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Villani v. Seibert

Supreme Court of Pennsylvania

April 26, 2017


          ARGUED: December 6, 2016

         Appeal from the Order of the Chester County Court of Common Pleas, Civil Division, dated 10/5/15 amending the 8/27/15 order at No. 2012-09795




         In this interlocutory direct appeal by permission, we consider whether a legislative enactment recognizing a cause of action for wrongful use of civil proceedings infringes upon this Court's constitutionally prescribed power to regulate the practice of law, insofar as such wrongful-use actions may be advanced against attorneys.

         The underlying litigation arose out of a land-ownership dispute between Jean Louse Villani, who was a co-plaintiff with her late husband until his death, and defendants John Seibert, Jr. and his mother, Mary Seibert ("Appellants"). Appellants prevailed in both an initial quiet title action and ensuing ejectment proceedings. During the course of this dispute, the Villanis were represented by Thomas D. Schneider, Esquire ("Appellee").

         Subsequently, Appellants notified Mrs. Villani and Appellee that they intended to pursue a lawsuit for wrongful use of civil proceedings based upon Mrs. Villani's and Appellee's invocation of the judicial process to raise purportedly groundless claims. In November 2012, Mrs. Villani countered by commencing her own action seeking a judicial declaration vindicating her position that she did nothing wrong and bore no liability to Appellants. Appellants proceeded, as they had advised that they would do, to file a complaint naming Ms. Villani and Appellee as defendants. The declaratory judgment complaint having been lodged in Chester County, but the ensuing wrongful-use action being filed in Philadelphia, a decision was made to coordinate the matters in the Chester County court.

         Appellee interposed preliminary objections to Appellants' complaint. As is relevant here, he contended that the statutory scheme embodying a cause of action for wrongful use of civil proceedings, commonly referred to as the "Dragonetti Act, "[1] is unconstitutional.[2] Appellee relied on Article V, Section 10(c) of the Pennsylvania Constitution, which invests in this Court the power to prescribe general rules "governing practice, procedure and the conduct of all courts, " as well as "admission to the bar and to practice law, " while directing that "[a]ll laws shall be suspended to the extent that they are inconsistent with rules prescribed under these provisions." Pa. Const. art. V, §10(c). He also stressed that this Court has characterized its constitutional and inherent powers to supervise the conduct of lawyers as being exclusive. See, e.g., Pa.R.D.E. 103; Commonwealth v. Stern, 549 Pa. 505, 510, 701 A.2d 568, 570 (1997).

         Centrally, Appellee portrayed the Dragonetti Act as an unconstitutional incursion by the General Assembly upon the Court's power under Article V, Section 10(c). Given this asserted defect, he claimed that attorneys should be immunized from any liability under these statutory provisions. In support, Appellee referenced a series of cases in which this Court had stricken legislative enactments on the basis that those statutes intruded on the Court's constitutionally prescribed powers. See Memorandum of Law in Support of Preliminary Objections in Seibert v. Villani ("Defendant's Memorandum"), No. 2012-09795 (C.P. Chester), at 7-9 (citing Beyers v. Richmond, 594 Pa. 654, 937 A.2d 1082 (2007) (plurality), Shaulis v. Pa. State Ethics Comm'n, 574 Pa. 680, 833 A.2d 123 (2003), Gmerek v. State Ethics Comm'n, 569 Pa. 579, 807 A.2d 812 (2002) (equally divided Court), Stern, 549 Pa. 505, 701 A.2d 568, Snyder v. UCBR, 509 Pa. 438, 502 A.2d 1232 (1985), Wajert v. State Ethics Comm'n, 491 Pa. 255, 420 A.2d 439 (1980), and In re Splane, 123 Pa. 527, 16 A. 481 (1889)).

         Appellee also observed that, in defining the contours of liability for wrongful use of civil proceedings, the Legislature fashioned a "probable cause" standard that permits a lawyer acting in good faith to proceed with litigation, where he or she "reasonably believes that under [the supporting] facts the claim may be valid under the existing or developing law." 42 Pa.C.S. §8352(1). According to Appellee, however, such prescription clashes with the Pennsylvania Rules of Professional Conduct promulgated by this Court, which authorize attorneys to advance good faith arguments for "extension, modification or reversal of existing law." Pa.R.P.C. §3.1 (emphasis added). It was his position that the asserted difference "surely represents an intrusion by the legislature into the exclusive power of the judiciary that is prohibited under Article V, Section 10(c)." Defendant's Memorandum at 11.

