[J-84-2021]
IN THE SUPREME COURT OF PENNSYLVANIA
EASTERN DISTRICT
BAER, C.J., SAYLOR, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.
DR. AHLAM KHALIL, : No. 24 EAP 2021
:
Appellant : Appeal from the Judgment of
: Superior Court entered on January
: 5, 2021 at No. 2549 EDA 2019,
v. : affirming in part, reversing in part
: and remanding the Order entered on
: July 12, 2019 in the Court of
GERALD J. WILLIAMS ESQUIRE; BETH : Common Pleas, Philadelphia
COLE ESQUIRE; WILLIAMS CUKER : County, Civil Division at No. 0825
BEREZOFSKY, LLC, : May Term, 2013.
:
Appellees : ARGUED: December 8, 2021
OPINION
JUSTICE TODD DECIDED: July 20, 2022
In this appeal by allowance, we consider whether Appellant’s legal malpractice
claims against Appellees, her former attorneys, are barred under this Court’s decision in
Muhammad v. Strassburger, McKenna, Messer, Shilobod & Gutnick, 587 A.2d 1346 (Pa.
1991), in which we held that a plaintiff may not sue his attorney on the basis of the
adequacy of a settlement to which the plaintiff agreed, unless the plaintiff alleges the
settlement was the result of fraud. For the reasons set forth below, we hold that certain
of Appellant’s claims are not barred under Muhammad. Accordingly, we reverse, in part,
and remand for further proceedings.
The instant case has a long and convoluted history. Appellant, Dr. Ahlam Kahlil,
owned a unit in the Pier 3 Condominiums in Philadelphia. Appellant’s individual unit was
insured by State Farm Fire and Casualty Company (“State Farm”), and the Pier 3
Condominium Association (“Pier 3”) was insured under a master policy issued by
Travelers Property Casualty Company of America (“Travelers”). In May 2007, Appellant
sustained water damage to her unit as a result of a leak in the unit directly above hers,
which was owned by Jason and Anne Marie Diegidio. Due to the water damage,
Appellant eventually moved out of her unit and stopped paying her condominium fees.
In July 2008, Appellant filed a civil action against State Farm and Travelers,
alleging breach of contract and bad faith, and against the Diegidios, alleging negligence
(hereinafter, the “Water Damage Case”).1 A year later, Pier 3 filed a separate lawsuit
against Appellant for her unpaid condominium fees and charges (hereinafter, the “Fees
Case”).2 In that matter, Appellant filed several counterclaims against Pier 3, asserting,
inter alia, that it failed to properly maintain the common area. She also filed a joinder
complaint against the Diegidios, individually and as members of the condominium board,3
and Wentworth Property Management (“Wentworth”), the company responsible for
managing the building.
In April 2010, after the Water Damage Case had been listed for trial, Appellant
retained Appellees Gerald J. Williams, Esq., and Beth Cole, Esq., to represent her in that
case.4 In May 2011, prior to trial, Appellant reached a settlement with Travelers for
$17,500. In accordance therewith, Appellant was presented with a draft of a general
release which provided, inter alia, that Appellant “release[d] and forever discharge[d] the
1 Khalil v. Diegidio, et. al., Docket No. 080503145 (Phila. Cnty. Court of Common Pleas).
2 Pier 3 Condominium Assoc. v. Khalil, Docket No. 090701819 (Phila. Cnty. Court of
Common Pleas).
3 Appellant alleged that Jason Diegidio, as president of the condominium association,
exerted undue influence to ensure that she would not be compensated for the damage to
her unit.
4 According to Appellees, the three law firms which previously represented Appellant in
the case all successfully petitioned to withdraw as counsel. See Appellees’ Motion for
Summary Judgment in the Water Damage Case at 3, ¶ 6.
[J-84-2021] - 2
said Releasee, and the Releasee’s insured, PIER 3 CONDOMINIUM (Releasee’s
Insured), of and from any and all claims.” Draft Release in the Water Damage Case
(Reproduced Record at 82a) (emphasis original).5 Appellant, however, was unwilling to
sign any release unless it contained specific language that her settlement with Travelers
would not prevent her from asserting her counterclaims and joinder claims in the Fees
Case. Thus, Appellant maintained that, notwithstanding Appellees’ repeated assurances
that her settlement with Travelers would have no effect on her claims in the Fees Case,
she refused to sign the Draft Release in the Water Damage Case.
As a result, Attorney Cole sent an email to Traveler’s counsel, Monica O’Neill,
Esq., proposing to include the following language: “This release does not include any
claims in connection with Pier 3 Condominium Association Ahlam Khalil v. Jason Diegidio
and Anne Marie Diegidio and Jane Doe and Wentworth Property Management,
Philadelphia Court of Common Pleas, Docket No. 090701819.” Email from Attorney Cole
to Attorney O’Neill, 5/16/11 (R.R. at 76a). Attorney O’Neill replied that Travelers was
“reluctant to make any reference to the other ligation since they’re not involved in it. I
have eliminated Pier 3 as a Releasee (since they are not a party in this matter) and have
just added an informational sentence about their role as an insured.” Email from Attorney
O’Neill to Attorney Cole, 5/16/11 (R.R. at 77a). The revised release (hereinafter,
“Travelers Release”),6 identifies Appellant as the “Releasor,” Travelers as the
“Releasee,” and Pier 3 as “Releasee’s insured,” and provides that Appellant:
[does] . . . release and forever discharge the said Releasee,
of and from any and all claims, including claims of bad faith,
demands, damages, debts, dues, accounts, bonds,
covenants, contracts, agreements, judgments, actions,
causes of action, or suits at law or in equity, of whatsoever
5The Reproduced Record is referred to herein as “R.R.”
