Court Opinion

ID: 4101300
Source: CourtListenerOpinion
Date Created: 2016-11-22 20:35:51.505233+00
Date Added: 2024-06-11T14:36:29.677480
License: Public Domain

J. A19012/16

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

EILEEN MCGUIRE,                   :           IN THE SUPERIOR COURT OF
                                  :                 PENNSYLVANIA
                    Appellant     :
                                  :
                v.                :
                                  :
DONALD RUSSO, D/B/A LAW OFFICES :
OF DONALD P. RUSSO, ESQUIRE,      :
DEIRDRE KAMBER TODD, D/B/A        :
FITZPATRICK LENTZ & BUBBA P.C.    :               No. 2603 EDA 2015
D/B/A KAMBER LAW GROUP, P.C., AND :
FITZPATRICK LENTZ & BUBBA P.C.    :

                 Appeal from the Order Dated July 15, 2015,
               in the Court of Common Pleas of Lehigh County
                      Civil Division at No. 2014-C-3564

BEFORE: FORD ELLIOTT, P.J.E., OTT AND FITZGERALD,* JJ.

MEMORANDUM BY FORD ELLIOTT, P.J.E.:            FILED NOVEMBER 22, 2016

      Eileen McGuire, plaintiff in the court below, appeals from the order of

July 15, 2015, sustaining defendants/appellees’ preliminary objections. We

affirm.

      The trial court has summarized the history of this matter as follows:

                   According to her Second Amended Complaint,
            Plaintiff is a skilled computerized tomography
            technologist who was employed by Palmerton
            Hospital in the fall of 2008 until July 2011. She
            alleges the hospital terminated her employment
            because she refused to engage in “multiple illegal
            and unethical healthcare practices” and because of
            her age. Second Amended Complaint, ¶ 6. She

* Former Justice specially assigned to the Superior Court.
J. A19012/16

          retained Defendants, Deidre [sic] Kamber Todd, Esq.
          (“Attorney Todd”) and the law firm of Fitzpatrick,
          Lentz & Bubba (“Fitzpatrick Firm”) “[a]round January
          2012” in order to file an employment discrimination
          complaint against the hospital and her former
          supervisor, Louis Richards (“Richards”). Id. ¶ 12.
          “Thereafter,” she (not Defendants) filed charges with
          the Equal Employment Opportunity Commission
          (“EEOC”) and the Pennsylvania Human Rights
          Commission (“PHRC”) on the basis of age
          discrimination. Id. ¶ 13.

                 On or about March 7, 2012, approximately
          three months after filing her claim with the PHRC,
          Attorney Todd filed an action against the hospital
          and Richards in the Monroe County Court of Common
          Pleas on March 7, 2012, for breach of contract and
          wrongful termination.     Id. ¶ 15-16.     Although
          Plaintiff seems to complain the complaint did not
          contain a claim for age discrimination, she also
          acknowledged her administrative remedies had not
          been exhausted. Id. ¶ 16-17.

                  Attorney Todd left the Fitzpatrick Firm
          “[a]round spring 2012, midway through the
          litigation.” Id. ¶ 18. Plaintiff retained new counsel,
          Attorney Donald Russo (“Attorney Russo”), on or
          about July 3, 2012.      The hospital and Richards
          removed the case to federal court on or about
          September 4, 2012.

                At federal court, “[t]he case was dismissed
          without prejudice and Plaintiff amended her
          complaint several times . . . [and] [o]n or about
          February 15, 2013, Plaintiff’s case was dismissed
          with prejudice. . . .”    Id. ¶ 24-25.  After the
          dismissal, Attorney Russo obtained a $7,000
          settlement for Plaintiff.

               In this action against Attorneys Russo and
          Todd, and their law firms, including the Fitzpatrick
          Firm, Plaintiff alleges “[b]ut for Defendants’ . . .
          malpractice, Plaintiff would not have been in the
          weakened position that forced her to accept a

                                  -2-
J. A19012/16

            settlement amount significantly lower than what
            Plaintiff would have received from meritorious
            litigation.” Id. ¶ 29.

Order, 7/15/15 at 1-2 n.1.

      Appellees’ preliminary objections in the nature of a demurrer were

sustained by order filed July 15, 2015.          This timely appeal followed.

Appellant complied with Pa.R.A.P. 1925(b), and the trial court filed an

opinion.

