Kilmer, J. v. Sposito, J. , 2016 Pa. Super. 141 ( 2016 )

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2016 Pa. Super. 141
JANET KILMER, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
JAMES SPOSITO,
Appellee No. 1776 MDA 2015
Appeal from the Order entered on September 30, 2015
In the Court of Common Pleas of Susquehanna County
Civil Division at No(s): 2010-2171
BEFORE: SHOGAN, J., DUBOW, J., and STEVENS, P.J.E.*
OPINION BY STEVENS, P.J.E.: FILED JULY 01, 2016
In this appeal, Appellant Janet Kilmer (“Appellant”) appeals the trial
court's order sustaining preliminary objections in the nature of a demurrer
filed by her former attorney, Appellee James Sposito (“Appellee”), in
Appellant’s legal malpractice and breach of contract case. Because we
conclude that the trial court erred as a matter of law, we reverse.
Appellant’s complaint asserted claims of professional negligence and
breach of contract against Appellee allegedly committed while he
represented Appellant in matters relating to settling the estate of her late
husband Chester Kilmer, Jr. According to the complaint, Appellee
negligently and carelessly advised Appellant, the surviving spouse, to file an
election to take against her husband’s will under the provisions of 20
*Former Justice specially assigned to the Superior Court.
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Pa.C.S.A. § 2203, which would entitle her to one-third of husband’s estate,1
when pure operation of law pursuant to 20 Pa.C.S.A. §§ 2507 and 21022
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1
It is undisputed that Husband, in his will, bequeathed less than one-third of
his estate to Appellant.
2
Sections 2203, 2507, and 2102 provide, respectively, in relevant part:
§ 2203. Right of election; resident decedent
(a)Property subject to election.--Except as provided in subsection (c),
when a married person domiciled in this Commonwealth dies, his surviving
spouse has a right to an elective share of one-third of the following
property:
(1) Property passing from the decedent by will or intestacy.
****
20 Pa.C.S.A. § 2203(a)(1);
§ 2507. Modification by circumstances
Wills shall be modified upon the occurrence of any of the following
circumstances, among others:
***
(3) Marriage.--If the testator marries after making a will, the surviving
spouse shall receive the share of the estate to which he would have been
entitled had the testator died intestate, unless the will shall give him a
greater share or unless it appears from the will that the will was made in
contemplation of marriage to the surviving spouse.
20 Pa.C.S.A. § 2507(3); and
§ 2102. Share of surviving spouse
The intestate share of a decedent's surviving spouse is:
***
(Footnote Continued Next Page)
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would have entitled Appellant to one-half of the estate as a surviving spouse
who had married the testator after he made his will. Appellant followed this
advice, and Appellee, on Appellant’s behalf, filed an election to take against
her husband’s will in Orphan’s Court on June 30, 2009, a move that
effectively reduced Appellant’s share of her husband’s estate from one-half
to one-third.3
Appellant terminated the services of Appellee upon discovering the
significance of exercising her right of election and hired a new attorney,
Michael Briechle, Esq., to represent her interests in the disposition of the
estate and challenge the validity of her election. Specifically, Appellant,
through Attorney Briechle, filed objections to the executors’ Final Account
that listed Appellant’s share as one-third of the estate consistent with her
election, and she argued that she was, instead, entitled to a one-half share
as if her husband had died intestate, pursuant to Secton 2507(3), supra.
The lower court scheduled a hearing on the issue of Appellant’s lawful share
of the estate, but it continued the hearing date on joint motion of the
_______________________
(Footnote Continued)
(4) If there are surviving issue of the decedent one or more of whom are not
issue of the surviving spouse, one-half of the intestate estate.
20 Pa.C.S.A. § 2102(4)
3
Appellant’s election, as drafted by Appellee, stated Appellant “do[es] not
accept the estate and interest therein devised and bequeathed to me in that
Will, but on the contrary I elect to take such interest in real and personal
property of said decedent as I would have been entitled to had the decedent
died intestate.”
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parties, who were negotiating toward settlement. In July of 2011, Attorney
Briechle and the estate reached settlement, wherein Appellant agreed to
accept a 41.5% share of Husband’s estate.
On June 3, 2015, Appellant filed the present action sounding in legal
malpractice and breach of contract against Appellee. As noted supra,
Appellee asserted preliminary objections asserting that legal precedent in
the decision of Muhammad v. Strassburger, McKenna, Messer,
Shilobod and Gutnick, 587 A.2d 1346 (Pa. 1991), which held a dissatisfied
plaintiff may not sue his or her attorney for malpractice following a
settlement with which plaintiff agreed, barred Appellant’s claims. Appellee
further objected that Appellant could not show actual loss given her
acquisition of a 41.5% share in the estate by virtue of her decision to settle.
