Say What You Mean, and Mean What You Say

As this blog has often mentioned, the attorney-client relationship is one of, if not the most important factor in moving forward with legal malpractice actions. Capitol Surgical Supplies, Inc. v. Casale, 86 Fed. Appx. 506 (3rd Cir. 2004) builds on this theme by clarifying when an attorney who does not form an explicit attorney-client relationship may still be held responsible for malpractice. The most important piece of the decision is that when working with an attorney; make sure to discuss the scope of the relationship. If an attorney does not sign an explicit agreement, or take actions which would place you in a clear attorney-client relationship, then if something goes awry, the client will have no repercussions.

Capitol was a case which involved Capitol, the business and an attorney Michael Casale and his law firm Casale & Bonner P.C. The business comprised of shareholder Norman Horowitz and Sidney Stadler. Their primary business was distributing medical products. To perform this job, they formed an exclusive distribution agreement with Haven Pride, inc. Haven Pride was a manufacturer of adult diapers organized in 1999 by Robert Meachem and George Greico. When Haven Pride was formed, the legal services regarding ownership were performed by Michael Casale.

The initial distribution agreement was informal, thus the parties sat down in 2000, at Casale's office to discuss replacing the initial agreement. Capitol's owners had never communicated with Casale before that meeting, and were aware he served as the attorney for Haven Pride. Casale drafted the new agreement, and Horowitz responded with changes. There were no discussions between Casale and Horowitz regarding the legal ramifications of the proposed changes. There was no written representation agreement, or payment for legal services between Capitol and Casale. The new agreement was signed, but the relationship deteriorated sometime after. Following the deterioration, Capitol initiated a suit against Haven Pride which settled out of court. They then brought the legal malpractice action, which was dismissed on summary judgment at the trial level, because of the lack of an attorney-client relationship.

On appeal, the Court stated that to win on the suit, Capitol had the burden of establishing that an attorney-client relationship existed between the parties, otherwise Casale owed no duty. Both sides agreed there was no explicit agreement, thus the Court needed to weigh Pennsylvania law on implied attorney-client relationships. Under Pennsylvania law, an attorney-client relationship is implied if the purported client sought advice or assistance from the attorney; the assistance sought was within the attorney's professional competence; the attorney expressly or impliedly agreed to provide such assistance; and it was reasonable for the putative client to believe that the attorney was representing him. The key factor according to the court was a request for legal services, and an agreement to provide legal services between the attorney and client, or Capitol and Casale in this case.

The Court looked to Capitol's evidence of this relationship in evaluating the claim. Capitol believed a relationship was formed based on deposition testimony where the parties indicated intent to formalize the distribution agreement. The Court believed this evidence was outweighed by the fact that Haven Pride owners initiated the first meeting with Casale. Additionally, Capitol's owners conceded that they did not request legal services from Casale.

The other evidence Capitol cited included documents from Casale with the words clientswritten, as well as direct communications between Casale and Capitol. While the Court considered this evidence relevant, it ultimately dismissed these things as bolstering Capitol's contention that it held a personal belief that Casale was working for them as well. According to the Court, this evidence did not touch the key question of whether Casale agreed to provide legal services in response to Capitol's request. The subjective belief that an attorney-client relationship was formed did not provide a basis for the case to move forward.

The Court's ruling in this case is important because of both the formalism, and application of the law in this arena. Prior to reaching a decision the Court was careful to point out that a plaintiff alleging malpractice may show the attorney-client relationship exists explicitly or implicitly. In this case, all parties agreed that no explicit relationship was formed, thus the Court deferred to Pennsylvania law on implied attorney-client relationships. While the Court laid out the 4 elements of an implied relationship, they did not use this measure. Rather, the Court pared the test down to whether there was a request and agreement between the parties. This is an important blue-print for future cases, because it would seem to indicate that had Capitol shown a request and accompanying agreement, the implied relationship would have existed, and their action could continue.


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