Josh J.T. Byrne, Swartz Campbell

In the last three months, Pennsylvania courts have issued significant opinions regarding the Dragonetti Act, and our Supreme Court is posed once again to address an issue regarding the constitutionality of the act.

Starting at the top, in February, the Pennsylvania Supreme Court granted a petition for permission to appeal in the case of Rupert v. Kling. As faithful readers will remember from my May 2017 article, a divided Supreme Court of Pennsylvania determined the Dragonetti Act (Pennsylvania's codification of the common law tort of wrongful use of civil proceedings) is not unconstitutional in Villani v. Seibert, No. 66 MAP 2016 (Pa. 2017). However, in doing so, the court appeared to specifically invite future litigation on claims for punitive damages under the Dragonetti Act and claims of lack or probable cause when an attorney was pursuing an action based upon a “good faith argument that the existing law should be changed.” Justice Debra Todd's concurrence in Villani made an even more forceful argument for these challenges. The Rupret v. Kling appeal is the opportunity for the court to address a more narrowly tailored attack on the constitutionality of an award of punitive damages against an attorney under the Dragonetti Act.

The Supreme Court will also consider whether, if an award of punitive damages under the Dragonetti Act is unconstitutional, then does the immunity from punitive damages also apply to “a plaintiff in an action who is represented by counsel, who seeks and is denied affirmative relief, but who also happens to be an attorney.” This question stems out of the unique underpinnings of the Rupert case which involves an attorney who filed a declaratory judgment action against his client following a legal malpractice action commenced by the client. The declaratory judgment action was (eventually) dismissed and the client commenced a Dragonetti action against her former attorney and his counsel. Dragonetti nerds throughout the commonwealth will await this decision on tenterhooks.

Moving down a level, the Superior Court has already issued four opinions on Dragonetti Act cases this year. In Brown v. Halpern, 2019 PA Super 5 (Pa. Super. 2019) the court affirmed a trial court judgment against attorney Mark Halpern, his firm and his client. According to press reports at the time, the Brown jury verdict which totaled $2.3 million was the second largest wrongful use of civil proceeding verdict in Pennsylvania history. Interestingly, one of the issues on appeal in the Brown case was the constitutionality of punitive damages under the Dragonetti Act. The Superior Court, however, determined the issue was waived because the appellants did not file proof that the Attorney General of Pennsylvania was notified of the constitutional challenge as required by Pa. R.A.P. 521.

The arguments addressed by the Superior Court included an assertion that the trial court erred in denying a request for a continuance. The Superior Court noted that Halpern failed to create a sufficient record of his alleged illness and request for a continuance to find that the trial court abused its discretion. Two other arguments on appeal addressed the substance of the Dragonetti Act claim itself. Appellants first argued the underlying action did not terminate in the plaintiffs favor, a requirement for any Dragonetti Act case. The underlying case was terminated through a praecipe to discontinue after the underlying defendants filed a motion for judgment on the pleadings. While the appellants argued the underlying case claims were withdrawn due to a settlement, the court stated “this argument is based on a misrepresentation of the procedural history of this case.” The Superior Court found no settlement was ever entered into.  In the alternative, the appellants argued they withdrew the underlying case for strategic reasons and therefore termination in plaintiff's could not be established. The Superior Court stated it carefully considered the “circumstances surrounding each of these alleged strategic reasons for withdrawing,” but affirmed the decision because the appellants “maintained the action well after it became clear that it lacked a reasonable basis in fact and law.”

The Superior Court also addressed an argument that because preliminary objections were overruled on two occasions in the underlying action the Dragonetti plaintiffs could not establish favorable termination. The court noted that even if summary judgment is denied, a party can still establish favorable termination at a later point. Interestingly, it appears the appellants made his argument only with respect to termination, and did not argue the denial of preliminary objections precluded the Dragonetti plaintiff from establishing a lack of probable cause.

The appellant client in Halpern also argued she was not liable under the Dragonetti Act because she relied upon the advice of counsel in commencing and continuing the underlying action. The court noted the record established that the client had hidden a relevant fact regarding the underlying case. The client had “forged her attorney's letterhead and signature on correspondence meant to allay her aunt's fears about who would benefit from her inheritance,” but informed Halpern the correspondence was authorized by her attorney. The Superior Court found: “There was overwhelming evidence supporting the jury's finding that Boghossian did not reasonably believe the facts supporting the underlying lawsuit.” The discussion of client liability under the Dragonetti Act is one of the more significant discussions on the issue in recent appellate court decisions.

The Superior Court in Halpern also reaffirmed that a plaintiff in a Dragonetti Act case does not need a medical expert to recover emotional distress damages. The only nonconstitutional argument the appellants made with respect to punitive damages was that punitive damages could not be awarded because there was no basis for compensatory damages. It does not appear that appellants argued the punitive damages were excessive because of the amount they exceeded the compensatory damages.

The Superior Court also reversed and remanded the trial court decision in Raynor v. D'Annunzio, 2019 PA Super 72 (Pa. Super. 2019). The Dragonetti claim in that case arose out of well publicized post-trial proceedings for contempt following a medical malpractice trial. The decision involves an in depth discussion of what constitutes a “civil proceeding” for purposes of the Dragonetti Act. Likewise, in the unpublished decision of LaRoche v. Beers, 2019 Pa. Super. Unpub. LEXIS 129, at *17 (Pa. Super. 2019) the court reversed a decision granting summary judgment in a Dragonetti Act case based on the Nanty-Glo Rule because the court relied on testimony of the party moving for summary judgment.

Add to this litany of 2019 blockbuster Dragonetti Act cases an additional five federal district court cases applying Pennsylvania law to Dragonetti Act claims, and we appear to be teed-up for a blockbuster year on Dragonetti. Professional liability insurers have long noted Pennsylvania's unusual affinity for wrongful use of civil proceedings claims. It does not appear that is going to change in the near future.

Josh J.T. Byrne, a partner in Swartz Campbell's professional liability group in the firm's Philadelphia office, is also co-chair of the Philadelphia Bar Association's professional guidance committee and the incoming chair of the Pennsylvania Bar Association's professional liability committee.