Lefta Associates v. Hurley (902 F. Supp. 2d 559, 2012)

MEMORANDUM AND ORDER

JOHN E. JONES III, District Judge.

THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:

This matter is before the Court on the Report and Recommendation (“R & R”) of Magistrate Judge Martin C. Carlson (Doc. 181), filed on August 15, 2012, which recommends that Plaintiffs’ Motion for Substitution, Joinder and Ratification (Doe. 159) be granted to permit Lefta Associates, Inc. to be substituted as the real party in interest for Lefta Associates, L.P., for the Lulu H. Auger Trust be permitted to prosecute the claims of both the Lulu H. Auger Trust and the Ulysses G. Auger Trust, and for Dina Economides, Frank Economides, and Jeffrey Rogers to be submitted as the real parties in interest for the Lulu A. Auger Trust pursuant to Rule 17(a)(3). The Magistrate Judge also recommends that we grant the Defendants’ Motion for Summary Judgment (Doc. 135) with respect to Plaintiffs’ claim of unjust enrichment (Count V), but that we deny the Motion for Summary Judgment in all other respects.

The Defendants filed objections to essentially all of the Magistrate Judge’s recommendations. The Plaintiffs filed a limited objection to the portion of the Magistrate Judge’s discussion regarding the application of the statute of limitations to the Plaintiffs’ legal malpractice claims. The objections have been briefed by the parties. Accordingly, the R & R is ripe for our review and disposition.

For the reasons that follow, we shall adopt the Magistrate Judge’s recommendations in their entirety.

I. STANDARDS OF REVIEW

A. Review of Magistrate Judge’s R & R

When objections are filed to the report of a magistrate judge, the district court makes a de novo determination of those portions of the report or specified proposed findings or recommendations to which objections are made. 28 U.S.C. § 636(b)(1); United States v. Raddatz, 447 U.S. 667, 674-75, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980). The court may accept, reject, or modify, in whole or in part, the magistrate judge’s findings or recommendations. Id. Although the standard of review is de novo, 28 U.S.C. § 636(b)(1) permits whatever reliance the district court, in the exercise of sound discretion, chooses to place on a magistrate judge’s proposed findings and recommendations. Raddatz, 447 U.S. at 674-75, 100 S.Ct. 2406; see also Mathews v. Weber, 423 U.S. 261, 275, 96 S.Ct. 549, 46 L.Ed.2d 483 (1976); Goney v. Clark, 749 F.2d 5, 7 (3d Cir.1984).

B. Summary Judgment

Summary judgment is appropriate if the record establishes “that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). Initially, the moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The movant meets this burden by pointing to an absence of evidence supporting an essential element as to which the non-moving party will bear the burden of proof at trial. Id. at 325, 106 S.Ct. 2548. Once the moving party meets its burden, the burden then shifts to the non-moving party to show that there is a genuine issue for trial. Fed.R.Civ.P. 56(e)(2). An issue is “genuine” only if there is a sufficient evidentiary basis for a reasonable jury to find for the non-moving party, and a factual dispute is “material” only if it might affect the outcome of the action under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In opposing summary judgment, the non-moving party “may not rely merely on allegations of denials in its own pleadings; rather, its response must ... set out specific facts showing a genuine issue for trial.” Fed.R.Civ.P. 56(e)(2). The non-moving party “cannot rely on unsupported allegations, but must go beyond pleadings and provide some evidence that would show that there exists a genuine issue for trial.” Jones v. United Parcel Serv., 214 F.3d 402, 407 (3d Cir.2000). Arguments made in briefs “are not evidence and cannot by themselves create a factual dispute sufficient to defeat a summary judgment motion.” Jersey Cent. Power & Light Co. v. Twp. of Lacey, 772 F.2d 1103, 1109-10 (3d Cir.1985). However, the facts and all reasonable inferences drawn therefrom must be viewed in the light most favorable to the nonmoving party. P.N. v. Clementon Bd. of Educ., 442 F.3d 848, 852 (3d Cir.2006).

Summary judgment should not be granted when there is a disagreement about the facts or the proper inferences that a factfinder could draw from them. Peterson v. Lehigh Valley Dist. Council, 676 F.2d 81, 84 (3d Cir.1982). Still, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; there must be a genuine issue of material fact to preclude summary judgment.” Anderson, 477 U.S. at 247-48, 106 S.Ct. 2505.

