J-S86013-16

*Former Justice specially assigned to the Superior Court.

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

J.W. HALL, INC., A CORPORATION 

Appellant

v.

MICHAEL W. NALLI, ESQUIRE AND 

MICHAEL W. NALLI, P.C.

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 IN THE SUPERIOR COURT OF

 PENNSYLVANIA

 No. 771 WDA 2016

Appeal from the Judgment Entered April 25, 2016

In the Court of Common Pleas of Beaver County 

Civil Division at No(s): 11132-2013

BEFORE: GANTMAN, P.J., MOULTON, J., STEVENS*, P.J.E.

MEMORANDUM BY STEVENS, P.J.E.: FILED FEBRUARY 15, 2017

J.W. Hall, Inc. appeals from the order entered by the Court of Common 

Pleas of Beaver County granting summary judgment in favor of Michael W. 

Nalli, Esq. and Michael W. Nalli, P.C., Defendants/Appellees in a legal 

malpractice action brought by Appellant. We affirm.

In its Opinion, the trial court set forth the relevant factual and 

procedural history as follows:

The [present] action arises as the result of a sale of a restaurant 

and liquor license for an establishment located in Hopewell 

Township, Beaver County, Pennsylvania, in 2011. Defendant 

Michael W. Nalli drafted the purchase agreement, and the claims 

arise from that transaction. Plaintiff [J.W. Hall, Inc.,] asserts 

that it was represented by Nalli in that transaction and, further, 

that as a result of that representation, negligence occurred that 

caused plaintiff [J.W. Hall, Inc.,] to incur losses after the 

purchasing entity, J.B. Culinary Enterprises, Inc., defaulted on its 

obligations under the purchase agreement and went into 

bankruptcy.
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****

The pleadings and discovery . . . give rise to the facts that are 

discussed herein. Commencing in the spring of 2011, an 

individual by the name of Jeffrey Belsky (hereinafter “Belsky”) 

entered into negotiations with Joseph Hall (hereinafter “Hall”), 

president of plaintiff, J.W. Hall, Inc.,[] in an attempt to purchase 

J.W. Hall’s Steak and Seafood Inn located in Hopewell Township, 

Beaver County, Pennsylvania. The parties initially haggled over 

the price and ultimately agreed on $800,000 as the purchase 

price.

Belsky thereafter contacted attorney Michael Nalli, whose office 

was, and is, located in Center Township, Beaver County, for the 

purpose of incorporating J.B. Culinary Enterprises, Inc. 

(hereinafter “J.B. Culinary”) to operate the restaurant after sale 

and to draft the purchase agreement. Attorney Nalli provided 

Belsky with an engagement letter, which Belsky signed. 

Shortly thereafter, Belsky and Hall met at Attorney Nalli’s office 

to discuss a draft of the purchase agreement on June 23, 2011. 

At that meeting, Attorney Nalli asked Hall if he had an attorney, 

to which Hall responded “No, Mike, I don’t. You can take care of 

this, can’t you?” There is a reference in the record that Nalli 

responded “Sure, Joe, no problem.” It should also be noted that 

there are several references in the record to confirm that Hall 

and Belsky shared the expense of Attorney Nalli’s legal fees for 

preparing the documents.

Following this meeting, Attorney Nalli made revisions to the 

purchase agreement, and sent an email to Belsky regarding 

what would happen in the event of a default on the agreement. 

The email stated that the purchase agreement would include a 

provision for an unsecured note so that [J.W. Hall, Inc.] could 

not simply take back the collateral in the event of a default.

Hall contacted his son, a tenured professor at Harvard Business 

School, regarding the proposed agreement. His son reviewed 

the agreement and raised questions regarding re-purchasing the 

property in the event of default and potential tax implications. 

In July of 2011, Belsky and Hall finalized the agreement on 

behalf of their respective companies for the purchase price of 

$800,000. The sum of $225,000 was to be paid up-front and 

the remaining $575,000 was to be paid in monthly increments of 
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$5,761.05. After execution of the agreement, the liquor license 

was transferred and J.B. Culinary began to operate the 

establishment.

After J.B. Culinary assumed operation of the restaurant, it made 

some improvements. J.B. Culinary operated the restaurant and 

made approximately 14 monthly installment payments, but the 

payments stopped in December of 2012. J.B. Culinary sought to 

renegotiate the monthly payments, but Hall declined that offer. 

