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A Philadelphia judge has denied Schnader Harrison Segal & Lewis’ summary judgment motion in a case in which a former client claims his divorce attorney entered into an oral settlement agreement in such a way that the client wasn’t reimbursed for $60,000 he had paid as part of his ex-spouse’s attorney fees and costs. Schnader Harrison v. Popowich stems from divorce proceedings between Maury Popowich and Deena Gerson that began in October 1999. The matter was assigned to the Commerce Case Management Program. By March 2002, when the parties reached an oral settlement agreement, Popowich had paid $60,000 toward Gerson’s attorney fees, according to an opinion recently filed by Judge Howland W. Abramson. According to the opinion, Popowich claimed that he asked his attorney, Albert Momjian — the chairman of Schnader’s family law practice group — if he would be able to recoup the $60,000 following the settlement of the divorce action. Popowich claimed that when the settlement — the terms of which were never written down — was being read into the record, Popowich interrupted to again make sure that Momjian was having the agreement entered in such a way that each party would be responsible for his or her own attorney fees, according to the opinion. “Popowich alleges that Momjian breached this oral agreement and ‘intentionally recited on the record only that each litigant was to bear his or her own attorney fees and costs without clarifying that this requirement applied to the $60,000 in attorney fees and costs that Popowich had previously parted with to support Gerson’s divorce action,’” Abramson wrote, quoting court papers filed by Popowich. “The final settlement stated that ‘each party will pay his or her own counsel fees and expenses.’ Thus, Popowich contends that he believed that his concern about the reimbursement of $60,000 had been properly addressed.” Several months after the settlement was reached, Popowich wrote Gerson a letter demanding reimbursement for the $60,000 he felt she owed him. She refused to pay him that amount, according to the opinion. Popowich next sought to have the reimbursement enforced by a Montgomery County Common Pleas Court, according to the opinion. His petition was denied; that court interpreted the settlement agreement’s language pertaining to attorney fees and costs as not applicable to money already paid. In July 2004, Schnader filed suit against Popowich for over $63,000 in unpaid legal fees. Popowich later filed a counterclaim against the firm for breach of contract and violation of fiduciary duty. He also filed a third-party complaint against Momjian for legal malpractice. Schnader and Momjian then filed a joint summary judgment motion on Popowich’s counterclaim and the third-party complaint, respectively. “Popowich alleges that Momjian did not fully explain to Popowich that the provision regarding responsibility for attorney fees and costs might be construed to only have a prospective effect,” Abramson wrote. Schnader and Momjian’s summary judgment motion was based on two arguments: that Popowich’s claims are barred by the statute of limitations and that they are alternatively barred by Pennsylvania case precedent restricting lawsuits arising from dissatisfaction with settlement agreements. Abramson agreed with Popowich that Popowich did not necessarily learn of his injury in March 2002, when the settlement agreement was read into the record. Popowich claimed he only realized Momjian’s negligence when the Montgomery County court rejected his petition to have his ex-wife forced to pay him back the $60,000. “The crux of the issue is determining when Popowich was aware, or should have been reasonably aware, that he was injured by Momjian,” Abramson wrote. “Reasonable minds could differ concerning the point in time that Popowich learned, or should have learned, of his injury.” Abramson next discussed the Pennsylvania Supreme Court’s 1991 decision in Muhammad v. Strassburger, in which the justices ruled that clients may not sue their attorneys for legal malpractice merely because they are dissatisfied with the terms of a settlement agreement. Under Muhammad, former clients must show that they were fraudulently led to settle. “Unlike the plaintiffs in Muhammad, Popowich did not simply change his mind about the monetary amount of the settlement,” Abramson wrote. “Instead, he is claiming that his attorney breached a contractual duty or a duty of care in crafting the settlement agreement itself.” Popowich’s attorney, Richard Caplan of Timoney Knox in Fort Washington, said that his client is a retired import/export businessman who currently divides his time between Florida and South Jersey. Caplan said that although there have not yet been any official settlement discussions, it is possible that Abramson’s decision “will precipitate them.” Philadelphia solo practitioner David Grunfeld, an attorney representing Schnader in the matter, described the case as one involving collection, not malpractice. Grunfeld also said it is likely that settlement discussions will take place before the matter proceeds to trial. “I’ve been doing collection work for 30 years, and I’m always interested” in discussing settlement, Grunfeld said. Both attorneys call it a coincidence that the amount Popowich felt he should not have to pay his ex-wife is roughly equal to the sum Schnader is seeking in unpaid legal bills. “A mediator might well suggest that the two sides could cancel each other out and go home,” Caplan said.

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