NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_____________ No. 14

- 4693

_____________ RASHEENA PHINISEE, Individually and on behalf of A.P., a minor, as her p arent and n atural g uardian , Appellant

v. DERE K R. LAYSER, Esquire; GILBERT G. SPENCER, JR., Esquire; SPENCER & ASSOCIATES; LAYSER FREIWALD, P.C.

_______________ On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 14

- c v - 3896 ) District Judge: Hon orable Be rle M. Schiller

_______________ Submitted Under Third Circuit L

. A

. R

. 34.1(a)

September 18, 2015 Before: FISHER, CHAGARES , and JORDAN, Circuit Judges

.

(Filed : September 21, 2015 )

_______________ OPINION 

_______________ JORDAN, Circuit Judge

.

 This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7, does not constitute binding precedent.2

Rasheena Phinisee, individually and on behalf of her minor daughter, A.P., appeals orders of the United States District Court for the Eastern District of Pennsylvania dismissing her complaint, denying her motion to amend findings of fact, and denying her motion for reconsideration. Because the District Court did not err with respect to any of those orders, we will affirm.
I. Background A. Factual Background 1 Between July 2008 and April 2012, Phinisee, individually and on behalf of A.P.,
was represe nted by Derek Layser, Esq., and Gilbert Spencer, Jr., Esq., and their respective law firms, Layser & Freiwald, P.C., and Spencer & Associates, in a medical malpractice action against a federally

- funded health care clinic. In that action, brought against t he United States under the Federal Tort Claims Act (“FTCA”) , Phinisee alleged that the clinic prescribed her the drug Microbid and that her daughter contracted a disorder resulting in liver failure when she ingested the drug through Phinisee’s breast
milk. Approximately two weeks before the action was set for trial, on April 19, 2012, the parties attended a settlement conference before Magistrate Judge Thomas J. Rueter. On the advice of her attorneys, Phinisee entered into a $1.2 million settlement agree ment , subject to approval by a designee of the Attorney General

.

1 W e recount the facts as alleged by the non

- movant, Phinisee, accepting them as true. Fowler v. UPMC Shadyside , 578 F.3d 203, 210 (3d Cir. 2009).3

The evening after the settlement conference, Phinisee came to understand through online research that there was a Medicaid lien o n the settlement funds. 2 The next morning, Phinisee info rmed Spencer that she wished to rescind the settlement agreement

. Over the next several days, Phinisee repeatedly emailed and called Spencer, restating her desire to go to trial and alleging that he had misi nformed her about the existence of the Medicaid lien. On April 26, 2012, Phinisee, unsatisfied with her attorneys’ work, faxed a
pro se motion to reopen, and, the next day, filed a motion to t erminate Spencer and Layser as attorneys of record in the case

. T he g overnment responded with a motion to e nforce the settlement, although the Attorney General’s designee had not yet officially approved it. Spencer and Layser also filed a motion to appoint a guardian ad litem for A.P. in order to complete the paperwork on the terms agreed upon at the settlemen t conference. Shortly thereafter, the settlement was officially approved, and, on June 6, 2012, an evidentiary hearing on the competing motions to reopen and to enforce was held before Magistrate Judge Jacob Hart

. 3 By that time, Phi nisee had retained new counsel to represent her.

2 The Medicaid program, jointly funded by the federal government and the states, pays for medical services to low

- income persons pursuant to state p lans approved by the Secretary of the United States Department of Health and Human Services. 42 U.S.C. § 1396a(a)

- (b). The Pennsylvania Department of Public Welfare administers Medicaid in Pennsylvania and is author ized to recover the reasonable value of benefits provided under the program from liable third parties. E.D.B. ex rel. D.B. v. Clair , 987 A.2d 681, 684 ( Pa. 2009). Because A.P.’s medical expenses were paid through Medicaid, the settlement proceeds were su bject to a lien held by the Department of Public Welfare.