      The standard of review we apply when considering a trial court’s order

sustaining preliminary objections is well settled:

            [O]ur standard of review of an order of the trial court
            overruling or granting preliminary objections is to
            determine whether the trial court committed an error
            of law. When considering the appropriateness of a
            ruling on preliminary objections, the appellate court
            must apply the same standard as the trial court.

            Preliminary objections in the nature of a demurrer
            test the legal sufficiency of the complaint. When
            considering preliminary objections, all material facts
            set forth in the challenged pleadings are admitted as
            true, as well as all inferences reasonably deducible
            therefrom. Preliminary objections which seek the
            dismissal of a cause of action should be sustained
            only in cases in which it is clear and free from doubt
            that the pleader will be unable to prove facts legally
            sufficient to establish the right to relief. If any doubt
            exists as to whether a demurrer should be sustained,
            it should be resolved in favor of overruling the
            preliminary objections.

HRANEC Sheet Metal, Inc. v. Metalico Pittsburgh, Inc., 107 A.3d 114,

118 (Pa.Super. 2014).

                                      -3-
J. A19012/16

      The trial court dismissed appellant’s legal malpractice claims on the

basis of Muhammad v. Strassburger, McKenna, Messer, Shilobod &

Gutnick, 587 A.2d 1346 (Pa. 1991). In that seminal case, the Muhammads

brought a medical malpractice claim following the death of their infant son

during a surgical procedure.      Id. at 1347.      After the case settled for

$26,500, the Muhammads filed a legal malpractice action against the

attorneys who had represented them in the underlying medical malpractice

case. Id. at 1347-1348. The Pennsylvania Supreme Court in Muhammad

held that absent specific allegations of fraud, a client who agrees to settle a

case cannot subsequently bring a legal malpractice action against his

attorney:

            Simply stated, 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
            settle the original action. An action should not lie
            against an attorney for malpractice based on
            negligence and/or contract principles when that
            client has agreed to a settlement. Rather, only cases
            of fraud should be actionable.

Id. at 1348. The Muhammad court’s decision was based on the strong and

historical public policy of encouraging settlements:

            The primary reason we decide today to disallow
            negligence or breach of contract suits against
            lawyers after a settlement has been negotiated by
            the attorneys and accepted by the clients is that to
            allow them will create chaos in our civil litigation
            system. Lawyers would be reluctant to settle a case
            for fear some enterprising attorney representing a
            disgruntled client will find a way to sue them for

                                      -4-
J. A19012/16

             something that “could have been done, but was not.”
             We refuse to endorse a rule that will discourage
             settlements and increase substantially the number of
             legal malpractice cases. A long-standing principle of
             our courts has been to encourage settlements; we
             will not now act so as to discourage them.

Id. at 1349. The Muhammad court declared that, “henceforth we should

view ‘litigation concerning litigation’ cases with a jaundiced eye.”         Id. at

1350.    Absent a specific allegation of fraud, an agreement to settle

forecloses the ability of a dissatisfied litigant to file suit against his attorney:

             We do believe, however, there must be redress for
             the plaintiff who has been fraudulently induced
             into agreeing to settle. It is not enough that the
             lawyer who negotiated the original settlement may
             have been negligent; rather, the party seeking to
             pursue a case against his lawyer after a settlement
             must plead, with specificity, fraud in the inducement.
             “One may not . . . induce another to contract by
             fraudulent     misrepresentations.”            College
             Watercolor Group, Inc. v. William H. Newbauer,
             Inc., 468 Pa. 103, 115, 360 A.2d 200, 206 (1976).

Id. at 1351 (emphasis in original).

             In the event a litigant believes he has been
             fraudulently induced into settling, he has the right to
             file a suit, alleging with specificity the acts that he
             claims are fraudulent. If his allegations meet the
             standard of specificity required by Pa.R.C.P. 1019(b),
             then he will be allowed to proceed. In the event
             those allegations do not meet that standard of
             specificity, then the case will be dismissed upon the
             filing of preliminary objections.

                                       -5-
J. A19012/16

Id. at 1352 (emphasis in original).1

      Appellant does not allege that she was fraudulently induced into

signing the settlement agreement. Accepting appellant’s allegations as true,

her attorneys failed to include a claim for age discrimination and also failed

to exhaust appellant’s administrative remedies and obtain a “right to sue”

letter from the EEOC.    These allegations go to negligence and breach of

contract, not actual fraud. Even if appellees’ negligence resulted in appellant

accepting a “low-ball” offer, there is no allegation that appellees engaged in

fraudulent conduct. Therefore, Muhammad applies to bar the action.

