McMahon v. Shea

657 A.2d 938, 441 Pa. Super. 304, 1995 Pa. Super. LEXIS 374

• Court: Superior Court of Pennsylvania
• Decided: February 23, 1995
• Status: Published

Opinions

WIEAND, Judge:

If, before a client signs a written agreement, his or her lawyer negligently fails to advise the client correctly about pertinent principles of law or the impact of the agreement upon the client’s future rights and obligations, is the lawyer immunized from liability to the client because the agreement was executed in settlement of a pending marital dispute? The trial court held that the lawyer was immune from liability under such circumstances and sustained preliminary objections in the nature of a demurrer to the client’s complaint seeking damages for legal malpractice. The client appealed. After careful review, we reverse and remand for further proceedings.

When Robert McMahon was separated from his wife, the law firm of Shea and Shea represented and advised him. Upon his lawyer’s advice, McMahon entered an agreement to pay his wife the sum of $791.00 per week, half of which was deemed child support and the other half of which was deemed alimony. The only provision for termination of these weekly payments was a clause referring to the time when “the youngest child reached age twenty-one, is emancipated or finishes college, whichever occurs last.” Subsequently, Mrs. McMahon filed a complaint in divorce. Allegedly upon the advice of Shea and Shea, McMahon agreed that the agreement for alimony should be incorporated but not merged into the decree in divorce.

Approximately two months after the divorce decree had been entered, Mrs. McMahon was remarried. McMahon was advised by his lawyers that his obligation to pay further alimony was terminated by the provisions of the Divorce Code, and a petition was filed to terminate the order requiring the payment of such alimony. The trial court, however, refused to grant relief, and the Superior Court affirmed. These courts held that the parties’ agreement had survived the decree of divorce ending the marriage and required McMahon to pay alimony until the youngest child became twenty-one, was emancipated or finished college. See: McMahon v. McMahon, 417 Pa.Super. 592, 612 A.2d 1360 (1992).

McMahon then filed an action against his lawyers, alleging that Shea and Shea had been guilty of negligence for failing to advise him regarding the duration of his duty to pay alimony under the Divorce Code and for failing to review the agreement and explain to him the duration of his duty to pay alimony under the agreement. He also contended that the lawyers had been negligent for allowing the property settlement agreement to be incorporated but not merged in the final decree of divorce. When Shea and Shea filed preliminary objections in the nature of a demurrer to McMahon’s complaint, the trial court dismissed the action. It held that, because McMahon had voluntarily signed the agreement in settlement of a pending action, he could have no cause of action against the lawyers.

In reviewing the trial court’s ruling, we accept as true all facts which have been well pleaded and all inferences reasonably deducible therefrom. We then determine whether, on the facts alleged, the law says with certainty that no recovery is possible. If a doubt exists, that doubt must be resolved in favor of the plaintiff. Collas v. Garnick, 425 Pa.Super. 8, 12, 624 A.2d 117, 119 (1993), allocatur denied, 535 Pa. 672, 636 A.2d 631 (1993); Kemper Nat’l P & C Cos. v. Smith, 419 Pa.Super. 295, 299, 615 A.2d 372, 374 (1992); Taras v. Wausau Ins. Cos., 412 Pa.Super. 37, 42, 602 A.2d 882, 884, allocatur denied, 532 Pa. 657, 615 A.2d 1313 (1992).

In Collas v. Garnick, supra, 425 Pa.Super. 8, 624 A.2d 117, the Superior Court said:

The elements which must be alleged in order to state a cause of action for legal malpractice are: “the employment of the attorney or other basis for duty; the failure of the attorney to exercise ordinary skill and knowledge; and that such negligence was the proximate cause of damage to the plaintiff.” Liberty Bank v. Ruder, 402 Pa.Super 561, 567, 587 A.2d 761, 764-765, allocatur denied, 528 Pa. 637, 598 A.2d 994 (1991). See also: McHugh v. Litvin, Blumberg, Matusow & Young, 525 Pa. 1, 5, 574 A.2d 1040, 1042 (1990); Rizzo v. Haines, 520 Pa. 484, 499, 555 A.2d 58, 65 (1989). A lawyer will be found to be negligent if he or she fails to possess and exercise that degree of knowledge, skill and care which would normally be exercised by members of the profession under the same or similar circumstances. McPeake v. Cannon, Esquire, P.C., 381 Pa.Super. 227, 232, 553 A.2d 439, 441 (1989). The lawyer has a duty to inform himself or herself of the manner in which a proposed settlement affects the client and to inform the client regarding consequences thereof. 7A C.J.S. Attorney and Client, § 261 (1980), citing Wade v. Clemmons, 84 Misc.2d 822, 377 N.Y.S.2d 415 (1975). See also: In re Snitoff, 53 Ill.2d 50, 289 N.E.2d 428 (1972), cert. denied, Snitoff v. Board of Managers of Chicago Bar Assn., 412 U.S. 906, 93 S.Ct. 2292, 36 L.Ed.2d 971 (1973). As one trial court has observed,

a lawyer should exert his best efforts to insure that decisions of his client are made only after the client has been informed of relevant considerations.

