J-A17007-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MACKIN MEDICAL, INC. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
LINDQUIST & VENNUM LLP D/B/A :
LINDQUIST & VENNUM D/B/A :
LINDQUIST & VENNUM P.L.L.P.; : No. 1817 EDA 2018
MARK A. JACOBSON, ESQUIRE; :
MARK PRIVRATSKY, ESQUIRE; :
CHRISTOPHER SMITH, ESQUIRE; :
BALLARD SPAHR ANDREWS & :
INGERSOLL LLP D/B/A BALLARD :
SPAHR :
:
Appellants :
Appeal from the Order Entered June 4, 2018
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): February Term, 2018 No. 4
BEFORE: PANELLA, P.J., OLSON, J., and FORD ELLIOTT, P.J.E.
MEMORANDUM BY OLSON, J.: FILED APRIL 06, 2020
Lindquist & Vennum, LLP, et al. (hereinafter “Appellant”),1 appeals from
the order entered on June 4, 2018, which overruled its preliminary objection
to compel arbitration. We vacate and remand.
Mackin Medical, Inc. (“Mackin Medical”) retained Appellant as legal
counsel to represent it on certain matters. As the trial court explained:
____________________________________________
1Although there are multiple named appellants, for ease of understanding we
will refer to the appellants as a singular “Appellant” throughout this
memorandum.
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On December 11, 2013, [Appellant] sent a letter to Mackin
Medical setting the scope and terms of its engagement . . .
as follows:
Scope of Our Engagement. You have retained the Firm
to represent Mackin Medical in connection with antitrust
and competition issues. While the Firm is available to
work with you on a wide range of other matters, this will
confirm that our engagement at this point is limited to the
performance of services solely in the matter described
above.
[Appellant] attached and incorporated to its retainer letter a
document titled “Engagement Terms and Policies.” This
[document] includes the following dispute resolution
provision:
[Dispute Resolution. Although we look forward to a
mutually rewarding relationship, in the unlikely event of
a dispute, including a dispute regarding the amount or
payment of fees and expenses we may have a duty or the
right to withdraw from representation as provided by the
applicable rules of professional conduct.] In the event of
a dispute, controversy or claim arising out of or relating
to our fees, costs, billing practices or this engagement,
we mutually agree that any such dispute, controversy or
claim will be submitted to mandatory binding arbitration
before a single arbitrator in Minneapolis, Minnesota, in an
arbitration administered by the American Arbitration
Association [(“AAA”)] under its Commercial Arbitration
Rules. The decision of the arbitrator will be final and
binding on the parties. Judgment on the award rendered
by the arbitrator may be entered in any court having
jurisdiction thereof. Arbitration has the advantage of
generally being faster, less expensive and more informal
than traditional litigation and any decision is final and
binding. It does not provide, however, for the assurance
of as much pre-hearing discovery, public trial by jury, or
appeal. Arbitration filing fees are typically more
expensive, and the parties are responsible for paying the
arbitrator. Your signature on the accompanying
engagement letter acknowledges your informed consent
to use of arbitration to resolve disputes with us.
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...
On December 12, 2013, Mackin Medical executed the retainer
letter with its incorporated engagement terms without
independent counsel review.
Trial Court Opinion, 12/26/18, at 2-3 (footnote omitted).
On February 2, 2018, Mackin Medical filed a complaint against Appellant
in the Court of Common Pleas of Philadelphia County, alleging that Appellant
was professionally negligent in advising and representing Mackin Medical.
Within the complaint, Mackin Medical averred:
20. At all relevant times, Mackin Medical was in the business
of renting medical equipment and devices including
GreenLight™ Lasers to hospitals, doctors and trained medical
professionals.
21. Before December 2013, Mackin Medical purchased
GreenLight™ lasers to rent to medical providers and did so
pursuant to a “Mobile Provider Distribution Agreement” (“the
Agreement”) with the GreenLight™ Laser patent owner, AMS.
22. Though the physical GreenLight™ lasers were owned
outright by Mackin Medical, each instance of operation of the
lasers required a one-time-use GreenLight™ Fiber Units and
one-time-use software cards.
23. The terms of the Agreement provided that both the Fiber
Units and software cards were not owned outright by Mackin
Medical, but rather were subject to a limited license from AMS
and subject to certain conditions.
24. In December 2013, following a request by AMS to amend
[] the terms of the Agreement, Mackin Medical retained
[Appellant] to provide legal counsel regarding the Agreement
to represent its interest in any contract negotiations with
AMS.
