Curran v. Stradley, Ronon, Stevens & Young

• Decision Date: 20 February 1987
• Citation: 521 A.2d 451,361 Pa.Super. 17
• Parties: Robert E.J. CURRAN, Esquire, Executor of the Estate of Victor S. Panaccion, Appellant, v. STRADLEY, RONON, STEVENS & YOUNG, Appellee. Robert E.J. CURRAN, Esquire, Executor of the Estate of Victor S. Panaccion, Appellee, v. STRADLEY, RONON, STEVENS & YOUNG, Appellant.
• Court: Pennsylvania Superior Court

Page 451

521 A.2d 451

361 Pa.Super. 17

Robert E.J. CURRAN, Esquire, Executor of the Estate of Victor S. Panaccion, Appellant, v. STRADLEY, RONON, STEVENS & YOUNG, Appellee.

Robert E.J. CURRAN, Esquire, Executor of the Estate of Victor S. Panaccion, Appellee, v. STRADLEY, RONON, STEVENS & YOUNG, Appellant.

Superior Court of Pennsylvania.

Argued Oct. 22, 1986.

Filed Feb. 20, 1987.

Garland D. Cherry, Sr., Media, for appellant in No. 1085 and appellee in No. 1111.

Edward C. Mengel, Jr., Philadelphia, for appellant in No. 1111 and appellee in No. 1085.

Before WIEAND, OLSZEWSKI and CERCONE, JJ.

OLSZEWSKI, Judge:

Plaintiff, Victor S. Panaccion ("Panaccion"), brought a claim of legal malpractice against the defendant law firm, Stradley, Ronon, Stevens & Young ("Stradley"). After the jury returned a verdict against Stradley in the amount of $500,000.00, the trial court granted, in part, Stradley's judgment n.o.v., reducing the verdict to $243,000.00. Both parties now appeal. We find that a new trial is required and, accordingly, vacate the order and remand the case for a new trial.

I. BACKGROUND

The seeds of this dispute were first sown in January of 1974, when Panaccion, the owner of a lumber company, entered into an agreement with Clifco Millwork ("Clifco," the "buyer") for the sale of the lumber company. The sale price of the business was $661,886.40, with Panaccion receiving a $100,000.00 down payment and the balance to be paid over a period of eleven years. Pursuant to the sales agreement, several certificates representing shares of stock in Clifco would be held in escrow by attorneys for both Panaccion and the buyer. After entering into the sales agreement, Panaccion secured the services of Stradley.

As of the time of settlement, the escrow agreement had not been prepared. It was agreed, however, that a member of the law firm, Herbert P. Eberharter, ¹ would prepare the escrow agreement and act as escrow agent. Stradley drafted a security agreement giving Panaccion a secured interest in the accounts receivable and the inventory of the lumber company.

The closing took place in February of 1974. In October of 1974, the buyer's attorney informed Eberharter that a majority shareholder of Clifco had transferred the Clifco stock to another entity, Emblem Flag Company ("Emblem"). ² Without consulting Panaccion, Eberharter released the certificate held in escrow which represented the shares in Clifco owned by that shareholder, and substituted a certificate in the name of Emblem. Sometime after October of 1975, the remaining shareholder in Clifco died; pursuant to a buy-back agreement with the company, Clifco was required to purchase these shares. Eberharter released the remaining Clifco shares and substituted another certificate in the name of Emblem. As with the stock transfer in October of 1974, Eberharter did not first notify Panaccion. Hence, Emblem became the 100% owner of Clifco. Although Eberharter held stock powers for the certificates representing the prior owners' interests in the Clifco stock, he failed to get stock power for the certificates issued to Emblem. Under the escrow agreement, however, Clifco could vote the shares of stock without Panaccion's approval. In February of 1976, Emblem, the new owner of Clifco, voted to permit Clifco to sell the real estate of the lumber company to A & P Company for $243,000.00. The actual sale to A & P occurred prior to June of 1976.

In June of 1976, Panaccion learned that all of the inventory in which he had held a security interest was dissipated. Thereafter, Panaccion brought suit against Stradley and Eberharter. Panaccion asserted that Stradley, inter alia, negligently permitted settlement of the sale of the lumber business to occur without first drafting the escrow agreement; drafted the escrow agreement permitting the Clifco shareholders the right to vote the shares of stock; failed to inform him of the transfer of the shares of stock to the new entity and to explain the significance and consequences of the transfers; and failed to inform him of the need to police the assets of the lumber business, which were subject to his security interest.

The jury returned a verdict against Stradley in the amount of $500,000.00. The trial court granted, in part, Stradley's motion for judgment n.o.v. and reduced the award to $243,000.00 (the sale price of the real estate to A & P in 1976), finding that Panaccion produced no other evidence of his loss.

