Preclusive Effect of Settlement Agreement in a Subsequent Legal Malpractice Claim

PALMER v. KENNEY (Pa. C.P. Phila. Cty., October 1, 2012)

The issue before the court in Palmer was whether a plaintiff, who settled a case, could subsequently assert a cognizable legal malpractice claim against the attorneys who represented her in the earlier case. The plaintiff, the wife of an individual who allegedly died as a result of silica exposure, filed a lawsuit against various silica manufactures in 2002. After many years of litigation, the plaintiff ultimately settled the silica lawsuit for the amount of $272,992.08. A few years later, in January 2012, the plaintiff filed a legal malpractice claim against the attorneys who represented her he silica case. The foundation for the legal malpractice claim was the assertion that the attorneys who represented her “failed to file a survival action” and “recommended improper releases.” As a result of this alleged malpractice, the plaintiff asserted that she “sustain[ed] great economic loss[es].”

The attorney defendants moved to dismiss the complaint, in part, on the ground that the plaintiff was precluded from pursuing the malpractice claim as a result of the settlement agreements she entered into as part of the silica case. Specifically, the Pennsylvania Supreme Court has previously held that it “will not permit a suit to be filed by a dissatisfied plaintiff against his [or her] attorney following a settlement to which the plaintiff agreed … .” An exception to this doctrine, however, has been created “for litigants who believe they have been fraudulently induced into settling their claims.” The court, in the end, dismissed the malpractice claim because the complaint lacked any allegations indicating that plaintiff was “fraudulently induced into settling her claims” and the Pennsylvania Supreme Court rule, noted above, precludes a plaintiff “from consenting to the settlement of their claims and then suing their attorneys for legal malpractice based upon dissatisfaction with the amount of settlement.”

Impact: The court’s opinion in Palmer is noteworthy for one very important reason. Specifically, the court recognized and strongly applied the doctrine that precludes a plaintiff, who voluntarily settled the underlying case, from suing his or her attorney for malpractice in the absence of fraud. Over the years, the courts in Pennsylvania have created a number of exceptions to this doctrine that have greatly weakened its application in practice. However, the Palmer opinion reaffirms that this doctrine still exists in Pennsylvania and provides attorneys with a potential avenue to seek the dismissal of a legal malpractice claim, early on in the litigation, where the plaintiff voluntarily settled the underlying case. This is a line of attack that should not be forgotten when initially evaluating a legal malpractice claim filed in Pennsylvania.