2012 PROFESSIONAL LIABILITY UPDATE - Eckert Seamans

market value, resulting in the corporation realizing a much lower amount than it would have in afuture sale or upon liquidating its assets via Chapter 11 bankruptcy. Id. at 85.More recently, the court in General Nutrition Corp. v. Gardere Wynne Sewell, LLP., No.2:08-cv-831, 2008 U.S. Dist. LEXIS 64585 (W.D. Pa. Aug. 20, 2008), permitted Plaintiff tomaintain a legal malpractice suit despite settlement of the underlying case. By way ofbackground, Plaintiff, GNC, and the attorney-Defendants entered into a contract for legal adviceregarding the termination of a contract with Franklin. Attorney-Defendants advised GNC thatthe contact was governed by the UCC and, therefore, exposure for termination of its contractwith Franklin would not exceed $3 million. Based upon Defendants’ advice, GNC terminated itscontract with Franklin. As a result, Franklin sued for breach of contract. The court found thatthe contract was not governed by the UCC and damages could exceed $34 million. Due to thepotential for large exposure, GNC settled with Franklin and then GNC filed the instant suitagainst attorney-Defendants. Citing Muhammad, attorney-Defendants argued that GNC’s claimsare barred due to its settlement with Franklin. Without providing further explanation, the courtdetermined that “[t]he settlement of the underlying case by GNC . . . resulted in its allegeddamages being made actual and concrete.” Therefore, the court concluded that the settlement didnot act to bar a subsequent malpractice action.In Hauber v. Mudy, 2009 Phila Ct. Com. Pl. LEXIS 183 (Phila. Cty. Ct. Com. Pl. Sept. 1,2009), the court, citing Muhammad, granted Defendants’ preliminary objections and dismissedPlaintiff’s complaint holding that Plaintiff, while being represented by Defendants, hadknowingly entered into a voluntary settlement and therefore could not maintain a legalmalpractice claim against these same defendants.In Moon v. Ignelzi, No. 260 WDA 2008, 2009 Pa. Super. LEXIS 7016 (Pa. Super. Dec.11, 2009) (unpublished opinion), the Superior Court rejected a legal malpractice claim basedpredicated on the supposition that plaintiffs were improperly advised of the affect of a lien ontheir settlement. The court held that the plaintiffs’ challenge in this regard was “at its core, achallenge to the attorney’s judgment regarding an amount to be accepted in settlement.” Moon2009 Pa. Super LEXIS 7016 at *18. The Superior Court therefore held that the trial courtproperly rejected this claim on preliminary objections. In doing so, the court quoted languagefrom the Muhammad v. Strassburger, McKenna, Messer, Shilobod and Gutnick, 526 Pa. 541,587 A.2d 1346, cert. denied, 502 U.S. 867, 112 S. Ct. 196, 116 L.Ed. 2d 156 (1991), which notesthat “we will not permit a suit to be filed by a dissatisfied plaintiff against his attorney followinga settlement to which that plaintiff agreed, unless that plaintiff can show he was fraudulentlyinduced to settle.” The court determined that the case created a bright-line rule that “shield[s]attorneys from malpractice claims sounding in negligence or contract in cases concluded bysettlement.” Moon 2009 Pa. Super LEXIS 7016 at *15.E. DamagesThe legal malpractice plaintiff must prove actual loss and often will find this to be adifficult task. As stated in Duke & Co. v. Anderson, 418 A.2d 613, 617 (Pa. Super. Ct. 1980),“when it is alleged that an attorney has breached his professional obligations to his client, anessential element of the cause of action . . . is proof of actual loss.” However, damages are151