Opinion
J-A26040-16 No. 370 WDA 2016
12-28-2016
ERIE INSURANCE EXCHANGE, AS SUBROGEE AND ASSIGNEE OF UNIVERSAL DEVELOPMENT MANAGEMENT, INC., T/D/B/A THE MEADOWS APARTMENTS, UDE OF MITCHELL ROAD, LTD. AND SHERRI LYNN WILSON v. R. ERIC HALL AND R. E. HALL AND ASSOCIATES, P.C. SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA v. R. ERIC HALL AND R. E. HALL AND ASSOCIATES, P.C. APPEAL OF: ERIE INSURANCE EXCHANGE
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order February 11, 2016 in the Court of Common Pleas of Lawrence County, Civil Division, No(s): 11342-07; 11359-07 BEFORE: BENDER, P.J.E., RANSOM and MUSMANNO, JJ. MEMORANDUM BY MUSMANNO, J.:
Erie Insurance Exchange ("Erie") appeals from the Order granting the Motion for Summary Judgment filed by R. Eric Hall and R. E. Hall and Associates, P.C. (collectively "Hall"), arising out of a legal malpractice claim against Hall for their representation of Erie's insured, Universal Development Management, Inc., t/d/b/a The Meadows Apartments, UDE of Mitchell Road, Ltd. (collectively "UDE"), and Sherri Lynn Wilson ("Wilson"), in a federal lawsuit filed by Basem Hussein ("Hussein"). We affirm.
In September 1999, Hussein, an Egyptian nationalist who worked as a radiologist, was renting an apartment at Meadow Ranch in Lawrence County. UDE owned and operated Meadow Ranch, and Wilson acted as the manager of the building. On September 11, 2001, Hussein was working in New Mexico and was not in his apartment. On that date, Wilson and James Caparoula, a maintenance man, entered Hussein's apartment without permission. Wilson observed a desktop computer, various New York City phonebooks, and a flight manual for a Boeing 737. Wilson, suspecting terrorist activity, contacted the local police as well as the Pennsylvania State Police. The police, after investigating Hussein's apartment, contacted the Federal Bureau of Investigation ("FBI"). The FBI conducted an investigation into Hussein, after which he was cleared of any wrongdoing. The investigation received extensive coverage from the local and national media.
On December 19, 2001, Hussein filed an action against UDE and Wilson in the United States District Court for the Western District of Pennsylvania. Hussein alleged that UDE and Wilson violated the Civil Rights Act, the Fair Housing Act, and asserted state law claims of invasion of privacy and trespass. As a result of Hussein's action, UDE and Wilson sought insurance coverage from Erie, Selective Insurance Company of South Carolina ("Selective"), and American International Specialty Lines Insurance Company ("AISLIC"). Ultimately, Hall was hired to represent UDE and Wilson. Following a jury trial in September 2005, the jury found in favor of UDE and Wilson on the Civil Rights Act count, the Fair Housing Act count, and the trespass count. The jury found in favor of Hussein on the invasion of privacy count, specifically finding that UDE and Wilson invaded Hussein's privacy and acted with "malice and reckless indifference." The jury awarded Hussein compensatory and punitive damages of $2,450,000. Following the jury verdict, UDE and Wilson filed a Motion requesting, inter alia, that the trial court enter judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50, in favor of UDE and Wilson. Notably, the trial court found this Motion waived based upon the failure to raise the motion prior to the case going to the jury, as required under Rule 50. UDE and Wilson filed a timely Notice of Appeal to the United States Court of Appeals for the Third Circuit. Thereafter, the matter was settled for $2.25 million.
Hussein's invasion of privacy claim was based upon two separate legal theories—false light and intrusion upon seclusion.
The jury did not specify the legal theory under which Hussein's privacy was invaded.
At the time of trial, Rule 50 stated the following, in relevant part:
(a) Judgment as a Matter of Law.Fed. R. Civ. P. 50.
(1) If during a trial by jury a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue, the court may determine the issue against that party and may grant a motion for judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue.
(2) Motions for judgment as a matter of law may be made at any time before submission of the case to the jury. Such a motion shall specify the judgment sought and the law and the facts on which the moving party is entitled to the judgment.
The three insurers contributed to the settlement as follows: Erie—$983,333.33, Selective—$983,333.33, and AISLIC—$283,333.33.
In September 2007, Erie filed the instant legal malpractice claim against Hall, averring that Hall's failure to make a proper Rule 50 motion resulted in a waiver of the claims. Erie further argued that either the trial court or the Third Circuit Court of Appeals would have dismissed the invasion of privacy claim had it been preserved. Following discovery, Hall filed a Motion for Summary Judgment. Erie filed a Response and brief in opposition. The trial court held a hearing on the Motion, and thereafter, granted Hall's Motion for Summary Judgment. Erie filed a timely Notice of Appeal.
On appeal, Erie raises the following questions for our review:
I. Did the trial court err in entering summary judgment in favor [of] Hall because there was insufficient evidence in the underlying federal trial record to sustain the jury's verdict on Hussein's claim for invasion of privacy based on intrusion upon seclusion?Brief for Appellant at 9.
