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Legal Updates for Lawyers' Professional Liability

Legal Updates for Lawyers’ Professional Liability - RESULTS & THOUGHT LEADERSHIP*

Presented by the Lawyers’ Professional Liability Practice Group

February 1, 2024

LAWYERS' PROFESSIONAL LIABILITY RESULTS*

Josh J.T. Byrne (Philadelphia, PA)

  • Obtained a verdict for the defense following trial on a wrongful use of civil proceedings (Dragonetti Act) claim in the Court of Common Pleas, Philadelphia County. The action arose out of an underlying FDCPA claim. 
  • Achieved a dismissal of a disciplinary complaint against a family law attorney. The disciplinary complaint arose out of issues relating to the safekeeping of client funds and whether Rule 1.15 funds were properly maintained in an appropriate escrow/IOLTA account. 
  • Achieved a dismissal of a disciplinary complaint against an attorney who served as the guardian of a disabled person. The 60-paragraph complaint included assertions of multiple violations of the Rules of Professional Conduct arising out of alleged failures to pay bills on behalf of the disabled person and provide timely reports on the guardianship required by the court.

Howard Mankoff and Fred Mason (Roseland, NJ) 

  • Obtained a dismissal of a legal malpractice claim where we represented an attorney whose client was a housekeeper for the plaintiff. The housekeeper purchased a house from the plaintiff, who later claimed the parties agreed the seller could live in the house the rest of his life (he was 85) and the agreement was not included in the closing documents. The plaintiff sued the attorneys, the housekeeper and the realtors. We moved, in lieu of an answer, to dismiss the complaint. The court accepted our argument that our client did not owe a duty to the plaintiff, based on case law holding that the circumstances in which an attorney owes a duty to a non-client third party are limited to those in which the attorney knows or should know that the non-client third party is relying on the attorney’s work. The court also accepted our arguments, based on the statute of limitations and the entire controversy doctrine.

Jack Slimm (Mount Laurel, NJ) 

  • With the assistance of Justyn Coddington (Mount Laurel, NJ), successfully handled an extremely complex case involving the value of an ultrasound company in an underlying equitable distribution case. At the close of evidence, the court granted our motion for involuntary dismissal, finding that the plaintiff’s experts had offered net opinions. The court dismissed the claims and took the case away from the jury. 
  • Obtained a defense jury verdict in a complex legal malpractice action arising out of two wrongful termination trials. The trial took place in Burlington County, NJ. This extremely complicated legal malpractice action arose out of two underlying employment trials for wrongful termination claims, as well as an appeal, and involved intellectual property. Jeremy Zacharias (Mount Laurel, NJ) handled a significant amount of the pretrial and key Motions on this case. In addition, Sydney Larsen (Mount Laurel, NJ) handled the evidence exhibits at trial. There were numerous evidence issues with there being two underlying trials. However, we were successful on pretrial hearing in limiting plaintiff’s proofs and in barring significant damages claims asserted by plaintiff’s expert. The jury rejected plaintiff’s claims, and awarded all of our client’s fees, with interest and costs.
  • Obtained an order from the Superior Court in Ocean County, New Jersey, on the eve of trial, granting our motion for summary judgment in a complex legal malpractice action arising out of an underlying equitable distribution arbitration. The case involved $14 million in damages. The court ruled in connection with our argument that the plaintiff’s expert’s opinion was speculative and, therefore, not admissible. Accordingly, the court granted our motion for summary judgment. 
  • Obtained an order from the Superior Court in Burlington County, New Jersey, on the eve of trial granting our motion to dismiss in a multiparty complex legal malpractice action. This suit was filed against a court-appointed administrator of an estate, the sellers of the property, the beneficiaries of the estate, and the estate itself. The case involved two actions in the Chancery Division, two actions in the Law Division, and an appeal arising out of the same, all involving claims for breach of contract, breach of fiduciary duty, negligence and legal malpractice against the administrator. The case was filed because the property was contaminated, and it was alleged that the estate and the administrator knew or should have known about the unlawful dumping but ignored those activities, allowed the property to become damaged, and kept the information about the contamination from the plaintiff’s beneficiaries. However, the court found that the claims against the lawyer/administrator were barred because in the underlying probate action, the court had held that the administrator fulfilled his duties and was discharged from all duties and obligations under New Jersey’s Probate Code. Accordingly, the court dismissed the Law Division action based upon the Entire Controversy Doctrine, res judicata, collateral estoppel and judicial estoppel.

