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HARSCO CORP. v. KERKAM

April 25, 1997

HARSCO CORPORATION, Plaintiff
v.
KERKAM, STOWELL, KONDRACKI & CLARKE, P.C.; EDWARD J. KONDRACKI; and JOHN C. KERINS; Defendants



The opinion of the court was delivered by: CALDWELL

 I. Introduction.

 In this diversity action controlled by Pennsylvania law, the plaintiff, Harsco Corporation, sued the defendants, Kerkam, Stowell, Kondracki & Clarke, P.C., a law firm, and Edward J. Kondracki and John C. Kerins, two lawyers with the firm. Harsco alleges that the individual defendants committed malpractice while representing IKG Industries, a division of Harsco, in patent litigation in the Eastern District of Michigan.

 We are considering the motion for summary judgment of the individual defendants. They assert that the action against them is barred by the two-year statute of limitations. *fn1" The motion requires us to decide when a cause of action for legal malpractice can accrue under Pennsylvania law when the malpractice is alleged to have occurred during representation in civil litigation. We will evaluate the motion under the well established standard, see Davis v. Portline Transportes Maritime Internacional, 16 F.3d 532, 536 n.3 (3d Cir. 1994), and we provide the following undisputed background from the summary-judgment record.

 II. Background.

 The underlying suit, W.S. Molnar Co. v. IKG Industries, No. 93-CV-60028-AA (E.D. Mich.), aff'd, 82 F.3d 434, 1996 WL 128262 (Fed. Cir.) (unpublished disposition), brought by Molnar for patent infringement, was tried in May 1994. The individual defendants represented IKG at trial, and they moved at the close of Molnar's case for judgment as a matter of law (JMOL) under Fed. R. Civ. P. 50(a)(1) but did not specify the grounds for doing so, as required by Fed. R. Civ. P. 50(a)(2). *fn2" This motion was denied. At the close of all the evidence, they again moved for JMOL but on the issue of infringement only, and only on the basis that IKG's product did not meet the hardness limitation in Molnar's patent claims. This motion was also denied.

 On May 18, 1994, the jury returned its verdict for Molnar in the amount of $ 1,810,000. On May 20, 1994, the court entered judgment on the verdict. After entry of the judgment, IKG filed several post-trial motions, including one that renewed its motion for JMOL, this time also specifying that it was relying on a "best mode" defense to the validity of Molnar's patents. *fn3" Molnar opposed the motion by pointing to IKG's violation of Rule 50(a)(2).

 On or about August 13, 1994, Kerins sent a copy of Molnar's brief dealing with the Rule 50(a)(2) issue to Russel Swanger, Jr., a senior counsel in Harsco's legal department who was responsible for dealing with the Molnar patent litigation. Kerins also talked with Swanger about the issue sometime between August 15, 1994, and August 17, 1994, and sent him copies of both the IKG draft reply brief and final reply brief, which also addressed the Rule 50(a)(2) issue. The reply brief was filed on August 18, 1994.

 On March 31, 1995, the district court denied IKG's post-trial motions. In doing so, it held that IKG had not properly preserved its right to move for JMOL on the basis of the best mode defense. On March 21, 1996, the Federal Circuit affirmed. Agreeing that IKG had waived its right to move for JMOL on that defense, the appellate court rejected the defense by examining it under a plain error standard of review.

 The instant lawsuit was filed on October 1, 1996. Harsco alleges that the defendant lawyers were negligent when they failed to comply with Rule 50(a)(2) by not specifying the facts or the law on which they sought JMOL on the best mode defense, thereby causing the trial court and appellate court not to give this defense the full consideration it deserved. Harsco also alleges that, absent the waiver, it would have prevailed on its best mode defense.

 III. Discussion.

 In Pennsylvania, a two-year period of limitations governs legal malpractice actions based in tort. See Bailey v. Tucker, 533 Pa. 237, 621 A.2d 108 (1993). Under what has sometimes been called the "occurrence rule," see Robbins & Seventko Orthopedic Surgeons, Inc. v. Geisenberger, 449 Pa. Super. 367, 674 A.2d 244 (1996), the limitations period "commences at the time the harm is suffered . . . ." Bailey, 533 Pa. at 252, 621 A.2d at 115. Alternatively, under the discovery rule, it may start when the injured party, in the exercise of reasonable diligence, knew or should have known of the injury. Id., 533 Pa. at 252 and n.15 (quoting Pocono International Raceway, Inc. v. Pocono Produce, Inc., 503 Pa. 80, 84, 468 A.2d 468, 471 (1983)). The discovery rule is a judicially created exception to the implicit statutory requirement that suit be brought within two years of injury or harm; it protects against a potential time-bar to suit if the harm could not have been reasonably discovered when it happened. See Pocono International Raceway, supra, 503 Pa. at 85, 468 A.2d at 471.

 The moving defendants rely on the discovery rule to contend that the limitations period started at the latest at the end of August 1994. In defendants' view, at that time Harsco would have known through the post-trial briefs and Kerins's conversation with Swanger about the Rule 50(a)(2) violation and the resulting injury, which was the May 18, 1994 jury verdict. Thus, they contend that a lawsuit filed on October 1, 1996, more than two years after August 1994, is untimely.

 Conversely, Harsco argues that under the occurrence rule the cause of action did not accrue until March 31, 1995, the date the district court denied IKG's post-trial motions, because there was no harm until the court ruled on the motions. Alternatively, it argues that under the discovery rule March 31, 1995, is also the correct accrual date since Harsco reasonably relied on the arguments of its lawyers that no violation had happened. The suit was therefore timely when it was filed within two years of this date.

 The parties have cited applicable law. We believe Bailey, supra, and Robbins, supra, are ...


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