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Legal Updates for Lawyers' Professional Liability

Legal Updates for Lawyers' Professional Liability - RESULTS & THOUGHT LEADERSHIP

January 3, 2022

LAWYERS’ PROFESSIONAL LIABILITY RESULTS*

Jack Slimm and Jeremy Zacharias (Mount Laurel, NJ), obtained a precedent setting decision in Johnson v. McClellan, A-2683-19 (App. Div. July 19, 2021), certif. denied 2021 WL 5446825, where the Appellate Division reversed the trial court’s ruling which held that a law professor, an attorney admitted to practice in Pennsylvania, was liable for hundreds of thousands of dollars in damages in connection with the alleged unauthorized practice of law and obtaining a referral fee. The trial court entered judgment against the professor, ordering a disgorgement of the referral fee, treble damages and attorneys’ fees under New Jersey’s Criminal Statute N.J.S.A. 2C:21-22(a). The trial court ruled that the professor, by accepting a referral fee and by consulting on an underlying medical malpractice case which was filed in New Jersey, had committed the unauthorized practice of law because the professor was not admitted to practice in New Jersey. 

On appeal, the Appellate Division held that the trial court erred in finding that the professor violated New Jersey’s Criminal Statute. In addition, the Appellate Division agreed with the professor’s argument that he did not violate the Rules of Professional Conduct. The court held that an attorney admitted to practice before the highest court of another state may engage in the lawful practice of law in New Jersey if the out-of-state lawyer’s practice in New Jersey is occasional and the lawyer associates himself with a lawyer admitted in New Jersey who will be responsible for the conduct of the out-of-state lawyer in the matter. 

The Appellate Division also ruled that the trial court erred in determining that the receipt of a fee would amount to an independent instance of unauthorized practice of law. The Appellate Division found that such a finding would have rendered every attorney who violates an RPC relating to the unauthorized practice of law open to criminal prosecution. Commentators have written that this case could spare other attorneys from criminal prosecution. 

Subsequently, the plaintiff filed a petition for certification before the New Jersey Supreme Court, which Jack and Jeremy successfully opposed. The Supreme Court, in its decision, denied the plaintiff’s petition, with costs in favor of the Professor, on November 19, 2021. 

On December 9, 2021, the New Jersey Law Journal recognized this case as one of the top three legal victories in 2021. See Toutant, Charles, “Law’s Winners and Losers of 2021: Some Saw Breakthroughs, While Others Hit Rock Bottom,” NEW JERSEY LAW JOURNAL, December 9, 2021. 

Also handled by Jack Slimm and Jeremy Zacharias, in 2820 Mt. Ephraim Avenue v. Dembo Brown & Burns, LLP, 2021 WL 2934611, certif. denied, 2021 WL 5879486 (December 10, 2021), the New Jersey Appellate Division affirmed a trial court decision granting summary judgment in a $10 million tortious interference and defamation case filed by borrowers against the attorneys for a lender bank. This case arose out of an underlying deficiency and foreclosure action filed by a bank due to the plaintiff’s failure to repay a multi-million dollar loan used to finance the purchase of real estate. 

During the course of negotiations to resolve the debt, the bank’s counsel had discussions with the plaintiff’s new lender. The plaintiff alleged that during these discussions, the bank’s attorney called the plaintiff a “wannabe gangster.”

On appeal, Jack and Jeremy successfully argued that the trial court was correct in dismissing this case on summary judgment. The Appellate Division held that the trial judge correctly concluded that a statement made by the bank’s attorney to a potential new lender calling the plaintiff a “wannabe gangster” was mere name calling, not actionable defamation. Counsel for the bank’s attorney argued on appeal that this pejorative was simply name calling and did not rise to the level of actionable defamation or slander. The claims for tortious interference were based upon the lost opportunity since the new lender rescinded its conditional commitment after the alleged statement was made. The Appellate Division also held that the trial court was correct in holding that the statement was protected under the litigation privilege. The Appellate Division held that the litigation privilege is not confined to the courtroom, but extends to all statements or communications in connection with judicial proceedings. 

Subsequently, the plaintiff filed a petition for certification before the New Jersey Supreme Court, which Jack and Jeremy successfully opposed. The Supreme Court, in its decision, denied the plaintiff’s petition, with costs in favor of our client, on December 7, 2021.