6The release is undated, but the trial court in the instant matter noted that it “is the only
executed release that exists in the related Water Damage case.” Trial Court Opinion,
3/2/20, at 5 (emphasis original).
[J-84-2021] - 3
kind or nature arising from the incident occurring at 3 North
Columbus Boulevard, Philadelphia, Pennsylvania 19106,
which has been reported to have occurred on or about May
25, 2007, as more fully described in Ahl[a]m Khalil v. The
Travelers Property Casualty Company of America,
Philadelphia Court of Common Pleas, Docket No.
080503145. It is acknowledged that the Releasee’s insured
in the applicable policy of insurance is Pier 3 Condominium.
Travelers Release at ¶ 1 (R.R. at 86a) (emphasis original).
The Travelers Release further provides that it “is made as a compromise to avoid
expense and to terminate all controversy and/or claims for injuries or damages against
Releasee, and Releasee’s Insured, and any affiliated or related people or entities, both
known and unknown, including future developments thereof, in any way growing out of or
connecting with said incident.” Id. at ¶ 3. Additionally, the Travelers Release states that
it “shall be a complete bar to all claims or suits against Releasee, Releasee’s Insured,
and any affiliated or related people or entities, both known and unknown, for injuries or
damages of whatsoever nature resulting from or to result from said incident.” Id. at ¶ 5.
Notably, the release does not contain any language limiting its application to the Water
Damage Case. Further, while the Travelers Release contains what purports to be
Appellant’s signature, she disputes its authenticity, as discussed below.
After settling with Travelers, Appellant proceeded to trial against the remaining
defendants − State Farm and the Diegidios − in the Water Damage Case. During trial,
Appellant agreed to settle her claims against the Diegidios and State Farm, for $50,000
and $40,000, respectively. On May 20, 2011, the trial court, by the Honorable Frederica
Massiah-Jackson, conducted a colloquy on the record, at which Appellant confirmed her
agreement to the terms of the settlements, as well as Appellees’ agreement to represent
Appellant in the Fees Case at no additional fee. Thereafter, the trial court marked the
Water Damage Case as settled, and Attorney Cole entered her appearance in the Fees
Case.
[J-84-2021] - 4
Almost immediately, Appellant changed her mind about the settlements and
refused to sign releases with State Farm and the Diegidios, or accept payments from any
of the defendants. As a result, Attorney Cole withdrew her appearance in the Fees Case.
On September 30, 2011, the trial court held a status hearing in the Water Damage Case,
during which Appellant explained that she objected to the settlements because she
believed that the release she signed with Travelers would impair her counterclaims in the
Fees Case, despite her attorneys’ assurances it would not. Ultimately, the trial court
issued an order finding the settlements with State Farm and the Diegidios valid, and
directed all defendants to pay their respective settlement amounts to the court for
placement in escrow, where it currently remains. Appellant did not appeal that
determination.
In April 2012, relying upon the language in the Travelers Release stating that the
release barred all claims in connection with the incident that occurred in Appellant’s
condominium unit, Pier 3 and Wentworth moved to dismiss Appellant’s counterclaims in
the Fees Case. The trial court, by the Honorable George W. Overton, granted the motion,
agreeing that Appellant’s counterclaims were precluded by the Travelers Release. The
case proceeded to a jury trial on Pier 3’s claims for outstanding assessment fees, and,
on July 19, 2012, the jury found in favor of Pier 3 for $109,000.
Appellant filed a motion for post-trial relief in the Fees Case, asserting, inter alia,
that she entered into the Travelers Release through “unilateral mistake, mutual mistake,
and/or fraud.” Defendant/Counterclaim Plaintiff’s Motion for Post-Trial Relief in the Fees
Case, 7/30/12, at ¶ 55 (R.R. at 622a). Specifically, Appellant denied signing the Travelers
Release, and claimed that the version she did sign contained a note “on the first page of
the Settlement Proposal in her own handwriting that it was her understanding that the
settlement proposal would in no way affect the additional claims she had against the
[J-84-2021] - 5
Condominium Association and Wentworth” in the Fees Case. Id. at ¶ 29. According to
Appellant, the release she signed contained the following language at the bottom of the
first page, marked by an asterisk: “This release does not include any claims in connection
with Pier 3 Condominium Association vs. Ahlam Khalil v. Jason Diegidio and Anne Marie
Diegidio and Jane Doe and Wentworth Property Management, Philadelphia Court of
Common Pleas, Docket No. 090701819.” Unsigned Release with Asterisk in Water
Damage Case (R.R. 84a).7 The trial court denied the motion and entered judgment for
Pier 3. Appellant appealed to the Commonwealth Court.8 In the interim, Appellees moved
to withdraw as counsel from the Water Damage Case, and the Commonwealth Court
stayed the appeal in the Fees Case pending the disposition of the Water Damage Case.