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25. Though [Appellant] attempted to re-negotiate the terms
of the Agreement, they were ultimately unsuccessful and the
contract was terminated with AMS.
26. [Appellant] advised Mackin Medical it was free to continue
to rent out the GreenLight™ laser technology owned by
Mackin Medical without any contractual Agreement with AMS,
provided that no GreenLight™ or AMS trademarks were used
or referenced.
27. Relying on this advice, Mackin Medical continued to rent
out the GreenLight™ lasers to its customers in 2014 through
August [] 2016 without any contractual Agreement with
[AMS] rather than selling the GreenLight™ lasers outright.
Mackin Medical’s Complaint, 2/2/18, at ¶¶ 20-27.
As Mackin Medical alleged, Appellant’s advice – that Mackin Medical may
continue renting the GreenLight lasers – was professionally negligent and
caused it harm. Id. at ¶¶ 41-48.
Appellant filed preliminary objections to the complaint and sought to
compel arbitration, in accordance with the arbitration provision contained in
the retainer agreement. See Appellant’s Preliminary Objections, 4/5/18, at
1-8. Mackin Medical answered Appellant’s preliminary objections and claimed:
the arbitration provision is invalid and unenforceable because Mackin Medical
was not “fully informed of the scope and effect of the agreement;” the
arbitration provision is invalid and unenforceable because a confidential
relationship exists between Mackin Medical and Appellant and there is no
evidence that Mackin Medical agreed to the provision “with an understanding
and knowledge of its nature, terms and consequences;” the arbitration
provision is invalid and unenforceable because it violates Pennsylvania Rule of
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Professional Conduct 1.8; and, even if the provision were enforceable, the
provision is ambiguous as to whether it encompasses legal malpractice claims
and, under our canons of construction, the current matter must be viewed as
falling outside the scope of the provision. See Mackin Medical’s Answer to
Preliminary Objections, 4/20/18, 1-7; Mackin Medical’s Memorandum of Law
in Opposition to Appellant’s Preliminary Objections, 4/20/18, at 1-17.
Neither Appellant nor Mackin Medical sought discovery or a hearing on
the issues and no discovery or hearing on the preliminary objections took
place.
On June 4, 2018, the trial court overruled Appellant’s preliminary
objections. Within its order, the trial court ruled that there was an ambiguity
as to whether the arbitration provision applied to a legal malpractice claim;
and, since Appellant drafted the agreement, the trial court held that the
ambiguity must be construed against Appellant. See Trial Court Order,
6/4/18, at 1; but see Provenzano v. Ohio Valley Gen. Hosp., 121 A.3d
1085, 1096-1097 (Pa. Super. 2015) (“any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration”) (quotations and
citations omitted).
Appellant filed a timely notice of appeal.2 Within the trial court’s
subsequent Rule 1925(a) opinion, the trial court seemingly abandoned its
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2 “An order overruling preliminary objections seeking to compel arbitration is
immediately appealable as an interlocutory appeal as of right pursuant to 42
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“ambiguity” justification and, instead, reasoned that it was required to
overrule Appellant’s preliminary objections because the arbitration provision
violated both Pennsylvania Rule of Professional Conduct 1.8(h)(1) and
1.8(a)(1). The trial court declared:
[an o]bjective reading of [Appellant’s] retainer letter and its
incorporated engagement terms compels a finding that the
law firm failed to reasonably disclose the prospective
limitations the firm was placing on its own liability for
malpractice. This is because the retainer and its incorporated
terms violate both [Pennsylvania Rule of Professional
Conduct] 1.8(h)(1) and [] 1.8(a)(1), the latter providing: “A
lawyer shall not enter into a business transaction with a client
. . . unless . . . the transaction and terms on which the lawyer
acquires the interest are fair and reasonable to the client and
are fully disclosed in a manner that can reasonably be
understood by the client.”
Trial Court Opinion, 12/26/18, at 6.
Appellant raises three claims in its brief:
1. Did the trial court err in holding that an arbitration
provision in a lawyer’s engagement agreement with a client
is a prospective limitation on the lawyer’s malpractice liability
that is “substantively unconscionable” and in violation of
Rules 1.8(h)(1) and 1.8(a)(1) of the Pennsylvania Rules of
Professional Conduct?
