Pa. Supreme Court to Reconsider Validity of Legal Malpractice Claims Based on Settlement Advice

In 1991, the Pennsylvania Supreme Court created a bright-line rule barring certain types of legal malpractice claims. Specifically, if a client settled a lawsuit but ultimately was unhappy with the settlement, the client could only sue her lawyers for legal malpractice if the lawyers fraudulently induced her to settle. See Muhammad v. Strassburger, McKenna, Messer, Shilobod, & Gutnick, 587 A.2d 1346, 1358 (Pa. 1991). In such situations, claims based on negligence or breach of contract would not be cognizable. Id.

This bright-line rule has slowly eroded over the years. In Collas v. Garnick, 624 A.2d 117 (Pa. Super. 1993), for example, the Superior Court held that Muhammad did not bar claims based on inaccurate legal advice related to a settlement agreement. In that case, a lawyer advised that certain language in a settlement agreement would not affect the client’s ability to sue other potentially liable parties, but that advice turned out to be wrong. Id. at 119. After the plaintiff’s second lawsuit was dismissed based on the release she signed when settling the first lawsuit, the plaintiff sued her lawyer. Id. The trial court held that the plaintiff’s claims were barred by Muhammad, but the Superior Court reversed. The Superior Court noted that Muhammad dealt with clients who were dissatisfied with the amount of the settlement, whereas the clients in Collas were complaining that they were misinformed as to the effect of the settlement. Id. at 121. The Superior Court held that, in such circumstances, lawyers could be liable for malpractice if they failed to exercise the necessary degree of care. Id.

The Superior Court has since clarified when Muhammad bars legal malpractice claims arising from a settlement agreement and when it does not:

[If] a dissatisfied litigant merely wishes to second guess his or her decision to settle due to speculation that he or she may have been able to secure a larger amount of money, i.e.[,] “get a better deal[,]” the Muhammad rule applies so as to bar that litigant from suing his counsel for negligence. If, however, a settlement agreement is legally deficient or if an attorney fails to explain the effect of a legal document, the client may seek redress from counsel by filing a malpractice action sounding in negligence.

Banks v. Jerome Taylor & Assocs., 700 A.2d 1329, 1332 (Pa. Super. 1997).

The Supreme Court will now consider doing away with Muhammad altogether as part of its review of the Superior Court’s decision in Khalil v. Williams, 244 A.3d 830 (Pa. Super. 2021), allocatur granted 53 EAL 2021 (Pa. Aug. 3, 2021). In Khalil, the plaintiff claimed that she only signed the settlement agreement in question after asking her lawyers to add language making clear that her claims in a related lawsuit would not be affected. Khalil, 244 A.3d at 840-41. After the plaintiff signed the revised release, her counsel allegedly doctored the signed release to remove any limiting language. Id. Her claims thus sounded in fraud and were not barred by Muhammad. Id. Yet, the plaintiff also alleged legal malpractice claims based on negligence and breach of contract. While the plaintiff claimed on appeal that she pleaded facts alleging that her counsel gave incorrect advice about the legal effect of the settlement agreement in the alternative, the Superior Court disagreed. Id. The Superior Court found that the only allegations in the complaint supported the fraud claim, not any claims sounding in negligence or breach of contract. Id. at 841. The Superior Court thus affirmed the dismissal of those claims.

The Supreme Court has now agreed to consider two issues on appeal—whether the plaintiff sufficiently pleaded negligence or breach of contract and, if so, whether Muhammad continues to be valid. Depending on the Court’s outcome and reasoning, Khalil could prove to be very important for understanding both the pleading rules for legal malpractice claims in Pennsylvania, as well as the potential liability for lawyers when advising their clients to accept a settlement offer.

Pennsylvania Superior Court Confirms that Fair Share Act Applies in Asbestos and Other Strict-Liability Cases and Requires Apportionment of Liability Among Defendants and Settled Tortfeasors Regardless of Bankruptcy Status

In Roverano v. John Crane, Inc., 2017 PA Super 415 (Dec. 28, 2017), the Pennsylvania Superior Court confirmed that Pennsylvania’s Fair Share Act, which prescribes how liability is allocated among multiple defendants, applies to strict-liability personal injury claims arising from asbestos exposure. [Note: Duane Morris was retained as appellate counsel and briefed and argued the appeal for one of the prevailing parties.] This is an important result for defendants in asbestos and products liability litigation throughout Pennsylvania.

To read the full text of this Alert, please visit the Duane Morris LLP website.

 

Duane Morris Partner Robert M. Palumbos Appointed to the Pennsylvania Supreme Court’s Appellate Court Procedural Rules Committee

Duane Morris LLP is pleased to announce that Robert M. Palumbos, a partner in the firm’s Philadelphia office, has been appointed to serve on the Pennsylvania Supreme Court’s Appellate Court Procedural Rules Committee. Palumbos’ three-year term will commence on July 15, 2015. The committee’s principal function is to make recommendations to the state Supreme Court for refining and updating the rules of appellate procedure in light of experience, developing case law and new legislation.

To read the full text, please visit the Duane Morris website.

Possible Split Decisions Not Related to Party Affiliation

I disagree with the premise of the opening sentence of your September 12 editorial, “Absence of Seventh Justice Impairs Court’s Ability to Act.” You write that the suspension of Justice Joan Orie Melvin “left the court divided equally with three Democrats and three Republicans, creating the possibility of 3-3 split decisions.”

I agree that there is a possibility of evenly divided decisions, and that as a result the Pennsylvania Supreme Court should exercise its power to assign a temporary justice. However, I disagree that this has anything to do with political party registration.

Click here to read the entirety of Robert Byer’s article from The Legal Intelligencer.

“Every Breath” of Asbestos Is Not a Substantial Factor in Pennsylvania

The Pennsylvania Supreme Court unanimously found that plaintiffs cannot rely on the theory that “every breath” is a substantial contributing factor in causing an asbestos-related disease in an asbestos case involving friction exposures, i.e., brakes and clutches. The May 23, 2012, ruling in Diana K. Betz v. Pneumo Abex LLC (“Simikian”) overturns the en banc decision of the state Superior Court, which the Pennsylvania Supreme Court found to be based on an “unduly cramped perspective.” This decision changes the face of asbestos litigation in Pennsylvania and may have farther-reaching impact. Plaintiffs can no longer lump together exposures and say all exposures contributed to disease. This brings asbestos litigation in line with the mainstream causation requirements for other substances—plaintiffs must be able to prove that each product was a substantial factor in their disease. (Note: Duane Morris represented defendant Ford in this case.)

To read the rest of this alert, please visit the Duane Morris website.