On January 7, 2013, the trial court granted Appellees’ motion to withdraw in the
Water Damage Case, and ordered the case “settled, discontinued, and ended.” Docket
Entry in Water Damage Case (R.R. at 391a). Appellant filed a pro se motion for
reconsideration, which the court denied. Appellant then filed a separate motion to vacate
and/or set aside the stipulation for the 2011 settlements and releases with State Farm
and the Diegidios, which the trial court also denied, concluding it lacked jurisdiction to
vacate those settlements. Appellant appealed the trial court’s orders, but the Superior
Court quashed the appeal, finding, inter alia, that Appellant’s attempt to litigate the validity
of the 2011 settlements was untimely. Following the Superior Court’s quashal of
Appellant’s appeal in the Water Damage Case, the Commonwealth Court relisted
7 Although Appellant suggested in her motion for post-trial relief that the limiting language
marked by an asterisk in the release that she signed was “in her own handwriting,”
Defendant/Counterclaim Plaintiff’s Motion for Post-Trial Relief in the Fees Case at ¶ 29,
the asterisked language in the release that she submitted as an exhibit is typewritten.
8 The Commonwealth Court has exclusive appellate jurisdiction over matters relating to
not-for-profit corporations, such as Pier 3, and their corporate affairs. See 42 Pa.C.S. §
762(a)(5); Mayflower Square Condo. Ass'n v. KMALM, Inc., 724 A.2d 389, 391 n.3 (Pa.
Cmwlth. 1999).
[J-84-2021] - 6
Appellant’s appeal in the Fees Case. Ultimately, the Commonwealth Court concluded
that, by signing the Travelers Release, Appellant had also released her counterclaims
against Pier 3 and Wentworth in the Fees Case and, thus, was not entitled to relief.
In May 2013, Appellant filed a praecipe for writ of summons initiating the instant
legal malpractice action against Appellees. Appellant filed a complaint on March 29,
2017, asserting claims of legal malpractice based on negligence; legal malpractice based
on breach of contract; negligent misrepresentation; breach of contract; and fraudulent
misrepresentation. Appellant alleged, inter alia, that Appellees failed to exercise ordinary
skill and knowledge by allowing her to enter into a settlement agreement in the Water
Damage Case – specifically, the Travelers Release – that would preclude her subsequent
counterclaims against Pier 3 in the Fees Case; that Appellees breached their contractual
duty to exercise ordinary skill and knowledge in representing her in connection with the
Fees Case; that Appellees repeatedly and erroneously advised her that the Travelers
Release would not affect her counterclaims in the Fees Case; and that Appellees
breached their contractual duty to diligently and competently represent her interests in
both the Water Damage and Fees Cases. Complaint at ¶¶ 39, 44, 45, 53, 64 (R.R. at
117a, 119a, 121a, 123a).
Appellant additionally alleged that Appellees fraudulently induced her into settling
her lawsuit “at a discounted rate by agreeing to represent her at no cost” in the Fees
Case, and then subsequently withdrawing as her counsel, id. at ¶ 39, and that “[t]he
Release submitted to the [trial] court was different from the one signed by [Appellant]
which had an asterisk,” id. at ¶ 77.
Appellees responded by filing a motion for summary judgment, alleging that
Appellant’s “real” objective in filing her legal malpractice suit was “to revisit the amount of
the settlements she agreed to [with State Farm and the Diegidios] in the [Water Damage]
[J-84-2021] - 7
case.” Motion for Summary Judgment at ¶ 39 (R.R. at 195a). Based on this assertion,
Appellees argued that Appellant’s claims were barred by this Court’s decision in
Muhammad.
In Muhammad, the plaintiffs retained a law firm to represent them in a medical
malpractice action against a hospital and its physicians following the death of their child.
The law firm negotiated a settlement, which the plaintiffs orally accepted, but, prior to
signing a written agreement, changed their minds. The law firm representing the
defendants filed a rule to show cause why the settlement agreement should not be
enforced. The trial court enforced the agreement, ordered the defendants to pay the
settlement funds, and instructed the prothonotary to mark the case settled. The plaintiffs
hired new counsel and appealed the trial court’s order, which the Superior Court affirmed.