II. DISCUSSION

A. Factual Background

Magistrate Judge Carlson sets forth the undisputed facts giving rise to this case in compelling detail at pages 1 through 14 of the R & R, thus we shall not endeavor to repeat the facts herein, but shall provide a simple summary for the benefit of the reader. The Plaintiffs in this action became limited partners in five Pennsylvania limited partnerships that were formed to facilitate the development of Gateway Gettysburg. The projects were financed by multiple bank loans specific to each aspect of the overall project. Two of those loans are implicated in this lawsuit: a $10.8 million dollar loan from Community Banks to fund construction of a 10-screen movie theater (“Theater Loan”) and a $3.9 million loan from Community Banks to fund production of “Fields of Freedom” (the “Production Loan”). The terms of both of these loans required the Plaintiffs to provide guarantees to the lender. In the course of negotiations with the bank and other partners, the Plaintiffs agreed to guaranty the loans, provided that the total guaranty under both loans would be capped at 25% of the outstanding loan obligations. However, the closing documents ultimately did not contain this limitation, but instead obligated the Plaintiffs to an aggregate 50% guaranty obligation.

After Plaintiffs discovered that their guaranty obligations were 50% rather than 25%, and after they allegedly began making payments under the guaranties in 2008, Plaintiffs brought this action on December 16, 2009 against the following Defendants: Jack Hurley, Esq., a Harrisburg real estate lawyer who was involved in providing lending counsel for the Gateway Gettysburg project, as well as Hurley’s law firm, Rhoads & Sinon, LLP, and an entity that Hurley controls called Paxton Land Company.

In short, Plaintiffs allege that Hurley was serving as their lawyer in connection with these loan negotiations and closings, and Plaintiffs claim that Defendants are liable for (1) failing to obtain signed copies of certifications from Community Banks clarifying that the Plaintiffs’ collective obligation under these loans was limited to 25% of the outstanding loan balances; and (2) delivering the loan documents to Community Banks, and facilitating the loan closing, without first obtaining copies of the certifications from the bank attesting to the 25% guaranty cap to which the Plaintiffs agreed. Based on these allegations, Plaintiffs assert claims for legal malpractice, grounded in both tort and contract, against Hurley and Rhoads & Sinon (Counts I, II), and for breach of contract (Count III, IV).

B. Motion for Substitution— F.R.C.P. 17(a)

As noted by the Magistrate Judge, Defendants contend in their summary judgment papers that Plaintiffs — two trusts and a limited partnership — lack the capacity to sue because the Plaintiffs have improperly sued in the name of the trust and the partnership, rather than through the trustees and partners. Plaintiffs concede that naming the trusts and limited partnership as Plaintiffs rather than the trustees and partners themselves is a pleading error, which they have now sought to correct via a motion filed pursuant to Rule 17 of the Federal Rules of Civil Procedure. Defendants opposed this motion and also moved for summary judgment based on lack of capacity of the trusts and limited partnerships to sue the Defendants.

Magistrate Judge Carlson recommends that the Plaintiffs’ motion to substitute be granted, reasoning that the interests of justice plainly militate in favor of permitting the substitution in a manner that would be purely formal. The Magistrate Judge concludes that there was no unreasonable delay in making this request for substitution, and that it would have no material impact on the complaint’s factual allegations so as to alter the events or the participants in this action. In fact, the trustees and the partners were specifically identified in the complaint, but the caption did not contain their names. Accordingly, the Magistrate Judge recommends that we grant the Plaintiffs’ motion to substitute and permit the matter to proceed with the individual trustees and partners as the Plaintiffs.

Defendants object to this recommendation, arguing that the Magistrate Judge focused too much of his analysis on a perceived lack of prejudice to the Defendants in permitting the requested substitution. We disagree. Simply put, Plaintiffs pleading error was substantively immaterial for purposes of this action, and the Defendants’ attempts to achieve summary judgment based on such an error does not amount to much more than gamesmanship, in our view. There is utterly no prejudice. Accordingly, the Plaintiffs’ motion to substitute shall be granted.

C. Motion for Summary Judgment

In his cogent 53-page R & R, Magistrate Judge Carlson analyzes the Defendants’ Motion for Summary Judgment in careful detail and recommends that the Motion be substantially denied. We agree entirely with the Magistrate Judge’s conclusions, however, for the sake of completeness, we shall address some of the parties’ objections warranting discussion within the following paragraphs.

First, the Plaintiffs take issue the Magistrate Judge’s application of the “occurrence rule” in his statute of limitations analysis on the Plaintiffs legal malpractice claims. In Pennsylvania, claims for legal malpractice run from the moment of the alleged breach, however Pennsylvania law also recognizes an exception to the aforesaid “occurrence rule,” known as the “discovery rule.” The “discovery rule,” applies “when the injured party is unable, despite the exercise of diligence, to know of his injury or its cause.” Knopick v. Connelly, 639 F.3d 600, 609 (3d Cir.2011). Plaintiffs contend that the “occurrence rule” does not apply in the context of transactional legal malpractice. Rather, Plaintiffs submit that in a transactional legal malpractice action, where the negligence involves the drafting, execution, or release of transactional documents, the action accrues when the client suffers the harm because of the malpractice. Thus, Plaintiffs desire to preserve their argument that their cause of action did not accrue until the Plaintiffs made their first payments on the guaranties.

