Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


11-8-2006

Duong v. Nationwide Ins Co
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-4136




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Recommended Citation
"Duong v. Nationwide Ins Co" (2006). 2006 Decisions. Paper 221.
http://digitalcommons.law.villanova.edu/thirdcircuit_2006/221


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                                                    NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT


                          No. 05-4136


                  GLORIA MY LE DUONG;
                    DAVID T. DUONG

                               v.

          NATIONWIDE INSURANCE COMPANY;
               ESQUIRE PAUL SHAPIRO;
             ESQUIRE HOWARD KAPLAN;
          KAPLAN, RADOL, SHAPIRO & KAPLAN

                       Gloria My Le Duong
                 and David T. Duong, her husband,
                                           Appellants


         On Appeal from the United States District Court
             for the Middle District of Pennsylvania
                     (D.C. No. 04-cv-00563)
         District Judge: Honorable William W. Caldwell




           Submitted Under Third Circuit LAR 34.1(a)
                      November 6, 2006

 Before: SLOVITER, CHAGARES, and NYGAARD, Circuit Judges

                   (Filed November 8, 2006)




                           OPINION
SLOVITER, Circuit Judge.

       Gloria My Le Duong and David Duong, her husband, appeal from the order of the

District Court dismissing their action against Nationwide Insurance Co. (“Nationwide”)

and two lawyers and their law firm who represented Nationwide, as subrogee of Gloria

My Le Duong, in its New Jersey state action for property damage to the automobile of

Gloria My Le Duong (“Duong”). Because David Duong’s claim is derivative of that of

his wife, we will use the singular “Duong” in this opinion.

                                            I.

       On November 7, 1998, Brett Masie, driving a truck with the name “Belfiore

Provisions” emblazoned on its side, struck a vehicle operated by Gloria My Le Duong.

She reported the collision to Nationwide, and explained that her vehicle had been

damaged and that she had sustained personal injuries. Nationwide paid her for the

property damage and for the medical expenses that were covered under the policy. In

July 2000, Nationwide hired the Appellee law firm Kaplan, Radol, Shapiro, & Kaplan

L.L.P. (the “Law Firm”) to pursue a subrogation action in the Superior Court of New

Jersey, Mercer County, for the property damage to Duong’s vehicle. Howard Kaplan and

Paul Shapiro (“Attorneys”), who were members of the Law Firm, represented

Nationwide. Although Nationwide had been apprised that Duong had retained attorney

David Knauer as counsel, it failed to inform Knauer that it had filed a complaint against

Belfiore in an attempt to recover the money paid to Duong under the policy. The



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complaint in the subrogation action named Nationwide as the plaintiff, “a/s/o Gloria My

Le,” and “Ronald Belfiore d/b/a Belfiore Provisions” as the defendant.

       In November 2000, Knauer filed a personal injury action on behalf of Duong in the

Philadelphia Court of Common Pleas (the “Philadelphia action”) and named Belfiore

Provisions and Masie as the defendants. The case was captioned “Gloria My Le Duong

and David T. Duong, her husband v. Belfiore Provisions and Brett L. Masie.”

       In March 2001, Belfiore filed a motion for summary judgment in the New Jersey

action, on the ground that on November 2, 1998, just five days before the accident, he had

agreed to sell the truck to Masie and that, on the morning of the accident, he had

transferred title to Masie in exchange for $6500. The New Jersey Superior Court granted

the motion. Thereafter, Belfiore moved for summary judgment in the Philadelphia action,

and attached a copy of the New Jersey Superior Court’s summary judgment order. The

Philadelphia court granted Belfiore’s motion.

       Duong, through the same counsel that represents her here, filed a motion for

declaratory judgment in the Philadelphia action “to determine if [Duong] could proceed

with [her] claim against Masie only and whether [Duong’s] counsel could ethically

prosecute [Duong’s] claim against Masie only.” App. at 11a. The Philadelphia court

issued a declaratory judgment stating that Duong had split her cause of action by filing

the New Jersey action and therefore could not maintain the action for personal injuries.

Duong did not appeal that ruling.



                                             3
       Instead, she filed this action in the United States District Court for the Middle

District of Pennsylvania alleging two breach of contract claims and a bad faith claim

against Nationwide, legal malpractice claims against Shapiro and Kaplan, as well as a

claim against the Law Firm under a respondeat superior theory.

