2012 PROFESSIONAL LIABILITY UPDATE - Eckert Seamans

decision in Muhammad precluded Mr. McMahon’s action. The majority, however, rejected thiscontention, and held that the reasoning of Muhammad has no application to these facts.Specifically, the court noted that Mr. McMahon was not attempting to attack the settlementvalue, but was alleging that his counsel failed to advise him as to the possible consequences ofentering into this settlement. Accordingly, the Court found that the analysis of Muhammad islimited to the facts of that case, and that the preliminary objections to Mr. McMahon’s actionshould have been dismissed. The concurring opinion joined the majority except to the extent thatthe majority limits Muhammad to its facts. Specifically, the concurrence emphasized that thepolicies underlying Muhammad are as necessary and valid today as they were when the decisionwas rendered five years ago and, therefore, Muhammad should not be limited to its facts.In Banks v. Jerome Taylor & Associates, 700 A.2d 1329 (Pa. Super. Ct. 1997), appealdenied, 723 A.2d 668 (Pa. 1998), the Pennsylvania Superior Court held that a negligence actionmay not be maintained against an attorney on the ground that the settlement amount obtainedwas too small. The Court reasoned that in cases where a dissatisfied litigant merely wishes tosecond guess his decision to settle in the hope that he may have been able to “get a better deal,”the Muhammad rule applies to bar that litigant from suing his counsel for negligence.Following Muhammad, in Piluso v. Cohen, 764 A.2d 549 (Pa. Super. Ct. 2000), appealdenied, 793 A.2d 909 (Pa. 2002), the Superior Court affirmed the trial court’s entry of summaryjudgment in favor of the attorney-Defendant. In the underlying medical malpractice action, theattorney had settled claims against some defendants for $100,000 and had proceeded to trial onthe claim against one remaining doctor. Plaintiff was aware of the settlement, although it hadoccurred outside her presence, and she did not repudiate it. Rather, she permitted the trial tocontinue against only the one remaining defendant. The jury returned a verdict in the amount of$1,500,000, but apportioned no liability to the sole non-settling doctor. Plaintiff thereafter filed alegal malpractice action against her attorney and claimed that she had not consented to thesettlement.Citing Muhammad, the Superior Court in Piluso held that by failing to promptlyrepudiate her attorney’s actions Plaintiff had ratified them, and was foreclosed from later filingsuit against her attorney since there was no allegation of fraud. Additionally, Plaintiff’s claimeddamages were purely speculative, as the outcome of the trial was likely to have been different ifthe settling Defendants had been present and defended the claims against them.In Red Bell Brewing Co. v. Buchanan Ingersoll, P.C., 51 Pa. D. & C. 4th 129 (Phila. Ct.Ct. Com. Pl. 2001), the Court of Common Pleas for Philadelphia County held that Muhammaddid not bar Plaintiff’s negligence action against his former attorneys where Plaintiff alleged thatDefendant-attorneys failed to provide accurate material facts on which its decisions were madeand to adequately disclose a conflict of interest between Plaintiff and one of the firm’s otherclients. The Court reasoned that the facts of Muhammad had no application to the case. Rather,the facts of the case were more similar to those in McMahon.In Capital Care Corp. v. Hunt, 847 A.2d 75 (Pa. Super. Ct. 2004), the Superior Courtapplied the rationale of Muhammad to its damage analysis to allow a corporation to prove thatthe attorney’s fraudulent misrepresentation induced it to sell its corporate assets for less than fair150