II. Did the trial court err in entering summary judgment in favor [of] Hall because there was insufficient evidence in the underlying federal trial record to sustain the jury's verdict on Hussein's claim for invasion of privacy based upon publicity placing a person in a false light?
III. Did the trial court err in finding that Wilson's reports to law enforcement were not protected communications under the Noerr-Pennington [d]octrine because the "sham" exception has no application here where the record is devoid of evidence of falsehood or malicious intent?
Our standard of review where a trial court grants a motion for summary judgment is as follows:
A reviewing court may disturb the order of the trial court only where it is established that the court committed an error of law or abused its discretion. As with all questions of law, our review is plenary.
In evaluating the trial court's decision to enter summary judgment, we focus on the legal standard articulated in the summary judgment rule. Pa.R.C.P. 1035.2. The rule states that where there is no genuine issue of material fact and the moving party is entitled to relief as a matter of law, summary judgment
may be entered. Where the non-moving party bears the burden of proof on an issue, he may not merely rely on his pleadings or answers in order to survive summary judgment. Failure of a non[-]moving party to adduce sufficient evidence on an issue essential to his case and on which it bears the burden of proof establishes the entitlement of the moving party to judgment as a matter of law. Lastly, we will view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.Thompson v. Ginkel , 95 A.3d 900, 904 (Pa. Super. 2014) (citation omitted).
In order to establish a claim of legal malpractice, a plaintiff must demonstrate the following:
1) employment of the attorney or other basis for a duty; 2) the failure of the attorney to exercise ordinary skill and knowledge; and 3) that such negligence was the proximate cause of damage to the plaintiff. An essential element to this cause of action is proof of actual loss rather than a breach of a professional duty causing only nominal damages, speculative harm or threat of future harm. In essence, in order to be successful in a legal malpractice action in Pennsylvania, the plaintiff must prove that he had a viable cause of action against the party he wished to sue in the underlying case and that the attorney he hired was negligent in prosecuting or defending that underlying case.Nelson v. Heslin , 806 A.2d 873, 876 (Pa. Super. 2002) (citations omitted).
We will address Erie's first two claims together because both involve Hall's purported negligence with regard to Hussein's invasion of privacy averments. In its first claim, Erie contends that the trial court erred in granting Hall's Motion for Summary Judgment, as Hall's negligence in failing to properly raise the Rule 50 Motion in the underlying Hussein case was the proximate cause of the harm to Erie. Brief for Appellant at 20. Erie argues that there was insufficient evidence to support Hussein's invasion of privacy claim based upon an intrusion of seclusion. Id. at 20, 21-25. Erie asserts that while Wilson intentionally entered Hussein's apartment, her behavior would not be highly offensive to a reasonable person. Id. at 23, 25. Erie claims that Wilson's behavior was reasonable because the circumstances of the entry must be considered in the context of the terrorist attacks on September 11, 2001. Id. Erie further argues that Wilson's actions were not highly offensive where she did not trespass by entering the apartment, as Hussein's lease permitted the apartment owner to enter at all reasonable times, and the entry lasted less than five minutes. Id. at 23-25. Erie also contends that Wilson observed the items, which were not of an embarrassing or private nature, in plain view. Id. at 24.
In its second claim, Erie argues that Hall's negligence in failing to raise the Rule 50 Motion challenging the invasion of privacy—false light averment was the proximate cause of harm to Erie. Id. at 26, 35. Erie asserts that the trial court erred in determining that the Hussein trial record demonstrated that "Wilson fabricated, exaggerated and/or lied about what she observed in the apartment for the specific purpose of finding support for her belief that Hussein was a terrorist." Id. at 27 (citation omitted). Erie points out that the uncontroverted testimony of the law enforcement officers supported Wilson's observations. Id. Erie claims that the fact that Wilson was mistaken about her observations does not require a finding that Wilson knowingly reported falsehoods. Id. at 28.
Erie additionally contends that the record does not establish, through clear and convincing evidence, that Wilson acted recklessly or with actual malice by reporting her observations to the police. Id. at 28, 30-31. Erie argues that Wilson's suggested personal animus toward Hussein does not establish malice. Id. at 31. Erie further argues that Wilson did not entertain serious doubts about her observations and concerns, and thus did not act recklessly or with malice. Id. at 31-32.
Erie also claims the trial record does not support a finding that Wilson "publicized" the information about Hussein. Id. at 32, 34. Erie argues that Wilson only reported her observations to the police, and did not speak with the media or the community at large. Id. at 34. Erie contends that the trial court erred in finding that it was reasonably foreseeable to Wilson that her report to the police would be broadly published to the public. Id. Erie asserts that a large number of people becoming aware of Wilson's communication to the police based upon subsequent media reports is not sufficient to support a finding that Wilson publicized the information. Id. at 34-35.
Here, the trial court set forth the relevant law, addressed Erie's claims, and determined that they are without merit. See Trial Court Opinion, 2/11/16, at 14-28; see also id. at 6-8 (wherein the trial court quotes a summary of the evidence prepared by the federal trial judge in the underlying Hussein case). On appeal, Erie argues that such a Rule 50 motion would have been granted had the trial court considered Wilson's testimony at Hussein's invasion of privacy trial in light of the context, circumstances, and setting of the entry.
