PITTSBURGH – Parties involved in litigation connected to allegedly inadequate representation of a Pennsylvania contractor, one who lost $1 million in an underlying bankruptcy action, are continuing to contest a motion for judgment on the pleadings to potentially decide the case.
Odyssey Contracting Corporation of Houston, Pa. first filed suit in the Allegheny County Court of Common Pleas on Jan. 5 versus Chris Georgoulis and Georgoulis, PLLC, of New York, N.Y.
“Defendant represented plaintiff in litigation in the U.S. District Bankruptcy Court for the Western District of Pennsylvania in Pittsburgh, Pennsylvania. The underlying litigation involved a contract dispute between Odyssey and L&L Painting Co., Inc. for a project on the Queensboro Bridge. At a pre-trial conference, defendant entered into a stipulation on behalf of plaintiff which provided if the court determined Odyssey was the breaching party, then all of the claims were disposed of in their entirety with prejudice,” the suit said.
“After the court determined that Odyssey was the breaching party, Odyssey appealed. L&L claimed that the stipulation waived Odyssey’s right to appeal. The court agreed and dismissed the proceeding with prejudice. Defendant appealed and the Third Circuit agreed that Odyssey waived its right to appeal.”
According to the plaintiff, this stipulation made by the defendant was counter to instructions provided by Odyssey to preserve the right to appeal, and furthermore, a breach of the defendant’s duty for the same.
The plaintiff said this turn of events caused it significant damages in the underlying action, significant fees to the defendant to prosecute the appeal and that it paid the over $1 million in legal fees, only to see the case dismissed on the basis of the defendant’s stipulation.
“Defendant had a duty to plaintiff to provide competent and adequate legal services. Defendant breached the duty to plaintiff by entering the stipulation without preserving plaintiff’s right to appeal. Defendant’s breach caused plaintiff significant damages in the loss of the underlying case and the defendant’s charges to prosecute the appeal to justify his own actions,” the suit stated.
“Plaintiff contracted with defendant for legal services. Defendant breached the contract by failing to follow plaintiff’s instructions, and entering a stipulation which waived plaintiff’s rights of appeal. Defendant not only caused plaintiff damages by losing the underlying case, but then charged plaintiff additional monies to prosecute the appeal which was the result of defendant’s own conduct.”
The defendants filed to remove the case to the U.S. District Court for the Western District of Pennsylvania on Feb. 23, citing both diversity of citizenship between the parties and the amount of damages at stake as reasons for the removal.
“This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. Section 1332 because there is complete diversity between the plaintiff and all of the defendants, and more than $75,000 is at stake. The complaint alleges that the plaintiff is a Pennsylvania corporation. The individual defendant, Mr. Georgoulis, is a citizen of the State of New Jersey. Georgoulis, PLLC is a New York Professional Limited Liability Company. No member of Georgoulis, PLLC is a citizen of the Commonwealth of Pennsylvania,” according to the removal notice.
“The malpractice is alleged to have occurred in a bankruptcy proceeding where the claims exceeded $1 million. The complaint claims that plaintiff paid over $1 million in legal fees. Therefore, this Court has original subject matter jurisdiction over this action pursuant to 28 U.S.C. Section 1332(a).”
The defendants answered the complaint on March 14, presenting a number of affirmative responses.
“An attorney is not liable for a mistaken opinion on a point of law that has not been settled by a court of last resort and on which reasonable doubt may well be entertained by informed lawyers. If an attorney exercises a reasonable degree of care, skill and dispatch while acting in an unsettled area of the law, which is to be evaluated in the context of the state of the law at the time of the alleged negligence, then the attorney does not breach the duty owed to the client, so as to be liable for legal malpractice,” the answer stated.
“As the opinion of the U.S. Court of Appeals recognized, at least two Circuits had reached contrary results on the issue presented, and thus issued precedential opinion in accordance with Internal Operating Procedure 5.2 of the U.S. Court of Appeals for the Third Circuit (published on its website). Precedential opinions are not issued when the law is clear and well-settled.”
