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Steiner v. Markel

April 29, 2009

CLIFFORD L. STEINER AND BONNIE J. STEINER, APPELLEES
v.
JOHN F. MARKEL, ESQUIRE AND NIKOLAUS & HOHENADEL, LLP, APPELLANTS



Appeal from the Memorandum and Order of the Superior Court dated January 3, 2008 at No. 148 MDA 2007 Reversing the December 21, 2006, exited December 22, 2006, Order of the Court of Common Pleas of Lancaster County, Civil Division, at No. CI-04-09822.

The opinion of the court was delivered by: Madame Justice Greenspan

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.

ARGUED: December 2, 2008

OPINION

We consider whether the Superior Court may declare, sua sponte, that a cause of action described in a complaint as a claim for "professional malpractice" is actually a claim for breach of contract for purposes of determining which statute of limitation applies. Appellants, John F. Markel, Esquire, and Nikolaus & Hohenadel, LLP (collectively referred to as the "Attorneys"), appeal from the Superior Court's order reversing the trial court's decision in the Attorneys' favor of a motion for judgment on the pleadings. We reverse the Superior Court and reinstate the trial court's order. We hold that Appellees, Clifford L. Steiner and Bonnie J. Steiner (collectively referred to as the "Clients") waived their right to argue that their professional malpractice claim should be construed as a contract claim. The Superior Court should not have addressed this issue sua sponte.

In January 2002 the Clients negotiated a purchase of certain real property in Lancaster County. The Clients contracted with Mr. Markel, a partner at Nikolaus & Hohenadel, LLP, to act as the attorney at the February 8, 2002 closing. Mr. Markel erroneously described the property in the deed he prepared and the error was not discovered until after the closing occurred. Although Mr. Markel attempted to correct his error through negotiation with the sellers, he was unsuccessful. As a result of the error, the Clients were sued by the sellers of the property.

Initially, the Clients attempted to join the Attorneys, via a joinder complaint, in the action commenced by the sellers. The joinder complaint did not contain a claim described as a breach of contract claim. Instead, the joinder complaint contained a claim for professional malpractice. The joinder complaint was dismissed because the Clients failed to file a certificate of merit.*fn1

On October 19, 2004, the Clients initiated the foregoing action by filing a writ of summons against the Attorneys in the Court of Common Pleas of Lancaster County. On December 7, 2004, the Clients filed their complaint, which contained three counts: Count I - Professional Malpractice; Count II - Third Party Beneficiary; and Count III - Breach of Good Faith and Fair Dealing (the "Complaint").*fn2 The Complaint did not contain a claim described as a breach of contract claim. The language of Count I of the Complaint tracks the requirements for a tort legal malpractice claim under Pennsylvania law.*fn3 See Kituskie v. Corbman, 714 A.2d 1027, 1029 (Pa. 1998) (noting that a claim of legal malpractice requires that the plaintiff plead the following three elements: employment of the attorney or other basis for a duty; the failure of the attorney to exercise ordinary skill and knowledge; and that the attorney's negligence was the proximate cause of damage to the plaintiff).

Initially, the Attorneys filed preliminary objections to the Complaint. The Clients then filed a petition to amend the Complaint. In the petition to amend, the Clients did not argue that Count I was based in contract, nor did the Clients seek leave to add a breach of contract claim to the Complaint.

After the Clients agreed to strike Count III of the Complaint, the Attorneys filed an answer and new matter to the Complaint. In the new matter, the Attorneys stated that the Clients' professional malpractice claim was barred by the two-year statute of limitations applicable to tort claims. 42 Pa.C.S. § 5524.

The Attorneys then filed a motion for judgment on the pleadings, arguing, inter alia, that the professional malpractice claim in the Complaint was untimely because the claim was a tort claim and the Complaint was filed after the two-year statute of limitations for tort claims had run. On October 23, 2006, the trial court dismissed Count I of the Complaint on the basis that the Clients' professional malpractice claim was barred by the statute of limitations.*fn4

The Clients filed a motion for reconsideration. In the motion for reconsideration, the Clients argued that the two-year statute of limitations on their professional malpractice claim had been tolled by the Attorneys' concealment of their wrongdoing, which delayed the Clients' discovery of their injury. In the motion for reconsideration, the Clients did not argue that their Complaint contained a claim for breach of contract.*fn5 The trial court denied the Clients' motion for reconsideration.*fn6

The Clients then appealed the trial court's dismissal of the Complaint to the Superior Court. In their Rule 1925(b) statement of matters complained of on appeal (the "Concise Statement"), the Clients did not assert that their professional malpractice claim was or involved a breach of contract claim.*fn7 Rather, the Clients again raised the issue that the two-year statute of limitations on their professional malpractice claim should have been tolled as a result of the Attorneys' actions.

The Superior Court reversed the trial court and remanded the case, holding, sua sponte, that the Complaint stated a timely claim for breach of contract despite the fact that the Clients did not advance that argument in their appeal. In holding that the Complaint contained a breach of contract claim, the Superior Court relied upon the following statement: "At closing, the Steiners also paid a fee to Nikolaus & Hohenadel for 'services' allegedly rendered by attorney Markel." Superior Court Memorandum at 14. The Superior Court also considered whether the statute of limitations on the Clients' professional malpractice claim was tolled by the Attorneys' conduct, and the Superior Court affirmed the trial court's finding that the two year statute of limitations for tort actions ...


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