Heldring v. Lundy Beldecos & Milby, P.C.
151 A.3d 634
| Pa. Super. Ct. | 2016Background
- Pencoyd Iron Works contracted to supply and install steel on a condominium conversion; it stopped work when the general contractor Axis failed to pay, resumed after assurances from David Grasso/affiliates, and remained owed ~$130,950.
- Pencoyd retained Attorney Eric Milby (Lundy, Beldecos & Milby, P.C.) by a written August 21, 2009 retention letter (signed by Heldring as Pencoyd’s president) to pursue collection.
- Milby sued entities identified as “Grasso Holdings” (a trade name) and obtained a bench judgment in Pencoyd’s favor for the owed amount; defendants later appealed but appeal was dismissed for failure to file post-trial motions.
- Pencoyd later learned “Grasso Holdings” was a trade name and alleged Milby should have sued GH Property Services, Inc. and other Grasso-controlled entities that were solvent and liable; Pencoyd claimed the judgment against the trade name was essentially uncollectible.
- Pencoyd and James Heldring (individually) sued Milby for legal malpractice (negligence and breach of contract) and unjust enrichment; the trial court dismissed the complaint on preliminary objections. The Superior Court affirmed dismissal of Heldring’s individual claims and Pencoyd’s unjust enrichment claim, but reversed dismissal of Pencoyd’s legal malpractice claim and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether suing a trade name ("Grasso Holdings") that produced an allegedly uncollectible judgment can support legal malpractice for failing to sue the correct, solvent entities | Milby negligently sued the wrong entity and thus caused Pencoyd to obtain an uncollectible judgment; this failure is actionable malpractice | Obtaining a judgment (even if on a trade name) defeats malpractice; collateral estoppel or the underlying judgment precludes relitigation and shows no loss | Reversed dismissal: failure to sue the correct party can state a malpractice claim; collectability is a defense for trial, collateral estoppel does not bar the malpractice claim |
| Whether Heldring may sue individually for malpractice/unjust enrichment despite the retention being with Pencoyd | Heldring joined as plaintiff seeking individual relief | Milby argued no attorney-client relationship or contract existed with Heldring personally; unjust enrichment barred because a written contract exists with Pencoyd | Affirmed dismissal: no individual attorney-client relationship or contract with Heldring; unjust enrichment unavailable where an express written retention contract exists |
Key Cases Cited
- Rizzo v. Haines, 555 A.2d 58 (Pa. 1989) (elements of legal malpractice and need to prove actual loss)
- Kituskie v. Corbman, 714 A.2d 1027 (Pa. 1998) (collectability of underlying damages is a defense in malpractice and is for the factfinder)
- Poole v. W.C.A.B., 810 A.2d 1182 (Pa. 2002) (recognizes malpractice claims based on suing the wrong party and places liability on counsel)
- McHugh v. Litvin, Blumberg, Matusow & Young, 574 A.2d 1040 (Pa. 1990) (attorney-client relationship is threshold for malpractice)
- Selective Way Ins. Co. v. Hospitality Grp. Servs., Inc., 119 A.3d 1035 (Pa. Super. 2015) (elements of collateral estoppel/issue preclusion)
- Northeast Fence & Iron Works, Inc. v. Murphy Quigley Co., 933 A.2d 664 (Pa. Super. 2007) (unjust enrichment requires absence of an express contract)