Coregis Ins. v. Baratta & Fenerty

• Decision Date: 13 September 2000
• Docket Number: 00-1175,Nos. 99-1740,s. 99-1740
• Citation: 264 F.3d 302
• Parties: (3rd Cir. 2001) COREGIS INSURANCE COMPANY, v. BARATTA & FENERTY, LTD; ANTHONY BARATTA, ESQ.; KENNETH LEE; DANIELLE LEE BARATTA & FENERTY, LTD; ANTHONY BARATTA, ESQ., Appellants Submitted Under Third Circuit LAR 34.1(a)
• Court: U.S. Court of Appeals — Third Circuit

Page 302

264 F.3d 302 (3rd Cir. 2001)

COREGIS INSURANCE COMPANY, v. BARATTA & FENERTY, LTD; ANTHONY BARATTA, ESQ.; KENNETH LEE; DANIELLE LEE BARATTA & FENERTY, LTD; ANTHONY BARATTA, ESQ., Appellants

Nos. 99-1740, 00-1175.

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Submitted Under Third Circuit LAR 34.1(a) September 13, 2000

Filed August 29, 2001

Appeal from the United States District Court for the Eastern District of Pennsylvania District Judge: The Honorable J. Curtis Joyner, (D.C. No. 99-CV-00573)

David Kraut Craig J. Fleischmann Cardis, Kraut & Harris 1777 Sentry Parkway West Abington Hall, Suite 200 Blue Bell, PA 19422, Attorneys for Appellants

Mary L. Cole Bollinger, Ruberry & Garvey 354 Eisenhower Parkway, Suite 1500 Livingston, NJ 07039, Attorney for Appellee

Before: BECKER, Chief Judge, NYGAARD and AMBRO, Circuit Judges

OPINION OF THE COURT

AMBRO, Circuit Judge:

Appellants Anthony P. Baratta ("Baratta") and Baratta & Fenerty, Ltd. ("B&F") appeal from judgments of the United States District Court for the Eastern District of Pennsylvania (the "District Court") (1) granting summary judgment in favor of appellee Coregis Insurance Company ("Coregis") and (2) denying Baratta's and B&F's motion for relief from judgment based on newly discovered evidence. The primary issue that we must decide is whether Baratta and B&F could have reasonably foreseen, prior to the effective date of their professional liability insurance policy, that Baratta's handling of his clients' case involved a breach of professional duty that might be the basis of a legal malpractice claim. If the answer is yes, coverage for those legal malpractice claims is excluded under the policy.

I. Background Facts and Procedural History

Kenneth Lee sustained severe injuries to his head on December 19, 1978 when he fell out of the passenger door of his car onto a highway. He sought treatment at Sacred Heart Hospital ("Sacred Heart") in Norristown, Pennsylvania where he was initially examined by Dr. Theodore Harrison, the emergency room physician on staff. After it became apparent that Dr. Harrison would not admit Mr. Lee to Sacred Heart, nor transfer him to a hospital that could do a CAT-scan of his injuries, Mr. Lee decided to return home with his wife, Danielle Lee.

Two days later, on December 21, 1978, Mrs. Lee returned home from work to find Mr. Lee collapsed on the floor. Mr. Lee was then taken to St. Mary's Hospital ("St. Mary's") in Langhorne, Pennsylvania, arriving in the mid- to late morning. Mr. Lee's condition deteriorated as he was required to await treatment throughout the afternoon. At 5:00 p.m., a neurologist arrived and ordered Mr. Lee transported to Mercer Hospital in Trenton, New Jersey for a CAT-scan that ultimately revealed a subdural hematoma and brain contusion. The physicians at Mercer Hospital performed emergency surgery on Mr. Lee. However, as a result of the delay in treatment, Mr. Lee allegedly suffered severe and debilitating injuries.

In January of 1979, Mr. and Mrs. Lee consulted with Baratta, who was then with the law firm Baratta & Takiff, about the possibility of filing a medical malpractice case against Sacred Heart, St. Mary's, and the doctors who had treated Mr. Lee for the injuries he had suffered on December 19, 1978. Baratta advised the Lees that they should file a medical malpractice claim against Sacred Heart and Dr. Harrison but not against St. Mary's. He explained that he "was a personal friend of a Dr. Cahill, who was a physician at St. Mary's Hospital, and that if the Lees did not sue St. Mary's Hospital, [Dr. Cahill] would be able to testify as to the negligence of Sacred Heart Hospital and Dr. Harrison."

