                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


1-28-2004

Cap Surgical Sup Inc v. Casale
Precedential or Non-Precedential: Non-Precedential

Docket No. 02-4144




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                                                     NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT


                                    NO. 02-4144
                                __________________

                      CAPITOL SURGICAL SUPPLIES, INC.,
                      d/b/a CAPITOL MARKETING GROUP,

                                               Appellant

                                          v.

               MICHAEL J. CASALE, JR; CASALE & BONNER, P.C.
                    _________________________________

                   On Appeal From the United States District Court
                       for the Middle District of Pennsylvania
                          (M..D. Pa. Civ. No. 01-cv-01338)
                      District Judge: Honorable Malcolm Muir
                      ________________________________

                           ARGUED OCTOBER 16, 2003

         Before: SLOVITER, ROTH AND STAPLETON, CIRCUIT JUDGES

                              (Filed: January 28, 2004)



Gary P. Lightman, Esquire
Kristine Chrstensen, Esquire (Argued)
Lightman, Manochi & Kornilowicz
1520 Locust Street, 12th Floor
Philadelphia, PA 19102

             Counsel for Appellant

                                         1
Jeffrey B. McCarron, Esquire (Argued)
Kathleen M. Carson, Esquire
Swartz, Campbell & Detweiler
1601 Market Street
34th Floor
Philadelphia, PA 19103

              Counsel for Appellees


                                    _________________

                                        OPINION
                                    _________________


ROTH, Circuit Judge

       Capitol Surgical Supplies d/b/a Capitol Marketing Group (“Capitol”) appeals

from the District Court’s order granting summary judgment in favor of the defendants,

Michael J. Casale, Jr., Esquire, and the law firm with which he is associated, Casale &

Bonner, P.C. (collectively, “Casale”). Capitol’s claims involve the alleged legal

malpractice and related breach of contract by Casale. For the reasons that follow, we will

affirm the District Court’s judgment.

       The background is set forth at length in the District Court’s order. Thus, because

we write for the parties, we will revisit the factual basis of the action only briefly.

Capitol is a distributor of medical products. The shareholders of Capitol are Norman

Horowitz and Sidney Stadler. Haven Pride, Inc. (“Haven Pride”) is an entity formed in


                                               2
1999 by Robert Meacham and George Greico for the purpose of manufacturing adult

diapers; Capitol was one of the initial shareholders of Haven Pride, owning a 15%

interest. At Meacham’s request, Casale performed legal services regarding the formation

of Haven Pride. In return for his services, Casale received Haven Pride stock equal to

2.5% of the company.

      Under an exclusive distribution agreement, Capitol was the exclusive distributor

of Haven Pride products. Initially, Capitol and Haven Pride operated under an agreement

they had drafted themselves, without Casale’s involvement. The entities later decided to

form a new distribution agreement to replace the initial agreement. Meacham consulted

with Casale regarding assistance with the new agreement and arranged a meeting with

Horowitz at Casale’s office to discuss it. Horowitz had never communicated with Casale

before that meeting in early 2000, and both Stadler and Horowitz knew that Casale was

Haven Pride’s attorney. After the meeting, Horowitz and Stadler negotiated on Capitol’s

behalf to have certain provisions included in the agreement.

      Casale drafted the new exclusive distribution agreement. Horowitz sent proposed

changes to the new agreement to Casale, but there was no discussion with Casale

regarding the legal ramifications of Capitol’s proposed provisions. Casale did not

provide any comment to Horowitz regarding the new agreement’s terms. No one on

Capitol’s behalf asked Casale for legal advice during the negotiation of the agreement.

Casale made no agreement to provide Capitol any legal assistance in connection with the


                                            3
negotiations with Haven Pride. Capitol did not pay, or agree to pay, any amount to

Casale for legal services. There was no written representation agreement between

Capitol and Casale.