Jack Slimm and Art Wheeler (Mount Laurel, NJ)

  • Won a decision from the Superior Court of New Jersey Appellate Division, which affirmed an order for summary judgment in a complex multi-party legal malpractice action involving financial ventures that led to two legal malpractice actions with economic losses at $11,583,180. The dismissal was affirmed, with the Appellate Division agreeing with the trial judge that the plaintiff’s expert reports were net opinions and inadmissible. Since the plaintiff could not demonstrate his actual damages to the jury, the trial court’s orders were affirmed.

Jack Slimm and Jeremy Zacharias (Mount Laurel, NJ) 

  • Obtained an order of dismissal on a motion to dismiss for failure to state a claim in the Superior Court in Monmouth County, New Jersey, in a complex legal malpractice action. This action arose out of a remand from the New Jersey Supreme Court in the matter of Schwartz v. Menas, et al., 251 N.J. 556 (2022). The court agreed with our argument, as well as the argument of the co-defendant, a national home builder, that all claims (conspiracy and fraud) for alleging stealing the plaintiffs’ development rights were barred under the Entire Controversy Doctrine and the Doctrine of Res Judicata, based upon the ruling of the court in the reported decision of Schwartz v. Menas, et al., 251 N.J. 556 (2022), which we argued before the New Jersey Supreme Court. 
  • Obtained a dismissal, prior to trial, of a complex legal practice action arising out of a multiparty medical malpractice failure-to-diagnose case in Burlington County, New Jersey. In this case, Jack and Jeremy represented one of Philadelphia’s most well-known and highly respected plaintiffs’ medical malpractice firms. Prior to granting dismissal, the trial court found that the plaintiff’s expert’s opinion was net. In addition, the court barred the plaintiff’s malpractice expert from testifying at trial. The court also denied plaintiff’s motion for reconsideration, notwithstanding the fact that the plaintiff submitted a new amended expert report, attempting to cure the deficiencies in the deposition we took of plaintiff’s expert. It is significant that in its decision, the court relied upon the Appellate Division’s decision in Morris Properties, Inc. v. Wheeler, et al., No. A-2653-20, 2023 WL 2249975, at *1 (N.J. Super. Ct. App. Div. Feb. 28, 2023) (approved for publication August 22, 2023), an appeal handled by Jack and Jeremy Zacharias. The court found that the Appellate Division decision was dispositive, and required the court to strike the plaintiff’s expert report and precluded his testimony at trial. The court then dismissed the case with prejudice. 

Carly Edman (Pittsburgh, PA) 

  • Obtained a dismissal of plaintiff’s legal and accounting malpractice claims in the U.S. District Court for the Western District of Pennsylvania. The plaintiff filed suit against a number of defendants as a result of tax liability stemming from a prior unrelated legal settlement. The plaintiff claimed that our attorney client was negligent in providing legal and accounting advice in regard to corrective tax filings following a legal settlement with a state entity. The plaintiff asserted claims of legal malpractice, accounting malpractice, fraud, and a host of constitutional violations. Carly sought dismissal via a number of arguments, including a lack of subject matter jurisdiction. After multiple rounds of amended pleadings and briefing, the court entered an order adopting our jurisdictional argument and dismissed the plaintiff’s latest complaint without prejudice based upon a Rule 8 violation for his failure to plead a proper jurisdictional basis. While the dismissal order was without prejudice, the running of the statute of limitations results in our client obtaining the win. 

*Prior Results Do Not Guarantee a Similar Outcome

 

LAWYERS’ PROFESSIONAL LIABILITY THOUGHT LEADERSHIP

On January 27, 2024 - Josh Byrne (Philadelphia, PA) was part of a panel which presented on avoiding legal malpractice at the Pennsylvania Bar Association’s Mid-Year Meeting. The panel focused on the benefits and risks of generative AI in the practice of law.

January 26, 2024 - Alesia Sulock (Philadelphia, PA) co-presented “The Business and Ethics Basics of Law Firm Management 2024” for the Pennsylvania Bar Institute CLE.

December 1, 2023 - Josh J.T. Byrne (Philadelphia, PA) joined a Pennsylvania Bar Institute panel to record the webinar “Continuity of Legal Services for Solo and Small Firm Attorneys 2023.” 

November 21, 2023 - Michael Turner (Philadelphia, PA) presented “Jury Selection: What You Need to Know!” for the Philadelphia Association of Defense Counsel. Participants learned the voir dos (and don’ts) of the voir dire process.