         Furthermore, Appellee took issue with the Dragonetti Act's incorporation of subjective standards. See, e.g., 42 Pa.C.S. §8352(3) (defining another contour of "probable cause" as encompassing a good-faith belief that litigation "is not intended to merely harass or maliciously injure the opposite party"). He contrasted such subjectivity with the more objective litmus established under Rule of Professional Conduct 3.1. Pa.R.P.C. 3.1 ("A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law." (emphasis added)). Appellee opined that the statute's focus on subjective motivation "means, as a practical matter, that summary disposition is exceedingly difficult." Defendant's Memorandum at 12. He concluded that, "[o]nce again, the legislature violates Article V, section 10(c) by purporting to regulate attorney conduct through different standards than those selected by the Supreme Court." Id.

         In a similar line of argument, Appellee claimed that the Act's prescription for monetary damages should be viewed as a further intrusion into this Court's exclusive province. In this regard, Appellee explained that the Rules of Disciplinary Enforcement, also promulgated by this Court, establish the procedures for addressing violations of the Rules of Professional Conduct, encompassing all stages from the investigation of an allegation of inappropriate conduct to the final disposition of a complaint by this Court, as well as delineating all available forms of discipline. See Pa.R.D.E. 204 - 208. Appellee commented that: "Nowhere do the disciplinary rules permit an opposing party to seek monetary damages from an attorney." Defendant's Memorandum at 12. According to Appellee, the only tribunal authorized to address any and all grievances against attorneys is the Disciplinary Board, which functions under the Supreme Court's oversight. See id. (citing Pa.R.D.E. 205-207). "In short, " he proclaimed, "the concept of a lawsuit against an attorney for money damages based on his conduct in a civil case is repugnant to Article V, section 10(c)." Defendant's Memorandum at 13; accord id. ("It is for the judiciary to sanction attorneys for bringing an action that is purportedly baseless or for engaging in other inappropriate conduct").

         In response, Appellants defended the Dragonetti Act as substantive remedial legislation designed, for the benefit of victims, to redress wrongs committed by those pursuing frivolous litigation. Appellants explained that it has long been the law of the Commonwealth that a lawyer may be liable for tortious conduct committed in his professional capacity. See Plaintiffs' Memorandum of Law in Opposition to Preliminary Objections in Seibert, No. 2012-09795 ("Plaintiff's Memorandum"), at 5 (citing Adelman v. Rosenbaum, 133 Pa. Super. 386, 391-92, 3 A.2d 15, 18 (1938), for the proposition that the defendant in a common law action for malicious use of process "cannot invoke the plea of privilege as an attorney acting for a client" because "malicious action is not sheltered by any privilege"); accord Dietrich Indus., Inc. v. Abrams, 309 Pa. Super. 202, 208, 455 A.2d 119, 123 (1982) ("An attorney who knowingly prosecutes a groundless action to accomplish a malicious purpose may be held accountable in an action for malicious use of process.").[3]

         Appellants further offered that the Dragonetti Act was fashioned after Section 674 of the Second Restatement of Torts, which indicates as follows:

One who takes an active part in the initiation, continuation or procurement of civil proceedings against another is subject to liability to the other for wrongful civil proceedings if
(a) he acts without probable cause, and primarily for a purpose other than that of securing the proper adjudication of the claim in which the proceedings are based, and
(b) except when they are ex parte, the proceedings have terminated in favor of the person against whom they are brought.

Restatement (Second) of Torts §674 (1977). Moreover, Appellants alluded to comment d to Section 674, which provides:

If [an] attorney acts without probable cause for belief in the possibility that [a] claim will succeed, and for an improper purpose, as, for example, to put pressure upon the person proceeded against in order to compel payment of another claim of his own or solely to harass the person proceeded against by bringing a claim known to be invalid, he is subject to the same liability as any other person.

Id., cmt. d.

         Appellants noted that the Superior Court had repeatedly cited and adopted Section 674 and referenced comment d relative to actions brought against attorneys, see Plaintiffs' Memorandum at 6 (citing Gentzler v. Atlee, 443 Pa. Super. 128, 135 n.6, 660 A.2d 1378, 1382 n.6 (1995), Meiksin v. Howard Hanna Co., 404 Pa. Super. 417, 420-21, 590 A.2d 1303, 1305 (1991), and Shaffer v. Stewart, 326 Pa. Super. 135, 140-43, 473 A.2d 1017, 1020-21 (1984)), and that no appellate court had ever concluded that the Dragonetti Act is unconstitutional. Additionally, they asserted that "[t]he fact that the common law claim for wrongful use of civil process was codified in 1980 does not render the claim unconstitutional." Id. at 8. According to Appellants, none of the cases cited by Appellee in which this Court had declared other statutes to be unconstitutional bore any relevance, since none pertained to the prescription for substantive redress for victims considering the harm caused by a lawyer's tortious conduct.

