OPINION BY MUSMANNO, J.:
Eric C. Coleman ("Coleman") and Linda Coleman ("Linda"), husband and wife, and Timothy G. Carroll ("Carroll"), individually and as executor of the estate of Louis Carroll, deceased,
The pertinent facts of this case are as follows:
Trial Court Opinion, 4/23/10, at 1-5 (footnote in original).
Plaintiffs raise the following issue on appeal: "Did the trial court err in granting [the Defendants'] Motion for Judgment on the Pleadings?" Brief for Appellants at 5.
Plaintiffs contend that the trial court erred in granting Defendants' Motion for judgment on the pleadings by holding that the Pennsylvania Supreme Court, in Bailey v. Tucker, 533 Pa. 237, 621 A.2d 108, 115 (1993), limited damages for all legal malpractice actions based on breach of contract to legal fees paid plus statutory interest. Plaintiffs assert that, under governing contract law, they are entitled to consequential damages for breach of contract.
Our standard of review is as follows:
Consolidation Coal Co. v. White, 875 A.2d 318, 325-26 (Pa.Super.2005) (citations omitted).
In Bailey, the Pennsylvania Supreme Court addressed two consolidated appeals. Bailey, 621 A.2d at 110. In each case, the criminal defendant filed a malpractice action in both trespass and assumpsit, against his criminal defense attorneys. Id. at 111, 112-13. In the first case, the trial court, after applying the two-year personal injury statute of limitations, concluded that the plaintiff's malpractice action was time-barred. Id. at 111. The Superior Court affirmed, and the Pennsylvania Supreme Court granted allowance of appeal. Id. In the second case, the trial court had granted the attorney's motion for judgment on the pleadings, based on its determination that the statute of limitations had run. Id. at 112. The Superior Court affirmed, and the Pennsylvania Supreme Court granted allowance of appeal. Id. After granting allowance of appeal, the Supreme Court in Bailey requested supplemental briefs on the issue of "whether there should be immunity for attorney malpractice in the criminal setting." Id.
The Bailey Court noted that an attorney malpractice action in a criminal case "can sound in trespass and/or assumpsit ...," and that the appellants therein had asserted both types of attorney malpractice. Id. The Court then discussed the attorney malpractice action in trespass in a criminal case, and indicated that there are "substantial differences" between a criminal and a civil attorney malpractice proceeding in trespass "which warrant distinct treatment of" the criminal cause of action. Id.
The Bailey Court reviewed various policy reasons advanced by the appellees in that case "as reasons for adopting absolute immunity for criminal defense lawyers," and concluded that (1) "the defendant [in a criminal malpractice action in trespass] must prove ... that he did not commit any unlawful acts with which he was charged as well as any lesser offenses included therein;" (2) although a criminal defendant, unlike his civil counterparts, may raise the ineffectiveness of his counsel as grounds for reversal, this opportunity for relief is designed to safeguard a criminal defendant's constitutional right to effective counsel, and does not provide a reason to eliminate the cause of action in trespass for malpractice by defense counsel; (3) the policy reasons advanced in support of attorney immunity in criminal malpractice actions in trespass, while not of such magnitude that all such actions should be barred, are nevertheless "substantial and important to the entire system charged with the administration of criminal law;" and (4) criminal legal malpractice trespass actions "are distinct from civil legal malpractice trespass actions, and as a result[,] the elements to sustain such a cause of action must likewise differ." Id. at 113-14.
The Bailey Court held that a plaintiff in a criminal legal malpractice action in trespass must establish the employment of the attorney; reckless or wanton disregard of the defendant's interest on the part of the attorney; "the attorney's culpable conduct was the proximate cause of an injury suffered by the defendant ...;" the criminal defendant suffered damages as a result of the injury; and the criminal defendant has "pursued post-trial remedies and obtained relief which was dependent upon attorney error...." Id. at 115.
The Bailey Court then addressed the legal malpractice action in assumpsit. Id. at 115. The Court reasoned and held as follows:
Bailey, 621 A.2d at 115-16 (emphasis added).
Based on our review of the Court's decision in Bailey, we conclude that the Court's discussion of the cause of action of malpractice in assumpsit must be viewed as a continuation of its previous discussion of the cause of action of malpractice in trespass, which specifically addressed attorney malpractice in a criminal case. We believe such a conclusion is clear from the Bailey Court's language that its
Id. at 115. Accordingly, we conclude that the limitation on damages imposed by the Bailey Court applies to an action in assumpsit based on a claim of attorney malpractice in a criminal case, but that limitation does not extend to an action for legal malpractice in assumpsit where the underlying action was, as here, a civil action. Thus, we conclude that the trial court in the present case erred in applying the Bailey limitation on damages, and we reverse the trial court on that issue.