November 17, 2023 - Alisia Sulock’s and Josh J.T. Byrne’s (Philadelphia, PA) article, “Probable Cause as a Matter of Law in Dragonetti Cases,” was published in the The Legal Intelligencer. You can read their article here.


 

Legal Update for Lawyers’ Professional Liability – February 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.

Firm Highlights

Thought Leadership

The Search-Incident-to-Arrest Doctrine Does Not License Strip Searches

In Beatty v. Gardner, No. 25-2860 (3d Cir. Sept. 16, 2026), Kyle Beatty sued police officers Clinton Gardner and Calvin Irvin under 42 U.S.C. § 1983 after they stopped, arrested, and searched him three times during a drug investigation in Williamsport, Pennsylvania. The officers initially smelled marijuana coming from the car in which Beatty was sitting and observed marijuana residue, giving them probable cause to arrest him. Beatty consented to the first pat-down, and the second search was conducted incident to his lawful arrest; neither search uncovered weapons or contraband. The officers then transported Beatty to the police station solely to strip-search him, but the strip search also revealed nothing. The District Court granted the officers summary judgment, concluding that the initial stop, arrest, and first two searches were reasonable and that qualified immunity protected the officers from liability for the strip search. The Third Circuit affirmed, but held that the strip search itself violated the Fourth Amendment. The court concluded that the search-incident-to-arrest doctrine does not automatically permit officers to strip-search an arrestee outside the jail or prison setting. Because strip searches are highly intrusive and the traditional justifications for searches incident to arrest (officer safety and preservation of evidence) did not justify the search of Beatty, the officers generally needed either the arrestee’s consent, exigent circumstances, or a warrant supported by probable cause to believe that a search beneath the clothing would reveal weapons, contraband, or evidence. Here, the officers had none of those justifications. Nevertheless, the court held that qualified immunity barred damages liability because, at the time of the search, the right against a warrantless strip search of an arrestee outside the institutional setting was not clearly established by Supreme Court or Third Circuit precedent. The court likewise upheld qualified immunity on Beatty’s First Amendment retaliation claim and affirmed summary judgment for the officers.

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Thought Leadership

Pennsylvania Supreme Court to Review Whether Legal Malpractice Claims May Be Recast as Breach of Contract Claims

The Pennsylvania Supreme Court recently granted allowance of appeal to consider whether a plaintiff may pursue a breach of contract claim against an attorney based on allegations that the attorney failed to provide competent legal services. The issue is significant in professional liability litigation because it concerns whether a plaintiff may avoid the statute of limitations applicable to professional negligence claims by characterizing the alleged misconduct as a breach of contract. Antoine Poteat retained attorneys Gary Asteak and Nino V. Tinari to represent him in a criminal matter. After his conviction was subsequently overturned through a Post Conviction Relief Act proceeding, Poteat filed suit against his former attorneys alleging that they breached their retainer agreements by failing to provide competent legal services. The attorneys argued that the claims sounded in professional negligence, rather than breach of contract, and were therefore time-barred. The trial court dismissed Poteat’s complaint, but the Superior Court, sitting en banc, reversed. The Superior Court held that the gist-of-the-action doctrine did not bar Poteat’s breach of contract claim because the alleged failure to provide competent legal services could constitute a breach of the parties’ agreement. The Court further held that a legal-services agreement contains an implied duty requiring an attorney to provide competent legal services, even where the agreement does not contain an express provision requiring such services. The Pennsylvania Supreme Court granted review in July 2026 and will consider whether the Superior Court’s decision conflicts with Pennsylvania precedent distinguishing contract and tort claims, including Bruno v. Erie Insurance Co. The Supreme Court will also address whether a plaintiff may maintain a breach of contract claim based on an implied duty to provide competent legal services without identifying a specific contractual provision that was breached. The Supreme Court’s decision could have significant implications for professional liability litigation in Pennsylvania, particularly where plaintiffs seek to characterize claims arising from alleged professional negligence as contractual claims.