While Plaintiffs’ argument has some appeal at first blush, a review of the well-settled and consistent case law in this Circuit and in Pennsylvania leads us to the inescapable conclusion that the “occurrence rule” is applied to both transactional legal malpractice and the more traditional type of legal malpractice that occurs when a lawyer fails to file or appropriately prosecute case on behalf of a client. Thus, we decline the Plaintiffs’ invitation to create a new legal distinction that is not recognized by the jurisprudence of this Court or the Third Circuit.

We likewise overrule the Defendants’ objection pertaining to the Magistrate Judge’s recommendation concerning Jack Hurley’s alleged legal representation of the Plaintiffs. Defendants argue in their summary judgment motion that the undisputed facts demonstrate that Jack Hurley was not acting as counsel for Plaintiff, thus neither he nor his law firm can be held liable for legal malpractice. The Magistrate Judge carefully evaluated the record and determined that there are sufficient facts from which a jury could reasonably conclude that he had undertaken legal representation on their behalf. We agree with the Magistrate Judge on this point, specifically noting that Rhoads & Sinon spent over 60 hours working on the partnerships in connection with the loans and billed the partnerships nearly $11,000 in December 2005, the month of the closing, while Richard Levin, Esq., who Defendants actually contend acted as counsel for the Plaintiffs, only billed $1,650 to the Augers for this engagement.

Next, we address the Defendants’ disagreement with Magistrate Judge Carlson’s application of Bailey v. Tucker, 533 Pa. 237, 621 A.2d 108 (1993) relative to their arguments concerning Plaintiffs’ prayer for consequential damages on their contractual legal malpractice claim. Defendants contend that Plaintiffs cannot receive consequential damages, because damages on a contractual legal malpractice claim are “limited to the amount actually paid for the services plus statutory interest.” Bailey at 115. Magistrate Judge Carlson agreed with the Plaintiffs’ counterargument — that Bailey’s strict limitation on recoverable damages under a breach-of-contract theory applies only in the criminal context, wherein a claimant would only be entitled to receive the legal fees paid and no other type of compensation. Thus, under Magistrate Carlson’s view, Bailey should not be read as a sweeping limitation on damages that may be recovered in contract-based malpractice civil actions. We agree, over the Defendants’ objections, with Magistrate Carlson that Bailey should not be read so broadly.

Finally, we consider the Defendants’ contention that by restructuring the loans, the Plaintiffs have actually been benefitted and effectively negated any damages that they might have incurred had the loans not been restructured. Plaintiffs’ response to this argument is that, by restructuring the loans, they were mitigating their damages, not divesting themselves of a legal remedy. We agree with the Magistrate Judge that these matters should be presented to a jury, which can assess not only whether Hurley’s alleged breaches were a substantial or significant factor in the Plaintiffs’ claimed injury, but also the extent of those injuries, and whether some or all were mitigated through the restructuring in 2010.

III. CONCLUSION

Accordingly, for the reasons set forth above, the parties’ objections are overruled and the R & R shall be adopted in its entirety. The resolution of these objections clears a path for this case to be scheduled for trial, and we ask that the parties endeavor to settle on a trial month as ordered hereafter.

NOW, THEREFORE, IT IS HEREBY ORDERED THAT:

1. The Report and Recommendation of Magistrate Judge Carlson (Doc. 181) is ADOPTED IN ITS ENTIRETY.

2. The Defendants’ Motion for Summary Judgment (Doc. 135) is GRANTED with respect to Plaintiffs’ claim of unjust enrichment (Count V) and DENIED in all other respects.

3. The Plaintiffs’ Motion for Substitution, Joinder and Ratification (Doc. 159) is GRANTED. Lefta Associates, Inc. is hereby substituted as the real party in interest for Lefta Associates, L.P., and the Lulu H. Auger Trust is permitted to prosecute the claims of both the Lulu H. Auger Trust and the Ulysses G. Auger Trust, and for Dina Economides, Frank Economides, and Jeffrey Rogers to be substituted as the real parties in interest for the Lulu A. Auger Trust pursuant to F.R.C.P. 17(a)(3).

4. Within twenty (20) days of the date of this Order, the parties shall file a letter or stipulation on the docket agreeing to a trial month within the calendar year 2013.

REPORT AND RECOMMENDATION

MARTIN C. CARLSON, United States Magistrate Judge.

Now pending in the above-captioned action is defendants’ motion for summary judgment (Doc. 135.), and plaintiffs’ motion for leave of court to permit the substitution of the trustees and partners as the proper parties-plaintiff in this case pursuant to Rule 17 of the Federal Rules of Civil Procedure (Doc. 159.). The motions are fully briefed and have been referred to the undersigned for purposes of preparing a report and recommended disposition. The court heard oral argument on the motions on Monday, August 6, 2012.