Thereafter, the plaintiffs filed a legal malpractice case against the law firm that
represented them in the medical malpractice case. The trial court granted the law firm’s
preliminary objections in the nature of a demurrer, and dismissed the action on the
grounds that it was barred by the doctrine of collateral estoppel, based on the Superior
Court’s decision in the medical malpractice case. The Superior Court reversed, holding
that the preliminary objections should not have been affirmed on the basis of collateral
estoppel. This Court reversed the order of the Superior Court. Although we agreed that
the plaintiffs’ legal malpractice action was not barred by the doctrine of collateral estoppel,
we held that the law firm’s preliminary objections were properly granted due to the
plaintiffs’ failure to state a claim:
This case must be resolved in light of our longstanding public
policy which encourages settlements. Simply stated, we will
not permit a suit to be filed by a dissatisfied plaintiff against
his attorney following a settlement to which that plaintiff
agreed, unless that plaintiff can show he was fraudulently
induced to settle the original action. An action should not lie
against an attorney for malpractice based on negligence
[J-84-2021] - 8
and/or contract principles when that client has agreed to a
settlement. Rather, only cases of fraud should be actionable.
Muhammad, 587 A.2d at 1348. We elaborated:
[W]e foreclose the ability of dissatisfied litigants to agree to a
settlement and then file suit against their attorneys in the hope
that they will recover additional monies. To permit otherwise
results in unfairness to the attorneys who relied on their
client's assent and unfairness to the litigants whose cases
have not yet been tried. Additionally, it places an
unnecessarily arduous burden on an overly taxed court
system.
We do believe, however, there must be redress for the
plaintiff who has been fraudulently induced into agreeing to
settle. It is not enough that the lawyer who negotiated the
original settlement may have been negligent; rather, the party
seeking to pursue a case against his lawyer after a settlement
must plead, with specificity, fraud in the inducement.
Id. at 1351 (emphasis original). The limited circumstance under which a plaintiff may file
an action against his attorney challenging the adequacy of a settlement into which he was
fraudulently induced to enter has been referred to as the Muhammad “fraud exception.”
In Muhammad, we specifically observed that Mrs. Muhammad, after agreeing to settle
the lawsuit in exchange for $26,500, “decided – for reasons unknown at that time – that
it just was not enough money.” Id. at 1349.
Subsequently, in McMahon v. Shea, 688 A.2d 1179 (Pa. 1997) (plurality), this
Court clarified that Muhammad does not bar a plaintiff’s action against his attorney when
the action does not challenge the amount of a settlement, but is based on the attorney’s
alleged failure to correctly advise the plaintiff regarding the law impacting a settlement.
In McMahon, the plaintiff husband (“Husband”) retained the defendant attorneys
(“Defendants”) to represent him in divorce proceedings. Husband was ordered to pay
$791 per week to his wife (“Wife”) and children. Husband appealed the order, and, prior
to a hearing, he and Wife entered into a written settlement agreement which provided that
[J-84-2021] - 9
half of the sum Husband had been ordered to pay would be deemed child support, and
the other half alimony. Wife subsequently filed a divorce complaint, and the parties, upon
the advice of counsel, entered into a stipulation under which the previous agreement
would be incorporated, but not merged, into the final divorce decree. After the divorce
was final, Wife remarried, and Defendants, on behalf of Husband, filed a petition to
terminate the order requiring the payment of alimony. The trial court denied the petition,
holding that the parties’ agreement survived the decree of divorce, and ordered Husband
to pay alimony until the youngest child turned 21, was emancipated, or finished college.
On appeal, the Superior Court affirmed.
Thereafter, Husband filed a civil complaint against Defendants, alleging that, by
failing to merge the alimony agreement into the final divorce decree, they breached their
duty to exercise reasonable care, skill, and diligence. Defendants filed preliminary
objections, and the trial court, relying on Muhammad, granted the objections and
dismissed Husband’s complaint. The Superior Court reversed, holding Muhammad is not
applicable where the “alleged negligence . . . involve[s] the failure to advise the client
about well established principles of law and the impact of the agreement upon the client's
future obligations.” McMahon v. Shea, 657 A.2d 938, 942 (Pa. Super. 1995).
On appeal, this Court affirmed the Superior Court’s decision. In an opinion
announcing the judgment of the court (“OAJC”), Justice Zappala, joined by Chief Justice
Flaherty and Justice Nigro, explained that the reasoning of Muhammad:
has no application to the facts of the instant case. There is no
element of speculation as to whether a jury would return a
verdict greater than the amount recovered by a settlement.
Also, [Husband] is not attempting to gain additional monies by
attacking the value that his attorneys placed on his case.
Instead, [Husband] is contending that his counsel failed to
advise him as to the possible consequences of entering into a
legal agreement.
[J-84-2021] - 10
McMahon, 688 A.2d at 1182. The OAJC concluded that “the analysis of Muhammad is
limited to the facts of that case,” and the “laudable purpose of reducing litigation and
encouraging finality would not be served by precluding the instant action.” Id.
Justice Cappy, in a concurring opinion joined by Justices Castille and Newman,
disagreed with the OAJC’s suggestion that Muhammad should be limited to the facts of
that case, and suggested a continuing need for Muhammad in light of the policy on which
it was based. However, he conceded:
Today, the majority holds that when counsel fails to advise a
client as to the controlling law applicable to a settlement
contract, he may be subject to a malpractice claim based on
a theory of negligence. In doing so, the court properly draws
the legally relevant distinction between a challenge to an
attorney’s professional judgment regarding an amount to be
accepted or paid in settlement of a claim, and a challenge to
an attorney’s failure to correctly advise his client about well
established principles of law in settling a case. This is a
reasonable and justifiable distinction.