Both parties to this action agree that Hall contacted defendant 

Nalli about the situation, and Nalli stated he could not do 

anything for Hall because he was representing Belsky.

J.B. Culinary filed for bankruptcy, and Hall created a new entity, 

JoeWillRoger, LLC, which purchased the restaurant [out of 

bankruptcy] for $178,000. Hall also claims to have spent 

$75,000 in legal fees for counsel to represent him in the repurchase, but only $56,394.24 in fees can actually be 

documented and accounted for, all of which were paid by 

personal checks of Hall and his wife or by the account of 

JoeWillRoger, LLC. Hall also, either personally or through the 

new entity, JoeWillRoger, LLC, expended approximately $50,000 

to $60,000 for renovations to the restaurant in connection with 

reopening it [].

Trial Court Opinion, 4/25/16, at 1-4.

On September 30, 2013, J.W. Hall, Inc., commenced a legal 

malpractice and breach of fiduciary duty action against Attorney Nalli and his 

professional corporation. Among the averments in the complaint were that 

Defendants/Appellees knew J.W. Hall, Inc., relied solely on them to facilitate 

the closing with J.B. Culinary, failed to discuss or include in the purchase 

agreement the personal guaranty of Belsky as guarantor for the loan in the 

event of default, and failed to prepare and file a UCC-1 financing statement 

in order to perfect J.W. Hall, Inc.’s, security interest in the 

restaurant/business as collateral. With respect to the last averment, J.W. 
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Hall, Inc., computed its losses with reference to what its financial position 

would have been had such a security clause existed.

On February 4, 2016, after discovery was complete, 

Defendants/Appellees filed a motion for summary judgment asserting J.W. 

Hall, Inc., failed to present sufficient evidence to establish a question of 

material as to whether: (1) an attorney-client relationship between the 

parties existed; (2) J.B. Culinary would have agreed to a security clause in 

the purchase agreement; and (3) J.W. Hall, Inc., incurred actual damages. 

Viewing the record in a light most favorable to non-movant J.W. Hall, Inc., 

the court perceived a dispute of material fact in each of 

Defendants/Appellees’ first two issues and, thus, declined to grant summary 

judgment thereon.

With respect to the final issue, however, the trial court first 

determined that J.W. Hall, Inc., failed to establish a dispute of material fact 

over whether it incurred actual losses. Undisputed evidence shows J.W. 

Hall, Inc., has both its restaurant and an amount of funds—from receipt of 

J.B. Culinary’s down-payment and subsequent installment payments—

greater than or at least equal to those funds it expended to reacquire the 

restaurant from bankruptcy. The court concluded, therefore, that J.W. Hall, 

Inc., cannot show it suffered actual losses when it was essentially in the 

same position in which it would have been had it never entered into the 

agreement drafted by Attorney Nalli. Accordingly, in its Order of April 25, 
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2016, the court granted Defendants/Appellees’ motion for summary 

judgment and entered judgment in their favor. This timely appeal followed.

Appellant J.W. Hall, Inc., presents the following questions for our 

review:

I. DID THE TRIAL COURT ERR IN FAILING TO FIND 

THAT THE PLAINTIFF SUFFERED PECUNIARY HARM 

BY THE DEFENDANTS’ ESTABLISHED FAILURE TO 

INCLUDE A SECURITY AGREEMENT IN THE SALES 

AGREEMENT?

II. DID THE TRIAL COURT ERR IN REFUSING TO TREAT 

AS IDENTICAL THE CORPORATION AND THE 

INDIVIDUALS OWNING ALL ITS STOCK AND ASSETS 

AND THAT THE COSTS WERE PAID BY A ‘MULTITUDE 

OF SOURCES’ OTHER THAN PLAINTIFF WHERE 

JUSTICE AND PUBLIC POLICY DEMANDED DOING SO 

AND WHEN THE RIGHTS OF INNOCENT PARTIES 

WERE NOT PREJUDICED THEREBY NOR THE THEORY 

OF CORPORATE ENTITY MADE USELESS?

III. DID THE TRIAL COURT ERR IN FINDING THAT

PLAINTIFF WOULD RECEIVE A WINDFALL WHERE 

PLAINTIFF, VIS A VIS JOSEPH HALL, INCURRED 

OVER $313,000 IN DAMAGES?

Appellant’s brief at 4.

In reviewing a trial court's decision to grant summary judgment, our 

standard review is as follows:

As has been oft declared by this Court, summary judgment is 

appropriate only in those cases where the record clearly 

demonstrates that there is no genuine issue of material fact and 

that the moving party is entitled to judgment as a matter of law. 