On September 30, 2015, the trial court sustained Appellee’s preliminary
objections and dismissed Appellant’s lawsuit. After the court denied
Appellant’s motion for reconsideration, Appellant timely appealed.
Appellant raises the following related issues for our review:
Where a plaintiff settled her claim against her late husband’s
Estate through subsequent counsel as a result of negligence of
her former attorney (the Appellee), does the rule pronounced in
Muhammad, supra, preclude her claim for such negligence
against the former attorney (the Appellee)?
Did the Court of Common Pleas err in determining that the
above caption[ed] matter should be dismissed on the basis of
the rule pronounced in Muhammad, supra?
Appellant’s brief at 3.
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Our standard of review of an order granting preliminary objections is
well-settled:
Preliminary objections in the nature of a demurrer should be
granted where the contested pleading is legally insufficient.
Cardenas v. Schober, 783 A.2d 317, 321 (Pa.Super. 2001)
(citing Pa.R.C.P. 1028(a)(4)). “Preliminary objections in the
nature of a demurrer require the court to resolve the issues
solely on the basis of the pleadings; no testimony or other
evidence outside of the complaint may be considered to dispose
of the legal issues presented by the demurrer.” Hess v. Fox
Rothschild, LLP, 925 A.2d 798, 805 (Pa.Super. 2007) (quoting
Cardenas, 783 A.2d 317 at 321). All material facts set forth in
the pleading and all inferences reasonably deducible therefrom
must be admitted as true. Id.
Cooper v. Church of St. Benedict, 954 A.2d 1216, 1218 (Pa.Super. 2008).
In reviewing a trial court's grant of preliminary objections, the standard of
review is de novo and the scope of review is plenary. Martin v. Rite Aid of
Pennsylvania, Inc., 80 A.3d 813, 814 (Pa.Super. 2013). Moreover, we
review the trial court's decision for an abuse of discretion or an error of law.
Lovelace ex rel. Lovelace v. Pennsylvania Prop. & Cas. Ins. Guar.
Ass'n, 874 A.2d 661, 664 (Pa.Super. 2005).
In its Pa.R.A.P. 1925(a) opinion, the trial court explained that it agreed
with Appellee’s position that Appellant’s claims were barred under
Muhammad:
Mrs. Kilmer voluntarily settled her claim against the estate. Had
she permitted the court to rule on her objections and not
prevailed, then, perhaps, she might have a cognizable claim of
negligence. But as it stands, she has suffered no damages.
Both the ruling and rationale of Muhammad are applicable to
this matter.
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Trial Court Opinion, dated October 21, 2015, at 2.
This Court recently had occasion to discuss the principles underlying
the Muhammad decision. In Silvagni v. Shorr, 113 A.3d 810, 813,
reargument denied (May 27, 2015), appeal denied, 128 A.3d 1207 (Pa.
2015), the plaintiff brought an action of legal malpractice against his former
attorney and firm for allegedly offering flawed advice that induced him into
settling his worker’s compensation claim. The trial court granted summary
judgment in favor of defendants, and, on appeal, we affirmed on the basis of
the Pennsylvania Supreme Court’s decision in Muhammad. In so doing, we
set forth the rationale of Muhammad as follows:
In Muhammad, plaintiffs filed a legal malpractice action against
defendant law firm as a result of defendant's representation of
plaintiffs in a medical malpractice lawsuit following the death of
plaintiffs' child. Defendant law firm negotiated a settlement of
the medical malpractice case. Plaintiffs verbally accepted the
settlement offer. Thereafter, plaintiffs changed their minds
about the settlement before signing a written accord. Defendant
law firm filed a Rule to Show Cause why the settlement
agreement should not be enforced. After an evidentiary hearing,
the trial court enforced the agreement. The court ordered the
defendants in the medical malpractice case to pay the settlement
funds and instructed the prothonotary to mark the case settled.
Plaintiffs hired new counsel, appealed the order, and this Court
affirmed. Muhammad v. Childrens Hospital, 337 Pa.Super.
635, 487 A.2d 443 (1984) (unpublished memorandum opinion).
Thereafter, plaintiffs filed a legal malpractice case
against the law firm that had negotiated the medical-
malpractice settlement. The legal malpractice case was
dismissed, and our Supreme Court affirmed that dismissal,
stating:
This case must be resolved in light of our
longstanding public policy which encourages
settlements. Simply stated, we will not permit a
suit to be filed by a dissatisfied plaintiff against
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his attorney following a settlement to which
that plaintiff agreed, unless that plaintiff can
show he was fraudulently induced to settle the
original action. An action should not lie against
an attorney for malpractice based on
negligence and/or contract principles when
that client has agreed to a settlement. Rather,
only cases of fraud should be actionable.