Id. at 1183 (Cappy, J., concurring). Thus, all six Justices who participated in McMahon
agreed that Muhammad is inapplicable where a plaintiff’s claim is based not on the
amount of a settlement, but on counsel’s purported failure to correctly advise him
regarding the applicable law pertaining to a settlement.
Returning to the case sub judice, significantly, in their motion for summary
judgment based on Muhammad, Appellees focused on Appellant’s putative challenge to
the settlement amount in the Water Damage Case; they did not address Appellant’s
allegations that they were negligent in allowing her to enter into a settlement agreement
in that case and sign a release with Travelers that, despite Appellees’ alleged assurances
to the contrary, barred her counterclaims against Pier 3 in the Fees Case.
Appellees further averred that Appellant’s allegations of fraud were previously
rejected by the Superior Court and the Commonwealth Court, and, thus, were barred by
[J-84-2021] - 11
the doctrine of collateral estoppel. Moreover, Appellees argued that, even if collateral
estoppel did not apply, Appellant failed to demonstrate the required elements to establish
a fraud claim.
On July 12, 2019, the trial court, by the Honorable Angelo Foglietta, granted
summary judgment in favor of Appellees and dismissed Appellant’s action with prejudice,
finding there were no genuine issues of material fact, and that Appellant’s claims were
barred as a matter of law under Muhammad, reasoning that “Appellant had consented to
a settlement and then later attempted to second guess the amount of the settlement.”
Trial Court Opinion, 3/2/20, at 20. The court further determined that the Muhammad fraud
exception did not apply because Appellant’s claims that she did not actually sign the
Travelers Release, but signed a different version of the release and that the releases
somehow were switched, were previously rejected by the courts, and, thus, were
precluded under the doctrine of collateral estoppel.9 Id. at 21-22.
Notably, like Appellees in their motion for summary judgment, the trial court did not
address Appellant’s claims that Appellees were negligent in allowing her to enter into a
settlement agreement in the Water Damage Case that would preclude her counterclaims
against Pier 3 in the Fees Case, and, moreover, in specifically advising Appellant that the
Travelers Release would not impact her counterclaims.
Appellant appealed to the Superior Court, asserting that the trial court erred in
finding all of her claims barred by Muhammad. She stressed that she was not challenging
the amount of her settlement in the Water Damage Case, but, rather, had alleged that
Appellees gave her incorrect legal advice concerning the scope and effect of the
Travelers Release. In support of her argument, Appellant relied on this Court’s decision
9 The court suggested that the only way Appellant could challenge the lower courts’
determination that the Travelers Release was enforceable would be “to plead and prove
extrinsic fraud relating to procedural matters,” which she failed to do. Trial Court Opinion,
3/2/20, at 22.
[J-84-2021] - 12
in McMahon, supra, as well as the Superior Court’s decision in Collas v. Garnick, 624
A.2d 117 (Pa. Super. 1993), wherein the appellant signed a general release as part of the
settlement of her motor vehicle personal injury action based on her attorney’s incorrect
assurance that the release would not preclude subsequent action against the
manufacturer of the car’s seat belt system. The Collas court found that Muhammad did
not bar the appellant’s legal malpractice action because the appellant alleged that she
entered into the settlement as a result of her attorney’s poor legal advice, and was not
challenging the adequacy of the settlement amount.
Appellant additionally maintained that the trial court erroneously dismissed her
fraud claim on the basis of collateral estoppel because her claim that she signed a
different version of the release, which was switched with the Travelers Release submitted
to the court, had not, in fact, been resolved in a prior action. See Concise Statement of
Matters Complained of on Appeal Pursuant to Pa.R.A.P. 1925(b), 10/20/19, at 5.
The Superior Court, in a unanimous, published opinion, affirmed in part, reversed
in part, and remanded. Khalil v. Williams, 244 A.3d 830 (Pa. Super. 2021). With regard
to Appellant’s allegations of fraud against Appellees, the Superior Court concurred with
Appellant that the issue “was not actually litigated in the [Fees Case], and therefore, is
not estopped from being raised in this matter,” and it reversed the trial court’s order in this
respect and remanded. Id. at 844.
With respect to Appellant’s remaining claims, the Superior Court acknowledged
the holdings of Collas and McMahon, and agreed that Muhammad does not bar claims of
attorney negligence in a settled case where the claims are based not on the amount of
settlement, but on the attorney’s failure to advise the client of the consequences of
[J-84-2021] - 13
entering the settlement. Khalil, 244 A.3d at 839-40.10 Nevertheless, the court held that
Appellant failed to plead in her complaint facts that fit within the Collas and McMahon
exception.
The Superior Court began by quoting the following select paragraphs from
Appellant’s complaint:
20. After [Appellant] refused to sign the release as presented
to her by [Attorneys] Williams and Cole, [Attorney] Cole
presented [Appellant] with a different settlement release that
contained an asterisk which [Attorney] Cole purported that the
release in [the water damage case] would not preclude[]
[Appellant] from asserting [her] counterclaims and joinder
action in [the Assessment fees case].