I. BACKGROUND

The above-referenced action arises out of a troubled real estate development project that was undertaken in Gettysburg, Pennsylvania, beginning in 2004. The project, called the “Gateway Gettysburg,” is situated -on approximately 100 acres of land in Adams County, Pennsylvania. The Gateway Gettysburg project involved the construction of two hotels, two restaurants, a multi-screen movie theater, and the production of a movie about the Civil War battles in Gettysburg entitled “Fields of Freedom.” The hotels and restaurants are operational and apparently capable of servicing their debts; in contrast, the theater is struggling financially and facing impending challenges, and the “Fields of Freedom” film has been described by the parties as an abject failure.

The plaintiffs in this action became limited partners in five Pennsylvania limited partnerships that were formed to facilitate the development of Gateway Gettysburg. The projects were financed by multiple bank loans specific to each aspect of the overall project. Only two of those loans are implicated in this lawsuit: a $10.8 million dollar loan from Community Banks to fund construction of a 10-screen movie theater (“Theater Loan”) and a $3.9 million loan from Community Banks to fund production of “Fields of Freedom” (the “Production Loan”), both of which closed on December 27, 2005.

With respect to each of these two loans, the plaintiffs were required to provide guarantees to the lender. In the course of their negotiations with the bank and the other partners, the plaintiffs agreed to guaranty the loans, provided that the total guaranty under both loans would be capped at 25% of the outstanding loan obligations. As explained below, however, the closing documents ultimately did not contain this limitation, but instead obligated the plaintiffs to an aggregate 50% guaranty obligation. This undisputed fact forms the central basis for this lawsuit.

Following the discovery that their guaranty obligations were 50% rather than 25%, and after they allegedly began making payments under the guarantees in 2008, plaintiffs brought this action on December 16, 2009, against the following defendants Jack Hurley, Esq., a Harrisburg real estate lawyer who was involved in providing lending counsel for the Gateway Gettysburg project, as well as Hurley’s law firm, Rhoads & Sinon, L.L.P., and an entity that Hurley controls called the Paxton Land Company. (Doc. 1.) The plaintiffs also restructured and re-negotiated their indebtedness to the bank.

The gist of plaintiffs’ claims is that Hurley was acting as the plaintiffs’ lending counsel in Pennsylvania in connection with the both the Theater and Productions Loans, and in this capacity had agreed and committed himself to obtain either: (1) signed certifications from the lender that would have expressly limited the plaintiffs’ guaranty obligations under the loans to 25% of the outstanding loan balances, consistent with the parties’ agreement; or (2) refuse to release the plaintiffs’ loan guarantees until these lender certificates were signed. Plaintiffs claim that Hurley failed to satisfy this obligation, and further allege that he committed legal malpractice by permitting the loan transactions to close without incorporating the bank’s signed certifications to expressly limit the guarantees being provided. Plaintiffs claim that they have suffered substantial damages as a result of Hurley’s alleged failures in this regard. Defendants deny each and every one of the plaintiffs’ claims, contend there is no evidence to support plaintiffs’ theories for relief, and maintain that plaintiffs have actually never suffered any compensable injury because, according to defendants, plaintiffs have never made any payment under the guarantees. Alternatively, defendants argue that plaintiffs are otherwise actually better off under the currently restructured loan agreements than they would have been under the prior loan terms, and thus cannot demonstrate injury and damages.

In the complaint, plaintiffs allege that Hurley and Rhoads & Sinon are liable for legal malpractice under tort and contract theories (Counts I, II), and for breach of contract (Counts III, IV)- Plaintiffs have also alleged that all Defendants are liable for unjust enrichment (Count V).

A. Overview of the Parties

1. Lefia Associates, L.P. (“Lefta”)

Plaintiff Lefta Associates, L.P. is a Washington, D.C. limited partnership, which is owned as follows: Lefta Associates, Inc. (100% of which is owned by the Auger Trusts), holds a .87% general partnership interest; the Lulu H. Auger Trust holds an 86.18% Class “A” limited partnership interest; and Thomas Lee and Jere Gulau each holds a 6.5% Class “B” limited partnership interest. Lefta was originally formed to hold an Embassy Suites Hotel, but has since been used to hold various other real property owned by the Augers. (Doc. 152, Plaintiffs Statement of Facts, ¶ 8) (hereafter “Plfs’ SMF ¶_”.)

Thomas Lee is the CEO of USA Management, an entity affiliated with the Lefta and Auger Trusts, which the trusts use to manage certain of their properties, including the Gateway Gettysburg. (Plfs’ SMF ¶ 4.) Until she died in December 2011, Lulu Auger was the president of Lefta Associates, Inc., the general partner of Lefta.

2. The Auger Trusts

The Ulysses G. Auger Trust and the Lulu H. Auger Trust (the “Auger Trusts”) were revocable trusts organized under the laws of the District of Columbia, which became irrevocable trusts following the deaths of Mr. and Mrs. Auger. Until her death, Lulu Auger was the sole trustee of both of the Auger Trusts. The successor trustees are Dina Economides, Frank Economides, and Jeffrey Rogers. (Plfs’ SMF ¶ 8.)