Lang v. Anton, 40 D. & C.3d 47, 48 (Wash. [Pa.Com.Pl.] 1983). See also: Ziegelheim v. Apollo, 128 N.J. 250, 262, 607 A.2d 1298, 1304 (1992) (attorneys should advise clients with respect to settlements with the same skill, knowledge, and diligence with which they pursue all other legal tasks.). Although a lawyer is not expected to be infallible, he or she is expected to conduct that measure of research sufficient to allow the client to make an informed decision. 7A C.J.S. at § 257. In order for a lawyer to advise a client adequately, he or she is obligated to scrutinize any contract which the client is to execute, and thereafter must disclose to the client the full import of the instrument and any possible consequences which might arise therefrom. Id. at n. 96, citing Ramp v. St. Paul Fire & Marine Insurance Co., 263 La. 774, 269 So.2d 239 (1972); Gill v. DiFatta, 364 So.2d 1352 (La.App.1978). See also: Soderquist v. Kramer, 595 So.2d 825 (La.App.1992); Bush v. O’Connor, 58 Wash.App. 138, 791 P.2d 915 (1990). The lawyer, moreover, must be familiar with well settled principles of law and the rules of practice which are of frequent application in the ordinary business of the profession. George v. Caton, 93 N.M. 370, 377, 600 P.2d 822, 829 (1979).

Id., 425 Pa.Super. at 12-14, 624 A.2d at 119-120.

The provisions of the Divorce Code which establish that the payment of alimony shall terminate upon the payee-spouse’s remarriage are well known to lawyers who practice marital law. See: 23 Pa.C.S. § 3706. These provisions state a rule of substantive law of which the defendant-lawyers in this case should have been aware. Moreover, even if the lawyers were unfamiliar with the provisions of the Divorce Code, they had an obligation to familiarize themselves with the law before advising their client to sign a legal agreement containing language which created rights contrary to and in excess of those established by statute. If the lawyers negligently advised their client incorrectly about the duration of the client’s duty to pay alimony or allowed him to execute an agreement more onerous than the substantive law required, it would seem that the client would have a cause of action for legal malpractice.

The trial court held, however, that a cause of action was barred by the decision of a panel of the Superior Court in Miller v. Berschler, 423 Pa.Super. 405, 621 A.2d 595 (1993), which had extended the holding of the Supreme Court in Muhammad v. Strassburger, McKenna, Messer, Shilobod and Gutnick, 526 Pa. 541, 587 A.2d 1346 (1991), cert. denied, 502 U.S. 867, 112 S.Ct. 196, 116 L.Ed.2d 156 (1991) to circumstances similar to those in the instant case. The Superior Court directed reargument of the instant case before a court en banc so that the Miller decision might be reviewed.

In Muhammad, the defendant-lawyers had represented parents who were asserting a claim for medical malpractice which, allegedly, had caused the death of their son. The parents, following negotiations, agreed to settle their claim for the sum of $26,500.00. They subsequently became dissatisfied with the amount of their settlement and sought to avoid their agreement. However, the trial court held that they were bound by their agreement and refused to allow them to withdraw. Thereafter, the parents filed an action against their lawyers for legal malpractice. They contended that the lawyers had been negligent in recommending the settlement amount. The trial court sustained preliminary objections in the nature of a demurrer to the parents’ complaint and dismissed the action. When the case subsequently reached the Supreme Court, that Court held that the trial court had correctly dismissed the complaint for failure to state a cause of action for which relief could be granted. The Court reviewed the principles which favored settlements of lawsuits and then reasoned further as follows:

Mindful of these principles, we foreclose the ability of dissatisfied litigants to agree to a settlement and then file suit against their attorneys in the hope that they will recover additional monies. To permit otherwise results in unfairness to the attorneys who relied on their client’s assent and unfairness to the litigants whose cases have not yet been tried. Additionally, it places an unnecessarily arduous burden on an overly taxed court system.

Id., 526 Pa. at 552, 587 A.2d at 1351. Therefore, the Court held:

[W]e will not permit a suit to be filed by a dissatisfied plaintiff against his attorney following a settlement to which that plaintiff agreed, unless that plaintiff can show he was fraudulently induced to settle the original action. An action should not lie against an attorney for malpractice based on negligence and/or contract principles when that client has agreed to a settlement. Rather, only cases of fraud should be actionable.

Id. at 546, 587 A.2d at 1348.