Panaccion now raises two issues for our consideration: (1) whether the court used an improper standard for measuring damages when it reduced the jury award; and (2) assuming the proper standard was used, whether the court erred in setting aside a portion of the award. Stradley raises several more issues in its appeal: (1) whether the court erred in precluding the testimony of Stradley's expert witness; (2) whether it was error to permit Panaccion's expert witness to identify himself as a former judge; (3) whether the court erred in failing to grant a full judgment n.o.v. where there was no evidence of negligence which caused an actual loss to Panaccion; and (4) whether the court erred in failing to consider evidence which would further reduce the alleged damages.

II. JUDGMENT N.O.V.

A. The Legal Standard

Upon consideration of the denial of a motion for judgment n.o.v. ³ our scope of review is quite narrow. Viewing the evidence in a light most favorable to the verdict winner and granting that party the benefit of all reasonable inferences, we must only determine whether the evidence was sufficient to sustain the verdict. Laniecki v. Polish Army Veterans Assoc., 331 Pa.Super. 413, 417, 480 A.2d 1101, 1103 (1984) (citations omitted).

B. Elements of a Legal Malpractice Claim

This Court recently restated the elements of a claim of legal malpractice:

1. The employment of the attorney or other basis for duty;

2. The failure of the attorney to exercise ordinary skill and knowledge; and

3. That such negligence was the proximate cause of damage to the plaintiff.

Schenkel v. Monheit, 266 Pa.Super. 396, 399, 405 A.2d 493, 494 (1979). Accord Gans v. Gray, 612 F.Supp. 608, 615 (E.D.Pa.1985); Duke & Co. v. Anderson, 275 Pa.Super. 65, 71, 418 A.2d 613, 616 (1980).

Trice v. Mozenter, 356 Pa.Super. 510, 515 A.2d 10, 13 (1986). Panaccion argued and introduced evidence in support of numerous claims of negligence against Stradley, ⁴ the essence of which is that the attorneys, through a series of representations, acts and inaction, failed to adequately protect his interests. As a result, Panaccion claims to have suffered a loss. Conversely, the thrust of Stradley's argument is that Panaccion's loss was due to the financial failure of the lumber business after the sale to Clifco, not because of any alleged negligence of the attorneys.

Unless the evidence is such that reasonable men cannot disagree, the question of whether the defendant's conduct is the cause of the injury is one for the jury. Vattimo v. Lower Bucks Hospital, Inc., 502 Pa. 241, 247, 465 A.2d 1231, 1234 (1983). The learned trial court specifically and thoroughly addressed the basis of several of Panaccion's claims and, after our own review of the record, we are satisfied that the evidence was sufficient for the jury to determine the issue of liability. Accordingly, for the reasons stated by the trial court, we conclude that Stradley's motion for judgment n.o.v. in this regard was properly denied.

Although the evidence was sufficient to support the jury's finding of liability, the record does not support the award of damages. ⁵ In order to recover in a malpractice action, the plaintiff must prove not only the negligence of the attorney, but also an actual loss resulting from that negligence. Mariscotti v. Tinari, P.C., 335 Pa.Super. 599, 601-602, 485 A.2d 56, 57 (1984) (citations omitted). Once the fact that damages occurred has been established, the jury is permitted to determine the extent of those damages. R. Mallen & V. Levitt, Legal Malpractice, Sec. 303 (2d Ed.1981). Nevertheless, the plaintiff has the burden of presenting sufficient evidence by which damages can be determined on some rational basis and other than by pure speculation or conjecture. See generally Delahanty v. First Pennsylvania Bank, N.A., 318 Pa.Super. 90, 464 A.2d 1243 (1983).

Panaccion has demonstrated actual injury--the loss of his property rights under the sales and the escrow agreements. ⁶ There is, however, absolutely no evidence in the record supporting the jury's valuation of that loss. Panaccion presented no testimony from an accountant, financial expert or appraiser, and no financial statements or records from the business documentating the value of the assets were introduced. ⁷ Indeed, Panaccion's expert witness could not render an opinion as to the value of the assets in the fall of 1974, just months after the agreements were executed. Moreover, Panaccion's expert testified that the full purchase price of $561,000.00 would probably not have been recovered. Panaccion's counsel also added in closing argument that the jury would have to guess as to the value of some of the assets since there was no evidence of record on which to rely. In short, the award of $500,000.00 is totally unsupported on the record and is contradicted by the testimony of Panaccion's own expert witness. Thus, after reviewing the testimony and exhibits, we agree with the trial court that the only evidence of record by which his loss can be measured is the $243,000.00 paid by A & P to Clifco when the real estate was sold in 1976.

The final question for our determination is Stradley's claim that the award of $243,000.00 should have been further reduced to account for a mortgage on the property in the sum of $150,000.00. In reducing the award, the court held there was no record evidence of the mortgage. We disagree. Testimony was introduced by the attorney for Clifco who opined as to the value of the...