Coleman v. Duane Morris, LLP
58 A.3d 833
Pa. Super. Ct.2012Background
- Coleman and Linda owned BCA Management, Inc.; Carroll and Louise Carroll owned BCA Professional Services, Inc.; they faced ~$2.16 million in unpaid taxes for which they were personally liable.
- Plaintiffs entered negotiations to sell BCA to Mirabilis Ventures; Shay provided legal advice about a nonbinding LOI and possible representation for the sale.
- Draft agreement envisaged sale of all BCA stock to Mirabilis with indemnities and tax payment guarantees; Avant Services later substituted as buyer.
- Plaintiffs were told the sale would relieve personal tax liability, but later learned they remained personally liable after the stock transfer.
- Plaintiffs sued for breach of contract (assumpsit) alleging damages including the value of their stock and accrued interest on taxes; defendants moved for judgment on the pleadings contending only legal fees paid were recoverable.
- Trial court granted judgment on the pleadings; on appeal the court reversed, holding damages could include actual losses beyond legal fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Damages rule from Bailey applies to civil assumpsit? | Bailey limits damages to fees plus interest; not applicable to civil actions here. | Bailey applies, restricting damages in attorney malpractice cases to fees and interest. | Bailey limitation does not apply to civil (assumpsit) attorney malpractice here. |
| Consequence damages in legal malpractice under contract theory? | Conceivable to recover consequential damages as breach of contract. | Damages limited to actual loss; consequential damages disallowed. | Damages may include actual losses beyond fees, including consequential damages. |
| Whether alleged stock-value and tax-interest damages constitute actual loss? | Stock value forfeited and unpaid taxes plus interest constitute actual loss from misrepresentation of liability relief. | Damages must be proven as actual loss; speculative or remote damages are insufficient. | Alleged damages constitute actual loss and are provable with reasonable certainty. |
Key Cases Cited
- Bailey v. Tucker, 533 Pa. 237 (Pa. 1993) (limits damages in criminal malpractice assumpsit to fees and interest; distinguishes from civil actions)
- Helpin v. Trustees of Univ. of Pa., 608 Pa. 45 (Pa. 2010) (consequential damages recoverable if natural, foreseeable, and provable with certainty)
- Gorski v. Smith, 812 A.2d 683 (Pa. Super. 2002) (permits damages beyond fees in civil legal malpractice breach of contract actions)
- Mariscotti v. Tinari, 485 A.2d 56 (Pa. Super. 1984) (essential element is proof of actual loss in legal malpractice claims)
- Wachovia Bank, N.A. v. Ferretti, 935 A.2d 565 (Pa. Super. 2007) (standard for reviewing judgments on the pleadings)