2012 PROFESSIONAL LIABILITY UPDATE - Eckert Seamans

In Abood v. Gulf Group Lloyds, No. 3:2007-299, 2008 U.S. Dist. LEXIS 51406 (W.D.Pa. July 1, 2008), the court addressed whether a declaratory judgment action brought by anattorney against his insurer, regarding the applicability of malpractice insurance coverage,exceeded the federal jurisdictional requirement that the amount in controversy exceed $75,000.The court determined there were three categories of damages presented in the malpracticeinsurance coverage dispute that could be included in calculating the amount in controversy. Thecourt stated the first category of damages is limited to the amount Plaintiff could have won in theunderlying lawsuit, but for the negligence of the attorney. The second category of damages isthe cost necessary to defend the malpractice action. The court explained the cost necessary todefend the malpractice action could only be included in the calculation of the amount incontroversy if the costs were a “necessary part of the amount in controversy.” (quoting Suber v.Chrysler Corp., 104 F.3d 578, 585 (3d Cir. 1997)). The court explained the costs of litigationinclude the costs for attorney’s fees, expert’s fees, depositions, and other trial-related costs. Thethird and final category of damages includes the cost of other benefits provided by theprofessional liability insurance policy. The court noted the professional liability policy includeda provision providing payment for lost wages due to time off from work to assist in the defenseof the claim. The court held that the amount in controversy exceeded $75,000 for jurisdictionalpurposes, reasoning that through the three sources of money, “it cannot be shown to a legalcertainty that the jurisdictional amount will not exceed $75,000.” (citing St. Paul MercuryIndem. Co. v. Red Cab Co., 303 U.S. 283 (1938)).In Giesler v. 1531 Pine St. Ass’n, L.P., 2010 Phila. Ct. Com. Pl. LEXIS 152 (Feb. 2,2010) the court held that an attorney could not be joined as a defendant in the instant actionbecause that action, in which the client was a defendant, would determine whether the clientsuffered an actual loss. As no liability had yet been found, nor any damages yet assessed, joinderof the attorney was inappropriate. The court noted that Defendant was not precluded from filinga separate legal malpractice claim at a later time.In General Nutrition Corp. v. Gardere Wynne Sewell, LLP., No. 2:08-cv-831, 2010 U.S.Dist. LEXIS 73654 (W.D. Pa. Aug. 20, 2010), Plaintiff alleged that it had entered into asettlement agreement based on faulty advice of the defendant attorneys. The Court grantedsummary judgment in favor of Defendants based on the fact that a separate corporate entity hadpaid the settlement on behalf of Plaintiff and that no reimbursement would ever be made. TheCourt reasoned that because reimbursement of the settlement funds would never be made thatplaintiff never suffered an “actual loss”.In Bayview Loan Servicing, LLC v. Law Firm of Richard M. Squire & Assoc., LLC,No. 10-1415, 2011 WL 1810603 (E.D. Pa. May 12, 2011), the court found that an essentialelement in a legal malpractice claim, whether the action is in trespass or assumpsit, is proofof actual loss. The court found to prove actual loss the plaintiffs were required to establishthey would have recovered a judgment in the underlying action but for the defendant’sactions. The court found the plaintiff failed to establish they would have recovered ajudgment, as the plaintiffs offered “little more than assertions that the damages are‘liquidated’ in the amount of the lost deficiency.”In Coleman v. Duane Morris, LLP, No. 0917, 2011 WL 5838278 (C.P. Phila. Nov. 4,2011), the plaintiffs did not pay the attorney fees in the underlying cause of action. The153