      Appellant relies on a series of cases distinguishing Muhammad on the

basis that the attorneys’ alleged negligence did not lie in their professional

judgment in negotiating a settlement, but rather in their failure to advise

their client of well-established principles of law and the consequences of

entering into a legal agreement. In McMahon v. Shea, 688 A.2d 1179 (Pa.

1997), for example, Robert McMahon and his wife Janet entered into a

written settlement agreement providing for weekly child support and alimony

payments.    Id. at 1180.     These payments were to continue until the

youngest living child reached age 21, was emancipated, or finished college,

1
   Under Rule 1019, “[t]he material facts on which a cause of action or
defense is based shall be stated in a concise and summary form.”
Pa.R.C.P. 1019. “Pennsylvania is a fact-pleading state; a complaint must
not only give the defendant notice of what the plaintiff’s claim is and the
grounds upon which it rests, but the complaint must also formulate the
issues by summarizing those facts essential to support the claim.” Feingold
v. Hendrzak, 15 A.3d 937, 942 (Pa.Super. 2011).

                                       -6-
J. A19012/16

whichever occurred last.   Id.   Upon advice of counsel, the parties entered

into a stipulation wherein the written agreements would be incorporated but

not merged into the final divorce decree. Id. Two months after the divorce

decree was entered, Mrs. McMahon remarried.         Id.   Mr. McMahon filed a

petition to terminate alimony, which was denied on the grounds that the

parties’ agreement had survived the divorce decree.2 Id.

      Mr. McMahon filed a legal malpractice action against his attorneys,

alleging that they negligently failed to merge his alimony agreement with

the final divorce decree, resulting in damages including alimony payments to

his former wife after her remarriage. Id. at 1180-1181. Our supreme court

distinguished Muhammad on the basis that Mr. McMahon was not simply

dissatisfied with his settlement valuation; rather, he was alleging a failure to

administer accurate advice about well-established principles of law in settling

a case:

2
            The Divorce Code provides that the payment of
            alimony shall terminate upon the payee-spouse’s
            remarriage. See 23 Pa.C.S.A. § 3701(e). Where,
            however, the parties enter into an alimony
            agreement that is not merged with a subsequent
            divorce decree, then that agreement survives the
            divorce decree, thus obligating the parties to the
            agreement to honor the agreement after the divorce
            decree has been entered.       See McMahon v.
            McMahon, 417 Pa.Super. 592, 612 A.2d 1360
            (1992) (en banc).

Banks v. Jerome Taylor & Assoc., 700 A.2d 1329, 1332 n.1 (Pa.Super.
1997), appeal denied, 723 A.2d 668 (1998).

                                     -7-
J. A19012/16

            The laudable purpose of reducing litigation and
            encouraging finality would not be served by
            precluding the instant action. Mr. McMahon merely
            seeks redress for his attorneys’ alleged negligence in
            failing to advise him as to the controlling law
            applicable to a contract.

Id. at 1182. The court in McMahon concluded that the longstanding public

policy favoring settlements had no application to the facts of that case,

where Mr. McMahon was not attacking the value that his attorneys placed on

his case:

            Instead, Mr. McMahon is contending that his counsel
            failed to advise him as to the possible consequences
            of entering into a legal agreement. The fact that the
            legal document at issue had the effect of settling a
            case should not exempt his attorneys from liability.

Id. at 1182.3

      In White v. Kreithen, 644 A.2d 1262 (Pa.Super. 1994), appeal

denied, 652 A.2d 1324 (Pa. 1994), the plaintiff in a medical malpractice

case discharged her attorneys, allegedly because of their negligence in

handling her case and because they were not prepared for trial.           Id. at

1263. The plaintiff sought to retain other counsel but could not because her

attorneys   refused   to   transfer   the   file   and   demanded   unreasonable

“referral fees” from proposed new counsel. Id. The case was placed on the

trial list, and the plaintiff still had not obtained new counsel. At a conference

3
   McMahon was decided by an evenly split six-member court.
Justice Cappy, joined by Justices Castille and Newman, filed a concurring
Opinion, rejecting the majority’s attempt to limit Muhammad to its facts
and emphasizing the continuing validity of Muhammad.