3. Jack Hurley and Rhoads & Sinon, L.L.P.

Jack Hurley has been a real estate and transactional attorney with the Harrisburg law firm Rhoads & Sinon since 1980, and a partner since 1985. In this capacity, Mr. Hurley has long represented Robert Monahan, a real estate developer. In 2001, Monahan, through an entity he controlled, acquired the 100 acres in Adams County on which the Gateway Gettysburg project was to be situated. Mr. Hurley represented Mr. Monahan with respect to this real estate acquisition. Hurley also owned direct and indirect pieces of each partnership that was formed to purchase and develop aspects of Gateway Gettysburg.

4. Paxton Land Company

The Paxton Land Company is a title company and escrow agent wholly-owned by Rhoads & Sinon, and which Hurley used for all Gateway Gettysburg loan closings.

B. Overview of the Gateway Gettysburg Project

In 2001, Monahan acquired approximately 100 acres of real property in Adams County, Pennsylvania, at the intersections of Routes 30 and 15, near Gettysburg, Pennsylvania. Monahan envisioned that the land could be used profitably to develop a multi-faceted hotel, restaurant, and movie theater project that would be featured as an overnight destination for tourists visiting the historical area, and as a conference center for businesses. This Gateway Gettysburg project also planned to feature the “Fields of Freedom” film that could be shown in the theater, and which would provide a starting point for battlefield visitors.

In 2004, the Augers sold an Embassy-Square Suites Hotel for approximately $40 million. In an effort to defer payment of capital gains taxes on the sale, the family looked for opportunities to exchange the proceeds of that sale into other real properties under Section 1031 of the Internal Revenue Code. One of the properties in which they decided to invest these proceeds was the Gateway Gettysburg project.

The Augers and Monahan negotiated an agreement whereby the Augers would invest in the project as a 25% limited partner, and Monahan would serve as the 75% general partner, and each would hold interests in the land used for the project commensurate with these percentage interests. The parties agreed that the Auger-affiliated entity, USA Management, would manage the hotels and restaurants being developed. Tom Lee, USA Management’s CEO, led negotiations on behalf of the Augers.

Monahan and the Augers formed separate partnerships to develop and own the different aspects of the Gateway Gettysburg project. Monahan’s holding company and the Augers deeded land from the 100 acres to the hotels, restaurants, and theater partnerships, on which those projects were to be built. Hurley and Rhoads & Sinon drafted the partnership agreements for these projects and entities, and, through Paxton Land Company, closed each of the transactions in which the land was transferred.

Although these ownership interests were subsequently restructured, in 2004-2005, the ownership of Theater Partners was as follows: Lefta held a 25% limited partnership interest; Gateway Gettysburg Historic Holdings, Inc., the entity that Monahan used to acquire the 100 acres in Adams County, held a 74% limited partnership interest; and Monahan Development, LLC, another Monahan entity, held the remaining 1% general partnership interest. The ownership of Production Partners was as follows: USA Management, Inc. held a 25% limited partnership interest; Monahan held a 70.25% limited partnership interest; Jack Hurley held a 3.75% partnership interest; and Monahan Production, LLC held the remaining 1% general partnership interest.

On December 27, 2005, Theater Partners and Production Partners entered into two separate loans with Community Bank — which has since become Susquehanna Bank, the current lender under the loans — to finance the development of the 10-screen movie theater and the “Fields of Freedom” film respectively. Theater Partners entered into a $10.8 million construction loan agreement, and Productions Partners entered into a $3.9 million term loan.

Plaintiffs and Hurley understood that the trusts had agreed to provide a limited guaranty under the loans that would be capped at a total 25% of the outstanding loan balance under each loan. As it turns out, the language used in the guaranty provision in each loan obligated the Plaintiffs to 50% of the outstanding balances. Plaintiffs informed Hurley of their concerns about the language in the loan documents prior to closing. Nevertheless, despite Hurley having been made aware of the problem; despite Hurley having undertaken to draft a form of certification to clarify the questions that had arisen regarding the guarantees; despite Hurley’s alleged agreement to obtain from Community Bank a signed certification that would clarify that the Auger entities’ collective guaranty was limited to 25%; and despite-Tom Lee’s representation to Hurley that Mrs. Auger would not release the guarantees until Community Bank had provided the certification to clarify the guaranty concerns, Hurley never obtained a signed certification from Community Bank, and he facilitated the loan closings that were later construed by the bank to obligate the plaintiffs to a 50% guarantee under the loans. None of the parties seemingly was. aware that the certifications had not been signed prior to closing, and discovery of this fact did not occur until more than two years later as this project began to falter.

