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April 27, 2017

Dragonetti Act Held Constitutional, But Narrower Challenges Remain

The Pennsylvania Supreme Court, by split decision, upheld the constitutionality of Pennsylvania's Dragonetti Act.  Villani v. Seibert, 66 MAP 2016; 2017 Pa. LEXIS 939 (April 26, 2017).  As a consequence, lawyers are not immune, as a general principle, from an action for wrongful use of civil proceedings.

Claimants in this case asserted a wrongful use of civil proceedings against the lawyer pursuant to the statutory authority of 42 Pa.C.S. §8351 et seq., commonly known in Pennsylvania as the Dragonetti Act.  At the trial court level, the defendant lawyer filed preliminary objections arguing that the statute violated Article V, Section 10(c) of the Pennsylvania Constitution, which invests the Supreme Court with the exclusive authority to supervise the conduct of lawyers.  In certain other contexts, Pennsylvania courts had held legislative enactments inapplicable to a lawyer's conduct on the basis that the statutes intruded on the Court's exclusive and constitutionally prescribed power to regulate the practice of law.  For example, in Beyers v. Richmond, the Supreme Court dismissed an Unfair Trade Practices Consumer Protection Law claim against a lawyer where the underlying conduct involved improper distribution of settlement proceeds.

The trial court agreed with the lawyer and sustained the Objections.  An interlocutory direct appeal to the Supreme Court was granted.

On appeal, the defendant lawyer argued for generalized attorney immunity from claims brought pursuant to the Act.  In response, Appellants argued that a Dragonetti Act claim provides substantive redress for victims of a lawyer's tortious conduct.  The Supreme Court agreed with Appellants, reversing the trial court.

In its Opinion, the Supreme Court discussed the separation of powers and the distinction between the Court's authority and the authority of the Legislative branch of government.  The Court also recognized the distinction between the duties owed by a lawyer pursuant to the Rules of Professional Conduct, as adopted by the Court, and actionable liability based on substantive remedial laws, as enacted by the Legislature.  Although the distinction between the rules of ethics and substantive law remains, the Court acknowledged that the distinction is sometimes blurred.  Ultimately, the Court viewed the Dragonetti Act as remedial in nature and of general application.  The Court declined to access its rulemaking powers to modify the substantive rights of litigant.

The Court specifically reserved for another day whether the Act's provision for punitive damages might be the subject of a future successful challenge.  The Act authorizes punitive damages according to law.  42 Pa.C.S.§8353(6).  This form of relief arguably conflicts with the sanctions provisions of Rule 1023.4(a)(1) of the Pennsylvania Rules of Civil Procedure, as promulgated by the Court.

The Court also reserved for another day whether, in a more narrow case, an attorney might successfully argue that Dragonetti Act liability is precluded if a lawyer advances a good faith argument that existing precedent should be changed, for example, as might arise in the context of a constitutional construction case.

The Supreme Court's decision confirms that Dragonetti Act liability remains a risk for all Pennsylvania lawyers, with the extent of the risk subject to future challenges.