Pennsylvania Legal Malpractice Claims: Moving Away From a (Nearly) Automatic Four-Year Statute of Limitations

The United States District Court for the Eastern District of Pennsylvania recently entered an interesting and potentially important opinion in a legal malpractice case applying Pennsylvania law. In Brenco Oil, Inc. v. Blaney, 2017 U.S. Dist. LEXIS 204775 (E.D. Pa. Dec. 13, 2017), the court held that a legal malpractice claim alleging an attorney was careless in performing a contract, but not that the attorney failed to perform a contract, sounded in tort, not breach of contract.

The plaintiff retained an attorney to issue title opinions that identified the current owners of land so that the plaintiff could purchase the oil, gas and mineral rights for resale. The attorney issued title opinions that identified the wrong owners of the land. The plaintiff purchased the rights to the land from the incorrectly identified owners, resold those rights and was later sued by the end purchaser. The plaintiff sued the attorney, alleging legal malpractice in the form of negligence and breach of contract, for failing to issue title opinions that identified the correct landowners.

When a plaintiff brings tort and breach of contract claims arising from the same conduct, the court must decide whether the complaint sounds in tort or breach of contract. Bruno v. Erie Ins. Co., 106 A.3d 48, 68 (Pa. 2014). Even if a contract exists and the claim arises from actions taken while performing the contract, the claim is not “automatically” for breach of contract. Rather, the contract could simply be “the vehicle, or mechanism, which established the relationship between the parties, during which the tort of negligence was committed.” “Tort actions lie for breaches of duties imposed by law as a matter of social policy, while contract actions lie only for breaches of duties imposed by mutual consensus agreements between particular individuals.

Thus, although nearly all legal malpractice claims arise from a contract between the attorney and the client, not all legal malpractice claims sound in breach of contract. “[W]hen a plaintiff’s cause of action is based on the attorney’s failure to exercise due care, it will sound in contract only if the attorney fails to follow the client’s specific instructions or, by her negligence, breaches a specific provision of the contract.” Edwards v. Thorpe, 876 F. Supp. 693, 694 (E.D. Pa. 1995). In Brenco Oil, the court found that the gist of the action was in tort because the plaintiff alleged a “careless performance” in drafting the title opinions, rather than a “flat-out failure to perform.”

This is an important digression from prior case law, which suggested that a legal malpractice claim can sound in both tort and contract when alleging a breach of the professional standard of care. In Bailey v. Tucker, 621 A.2d 108, 115 (Pa. 1993), the Pennsylvania Supreme Court stated: “An attorney who agrees for a fee to represent a client is by implication agreeing to provide that client with professional services consistent with those expected of the profession at large.” In Gorski v. Smith, 812 A.2d 683, (Pa.Super. 2002), the Pennsylvania Superior Court specifically stated that: “[a] breach of contract claim may properly be premised on an attorney’s failure to fulfill his or her contractual duty to provide the agreed upon legal services in a manner consistent with the profession at large.” However, both Bailey and Gorski preceded Bruno, which applied the gist of the action doctrine in considering a negligence claim against a homeowners’ insurance company for failing to recognize the nature and severity of a mold problem. There, the Pennsylvania Supreme Court held: “[a] negligence claim based on the actions of a contracting party in performing contractual obligations is not viewed as an action on the underlying contract itself, since it is not founded on the breach of any of the specific executory promises which comprise the contract.”

More recently, the Philadelphia Court of Common Pleas applied Bruno to dismiss a plaintiff’s legal malpractice claim sounding in breach of contract, holding that, because the plaintiff did not allege that the defendant breached a specific term of the contract, the gist of the action sounded in tort. Seidner v. Finkelman, 2016 Phila. Ct. Com. Pls. LEXIS 378 at *36 (C.P. Phila. Oct. 4, 2016). The court explained that allowing breach of contract claims that sound in tort would allow plaintiffs to circumvent the statute of limitations for a negligence claim by “[u]sing contracts as a foundation upon which to sue for negligence that occurred during the contractual relationship and may otherwise be time-barred.”

The court’s ruling in Brenco Oil further solidifies the trend towards reestablishing the difference between a legal malpractice claim sounding in tort and one sounding in breach of contract. This is an important development for the statute of limitations defense to legal malpractice claims because, in Pennsylvania, the statutes of limitations for those claims are different—two years for negligence and four years for breach of contract. With the application of the gist of the action to legal malpractice claims, more cases will be subject to the two-year statute of limitations, and plaintiffs will no longer be able to automatically rely on the four-year statute of limitations simply due to the existence of an engagement agreement.

*Alesia is an associate in our Philadelphia, Pennsylvania office. She can be reached at 215.575.4557 or assulock@mdwcg.com.

_{Defense Digest, Vol. 24, No. 2, June 2018. Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2018 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}