Plaintiffs also contend the trial court erred in granting the Defendants' Motion for judgment on the pleadings because Plaintiffs allege that they are entitled to recover all actual damages incurred by them, including consequential damages, in this action. Plaintiffs cite Condominium Ass'n Ct. of Old Swedes v. Stein-O'Brien, 973 A.2d 475 (Pa.Cmwlth.2009), in this regard. In that case, involving a breach of contract counterclaim in assumpsit by a condominium owner, the jury found in the owner's favor and awarded him, inter alia, $213,000 in consequential
Id. at 483-84 (citation omitted); see also Helpin v. Trustees of Univ. of Pa., 608 Pa. 45, 10 A.3d 267, 270 (2010) (stating that, where one party to a contract breaches the contract without legal justification, the party is entitled to recover, "unless the contract provided otherwise, whatever damages he suffered, provided (1) they were such as would naturally and ordinarily result from the breach, or (2) they were reasonably foreseeable and within the contemplation of the parties at the time they made the contract, and (3) they can be proved with reasonable certainty").
Plaintiffs also cite Gorski v. Smith, 812 A.2d 683 (Pa.Super.2002), in support of their contention. In that case, the appellees had filed a legal malpractice action in trespass and assumpsit against the attorney who had represented them in connection with a land sale agreement. Id. at 688-90. The jury found that the attorney and his law firm were negligent, had breached their contractual obligation to provide effective legal representation, and had acted in bad faith. Id. at 690. The jury awarded the appellees $435,000.00 as damages for the breach of contract claim, $26,000.00 for the bad faith claim, and no damages for the negligence claims. Id. Subsequently, the trial court granted the appellees' post-trial motion to mold the verdict, and molded it to include an award of $435,000.00 for negligence. Id. However, on appeal, the Superior Court vacated the award of damages on the negligence claim, holding that it could "discern no clear intent on the part of the jury" to award $435,000.00 in damages for the negligence claim. Id. at 708. The Court noted that the amount of $435,000.00 reflected the amount the appellees had paid to settle the buyer's claim in a bankruptcy proceeding, as well as the amount the appellees had paid in closing costs. Id. Thus, the Gorski case demonstrates that the appellees therein were permitted to recover damages for loss, not limited to attorneys' fees, in a civil legal malpractice action for breach of contract.
In the instant case, the Plaintiffs requested damages "including, but not limited to, the loss of the value of BCA's stock (estimated to be $2.5M), and the interest and penalties that have accrued on the taxes since July 14, 2006, when the Company was sold [to] Avant." Amended Complaint, 1/10/11, par. 39.
Defendants contend that the above claim for damages is inconsistent with proof of actual loss as required in legal malpractice actions. See Mariscotti v. Tinari, 335 Pa.Super. 599, 485 A.2d 56, 57 (1984) (stating that an essential element of a claim of legal malpractice, whether the action is denominated assumpsit or trespass, is proof of actual loss); see also Kituskie v. Corbman, 552 Pa. 275, 714 A.2d 1027, 1030 (1998) (holding that an essential element of a claim of legal malpractice pursued under either a contract or trespass theory is "proof of actual loss rather than breach of a professional duty causing only nominal damages, speculative harm or the threat of future harm"). Defendants assert that the Plaintiffs' claimed damages are speculative
In the instant case, the Plaintiffs alleged that, prior to their execution of the Stock Purchase Agreement, Attorney Shay confirmed that the transaction would relieve Plaintiffs of their personal liability for accumulated, unpaid taxes. Amended Complaint, par. 18, 26. Plaintiffs alleged that they executed the Stock Purchase Agreement, and transferred one hundred percent of their stock to Avant. Id., par. 29. Plaintiffs further asserted that, several months later, they learned that they remained personally liable for the taxes until they were actually paid. Id., par. 30. Plaintiffs stated that the taxes were paid when the IRS seized a bank account in BCA's name. Id., par. 35.
Accepting these allegations as true, as we must under our standard of review, we conclude that the Defendants were not entitled to judgment on the pleadings. The Plaintiffs' claim for damages constituted a claim alleging actual loss, as the Plaintiffs alleged that they had sold their stock to Defendants, without receiving the bargained-for result, i.e., their release from liability for the owed taxes. Thus, the Plaintiffs' claim for the value of their stock, which they bargained away based on their reliance on Defendants' legal advice, and the interest and penalties that had accrued on the unpaid taxes, if proved, would constitute the actual losses sustained by Plaintiffs. Further, the alleged damages were such as would naturally and ordinarily result from the breach, were reasonably foreseeable and within the contemplation of the parties at the time they made the contract, and are capable of being proved with reasonable certainty. See Helpin, 10 A.3d at 270; Gorski, 812 A.2d at 690. Accordingly, we conclude that the trial court erred in granting judgment on the pleadings in favor of Defendants.
Order reversed; case remanded for further proceedings; "Application to Strike Purported Rule 2501(b) Letter" denied.