In affirmative defenses, the defendants argued the Court does not have personal jurisdiction over either defendant as neither defendant does business in Pennsylvania, that venue is improper here for that same reason, that the action is barred by the statute of limitations and that the complaint fails to state a cause of action.
On March 28, the defendants filed a motion for judgment on the pleadings.
“The complaint alleges personal jurisdiction on the theory that the defendants are ‘doing business’ in Pennsylvania. The defendants are not subject to jurisdiction on such a basis, and, accordingly, the complaint must be dismissed or the action transferred to the U.S. District Court for the Southern District of New York. In any event, the action is barred by the Pennsylvania statute of limitations, it does not state a cause of action for breach of contract, and, under the doctrine of ‘judgmental immunity,’ there can be no liability for acts and omissions by an attorney in the conduct of litigation which are based on an honest exercise of professional judgment,” per the defense motion.
The plaintiff presented a response to this motion on April 18, attempting to refute the defense arguments and arguing why the case should not be dismissed.
“In the present case, defendant represented plaintiff in three separate forums in Pennsylvania, the U.S. District Court for the Western District of Pennsylvania Bankruptcy Court, the U.S. District Court for the Western District of Pennsylvania and the U.S. Court of Appeals for the Third Circuit. Defendant was not licensed before these tribunals but had to be admitted pro hac vice. Defendant purposefully availed himself of the privilege of practicing law in Pennsylvania for his own pecuniary benefit. Necessary minimum contacts are present. The Court has jurisdiction over defendants,” according to the plaintiff.
“Contrary to plaintiff’s arguments, the discovery rule is applicable in the instant matter. Most particularly, defendants’ representation of plaintiff continued through May 2020, while defendant sought to overturn the stipulation he entered. Defendant continued to represent to plaintiff that the trial court’s rulings on the stipulation were incorrect. Defendant should not be allowed to eliminate the statute of limitations by prosecuting appeals past the limitations period. It was only when the appeals were exhausted, that plaintiff discovered the full extent and consequence of defendant’s actions. If defendant’s argument were to be followed, the statute of limitations on the legal malpractice claim would have run before the appeal was decided by the Third Circuit. (September 2019 vs. December 2019) This would put plaintiff in the awkward position of suing defendant, while defendant was still prosecuting the appeals process. The limitations period cannot be deemed to have started until after the litigation and defendants’ representation of plaintiff ended in May 2020, whether in contract or in tort.”
On the topic of judgmental immunity, the plaintiff argued that this is “an issue to be determined by the fact finder.”
“Defendant advanced legal positions which were not based on Third Circuit precedent. The Third Circuit opinion does not indicate why it was labeled precedential. However, the Court did not indicate that it was settling conflicting interpretations of the law but rather distinguished the cases cited by defendant on the facts. The Third Circuit specifically stated that it previously set forth the rule in the Keefe case. Based on the foregoing, defendant should not be allowed to assert a defense of judgmental immunity to dismiss this action,” the plaintiff’s counter-motion read.
UPDATE
The defense filed a reply brief in support of motion for judgment on the pleadings on April 22.
“Plaintiff alleges in the complaint that the defendant ‘does business’ in Pennsylvania. There is no question that he does not and counsel now concedes as much. He has not, however, sought leave to amend the complaint. There is no personal jurisdiction on the pending complaint,” according to the defense’s reply brief.
“The law is not always static and predictable, the judgmental immunity doctrine shields from malpractice liability lawyers who offer a reasoned professional evaluation based on the exercise of an informed judgment, even if their advice later turns out to have been incorrect. Defendants had the right to rely on texts…holding that the rights of appeal had to expressly be waived, upon precedents of other Circuits and that consent judgment rules had not been applied to other types of agreement.”
For counts of negligence and breach of contract, the plaintiffs are seeking judgment in their favor and against the defendants, and further demand a trial by jury.
The plaintiff is represented by Stephen J. Taczak of Taczak Law, in Canonsburg.
The defendants are both representing themselves and are being further represented by Lori W. Azzara of Cohen Seglias Pallas Greenhall & Furman, in Pittsburgh.
U.S. District Court for the Western District of Pennsylvania case 2:22-cv-00338
Allegheny County Court of Common Pleas case GD-22-000179
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com