Travelers Indemnity Co. Ex Rel. De Luca v. Stengel ( 2013 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 12-1204
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TRAVELERS INDEMNITY CO.,
as subrogee of Daniel De Luca and Nelson, Levine,
DeLuca and Horst, LLC,
Appellant
v.
ROBERT M. STENGEL;
KEVIN BERRY;
THE LEDGEWOOD LAW FIRM, P.C.
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On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-08-cv-02583)
District Judge: Honorable Petrese B. Tucker
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Argued January 8, 2013
Before: RENDELL, FISHER and JORDAN, Circuit Judges.
(Filed: January 29, 2013)
Christopher J. Brill (ARGUED)
301 South State Street, Suite N105
Newtown, PA 18940
Peter C. Kennedy (ARGUED)
Gibbons
18th and Arch Streets
1700 Two Logan Square
Philadelphia, PA 19103
Counsel for Appellant
Jeffrey P. Brien
Daniel F. Ryan, III (ARGUED)
Marshall L. Schwartz
O’Brien & Ryan
2250 Hickory Road, Suite 300
Plymouth Meeting, PA 19462
Counsel for Appellee, Robert M. Stengel
Kimberly A. Boyer-Cohen
Arthur W. Lefco (ARGUED)
Marshall, Dennehey, Warner, Coleman & Goggin
2000 Market Street, Suite 2300
Philadelphia, PA 19103
Counsel for Appellees, Kevin F. Berry
and The Ledgewood Law Firm
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OPINION OF THE COURT
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FISHER, Circuit Judge.
Travelers Indemnity Company appeals from the District Court’s grant of summary
judgment to Robert M. Stengel, Kevin Berry, and the Ledgewood Law Firm, P.C. For
the reasons stated below, we will affirm.
I.
We write principally for the parties, who are familiar with the factual context and
legal history of this case. Therefore, we will set forth only those facts necessary to our
analysis.
This case arises out of a zoning dispute. Because they believed that they were
wrongly denied the required permits to use their property as they wished, Craig and Mary
Jo Sanford sought redress from their Township’s Supervisors. Attorney Robert Stengel
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initially drafted a complaint that alleged, among other things, RICO violations. The
Sanfords eventually filed that complaint pro se, and they later retained attorney Kevin
Berry to help them continue to assert the RICO claim, despite its dubious grounding in
law and fact. The complaint that was amended by Berry was dismissed.
Later, the named Supervisors sought damages from the Sanfords under
Pennsylvania’s Dragonetti Act, 42 Pa. Cons. Stat. § 8351 et seq., which prohibits
wrongful use of civil proceedings. Daniel de Luca represented the Sanfords in the
Dragonetti case, which they lost by default because de Luca missed a filing deadline. A
$3.03 million judgment was entered against the Sanfords, who filed a malpractice claim
against de Luca. De Luca’s malpractice insurance carrier, Travelers, paid $1.5 million to
the Supervisors to settle both the Dragonetti suit and the malpractice claim. 1 Travelers
then sought contribution under the Uniform Contribution Among Tortfeasors Act
(“UCATA”), 42 Pa. Cons. Stat. § 8321 et seq., from the attorneys who had previously
handled the RICO matter. The District Court granted summary judgment to Berry,
Stengel, and Ledgewood, concluding that Travelers could not seek contribution from
them because they were not joint tortfeasors with de Luca and were not proximate causes
of the Dragonetti judgment.
1
As part of the settlement agreement, Travelers obtained from the Sanfords a
release of any liability Berry, Stengel, and Ledgewood might have to them.
3
II.
The District Court had jurisdiction under 28 U.S.C. § 1332(a)(1), due to diversity
of citizenship of the parties. We have jurisdiction over this appeal pursuant to 28 U.S.C.
§ 1291 and, under Erie v. Tompkins, 304 U.S. 64 (1938), we apply Pennsylvania state
substantive law. “When the state's highest court has not addressed the precise question
presented, a federal court must predict how the state's highest court would resolve the
issue.” Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1373 (3d Cir. 1996). Our
review of an order granting summary judgment is plenary. Callison v. City of Phila., 430
F.3d 117, 119 (3d Cir. 2005). Summary judgment is proper where no genuine issue of
material fact exists and the moving party is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
III.
Travelers seeks contribution for the funds it paid to settle the Sanfords’
malpractice claim under the UCATA. As a threshold matter, we must first consider
whether the UCATA applies to legal malpractice claims. We then review the District
Court’s determinations that Stengel, Berry, Ledgewood, and de Luca were not joint
tortfeasors and that Stengel, Berry, and Ledgewood’s actions were not proximate causes
of the Dragonetti judgment against the Sanfords. If either one of those conclusions was
correct, Travelers’s contribution claim must fail.
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A.
Stengel, Berry, and Ledgewood argue for the first time on appeal that Travelers’s
claim must fail because the UCATA’s definition of joint tortfeasor – “two or more
persons jointly or severally liable in tort for the same injury to persons or property” –
cannot apply because the economic harm caused by malpractice does not constitute an
“injury to persons or property.” 42 Pa. Cons. Stat. § 8322. We consider this issue now
because we may affirm for any reason supported by the record. Because the
Pennsylvania Supreme Court has not addressed this question, we have examined the
available evidence to predict what that court would likely decide. See Orson, 79 F.3d at
1373. We conclude that the Pennsylvania Supreme Court would likely hold that the
District Court properly applied the UCATA.
