Superior Court affirms transfer of whistleblower's multimillion-dollar legal malpractice case

By Angela Underwood | Jan 31, 2018

HARRISBURG – The state Superior Court has affirmed a previous ruling that changed venue in an appeal brought by a whistleblower seeking a piece of a $56 million settlement.

Judges Susan Peikes Gantman and Alice Beck Dubow on Jan. 19 sustained the preliminary objections of Linda Stengle, Stengle Law, The Arras Groups and Robert Madsen.  

John Ferguson had appealed after the original ruling changed venue to another court in a Jan. 19 opinion. Judge Jack Panella dissented.

According to the opinion, Ferguson, a California resident, retained Linda Stengle when she was an attorney at Kenney & McCaffery and kept her on when she started Stengle Law in his whistleblower lawsuit against Fifth Third Bankcorp. Stengle filed the complaint in Southern District of New York. 

Simultaneously, Stengle began representing Madsen in a separate whistleblower suit against Bank of America, also filed in the Southern District of New York, allegedly telling Ferguson he was now a part of the “client team,” which Ferguson believed made him entitled to Madsen’s $56 million share of a Bank of America settlement, the opinion states.

However, the opinion states Stengle "refused to meet" Ferguson's demand, and Ferguson filed a writ of summons against the appellees and Kenney & McCaffery in the Philadelphia County Court of Common Pleas after he settled his claims against the Kenney firm and removed it from his 2016 nine-count legal malpractice complaint.

Ferguson alleged due to misconduct, Madsen’s attorneys collected approximately $19 million dollars in legal fees from the settlement. The defendants countered with a venue objection, which the trial court sustained, ordering a transfer to the Montgomery County Court of Common Pleas.

Breaking down the venue jurisdiction, Dubow began citing Fritz v. Glenn Mills Schools from 2003, stating “'it is well established that a trial court’s decision to transfer venue will not be disturbed absent an abuse of discretion.'

“In the first sub-issue, appellant claims that venue is proper in Philadelphia County because appellant and (Kenney & McCaffery) had an agreement to litigate disputes in Philadelphia County, which (Kenney & McCaffery) allegedly had assigned to Stengle,” Dubow wrote in the opinion, adding the root of Ferguson's first sub-issue arguing Philadelphia County is the proper venue since the retainer agreement identifies Philadelphia as the place for arbitrating arguments between Ferguson and Kenney & McCaffery.

“Appellant’s claim that the retainer agreement is applicable on its face as determinative of the proper venue fails,” Dubow wrote in the opinion, noting there was no evidence of record to support the claim. “Simply, because (Kenney & McCaffery) is not a party to this action, the venue provision in the retainer agreement does not apply to the instant case.”

The second sub-issue, “that the trial court erred in failing to consider Pa.R.C.P. No. 1006  and Pa.R.C.P. No. 2179, instead analyzing the propriety of venue in Philadelphia County under Pa.R.C.P. 2179 ,” argued by Ferguson was also a fail, according to the judges.

Citing Jones v. Jones from 2005, Dubow details why the rejection.

“It is long-settled that failure to argue and to cite any authority supporting the argument constitutes a waiver of the issue on appeal,” Dubow wrote in the opinion, “This court will not act as counsel and will not develop arguments on behalf of an appellant.”

While judges Gantman and Dubow deemed the trial court appropriately analyzed the venue and Ferguson lacked necessary contact with Philadelphia County to find jurisdiction there, Panella saw differently in his dissent.

“I agree with my esteemed colleagues in the majority that appellant’s complaint would be properly transferred to Montgomery County if we were constrained to considering whether Linda Stengle, esquire, ‘regularly conducted business’ in Philadelphia,” Panella wrote in the dissent. “However, it is undisputed attorney Stengle represented Ferguson even after October 2011, when she left the (Kenney & McCaffery) to found Stengle Law.”

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