Knopick v. Connelly

• Decision Date: 13 April 2011
• Docket Number: No. 10–1589.,10–1589.
• Citation: 639 F.3d 600
• Court: U.S. Court of Appeals — Third Circuit
• Parties: Nicholas KNOPICK, Appellantv.John J. CONNELLY, Jr.; Susan M. Kadel; James, Smith, Durkin & Connelly, L.L.P.; Philip A. Downey.

639 F.3d 600

Nicholas KNOPICK, Appellant

v.John J. CONNELLY, Jr.; Susan M. Kadel; James, Smith, Durkin & Connelly, L.L.P.; Philip A. Downey.

No. 10–1589.

United States Court of Appeals, Third Circuit.

Argued on Dec. 15, 2010.Opinion Filed: April 13, 2011.

Dennis E. Boyle, (argued), Joshua M. Autry, Boyle, Neblett & Wenger, Camp Hill, PA, for Appellant.Philip A. Downey, (argued), Downey Law Firm, Unionville, PA, for Appellee Downey.Edwin A.D. Schwartz, Marshall, Dennehey, Warner, Coleman & Goggin, Harrisburg, PA, for Appellees Connelly, Jr.; Kadel; and James, Smith, Durkin & Connelly, L.L.P.Before: SLOVITER, GREENAWAY, JR., and GREENBERG, Circuit Judges.

OPINION

GREENAWAY, JR., Circuit Judge.

Nicholas Knopick (“Knopick”) appeals the District Court of the Middle District of Pennsylvania's grant of summary judgment for Appellee Philip Downey (“Downey”), Esquire, on Knopick's legal malpractice tort and contract claims against Downey. Knopick claims that Downey committed malpractice in failing to prosecute a legal malpractice action on Knopick's behalf against John Connelly, Jr., Esquire, Susan M. Kadel, Esquire, and their law firm James, Smith, Durkin & Connelly, L.L.P. (“Connelly Defendants”).

Knopick argues that the District Court should not have applied the occurrence rule to determine the start date of the statute of limitations for his claim against the Connelly Defendants; instead, the Court should have tolled the statute of limitations based on the discovery rule or fraudulent concealment doctrine. Knopick also argues that even applying the occurrence rule, the District Court erred in its ruling because he and Downey had entered into an attorney-client relationship before the statute of limitations had run.

We find that the District Court erred in granting summary judgment in favor of Downey based on its application of the occurrence rule to Knopick's underlying claim against the Connelly Defendants. We will apply the discovery rule to Knopick's underlying claim and we subsequently find a genuine issue of fact as to when Knopick should have known of his injury and its cause under the discovery rule. We will reverse the decision of the District Court and remand Knopick's case for further proceedings, in accordance with this opinion.

I. BACKGROUND ¹

On May 11, 1998, Knopick, a commercial pilot, and his wife, Darlene Knopick (“Dolly”), entered into a Separation and Property Settlement Agreement (“PSA” or the “Agreement”) whereby Dolly would receive $60,000 from Knopick's retirement plan. In July 1999, Knopick filed for divorce. Dolly filed a motion to set aside the Agreement and to hold an equitable distribution hearing for the property. In the motion, she alleged that Knopick failed to disclose all of his stock investments at the time they entered into the Agreement. Specifically, she was unaware of two million dollars worth of stock that Knopick held. Knopick maintained that at the time of the Agreement, Dolly was fully aware of all of his assets, including the two million dollars worth of stock. In any case, the stock was encumbered by a two million dollar loan.

Knopick retained the Connelly Defendants in 2004 to represent him in the matter. The Connelly Defendants told Knopick that the Agreement was valid, and that if it were set aside, he would only have to pay Dolly the amount that the stock was worth at the time he entered into the Agreement. On August 2, 2004, a PSA hearing was held before Judge Kathy A. Morrow in the Court of Common Pleas in Perry County, Pennsylvania, to determine whether Dolly was provided with full disclosure of Knopick's assets in 1998.

Before the hearing, Knopick told Connelly of four witnesses who could testify as to Dolly's knowledge of his assets at the time he entered into the PSA. The witnesses on the list were Dolly's lawyer, Carl Wass; Knopick's lawyer, Michael Hanft; the couple's accountant, Charles (“Chuck”) Pegg; and his wife, Becky Pegg. Knopick claims that Connelly represented that he would contact the witnesses on the list, including Wall, Chuck Pegg, and Hanft. Prior to the PSA hearing, Dolly offered to settle the case, if Knopick would transfer $300,000 of his UPS stock to her. Based on advice from Connelly and Kadel, including Kadel's indication that they had a lot of evidence including tax returns, Knopick rejected the offer.