3 Magistrate Judge Hart was, by consent, designated to conduct all proceedings in the FTCA action and enter final judgment in accordance with 28 U.S.C. § 636(c) and Federal Rule of Civil Procedur e 73.4

On August 6, 2012, Judge Hart gran ted the g overnment’s motion to enforce the
settlement. Judge Hart c oncluded that Spencer and Layser had adequately explained the Medicaid lien to Phinisee, and there was no question of fraud o r duress which might vitiate the settlement. Two days later, Spencer and Layser filed a minor’s compromise petition on behalf of A.P. Phinisee did n ot respond to the petition, and Judge Hart approved it. Noting that his order granting the minor’ s compro mise petition was the final order in the case, Judge Hart dismissed as moot Phinisee’s motion to terminate Spencer and Layser as the attorneys of record and Spencer’s and Layser’s motion for appointment
of a guardian ad litem

. Phinisee moved separately for reconsideration of the order granting enforcement of the settlement and the order granting the minor’s compromise petition , both of which

were denied. Phinise e then timely appealed both of the underlying rulings and the denial of her motions for reco nsideration. On February 21, 2014, in a non

- precedential opinion,

we affirmed Judge Hart’s orders in their entirety. A.P. ex rel. Phinisee v. United States , 556 F. App’x 132, 135 (3d Cir. 2014) . In concluding that the motion to enforce was properly gran ted, we noted that “[t]he record in this case is replete with evidence, which
the Magistrate Judge credited, that: the Assistant United States Attorneys offered to settle the case for $1.2 million; Judge Rueter conveyed that offer to the plaintiffs’ then

- c ounsel; Phinisee instructed her counsel to accept the offer; and counsel did so.” Id. at 136 (footnote omitted). We also relied on Judge Hart’s finding

– which we noted Phinisee did not appeal

– that Spencer and Layser “informed Phinisee about the existe nce and significance of the Medicaid lien on the settlement proceeds.” Id.5

After exhausting her challenges to the val idity of the settlement, Phinise e has now sued Spencer and Layser for negligence, breach of fiduciary duty, fraudulent and negligent misr epresentation, and breach of contract, alleging that her former attorneys induced her to settle the medical malpractice lawsuit for significantly less than the value of the claim. She claims that , during the settlement conference, Spencer and Layser misre presented to her that she did not have a right to assert a claim on her own behalf to recover medical expenses incurred for the care of her daughter. She also claims that Spencer and Layser failed to notify her that she was responsible for the costs of ca ring for her daughter until her daughter reached the age of majority. Moreover, Phinisee alleges that her attorneys withheld an expert report and deposition transcript, which she says strongly supported her case. Finally, according to Phinisee, Spencer a nd Layser convinced her that the negligence claim was “tenuous,” when, in fact, the evidence of liability was “rock

- solid, almost to the point of being overwhelming.” ( App. at 3 7

. ) Spencer and Lay s er moved to dismiss her complaint for failure to state a claim, and the District Court granted that motion

. The Court held that Phinisee’s negligence, breach of fiduciary duty, negligent misrepresentation, and breach of contract claims were, under the circumstances, barred by Pennsylvania law , and that her fra udulent misrepresentation and concealment claim was barred by the doctrine of collateral estoppel. Phinisee then filed a motion to amend the findings of fact and judgment, or, in the alternative, a motion for reconsideration, which the District Court deni ed. In response, Phinisee filed a motion for reconsideration of the denial of her motion to amend, which the Court also denied. P hinisee now timely appeals tho s e several rulings.6

II. Discussion 4 Phinisee contends that the District Court erred in apply ing Pennsylvania law to foreclose relief on a number of her claims and in concluding that collateral esto ppel barred her remaining claim

. Her arguments are unpersuasive. A. The Non
- Fraud Claims
In Muhammad v. Strassburge r, McKenna, Messer, Shilobod & Gutnick , 587 A.2d 1346 (Pa. 1991), t h e Pennsylvania Supreme Court held that dissatisfied plaintiffs may not sue their attorneys for negligence, breach of fiduciary duty, or breach of contract following a settlement to which the plaintiffs agreed, absent pr oof of fraud. “Simply stated, ” the court said, “ we will not 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 set tle the original action.” Id. at 1348. The Muhammad court explained that the “primary reason” for its decision was that allowing such suits would “ create chaos in our civil litigation system.” Id. at 1349. According to the court, “[l]awyers would be re luctant 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. (internal quotation marks omitted). The court thus “refuse[d] to endors e a rule that will discourage settlements and increase substantially the number of legal malpractice cases.” Id.