                                       -8-
J. A19012/16

before the Calendar Judge at which the plaintiff appeared pro se, the

Calendar Judge recommended settlement in the amount of $150,000 and

stipulated that if the plaintiff did not accept his recommendation, she would

be forced to immediate trial unless the defendants refused to agree.       Id.

The plaintiff alleged that her medical expenses alone exceeded $150,000.

Id.    The medical malpractice defendants agreed to pay the figure

recommended by the Calendar Judge, at which point the plaintiff had no

choice but to accept the figure. Id.

      This court concluded that the subsequent legal malpractice suit was

not barred as a result of the plaintiff’s settlement of the medical malpractice

action, distinguishing Muhammad:

            It is thus apparent that Muhammad does not
            control the present case since the settlement in the
            underlying action was not a settlement negotiated by
            counsel for appellant.       Rather, after appellant
            discharged appellees, allegedly for failure to properly
            investigate and prepare her case for trial, appellant
            was forced, due to her inability to retain counsel, to
            accept the settlement figure proposed by the judge.
            Moreover and quite importantly, none of the
            motivating reasons for the Supreme Court decision in
            Muhammad, supra, would be achieved by finding
            the instant malpractice action barred, since appellees
            did not participate in the settlement, and appellant
            was prevented-allegedly as a result of appellees’
            conduct-from     questioning    “before    settlement”
            whether the terms of the settlement were
            advantageous.

                                       -9-
J. A19012/16

Id. at 1265. Therefore, critical to this court’s decision in White was the fact

that the defendants in the legal malpractice action did not negotiate the

settlement in the underlying medical malpractice action.

      Similarly, in the recent case of Kilmer v. Sposito,       A.3d     , 2016

WL 3612406 (Pa.Super. July 1, 2016), the plaintiff’s former attorney

represented her in matters related to settling the estate of her late husband.

Id. at *1. According to the complaint, he negligently advised the plaintiff to

file an election to take against her husband’s will under 20 Pa.C.S.A. § 2203,

which would entitle her to one-third of her husband’s estate. Id. In fact,

under 20 Pa.C.S.A. §§ 2507 and 2102, she was entitled to one-half of the

estate as a surviving spouse who had married the testator after he made his

will. Id. The plaintiff followed her attorney’s advice and filed an election to

take against the will, effectively reducing her share of the estate from one-

half to one-third. Id.

      Subsequently, the plaintiff terminated her attorney’s services and

retained new counsel to challenge the validity of her election.             Id.

Ultimately, she reached a settlement with the estate whereby she agreed to

accept a 41.5% share of her late husband’s estate. Id. The plaintiff then

filed a legal malpractice action against her former attorney, which was

dismissed on the basis of Muhammad.           On appeal, this court reversed,

distinguishing Muhammad where the plaintiff was challenging her former

attorney’s failure to advise her correctly on the law pertaining to her interest

                                     - 10 -
J. A19012/16

in her late husband’s estate. Id. at *4. Following McMahon, in which all

six justices drew a distinction between challenging an attorney’s professional

judgment regarding settlement and challenging an attorney’s failure to

advise a client of well-established principles of law and the impact of a

written agreement, this court in Kilmer stated:

            We apply the same rationale herein, for barring
            Appellant from seeking to hold Appellee accountable
            for allegedly flawed legal advice on an underlying
            matter essential to her inheritance as a surviving
            spouse would not advance the interests of finality in
            settlements. Appellant alleged in her complaint that
            Appellee’s negligence and breach of contract
            consisted of his failure to advise her properly on the
            consequences of exercising her right of election to
            take against the will.         Appellant relied upon
            Appellee’s advice to her ostensible detriment when
            she authorized Appellee to file her election with the
            orphan’s court, a filing that would reduce Appellant’s
            legal interest in her husband’s estate by 17 2/3 if
            accepted by the court.        She and new counsel
            challenged the validity of her election in a
            subsequent proceeding, but the prospects of
            prevailing in that matter were uncertain at best,
            driving them to the reasonable position of accepting
            a settlement that allowed her to make what was,
            indisputably, only a partial recovery of what she lost
            by virtue of the advice rendered by Appellee.

Id. at *4 (footnote omitted).     As in White, the defendant attorney in

Kilmer did not negotiate any settlement on his client’s behalf. Rather, he

administered plainly erroneous legal advice.