2. Does the Federal Arbitration Act [(“FAA”)], which requires
enforcement of arbitration agreements on an equal footing
with all other contracts, preempt the trial court’s holding that
a lawyer’s engagement agreement with a client containing an
arbitration clause cannot be enforced unless the lawyer
advises the client to consult with independent counsel, where
____________________________________________
Pa.C.S.A. § 7320(a) and Pa.R.A.P. 311(a)(8).” Cardinal v. Kindred
Healthcare, Inc., 155 A.3d 46, 49 n.1 (Pa. Super. 2017).
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no such requirement exists for the enforcement of an
engagement agreement without an arbitration clause?
3. Did the trial court err in holding that the parties’ broad
arbitration agreement, which encompassed any “dispute,
controversy or claim arising out of or relating to . . . this
engagement,” was ambiguous because it did not explicitly
mention “malpractice” or “legal negligence,” and did the
[trial] court further err in then holding that such asserted
ambiguity precluded enforcement of the arbitration
agreement?
Appellant’s Brief at 4.
We have explained:
Our review of a claim that the trial court improperly
[overruled] the appellant's preliminary objections in the
nature of a petition to compel arbitration is limited to
determining whether the trial court's findings are supported
by substantial evidence and whether the trial court abused
its discretion in [overruling the preliminary objections]. In
doing so, we employ a two-part test to determine whether
the trial court should have compelled arbitration. First, we
examine whether a valid agreement to arbitrate exists.
Second, we must determine whether the dispute is within the
scope of the agreement. . . . If the two-part test results in
affirmative answers, then the controversy must be submitted
to arbitration. . . .
Whether a claim is within the scope of an arbitration provision
is a matter of contract, and as with all questions of law, our
review of the trial court's conclusion is plenary. In making
these determinations, courts must bear in mind: (1)
arbitration agreements are to be strictly construed and not
extended by implication; and (2) when parties have agreed
to arbitrate in a clear and unmistakable manner, every
reasonable effort should be made to favor the agreement
unless it may be said with positive assurance that the
arbitration clause involved is not susceptible to an
interpretation that covers the asserted dispute. To resolve
this tension, courts should apply the rules of contractual
constructions, adopting an interpretation that gives
paramount importance to the intent of the parties and
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ascribes the most reasonable, probable, and natural conduct
to the parties. In interpreting a contract, the ultimate goal is
to ascertain and give effect to the intent of the parties as
reasonably manifested by the language of their written
agreement.
TTSP Corp. v. Rose Corp., 217 A.3d 1269, 1280 (Pa. Super. 2019)
(quotations and citations omitted).
First, Appellant claims that the trial court erred in concluding that the
arbitration provision violates Rules 1.8(h)(1) and 1.8(a)(1) of the
Pennsylvania Rules of Professional Conduct. We agree.
Pennsylvania Rule of Professional Conduct 1.8(h)(1) provides:
(h) A lawyer shall not
(1) make an agreement prospectively limiting the
lawyer’s liability to a client for malpractice unless the
client is independently represented in making the
agreement.
Pa.R.P.C. 1.8(h)(1).
Here, the arbitration provision declares that any dispute “arising out of
or relating to . . . this engagement . . . will be submitted to mandatory binding
arbitration before a single arbitrator . . . in an arbitration administered by the
[AAA] under its Commercial Arbitration Rules.” Retainer Agreement,
Engagement Terms and Policies, at 3. Neither Mackin Medical nor the trial
court has provided a cogent argument or claim as to how the AAA’s
Commercial Arbitration Rules would or could limit Appellant’s liability to
Mackin Medical for malpractice.
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To be sure, Rule 47(a) of the AAA’s Commercial Arbitration Rules
broadly states that the “arbitrator may grant any remedy or relief that the
arbitrator deems just and equitable and within the scope of the agreement
of the parties.” AAA Commercial Arbitration Rules, Rule 47(a) (emphasis
added). Thus, the AAA’s Commercial Arbitration Rules do not limit Appellant’s
potential liability to Mackin Medical. Instead, the rules provide the arbitrator
with the authority to grant “any remedy or relief that the arbitrator deems
just and equitable.” Further, nothing in the parties’ agreement limits the
broad grant of authority to the arbitrator to award “any remedy or relief that
the arbitrator deems just and equitable.”
Within the trial court’s opinion, the trial court reasons that the
arbitration provision prospectively limits Appellant’s liability to Mackin Medical
because “procedural differences exist between courts and [AAA arbitration].”