       Nationwide thereafter moved to dismiss the complaint, arguing that Duong had

lost her right to recover for her personal injuries because counsel erroneously sought a

declaratory judgment which clarified the alleged claim-preclusive effect of the New

Jersey action, and not because Nationwide had separately pursued its subrogation action.

The District Court granted Nationwide’s motion to dismiss, concluding that Pennsylvania

law had not barred the personal injury action because Duong alleged she had no notice of

the subrogation action. The District Court did permit Duong to file an amended

complaint if she could allege facts, in good faith, that could support her claim.

       The amended complaint provided more factual detail concerning Duong’s contacts

with Shapiro and alleged two new claims against Nationwide, one for negligence, based

on its handling of the subrogation claim, and one for breach of contract on a separate

claim that Nationwide had failed to pay for their rental car while hers was being repaired.

Nationwide, Shapiro, Kaplan and the Law Firm thereafter filed separate motions to

dismiss and the District Court granted their motions.1 This appeal followed.




                    1
                      The remaining rental car claim has apparently been
            resolved, as that count was subsequently dismissed.

                                              4
                                             II.

A.     Nationwide

       The District Court granted the defendants’ motion to dismiss on the ground that

Duong had split her cause of action. Duong, whose success in this action against

Nationwide and the defendant lawyers is dependent upon a holding that the New Jersey

action for property damage precluded her Pennsylvania suit for personal injuries, seeks to

hold the defendants responsible for that effect. Therefore, it is her position that the

Philadelphia judge’s decision that the Pennsylvania suit was barred was both correct as a

matter of law and should be given full faith and credit.

       The District Judge rejected Duong’s argument. The Court recognized that the

Pennsylvania Supreme Court in Spinelli v. Maxwell, 

, 

(1968),

held that because plaintiff had recovered a judgment for the damages to his vehicle, he

split his action and was barred by res judicata from bringing a second complaint for his

personal injuries. However, shortly thereafter in Stahl v. Hilderhoff, 

, 

(1968), the Pennsylvania Supreme Court, faced with a somewhat similar factual

situation, concluded that the Spinelli rule was inapplicable because the plaintiff was not a

party or in privity with the parties in the property damage action. Holding that Stahl

rather than Spinelli was applicable in this case because Duong had not alleged that she

authorized the New Jersey action, the District Court held that Duong had preserved her

right to sue for personal injuries by refusing to consent to the subrogation action filed by



                                              5
Nationwide in New Jersey.

       The District Court also rejected Duong’s argument that it erred in failing to give

full faith and credit to the decision of the Philadelphia Court of Common Pleas. The

District Court stated that under 28 U.S.C. § 1738, it “must accord state-court rulings the

same effect they would have in a state court.” App. at 18a. The Court continued, “This

requires us to follow the state law of issue preclusion. . . . Pennsylvania law on issue

preclusion [referring primarily to Spinelli and Stahl] does not bar the defendants from

litigating the claim-preclusive effect of the New Jersey summary judgment on the

Philadelphia action. Hence, we are giving the ruling in the Philadelphia action the same

effect a state court would.” App. at 18a. We see no reason to disturb the District Court’s

decision granting Nationwide’s motion to dismiss.

B. The Attorneys

       The District Court granted the motion of the Attorneys to dismiss because Duong’s

amended complaint failed to allege facts showing that any of the attorney defendants were

the proximate cause of the loss of Duong’s personal injury action. The Court agreed with

the Attorneys that Duong was the cause of the loss by moving for a declaratory judgment

in the personal injury action. Although the District Court did not analyze the proximate

cause issue further, aside from its ruling that Pennsylvania would not have precluded

Duong from maintaining her action for personal injuries under the circumstances, we note

that Duong did not appeal the ruling of the Philadelphia court. Such an appeal would



                                              6
have given a Pennsylvania appellate court the opportunity to note that neither Nationwide

nor the Attorneys were in privity with Duong in her personal injury suit, so that the

decision in the New Jersey action may not have barred the Pennsylvania suit brought by

Duong against Masie. We choose not to conjecture whether Duong failed to take further

steps to assert her personal injury claim against Masie because of a calculation that this

suit against Nationwide and the Attorneys was more promising. It is sufficient for us to

hold that the District Court did not err in ruling that Duong had not shown that any of the

Attorneys were the proximate cause of the loss of Duong’s personal injury action. It

follows that we will affirm the decision of the District Court.




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