When considering a motion for summary judgment, the trial 

court must take all facts of record and reasonable inferences 

therefrom in a light most favorable to the non-moving party. In 

so doing, the trial court must resolve all doubts as to the 
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existence of a genuine issue of material fact against the moving 

party, and, thus, may only grant summary judgment where the 

right to such judgment is clear and free from all doubt.

On appellate review, then, an appellate court may reverse a 

grant of summary judgment if there has been an error of law or 

an abuse of discretion. But the issue as to whether there are no 

genuine issues as to any material fact presents a question of 

law, and therefore, on that question our standard of review is de 

novo. This means we need not defer to the determinations 

made by the lower tribunals. To the extent that this Court must 

resolve a question of law, we shall review the grant of summary 

judgment in the context of the entire record.

Allen–Myland, Inc. v. Garmin Int'l, Inc., 140 A.3d 677, 682 (Pa.Super. 

2016) (quoting Summers v. Certainteed Corp., 606 Pa. 294, 307, 997 

A.2d 1152, 1159 (2010) (internal citations and quotation marks omitted)).

We have, recently, discussed the burden borne by a plaintiff in a legal 

malpractice action: 

The Supreme Court of Pennsylvania has described the unique 

nature of a legal malpractice claim:

[A] legal malpractice action is distinctly different 

from any other type of lawsuit brought in the 

Commonwealth. A legal malpractice action is 

different because ... a plaintiff must prove a case 

within a case since he must initially establish by a 

preponderance of the evidence that he would have 

recovered a judgment in the underlying action. ... It 

is only after the plaintiff proves he would have 

recovered a judgment in the underlying action that 

the plaintiff can then proceed with proof that the 

attorney he engaged to prosecute or defend the 

underlying action was negligent in the handling of 

the underlying action and that negligence was the 

proximate cause of the plaintiff's loss since it 

prevented the plaintiff from being properly 

compensated for his loss.
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Kituskie v. Corbman, 552 Pa. 275, 714 A.2d 1027, 1030 

(1998) (footnote omitted). Therefore, an important question in 

a legal malpractice action is whether the plaintiff “had a viable 

cause of action against the party he wished to sue in the 

underlying case and that the attorney he hired was negligent in 

prosecuting or defending that underlying case (often referred to 

as proving a ‘case within a case’).” Poole v. W.C.A.B. 

(Warehouse Club, Inc.), 570 Pa. 495, 810 A.2d 1182, 1184 

(2002).

Heldring v. Lundy Beldecos & Milby, P.C., ___ A.3d ____, 2016 WL 

6946583 (Pa.Super. Nov. 28, 2016).

The case sub judice involves not the would-be recovery of a judgment 

in an underlying litigation, but, instead, an analogous would-be recovery of 

collateral through the exercise of a security clause in a purchase/sale 

agreement. In both instances, the claim states that, but for the negligence 

of counsel in an underlying matter involving a third party, the legal 

malpractice plaintiff would have recovered its due from such third party. 

Accordingly, the trial court properly turned to Kituskie for guidance in the 

present matter.

To support its view, the court relied on the Kituskie rationale that the 

“collectibility of damages in the underlying action” is part of the analysis of 

actual loss compensable in a legal malpractice action. In this regard, 

Kituskie explained that “actual losses in a legal malpractice action are 

measured by the judgment the plaintiff lost in the underlying action and the 

attorney who negligently handled the underlying action is the party held 

responsible for the lost judgment.” Kituskie, 552 Pa. at 282, 714 A.3d at 

1030. A legal malpractice plaintiff should not obtain a judgment “against an 
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attorney which is greater than the judgment the plaintiff could have 

collected from the third party; the plaintiff would be receiving a windfall at

the attorney’s expense.” Id. at 283, 714 A.3d at 1030.

As noted, supra, the trial court purported to apply these principles in 

finding that J.W. Hall, Inc., failed to demonstrate an issue of material fact as 

to actual losses where it ultimately experienced a “break-even” result. That 

is, because the discovery record established that J.W. Hall, Inc., owned 

essentially the same restaurant after default as it did before selling to J.B. 

Culinary, and the income it earned from the sale offset the expenses 

incurred from re-purchasing the restaurant from bankruptcy, it could not 

establish losses requisite to a legal malpractice claim.