In Miller v. Bersckler, supra, 423 Pa.Super. 405, 621 A.2d 595, a panel of the Superior Court expanded the holding of Muhammad to dismiss a legal malpractice action against a lawyer who had negligently failed to explain to a client his rights under the Divorce Code and who had failed to advise the client that the written agreement of settlement imposed more onerous obligations upon him than those imposed by statute. In Miller, the client had not complained about the amount of alimony to be paid or about the lawyer’s judgment in recommending the payment of such amount. His complaint, rather, was in the lawyer’s failure to explain that (1) under the law, the client’s obligation to pay alimony terminated if his wife cohabited with another man, and (2) the terms of the agreement imposed an obligation of greater duration than that required by statute. As a result, the client had executed an agreement which required him to continue paying alimony even after his former wife had begun cohabiting with another man. A majority of the Miller panel held that the language used by the Supreme Court in deciding Muhammad was broad enough to immunize a lawyer who had negligently failed to advise a client about applicable legal principles and the effect of a written agreement so long as the agreement had been executed in settlement of pending litigation.

It is axiomatic, however, that a judicial decision is precedential authority only “for an identical or similar case after-wards arising or a similar question of law.” Black’s Law Dictionary (5th ed. 1979). “General expressions in an opinion must be considered in the light of and cannot be dissevered from the facts of that case; what is actually decided and controlling is the law applicable to the particular facts of that particular case and while all other statements and conclusions therein are entitled to great consideration they are not controlling.” In re Trust Estate of Pew, 411 Pa. 96, 105, 191 A.2d 399, 405 (1963), overruled on other grounds, Estate of Tyler, 474 Pa. 148, 377 A.2d 157 (1977).

The salutary policy which formed the basis for the Supreme Court’s decision in Muhammad is not equally applicable where the lawyer’s alleged negligence does not lie in the exercise of judgment regarding an amount to be accepted or paid in settlement of a claim, but, rather, in the failure to advise the client properly about well established principles of law and the impact of an agreement upon the substantive rights and obligations of the client. A person about to enter a contract, all would agree, should be entitled to rely on the advice of his or her lawyer regarding the impact of the terms of the agreement. Should the result be different because the agreement is intended to settle property rights which are the subject of pending litigation? We think not. With respect to counsel’s duty to advise a client, he or she is required to exercise the same degree of care as if advising a client about an agreement which is not part of a settlement of pending litigation. See: Collas v. Garnick, supra, 425 Pa.Super. 8, 624 A.2d 117. See also: White v. Kreithen, 435 Pa.Super. 115, 121-22, 644 A.2d 1262, 1265 (1994) (client may maintain malpractice action where attorney’s negligent conduct before settlement caused damage).

The rule announced by the Supreme Court in Muhammad is limited to cases involving facts similar to those which caused the Court’s ruling. Thus, Muhammad has been held to be controlling where the lawyer’s alleged negligence consisted of “advising and representing [a client] and in negotiating for him the terms of [a] settlement and sale.” Goodman v. Kotzen, 436 Pa.Super. 71, 77-79, 647 A.2d 247, 250 (1994). Muhammad was also held to be determinative where the client merely expressed dissatisfaction with the amount of her marital award and averred that the lawyer’s conduct had caused her to receive “a deficient amount” of marital property, alimony and other available relief. Spirer v. Freeland & Kronz, 434 Pa.Super. 341, 344-46, 643 A.2d 673, 675 (1994). Finally, in Martos v. Concilio, 427 Pa.Super. 612, 629 A.2d (1993), Muhammad was held to be controlling where the lawyer’s alleged negligence had consisted of an “alleged failure to adequately represent [the client] in negotiations of the settlement agreement.” Id. at 613, 629 A.2d at 1038. These are situations in which the client perceived a deficiency in the lawyer’s exercise of his or her professional judgment.

The facts in the instant case are not similar. The alleged negligence of the defendant-lawyers in this case involved the failure to advise the client about well established principles of law and the impact of the agreement upon the client’s future obligations.

Unless the Supreme Court directs otherwise, we will not interpret Muhammad, to blindly protect lawyers who carelessly advise clients incorrectly about their substantive rights and the effect of a written agreement which is intended to resolve an existing dispute. Because the decision in Miller v. Berschler, supra, 423 Pa.Super. 405, 621 A.2d 595, reaches a contrary result, it is expressly overruled. To do otherwise would do a disservice to clients who must rely upon the advice of their lawyers before entering agreements involving future obligations and also to careful and conscientious practitioners who undertake to advise their clients fully before the client is asked to execute an agreement, whether simple or complex, and who protect their clients, or at least advise them, against contractual provisions which impose more onerous burdens than the substantive law requires.

Whether the lawyers in this case were negligent in fact is not now for us to decide. We hold only that the complaint was adequate to withstand the summary granting of judgment in response to preliminary objections in the nature of a demurrer.

Reversed and remanded for further proceedings. Jurisdiction is not retained.

DEL SOLE, J., files a Concurring Statement. CAVANAUGH, J., files a Dissenting Opinion in which CIRILLO, POPOVICH and HUDOCK, JJ. join.