C. The Theater and Production Loans Encounter Difficulties

In 2008, around the time the overall economy was entering into recession, the Theater Partners and Productions Partners became unable to cover their debt service obligations under both the Theater and Productions Loans. As a result, Monahan sought capital contributions from the partners in order to remain current on the loans. The partners, including Lefta, began paying these capital contributions in proportion to their partnership interests.

In October 2008, however, Monahan refused to continue making further capital contributions for his 75% share of the debt service, and the loans went into arrears. Susquehanna Bank did not formally declare a default under the loans, but plaintiffs have pointed to evidence to show that starting in December 2008, the bank was demanding payment on the guarantees and was threatening foreclosure if plaintiffs did not honor their 50% guarantees. (Plfs’ SMF ¶¶ 224(c), (d), and 261.)

Furthermore, Monahan’s refusal to continue paying down the debt forced the plaintiffs to fundamentally re-evaluate carefully how to proceed under the troubled loans and projects. Plaintiffs assessment, which utilized the assistance of legal and financial counsel, resulted in consideration of a menu of different options, including (a) walking away from the project; (b) staying in the project; (c) dividing up the assets between the Augers and Monahan; (d) seeking new investors; (e) restructuring the loans with the banks; or (f) some variations of the above. Ultimately, following advice by legal counsel and financial advisors, the Augers engaged in talks with Susquehanna Bank to renegotiate the loans, and with Monahan to restructure the ownership interests of the Theater and Productions Partners.

D. The Theater and Productions Partnerships and Loans are Restructured

On or around June 1, 2010, the Augers, Monahan, and Susquehanna Bank finalized the restructuring of the loans and the partnership agreements. Pursuant to these negotiations, Monahan diluted his equity position, and now owns 25% of the Gateway Gettysburg partnerships, the Augers’ interests control 75%, and an Auger entity serves as the general partner in each partnership.

At the time of the restructuring, the Theater Loan had a balance of approximately $9.7 million and the Productions Loan had a balance of approximately $1.8 million. In addition to other modifications, the Theater and Productions Loans were extended another five years, with a $7.9 million balloon payment due in May 2015, and the monthly loan obligations under the loans was reduced from $130,000 to $94,000.

Notably, Susquehanna Bank has remained fixed and unwavering in its interpretation that the Augers’ guaranty obligations under the original loan terms collectively amounted to 50%, and the bank insisted on including this level of guaranty when restructuring the loan terms in 2010. The plaintiffs thus continue to have guaranty liability under the modified loans, which at the time of briefing on the pending motion amounting to approximately $460,000 on the Productions Loan and $4 million on the Theater Loan.

The modified loans also provide for dollar-for-dollar reductions in the guarantees, and other provisions that limit the ability of the bank to seek payment under the guarantees if certain payment thresholds are met over a period of years. The loan modification further provides that capital contributions made in relation to any of the Gateway Gettysburg partnerships earns a preferred rate of 8%, and entitled the plaintiffs to a priority distribution of the preferred return and all capital contributions before any distribution would be made to the partners in proportion to their partnership interests.

According to defendants, the plaintiffs have remained current with their loan obligations, and neither loan is in default; plaintiffs do not appear to dispute that assertion. However, plaintiffs contend that the erroneous inclusion of the 50% guaranty obligation has caused them injury, which limited their options under either of the loans both before and after they were restructured — indeed, they maintain that one of the conditions to the restructure was that the 50% guaranty remain part of the loan terms. Moreover, plaintiffs characterize the business prospects for the Theater and Productions projects as dismal, and anticipate that the projects may ultimately fail by the end of 2012.

E. Summary of Plaintiffs Claims

The dispute in this case relates only to Lefta’s and the Auger Trusts’ original guarantees of the Theater and Production Loans. In short, plaintiffs allege that Hurley was serving as their lawyer in connection with these loan negotiations and closings, and plaintiffs claim defendants are liable for (1) failing to obtain signed copies of certifications from Community Bank clarifying that the plaintiffs’ collective obligation under these loans was limited to 25% of the outstanding loan balances; and (2) delivering the loan documents to Community Bank, and facilitating the loan closing, without first obtaining copies of the certifications from the bank attesting to the 25% guaranty cap to which the plaintiffs agreed.

On the basis of these contentions, plaintiffs have brought claims for legal malpractice under both tort and contract theories of liability, breach of contract claims unrelated to legal malpractice, and for unjust enrichment.

II. PROCEDURAL HISTORY

Plaintiffs commenced this action on December 16, 2009. (Doe. 1.) Plaintiffs answered the complaint on January 26, 2010. (Doc. 10.) Nearly 11 months later, defendants filed an amended answer to the complaint in order to correct certain factual allegations, modify one affirmative defense, and to add three additional affirmative defenses invoking the statute of limitations and the doctrines of waiver and estoppel, bringing the total affirmative defenses asserted to 15. (Doc. 39.)