Thought Leadership

Two Tracks, No Preclusion: Ohio Supreme Court Preserves Separate Damages Claims After Chapter 2506 Appeals

The Supreme Court of Ohio has clarified that an administrative appeal under Ohio Revised Code Chapter 2506 does not bar a separate action for damages and declaratory relief that could not have been pursued in the administrative appeal. The Ohio Supreme Court considered Sheetz, Inc. v. Centerville (2026-Ohio-3531) as a result of a certified question from the Southern District of Ohio. The question was whether Sheetz, the gas station/convenience store brand, was barred from seeking damages in a separate action since damages were not sought in their administrative appeal. Ultimately, the Ohio Supreme Court ruled that res judicata does not bar a separate action for damages after ruling on an administrative appeal because R.C. Chapter 2506 is limited to judicial review and cannot grant affirmative relief. The case arose after Centerville’s city council rejected a site plan proposed by Sheetz, Inc. that had received unanimous approval from the City’s planning commission. Sheetz filed an administrative appeal pursuant to R.C. 2506 in the Montgomery County Court of Common Pleas, and two months later filed a complaint for damages and declaratory relief under 42 USC § 1983 as a takings action with the city, city council, and other objectors as improper takings and a violation of due process, as well as interference with business and contractual relationship. The city and city council removed the § 1983 action for damages to federal court. Montgomery County Court of Common Pleas reversed the city council’s denial, and allowed the Sheetz project to move forward. Upon that ruling, the federal court issued a show-cause order questioning whether the § 1983 action was barred by the doctrine of res judicata via claim preclusion (which includes all theories of recovery).  Sheetz argued that Ohio courts of common pleas do not have authority to award damages or declaratory relief as party of the R.C. Ch. 2506 appeal, therefore res judicata could not be triggered to apply to the § 1983 action. Additionally, Sheetz moved to certify the issue to the Ohio Supreme Court, citing differing results between the second and sixth districts on this same issue. Centerville approached the question, not from a claim preclusion standpoint, but from the holding in Grava v. Parkman, Twp which states that a final judgment rendered on the merits bars all subsequent action based on the same transaction or occurrence.  In yet another approach, an objector argued that claim preclusion was satisfied because Sheetz could have raised its damages claims in the administrative appeal – Sheetz disagrees. In their analysis, the Supreme Court of Ohio broke down the elements of a claim preclusion analysis: 1) a prior final, valid decision on the merits by a court of competent jurisdiction; (2) a second action involving the same parties, or their privies, as the first; (3) a second action raising claims that were or could have been litigated in the first action; and (4) a second action arising out of the transaction or occurrence that was the subject matter of the previous action. The Court held that R.C. Ch. 2506 does not permit a party to argue damages as R.C. Ch. 2506 limits the common pleas jurisdiction as if it were sitting on appeal, and therefore can only affirm, reverse, vacate, or modify the appealed order, or can remand the case to the administrative body. Further, the Court held that Grava’s conclusion that a final judgment precludes additional litigation for different relief is inapplicable under this fact pattern because it was meant only to apply to those matters in which the plaintiff brings the exact same case twice, but for new relief. The Court found Grava was inapplicable because Sheetz could have requested damages or declaratory relief in the R.C. 2506 appeal. Therefore, Grava would be nothing more than dicta if it even did apply. Going further, the Ohio Supreme Court disavowed Sixth Circuit precedent which, in reliance on Grava and other district court decisions, permitted an owner to seeking relief under 42 U.S.C. § 1983 alongside an administrative appeal. See Moore v Hiram Twp., 988 F.3d 353 (6th Cir.2021). The Ohio Supreme Court found that the Sixth Circuit had disregarded a critical decision in Community Concerned Citizens, Inc. v. Union Twp. Bd. of Zoning Appeals, 1993-Ohio-115, which clearly held that a R.C. Ch. 2506 appeal cannot be combined with a complaint seeking other claims for relief. Id. at ¶ 11. To that end, the Ohio Supreme Court has determined that the decisions Moore relied on (outside of Grava) are no longer good law, and that Moore was wrongly decided. The decision draws a clear procedural boundary: Chapter 2506 provides judicial review of an administrative decision, not a forum for independent claims seeking affirmative relief. Although Grava may place claims arising from a single transaction within the potential scope of claim preclusion, those claims are not barred unless the complete claim-preclusion test is satisfied. Because Sheetz could not have pursued damages or declaratory relief in its Chapter 2506 appeal, the separate action was not precluded. The remaining question for practitioners looking to apply or defend against this exception is when does the statute of limitations begin to run on damages and declaratory relief claims related to an administrative decision on appeal? A takings action in federal court has a 2-year statute of limitations, or as a state claim, 4 years (like the other tortious claims raised therein). Correlating this case with others, an administrative appeal will not likely toll the statute of limitations on claims based on a final decision by a municipal authority. Therefore, practitioners should look for these cases to be brought simultaneously.

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