       The new exclusive distribution agreement was executed by Horowitz and Stadler

on Capitol’s behalf, and by Meacham on Haven Pride’s behalf. However, the business

relationship between Capitol and Haven Pride deteriorated in the fall of 2000. Capitol

filed a separate lawsuit against Haven Pride for breach of the exclusive distribution

agreement. Capitol and Haven Pride reached a settlement in that action, but the course of

that litigation revealed issues regarding the validity of the agreement.

       On July 18, 2001, Capitol filed this action against Casale in the District Court

under theories of negligence and breach of contract. Specifically, Capitol alleged that

Casale was negligent and breached certain duties owed to Capitol in preparing the new

exclusive distribution agreement, and that Casale breached a contract with Capitol

regarding Capitol’s instructions to prepare a valid and enforceable exclusive distribution

agreement. Casale moved for summary judgment. By memorandum and order entered

October 25, 2002, the District Court granted the motion, determining that no reasonable

fact-finder could conclude that an attorney-client relationship existed between Capitol

and Casale. In addition, the District Court concluded that Capitol had not sufficiently

demonstrated any harm suffered as a consequence of Casale’s alleged negligence. This

appeal followed.


                                              4
         We have appellate jurisdiction under 28 U.S.C. § 1291. We exercise plenary

review over an order granting summary judgment. Curley v. Klem, 298 F.3d 271, 276-

77 (3d Cir. 2002). Summary judgment is appropriate when “no genuine issue [exists] as

to any material fact and [when] the moving party is entitled to a judgment as a matter of

law.” Fed. R. Civ. P. 56(c). We view the facts in the light most favorable to the

nonmoving party and we draw all inferences in that party’s favor. See Reitz v. County of

Bucks, 125 F.3d 139, 143 (3d Cir. 1997).

         In order to prevail on its claims, Capitol had the burden of establishing the

existence of an attorney-client relationship between the parties as a basis for Casale’s

owing Capitol a duty. In this case, it is undisputed that there was no express contract

between Capitol and Casale for legal services. Therefore, Capitol had to establish the

existence of an implied attorney-client relationship. Under Pennsylvania law,1 an implied

attorney-client relationship is shown if (1) the purported client sought advice or

assistance from the attorney; (2) the assistance sought was within the attorney’s

professional competence; (3) the attorney expressly or impliedly agreed to provide such

assistance; and (4) it is reasonable for the putative client to believe that the attorney was

representing him. Atkinson v. Haug, 622 A.2d 983, 986 (Pa. Super 1993). A request for

legal services, and an agreement to provide legal services, are necessary elements to form

an attorney-client relationship. Cost v. Cost, 677 A.2d 1250, 1254-55 (Pa. 1996).


   1
       There is no dispute that Pennsylvania law applies to this case.

                                               5
       The District Court concluded that the record is devoid of any evidence that

Capitol sought Casale’s legal services or that Casale agreed to provide legal counsel to

Capitol. Capitol argues that the District Court ignored evidence that Horowitz and

Meacham jointly sought Casale’s legal assistance in drafting the new exclusive

distribution agreement. In support, Capitol cites portions of deposition testimony by

Horowitz, Stadler, and Meacham in which each indicated that the parties wanted to

formalize their pre-existing agreement. Yet Horowitz also testified that Meacham

initiated Casale’s involvement with the new agreement and that his first contact with

Casale occurred at the meeting arranged by Meacham. Moreover, Horowitz and Stadler

both indicated elsewhere in their depositions that they did not request any legal services

from Casale.

       Capitol cites other evidence, such as Casale’s references to multiple “clients” on

his billing entries relating to the new exclusive distribution agreement, as well as

instances where Casale had some direct communications with Capitol following their

initial meeting. However, we agree with the District Court that, although these facts

might bolster Capitol’s contention that it held a subjective belief that Casale was

representing Capitol, they do not create a genuine issue of material fact concerning

whether Capitol requested, and Casale agreed to provide, legal services. A subjective

belief that an attorney-client relationship was formed is an insufficient basis upon which

to find the existence of a genuine issue of material fact precluding summary judgment.