21. Relying on the assurance and [advice] of [Attorneys]
Williams and Cole, [Appellant] signed the aforementioned
release containing an asterisk.
31. To [Appellant's] dismay, the release presented by counsel
for [Pier 3 and Wentworth] was not the one presented to
[Appellant] by [Attorney] Cole.
32. The release presented by counsel for [Pier 3 and
Wentworth] in the summary judgment motion in the [Fees
Case] did not contain the aforementioned asterisk and was
not the one signed by [Appellant].
10 The Superior Court also noted that, in Kilmer v. Sposito, it “distinguished an attorney’s
professional judgment in negotiating a settlement from the attorney’s failure to advise a
client correctly on the law pertaining to the client’s interests, recognizing that under the
latter scenario, the plaintiff’s claims are not barred by Muhammad.” Khalil, 244 A.3d at
840 (citing Kilmer v. Sposito, 146 A.3d 1275, 1279-80 (Pa. Super. 2016)); see also Banks
v. Jerome Taylor & Assocs., 700 A.2d 1329, 1332 (Pa. Super. 1997) (Where a litigant
merely wishes to second guess a decision to settle “due to speculation that he or she may
have been able to secure a larger amount of money, i.e. ‘get a better deal,’ the
Muhammad rule applies.” Where, however, “a settlement agreement is legally deficient
or if an attorney fails to explain the effect of a legal document, the client may seek redress
from counsel by filing a malpractice action sounding in negligence.”).
[J-84-2021] - 14
33. It became evident to [Appellant] that [Attorneys] Cole and
Williams and/or counsel for [Pier 3 and Wentworth] switched
the release. Nevertheless, [Appellant] would not have
entertained a release without the assurances from [Attorneys]
Williams and Cole that it would not affect her counterclaims
and joinder claim in [the Fees Case].
Id. at 840 (alterations and emphasis original).
The Court then reasoned:
As these averments show, Appellant pled facts alleging
that she was the victim of fraud. More specifically, she alleged
that the Travelers release that she signed was intentionally
switched with one that she did not sign, thus leading to her
claims in a separate case to be dismissed due to the fraud.
While claims of fraud are not barred under Muhammad, they
also cannot be styled as claims sounding in negligence and
breach of contract after a settlement has been accepted by
the client.
While she does allege that her attorneys gave her
flawed legal advice about the effect of signing the Travelers
release, Appellant then alleges that she refused to sign the
release unless the language she wanted was added.
[Complaint] at Paragraphs 19-20. Then, after she signed a
release with the language she demanded, that release was
intentionally switched and later used against her in a separate
case. Id. at Paragraph 33. Put differently, Appellant is not
alleging that it is her attorneys’ negligence that caused her
damages; instead, she is alleging that her
damages−dismissal of her claims in a separate case−were
caused by fraud.
Id. at 840-41.
Finally, the court distinguished the instant case from Collas and McMahon, noting
that, in those cases,
neither of the plaintiffs . . . alleged conduct of the sort that
Appellant has alleged. Instead, in both of those cases, the
plaintiffs claimed that their attorneys failed to correctly advise
them about well-established principles of the law in settling
the case, and that it was these misstatements about the effect
of the settlements that placed the plaintiffs’ claims outside the
scope of the Muhammad bar against claims of negligence
[J-84-2021] - 15
against a former attorney after a settlement has been
reached.
Id. at 841. The Superior Court ultimately concluded that “Muhammad applies to bar
[Appellant’s] claims sounding in negligence and contract against her former attorneys and
their law firm,” and it affirmed the trial court’s dismissal of the first four counts of
Appellant’s complaint. Id.
Appellant filed a petition for allowance of appeal with this Court, and we granted
review of the following issues:
(1) Should the Court overturn Muhammad v. Strassburger . . .
which bars legal malpractice suits following the settlement of
a lawsuit absent an allegation of fraud?
(2) Did the Superior Court misconstrue the averments in
[Appellant’s] complaint and err as a matter of law when it held
that [her] legal malpractice claims were barred by Muhammad
v. Strassburger?
Khalil v. Williams, 260 A.3d 77 (Pa. 2021) (order).
Appellant argues that the Superior Court erred as a matter of law when it relied on
Muhammad to affirm the trial court’s grant of Appellees’ motion for summary judgment
and its dismissal of her claims. Specifically, she maintains that her claims were based
upon Appellees’ erroneous legal advice regarding the scope and effect of the Travelers
Release, rather than her dissatisfaction with the amount of her settlement, and she
contends that the lower courts mischaracterized her claims in this regard. She
acknowledges that she alleged both fraud and negligence in her complaint, but asserts
that the Superior Court “cherry-picked paragraphs from the complaint that address [her]
fraud claims,” Appellant’s Brief at 35, ignoring most of the complaint’s factual allegations
related to her claims of legal malpractice, negligent misrepresentation, and breach of
contract. Id. at 48. Appellant further submits that she presented ample evidence that
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Appellees breached their duty to her in negotiating the Travelers Release and advising
her that it would not impact her subsequent claims in the Fees Case.