The following month, on December 10, 2010, defendants filed a motion for leave to file a second amended answer. (Doc. 45.) In their motion, defendants sought permission to, inter alia, incorporate in their answer a factual denial that plaintiffs have sufficient capacity to maintain their claims, and to include an affirmative defense that they lack such capacity. (Doc. 44.) Over plaintiffs’ objection, the court granted defendants leave to amend. (Doc. 45.) Thereafter the parties engaged in discovery and other pretrial litigation, which resulted in defendants moving for summary judgment on February 1, 2012. (Doc. 135.) The motion is fully briefed, (Docs. 137, 148, 149, 150, 151, 152, 153, 158, 163.). The briefs alone exceed 200 pages, and the parties have offered thousands of pages of documents and other record evidence in support of their respective positions.

Following this substantial briefing on the summary judgment motion, plaintiffs filed a separate motion for leave to substitute the trustees of the Auger Trusts, and Lefta’s partners, as the named plaintiffs in this action, pursuant to Rule 17 of the Federal Rules of Civil Procedure in order to comply with Pennsylvania law of capacity, (Doc. 159.), and this motion is also fully briefed, (Docs. 165, 166, 167, 168, 172, 174.). Because this motion overlaps one of the arguments made in defendants’ motion for summary judgment, and because the parties agree that this issue is potentially case dispositive, we will include a recommended disposition of this motion in this report and recommendation.

III. STANDARD OF REVIEW

Rule 56(a) of the Federal Rules of Civil Procedure provides as follows:

A party may move for summary judgment, identifying each claim or defense — or the part of each claim or defense — on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. The court should state on the record the reasons for granting or denying the motion.

Fed.R.Civ.P. 56(a). For purposes of Rule 56, a fact is material if proof of its existence or nonexistence might affect the outcome of the suit under the applicable substantive law. Haybarger v. Lawrence Cnty. Adult Prob. & Parole, 667 F.3d 408, 412 (3d Cir.2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). For an issue to be genuine, “all that is required is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at trial.” Id. (quoting Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505).

Accordingly, in support of a motion for summary judgment, the moving party must show that if the evidence of record were reduced to admissible evidence in court, it would be insufficient to allow the non-moving party to carry its burden of proof. See Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Provided the moving party has satisfied this burden, “its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.” Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). Instead, if the moving party has carried its burden, the non-moving party must then respond by identifying specific facts, supported by evidence, which show a genuine issue for trial, and may not rely upon the allegations or denials of its pleadings. See Marten v. Godwin, 499 F.3d 290, 295 (3d Cir.2007); see also Fed.R.Civ.P. 56(c).

In adjudicating the motion, the court must view the evidence presented in the light most favorable to the opposing party, Anderson, 477 U.S. at 255, 106 S.Ct. 2505, and draw all reasonable inferences in the light most favorable to the non-moving party, Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir.1992). Where the non-moving party’s evidence contradicts the movant’s, then the nonmovant’s must be taken as true. Id. Additionally, the court is not to decide whether the evidence unquestionably favors one side or the other, or to make credibility determinations, but instead must decide whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. Anderson, 477 U.S. at 252, 106 S.Ct. 2505; see also Big Apple BMW, 974 F.2d at 1363. In reaching this determination, the Third Circuit has instructed that:

To raise a genuine issue of material fact ... the opponent need not match, item for item, each piece of evidence proffered by the movant. In practical terms, if the opponent has exceeded the “mere scintilla” threshold and has offered a genuine issue of material fact, then the court cannot credit the movant’s version of events against the opponent, even if the quantity of the movant’s evidence far outweighs that of its opponent. It thus remains the province of the factfinder to ascertain the believability and weight of the evidence.

Id. In contrast, “[wjhere the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (internal quotation marks omitted); NAACP v. North Hudson Reg’l Fire & Rescue, 665 F.3d 464, 476 (3d Cir.2011).

IV. DISCUSSION

Defendants have raised a number of arguments in support of their motion for summary judgment, which will be addressed separately below. The first of these issues concerns plaintiffs’ capacity to bring the instant lawsuit, and directly implicates plaintiffs’ pending motion for leave to ratify and substitute under Rule 17 of the Federal Rules of Civil Procedure. The parties agree that this threshold issue is both fundamental and potentially dispositive, and thus we address it at the outset of our discussion.

A. Substitution — Rule 17(a)

Defendants contend that plaintiffs — two trusts and a limited partnership — lack the capacity to sue because the plaintiffs have improperly sued in the name of the trusts and the partnership, rather than through the trustees and partners. Defendants note that they placed plaintiffs on notice about this pleading defect through a factual denial and affirmative defense asserted in the second amended answer to the complaint, and again in their motion for summary judgment. Plaintiffs have recently taken steps to cure what they apparently concede was a formal pleading error by moving for leave for the partners and trustee to ratify and substitute themselves as plaintiffs under Rule 17 of the Federal Rules of Civil Procedure.

