies to ’factual findings resulting from an investigation made pursuant to 

authority granted by law.’ Fed. R. Evid. 803(8)(C). A judge in a civil trial is not an 

investigator, rather a judge."); United States v. Jones, 29 F.3d 1549, 1554 (11th Cir. 

1994) (finding that judicial findings are inadmissible hearsay that cannot be corrected 

under 803(8)); Zenith Radio Corp. v. Matsushita Elec. Indus. Co., 505 F.Supp. 1125, 

1185 (E.D. Pa. 1980), aff’d in part and rev’d on other grounds in part sub nom. In re 

Japanese Elec. Prod. Antitrust Litig., 723 F.2d 238, 275 (3d Cir. 1983), rev’d sub nom. 

Matsushita Elect. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (concluding 

that prior judicial findings were not admissible under Rule 803(8)(C), and that the 

trustworthiness analysis required under Rule 803(8)(C) would be unsuited to evaluating 

judicial findings because a judge is not a proper witness under Rule 605). 

 Because ILA cannot overcome the first level of hearsay, we need not reach 

the question of whether Fausto’s statements are an admission of a party opponent. 

 Finally, ILA provides no support, and we find none, for the proposition 

that simply attaching the opinion to its complaint against Fausto would make it 

admissible evidence. 

 B. Rule 50 Motion 

 Under Rule 50, a District Court may grant judgment as a matter of law if a 

"party has been fully heard on an issue and there is no legally sufficient evidentiary basis 

for a reasonable jury to find for that party on that issue." Fed. R. Civ. P. 50(a)(1). Our 

review of a trial court’s grant of judgment as a matter of law is plenary. Mosely v. 

Wilson, 102 F.3d 85, 89 (3d Cir. 1996). 

 Under Pennsylvania law, in order to establish a claim of legal malpractice, 

the plaintiff must show three basic elements: 1) employment of the attorney or other 

basis for a duty; 2) the failure of the attorney to exercise ordinary skill and knowledge; 

and 3) a causal nexus between the negligence and damage to the plaintiff. See Kituskie 

v. Corbman, 714 A.2d 1027, 1029 (Pa. 1998); Rizzo v. Haines, 555 A.2d 58, 66 (Pa. 

1989). "The standard of care to which an attorney must adhere is measured by the skill 

generally possessed and employed by practitioners of the profession." Gans v. Mundy, 

762 F.2d 338, 341 (3d Cir. 1985). Plaintiffs must show "proof of actual loss rather than 

a breach of a professional duty causing only nominal damages, speculative harm or the 

threat of future harm." Kituskie, 714 A.2d at 1030. To demonstrate that he has suffered 

actual damages, a plaintiff must "prove that he had a viable cause of action against the 

party he wished to sue in the underlying case." Id. This concept is often referred to as 

proving the "case within a case." Id. 

 In both bench and jury trials, the plaintiff must put on expert testimony to 

establish the relevant standard of care and whether the defendant complied with that 

standard. See Lentino v. Fringe Employment Plans, 611 F.2d 474, 480-81 (3d Cir. 1979) 

(applying Pennsylvania law); Rizzo, 555 A.2d at 66; see also Gans, 762 F.2d at 342 

("[T]he Letino expert evidence requirement devolves upon the plaintiff, not the 

defendant."). Only "where the matter under investigation is so simple, and the lack of 

skill so obvious, as to be within the range of the ordinary experience and comprehension 

of non-professional persons," are expert witnesses unnecessary. Lentino, 611 F.2d at 

480. 

 ILA contends that Fausto was negligent in failing to timely file the petition 

and in failing to conduct discovery. It insists that Tassio’s testimony regarding the hiring 

of Fausto to file the petition is enough to overcome the Rule 50 motion on the timeliness 
issue. Further, ILA argues that it need not present expert testimony on the discovery 

issue because Fausto did not conduct any discovery. Lastly, ILA contends that it met the 

burden of proving the case within the case by the testimony of Tassio and Wellington, 

which, according to ILA, established the merits of the underlying case. Like the District 

Court, we find these arguments unpersuasive. 

 Whether Fausto negligently filed the petition late is to be judged in light of 

the skill generally possessed and employed by practitioners of the profession. The fact 

that the state court denied ILA’s petition because Fausto filed it late does not establish 

that he was negligent in doing so. ILA had to put on expert testimony to show how long 

it would take a reasonable attorney in Fausto’s position to investigate the matter and to 

prepare the necessary petition as well as what a reasonable attorney would have expected 

a court to regard as an "unreasonable delay." Contrary to ILA’s suggestion, these are not 

matters that a jury should be asked to answer without the help of an expert in the practice 

of law. 

 The same is true of the issues raised by the claim of negligence in the 

failure to take discovery. Lay people should not be asked to determine without expert 

help what discovery is necessary when the client is claiming that its signature was 

unauthorized or obtained by fraud. 

 But even if we assume that ILA could establish malpractice for failure to 

conduct discovery without expert testimony, it would need expert testimony to 

demonstrate that it would have won the case within the case if Fausto had not been 

negligent, a matter that involves the law of suretyship, agency and corporate governance. 

 Because ILA presented no expert testimony establishing either the standard 

of care for an attorney or the fact that it would win the case within the case, it failed to 

meet its burden under the Pennsylvania standard. 

 IV. 

 The judgment of the District Court will be affirmed. 

 __________________________ 

TO THE CLERK: 

 Please file the foregoing not precedential opinion. 

 /s/ Walter K. Stapleton 

 Circuit Judg