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ROBERT E.J. CURRAN v. STRADLEY (02/20/87)

filed: February 20, 1987.

ROBERT E.J. CURRAN, ESQUIRE, EXECUTOR OF THE ESTATE OF VICTOR S. PANACCION, APPELLANT,
v.
STRADLEY, RONON, STEVENS & YOUNG, APPELLEE. ROBERT E.J. CURRAN, ESQUIRE, EXECUTOR OF THE ESTATE OF VICTOR S. PANACCION, APPELLEE, V. STRADLEY, RONON, STEVENS & YOUNG, APPELLANT



Appeal from the Order entered March 17, 1986, in the Court of Common Pleas of Delaware County, Civil No. 78-7284. Appeal from the Order entered March 17, 1986, in the Court of Common Pleas of Delaware County, Civil No. 78-7284.

COUNSEL

Garland D. Cherry, Sr., Media, for appellant in No. 1085 and appellee in No. 1111.

Edward C. Mengel, Jr., Philadelphia, for appellant in No. 1111 and appellee in No. 1085.

Wieand, Olszewski and Cercone, JJ.

Author: Olszewski

[ 361 Pa. Super. Page 21]

Plaintiff, Victor S. Panaccion ("Panaccion"), brought a claim of legal malpractice against the defendant law firm, Stradley, Ronon, Stevens & Young ("Stradley"). After the jury returned a verdict against Stradley in the amount of $500,000.00, the trial court granted, in part, Stradley's judgment n.o.v., reducing the verdict to $243,000.00. Both parties now appeal. We find that a new trial is required and, accordingly, vacate the order and remand the case for a new trial.

I. BACKGROUND

The seeds of this dispute were first sown in January of 1974, when Panaccion, the owner of a lumber company, entered into an agreement with Clifco Millwork ("Clifco," the "buyer") for the sale of the lumber company. The sale price of the business was $661,886.40, with Panaccion receiving a $100,000.00 down payment and the balance to be paid over a period of eleven years. Pursuant to the sales agreement, several certificates representing shares of stock in Clifco would be held in escrow by attorneys for both Panaccion and the buyer. After entering into the sales agreement, Panaccion secured the services of Stradley.

[ 361 Pa. Super. Page 22]

As of the time of settlement, the escrow agreement had not been prepared. It was agreed, however, that a member of the law firm, Herbert P. Eberharter,*fn1 would prepare the escrow agreement and act as escrow agent. Stradley drafted a security agreement giving Panaccion a secured interest in the accounts receivable and the inventory of the lumber company.

The closing took place in February of 1974. In October of 1974, the buyer's attorney informed Eberharter that a majority shareholder of Clifco had transferred the Clifco stock to another entity, Emblem Flag Company ("Emblem").*fn2 Without consulting Panaccion, Eberharter released the certificate held in escrow which represented the shares in Clifco owned by that shareholder, and substituted a certificate in the name of Emblem. Sometime after October of 1975, the remaining shareholder in Clifco died; pursuant to a buy-back agreement with the company, Clifco was required to purchase these shares. Eberharter released the remaining Clifco shares and substituted another certificate in the name of Emblem. As with the stock transfer in October of 1974, Eberharter did not first notify Panaccion. Hence, Emblem became the 100% owner of Clifco. Although Eberharter held stock powers for the certificates representing the prior owners' interests in the Clifco stock, he failed to get stock power for the certificates issued to Emblem. Under the escrow agreement, however, Clifco could vote the shares of stock without Panaccion's approval. In February of 1976, Emblem, the new owner of Clifco, voted to permit Clifco to sell the real estate of the lumber company to A & P Company for $243,000.00. The actual sale to A & P occurred prior to June of 1976.

[ 361 Pa. Super. Page 23]

In June of 1976, Panaccion learned that all of the inventory in which he had held a security interest was dissipated. Thereafter, Panaccion brought suit against Stradley and Eberharter. Panaccion asserted that Stradley, inter alia, negligently permitted settlement of the sale of the lumber business to occur without first drafting the escrow agreement; drafted the escrow agreement permitting the Clifco shareholders the right to vote the shares of stock; failed to inform him of the transfer of the shares of stock to the new entity and to explain the significance and consequences of the transfers; and failed to inform him of the need to police the assets of the lumber business, which were subject to his security interest.

The jury returned a verdict against Stradley in the amount of $500,000.00. The trial court granted, in part, Stradley's motion for judgment n.o.v. and reduced the award to $243,000.00 (the sale price of the real estate to A & P in 1976), finding that Panaccion produced no other evidence of his loss.

Panaccion now raises two issues for our consideration: (1) whether the court used an improper standard for measuring damages when it reduced the jury award; and (2) assuming the proper standard was used, whether the court erred in setting aside a portion of the award. Stradley raises several more issues in its appeal: (1) whether the court erred in precluding the testimony of Stradley's expert witness; (2) whether it was error to permit Panaccion's expert witness to identify himself as a former judge; (3) whether the court erred in failing to grant a full judgment n.o.v. where there was no evidence of negligence which caused an actual loss to Panaccion; and (4) whether the court erred in failing to consider evidence which would further reduce the alleged damages.

[ 361 Pa. Super. Page 24]

    is that Panaccion's loss was due to the financial failure of the lumber business after the sale to Clifco, not because of any alleged negligence of the attorneys.

Unless the evidence is such that reasonable men cannot disagree, the question of whether the defendant's conduct is the cause of the injury is one for the jury. Vattimo v. Lower Bucks Hospital, Inc., 502 Pa. 241, 247, 465 A.2d 1231, 1234 (1983). The learned trial court specifically and thoroughly addressed the basis of several of Panaccion's claims and, after our own review of the record, we are satisfied that the evidence was sufficient for the jury to determine the issue of liability. Accordingly, for the reasons stated by the trial court, we conclude that Stradley's motion for judgment n.o.v. in this regard was properly denied.

Although the evidence was sufficient to support the jury's finding of liability, the record does not support the award of damages.*fn5 In order to recover in a malpractice action, the plaintiff must prove not only the negligence of the attorney, but also an actual loss resulting from that negligence. Mariscotti v. Tinari, P.C., 335 Pa. Super. 599, 601-602, 485 A.2d 56, 57 (1984) (citations omitted). Once the fact that damages occurred has been established, the jury is permitted to determine the extent of those damages. R. Mallen & V. Levitt, Legal Malpractice, Sec. 303 (2d Ed.1981). Nevertheless, the plaintiff has the burden of presenting sufficient evidence by which damages can be ...


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