Neither Kadel nor Connelly met with Knopick prior to the hearing. On August 2, 2004, the date of the hearing, Knopick was informed that Kadel, not Connelly—whom he had expected to appear on his behalf—would represent him at the hearing. Kadel did not call any of the witnesses that Knopick had recommended. Kadel told Knopick that Connelly did not need to be there, that the other witnesses were not necessary because of the tax records, and that the Agreement would not be set aside.

In fact, only Knopick testified on his own behalf. Knopick denied committing any fraud or concealing his assets. He testified that Dolly was aware of the value of his stock and that she had access to all of his financial statements. He further stated that Dolly had access to his financial information each year when they prepared their joint tax returns with their accountant, Mr. Pegg.

Dolly and her sister, Carol Ann Chaft, testified on Dolly's behalf. Dolly testified that Knopick had acted fraudulently and had failed to disclose his assets. Dolly claimed that she thought Knopick only had a small amount of stocks and that she did not know their value. Dolly asserted that Knopick and Pegg did not share Knopick's financial information with her when they did the couple's taxes. She also testified that, at the time, she believed Mr. Hanft to be their family attorney. She professed that she never consulted with Wass about Knopick's assets before signing the Agreement.

After the hearing, Kadel told Knopick that it had gone well. Connelly told Knopick later that the hearing “was not a big deal and that any competent attorney could handle it.” (App. at 476.) Over the next few months when Knopick spoke to Connelly and Kadel, they told him that there was nothing to worry about, and assured him that the hearing had gone well. On July 7, 2005,² the Court decided the matter in Dolly's favor, setting aside the Agreement in order to subject Knopick's assets to an equitable distribution hearing. Knopick claims that at that point, Kadel and Connelly told him that an appeal was in the works.³ Shortly thereafter, Knopick discharged the Connelly Defendants because of how Connelly had handled the custody aspect of the case. At that point, Knopick hired attorney Rich Wagner to represent him, and claims that only after Wagner reviewed the case did he come to believe that Connelly and Kadel may have been negligent.

On July 28, 2006,⁴ Knopick first met with Mr. Downey, who had been recommended to him, to discuss bringing a malpractice action against the Connelly Defendants for their representation of him in the PSA matter. ⁵ On August 9, 2006, at Downey's direction, Downey and Knopick met with attorney Albert Momjian, whom Downey identified as an expert in domestic relations cases. After their meeting, Downey met with Knopick several times and told Knopick that he had a good malpractice case. Downey also told Knopick that he had retained an expert and was filing suit on Knopick's behalf.

On October 26, 2006, Downey sent a letter to the Connelly Defendants stating, in part, the following:

Having reviewed the hearing transcript, it does appear that your firm was negligent in failing to present both testimonial and documentary evidence, and for repeatedly failing to object to improper testimony by Darlene Knopick and questioning by her attorney.

The evidence and objections in question, were of sufficient weight that they very likely would have resulted in a different outcome.... At this juncture we do not know Mr. Knopick's exact monetary loss as a result of your firm's apparent malpractice; however, it seems almost certain that it will exceed one million dollars ($1,000,000), and could well be in the vicinity of fifteen million dollars ($15,000,000).

Please place your carrier on notice of this potential claim. The statute of limitations on this matter, in tort, is July 5, 2007, [two years after the date of Judge Morrow's Order invalidating the Property Settlement Agreement].

(App. at 523.) On March 30, 2007, five months later, Downey asked Knopick to sign an official agreement to file suit on the malpractice claim, which Knopick did. However, Downey did not file the lawsuit.

On February 25, 2008, Downey sent Knopick a letter terminating his representation. Knopick claims that until this time, Downey repeatedly told him that he had a good case. The letter stated that the two-year statute of limitations on his claim against the Connelly Defendants had begun to run from the date of the August 2, 2004 hearing when the firm failed to call potentially relevant witnesses, and had expired on August 2, 2006, prior to Downey's representation of Knopick.⁶

On July 6, 2009, Knopick filed suit against the Connelly Defendants, claiming legal malpractice under a breach of contract theory. In that complaint, Knopick also brought claims against Downey, alleging legal malpractice under both tort and contract theories of liability. On July 22, 2009, the Connelly Defendants moved to dismiss Knopick's claim against them. On December 29, 2009, the District Court granted this motion. It found that Knopick's claim against the Connelly Defendants was grounded in tort, not contract. The tort claim was thus subject to a two-year statute of limitations which had run, with regard to Knopick's claims against them, regardless of the start date of the statute of limitations, an issue which the Court explicitly did not decide. Knopick v. Connelly, Civil No. 09–1287, 2009 WL 5214975, at *1 (M.D.Pa. Dec. 29, 2009). Knopick did not file a timely appeal of that ruling.

On October 21, 2009, Downey filed a...