Howard Mankoff (Roseland, NJ) represented an attorney who was sued by a former client, whom the attorney represented in a personal injury claim. The plaintiff alleged that the attorney failed to file suit within the time allowed by the statute of limitations. We argued in our summary judgment motion that the attorney sent two letters to the plaintiff, advising that the attorney would not file suit and further informing the plaintiff when the statute of limitations would expire. The plaintiff, who filed suit four years later, argued that he did not receive the letters and the attorney was obligated to do more than send letters. We successfully argued that the plaintiff failed to overcome the presumption that a letter, correctly addressed, was received. The Appellate Division affirmed, adopting our argument that the plaintiff could not overcome the presumption by simply claiming he did not receive the letters. The appeal was handled by Walter Kawalec (Mount Laurel, NJ). 

Aaron Moore (Philadelphia, PA) handled a complaint filed with the Pennsylvania Lawyers’ Fund for Client Security against our client attorney, which was successfully dismissed as unsupported. In a second case handled by Aaron, a surcharge claim was filed against our client attorney in the Philadelphia Orphans’ court, which was dismissed as unsupported.

Edwin Schwartz (Harrisburg, PA) successfully settled a $1.5 million liability claim for $450,000 by effectively challenging the damage model as speculative with plaintiffs’ counsel and the mediator. In a second matter, Ed convinced opposing counsel to drop his efforts in pursuing a claim of ineffective assistance of counsel against our client in an underlying criminal matter. Ed also received a favorable Report and Recommendation from a U.S. Magistrate Judge recommending dismissal with prejudice based on his motion to dismiss. Finally, two of Ed’s cases were dismissed with prejudice based on preliminary objections. 

*Prior Results Do Not Guarantee A Similar Outcome

 

THOUGHT LEADERSHIP

Josh Byrne (Philadelphia, PA) published articles in the Legal Intelligencer over the last quarter on lessons to be learned from the Disciplinary Board’s disbarments in 2021 and considerations in purchasing legal malpractice insurance. He also published an article for the PLUS Blog on the issues surrounding employing a formerly admitted attorney. In addition to authoring articles, Josh has presented on professional liability issues surrounding cyber-attacks at the Lackawanna Bench Bar Conference as well as to the Pennsylvania Bar Association.

Edwin Schwartz (Harrisburg, PA) presented the program “Avoiding Legal Malpractice” to the Dauphin County Bar Association on December 15th.

Charlene Seibert (Pittsburgh, PA) presented “Role as a Risk Manager in Avoiding Legal Malpractice Centre” to the County Bar Association’s Bench Bar.

 

The material in this law alert has been prepared for our readers by Marshall Dennehey Warner Coleman & Goggin. It is solely intended to provide information on recent legal developments, and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. If you receive the alerts in error, please send a note tamontemuro@mdwcg.com. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2022 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved.

 

 

Firm Highlights

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Result

Summary Judgment Secured for Life Insurance Agent

Thought Leadership

New Jersey Appellate Division Affirms Exclusion of Legal Malpractice Expert as Impermissible Net Opinion

Jack Slimm and Jeremy Zacharias obtained a favorable decision on behalf of their client in a case centering on the admissibility of expert testimony in legal malpractice actions. In Martin v. Loury, the New Jersey Appellate Division affirmed the exclusion of a plaintiff's legal malpractice expert, holding that the expert's opinions on causation and damages were too speculative to support the malpractice claim. The legal malpractice action arose from an underlying employment dispute involving claims for damages stemming from the breach of an employment agreement. The plaintiff alleged that defense counsel committed malpractice during a second trial by failing to recall the plaintiff as a rebuttal witness after the employer's CEO testified. According to the plaintiff's expert, additional rebuttal testimony would have bolstered the plaintiff's damages claims and led to a more favorable result. Both the trial court and the Appellate Division rejected that theory. The courts found that the expert could not explain how the proposed rebuttal testimony would have altered the outcome of the underlying case or resulted in any additional recoverable damages. Notably, the trial judge in the underlying employment matter had already rejected the CEO's testimony as not credible and had accepted the damages analysis advanced by the plaintiff. The court had also determined that the amount of damages was not genuinely disputed. As a result, the expert's opinion that additional rebuttal testimony would have produced a better outcome was unsupported by the record and based on speculation rather than evidence. The Appellate Division agreed that neither the plaintiff nor the expert could identify any actual damages attributable to the alleged malpractice or demonstrate the required element of proximate causation. The court further upheld the trial court's application of New Jersey's net opinion doctrine, finding that the expert failed to provide the necessary "why and wherefore" supporting his conclusion that the attorney's conduct caused a compensable loss. Because the opinions rested on unquantified possibilities rather than demonstrable facts, they were inadmissible. Key Takeaway for Legal Malpractice Defendants For attorneys and firms defending legal malpractice claims, Martin v. Loury underscores the importance of closely scrutinizing an opponent's expert report on the critical elements of proximate causation and damages. The decision demonstrates that a malpractice claim cannot survive where an expert merely speculates that different litigation tactics might have produced a better result. Instead, the plaintiff must present admissible expert testimony grounded in the record that explains how the alleged attorney error probably changed the outcome of the underlying matter and resulted in measurable damages.