                                             6
Atkinson v. Haug, 622 A.2d at 987-88. We have considered Capitol’s remaining

arguments and find them without merit.

       Upon review of the record and the parties’ contentions, we agree that no attorney-

client relationship was formed between the parties and, thus, that there was no basis for a

duty to Capitol. For that reason, we need not reach the issue whether Capitol suffered

any harm as a result of Casale’s alleged breaches of duty. Accordingly, we will affirm the

District Court’s order granting summary judgment in favor of Casale.




_______________________

TO THE CLERK:

       Please file the foregoing opinion.

                                                 By the Court,



                                                 /s/ JANE R. ROTH
                                                    Circuit Judge




                                             7
     CAPITOL SURGICAL SUPPLIES, INC. V. CASALE – NO. 02-4144

     /S/ Walter K. Stapleton, Circuit Judge

     STAPLETON, J., Dissenting:

            I conclude that there is a material dispute of fact as to: (a) whether there was an

     attorney-client relationship between Capitol and Casale, and (b) whether Casale’s alleged

     breach of duty to Capitol caused it to settle its litigation with Haven Pride for

     substantially less than it would have received in the absence of that breach. Accordingly,

     I would reverse and remand this case to the District Court for further proceedings.

            The summary judgment record will support a finding that Capitol and Haven Pride

     made a joint request of Casale that he prepare a distribution agreement for them and that

     Casale honored that request by doing so. Horowitz and Stadler repeatedly insisted during

     their depositions that a joint request was made at the initial meeting.2 If that testimony is

     credited, it is clear that Casale accepted the requested representation by drafting the




        2
 1        Horowitz was asked at this deposition, “[D]id you make any specific request of Mr.
 2   Casale during the January 2000 meeting?” Horowitz replied, “That he put together an
 3   agreement for the business – for the distribution – to put together the distribution
 4   agreement to be a legally binding document. I think myself and Mr. Meacham did that.”
 5   (See Appellees’ App. at 76, 79.) This version of events was corroborated by Stadler, who
 6   testified that “[w]e all together asked [Casale] as a unit, just as a matter of discussion, that
 7   he would draft an agreement between Haven Pride and [Capitol].” (See id. at 262.)
 8   Moreover, there is documentary evidence tending to show that Horowitz requested legal
 9   advice from Casale. For example, on one of the draft versions of the distribution
10   agreement, Horowitz made a notation next to the termination clause which read, “What
11   do you suggest?” (See Appellees’ App. at 104-05.) At his deposition, Horowitz testified
12   that his question was directed to Casale. (See id.)

                                                    8
    requested agreement and forwarding his draft to both Capitol and Haven Pride. Casale

    does not claim to have told Capitol that he was only representing Haven Pride, and his

    time records bear evidence which would support a finding that he understood this to be a

    joint representation. In any event, whether or not Casale subjectively believed he

    represented Capitol, the relevant issue is whether there is record evidence permitting a

    conclusion that a reasonable client in Capitol’s position could have believed it was a joint

    representation. Atkinson v. Haug, 622 A.2d 983, 986 (Pa. Super. 1993). I conclude that

    there is.

           While it is a closer question because the relevant record is less well developed, I

    also conclude that Capitol has proffered enough evidence to avoid summary judgment on

    the issue of whether Casale’s alleged malpractice resulted in harm to Capitol. It is

    undisputed that Haven Pride asserted as a defense that the agreement was invalid because

    it was not approved in the manner required for contracts with a director.3 While Horowitz

    and Stadler acknowledged that they may have had other reasons for settling as they did,

    their deposition testimony reflects their concern about this defense and would support a

    finding that they would not have settled on the terms they did but for that concern.




       3
1      The issue of whether the distribution agreement is invalid is not before us, and I
2   would express no opinion regarding it.

                                                 9