Appellant additionally suggests that this Court should overturn Muhammad due to
“confusion and uncertainty about the viability and proper application” of the rule in the
lower courts. Id. at 55. In support of her argument, she compares an unpublished non-
precedential Superior Court decision with a precedential decision “to illustrate the
divergence of views about McMahon revealed in both published and unpublished
opinions.”11 Id. at 56 n.13. Appellant further avers that the Muhammad doctrine is
unnecessary in light of the high burden of proof; that it unfairly provides an advantage to
trial lawyers but not to non-trial lawyers; and that it has been rejected by most other
jurisdictions.
Conversely, Appellees maintain that the lower courts properly dismissed
Appellant’s claims pursuant to Muhammad, stressing that Appellant’s “decade-long
obsessive attempts to relitigate the validity of the settlements and release through a
multiplicity of lawsuits is exactly the type of socially unproductive, burdensome and
needless litigation the Supreme Court condemned and expressly foreclosed in
Muhammad.” Appellees’ Brief at 12. Appellees dispute Appellant’s assertion that the
Superior Court misconstrued her complaint to conclude that she did not allege negligence
by her attorneys, and, indeed, they contend that it is clear from the record that Appellant’s
“true objective in bringing this professional liability claim was to revisit the amount of the
11Appellant compares the unpublished decision in Abeln v. Eidelman, 2015 WL 7573233,
*2 (Pa. Super. 2015) (“McMahon did not serve to limit Muhammad to its facts, and
Muhammad remains as controlling precedent until a true majority of the supreme court
rules otherwise”), with the published decision in Kilmer, 146 A.3d at 1280 (“Even without
supplying binding precedent, McMahon provides helpful guidance on the issue at bar, for
the concurrence agreed with the [OAJC] where it distinguished ‘between a challenge to
an attorney's professional judgment regarding an amount to be accepted or paid in
settlement of a claim, and a challenge to an attorney's failure to correctly advise his client
about well established principles of law in settling a case. . . .’”).
[J-84-2021] - 17
settlements she agreed to in the [Water Damage] case, rather than any dissatisfaction
with [Appellees’] handling of the underlying litigation.” Id. at 15. Accordingly, Appellees
contend that the instant matter is distinguishable from both Collas and McMahon, wherein
the litigants claimed that their attorneys provided incorrect advice regarding the “well-
established principles of law in settling the case[s],” which placed the claims “outside the
bounds of Muhammad.” Id. at 23. Appellees reiterate that Appellant alleged that she was
the victim of fraud by claiming that the release she actually signed was switched with the
Travelers Release.
Appellees further argue that this Court’s decision in Muhammad should not be
overturned, as it promotes finality in litigation and ensures that judicial resources are not
wasted, and they suggest that overturning Muhammad will result in a surge of litigation.
Nevertheless, Appellees are not opposed to a clarification of the exceptions to the
Muhammad doctrine. Id. at 33.12
Preliminarily, we note that, in reviewing the grant or denial of a motion for summary
judgment, this Court's standard of review is de novo, and our scope of review is plenary.
Bourgeois v. Snow Time, Inc., 242 A.3d 637, 649 (Pa. 2020). We have explained that a
trial court should grant summary judgment only in cases where the record contains no
genuine issue of material fact, and the moving party is entitled to judgment as a matter of
law. Id. at 649-50. It is the moving party’s burden to demonstrate the absence of any
12The Pennsylvania Bar Association, the Philadelphia Bar Association, and the Allegheny
County Bar Association filed a joint amicus brief in support of Appellees. Amici submit
that Muhammad serves an important public policy purpose and, thus, should stand.
However, they contend that, because the Superior Court found that Appellant’s action
sounded in fraud, which is an exception to the Muhammad rule, Muhammad does not
apply to the facts of this case, and there is no “compelling need” for this Court to overturn
Muhammad at this juncture. Amicus Brief at 4-5.
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issue of material fact, and the trial court must evaluate all the facts and make reasonable
inferences in a light most favorable to the non-moving party. Id. at 650. The trial court
must also resolve any doubts as to the existence of a genuine issue of material fact
against the moving party and “may grant summary judgment only where the right to such
a judgment is clear and free from doubt.” Id. (citation omitted). An appellate court may
reverse a grant of summary judgment only if the trial court erred in its application of the
law or abused its discretion. Id. Under that standard, and following a comprehensive
review of Appellant’s March 2017 complaint, we conclude that the Superior Court erred
in holding that Appellant’s negligence and breach of contract claims were barred under
Muhammad.
As noted above, in holding Appellant’s claims were barred under Muhammad, both
the trial court and the Superior Court focused on select, fraud-based averments in
Appellant’s complaint wherein she asserted that she did not sign the Travelers Release,
but instead signed a different version of a release that she claims was switched with the
Travelers Release. The lower courts ignored, however, other averments in Appellant’s
complaint which did not allege fraud, but, rather, alleged legal malpractice by Appellees
in allowing Appellant to enter into a settlement agreement in the Water Damage Case
that subsequently precluded her from raising her desired claims in the Fees Case, while
repeatedly advising Appellant that the settlement agreement would not preclude those
claims.