4 The District Court had jurisdiction pursuant to 28 U.S.C. § 1332 and we have appellate jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review over a district court’s dismissal of a complaint under Rule 12(b)(6) of the Federal Ru les of Civil Procedure. Grier v. Klem , 591 F.3d 672, 676 (3d Cir. 2010).7

Applying Muhammad , the District Court concluded that Phinisee’s claims, other than those alleging fraud, were barred as a matter of law. Ph inisee makes no attempt to distinguish Muhammad or show why that decision is inapplicable. Instead, she relies on McMahon v. Shea , 688 A.2d 1179 ( Pa. 1997), a subsequent plurality decision of the Pennsylvania Supreme Court which arguably narrow ed the hold ing of Muhammad

. In McMahon , the plaintiff’s attorney failed to advise him of the consequences of not merging a prior alimony agreement into his final divorce decree. Id. at 1180. The Pennsylvania Supreme Court ruled that the plaintiff could maintain a malpractice suit against his attorney to recover damages incurred from his obligation to pay alimony to his remarried wife. Id. at 1182. The McMahon court emphasiz ed that the plaintiff was “not attempting to gain additional monies by attacking the valu e that his attorneys placed on his case,” but instead was “contending that his counsel failed to advise him as to the possible consequences of entering into a legal agreement” and thus that Muhammad did not apply. Id. As the District Court noted, McMahon merely clarified that there was a distinction between “lawsuits alleging a failure to inform a client of the legal ramifications of a settlement agreement and lawsuits second

- guessing an attorney’s professional judgment in eva luating the value of a claim

. ” Phinisee v. Layser , No. Civ

. A. 14

- 3896, 2014 WL 5780935, at *1 (E.D. Pa. Nov. 5, 2014)

. Muhammad applies in the latter category of cases, while McMahon applies in the former. This case fits squarely within the latter category. At its core, this ma lpractice claim is an attempt by Phinisee to recover a greater amount than the $1.2 million settlement to which she agreed after having been fully advised of the legal consequences8

of entering into the settlement agreement. In her amended complaint, Phini see twice alleges that she suffered damages because she “settled the lawsuit for value significantly less tha[n] the value of the case.” (App. at 41 .) Unlike the plaintiff in McMahon

– who was forced to pay alimony to his former spouse after her remarria ge by virtue of the failure to merge the alimony agreement with the divorce decree

– Phinisee suffered no new financial obligations or additional damages as a result of signing the settlement agreement. He r purported damages, premised o n her own subjectiv e assessment of the likelihood of success at trial, are purely speculative. In her earlier suit b efore Judge Hart , Phinisee argued that she was not informed prior to agreeing to settle that the p roceeds of the settlement award were subject to a Medicaid l ien. She does not appear to be making that argument now . But even if she

were alleging malpractice due to her attorneys’ failure to inform her about the Medicaid lien, that argument would fail because Judge Hart found that, in fact, Phinisee was informed about the lien before she agreed to the settlement. Moreover, Phinisee did not challenge that finding on appeal from the grant of the motion to enforce the settlement. Phinisee , 556 F. App’x at 136 (“ The Magistrate Judge also found

– and the plaint iffs do not challenge on appeal

– t hat the plaintiffs’ counsel informed Phinisee about the existence and significance of the Medicaid lien on the settlement proceeds .”). Instead, s he claims that her attorneys misrepresented to her that she did not have a right to assert a claim on her own behalf. But Judge Hart, in concluding that the settlement was enforceable, specifically addressed that allegation and found that it constituted nothing more than “second thoughts as to the wisdom of her attorney’s9

advice.” ( Supp. App. at 71.) He further noted that “the advantage Ms. Phinisee seems to think she would have obtained by bringing a claim in her own name to recover for medical expenses is illusory” because Medicaid paid all of A.P.’s medical expenses, so
even if P hinisee did recover anything, Medicaid would then collect from her. ( Id. ) Similarly, Phinisee’s claim that her attorneys failed to use favorable expert testimony to increase the settlement amount is merely another attack on the value of the settlement to which she agreed. Finally, Phinisee’s claim that Spencer and Layser convinced her that the negligence claim was weak, when, according to her, the evidence of liability was “rock

solid, almost to the point of being overwhelming” is also without merit. (App. at 3 7 .) That argument plainly falls into the category of claims that Muhammad bars