Stengel, Berry, and Ledgewood argue that similar language used in other contexts
has been held not to extend to economic injury. For example, Pennsylvania’s Rule of
Civil Procedure regarding delay damages, Pa. R. Civ. P. 238, was held to be explicitly
limited by the phrase “bodily injury, death or property damage” and therefore
inapplicable to legal malpractice. Rizzo v. Haines, 515 A.2d 321, 325 (Pa. Super. Ct.
1986). Similarly, the language “resulting in death or injury to person or property” in the
Comparative Negligence Act was not applied to claims for purely monetary losses.
Gorski v. Smith, 812 A.2d 683, 701 (Pa. Super. Ct. 2003).
Here, we conclude that Appellees have attempted to find ambiguity where there is
none. The precise phrasing at issue has been used to refer to non-personal injury
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negligence actions in contexts including in the statute of limitations that applies to legal
malpractice. 42 Pa. Cons. Stat. § 5524(c)(7). Numerous other courts construing the same
language have come to the same conclusion. See, e.g., Cherry Hill Manor Assocs. v.
Faugno, 861 A.2d 123, 129 (N.J. 2004); Faier v. Ambrose & Cushing, P.C., 609 N.E.2d
315, 316 (Ill. 1993); Maddocks v. Ricker, 531 N.E.2d 583, 590 (Mass. 1988). For these
reasons, we conclude that the UCATA governs here.
B.
To establish a right of contribution, Travelers must show that Berry, Stengel,
Ledgewood, and De Luca were joint tortfeasors. Actors are joint tortfeasors under the
UCATA if their conduct “causes a single harm which cannot be apportioned . . . even
though [the actors] may have acted independently.” Capone v. Donovan, 480 A.2d 1249,
1251 (Pa. Super. Ct. 1984) (citing Restatement (Second) of Torts § 879 (1977)).
In its effort to clarify this unsettled area of Pennsylvania law, the District Court
identified two lines of cases that explain joint tortfeasor status. The first group finds joint
liability where tortfeasors caused cumulative harms that resulted in a single, indivisible
injury to the plaintiff. In a second group of cases, Pennsylvania courts have not found
joint liability where the tortfeasors clearly acted independently and created separable
injuries. Because it concluded that this case involved an initial injury caused by Stengel,
Berry, and Ledgewood and another later injury caused by de Luca’s default, the District
Court looked to the second group of cases and applied the factors laid out in Voyles v.
Corwin, 441 A.2d 381, 383 (Pa. Super. Ct. 1982).
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Travelers contends that neither Stengel nor Berry has shown a reasonable way in
which the liability for the Dragonetti judgment can be apportioned. Because Stengel’s
decision to draft and Berry’s decision to continue the RICO action without adequate
factual and legal support put the Sanfords in jeopardy of a Dragonetti action, Travelers
urges that the lawyers should be analogized to two drivers who, in succession, each
collided with another vehicle and were found to have jointly created a single injury. See
Smith v. Pulcinella, 656 A.2d 494, 497 (Pa. Super. Ct. 1995).
Travelers also asserts that its claims are distinguishable from medical malpractice
cases where the perpetrator of an original injury and a physician who aggravated that
injury are not found to be joint tortfeasors. Travelers argues that in those cases the courts
made their decisions because they found two separable injuries. See, e.g., Harka v.
Nabati, 487 A.2d 432, 435 (Pa. Super. Ct. 1985). Here, Travelers contends that because
the Sanfords did not have a cognizable malpractice claim against Berry and Stengel until
the Dragonetti judgment against them was final (i.e., when the Sanfords had incurred
damages), the analogous line between initial perpetrator and aggravator cannot be drawn.
We also acknowledge Travelers’s argument that the most recent authority binding
on our decision, Harsh v. Petroll, 887 A.2d 209 (Pa. 2005), places some limitations on
the applicability of the Voyles multifactor test. The Harsh court implied that applying a
multifactor test, which helps courts “to determine the propriety of apportionment[,]”
would be inappropriate in cases where substantial-factor causation had been established
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at trial. Id. at 214. Here, proximate cause was not established at trial. We therefore
reject the assertion that the District Court’s application of the Voyles factors was error.
We have considered those factors and the question of whether Berry, Stengel, and
de Luca created a single, unapportionable harm. We note the differences between the
specific duties involved in pursuing RICO liability and in defending clients against a
Dragonetti action. Those dissimilarities also mean that different types of evidence would
be required to demonstrate that each attorney committed malpractice, particularly
because the case against de Luca is so starkly procedural. Additionally, years passed
between the actions of Berry and Stengel and the later representation by de Luca.
Furthermore, the Dragonetti judgment is not the direct or immediate consequence of
Berry or Stengel’s representation. Although the Dragonetti suit might have been a direct
result of their actions, the judgment caused by de Luca’s default, which cost the Sanfords
the right to assert potentially viable defenses, was not. We therefore conclude that the
Appellees and de Luca did not cause a single, unapportionable injury. Because Appellees
and de Luca were not joint tortfeasors, Travelers has no right to contribution. 2
IV.
For the foregoing reasons, we will affirm the order of the District Court.
2
In order to establish a right to contribution, Travelers must also show that
Stengel, Berry, and Ledgewood are liable to the Sanfords for the underlying malpractice
claim, which includes the element of proximate cause. See Bailey v. Tucker, 621 A.2d
108, 112 (Pa. 1993). The District Court concluded that the failures of the attorneys who
preceded de Luca were not proximate causes of the Dragonetti judgment. Because we
conclude that the joint tortfeasor requirement was not met, we need not reach this
question.
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