Portrait of Carolyn Schweizer, with text below: Philadelphia Office Managing Attorney

News

Marshall Dennehey Names Carolyn Schweizer New Philadelphia Office Managing Attorney

Marshall Dennehey Announces 2026 Ohio Super Lawyers and Rising Stars

News

Marshall Dennehey Announces 2026 Ohio Super Lawyers and Rising Stars

Thought Leadership

Supreme Court of Pennsylvania Holds That Public Policy Does Not Prevent Insurance Coverage for Sex Trafficking Claims

On July 21, 2026, the Supreme Court of Pennsylvania issued an opinion emphasizing the limited circumstances in which courts may invoke public policy to bar insurance coverage, holding in Samsung Fire & Marine Insurance Co., Ltd. (U.S. Branch) v. RI Settlement Trust that Pennsylvania public policy does not preclude coverage for claims alleging that insureds enabled or profited from human sex trafficking. The decision rejects a line of federal district court decisions predicting otherwise and reinforces that Pennsylvania courts will invoke the public policy doctrine only in the clearest of circumstances. RI Settlement is particularly significant because it arose on certified questions from the United States Court of Appeals for the Third Circuit, giving the Supreme Court the opportunity to resolve an issue on which federal courts had predicted Pennsylvania law differently. RI Settlement arose out of four separate civil complaints in which the underlying plaintiffs alleged that, as minors, they were the victims of human sex trafficking at various hotels in Philadelphia. The plaintiffs claimed that the hotel owners were negligent in failing to stop the sex trafficking from happening at their hotels. After the filing of the lawsuits, the hotel owners sought coverage under their Commercial General Liability policies. The insurers initially defended the hotels under Reservation of Rights letters, though the carriers later filed Declaratory Judgment actions seeking declarations that they did not owe a duty to defend or indemnify. In short, the insurers argued in the alternative that they did not owe any obligation to provide coverage based upon Pennsylvania public policy (because the claims violated the Human Trafficking Law – 18 Pa.C.S. § 3011) and the terms and conditions of the policy. On motions for judgment on the pleadings, the District Court found for the insurers on the basis of public policy: There is no duty to defend or indemnify against actions arising out of an insured's criminal conduct related to the sex trafficking of minors. The Court appreciates that it may make public policy the basis of a judicial decision only in “the clearest of cases.” See Minnesota Fire & Cas. Co. v. Greenfield, 589 A.2d 854, 868 (Pa. 2004) (quoting Hall v. Amica Mut. Ins. Co., 648 A.2d 755, 760 (Pa. 1994)). Yet, the Court strains to imagine a clearer case than the one presented here in which the facts alleged indicate that Policyholders engaged in criminal conduct in violation of Pennsylvania's Human Trafficking Law. The hotel owners appealed the matter to the Third Circuit, which petitioned the Supreme Court of Pennsylvania to grant review of two certified questions of law: (1) whether Pennsylvania law had an “overriding public policy” against sex trafficking, such that an insurer’s duty to defend and/or indemnify is abrogated when an insured is alleged to have enabled or profited from such trafficking; and (2) if yes, is that duty abrogated whenever the insured’s alleged conduct would constitute a violation of the Pennsylvania Human Trafficking statute. Importantly, the certified questions did not ask the Supreme Court to determine whether the policies afforded coverage under their terms. Rather, the court was asked only whether Pennsylvania public policy independently barred coverage. As a result, the court assumed for purposes of answering the certified questions that the insurers otherwise owed a duty to defend and addressed only the public policy issue, leaving all policy-based coverage defenses for further proceedings. Because the court concluded that the answer to the first certified question was “no”, it did not reach the second issue. In reaching its determination that Pennsylvania public policy does not prohibit insurance coverage for sex trafficking claims, the court limited the impact of its decision in Minnesota Fire & Cas. Co. v. Greenfield, 855 A. 2d 854, 855 (Pa. 2004), which the RI Settlement opinion emphasized as having been an “Opinion Announcing Judgment of the Court” – or a plurality opinion. In Greenfield, the insured homeowner was sued by the estate of his houseguest who overdosed from heroin that he sold to her. The matter wound its way to the Supreme Court, which determined that the insurer did not owe a duty to defend or indemnify based upon Pennsylvania public policy, which criminalized the sale and use of heroin as a Schedule I narcotic. In RI Settlement, the court “decline[d] the invitation” to extend the rationale of the three-justice plurality in Greenfield beyond cases involving Schedule I controlled substances. In so holding, the justices in RI Settlement refused to “divine an overriding public policy pronouncement by the General Assembly by virtue of its enactment of the Human Trafficking Law.” The opinion further states that it is not “within the purview of this Court to rank the magnitude of the public policy underlying the various crimes defined in the Crimes Code. It is sufficient for the work of the courts to know that the General Assembly has identified conduct it deems harmful and dangerous to the maintenance of an orderly society and criminalized it.” While the court declined to declare that Pennsylvania public policy prohibits coverage for sex trafficking claims, the opinion in RI Settlement expressly states that insurers are free to include appropriate exclusionary language for such causes of actions in their policies if they desire to do so. It will certainly be interesting to see whether the insurance industry accepts the court’s invitation, or perhaps whether the Pennsylvania legislature steps in to clarify that sex trafficking claims are indeed of the type or magnitude that they should not be covered by insurance. In any event, we will, of course, continue to monitor this and other insurance coverage issues that arise before courts in Pennsylvania, New Jersey and throughout our firm’s geographic footprint and around the country.

