Defense Digest

The Pennsylvania Superior Court Affirms Application Of The Contributory Negligence Doctrine In Two Professional Liability Cases

For several years, members of the plaintiffs’ bar have attempted to convince defense counsel and county court judges that the Pennsylvania Comparative Negligence Act (“Act”) should be applied in the context of non-medical malpractice professional liability cases.  This assertion has baffled defense practitioners given the unequivocal provisions of the Act, which instruct that it shall be applied only in cases of “negligence resulting in death or injury to person or property.”  In non-medical malpractice professional liability cases, the damages sought by plaintiffs are, of course, generally limited to pecuniary damages.  By its holdings in Gorski v. Smith, 812 A.2d 683 (Pa. Super. 2002) and Columbia Medical Group, Inc. v. Herring & Roll, P.C., 829 A.2d 1184 (Pa. Super. 2003), the Superior Court of Pennsylvania has provided defense practitioners with the decisional authority necessary to combat the assertions of the plaintiffs’ bar and some judges that the Act should be applied in non-medical malpractice professional liability cases.

In Gorski, the Superior Court observed that it was faced with an issue of first impression for a Pennsylvania appellate court:  whether an attorney may assert, as an affirmative defense, the contributory negligence of a client to bar the client’s recovery on a claim of professional negligence.  The Gorskis were real estate developers, and a man named Iacobucci wished to purchase some of their land to construct townhouses.  The Gorskis retained the services of an attorney, Mr. Jenkins, to negotiate a land sales agreement with Iacobucci.

The agreement between the parties provided that the Gorskis must warrant that they had satisfied all of the Township’s subdivision requirements, including several specific requisites set forth in a letter from the Township’s solicitor.  Among those requirements was an obligation for the Gorskis to obtain written verification from the Township sewer authority that sewer service would be provided to the property.  The agreement was signed by the parties, although that obligation was not satisfied. 

Complications pertaining to sewer approval arose subsequent to execution of the agreement, and the deal broke down.  Litigation ensued, and a jury ultimately rendered a verdict against the Gorskis and in favor of Iacobucci in an amount exceeding $700,000.  The Gorskis then commenced suit against Mr. Jenkins and his firm on theories of professional negligence, breach of contract, and bad faith pursuant to the alleged negligence of Mr. Jenkins in the contract negotiations and in Mr. Jenkins’ subsequent representation of the Gorskis in the legal proceedings with Iacobucci.

The jury in the Gorskis-Jenkins case found, among other things, that Jenkins and his firm were liable for $435,000 worth of damages relating to their representation of the Gorskis during the land sale agreement; however, the jury also concluded that the Gorskis had exhibited contributory negligence through their actions relating to creation of the agreement.  The trial court entered judgment in favor of the Gorskis for an amount which included the $435,000, among other damages.  On appeal, the Jenkins defendants raised several issues, including the question of whether the contributory negligence of the Gorskis should bar their professional negligence claims.

The Superior Court conducted a thorough review of the case law from other jurisdictions to arrive at its conclusion on this question.  It identified 31 states that had addressed the issue, finding that 18 of those states employed the principles of comparative negligence (i.e., offsetting the client’s recovery only by that portion of liability attributed to him or her, rather than completely barring recovery), whereas another 12 apparently utilized the harsher contributory negligence bar.  Upon further examination, however, the court explained that all but four of the “contributory negligence” states had modified the doctrine to some degree in cases of legal malpractice to allow a negligent plaintiff recovery in certain circumstances. 

Despite the overwhelming trend toward permitting recovery for plaintiffs where they contribute to the harm suffered, the Superior Court concluded that it was “constrained to agree” with the approach endorsed by Alabama, Maryland, North Carolina, and Virginia to afford an attorney a complete defense to a professional malpractice claim by a client where the client is contributorily negligent.  The court explained that the plain language of the Pennsylvania Comparative Negligence Act limits application of the Act to situations where the damages claimed result from death or injury to persons or “tangible” property.  Therefore, in cases where the Act does not apply (i.e., those cases where the damages sought are for economic or pecuniary loss only), the courts must revert to applying the doctrine of contributory negligence.