         Appellants also differed with Appellee's depiction of the legislative purpose underlying the Act as being to regulate the practice of law. Rather, they contended that the primary objective was to codify the common law cause of action for malicious prosecution, while adjusting it to eliminate the requirement of seizure or arrest and substitute gross negligence for malice as a liability threshold. See Plaintiffs' Memorandum at 7 (citing Nw. Nat'l Cas. Co. v. Century III Chevrolet, Inc., 863 F.Supp. 247, 250 (W.D. Pa. 1994)); accord Walsavage v. Nationwide Ins. Co., 806 F.2d 465, 467 (3d Cir. 1986). See generally 42 Pa.C.S. §8351(b) ("The arrest or seizure of the person or property of the plaintiff shall not be a necessary element for an action brought pursuant to this subchapter.").

         According to Appellants' position as stated from the outset, the Dragonetti Act does not conflict with Rule of Professional Conduct 3.1, which was never intended to govern civil liability or otherwise grant or curtail remedies to third parties harmed by an attorney's tortious conduct. See Plaintiffs' Memorandum at 7-8 (citing the Scope provision from the Rules of Professional Conduct for the propositions that "violation of a Rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached" and that the rules "are not designed to be a basis for civil liability"). Along these lines, Appellants also referenced Maritrans GP Inc. v. Pepper, Hamilton & Scheetz, 529 Pa. 241, 602 A.2d 1277 (1992), in which this Court chastised the Superior Court for "badly confus[ing] the relationship between duties under the rules of ethics and legal rules that create actionable liability apart from the rules of ethics." Id. at 255, 602 A.2d at 1284 (emphasis added). In light of this essential distinction between ethical regulation and substantive remedial laws, Appellants maintained that the Dragonetti Act "supplements, but does not interfere with, the operation of those rules." Plaintiffs' Memorandum at 8.

         The common pleas court granted Appellee's preliminary objections grounded on his constitutional challenge to the Dragonetti Act, for essentially the reasons that he had advanced. Citing to decisions that Appellee had referenced in which this Court has suspended statutes per its Article V, Section 10(c) powers, the county court observed that the "Supreme Court has long asserted its authority over the conduct of attorneys." Villani, No. 2012-09795, slip op. at 4 n.1 (C.P. Chester Aug. 27, 2015). The court further reasoned that the "Dragonetti Act goes to the heart of what an attorney is trained and called upon to do, exercise legal judgment about the existence of probable cause under the law as it presently exists or is developing." Id. at 5 n.1. In this regard, the court of common pleas credited the position that the Act conflicts with Rule of Professional Conduct 3.1 by adopting a more restrictive standard and in grounding liability upon subjective beliefs. See id. ("[T]he legislature violates Art. V, §10(c) of the Pennsylvania Constitution by attempting to regulate attorney conduct through standards other than those selected by the Supreme Court."). Additionally, the court agreed with Appellee that the imposition of monetary damages under the Act, see 42 Pa.C.S. §8353, represented a further transgression, since no disciplinary rule promulgated by this Court so provides. The court of common pleas concluded, again, essentially echoing Appellee's arguments:

The only tribunal authorized by the Supreme Court to address grievances against an attorney is the Disciplinary Board. Pa.R.D.E. 205. The concept of a lawsuit against an attorney for money damages based on how a civil case is conducted is repugnant to the system of discipline established by the Supreme Court pursuant to Art. V, §10(c) of the Pennsylvania Constitution.
* * *
For the reasons stated, the Dragonetti Act is a legislative attempt to intrude upon the Supreme Court's exclusive authority to regulate the conduct of attorneys in the practice of law. It is for the judiciary to sanction lawyers for bringing actions that are baseless or for otherwise engaging in inappropriate conduct. The Dragonetti Act, as it pertains to lawyers, is unconstitutional and unenforceable.

Id. at 6-7 n.1.

         Appellants sought permission to appeal on an interlocutory basis, [4] initially in the Superior Court, which was granted after the proceedings were transferred to this Court. See 42 Pa.C.S. §722(7) (vesting exclusive original appellate jurisdiction in the Supreme Court over a final order holding a Pennsylvania statute unconstitutional). Our review of a challenge to the constitutionality of a duly enacted statute is plenary. See, e.g., Commonwealth v. Hopkins, 632 Pa. 36, 49, 117 A.3d 247, 255 (2015).