Trial Court Opinion, 12/26/18, at 6 n.13. The trial court specifically cites the
limited pre-hearing discovery and the limitation on the right of a party to
appeal that exist in arbitration proceedings. Id. However, as the trial court
recognizes, these are procedural differences between courts and AAA
arbitration. The procedural differences do not, in any way, prospectively limit
the substantive scope of Mackin Medical’s potential claims against Appellant
or limit Appellant’s liability to Mackin Medical. Rather, Appellant’s potential
liability to Mackin Medical remains subject to the arbitrator’s broad power to
“grant any remedy or relief that the arbitrator deems just and equitable.” AAA
Commercial Arbitration Rules, Rule 47(a).
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Thus, we conclude that the trial court’s decision in this case directly
contravenes the plain language of Pennsylvania Rule of Professional Conduct
1.8(h)(1).
Further, the trial court’s decision is contrary to Comment 14 of Rule 1.8.
Comment 14 to the rule declares:
[14] Agreements prospectively limiting a lawyer's liability for
malpractice are prohibited unless the client is independently
represented in making the agreement because they are likely
to undermine competent and diligent representation. Also,
many clients are unable to evaluate the desirability of making
such an agreement before a dispute has arisen, particularly
if they are then represented by the lawyer seeking the
agreement. This paragraph does not, however, prohibit
a lawyer from entering into an agreement with the
client to arbitrate legal malpractice claims, provided
such agreements are enforceable and the client is fully
informed of the scope and effect of the agreement.
Pa.R.P.C. 1.8 cmt. 14 (emphasis added).
Thus, the comment to Rule 1.8 expressly states that the rule does not
“prohibit a lawyer from entering into an agreement with the client to arbitrate
legal malpractice claims, provided such agreements are enforceable and the
client is fully informed of the scope and effect of the agreement.” Id. Further,
to the extent Mackin Medical claims that it was not “fully informed of the scope
and effect of the agreement,” that issue implicates Pennsylvania Rule of
Professional Conduct 1.4(b) – not 1.8(h)(1).3 See Pa.R.P.C. 1.4(b) (“[a]
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3 Moreover, as will be explained below, any claim that Mackin Medical was not
“fully informed of the scope and effect of the [arbitration] agreement” fails.
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lawyer shall explain a matter to the extent reasonably necessary to permit the
client to make informed decisions regarding the representation”).
We thus conclude that the arbitration provision in this case does not
“prospectively limit[ Appellant’s] liability to [Mackin Medical] for malpractice.”
See Pa.R.P.C. 1.8(h)(1). Moreover, since the agreement does not
prospectively limit Appellant’s liability to Mackin Medical, the provision is not
unenforceable simply because Mackin Medical was not “independently
represented in making the agreement.” See id. The trial court erred in
concluding otherwise.
Appellant also contends that the trial court erred in concluding that the
arbitration provision violates Pennsylvania Rule of Professional Conduct
1.8(a)(1).4 We agree that the trial court erred in this regard.
Rule 1.8(a)(1) declares:
(a) A lawyer shall not enter into a business transaction with
a client or knowingly acquire an ownership, possessory,
security or other pecuniary interest adverse to a client
unless:
(1) the transaction and terms on which the lawyer
acquires the interest are fair and reasonable to the client
and are fully disclosed and transmitted in writing in a
manner that can be reasonably understood by the client.
Pa.R.P.C. 1.8(a)(1).
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4 As explained above, within the trial court opinion, the trial court declared
that it overruled Appellant’s preliminary objections because the arbitration
provision violates both Pennsylvania Rule of Professional Conduct 1.8(h)(1)
and 1.8(a)(1).
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The arbitration provision in this case is found within a retainer
agreement between a lawyer and a client. Simply stated, the retainer
agreement does not constitute a “business transaction with a client” pursuant
to Rule 1.8(a)(1). See, e.g., Pa.R.P.C. 1.8 cmt. 1 (“[a] lawyer's legal skill
and training, together with the relationship of trust and confidence between
lawyer and client, create the possibility of overreaching when the lawyer
participates in a business, property or financial transaction with a
client, for example, a loan or sales transaction or a lawyer investment
on behalf of a client. . . . [Rule 1.8] does not apply to ordinary fee
arrangements between client and lawyer, which are governed by Rule
1.5”) (emphasis added). Therefore, Rule 1.8(a)(1) does not apply to this
dispute.
Next, Appellant contends that the trial court’s decision violates the FAA.