For example, Appellant specifically alleged that:
39. [Appellees] failed to exercise ordinary skill and knowledge
in representing [Appellant] as attorneys . . . by allowing her to
enter into a settlement agreement that would preclude her
counterclaims against [Pier 3 in the Fees Case].
***
[J-84-2021] - 19
44. [Appellant] entered into two different contracts with
[Appellees] to diligently and competently represent her
interests in [the Water Damage Case and the Fees Case].
45. [Appellees] breached the contracts and failed to exercise
ordinary skill and knowledge in representing [Appellant] in the
above-mentioned actions by allowing her to enter into a
settlement agreement that would preclude her counterclaims
against [Pier 3 in the Fees Case].
***
53. [Appellees] repeatedly assured [Appellant] that none of
the settlement agreement [in the Water Damage Case] will
prejudice [Appellant’s] recognizable defenses and claims in
the Pier 3 [Fees C]ase.
***
64. [Appellees] breached the contracts and failed to exercise
ordinary skill and knowledge in representing [Appellant] in the
above-mentioned actions as her attorneys by allowing her to
enter into a settlement agreement that would preclude her
counterclaims against [Pier 3 in the Fees Case].
Complaint at ¶¶ 39, 44, 45, 53, 64.
These claims, which do not challenge the amount of the settlement, but instead
are based on Appellees’ alleged failure to properly advise Appellant of the consequences
of signing the Travelers Release, are precisely the type of claims that the Superior Court
recognized were permissible in Collas, Kilmer, and Banks, supra, and which this Court
held are permissible in McMahon, supra. Although the Superior Court purported to
distinguish the instant case from Collas and McMahon on the basis that, in those cases,
the plaintiffs alleged only negligence and not fraud, the court offered no legal support for
its determination in this regard. Indeed, a plaintiff is permitted to assert alternative causes
of action. See Pa.R.Civ.P. 1020(c) (“Causes of action and defenses may be pleaded in
the alternative.”).
Moreover, we find the Superior Court’s statement that, “[w]hile claims of fraud are
not barred under Muhammad, they also cannot be styled as claims sounding in
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negligence and breach of contract after a settlement has been accepted by the client,”
Khalil, 244 A.2d at 840, to be confusing at best. If Appellant’s claims are based on fraud,
regardless of whether they also may be couched in negligence or contract, they are not
barred by Muhammad. See Muhammad, 587 A.2d at 1351. Likewise, if Appellant’s
claims are based on negligence and challenge Appellees’ legal advice, those claims also
are not precluded by Muhammad. See McMahon, 688 A.2d at 1182 (OAJC); id. at 1183
(Cappy, J., concurring).
Finally, as our review of Appellant’s complaint demonstrates that she was not
merely challenging the amount of her settlement in the Water Damage Case, but rather
alleged that Appellees provided incorrect legal advice regarding the scope and effect the
Travelers Release, we hold that Muhammad’s bar on lawsuits based on the adequacy of
a settlement is not implicated in this case. Accordingly, we conclude further consideration
of the wisdom of Muhammad is unnecessary at this time.13
For all of these reasons, we reverse the Superior Court’s decision to the degree it
affirmed the trial court’s grant of summary judgment in favor of Appellees on Counts I
through IV of Appellant’s complaint, and we direct that the matter be remanded to the trial
court for further proceedings consistent with this opinion. We affirm the Superior Court’s
13 Our decision to defer consideration of the continued viability of Muhammad until we are
presented with a case in which is it is squarely implicated should not, as the concurrence
suggests, be interpreted as a “fondness for Muhammad,” Concurring Opinion (Wecht, J.)
at 9, nor do we “skirt the issue . . . nonchalantly” as alleged in the concurrence, id. at 19.
It is not our goal to “narrow Muhammad’s scope while preserving some small part of the
rule.” Id. at 16. Rather, as explained herein, the Superior Court wholly misconstrued
Appellant’s complaint by focusing on only Appellant’s fraud-based claims, while ignoring
her legal malpractice claims wherein she clearly alleged that Appellees failed to properly
advise her of the consequences of signing the Travelers Release. As such, Appellant is
entitled to relief based on the Superior Court’s failure to apprehend the nature of her
claims, and, notwithstanding the concurring Justices’ eagerness to dispose of
Muhammad, it is simply unnecessary for this Court to consider doing so at this juncture.
[J-84-2021] - 21
decision reversing the trial court’s grant of summary judgment in favor of Appellees on
Count 5 (the fraud claim) of Appellant’s complaint.
Affirmed in part and reversed in part. Case remanded. Jurisdiction relinquished.
Chief Justice Baer and Justices Donohue and Dougherty join the opinion.
Justice Wecht files a concurring opinion.
Justice Mundy files a concurring opinion.
Former Justice Saylor did not participate in the consideration or decision of this
matter.
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