On March 23, 1981, Baratta filed a complaint in the Montgomery County, Pennsylvania, Court of Common Pleas (the "Court of Common Pleas") on behalf of the Lees alleging that Sacred Heart and Dr. Harrison failed to treat and diagnose properly Mr. Lee's injuries. More than ten years later, on September 17, 1991, the Court of Common Pleas dismissed the Lees' suit for lack of activity. In January of 1994, Baratta, who was by that time a partner in B&F, met with the Lees and informed them that their case had been dismissed for lack of activity but that he had taken action to get the case reinstated. On January 13, 1995, Mr. Lee sent Baratta a letter expressing his dissatisfaction with the handling of his case that stated in part:

You have, for whatever reason that you never explained, dragged this case on since 1979. You have constantly brushed off inquiries for a case status report. You caused and continue to cause great anguish to me and my family by ignoring my case, my plight, my right to expect you to abide by your contract with me, to represent me and my best interest, in my case for the medical negligence I encountered at the hands of Dr. Harrison at the Sacred Heart Hospital in December of 1978.

On February 22, 1995, the Court of Common Pleas denied Baratta's petition to have the Lees' case reinstated, a decision that was affirmed by the Pennsylvania Superior Court on November 20, 1995, and by the Supreme Court of Pennsylvania on April 18, 1996.

On April 24, 1996, Baratta and B&F submitted an application for professional liability insurance to Coregis, which extended coverage under Policy No. PLL 319978-8 (the "Policy") for the period May 6, 1996 to May 6, 1997. On November 6, 1996, the Lees initiated a legal malpractice action against Baratta and B&F by filing a Writ of Summons in the Court of Common Pleas. Baratta and B&F promptly reported this event to Coregis. On December 18, 1996, Coregis sent a letter to Baratta and B&F reminding them that Exclusion B of the Policy provides that"[the] policy does not apply to . . . any CLAIM arising out of any act, error, omission or PERSONAL INJURY occurring prior to the effective date of this policy if any INSURED at the effective date knew or could have reasonably foreseen that such act, error, omission or PERSONAL INJURY might be expected to be the basis of a CLAIM . . . ." Coregis followed up on this letter by denying coverage in January 1997 for the Lees' malpractice claims against Baratta and B&F.

On October 27, 1998, the Lees filed a complaint in the legal malpractice suit alleging inter alia, a failure to fulfill contractual obligations, failure to exercise skill and knowledge possessed by other attorneys in the community, and failure to prosecute the Lees' case against Sacred Heart and Dr. Harrison. In addition, the complaint alleged legal malpractice for failing to sue St. Mary's.

On November 20, 1998, Baratta and B&F renewed their request for coverage, which Coregis denied on February 9, 1999. In addition, on February 3, 1999, Coregis initiated in the District Court a declaratory judgment action against Baratta and B&F to obtain a declaration of its rights and obligations under the Policy. In granting Coregis' motion for summary judgment on August 3, 1999, the District Court concluded that "a reasonable attorney in the position of Baratta would foresee that his lack of action in the Lees['] medical malpractice case might be expected to be the basis of not only a tort claim, but also a contract claim" and that "Exclusion B in the 1996-97 policy . . . precludes coverage for the Lees' legal malpractice action against Baratta as a matter of law." Coregis Ins. Co. v. Baratta & Fenerty, LTD., 57 F. Supp. 2d 179, 184 (E.D. Pa. 1999). On August 31, 1999, Baratta and B&F appealed to this Court.

Notwithstanding their appeal, on December 10, 1999, Baratta and B&F filed in the District Court a motion for relief from judgment pursuant to Federal Rule of Civil Procedure 60(b). The Rule 60(b) motion presented the District Court with newly discovered evidence contained in reports from Drs. Frederick J. McEliece and Joseph J. Levinsky that were submitted in connection with the Lees' legal malpractice action against Baratta and B&F in February and September of 1998, respectively. The McEliece report provides that despite "some confusion and at least poor communication" at Sacred Heart, there was no deviation from "the standard of care at the time," but with regard to St. Mary's, "if indeed [Kenneth Lee] arrived at 8:00 . . . in the morning and was evaluated at that time[,] the delay until 2:00 P.M. until obtaining a neurosurgical consultation is not acceptable."¹ The Levinsky report states that "[e]valuation of the care rendered [at Sacred Heart] shows no evidence of a deviation from the accepted standard of emergency medical care in 1978." However, "[e]valuation of the care at St. Mary's Hospital reveals significant deviations from the accepted standard of medical care."

By order entered on March 17, 2000, the District Court denied Baratta and B&F 's Rule 60(b) motion. On March 22, 2000, Baratta and B&F filed another appeal. By order of this Court on April 4, 2000, the two appeals were consolidated. We have appellate jurisdiction under 28 U.S.C. S 1291.

II. Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure provides that a moving party is entitled to summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact." Fed. R. Civ. P. 56(c). Summary judgment is only appropriate if the evidence cannot reasonably support a verdict for the non-moving party. Allstate Ins. Co. v. Brown, 834 F. Supp. 854, 856 (E.D. Pa. 1993). In making this determination, all of the facts must be reviewed in the light most favorable to, and all inferences must be drawn in favor of, the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Although the moving party bears the initial burden of demonstrating the absence of genuine issues of material fact, the non-movant must establish the existence of each element of his case. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

In the case...