PA: No Duty to Non-Clients
Cost v. Cost, 450 Pa. Super. 685 (1996)
PA Underlying Commercial Action
Student Contributor: Rachel Morris
Facts: In connection with the “buyout” of ownership interests in several family businesses, the Plaintiff signed various agreements including “spousal joinder” forms. The spousal joinder forms created an indemnification obligation and release on the part of the Plaintiff in favor of the party selling the ownership interests and another third-party. Plaintiff subsequently filed an action against the attorney for the seller alleging breach of his professional duty to explain the legal ramifications of the buyout, and more specifically, the consequences of the various forms signed by the Plaintiff to complete the transaction.
Issue: Is a lawyer liable for malpractice because he failed to explain to a non-client the legal ramifications of entering into a particular transaction or signing certain documents?
Ruling: No, absent any written or oral retainer agreement between the lawyer and the complainant. Here, the court found that there was (1) no express contract for legal representation between the lawyer and the Plaintiff, (2) the Plaintiff never sought advice or assistance from the lawyer, and (3) the lawyer never expressly or impliedly agreed to represent the Plaintiff. Therefore, the court ruled that the Plaintiff could have had no reasonable expectation that the lawyer was looking out for her interests, much less that he had any duty to explain the legal significance of the documents she signed.
Lesson: A plaintiff’s subjective belief that an attorney is representing her interests is insufficient, absent other indicia of an express or implied attorney-client relationship, to successfully assert a cause of action in legal malpractice.
I believe a reasonable person test should be used to discern whether a attorney/client relationship exists. A subjective belief is too open to interpretation.
This case seems to be about privity or rather, the absence of privity. If privity is necessary in a legal malpractice cause of action in Pennsylvania, I wonder how this case was commenced. The plaintiff clearly had to relationship with the attorney and was therefore not in privity. Just because the plaintiff believed that she was owed certain duties from the defendant, that is irrelevant.
I agree with Ms. Neuman that this case is about the absence of privity. Assuming that Pennsylvania is like New York on the topic, then this is a clear case. If there's no privity with the lawyer, then there's no claim for malpractice against them. I agree with the case's holding here, but I also see the merit in the New Jersey approach in Petrillo v. Bachenberg. In that case, there was a similar relationship between the Plaintiff and the Defendant attorney, but the attorney made affirmative misrepresentations to the Plaintiff.
I agree with Ms. Goldberg in that a reasonable person test should be used. I also believe a subjective person test leaves too much discretion.
I agree with Ms. Goldberg as well. A subjective test would leave room for unreasonable people to begin claiming that an attorney/client relationship exists, this could extend way beyond an attorney's control and attorney's could be held liable in situations which they never even knew they had a duty. A rigid reasonable person test could cause some problems, however, especially for those who are less intelligent, and may believe a relationship exists because they don't fully understand the aspects of an attorney/client relationship and how one is formed.