While much has been written (including in this attorney liability column) about the unique claim of wrongful use of civil proceedings (i.e., the Dragonetti Act), those writings primarily concern the impropriety of the initiation of the underlying action. As the act plainly requires “favorable termination,” this element is given short shrift. Of course, a Dragonetti plaintiff must have been a prevailing defendant in the underlying action.
However, what does it mean to prevail?
In Majorsky v. Douglas, __A.3d__, 2012 PA Super 258 (Nov. 27, 2012), the court addressed what is often presumed to be an easy-to-prove prong.
Plaintiff Paul Majorsky created PBK Promotional Products. At the time, Majorsky was employed as a professor of accounting with Robert Morris University. RMU eventually became a key customer of PBK, according to the opinion.
After a lengthy career with PBK, some of Majorsky’s customers began to refer to him as the “trinkets and trash man” (and to him and his wife, Margaret, jointly as “Mr. and Mrs. PBK”). Paul Majorsky never sought intellectual property protection for these monikers, nor did he utilize them in any advertisements.
In 1999, Majorsky brought George Douglas into PBK as a partner pursuant to an oral agreement. In 2001, Majorsky and Douglas joined with J.C. Natale to form a new business partnership separate from PBK but that still dealt with commercial products, becoming known as D.J. Hess Advertising.
Despite their partnership in DJH, Douglas and Majorsky continued to sell promotional products through PBK. In fact, Natale sold similar products through his own venture known as Natale Sporting Goods.
In 2003, disputes arose over the partnership structures and compensation arrangements of both PBK and DJH. Majorsky filed a suit against Douglas and Natale. The defendants’ answer contained a counterclaim with putative joinder of Margaret Majorsky.
On December 7, 2006, after a four-day, nonjury trial, at the request of the parties, the court entered a consent verdict in which Paul Majorsky was to receive $10,000. No settlement agreement or release was ever executed, but a praecipe to “settle, satisfy and discontinue” the entire action was entered.
Thereafter, a Dragonetti Act action was brought against underlying counterclaim defendants alleging the impropriety of the underlying joinder of Margaret Majorsky. The trial court granted preliminary objections dismissing the Dragonetti Act claim.
Paul Majorsky argued that the consent verdict constituted a favorable termination; however, the Superior Court held that a negotiated resolution of litigation does not constitute a favorable termination under the statute. Citing D’Elia v. Folino, 933 A.2d 117 (Pa.Super. 2007), “where the parties to the underlying suit agree to jointly end the underlying suit in a non-litigious nature, the liability of the underlying defendant … is never determined with finality.”
Notwithstanding that there did not exist a release, the facts surrounding the consent verdict — it being a negotiated termination of litigation — led the Superior Court to affirm the trial court’s preliminary objection determination.
Majorsky further argued that whether the underlying action’s consent verdict was a termination or negotiated resolution was a fact question precluding the grant of preliminary objections. In Bannar v. Miller, 701 A.2d 242 (Pa.Super. 1997), the court held that whether withdrawal or abandonment constitutes a final termination depends on the circumstances. Distinguishing Bannar, the Superior Court in Majorsky differentiated the Majorsky mutual entry of the consent verdict as opposed to the “unbidden abandonment of a claim brought in bad faith, as was the case in Bannar.”
In support of this distinguishment, the Superior Court noted the Dragonetti instant defendants’ diligent pursuit of their counterclaim, the record indicating “that the consent verdict had all the hallmarks of an amicable settlement of all claims,” and the praecipe to discontinue having been entered.
From this author’s experience in prosecuting legal malpractice claims, such actions are often resolved similarly to Majorsky — negotiated record dismissals so that the public record satisfies settling the defendant-attorneys’ image needs in exchange for the traditional earmarks of otherwise garden-variety settlements. Majorsky cures the fear that those record-dismissed attorneys would satisfy the favorable termination prong of a perhaps retaliatory Dragonetti punitive action. Prior to Majorsky, Bannar seemed to open the door for such retaliation. It is comforting that the courts’ analysis of the gist of the resolution will be analyzed.
Contrarily, it is procedurally off-putting that the Superior Court affirmed the trial court’s factual analysis upon preliminary objections. In affirming, the Superior Court very literally allowed the trial court to intuit the facts giving rise to the settlement. From all accounts, it appears the result — Dragonetti dismissal — would have occurred in any event, but to allow a trial court to interpret an underlying action’s perhaps record facts along with the instant pleadings toward a final factual determination at a preliminary stage seems yet another example of how attorney liability claims are, simply, treated differently than all others. That is, there seems to be some ineffable public policy supporting premature early termination of attorney liability claims that does not invade other matters (as to undo the prohibition of factual determination upon preliminary objection).
Further, the court’s noting of the so-called bad-faith elements as somehow giving background to the favorable termination prong seems also to carry an air of that same public policy.
The question begged is: What is the public policy circulating within attorney liability actions? When contrasting insurance “bad faith” actions (wherein bad faith is uncommonly held evidence) with attorney liabilities (sanctions, Dragonetti actions and legal malpractice matters), it seems that there exists institutional unspoken protections in favor of lawyers as a class of defendants in contrast to attorneys as prosecuting advocates.
Said differently, it is much more common for sanctions to be awarded against plaintiffs counsel than an ulterior motive held evident by a defendant-attorney. It is more dangerous to prosecute an attorney liability matter than to be the attorney claimed liable.
When prosecuting professional and moreso attorney liability matters, the pleaded facts will govern the court’s perception of the entire controversy and of that complaint’s author. Because a dispositive complaint may be usurped by facts unknown (because of the non-attorney, unsophisticated client), the legal malpractice plaintiffs counsel is at a severe disadvantage.
In other words, if you are going to sue a professional, let alone an attorney, you must do your homework, articulate a factually well-pleaded and persuasive complaint, and be circumspect enough to know that your client may not be an accurate narrator. You and your client will be judged.
Matthew Weisberg is the managing partner of Weisberg Law. He focuses the firm’s practice on consumer and individual rights throughout Pennsylvania and New Jersey. Weisberg Law represents victims of legal malpractice and other professional negligence resulting in financial injury, fraud, civil rights violations, consumer abuse and foreclosure actions.