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Legal Updates for Lawyers' Professional Liability

Don’t Forget Your Probable Cause Argument in Dragonetti Proceedings

Legal Updates for Lawyers’ Professional Liability – September 2024

September 1, 2024

by Gregory P. Graham

Our Lawyers’ Professional Liability Practice Group in Pittsburgh has noticed a growing trend in western Pennsylvania plaintiffs’ practice concerning Wrongful Use of Civil Proceedings tort claims filed by original defendants arising from actions with “split outcomes.” “Split outcome” actions occur when an original plaintiff prevailed on some, but not all, of their claims against an original defendant. The original defendant then sues the original plaintiff and asserts, among other claims, a Wrongful Use of Civil Proceedings count. We have seen a noticeable increase in such filings in 2023 and 2024. 

This trend necessitates an important reminder that early dismissal of these counts should be pursued based upon established case law, that the split outcome of the original action can actually result in the dismissal of the wrongful use claim. 

The tort of Wrongful Use of Civil Proceedings, commonly referred to as a “Dragonetti Action,” is codified at § 42 Pa.C.S.A. 8351. In order to prove a wrongful use claim, a plaintiff must plead and prove that: (1) the underlying proceedings were terminated in their favor; (2) the defendants caused those proceedings to be instituted or continued without probable cause; and (3) the proceedings were instituted primarily for an improper cause. Sabella v. Milides, 992 A.2d 180, 188 (Pa. Super. 2010). 

It is critical to note that multiple courts have found that, when probable cause existed for one claim within an action, probable cause can be considered to have existed for the entirety of the proceeding. Bobrick Corp. v. Santana Prods., Inc., 698 F. Supp. 2d 479, 493-94 (M.D. Pa. 2010), aff’d, 422 Fed. Appx. 84 (3d Cir. 2011); Rosen v. Tabby, 1997 WL 667147 (E.D. Pa. Oct. 9, 1997), aff’d mem., 175 F.3d 1011 (3d Cir. 1999); Laventhol & Horwath v. First Pennsylvania Bank, N.A., 18 Phila. 580, 1988 WL 679860 (Phila. C.P. Phila. Co., Nov. 10, 1988). Put another way, the probable cause/gross negligence prong of a Wrongful Use of Civil Proceedings claim under Pennsylvania law pertains to the entirety of a “proceeding” rather than any individual claims asserted therein.

When facing Wrongful Use claims arising from split outcome actions, Dragonetti-claim defendants should, therefore, seek early dismissal of these counts by arguing the fact that a competent tribunal ruled in favor of the original plaintiff on some of the claims asserted in the original action means that probable cause existed for all such claims.  


 

Legal Update for Lawyers’ Professional Liability – September 2024 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

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Appellate Division Affirms Dismissal of Legal Malpractice Counterclaim Against Martin Law Firm

In Martin v. Loury, 2026 N.J. Super. Unpub. LEXIS 1617 (App. Div. July 15, 2026), Martin Law Firm represented Kirk Loury in an employment matter Mr. Loury filed against his former employer, Concord Equity Group Advisors LLC (“Concord”). The allegations included, among other things, that Loury was not fairly compensated for his employment with Concord. After a bench trial finding in Loury’s favor, the Appellate Division remanded this matter in February 2016 for a second trial. During the second trial, Concord CEO, Lee Argush, testified to lower compensation estimate than first trial. On remand, the second trial judge awarded Mr. Loury the same damages as the first judge, finding Mr. Argush not credible. After the findings during the second trial, Martin Law Firm filed an action against Mr. Loury to recover legal fees and costs of representing Mr. Loury in a second bench trial and Mr. Loury filed a counterclaim against Martin Law Firm for legal malpractice, alleging he should have received an even higher award in the second bench trial. In this allegation, Mr. Loury, through his expert, claimed that Martin Law Firm should have recalled Mr. Loury to the stand to rebut Mr. Argush’s testimony to allege an alternative theory of damages. Mr. Loury’s expert admitted that the second judge already rejected Mr. Argush's theory and accepted Loury's damages theory. The trial court barred Mr. Loury’s expert and dismissed Loury's counterclaim with prejudice before convening the collection trial, and the jury ruled in Martin Law Firm’s favor. Mr. Loury appealed the trial court's pretrial rulings barring his liability expert from testifying in support of his legal malpractice counterclaim, denying his motion for summary judgment on that counterclaim, and denying his motion to amend his counterclaim by adding attorney Joseph A. Martin as a codefendant. In affirming the trial court’s decision, the Appellate Division held that the trial court properly excluded Loury’s expert testimony in the counterclaim against Martin Law Firm because the expert could not explain how calling Loury as a rebuttal witness would have increased damages when the second judge already rejected Mr. Argush's testimony and accepted Loury's damages theory, making the expert’s causation opinion speculative. The Appellate Division also held that the trial court properly denied Mr. Loury's summary judgment motion on his malpractice counterclaim because reasonable minds could differ on whether Mr. Martin's alleged failures would have changed the second judge's damages award, given the judge already found Mr. Argush not credible, creating genuine factual disputes precluding summary judgment. Also, the Appellate Division held that the trial court properly denied Loury's May 2023 motion to add Joseph Martin individually because the statute of limitations expired in February 2022, six years after the 2016 appellate remand when Mr. Loury incurred new legal costs, and relation back did not apply because Mr. Loury knew Mr. Martin's identity throughout and strategically chose to sue only Martin Law Firm in his 2019 counterclaim.