         Presently, Appellants maintain their core contention that the Dragonetti Act constitutes a substantive remedial law designed to provide an essential remedy to third parties harmed by abusive litigation, and not a misguided effort by the General Assembly to usurp this Court's regulatory power over attorneys.

         Appellants supplement this position with a number of observations and arguments that they did not specifically present to the county court. In addition to referencing cases from the Superior Court, Appellants relate that this Court has acknowledged the Dragonetti Act on several occasions. See Brief for Appellants at 23 (citing Stone Crushed P'ship v. Kassab Archbold Jackson & O'Brien, 589 Pa. 296, 299 n.1, 908 A.2d 875, 877 n.1 (2006), and McNeil v. Jordan, 586 Pa. 413, 438-39, 894 A.2d 1260, 1275 (2006)). In the McNeil decision, Appellants elaborate, this Court found that the Dragonetti Act served as a useful aid in interpreting the Rules of Civil Procedure governing pre-complaint discovery. See McNeil, 586 Pa. at 438-39, 894 A.2d at 1275. From this, Appellants draw the conclusion that "the Dragonetti Act comports entirely with the duty of the litigant, whether party or attorney, to demonstrate good faith and probable cause 'in the procurement, initiation or continuation of civil proceedings' and to conduct discovery in conformity with these basic principles." Brief for Appellants at 26- 27 (quoting 42 Pa.C.S. §8351(a)); see also id. at 27 ("In other words, this Court has extolled the Dragonetti Act, which codified centuries of common law, as a necessary and appropriate basis for relief for victims of abusive litigation conduct.").

         Next, Appellants explain that this Court previously considered the constitutionality of a segment of the Dragonetti Act, at least, when it suspended its provision for attorney certifications and civil penalties for violations. See Pa.R.C.P. No. 1023.1(e) (reflecting the suspension of 42 Pa.C.S. §8355). According to Appellants, by suspending Section 8355, while leaving intact the remaining sections of the Act, this Court "tacitly endorsed Sections 8351 through 8354 as constitutional." Brief for Appellants at 28. Appellants also highlight the explanatory note to Rule 1023.1, referencing the Act as providing "additional relief from dilatory or frivolous proceedings." Pa.R.C.P. No. 1023.1, Note; see Brief for Appellants at 29 ("The explanatory comment to Rule of Civil Procedure 1023.1, which refers directly to the Dragonetti Act as a viable cause of action, is further evidence that the Supreme Court has for several decades approved of the Dragonetti Act as a supplemental remedy for victims of frivolous civil proceedings.").

         Appellants additionally argue that Rule 1023.1 sanctions do not adequately compensate the victims of frivolous claims. In this regard, Appellants quote Werner v. Plater-Zyberk, 799 A.2d 776 (Pa. Super. 2002), as follows:

[The Dragonetti Act defendant] argue[s] that [the plaintiff's] interests would be vindicated adequately via sanctions imposed by the federal district court. However, the damages [the plaintiff] seeks are distinct from the various types of penalties that may be imposed by a court as sanctions against a tortfeasor. Sanctions, including monetary sanctions paid to an adversary in the form of fees or costs, address the interests of the court and not those of the individual. A litigant cannot rely on a sanction motion to seek compensation for every injury that the sanctionable conduct produces. Rather, an injured party must request tort damages to protect his personal interest in being free from unreasonable interference with his person and property.
* * *
The main objective of Rule 11 is not to reward parties who are victimized by litigation; it is to deter baseless filings and curb abuses. While imposing monetary sanctions under Rule 11 may confer a financial benefit on a victimized litigant, this is merely an incidental effect on the substantive rights thereby implicated. Simply put, Rule 11 sanctions cannot include consequential damages and thus are not a substitute for tort damages. In light of the foregoing, we conclude that [the plaintiff's] right to seek tort damages for his alleged injuries exists independently of, and in addition to, any rights he might possess to petition for sanctions from the federal district court . . ..

Id. at 784-85 (citations omitted); accord Perelman v. Perelman, 125 A.3d 1259, 1269-72 (Pa. Super. 2015).

         Appellants further take issue with the distinction drawn by the common pleas court and Appellee between the Dragonetti Act's probable cause requirement and the standard set forth in Rule of Professional Conduct 3.1. In this regard, Appellants again cite McNeil as clarifying that "the term 'probable cause' is sufficiently well defined and understood in Pennsylvania law to ensure an objective, unified standard . . .." McNeil, 586 Pa. at 438, 894 A.2d at 1275. Furthermore, Appellants explain that in the decades throughout which the Dragonetti Act has been in existence, no Pennsylvania appellate court has ever interpreted the enactment to require that the term "developing law, " as it appears in the enumeration of the probable cause standard set forth in Section 8352(1), should not include an argument for extension, modification or reversal of exiting law. See Brief for Appellants at 34 ("What, after all, is a 'developing law' if not a law that is the subject of legal argument and debate, including debate over the extension, modification or reversal of existing law?").

