## Facts

- Bayview Loan Servicing, LLC (Bayview) foreclosed on a mortgaged property that was later sold for well below its alleged market value.
- The Law Firm of Richard M. Squire & Associates, LLC (Squire) represented Bayview in connection with the foreclosure.
- After the foreclosure sale, Bayview instructed Squire to pursue collection of the deficiency (the difference between the debt and the value credited from the foreclosure sale).
- Pennsylvania’s Deficiency Judgment Act required a judgment creditor seeking a deficiency after a sheriff’s sale to file a petition to fix the fair value of the property within six months of the sale.
- Squire allegedly failed to file the petition to fix fair value within the six-month period.
- Bayview alleged that the missed deadline extinguished its right to pursue the deficiency.
- Bayview further alleged that Squire concealed the failure to file and the resulting legal consequences.
- Bayview filed a legal-malpractice action against Squire, alleging breaches of fiduciary duty (including the duty of care) and the duty to provide competent legal representation.
- Squire moved to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

## Issues

1. Whether Bayview plausibly stated a legal-malpractice claim based on allegations that foreclosure counsel failed to file a Deficiency Judgment Act petition to fix fair value within the statutory six-month deadline, causing Bayview to lose its deficiency rights.
2. Whether Bayview plausibly stated a fiduciary-duty claim based on allegations that counsel concealed the missed filing and its consequences.

## Decision

- The court denied Squire’s Rule 12(b)(6) motion to dismiss.
- The court held that, accepting the pleaded facts as true, Bayview adequately alleged attorney error (missing a statutory deadline) and resulting harm (loss of the deficiency remedy).
- The court also allowed Bayview’s fiduciary-duty theory to proceed based on the allegations of concealment and nondisclosure.

## Legal Principles

- On a Rule 12(b)(6) motion, a court accepts well-pleaded facts as true and determines whether the complaint states a plausible claim for relief.
- Under Pennsylvania law, a legal-malpractice plaintiff must plead an attorney-client relationship, a breach of the applicable standard of care, a causal connection between the breach and the harm, and actual damages.
- When a statute imposes a clear filing deadline that conditions the availability of a remedy, allegations that counsel missed the deadline and the client thereby lost the remedy can sufficiently plead breach and causation at the motion-to-dismiss stage.
- Attorneys also owe fiduciary obligations to clients, including obligations of honesty and disclosure; allegations that counsel concealed a material error and its legal effect can support a fiduciary-duty claim at the pleading stage.

## Conclusion

The Eastern District of Pennsylvania denied the foreclosure law firm’s motion to dismiss, concluding that Bayview plausibly alleged legal malpractice and breach of fiduciary duty where counsel allegedly failed to timely file the Deficiency Judgment Act petition to fix fair value, causing Bayview to lose the ability to pursue a deficiency, and then allegedly concealed the error and its consequences.


Bayview Loan Servicing, LLC v. Law Firm of Richard M. Squire & Associates, LLC, 2010 WL 5122003 (2010)