Superior Court Again Reaffirms Rule Against Legal Malpractice Cases Following Settlements

/ 01.Jun, 2015
In Silvagni v. Shorr, 2015 Pa. Super. 62 (Pa. Super. 2015), the Superior Court, in an opinion written by Judge Lazarus, affirmed the dismissal of a legal malpractice action on summary judgment.  The legal malpractice action arose after plaintiff was advised to sign a compromise and release of a Workers’ Compensation claim.  The Superior Court reaffirmed the decision in Muhammad v. Strassburger, McKenna, Messer, Shilobod and Gutnick, 587 A.2d 1346 (Pa. 1991), rehearing denied, 528 Pa. 345, 598 A.2d 27 (Pa. 1991), cert denied 112 S.Ct. 196, (1991) noting plainly the court “will not permit a suit to be filed by a dissatisfied plaintiff against his attorney following a settlement to which that plaintiff agreed, unless that plaintiff can show he was fraudulently induced to settle the original action.”  Judge Lazarus noted that during a colloquy before signing the compromise and release of his Workers’ Compensation claim, Mr. Silvagni acknowledged the settlement was explained to him and he understood he would not be entitled to any additional wage or medical benefits. Mr. Silvagni argued he was negligently advised to enter into the compromise and release so he could pursue a third party action.  The court found Mr. Silvagni could not plead and prove the defendants fraudulently induced him into signing the compromise and release. The published opinion is significant in that it continues the recent trend of strongly reaffirming the conclusive nature of the Muhammad rule.  The scope of the Muhammad decision was questioned in McMahon v. Shea, 547 Pa. 124, 688 A.2d 1179 (Pa. 1997).  McMahon entered into a counseled agreement with his estranged wife to pay her alimony and child support.  Upon counsel’s recommendation, McMahon entered into a stipulation to incorporate, but not merge, the agreement into the final divorce decree.  When his ex-wife remarried two months later, McMahon filed a motion to terminate alimony.  The trial court denied the request because the agreement survived the divorce since it was not merged into the final decree.  Alleging negligence, McMahon initiated a legal malpractice claim alleging negligence against counsel representing him in the divorce.  The trial court, relying on Muhammad, granted McMahon’s attorney’s preliminary objections and dismissed the complaint.  The Superior Court, sitting en banc, reversed the trial court, finding that the policy set forth in Muhammad was not applicable where an attorney’s alleged negligence does not lie in the judgment regarding the amount to be accepted or paid in settlement, but rather lies in the failure to advise a client of well established principles of law and the impact of a written agreement.  Id. at 128-29, 688 A.2d at 1181. The Supreme Court affirmed the decision of the Superior Court but, but did not issue a majority opinion.  Two Justices joined the opinion written by Justice Zappala which found the reasoning of Muhammad had no application to the facts of McMahon’s legal malpractice claim:
…there is no element of speculation as to whether a jury would return a verdict greater than the amount recovered by a settlement. Also, Mr. McMahon is not attempting to gain additional monies by attacking the value that his Attorneys placed on his case. Instead, Mr. McMahon is contending that his counsel failed to advise him as to the possible consequences of entering into a legal agreement. The fact that a legal document at issue had the effect of settling a case should not exempt his attorneys from liability…
Id. at 130, 688 A.2d at 1182. Justice Zappala then, unnecessarily, concluded “that the analysis of Muhammad is limited to the facts of that case.”  Justice Cappy, joined by Justice Castille and Justice Newman concurred in Justice Zappala’s opinion except to the extent that it limited Muhammad to its facts.  Id. at 132, 688 A.2d 1182-83.  Justice Cappy wrote “to emphasize the continuing need for, and validity of, [the Supreme Court’s] decision in Muhammad.”  Id.  The concurring opinion agreed with the analytical distinction between a legal malpractice claim based on a challenge to an attorney’s professional judgment regarding an amount to be accepted in settlement of a claim (Muhammad) and a challenge to an attorney’s failure to correctly advise his client about well established principles of law in settling a case (McMahon).  Id. After the plurality decision in McMahon v. Shea, 547 Pa. 124, 688 A.2d 1179 (Pa. 1997), stated the decision in Muhammad was limited to the facts in that case, the Muhammad decision faced significant scrutiny.  However, recent cases suggests McMahon will not be followed to the extent it attempted to limit the general Muhammad rule against legal malpractice actions following a settlement.  See, Phinisee v. Layser, 2014 U.S. Dist. LEXIS 132408 (E.D. Pa. Sept. 22, 2014); Spector Gadon & Rosen, P.C. v. Fishman, 2015 U.S. Dist. LEXIS 42248 (E.D. Pa. Mar. 31, 2015); Moon v. Ignelzi, 2009 Pa. Super. LEXIS 7016 (Pa. Super. Ct. Dec. 11, 2009). -Josh J.T. Byrne, Esquire