The court further explained, however, that a client cannot be held contributorily negligent for failing to anticipate the negligence of his or her attorney; rather, contributory negligence, in the context of a legal malpractice claim, arises in instances where: a client withholds or misrepresents relevant information to the attorney; the client elects to disregard the advice provided by the attorney; or the client violates the specific instructions of his or her attorney.

Based on the facts of Gorski, the Superior Court affirmed the judgment entered by the trial court (against the lawyer and his firm) because the Gorskis had not committed any of the above-identified acts of contributory negligence.  Nevertheless, the decision clearly establishes the defense of contributory negligence as a complete bar to a client’s recovery in cases where the client has exhibited contributory negligence vis-à-vis the actions of his or her attorney. 

Following the Gorski decision, defense practitioners offered its holding in other types of non-medical malpractice professional liability cases.  Nevertheless, some plaintiffs’ attorneys and judges were hesitant to concede that the contributory negligence doctrine should be applied in other professional liability contexts given the complete bar on recovery which is imposed upon plaintiffs.  In Columbia Medical Group, however, the Superior Court reaffirmed the narrow application of the Act and held that contributory negligence is available to an accountant, in Pennsylvania, as a complete defense to the professional negligence claims of his or her client.

Frank Kresock and Rosemary DePaoli, husband and wife, were the sole shareholders of the Columbia Medical Group (“CMG”), a medical practice.  CMG, Kresock, and DePaoli retained William Roll and his accounting firm to perform all of the necessary accounting services for the practice and for Kresock and DePaoli, individually.  In 1995, the Internal Revenue Service (“IRS”) audited CMG.  The IRS discovered several instances of misappropriated corporate assets and efforts to conceal personal expenditures by the corporation.  Ultimately, Kresock and DePaoli were convicted by a jury on multiple counts of felony income tax evasion. 

Subsequent to their convictions, Kresock and DePaoli commenced suit against Mr. Roll and his firm on behalf of CMG and themselves, individually.  Among their claims were assertions of professional negligence against Mr. Roll and his firm for Mr. Roll’s alleged failure to properly create CMG’s accounting system and for his purported negligence in failing to properly prepare corporate and personal tax returns.  The defendants filed a pre-trial motion for summary judgment, which was granted.  The plaintiffs appealed that ruling.

On appeal, Mr. Roll and his firm argued that the facts supporting the criminal charges against Kresock and DePaoli, coupled with their convictions, illustrated that the plaintiffs had been contributorily negligent in relation to the accounting and tax services provided by Roll.  They further argued that a showing of contributory negligence would bar any recovery by the plaintiffs based upon the decision in Gorski. 

The Superior Court commenced its discussion by reciting the limited scope section of the Comparative Negligence Act.  The court then explained that the plaintiffs were seeking “purely monetary loss,” as had the plaintiffs in Gorski; therefore, the Superior Court held that “the holdings enunciated in Gorski concerning contributory negligence and legal malpractice are equally applicable” to the claims in the Columbia Medical Group case.   The Superior Court agreed with Mr. Roll and his firm, and it held that the plaintiffs were collaterally estopped (i.e., barred) from denying their contributory negligence based upon the facts and convictions adduced in the plaintiffs’ criminal proceedings.

Although the holdings in Gorski and Columbia Medical Group arguably do little more than confirm the narrow applicability of the Pennsylvania Comparative Negligence Act (i.e., it only applies to cases involving death, injuries to persons or “tangible” property), they represent a substantial symbolic victory for the professional liability defense bar, whose members have been clashing with the plaintiffs’ bar and county court judges for years over the proper application of the Act in non-medical malpractice professional liability cases.                

*Jay is a shareholder and Co-Chair of the firm's Professional Liability Practice Group.  He is located in the Philadelphia office and can be reached at 215-575-2802 or jrothman@mdwcg.com.  Doug is an associate in the Professional Liability Practice Group of Marshall Dennehey’s Philadelphia office.  He can be reached at (215) 575-2698 or dherman@mdwcg.com.