– that an attorney underestimated the value of a potential claim. Moreover , Judge Hart specifically assessed the strength of Phinisee’s negligence claim and, like he r attorneys at the time, found it lacking. As Judge Hart noted, the government “posted a serious challenge to the liability aspect” of the case by presenting medical experts who testified that Macrobid
had never been linked to bilary artesia, the disease contracted by A.P. (Supp. App. at 61.) A panel of our Court credited that finding on appeal. Phinisee , 556 F. App’ x at 138. In concluding that the settlement was enforceable, Judge Hart further reasoned that “the amount the [g]overnment was willing to offer in settlement was limited in accordance with the weakness in Phinisee’s evidence on liability.” (Supp. App. at 71.) Although, in light of Muhammad , we need not assess the wisdom of the advice regarding the strength10

of Phinisee’s claims, it b ears me ntion that her attorneys’ advice was not witho ut ample support in the record. 5
Because Phinisee’s non

- fraud claims are nothing more than an expression of dissatisfaction with the amount of money that she agreed to and received in the settlement, they are barred by Muhammad

. B. The Fraud Claim The District Court held that Phinisee’s fraudulent misrepresentation and
concealment claim was barred by the doctrine of collateral estoppel. Under Pennsylvania law, collateral estoppel bars litigation if: (1) an identical issue has been decided in a prior action; (2) there has been a final judgment on the merits; (3) the party against whom estoppel is asserted was a party, or in privity with a party, t o the prior litigation; and (4) the party against whom estoppe l is asserted had a full and fair opportunity to litigate the issue in question. Aetna Life & Cas. Corp. v. Maravich , 824 F.2d 266, 268 (3d Cir. 1987). A litigant who was not a party to a prior judgment may use a prior judgment

5 Phinisee also says, with little argument or support, that Spencer and Layser engaged in representation against her and her daughter’s best interests when they filed the minor’s compromise petition. Phinisee made the same argument before Judge Hart in her motion for reconsideration of the order granting the minor’s compromise petition and before us on appeal from that ruling. We conclude now, as we did then, that her argument is without merit. In our opinion affirming Judge Hart’s rulings, w e noted that , although the petition was filed by the Phinisee’s former counsel, “the filing was appropriate because the same attorneys had obtained the settlement.” Phinisee , 556 F. App’x at 137. Moreover, we emphasized that the petition was served upon Phinisee’s new counsel and that she had ample opportunity to respond. Because she failed to do so, we concluded that Phinisee had ratified her former attorneys’ actions and could not challen ge their authority to file the petition. Id. at 137

- 38 (noting that “[u]nder Pennsylvania law, ‘a client ratifies her attorney’s act if she does not repudiate it promptly upon receiving knowledge that the attorney has exceeded his authority’”) (brackets o mitted) (quoting Yarnall v. Yorkshire Worsted Mills , 87 A.2d 192, 193 ( Pa. 1952)).11

“offensively” to estop an opposing party from relitigating issues that were decided in the previous proceeding. Parklane Hosiery Co., Inc. v. Shore , 439 U.S. 322, 326 , 331 (1979). Phinisee appears only to challenge the first prong of th e collateral estoppel analysis. S he claim s that the issue here is one of attorney malpractice and was not previously decided, but s he is incorrect. The issue here is of fraudulent mis representation and concealment; she is alleging that her attorneys “made false representations of
material facts at the time of the settlement conference and intentionally concealed material facts” from her . (App. at 41.) That issue was addressed and decided by Judge Hart. In concluding that the settlement agreement was valid and enforceable , he determined that “t here is no question of fraud or duress here, which would vitiate Phinisee’s consent.” (Supp. App. at 67.) Upholding that ruling, we explicitly noted that there was “no evidence of either fraud or mistake” associated with the settlement.
Phinisee , 556 F. App’x at 137. Because the issue of fraud was previously litigated, Phinisee is estopped from relitigating it , and the fraud claim was properly dismissed. For the same reason, Phinisee’s motion to amend findings of fact and judgment and her
motion for re consideration were also properly denied.
III. Conclusion For the foregoing reasons, we will affirm the District Court’s orders.