Monthly Column - Attorney Liability: Non-Negligence Claims

Previously, this column on attorney liability discussed various attorney liabilities arising from claims of negligence and misuse of process: Dragonetti (wrongful use of civil proceedings), abuse of process, sanctions, etc. (all underlying a claim of "frivolity"). However, attorney liability is not just confined to negligent representation or so-called frivolous pleadings:

Breach of Fiduciary Duty: Unlike the traditional negligence (or Gorski - previously discussed - breach of contract) action, it is arguable that attorneys may be liable for their breach of fiduciary duty to their client even in the absence of causally related "damages." An attorney breaching his fiduciary duty may be liable for disgorgement of fees as well as punitive damages. For example, the Third Circuit predicted the Pennsylvania Supreme Court would recognize a breach of fiduciary duty claim arising from the failure to make adequate and meaningful (and not form) disclosures regarding a conflict of interest even within a class action. By logical implication, a breach of fiduciary duty claim may also arise where an attorney's breach of the attorney-client privilege causes a client the loss of due process (even if that process would not have otherwise led to a result in favor of the client); thus, the loss of the substantive right to a client's untainted "day in court" may be the harm giving rise to fee disgorgement and punitive damages even if that loss did not cause an adverse result.

Breach of Implied Covenant of Quiet Enjoyment and Peaceful Possession: While perhaps not meeting the heightened "improper purpose" element of Dragonetti, an attorney bringing an eviction (or, equally meaningful during this "foreclosure crisis," foreclosure ejectment) can be liable for that attorney's breach of that occupier's implied covenant of quiet enjoyment and peaceful possession. A constructive (without judicial process) eviction interferes with a tenant's right of access to the courts (via defense or affirmative injunction) as Pennsylvania constitutionally mandated. An attorney coordinating a premature "lock-out" may be one example of misconduct giving rise to this cause of action.

Fair Debt Collection Practices Act: Under the Fair Debt Collection Practices Act ("FDCPA"), an attorney doing business as a debt collector may be liable statutorily and for actual harm (plus attorney's fees and costs) if that attorney violates the FDCPA. That violation may be technical (i.e., failure to provide written notice following an initial collection telephone call) or substantive (threatening but not intending legal action to coerce collection of a debt). Among the many aspects of the FDCPA (effectively precluding unfair, deceptive, and abusive debt collection practices), debt collection attorneys are unfortunately much too familiar with the "letter violation" - occasioned by a violative debt collection letter (such as, a letter failing to include the "mini-Miranda" warning at the bottom, containing self-conflicting and thus confusing language, etc.) which, if done en masse (as would be traditional by a large debt collection practice engaging in form collection letters), may lead to a class action.

Recently, the Third Circuit held the FDCPA violated even if the defective collection letter was received by another attorney (as opposed to the debtor).

Civil Rights: An attorney who uses court process to violate a constitutional (such as, property) right may be liable under 42 U.S.C. § 1983. The Third Circuit held that an improper confession of judgment followed by garnishment may give rise to a civil rights violation. Consistently, the Eastern District of Pennsylvania has held a homeowner, whose property was sold at sheriff's foreclosure sale despite her pre-sale pay-off, was deemed to have had her civil rights violated vis-à-vis via improper divestiture of title to her property.

Ethics Violation: Contrary to the above-discussed causes of action, an ethics violation, in and of itself, is not an element of nor does it give rise to a cause of action for attorney liability. That said, a rule of professional conduct may set the standard of care (see below). For example, a written fee agreement with a new client may be ethically required but that failure does not, in and of itself, give rise to a cause of action in breach of contract; that said, the absence of a fee agreement exposes the attorney to cross-examination if that attorney attempts to rebut a client's perception as to the scope of engagement (i.e., if the attorney claims the scope limited but the client claims otherwise - that attorney's failure to memorialize may undermine that defense given that attorney's parallel ethical obligation).

Along those lines, an attorney having been disciplinary adjudicated in conflict of interest with his client in, for example, a real estate transaction gone bad is not collateral estopped to that attorney's defense of legal malpractice (but, as discussed, it may undermine that defense).

Defamation: An attorney is immune via the litigation or judicial privilege from her pleadings' claimed libelous content. However, the Pennsylvania Supreme Court recently abrogated that immunity when it held that the passing of that objectionable pleading to a third-party (e.g., newspaper) for publication a waiver of that privilege. Generally, statements made by an attorney during, through, and for litigation are absolutely privileged (including, settlement demands, negotiations, letters, and oral communications). Statements made by a witness, party, counsel, or a judge in the context of litigation cannot form the basis for a defamation action.

But, when an attorney acts extra-judicially, such as forwarding a communication to the Disciplinary Board, that privilege may likewise be waived.

Misrepresentation: Generally, the Unfair Trade Practices and Consumer Protection Law ("UTPCPL") does not apply to attorney misconduct. However, intentional or negligent misrepresentations may give rise to those and potentially third-party claims.

Standard of Care: As discussed in previously columns, an action in legal malpractice (or Gorski breach of contract) requires a certificate of merit even if an ultimate legal expert report is not required (such as, when the violation can be made clear through a jury instruction capable of being factually determined by a lay juror - such as, a "blown" statute of limitations). However, the Pennsylvania Superior Court has determined that a certificate of merit not required in a Dragonetti action (and by necessary implication, would likely hold similar to any of the above-discussed non-negligence based causes).

It has yet been adjudicated the necessary methodology for an attorney liability expert report (when that expert report and testimony is required). In New Jersey, an expert report without citations to precedent is an inadmissible "net opinion" (e.g., "junk science"). However, Pennsylvania has yet to adjudicate that similar requirement giving rise to often creative legal malpractice claims that may even be novel (thus, oxymoronic). In Pennsylvania, however, the fee agreement governs substantially with regards to attorney liability claims (including the allowance of inclusion of binding arbitration, statute of limitations shortening, conflict of interest waiver, and limited scope provisions).

Absent an agreed memorialization, Pennsylvania's yet specific proscription on perhaps Frye prohibited legal malpractice opinions without any true methodology should endeavor practice conservativism. That said, not every situation can be premeditated. Is it negligent to refuse to appeal from a compulsory non-binding arbitration? Is it negligent to require a client fund an action dismissed to contractual binding arbitration? Is an attorney liable for failing to appeal an adverse judgment? Is an attorney's judgment to narrowly tailor a Complaint's possible causes of action liability inducing?

In conclusion, the absence of carelessness or maliciousness does not immunize an attorney. Unilateralism may give rise to causes of action. Standards of care are not well defined. Next month's column on attorney liability: the Business of Law - the Rule of Unintended Consequences a/k/a the Road of Best Intentions.

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