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Of Suits and Settlements in Pennsylvania.

Jan Rubin Association Inc. v. Nixon Peabody LLP, 2008 WL 4106694 (Pa. Com. Pl. June Term 2007) is aPennsylvania case which examines settlements in the same way earlierNew Jersey cases have. Most importantly, the case shows that settlements, even if signed, will not prevent a legal malpractice suit. However, often times, there may be another condition which does indeed prevent the suit.

The case arose based on representation of Jan Rubin Association by Nixon Peabody in a Kentucky Federal case. In that case, Rubin made various civil suits against a public housing administrator, and was then subjected to counter-claims by the very same. TheKentuckycourt, in 2007, dismissed all counts against the public housing administrator. Following dismissal, a settlement was signed, whereby, the public housing administrator agreed to withdraw the counterclaim in exchange for Jan Rubin not utilizing the available appeals process.

Following this chain of events, Nixon Peabody LLP was brought to court inPennsylvania, by Jan Rubin based on a legal malpractice claim. Nixon Peabody then moved the court to judge based on the pleadings. The law firm believed that, even if everything in the pleadings of Jan Rubin was true, the claim must still fail for 2 reasons. First, they asserted thatPennsylvanialaw barred the claim because a client who enters into a settlement agreement may not then institute a malpractice suit against that attorney based on the underlying claim. The law firm also asserted that a signed certification by Jan Rubin which asserted the absence of certain elements of the civil claim precluded allegations of a prima facie case. The court dealt with these two issues in drafting an opinion.

The court did not agree with Nixon Peabody that the settlement precluded a legal malpractice claim. The law firm relied on Muhammad v. Strassburger, 526Pa. 541 (Pa. 1991) for establishing the preclusion doctrine. In that case a medical malpractice plaintiff agreed to a monetary settlement in exchange for dismissing their lawsuit. Later, the plaintiffs changed their mind, and believed the settlement insufficient. The clients then sued their attorney for malpractice, and the court held that dissatisfaction with a settlement will not provide a basis for a legal malpractice suit.

In fact, the court noted, Muhammad was narrowly read in a later court case involving a settlement for a breach of contract case. During that case, the defendant attorney did not advise the client of a contract's controlling law, which did constitute negligence. Thus, settlements at that point only precluded legal malpractice suits based on dissatisfaction. Simply put, these two cases have been reconciled by the court to mean that when a person accepts a settlement, and sues to get a 'better deal', the legal malpractice suit will be barred. However, when the suit is based on legal deficiencies within the settlement agreement, then a malpractice suit based in negligence should be allowed.

Applying this law to the Jan Rubin case, the court believed it fit into the negligence category. The complaint of Jan Rubin was not based on dissatisfaction with the settlement at hand. Rather, they were upset at Nixon Peabody's failure to advise them regarding controlling law applicable to statutes of limitations, and its ramifications. Because they were unhappy with the legal services provided, the court believed the settlement did not preclude a malpractice suit.

As to the second complaint of Nixon Peabody, it was in many ways connected to the first. Because the court believed a legal malpractice suit could survive this early stage of litigation, there were facts in dispute. When there is a dispute of facts, a judgment of the pleadings is usually inappropriate. Thus, the court did not strike the suit based on this argument.

This is a good case to show thatNew JerseyandPennsylvaniashare at least one common trait regarding malpractice. Suing after a settlement to get a 'better deal' will not be tolerated. There are many reasons for this, but one need only look to the court in this case and see their admonitions. Public policy encourages settlement of disputes, and frowns upon "Monday morning quarterback" suits. There are many law suits in courts today, and it may take years before a Judge ever commences litigation. It is important then as a client and an attorney, to pay attention to a settlement agreement. As this case shows, just because a settlement is prepared and agreed to, it does not mean a client has not received negligent legal advice.

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