Muhammad, 587 A.2d at 1348 (emphasis added). The Court
further stated:
[W]e foreclose the ability of dissatisfied litigants to
agree to a settlement and then file suit against their
attorneys in the hope that they will recover
additional monies. To permit otherwise results in
unfairness to the attorneys who relied on their
client's assent and unfairness to the litigants
whose cases have not yet been tried.
Additionally, it places an unnecessarily arduous
burden on an overly taxed court system. We do
believe, however, there must be redress for the
plaintiff who has been fraudulently induced
into agreeing to settle. It is not enough that
the lawyer who negotiated the original
settlement may have been negligent; rather, the
party seeking to pursue a case against his lawyer
after a settlement must plead, with specificity, fraud
in the inducement.
Id. at 1351.
Silvagni, 113 A.3d at 813 (emphasis added). In view of Muhammad, we
held plaintiff Silvagni was barred from maintaining an action in either
negligence or contract principles seeking additional monies against
defendant attorneys for their having procured a settlement agreement that
he, himself, had approved.
Muhammad, therefore, stands for the proposition that dissatisfied
plaintiffs may not later challenge an attorney’s professional judgment with
respect to an amount of money to be accepted in a settlement, unless
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plaintiffs plead and can prove they were fraudulently induced to settle. As
such, the Muhammad decision is inapposite to the present action, which
focuses not on Appellee’s professional judgment in negotiating a
settlement—indeed, he was no longer Appellant’s attorney when Appellant
challenged the Final Accounting and ultimately settled—but on his failure to
advise her correctly on the law pertaining to her interest in her late
husband’s estate. The facts of the case sub judice, therefore, take it outside
the scope of the Muhammad prohibition against second-guessing an
attorney’s judgment as to settlement amounts.
Further militating in favor of reversal in the present case is the
Pennsylvania Supreme Court’s non-precedential decision in McMahon v.
Shea, 688 A.2d 1179 (Pa. 1997), which affirmed this Court’s reversal of a
trial court order invoking Muhammad to dismiss a legal negligence claim
alleging flawed legal advice as the basis for settlement. In our en banc
decision, we held the policy set forth in Muhammad was not applicable
where the attorneys' alleged negligence lay not in the judgment regarding
the amount to be accepted or paid in a settlement but, rather, in the failure
to advise a client of well-established principles of law and the impact of a
written agreement. A six-member Supreme Court affirmed, but with three
justices concurring in the result because they would not limit Muhammad to
its facts as would the “majority.”
Even without supplying binding precedent, McMahon provides helpful
guidance on the issue at bar, for the concurrence agreed with the Opinion
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Announcing the Judgment of Court where it distinguished “between a
challenge to an attorney's professional judgment regarding an amount to be
accepted or paid in settlement of a claim, and a challenge to an attorney's
failure to correctly advise his client about well established principles of law in
settling a case. This is a reasonable and justifiable distinction.” McMahon,
688 A.2d at 1183 (Cappy, J., Concurring). As such, all six members of the
Court deciding the case drew a distinction between “holding an attorney
accountable to inform a client about the ramifications of existing law and
allowing the second guessing of an attorney’s professional judgment in an
attempt to obtain monies, once a settlement agreement has been reached.”
Id.
We apply the same rationale herein, for barring Appellant from seeking
to hold Appellee accountable for allegedly flawed legal advice on an
underlying matter essential to her inheritance as a surviving spouse would
not advance the interests of finality in settlements. Appellant alleged in her
complaint that Appellee’s negligence and breach of contract consisted of his
failure to advise her properly on the consequences of exercising her right of
election to take against the will. Appellant relied upon Appellee’s advice to
her ostensible detriment when she authorized Appellee to file her election
with the orphan’s court, a filing that would reduce Appellant’s legal interest
in her husband’s estate by 17 2/3% if accepted by the court. She and new
counsel challenged the validity of her election in a subsequent proceeding,
but the prospects of prevailing in that matter were uncertain at best, driving
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them to the reasonable position of accepting a settlement that allowed her
to make what was, indisputably, only a partial recovery of what she lost by
virtue of the advice rendered by Appellee.4
Accordingly, as we deem Muhammad inapposite to the present
matter, we are constrained to reverse the order entered below and remand
for further proceedings consistent with this decision.
Order reversed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/1/2016
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4
We, accordingly, reject Appellee’s position that Appellant failed to plead
and cannot establish actual loss, a necessary element to both her legal
malpractice and breach of contract claims, when she averred she reached
settlement for a share of the estate less than what she would have received
had Appellant properly advised her of her lawful share pursuant to sections
2502 and 2507.
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