As the United States Supreme Court has explained:
The FAA was designed to overrule the judiciary's
long-standing refusal to enforce agreements to arbitrate and
to place such agreements upon the same footing as other
contracts. While Congress was no doubt aware that the
[FAA] would encourage the expeditious resolution of
disputes, its passage was motivated, first and foremost, by a
congressional desire to enforce agreements into which
parties had entered. . . . [The FAA] simply requires courts to
enforce privately negotiated agreements to arbitrate, like
other contracts, in accordance with their terms.
Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489
U.S. 468, 478 (1989) (quotations and citations omitted).
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In keeping with this, the Supreme Court held that “generally applicable
contract defenses, such as fraud, duress, or unconscionability, may be applied
to invalidate arbitration agreements without contravening” the FAA. Doctor’s
Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996). However, “[c]ourts
may not . . . invalidate arbitration agreements under state laws applicable
only to arbitration provisions.” Id.
Here, the trial court invalidated the arbitration provision based solely
upon procedural differences that exist between courts and arbitration. See
Trial Court Opinion, 12/26/18, at 6 n.13. In doing so, the trial court has
“singl[ed] out [this] arbitration provision[]” – and, in effect, all arbitration
provisions – “for suspect status” based solely upon procedural differences that
exist between adjudication before courts and arbitration. This rationale
thwarts the will of Congress and violates the FAA. See Doctor’s Assocs.,
517 U.S. at 687.
Third, Appellant claims that the trial court erred in ruling that the
arbitration provision was ambiguous. We agree.
Within the trial court’s initial order in this case, the trial court declared
that it was overruling the preliminary objections because there was an
ambiguity as to whether the arbitration provision encompassed a legal
malpractice claim. According to the trial court, since Appellant drafted the
agreement, the ambiguity must be construed against Appellant; the trial court
thus held that the provision did not apply to legal malpractice claims. See
Trial Court Order, 6/4/18, at 1.
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Although the trial court later abandoned its “ambiguity” justification in
its subsequent Rule 1925(a) opinion, its initial ruling regarding ambiguity was
never expressly overruled and is, thus, still present in this case. Therefore,
we must address this issue.
The Pennsylvania Supreme Court has explained:
Contractual language is ambiguous if it is reasonably
susceptible of different constructions and capable of being
understood in more than one sense. This is not a question to
be resolved in a vacuum. Rather, contractual terms are
ambiguous if they are subject to more than one reasonable
interpretation when applied to a particular set of facts. We
will not, however, distort the meaning of the language or
resort to a strained contrivance in order to find an ambiguity.
Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa.
1999) (quotations and citations omitted).
“Where . . . the language of the contract is clear and unambiguous, a
court is required to give effect to that language.” Id. (quotations and citations
omitted); see also Provenzano, 121 A.3d at 1096-1097 (“any doubts
concerning the scope of arbitrable issues should be resolved in favor of
arbitration”) (quotations and citations omitted).
We conclude that the trial court’s determination that the arbitration
provision is ambiguous is incorrect and that the arbitration provision
unambiguously applies to legal malpractice claims. The arbitration provision
plainly declares:
In the event of a dispute, controversy or claim arising out of
or relating to our fees, costs, billing practices or this
engagement, we mutually agree that any such dispute,
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controversy or claim will be submitted to mandatory binding
arbitration.
Retainer Agreement, Engagement Terms and Policies, at 3.
The parties’ contract defines the term “engagement” as encompassing
“antitrust and competition issues.” Retainer Agreement, at 1.
This contractual language is clear and unambiguous. Further, the
language obviously encompasses legal malpractice claims, as: a legal
malpractice claim is a “claim arising out of or relating to . . . this engagement”
and, other than a fee or billing dispute (which are specified in the agreement),
a legal malpractice claim is the principal dispute that could “arise out of or
relate to” an attorney-client engagement. Thus, the trial court erred in
concluding that the arbitration provision was ambiguous.
It is true that “we have the ability to affirm a [trial court’s] decision on
any grounds that are supported by the record.” Shamis v. Moon, 81 A.3d
962, 970 (Pa. Super. 2013). However, none of the other arguments proffered
by Mackin Medical support the trial court’s order in this matter.
First, to the extent Mackin Medical argues that the legal malpractice
claim falls outside the scope of the arbitration agreement, this claim fails.
Within its complaint, Mackin Medical claimed that Appellant was
professionally negligent in advising that Mackin Medical may continue to rent
the GreenLightTM lasers, despite the fact that Mackin Medical did not have a
contractual agreement with the GreenLightTM Laser patent owner, AMS, and
despite the fact that “each instance of operation of the lasers required a
one-time-use GreenLightTM Fiber Units and one-time-use software cards . . .