However, in examining a Rule 50 motion, federal courts "must draw all reasonable inferences in favor of the non[-]moving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing , 530 U.S. 133, 150 (2000); see also id. at 150-51 (stating that "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge. ... [A]lthough the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe.") (citation and quotation marks omitted); CNH Am. LLC v. Kinze Mfg., Inc., 809 F. Supp. 2d 280, 285 (D. Del. 2011) (stating that in ruling on a Rule 50 motion, "the court must resolve all conflicts of evidence in favor of the non-movant."). Thus, the question for federal courts "is not whether there is literally no evidence supporting the party against whom the motion is directed[,] but whether there is evidence upon which the jury could properly find a verdict for that party." Goodman v. Pennsylvania Tpk. Comm'n , 293 F.3d 655, 665 (3d Cir. 2002); see also Reynolds v. Univ. of Pennsylvania , 684 F. Supp. 2d 621, 626 (E.D. Pa. 2010) (stating that a motion for judgment as a matter of law "should be granted only if, viewing the evidence in the light most favorable to the nonmovant and giving it the advantage of every fair and reasonable inference," a reasonable juror would have been required to accept the view of the moving party).
Here, the trial court, in ruling on a Rule 50 motion, would have been free to disregard Wilson's testimony and, further, could not favorably weigh or give a reasonable inference as to UDE and Wilson's evidence. Moreover, in reviewing the evidence of record, in a light most favorable to Hussein, there was sufficient evidence to support his invasion of privacy claims. See Trial Court Opinion, 2/11/16, at 14-28. Based upon this finding, neither the federal district court of the Third Circuit Court of Appeals would have granted a motion for judgment as a matter of law. Accordingly, the record establishes that Hall's failure to properly raise a Rule 50 motion caused no harm or loss to Erie, and Erie's first two claims are without merit. See Nelson , 806 A.2d at 876.
In its third claim, Erie contends that Wilson's reports to law enforcement regarding observations of Hussein's apartment were protected by the Noerr-Pennington doctrine. Brief for Appellant at 36-37, 38-39. Erie further argues that the "sham" exception to the Noerr-Pennington doctrine has no application to the facts of this case. Id. Erie asserts that Wilson never intentionally communicated false information to law enforcement officers or made the reports simply to harass Hussein. Id. at 37-38; see also id. at 37 (wherein Erie argues that the trial court erred in finding that the Noerr-Pennington doctrine was inapplicable to this case because Wilson intentionally made false statements).
The Noerr-Pennington doctrine is based on the right to petition the government under the First Amendment of the United States Constitution. See Eastern R.R. Presidents Conference v. Noerr Motor Freight , Inc., 365 U.S. 127 (1961); United Mine Workers v. Pennington , 381 U.S. 657 (1965).
The "sham" exception to the Noerr-Pennington doctrine "involves a defendant whose activities are not genuinely aimed at procuring favorable government action at all, not one who genuinely seeks to achieve his governmental result, but does so through improper means." Penllyn Greene Assocs., L.P. v. Clouser , 890 A.2d 424, 429 n.5 (Pa. Cmwlth. 2005) (citation omitted). "Therefore, under the sham exception, an individual will be liable if he use[s] the governmental process—as opposed to the outcome of that process—as [a] ... weapon." Id. (citation omitted).
Initially, Hall argues that Erie waived this issue as the Noerr-Pennington doctrine was never raised in Erie's legal malpractice Complaint. Brief for Appellee at 48. Our review confirms that Erie did not raise a claim against Hall for failing to raise the Noerr-Pennington doctrine during Hussein's trial in its Complaint. Notwithstanding, in its Response to Hall's Motion for Summary Judgment, Erie argued that Hall committed legal malpractice for failing raise the Noerr-Pennington doctrine defense to Hussein's invasion of privacy - false light claim. Thus, we decline to conclude that Erie's claim is waived on this basis. Cf. Krentz v. Consol. Rail Corp., 910 A.2d 20, 37 (Pa. 2006) (stating that arguments not raised before the trial court in opposition to summary judgment cannot be raised for first time on appeal).
Nevertheless, in its appellate argument, Erie failed to argue that Hall committed legal malpractice for failing to raise the Noerr-Pennington doctrine defense at Hussein's trial. Instead, Erie merely argues that the Noerr-Pennington doctrine protected Wilson's reports to law enforcement. In its Opinion, the trial court addressed Erie's claim and determined that it is without merit. See Trial Court Opinion, 2/11/16, at 28-29. We adopt the sound reasoning the of the trial court and conclude that Erie's claim is without merit. See id.
To the extent that Erie sought to raise a legal malpractice claim against Hall for failing to raise the Noerr-Pennington doctrine defense at Hussein's trial, we would conclude that such a claim is without merit. See Nelson , 806 A.2d at 876.
Based upon the foregoing, the trial court properly granted summary judgment in favor of Hall.
Order affirmed. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary Date: 12/28/2016
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