We discern error with the court’s assessment of losses, however, as it 

reflects a comparison of J.W. Hall, Inc.’s,1 pre-transaction and posttransaction economic realities, when the proper computation of actual losses 

should instead reflect what, if any, rightful benefits eluded J.W. Hall, Inc., 

due to its attorney’s alleged malpractice. Just as a judgment lost due to 

courtroom malpractice defines a litigant’s actual loss, so, too, would 

collateral lost due to transactional malpractice define a contracting party’s 

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1

It is only for ease of discussion regarding the issue of actual losses that we 

identify J.W. Hall, Inc., as both the seller and re-purchaser of the restaurant 

in question. By doing so, we do not mean to suggest a disposition of the 

subsequent issue premised on the charge that a different entity bought the 

restaurant out of bankruptcy.
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loss. While we do not dispute the trial court’s observation that J.W. Hall, 

Inc., appeared no worse off after repurchasing the restaurant than it was 

before transacting with J.B. Culinary, the Kituskie inquiry concerns itself 

with a different assessment of damages flowing from alleged malpractice. 

Here, J.W. Hall, Inc., framed the inquiry properly when it effectively 

claimed that its loss was the rightful benefit it was denied when Attorney 

Nalli negligently failed to incorporate in the purchase/sale agreement an 

industry-standard security clause authorizing J.W. Hall, Inc., to retake 

ownership of the collateralized restaurant in the event of buyer’s default. 

This loss, moreover, was not speculative, incalculable, or illusory; it was the 

total of all requisite expenses made to buy the collateral out of bankruptcy, 

and J.W. Hall, Inc., identified them during discovery. We, therefore, reject 

the court’s grant of summary judgment for want of evidence of actual losses.

The trial court’s determination that J.W. Hall, Inc., failed to 

demonstrate actual losses had a second component, however, that proves 

more problematic to the Appellant company’s cause. The record establishes 

that it was not actually J.W. Hall, Inc., that paid $178,000 to purchase the 

restaurant out of bankruptcy and $56,394.24 in legal fees to effectuate such 

purchase, but was, instead, the separate entities of JoeWillRoger, LLC, and 

Mr. and Mrs. J.W. Hall in their individual capacities. As such, the trial court 

entertained the question of whether damages claimed by Plaintiff/Appellant 

J.W. Hall, Inc., were, in fact, incurred by separate and distinct entities even 
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though it is undisputed that Mr. Hall and his wife are the sole owners of the 

two corporations in question.

In addressing this issue, the trial court turned to, inter alia, Sams v. 

Redevelopment Authority of New Kensington, 431 Pa. 240, 244 A.2d 

779 (Pa. 1968). The court aptly summarized Sams as follows:

In Sams, the New Kensington Redevelopment Authority adopted 

a resolution condemning a plot of land owned individually by Mr. 

Sams and Mr. Mannarino. That plot of land was used as a scrap 

yard for the receipt of shipping of scrap metal. 

At the time of the condemnation, Sams and Mannarino also 

owned, through a corporation, another plot of land located on 

the opposite side of the street, which was being operated as a 

foundry. 

When awarding damages, the Board of Viewers awarded 

damages to Sams and Mannarino individually, [and] as 

copartners, trading and doing business as the corporation. The 

Redevelopment Authority appealed on the basis that evidence 

should not have been admitted regarding the corporate property 

in that it did not have the same owner and was not used for the 

same purpose. 

Trial Court Opinion, at 11. 

The Pennsylvania Supreme Court noted at the outset of its decision 

that, under the then-governing Eminent Domain Code, damages may be 

assessed as if two or more non-contiguous tracts of land were one parcel 

only upon a demonstration that the tracts are owned by one owner and are 

used together for a unified purpose. The corporate shareholders, Messers 

Sams and Mannarino, argued that the Court should pierce the corporate veil 

of their corporation to find an identity of ownership between the two lots, as 
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the two men were the sole shareholders of the corporation and doing so 

would further the practical application of the intent of the law. Id. at 781. 

The Court refused to do so.