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[, which] were subject to a limited license from AMS and subject to certain
conditions.” See Mackin Medical’s Complaint, 2/2/18, at ¶¶ 20-27.
The plain language in Mackin Medical’s complaint demonstrates that
Mackin Medical’s current claim arises out of and relates to the “competition
issues” Mackin Medical had with the GreenLightTM Laser patent owner; hence,
the claim falls within the scope of the arbitration provision. Retainer
Agreement, at 1; Retainer Agreement, Engagement Terms and Policies, at 3.
Second, within Mackin Medical’s response in opposition to Appellant’s
preliminary objections, Mackin Medical claimed that the arbitration provision
was invalid and unenforceable because Mackin Medical was not “fully informed
of the scope and effect of the agreement.” See Mackin Medical’s Answer to
Preliminary Objections, 4/20/18, 1-7. This claim fails.
Mackin Medical’s claim stems from Comment 14 to Pennsylvania Rule of
Professional Responsibility 1.8. Comment 14 declares that Rule 1.8(h)(1):
does not . . . prohibit a lawyer from entering into an
agreement with the client to arbitrate legal malpractice
claims, provided such agreements are enforceable and the
client is fully informed of the scope and effect of the
agreement.
Pa.R.P.C. 1.8 cmt. 14.
However, in this case, Mackin Medical was “fully informed of the scope
and effect of the [arbitration] agreement.” To be sure, the arbitration
provision in this case: is written in plain, easily understood language; is
separately-paragraphed with the bolded title “Dispute Resolution;” is
contained in a short, seven-page retainer agreement that is type-written in a
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normal font and size; plainly declares that any “dispute, controversy or claim
. . . arising out of or relating to . . . this engagement . . . will be submitted to
mandatory binding arbitration;” (as explained above) plainly applies to legal
malpractice claims; and, sets forth and explains some of the costs and benefits
of arbitration. With respect to this last point, the arbitration provision
specifically declares:
The decision of the arbitrator will be final and binding on the
parties. Judgment on the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof.
Arbitration has the advantage of generally being faster, less
expensive and more informal than traditional litigation and
any decision is final and binding. It does not provide,
however, for the assurance of as much pre-hearing
discovery, public trial by jury, or appeal. Arbitration filing
fees are typically more expensive, and the parties are
responsible for paying the arbitrator.
Retainer Agreement, Engagement Terms and Policies, at 3.
This arbitration provision fully informed Mackin Medical of the scope and
effect of the agreement. Thus, this claim in opposition to Appellant’s
preliminary objections fails.
Finally, within its response in opposition to Appellant’s preliminary
objections, Mackin Medical claimed the arbitration provision was invalid and
unenforceable because a confidential relationship existed between Mackin
Medical and Appellant and there was no evidence that Mackin Medical agreed
to the provision “with an understanding and knowledge of its nature, terms
and consequences.” See Mackin Medical’s Memorandum of Law in Opposition
to Appellant’s Preliminary Objections, 4/20/18, at 1-17. This claim also fails.
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Mackin Medical’s claim relies upon Paone v. Dean Witter Reynolds,
Inc., where we held:
A contract that is the product of a confidential relationship is
presumptively voidable unless the party seeking to sustain
the validity of the transaction affirmatively demonstrates that
it was fair under all of the circumstances and beyond the
reach of suspicion. More precisely, the proponent of the
contract must prove by clear and convincing evidence that
the contract was free, voluntary and an independent act of
the other party, entered into with an understanding and
knowledge of its nature, terms and consequences.
Paone v. Dean Witter Reynolds, Inc., 789 A.2d 221, 226 (Pa. Super. 2001)
(footnote, quotations, and citations omitted).
Mackin Medical’s claim fails because the arbitration provision was
contained in the initial retainer agreement between Appellant and Mackin
Medical and Mackin Medical did not allege or produce any evidence that a
confidential relationship existed between the parties prior to the signing of the
agreement. Therefore, at the time the arbitration provision was agreed to, a
confidential relationship did not exist between the parties; the provision, thus,
was not “the product of a confidential relationship.” See id. (emphasis
added). Hence, Mackin Medical’s claim fails.
In conclusion, since the arbitration provision is enforceable and
encompasses the parties’ current dispute, we must vacate the trial court’s
order in this case.
Order vacated. Case remanded. Jurisdiction relinquished.
President Judge Emeritus Ford Elliott joins.
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President Judge Panella files a Dissenting Statement.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/6/2020
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