Result

Summary Judgment Secured, Preserving $750,000 in Coverage for Insured in Major Trucking Liability Dispute

Ray Freudiger and Michael A. Roberts (both of Cincinnati) successfully obtained summary judgment on behalf of their client in a coverage dispute arising from a May 19, 2022, motor vehicle accident. A permissive driver operated a box truck for an interstate trucking company and caused severe injuries to two tort victims. Prior to the accident, the insured had procured a commercial auto policy for the trucking company with stated limits of $1,000,000. Following the accident, the insurer initiated a declaratory judgment action asserting that only reduced bodily injury limits of $25,000/$50,000 applied and later counterclaimed, alleging it would not have insured the driver had he been properly submitted for approval under the policy. After extensive discovery, briefing, and oral argument, the court rejected the insurer’s attempt to shift responsibility for the $750,000 in coverage it was legally required to provide for permissive drivers under Ohio law, granting summary judgment in favor of the insured and preserving $750,000 in liability exposure.

Casey Alan Coyle Joins Marshall Dennehey's PA Appellate Practice as a Shareholder in Harrisburg and Philadelphia

News

Marshall Dennehey Expands Leading Pennsylvania Appellate Practice With Addition of Shareholder Casey Coyle

blue facade of a hospital sign against blue sky

Result

Defense Verdict in Complex Medical Malpractice Trial

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict. 

Thought Leadership

Court Allows Recklessness and Punitive Damages Claims to Proceed After Work‑Zone Crash

In a case where a defendant filed preliminary objections against allegations of recklessness and punitive damages, the Susquehanna County Court of Common Pleas denied these preliminary objections. This case stems from a motor vehicle accident, where the defendants car struck the plaintiffs car after the defendant allegedly fell asleep at the wheel, going at a high rate of speed, through a construction work zone. Defendant first objected to the general allegations throughout the plaintiff’s complaint pertaining to “reckless” conduct contending that there were insufficient factual allegations to support the claim of reckless conduct. Defendant next objected to the plaintiffs claim for punitive damages, as punitive damages may only be assessed against a motorist for falling asleep while driving if there is further evidence to prove driver was aware of their drowsiness and risk of falling asleep. Lastly, defendant objected to plaintiffs complaint, claiming it lacked specificity. The court here found that the plaintiff had included in the complaint specific allegations related to the defendant’s alleged recklessness, including allegations regarding speeding in a work zone, almost striking the flagger, falling asleep at the wheel, and striking the plaintiffs vehicle which was stopped. Additionally, the court noted that falling asleep does not come without warning. The court found that these allegations were sufficient to support an allegation of recklessness at the pleadings stage.