by Jeffrey B. Albert
A recent Philadelphia Court of Common Pleas decision analyzing the statute of limitations in a legal malpractice case involving allegedly deficient drafting presents the troubling issue as to whether a lawyer’s advice that the other side’s position is “meritless” can have substantive meaning sufficient to toll the running of the statute of limitations.
In Crown Cork & Seal Co. v. Montgomery, McCracken, Walker & Rhoades, Dec. Term, 2002, No. 03185, slip op. (Phila., Commerce Program, Dec. 29, 2003), the court denied defendant’s motion for summary judgment on statute of limitations in a case in which plaintiff alleges that its counsel negligently drafted a document leading to litigation in California in which the other side asserted that the document did not mean what plaintiff thought it meant.
This type of malpractice claim may become even more common when securitization deals fall apart, as with the recent DVI Financial Chapter 11 proceeding. As one commentator recently observed, concerning the DVI deals “The reality is that the sheer size and volume of paper in a securitization does not allow the time necessary to perform ordinary due diligence and almost by definition includes the risk of accepting such irregular and incomplete instruments.” Anthony F. Walsh, DVI Financial and Its Broken Commitments; Revisiting Holder in Due Course Concepts in Bankruptcy, Jan. 10, 2004 (www.saul.com/articles/Leasing/LeaseUpdate2004_01a.pdf).
In Crown Cork & Seal, apparently, once the issue of document interpretation arose, counsel advised her client that the other side’s position was meritless. From that statement, the court analyzed the advice as telling the client that the claim concerning the document was such that it could effectively ignore its consequences. Therefore, the lawyer’s advice was transformed into an assurance that the language was correct, when no such representation was present when the document was drafted.
In reaching his holding, Judge Jones discussed at some length the apparent contradictions in Pennsylvania’s legal malpractice jurisprudence involving the running of the statute of limitations. As he noted, some authority appear to have taken both sides of the issue, and there is little consistency in the realm of the onset and tolling of statute of limitations outside of clearly dispositive error in handling litigation.
Frequently, the term “meritless” is used by courts to substitute for the term “frivolous,” but that term simply is an expression of opinion as to which side of a controversy should prevail, not that the controversy is not worthy of discussion.
However, given the cautionary tale in Philadelphia, counsel who do not want their words to be used against them are cautioned to give clients more detailed analyses of controversies involving their clients. If not, they may see, as the court in Philadelphia held, that a jury question is presented as to whether the statute of limitations begins to run.
Jeffrey B. Albert is a shareholder of the Philadelphia-based
law firm of McKissock & Hoffman P.C., with offices also in Harrisburg,
Doylestown, West Chester and Westmont, N.J. He serves as co-chair of the PBA
Task Force on Law Practice Management and Legal Technology and as chair of a
PBA Professional Liability Committee subcommittee.