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Undue Delays Could Prove Costly To Lawyers

The case of Windward Agency v. Spector Gadon & Rosen and Russell has arguably been on-going since 2001 and shows no sign of being over any time soon. With the Pennsylvania Supreme Court's denial on May, 27 2011 of the order for a petition for allowance of appeal, it merely opened the door for another case against the defendants and barring another incredibly surprising jury verdict, they will most likely be held accountable for the clear negligence they performed.

A brief summary is in order before delving into the heart of the matter. The Plaintiff, Windward Agency Inc.'s suit against Defendants Spector Gadon & Rosen and Russell (most importantly attorney Russell) arose from Defendant Russsell's failure to pursue arbitration of a federal lawsuit in which plaintiff was a party. Ultimately, the lawsuit was dismissed pursuant to Fed. R. Civ. P. 41(b) for a failure to prosecute based on the plaintiff waiting five years to appoint an arbitrator only after receiving the notice of dismissal from the federal district court.

The legal malpractice suit turned on the question of why no arbitrator had been appointed by defendant for plaintiff since the time defendant had entered his appearance on plaintiff's behalf to when the federal district court dismissed the action for lack of prosecution. The court set forth its opinion ordering a new trial in the matter. Plaintiff, a former client, had filed a post-trial motion requesting a new trial in its legal malpractice suit against Defendant Russell.

This legal malpractice action was tried before a jury from December 12, 2008 through December 31, 2008. On December 31, 2008 the jury entered a verdict finding of no negligence. On June 10, 2009, the Court properly granted Plaintiff's Post Trial Motion requesting a new trial. Defendants timely appealed the June 10, 2009 order. The trial was then affirmed without opinion by, Sub nomine at Windward v. Gadon, 2010 Pa. Super. LEXIS 6117 (Pa. Super. Ct., Aug. 24, 2010).

Further, the court acknowledged that plaintiff had severe problems in damages recovery because of a prior arbitration where Plaintiff was awarded $2.1 million from a third party and because of the testimony of a defense expert witness but that the no negligence verdict could not stand. The court held that it had properly ordered a new trial and that the order should be affirmed.

The underlying case is as follows: A dispute between Windward Agency, Inc. and Gerber Insurance Company went to arbitration where Windward was awarded $ 2.1 Million Dollars in damages. Windward then sued Cologne Life Reinsurance Company. On April 1, 1997, Judge McGlynn ordered Windward and Cologne to proceed to arbitration "in accordance with the terms provided in Article IX of the Reinsurance Agreement."

On November 20, 2001 Defendant Russell and the defendant law firm Spector, Gadon & Rosen, P.C. entered its appearance after the previous attorney withdrew as counsel due to illness. There was no further action until October 6, 2003 when Cologne filed a Motion to Dismiss for Failure to Prosecute . By Order dated December 4, 2003, Judge Bartle dismissed plaintiff's case with prejudice because of Windward's extraordinary delay, amounting to approximately 5 1/2 years, in naming an arbitrator. This Order of Dismissal was appealed to the Third Circuit which affirmed the dismissal due to plaintiff's delay in appointing an arbitrator.

As for the Malpractice case stemming from that matter, the question presented was whether the delay of Defendant Russell in appointing an arbitrator comported with the professional standard of care expected of attorneys. Judge Bartle's Opinion clearly delineated the delay of these defendants as the cause of dismissal. Based upon the unequivocal admissions of Defendant Russell himself in his testimony at trial, the Court also properly directed that there had been no contributory negligence on the part of the Windward, and nothing Windward did or failed to do had any role in the dismissal.

Defendant Russell's various actions of malpractice are almost too numerous too count. Some of the specific ones mentioned by the court were:

  • That Defendant Russell was "not diligently seeking to get an arbitrator."
  • Attorney Russell acknowledged in testimony that his lack of activity was not due to ignorance because his client repeatedly asked him to do something on the case. Those requests however were ignored.
  • A letter from the client to the managing attorney of Mr. Russell's law firm admitted was also ignored.
  • Unaware that Cologne had appointed an arbitrator, Attorney Russell appointed the individual his client had recommended several years before.
  • However, despite finally acting, Attorney Russell admitted in testimony that he failed to notify opposing counsel of this appointment.
  • Further, Russell testified he saw no reason whatsoever to chat with opposing counsel until he finally spoke with him in late 2002.
  • Even after Cologne's attorney demanded that Windward appoint an arbitrator and Russell claims to have felt a heighten sense of urgency he did nothing before receiving a threat of dismissal from the Federal Court.
  • Defendant Russell stated that when he entered his appearance in November of 2001, he claimed his predecessor's files were incomplete, and that because of the specific qualifications required of the arbitrators he had difficulty finding an arbitrator. At trial however, Attorney Russell admitted that he had inaccurately represented the reasons for delay. He admitted that the disarray of the file he inherited had nothing to do with failing to get an arbitrator. Rather, his lack of diligence was the total cause.
  • Defendant Russell had thought that inactivity and long delay was a common occurrence in arbitration.
  • He also relied upon his belief that if Cologne had appointed an arbitrator and he failed to diligently appoint one for Windward, the contract allowed the Cologne arbitrator to appoint an arbitrator for Windward. The possibility of appearing before three arbitrators all of whom had been appointed by his opponent was somehow not a point of worry for Attorney Russell, However, as the court points out, foregoing the right to name an arbitrator and losing all right to participate in naming a neutral arbitrator is clearly below the professional standard of care.

Even with the aforementioned clear signs of negligence, a jury failed to find negligence. Further, even if there is to be a finding of negligence, as was previously mentioned, Plaintiff has severe problems in damages recovery because of the prior arbitration where Plaintiff collected $2.1 million in damages from Gerber Life Insurance Co. Another problem is one of proof of damages as was set forth by defense expert Aronchick who opined that no money would ever have been awarded if the arbitration had proceeded.

Due to the Supreme Court of Pennsylvania denying the petition for allowance of appeal, there are clearly grounds for a new trial against Defendant attorneys.

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