Precedent allowed courts to disregard the corporate entity or 

personality “only when the entity is used to defeat public convenience, 

justify wrong, protect fraud or defend crime,” the Court noted. Because the 

partnership in question was not formed for such purpose, the Court refused 

to disregard its corporate status and recognize an identity of ownership 

between the two lots. The Court reasoned:

The cases on disregarding the corporate entity suggest that in 

order for the courts to justify piercing the corporate veil, it must 

be determined that the corporate fiction is being used by the 

corporation itself to defeat public convenience, justify wrong 

either to third parties dealing with the corporation, or internally 

between shareholders’ (derivative suits), perpetrate fraud or 

other similar reprehensible conduct. Since, in the instant 

case, the corporate fiction is not being employed as a 

means to shield itself from its ultimate responsibilities 

and liabilities, no sound reason exists for piercing the veil 

for the benefit of the individual shareholders, who created 

the veil in order to procure other business advantages. In 

our view, one cannot choose to accept the benefits 

incident to a corporate enterprise and at the same time 

brush aside the corporate form when it works to their 

(shareholders’) detriment. The advantages and 

disadvantages of the corporate structure should be 

seriously considered and evaluated at the time such 

organization is contemplated and after incorporation has 

been selected, the shareholders cannot be heard to argue 

that the courts should not treat them as a corporation for 

some purposes and as a corporation for other purposes, 

which suits their present economic interest.

Id. (emphasis added).
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The trial court relied upon Sams to grant Defendants/Appellees’ 

motion, and as J.W. Hall, Inc., fails to distinguish Sams on the facts,2 we 

agree that the rationale expressed therein is directly on point and represents 

controlling precedent. To buy back their former restaurant, Mr. and Mrs. 

Hall formed a new corporate entity, JoeWillRoger, LLC, that was separate 

and distinct from both Appellant/Plaintiff J.W. Hall, Inc., and themselves in 

____________________________________________

2 Appellant contends our decision in Kellytown Co. v. Williams, 426 A.2d 

663 (Pa.Super. 1981) supports piercing the corporate veil in the present 

case. We disagree, as Kellytown approves of treating a corporation and its 

owners as identical entities only within the framework announced in Sams. 

Kellytown provides:

The established rule in Pennsylvania is that a court will not 

hesitate to treat as identical the corporation and the individual or 

individuals owning all its stock and assets whenever justice and 

public policy demand and when the rights of innocent parties are 

not prejudiced thereby nor the theory of corporate entity 

made useless. Great Oak B & L, et al. v. Rosenheim, 

supra, Pasos v. Ferber, 263 F.Supp. 877, 881-82 (1967); 

Gagnon v. Speback, 389 Pa. 17, 131 A.2d 619 (1957); 

Wedner Unemployment Compensation Case, 449 Pa. 460, 

296 A.2d 792 (1972); Tucker v. Bienstock, 310 Pa. 254, 165 

A. 247 (1933). In Sams v. Redevelopment Authority, 431 

Pa. 240, 244 A.2d 779 (1968), the Supreme Court of 

Pennsylvania held that:

The corporate entity or personality will be 

disregarded only when the entity is used to defeat 

public convenience, justify wrong, protect fraud or 

defend crime.

Kellytown, 426 A.2d at 668 (emphasis added). As explained, infra, 

Appellant fails to meet this standard for piercing the corporate veil.
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their individual capacities. There is no reason to doubt that the Halls 

discerned some advantage to forming this new entity,3and Sams

admonishes that the corporate status providing such advantage may not 

simply be “brushed aside” whenever consequential disadvantages do not suit 

shareholders’ individual interests. 

It was the Halls’ election to re-purchase the restaurant with their own 

personal monies and the funds of a newly-incorporated JoeWillRoger LLC, 

exclusively. Restaurant seller, Appellant/Plaintiff J.W. Hall, Inc., a separate 

legal entity, expended no funds in the re-purchase effort, and so it may not 

now identify the re-purchase payment as an actual loss it sustained for 

purposes of satisfying a necessary element to its legal malpractice claim. 

Because the trial court’s finding to this effect was dispositive of the action, it 

properly granted Defendants/Appellees’ motion for summary judgment, and 

we affirm for this reason.

Order Affirmed. 

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3 Appellant’s request to pierce the corporate veil to its benefit is not without 

a degree of convolution, as it is asking the courts to pierce both its corporate 

veil and that of “JoeWillRoger, LLC” so that the two distinct corporate 

entities may effectively be considered the same entity for this discrete 

purpose. This would allow the courts to consider the money expended by 

JoeWillRoger, LLC as money expended by J.W. Hall, Inc. Of course, this 

begs the question of why the Halls elected to form a different corporation to 

repurchase the restaurant in the first place, and how requiring it to accept 

not only the presumptive advantages of its election but also the 

disadvantages would work the kinds of injustice addressed in Sams.
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Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 2/15/2017