PHILADELPHIA - A former law office challenging malpractice claims against it after two deals went bad with the same client has successfully challenged breach of contract claims made by the parties it is seeking payment from, according to recent a recent court document filed in the United States District Court for the Eastern District of Pennsylvania.
Law office Jacoby Donner, P.C. filed a lawsuit against Aristone Realty Capital, LC, Todd M. Lippiat, and Patrick M. McGarth, alleging they didn’t pay him for legal services provided. The defendants responded with a counterclaim that Jacoby Donner committed malpractice concerning the services in question. Jacoby Donner filed a motion to dismiss the counterclaims against it. The court granted it in part and denied it in part in April.
Their legal issues began after Aristone hired Jacoby Donner to represent it for multiple real estate development projects. It is noted Jacoby Donner was also the legal counsel for Aristone’s other affiliate company.
Jacoby Donner filed a lawsuit for nonpayment of legal fees after both projects were left and ended. The defendants responded with their malpractice counterclaims for breach of contract and negligence.
Donner followed up with the motion to dismiss under the argument the complaint lacks standing and that particular counterclaims are “barred by the gist of the action doctrine.”
When it comes to the standing argument, the district court pointed out the counterclaims are from the negative impact companies experienced, not McGrath or Lippiatt.
“There is no allegation that either McGrath or Lippiatt sustained any distinct individual injury – independent of injuries sustained by CS Paradiso – as a result of Jacoby Donner’s representation," the court wrote.
Considering this, the district court determined McGrath and Lippiatt do not have standing to bring the counterclaim against Donner. Still, it decided Aristone does have standing considering it was the “promisee” in the actual contract between Aristone and Jacoby Donner.
The court then evaluated Donner’s gist of the action doctrine argument regarding the breach of contract counterclaim. The gist regulation states the court has to decide if “the claim is truly one in tort, or for breach of contract.”
Donner said the claims are founded on tort, “specifically a negligent violation of a professional standard of care,” according to the court document. The court agreed and dismissed the breach of contract claim.
Donner also requested the court dismiss the negligence claim and stated it is raised out of its representation of CS Paradiso. The court disagreed with this argument and did not dismiss the negligence claim.