Pennsylvania's Consumer Protection Law Does Not Apply to Attorney's Misconduct in Collecting and Distributing Settlement Proceeds.
By Christopher J. Conrad, Esquire
Harrisburg, PA
cjconrad@mdwcg.com or 717-651-3531
In the recent decision Beyers v. Richmond, Pennsylvania Supreme Court, No. 38 EAP 2006, Fitzgerald, J. (Dec. 28, 2007), the Pennsylvania Supreme Court considered, as an issue of first impression, whether the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. C.S. §§201-1 - 209-6 ("UTPCPL"), applies to an attorney's misconduct in collecting and distributing settlement proceeds. The lawsuit arose from the admitted conversion of settlement funds by an associate in a Pennsylvania law firm, for which the firm was held vicariously liable, and for the preparation of a settlement distribution sheet by the firm which included certain deductions for unsubstantiated costs. Plaintiffs, who were represented by the firm and its associate in an underlying personal injury claim which resulted in the settlement, brought suit against the firm and the associate individually, alleging, among other claims, a violation of the UTPCPL. The trial court found in favor of Plaintiffs on their UTPCPL claim, and the Pennsylvania Superior Court affirmed, holding that Defendants' actions did not arise from the practice of law, and thus they could not use their profession as a shield from liability under the statute.
The Supreme Court majority reversed the decision of the lower courts. The Court reasoned that because the Pennsylvania Constitution vests the Supreme Court with the exclusive power to govern the practice of law in Pennsylvania (founded upon separation of powers principles), any application of the UTPCPL to the facts at bar would purport to regulate the conduct of attorneys and thus would be an impermissible encroachment on the power of the Court. The Court further reasoned that the Pennsylvania Rules of Professional Conduct and Rules of Disciplinary Enforcement, which were promulgated by the Supreme Court pursuant to its constitutional authority, provide the exclusive remedy for the attorney misconduct complained of by Plaintiffs.
In a concurring opinion, joined by Justice Baer, Chief Justice Cappy concluded that as a matter of statutory construction, the UTPCPL does not apply to attorneys practicing law, and thus he declined to adopt the majority's opinion to the extent it was decided on constitutional grounds. In a dissenting opinion, Justice Eakin concluded that the UTPCPL is not a law directed at regulating attorneys but rather is a law of general applicability, and attorneys should not be exempted from the reach of the statute merely by virtue of their professional status. Justice Saylor joined Justice Eakin's dissenting opinion and also reasoned that because the conduct complained of did not involve the exercise of legal judgment, but rather the business aspects of the activities of a law firm, the UTPCPL should apply.
Superior Court Maintains Tough Stance on Accrual of Legal Malpractice Claims
By Joshua L. Kirsch, Esq.
Philadelphia, PA
215-575-4557 or jlkirsch@mdwcg.com
In Wachovia Bank, N.A. v. Ferretti, et al., 2007 Pa. Super. 320 (Pa. Super. Ct. 2007), the plaintiff-bank complained that an attorney and her firm committed legal malpractice and also breached their alleged contractual obligations, by failing to enter a satisfaction of judgment in an earlier matter in which the defendants represented Wachovia's predecessor-in-interest. That failure, after meandering throughout Pennsylvania's legal system and reaching the heights of Pennsylvania's Supreme Court, ultimately produced a multi-million dollar liability for which Wachovia's predecessor-in-interest was answerable.
Wachovia's action sought compensation from the defendants for this liability, but the defendants moved for judgment on the pleadings on the basis that Wachovia exceeded the applicable statutes of limitation in commencing its action. The Court of Common Pleas of Lehigh County dismissed Wachovia's action on this basis. The trial court reasoned that Wachovia's legal malpractice claim accrued at the time that judgment was entered against its predecessor and further, that the appeals taken by its predecessor, did not toll the applicable two year professional negligence limitations period. The trial court also concluded that the plaintiff's breach of contract claim accrued no later than the date at which Wachovia's predecessor-in-interest was sued. This conclusion meant that Wachovia exceeded the four year statute of limitations applicable to breach of contract claims by a magnitude of years.
Wachovia appealed the decision of the trial court to Pennsylvania's Superior Court. Wachovia reasoned that "actual loss" was required for Wachovia's malpractice and breach of contract claims to accrue and if measured from that standard, both its claims were timely. The Superior Court disagreed and affirmed the decision below. The Superior Court reasoned that the touchstone for the accrual of a legal malpractice claim is not actual loss, but rather, breach of duty by the attorney or firm. By this standard, the Superior Court determined that the accrual for both the professional negligence claim and breach of contract claim, occurred at the time that suit was commenced against Wachovia's predecessor-in-interest.
The case is a positive one for attorneys, as it places a firm burden on plaintiffs to bring suit upon learning of a breach of duty, rather than waiting until the realization of harm.