         In terms of the subjective-objective distinction drawn by the county court and Appellee, Appellants asserts that this rests on a misinterpretation of Rule of Professional Conduct 3.1, which recognizes the necessity of "good faith" in argumentation. Pa.R.P.C. 3.1. Appellants also posit:

Whether charged with a violation of [Rule] 3.1 or a violation of the Dragonetti Act, an attorney would defend with the same evidence upon which the attorney based his or her good faith belief that there was a basis in law and fact to bring or defend the underlying civil proceeding. In either case, the finder of fact would be charged with determining whether the lawyer's belief was objectively reasonable, i.e., whether the lawyer had acted in good faith by relying upon creditable facts and a non-frivolous legal argument for purposes of probable cause to pursue a claim.

Brief for Appellants at 35. In this line of argument, Appellants note that the governing standards, as they have developed in the decisional law, are highly deferential relative to attorney judgment. See, e.g., Perelman, 125 A.3d at 1264 ("Insofar as attorney liability is concerned, 'as long as an attorney believes that there is a slight chance that his client's claims will be successful, it is not the attorney's duty to prejudice the case.'" (quoting Morris v. DiPaolo, 930 A.2d 500, 505 (Pa. Super. 2007))). To the degree that an assessment of a lawyer's beliefs is necessary, Appellants do not agree with the common pleas court and Appellee that this unnecessarily complicates the summary judgment process.

         Appellants also relate that there are other legislative remedial schemes that operate to authorize compensation to victims of wrongful, injurious acts committed by attorneys. For example, Appellants reference the Loan Interest and Protection Law, [5]which imposes civil liability for collection of interest or charges in excess of those otherwise permitted under the enactment. See 41 P.S. §502. They indicate that this Court recently confirmed, as a matter of statutory interpretation, that attorneys are not excluded from the category of persons subject to liability under the act. See Glover v. Udren Law Offices, ___ P.C., Pa.___, ___, 139 A.3d 195, 200 (2016). Appellants draw supportive significance from the absence of any mention, in Glover, of a conflict between the enactment under review and Article V, Section 10(c) of the Pennsylvania Constitution.

         Finally, Appellants explain that this Court previously has rejected constitutional challenges to other statutes that impose ethical and professional requirements upon groups that include attorneys. See Maunus v. State Ethics Comm'n, 518 Pa. 592, 544 A.2d 1324 (1988) (disapproving an attack upon an Ethics Act requirement for all employees of the Pennsylvania Liquor Control Board, which included attorney-employees, to file statements of financial interest). Appellants highlight the Maunus Court's observations that: the challenged enactment was not targeted solely at lawyers; the statute did not impose a duty upon every attorney admitted to practice law in the Commonwealth; and the duty imposed was not inconsistent with the professional and ethical obligations arising from directives of this Court. See id. at 600, 544 A.2d at 1328. Indeed, responding to the assertions of the county court and Appellee that the imposition of civil liability upon attorneys is repugnant, Appellants express the contrary position that "immunization of lawyers who have engaged in the wrongful use of civil proceedings is repugnant." Brief for Appellants at 44.

         In support of Appellants, amicus curiae Nicholas O. Brown -- who is a plaintiff in a pending Dragonetti action lodged against an attorney-defendant -- invokes Article I, Section 11 of the Pennsylvania Constitution. See Pa. Const. art. I, §11 ("All courts shall be open; and every man for an injury done him in his lands, goods, person or reputation shall have remedy by due course of law . . .."). Amicus views the form of lawyer immunity envisioned by Appellee to be fundamentally inconsistent with this constitutionally prescribed right to a remedy. Furthermore, he believes that nothing in Article V, Section 10(c) was ever intended to invalidate the Legislature's core power to fashion substantive law, inter alia, by compensating persons harmed by abusive and frivolous litigation.

         Appellee, for his part, opens his brief with an extensive array of waiver-based arguments, mainly contending that, since Appellants failed to present most of the arguments advanced in their appellate brief during the course of the proceedings in the common pleas court, those are unavailable for this Court's present review. For example, Appellee asserts that Appellants failed to reference Rules of Disciplinary Enforcement 204 though 208 or to provide a developed argument with regard to Rule of Professional Conduct 3.1. Indeed, according to Appellee's parsimonious view of what was presented to the county court, the sole argument that Appellants preserved for appellate ...

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