Allocatur Watch

The Pennsylvania Supreme Court has agreed to consider overturning 26-year-old precedent that bars legal malpractice claims following a settlement, absent an allegation of fraud.

The justices granted allocatur in McGuire v. Russo on June 6, agreeing to hear arguments over whether the court should reverse course on its own 1991 decision in Muhammad v. Strassburger, McKenna, Messer, Shilobod & Gutnick.

In November of last year, a three-judge panel of the Superior Court ruled 2-1 to grant the preliminary objections of defendant attorneys Donald Russo and Deirdre Kamber Todd and the law firm of Fitzpatrick Lentz & Bubba.

According to the lower court’s opinion, plaintiff Eileen McGuire had filed a legal malpractice suit alleging that she had been forced to settle breach of contract and wrongful termination claims with her former employer for only $7,000 because her attorneys left her in a weakened negotiating position.

McGuire alleged that the lawyers failed to include all pertinent facts in her initial complaint, failed to properly amend the complaint, failed to exhaust her administrative remedies and failed to respond to her questions about settling her case.

But the Superior Court unanimously ruled to uphold a Lehigh County trial court’s ruling that Muhammad barred McGuire’s claims because she failed to make specific allegations of fraud.

“In the case sub judice, appellant agreed to settle her case for $7,000 after her third amended complaint was dismissed in federal court,” Judge Kate Ford Elliott said in a memorandum decision. “Appellant does not allege that she was fraudulently induced into accepting the 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.”

Ford Elliott, joined in the majority by Judge Paula Francisco Ott, added, “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.”

Senior Judge James J. Fitzgerald III noted his dissent but did not file an opinion.

The majority rejected McGuire’s argument that the Muhammad ruling should be overturned because it has been criticized and other jurisdictions, including New Jersey, have refused to follow it.

The majority also waved off McGuire’s claim that the 1997 state Supreme Court case McMahon v. Shea served to limit Muhammad to its facts.

Ford Elliott said McMahon was the product of an evenly split six-justice Supreme Court, though all six justices drew a distinction between challenging an attorney’s professional judgment regarding a settlement and challenging an attorney’s failure to advise a client of well-established principles of law and the impact of a written agreement.

“In point of fact, the three-member ‘minority’ concurred in the result, but specifically objected to limiting Muhammad to its facts,” Ford Elliott said. “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.”

Ford Elliott added in a footnote that McGuire could not maintain a malpractice action against Todd or Fitzpatrick Lentz anyway because they were let out of her underlying suit in 2012, at which point Russo took over.

McGuire’s attorney, Matthew B. Weisberg of Morton, called the allocatur grant “extraordinary…considering the court has accepted the question as to whether its own relatively recent precedent should be reversed.”

Counsel for Fitzpatrick Lentz, Paul C. Troy of Kane, Pugh, Knoell, Troy & Kramer in Norristown, could not be reached, nor could Todd’s attorney, Matthew S. Marrone of Goldberg Segalla in Philadelphia. Russo’s attorney, Danny P. Cerrone of Clark Hill in Pittsburgh, declined to comment.

Zack Needles can be contacted at 
215-557-2373 or zneedles@alm.com. Follow him on Twitter @ZackNeedlesTLI.