     In the case sub judice, appellant agreed to settle her case for $7,000

after her third amended complaint was dismissed in federal court. Appellant

does not allege that she was fraudulently induced into accepting the

                                    - 11 -
J. A19012/16

settlement, or that appellees misrepresented the terms of the agreement.

Nor does appellant allege that appellees gave her wrong advice concerning

well-established principles of law, or failed to explain the impact of a legal

document. See Banks, 700 A.2d at 1332 (the Muhammad rule does not

bar a client from suing his counsel for negligence where the settlement

agreement is legally deficient or where counsel fails to explain the effect of a

legal document) (citations omitted). Here, appellant alleges, inter alia, that

appellees failed to include all pertinent facts in her first complaint when the

lawsuit was initiated, failed to properly amend the complaint, failed to

exhaust her administrative remedies, and failed to respond to her questions

regarding settlement of her case. (Second amended complaint, 4/10/15 at

¶ 31; RR Vol. I at 72.) Since appellant failed to specifically plead fraudulent

inducement or that the settlement agreement itself was somehow legally

deficient, the Muhammad rule applies, and appellant is barred from filing

suit for legal malpractice. It appears that appellant is dissatisfied with her

decision to settle and feels that more competent counsel would have been

able to get her a “better deal”; this is precisely the sort of inefficacious

litigation that the court in Muhammad was trying to foreclose.             See

Muhammad, 587 A.2d at 1350 (“Particularly troublesome to the efficacy of

the courts are these ‘second bite’ cases; they require twice the resources as

a single case, yet resolve only a single litigant’s claims--thus denying access

                                     - 12 -
J. A19012/16

to the courts to litigants who have never had a single resolution of their

dispute.”).4

      In her reply brief, appellant complains that Muhammad has been

heavily criticized and other jurisdictions, including New Jersey, have refused

to follow it.   (Appellant’s reply brief at 4.)   It is well established that this

court is bound by decisions of our supreme court unless they are overturned

by that court. See Marks v. Nationwide Ins. Co., 762 A.2d 1098, 1101

(Pa.Super. 2000) (this court continues to follow controlling precedent as long

as the decision has not been overturned by our supreme court), appeal

denied, 788 A.2d 381 (Pa. 2001).               Appellant wrongly characterizes

McMahon as limiting Muhammad to the facts of that case.               (Appellant’s

brief at 19.)    As stated above, McMahon was the product of an equally

divided, six-member supreme court.        In point of fact, the three-member

“minority” concurred in the result, but specifically objected to limiting

Muhammad         to   its   facts.   McMahon,      688    A.2d   at   1182-1183.

Consequently, McMahon did not serve to limit Muhammad to its facts, and

Muhammad remains as controlling precedent until a true majority of the

supreme court rules otherwise.       The trial court did not err in sustaining

4
  At any rate, clearly appellant cannot maintain suit against the Todd and
Fitzpatrick defendants where they were replaced in 2012. Appellant hired
appellee Russo who filed several amended complaints on her behalf,
including an age discrimination claim. As the trial court observed, neither
Todd nor the Fitzpatrick firm represented appellant when she negotiated and
accepted the settlement agreement. (Trial court opinion, 10/9/15 at 5.)

                                      - 13 -
J. A19012/16

appellees’ preliminary objections and dismissing appellant’s complaint with

prejudice where she failed to allege that the settlement agreement was

legally deficient, that she was fraudulently induced to settle, and/or that the

consequences of the legal agreement were not fully explained to her.

      For these reasons, it is unnecessary to address appellant’s other claim

raised on appeal, that she was entitled to attorneys’ fees.5     Furthermore,

“The settled law of this Commonwealth is that attorneys’ fees are

recoverable from an adverse party to a cause only when provided for by

statute, or when clearly agreed to by the parties.” J.C. Snavely & Sons,

Inc. v. Web M & E, Inc., 594 A.2d 333, 337 (Pa.Super. 1991), appeal

denied, 602 A.2d 860 (Pa. 1991), quoting Fidelity-Philadelphia Trust Co.

v. Philadelphia Trans. Co., 173 A.2d 109, 113 (Pa. 1961).            Instantly,

appellant has cited no statute or agreement between the parties that would

entitle her to attorneys’ fees.

      Order affirmed.

      Ott, J. joins this Memorandum.

      Fitzgerald, J. notes dissent.

5
  Appellant has abandoned her claims for punitive damages and breach of a
fiduciary duty.

                                      - 14 -
J. A19012/16

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 11/22/2016

                          - 15 -