Firm Ripped Over 'Ploy' to Keep Malpractice Case in Home County
A Butler County law firm has been harshly criticized by the state Superior Court for filing a declaratory judgment action against a former client, because the court said it was nothing more than a "ploy" to have the former client's legal malpractice action tried in the firm's home county.
The former client alleged the firm had filed its action in Butler County to "avoid defending a malpractice case in a jurisdiction where they did not have the advantage of familiarity with the local judiciary," the opinion said.
The legal malpractice suit stemmed from a $19 million settlement Dillon McCandless King Coulter & Graham secured in a personal injury case for the former client and her then-husband. The former client claimed the firm had a conflict of interest and helped her husband and former father-in-law prevent her from having access to most of the settlement money.
The firm claimed it had reduced its contingency fee in order to "fund" the former client's recovery for her loss of consortium claim.
The former client sued the firm for legal malpractice in Allegheny County. The firm filed a declaratory judgment action in Butler County, alleging the woman was trying to alter the terms of the revised fee agreement. A Butler County judge granted the firm's motion to have both cases coordinated and transferred to Butler County.
But the unanimous three-judge panel in Dillon McCandless King Coulter & Graham v. Rupert said it was "improper" for the Butler County judge to coordinate and transfer Jacqueline Rupert's legal malpractice action because she was never looking to negate the fee agreement.
The firm's declaratory judgment action, the court said, was "filed on an entirely false premise."
"A declaration was sought concerning the validity of an accord that Jacqueline never claimed was void," Superior Court Judge Mary Jane Bowes wrote for the court. "Rather, Jacqueline accused [the firm] of misconduct in connection with obtaining her assent to the accord. This action was based upon fabricated allegations, which were not oversights or minor mistakes but which formed the complete underpinning for the lawsuit.
"The present litigation was nothing more than a ploy designed to deprive Jacqueline of the benefit of her chosen forum in which to litigate her malpractice case."
Bowes was joined on the panel by Judges Christine Donohue and Sallie Updyke Mundy.
The court ordered that Rupert be allowed to proceed with her legal malpractice case in Allegheny County.
According to the opinion, the case stemmed from a May 2010 automobile accident that left Rupert's former husband, Michael Rupert, "horrifically injured." While he was in a coma and incapacitated, Jacqueline Rupert hired Dillon McCandless to represent her and her husband, the opinion said.
The Ruperts and their lawyer from Dillon McCandless, Thomas W. King III, executed a revised fee agreement in November 2010, the opinion said. The agreement called for the firm to reduce its fee by 30 percent, have Jacqueline Rupert's claim settle for 3.33 percent of the case, provide more than 66 percent of any recovery to Michael Rupert, and set out that the money laid out in the agreement would be "the sole and independent property" of each of the Ruperts, Bowes said.
King later drafted an irrevocable trust for Michael Rupert to deposit part of the proceeds of any personal injury claim, Bowes said, and in the event of a divorce, Jacqueline Rupert would get none of it.
The case settled for $19 million. Jacqueline Rupert received $632,700 for her loss of consortium claim, she said.
Two days after Jacqueline Rupert filed for divorce in November 2011, her new lawyer, Maurice Nernberg, sent King a letter accusing him of malpractice and conflict of interest, Bowes said. The letter, quoted in its entirety in the opinion, alleged that King knew that Michael Rupert and his father, Timothy Rupert, didn't want Jacqueline Rupert to receive any portion of any settlement.
"At the time your firm learned that Michael and Jacqueline were on opposite sides of the table, it had a duty to inform her that she would have to obtain her own counsel," the letter said. "Your firm had an irreconcilable conflict of interest."
The letter also claimed Jacqueline Rupert's loss of consortium claim was worth much more than "the small share of the settlement she received."
In addition, according to the opinion, the letter argued drafting the irrevocable trust made things worse and would only provide Jacqueline Rupert with benefits "if she was essentially an indentured servant to Michael." The letter alleged that King not only knew that Michael and Timothy Rupert didn't want Jacqueline Rupert to get any part of any recovery, but that they intended to use the trust to prevent her from getting any of the proceeds.
At the end of the letter, Nernberg wrote that Jacqueline Rupert intended to sue the firm unless there was a settlement or agreement.
Bowes said King and the firm filed a declaratory judgment action, claiming Jacqueline Rupert was trying to nullify the revised November 2011 contingency fee arrangement. A Butler County judge later ruled that Rupert's legal malpractice case should be moved from Allegheny County to Butler County and coordinated with the declaratory judgment action.
On appeal to the Superior Court, Rupert argued the firm's action "was a sham," aimed at stopping her from filing suit in Allegheny County.
Bowes said that even though King had an attorney-client relationship with Rupert, knew that Michael Rupert's father, Timothy Rupert, "vehemently disliked Jacqueline" and didn't want her involved in the case, he included Timothy Rupert in discussions about the case.
"As a result of significant private communications with and directions from Timothy, Mr. King's advice to Jacqueline was improperly influenced to Jacqueline's detriment," Bowes said.
According to Bowes, Jacqueline Rupert alleged that King failed to tell her that her loss of consortium claim was a separate claim that could be tried by a jury. Rupert claimed that King told her that a high average for loss of consortium claims was $100,000 and that Michael and Timothy Rupert would not share any settlement or verdict with her.
She also alleged that King told her he would reduce his contingency fee and give her the reduction, Bowes said, and that the amount she would get would be more than if she took her case to trial.
"The reduction in the fee was designed to secure Jacqueline's assent to settle to the benefit of [the firm], which received a multimillion-dollar fee," Bowes said.
Despite the firm's claims and the trial court's finding, Bowes said Jacqueline Rupert's letter and lawsuit were centered on allegations of legal malpractice, conflict of interest and breach of fiduciary duty, and not on trying to nullify the fee agreement.
"At no point in the complaint did Jacqueline seek to negate or avoid the legal impact of any documents she signed," Bowes said. "Rather, her allegations solely concerned Mr. King's advice to and representation of her in connection with her execution of documents."
To let the case be tried in Butler County would prejudice Rupert, she said, because Allegheny County is her chosen forum.
"There is no danger of duplicative judgments because the issues are not related," Bowes said. "One involves whether the agreements, especially the revised contingent fee arrangement, are valid. The other issue is whether [the firm] committed malpractice and other improper conduct in inducing Jacqueline to execute the documents in question."
Rupert's attorney, Nernberg of Nernberg & Associates in Pittsburgh, said the Superior Court correctly perceived the nature of the declaratory judgment action.
"We thought [the opinion] was very critical of the firm," Nernberg said. "We were surprised that the trial court" had agreed to coordinate the cases in Butler County.
"This action was aimed at giving the Butler County Common Pleas Court the chance to take the case out of Allegheny County and give the firm the home-field advantage," he said.
The attorney for Dillon McCandless, Jay D. Marinstein of Fox Rothschild in Pittsburgh, could not be reached for comment at press time.
(Copies of the 19-page opinion in Dillon McCandless King Coulter & Graham v. Rupert, PICS No. 13-2730, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •