2012 PROFESSIONAL LIABILITY UPDATE - Eckert Seamans

inspected for design and manufacturing defects. Summary judgment had been entered in favorof the car manufacturer because she could not offer any evidence of the cause of the accident.In her subsequent legal malpractice action, Plaintiff claimed that her lawyers’ negligentspoliation of the evidence (her car) had precluded any possibility that she would prevail in thebreach of warranty and products liability action. The Superior Court held, however, that theincreased risk of harm standard, defined at The Restatement (Second) of Torts, § 323, wasinapplicable to a legal malpractice action. Rather, proof of actual loss is required. To prove suchloss, Plaintiff “must demonstrate that she would have prevailed in the underlying action in theabsence of [her lawyers’] alleged negligence.” Id. at 1185. Finding that she had suffered noactual injury from the alleged negligent conduct, the Court affirmed the grant of summaryjudgment in favor of Defendants.D. SettlementIn Muhammad v. Strassburger, McKenna, Messer, Shilobod & Gutnick, 587 A.2d 1346,1348 (Pa. 1991), reargument denied, 598 A.2d 27 (Pa. 1991), cert. denied, 502 U.S. 867 (1991),the Pennsylvania Supreme Court decided “we will not permit a suit to be filed by a dissatisfiedPlaintiff against his attorney following a settlement to which that Plaintiff agreed, unless thatPlaintiff can show he was fraudulently induced to settle the original action.”In Wassall v. DeCaro, 91 F.3d 443 (3d Cir. 1996), the Third Circuit held that Plaintiffscould maintain their legal malpractice action against their former attorney even though theyagreed to a dismissal because of the attorneys’ failure to prosecute the action. The courtobserved that the policies expressed in Muhammad would be served by allowing this action to goforward because the attorney’s failure to settle the matter, as the clients wished, ran counter tothe policy of encouraging settlements. Id. at 449. The Wassall Court noted that where anattorney delays inordinately in prosecuting a claim “forc[ing] a client to accept a dismissal of thecase, allowing a subsequent malpractice action serves as a systemic deterrent for this behaviorand thus promotes the policies articulated in Muhammad.” Id. at 449.In McMahon v. Shea, 688 A.2d 1179 (Pa. 1997), the Supreme Court was presented withan issue involving the application of the Court’s decision in Muhammad to a legal malpracticeaction based upon alleged attorney negligence in the drafting and execution of a propertysettlement agreement in a domestic relations matter. Specifically, Defendant-attorneys advisedMr. McMahon to enter into a written settlement agreement which was incorporated but notmerged into a final divorce decree. The agreement provided that half of Mr. McMahon’spayments to his ex-wife were deemed to be child support and the other half was deemedalimony. The only provision for termination of these payments is a clause referring to the timewhen the “youngest living child reaches the age of twenty-one, is emancipated or finishescollege, whichever occurs last.” Id. at 1180. As a result of this advice, the Court directed Mr.McMahon to continue to pay alimony to his former wife even after she had remarried, holdingthat the parties’ agreement had survived the decree of divorce.Mr. McMahon thereafter filed a legal malpractice action alleging that Defendantattorneys’failure to merge the alimony agreement with the final divorce decree constituted abreach of their duty to exercise reasonable care on his behalf. Defendants contended that the149