In dismissing Stradley Ronon Stevens & Young’s lawsuit against former client Sovereign Bank, a federal judge has ruled the firm cannot use the Declaratory Judgment Act to pre-empt a state court malpractice filing by Sovereign. Stradley Ronon asked U.S. District Judge Joel H. Slomsky of the Eastern District of Pennsylvania to rule it did not commit legal malpractice when drafting an amendment to a loan agreement for the bank, in hopes of forestalling threats by Sovereign to sue over the $97 million it said it lost because of poor terms in the agreement.
Sovereign did eventually sue Stradley Ronon for legal malpractice in the Philadelphia Court of Common Pleas about a month after the law firm filed its declaratory judgment action in federal court. The state action had been stayed until Slomsky could address Sovereign’s motion to dismiss Stradley Ronon’s case against it.
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