PA: Underlying Real Estate Dispute
Facts: Owner of real estate retained attorneys to assist her in selling it. Attorneys appointment was general without any written agreement defining their duties and authority to act on owner’s behalf. Corporation contacted attorneys, made an offer below the asking price, and requested changes to their previous agreement. Corporation initialed the changes and signed the agreement but attorney refused to initial or sign stating that it will have to be presented to owner for review. By the time the agreement was presented to owner another buyer made an offer for the asking price which the owner accepted. Corporation brought breach of contract claim against the owner. Corporation also attempted to join attorneys as defendants alleging legal malpractice for negligently advising owner to reject a settlement made by corporation and other buyer causing owner damages.
Issue: 1. Did attorneys have authority to agree to the terms of the sale on owner’s behalf? 2. Could defendant have joined owner’s attorneys on the grounds that they were guilty of malpractice in failing to recommend settlement to their client?
Ruling: 1. No. there was no special relationship between owner and attorneys which would have authorized them to do so. 2. No. Corporation had no cause of action against attorneys because of advice that attorneys gave their client regarding offers to settle. An attorney cannot be held liable for negligence to a third person with whom he has no contract of employment. Attorney cannot be liable to the third party adversary because of the client’s refusal to settle a claim. The owner did not assert a claim against her attorneys and defendant will not be allowed to force her to do so in her action against the defendant. Pennsylvania’s joinder rules do not permit joinder of plaintiff’s attorneys on the grounds that their malpractice in recommending rejection of an offer of settlement has contributed to the plaintiff’s loss.
Lesson: A third party who does not have a contract of employment with attorney does not have a cause of action against attorney based on advice that attorney gave to attorney’s client. Also, a defendant may not join attorneys as additional defendants on the grounds that attorney’s advice to his or her client contributed to plaintiff’s loss.