A $625 million legal malpractice lawsuit alleging Duane Morris negligently failed to file an appellate brief in a federal case cannot proceed because the plaintiffs lacked standing in the underlying suit, the Pennsylvania Superior Court has ruled.
A three-judge appeals panel unanimously affirmed a decision by the Philadelphia Court of Common Pleas granting Duane Morris’ preliminary objections.
Plaintiff Jeffrey Servin had alleged that, as a 50 percent equity owner of First City Communications (FCC), he was relying on Duane Morris to file an appellate brief on behalf of the company in a business dispute in the U.S. Court of Appeals for the Second Circuit, which the firm ultimately did not do.
In the underlying federal case, Servin and fellow FCC shareholder Leonard Berwick alleged that, through FCC, they had rights to a government fiber optics license in Jamaica by way of a business arrangement with Jamaica Fibre Optic Cable (JFOC). Servin and Berwick, through FCC, attempted to acquire a company that owned a fiber optic ring connecting to locations in the Caribbean. But, they alleged, a competing bidder torpedoed FCC’s bid by making misrepresentations about JFOC’s Jamaican license.
In his complaint, filed Dec. 27, 2016, Servin contended that FCC’s claim was worth $1.25 billion, making his claim worth $625 million. FCC was also named as a plaintiff in the malpractice suit.
According to the Superior Court’s opinion, the U.S. District Court for the Southern District of New York dismissed the underlying suit for lack of standing, holding that only JFOC or a joint venture with JFOC could assert the claims. Duane Morris agreed to represent FCC and Berwick on appeal to the Second Circuit appeal. Servin, an attorney, represented himself in the appeal.
Servin filed an appeal brief but Duane Morris ultimately decided against filing a brief on behalf of FCC and Berwick, the opinion said. The Second Circuit dismissed Servin’s appeal, upholding the lower court’s ruling. FCC’s and Berwick’s appeal was also dismissed for failure to file a brief.
Servin then sued Duane Morris for malpractice, but Philadelphia Court of Common Pleas Judge Patricia A. McInerney dismissed the claims with prejudice, reasoning that Servin and FCC “would never have prevailed on appeal in the [federal litigation], no matter how many briefs Duane Morris filed, because they lacked, and continue to lack, standing to assert the claims they raised in the [federal litigation].’”
Judge Maria McLaughlin, writing for the Superior Court panel, agreed with McInerney.
“Because appellants lacked standing to assert the claims in the federal litigation, they are unable to establish they would have succeeded on appeal of the federal litigation, and, therefore, cannot establish their legal malpractice claims,” said McLaughlin, who was joined by President Judge Susan Peikes Gantman and Senior Judge William H. Platt.
McLaughlin rejected Servin’s argument that because the Second Circuit dismissed FCC’s appeal for failure to file a brief, it was unable to fully address the merits of Servin’s and FCC’s appeals.
“After considering Servin’s brief and oral argument, including his claim that the plaintiffs in the federal litigation had standing, the Second Circuit affirmed the district court’s order for the reasons included in the district court opinion,” McLaughlin said. “Those reasons included that only JFOC, or a joint venture with JFOC, would have standing to assert the claims, which alleged the defendants made tortious statements regarding a licensed owned by JFOC. Such reasoning would preclude any claim FCC had against the defendants in the federal litigation. Accordingly, the Second Circuit considered and rejected appellants’ claim that the plaintiffs in the federal litigation had standing to assert the claims raised therein.”
The Superior Court, like the trial court, also rejected Servin’s and FCC’s claim that Duane Morris made negligent misrepresentations that it would file an appeal brief, finding that the plaintiffs failed to prove they were injured because of any justifiable reliance on representation by the firm.
Counsel for Duane Morris, Joseph C. Crawford of Pepper Hamilton in Philadelphia, declined to comment on the ruling.
Servin, who represented himself in the state court appeal, said he plans to petition the Superior Court for reargument.