Although they candidly conceded at oral argument that they would not, in fact, be prejudiced by this substitution, defendants urge the court to grant summary judgment in them favor, or to otherwise deny the motion to substitute, on the grounds that plaintiffs pleading mistake was unreasonable, and because they failed to correct the problem within a reasonable period of time.

Because we do not find that plaintiffs unreasonably delayed in seeking this relief, and because we find that the interests of justice plainly militate in favor of permitting the substitution of plaintiffs in a manner that would be purely formal, and which would have no material impact on the complaint’s factual allegations so as to alter the events or the participants. We thus will recommend that the court deny defendants’ motion for summary judgment on this ground, and permit plaintiff leave to substitute the proper plaintiffs to sue on behalf of the trusts and the partnership.

In accordance with Rule 17 of the Federal Rules of Civil Procedure, Pennsylvania law governs the parties’ capacity to sue or be sued. Fed.R.CivJP. 17. Defendants maintain that under Pennsylvania law, a trust cannot sue in its own capacity, but instead must bring suit through its trustee. See Porter v. Hayes, 293 Pa. 194, 142 A. 282, 283 (Pa.1928); Pa. R. Co. v. Duncan, 111 Pa. 352, 5 A. 742, 746 (Pa. 1886). Likewise, defendants contend that in Pennsylvania a partnership does not have capacity to sue on its own behalf, but must instead bring suit in the name of the partners. Pa. R. Civ. P. 2127(a); see also In re Lawrence County Tax Claim Bureau, 998 A.2d 675, 680 (Pa.Commw.Ct.2010).

Plaintiffs appear to concede that they commenced this action improperly in the name of the trusts and the partnership, rather than through the trustees and partners. Plaintiffs did include factual averments in the complaint clearly identifying the trustees and the partners, but for formal purposes, plaintiffs brought suit in the name of the trusts and the partnership. This, they now apparently acknowledge, was error, and they have moved for leave to have the trustees and partners ratify the lawsuit and be substituted as the plaintiffs and real parties in interest.

The issue is what effect this technical pleading defect should have at this point in the litigation — litigation that has spanned nearly three years, which involves disputed claims amounting to millions of dollars, and which involve sophisticated parties— where it is agreed that the pleading error has posed no prejudice of any kind to defendants.

Under Rule 17(a)(1), “[a]n action must be prosecuted in the name of the real party in interest.” Fed.R.Civ.P. 17(a)(1). However, Rule 17(a)(3) of the Federal Rules of Civil Procedure provides an express limitation on the power of a court to dispose of an action when it has not been brought by the real party interest:

Joinder of the Real Party in Interest. The court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action. After ratification, joinder, or substitution, the action proceeds as if it had been originally commenced by the real party in interest.

Fed.R.Civ.P. 17(a)(3). Thus, although actions must be prosecuted in the name of the real party interest, the rules also prevent courts from dismissing actions simply because a plaintiff is not the proper party in interest, or lacks capacity to sue, until a reasonable period of time has been provided to ratify, or to be substituted into the action, once an objection is made. Once such substitution occurs, the action proceeds in the normal course. Id.

The purpose of Rule 17’s requirement that an action be brought in the name of the real party in interest is “to enable the defendant to present his defenses against the proper persons, to avoid subsequent suits, and to proceed to finality of judgment.” Wright, Miller & Kane, Federal Practice & Procedure, 3d ed. § 1541. The Third Circuit has interpreted Rule 17(a)(3) to “prevent forfeiture of an action when determination of the right party to [bring suit] is difficult or when an understandable mistake has been made.” Gardner v. State Farm Fire & Cas. Co., 544 F.3d 553, 563 (3d Cir.2008) (quoting U.S. ex rel. Wulff v. CMA, Inc., 890 F.2d 1070, 1074 (9th Cir.1989)).

One leading treatise on the civil rules has recognized that “a literal interpretation of Rule 17(a)(3) would make it applicable to every case in which an inappropriate plaintiff has been named” and for this reason recommend that “the rule should be applied only to cases in which substitution of the real party in interest is necessary to avoid injustice.” 6A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1655, at 415 (2d ed. 1990). “What constitutes reasonable time ‘is a matter of judicial discretion and will depend on the facts of each case.’ ” Killmeyer v. Oglebay Norton Co., 817 F.Supp.2d 681, 690 (W.D.Pa.2011) (quoting Schafer v. Decision One Mortgage Corp., No. 08-5653, 2009 WL 1886071, at *6 (E.D.Pa. June 30, 2009)). Furthermore, as one circuit has recognized, “Rule 17(a) substitution of plaintiffs should be liberally allowed when the change is merely formal and in no way alters the original complaint’s factual allegation as to the events or the participants.” Advanced Magnetics v. Bayfront Partners, Inc., 106 F.3d 11, 20 (2d Cir.1997).

In consideration of the foregoing legal authorities, and applying them to the facts of this case, defendants motion for summary judgment should be denied on the grounds that plaintiffs simply failed to bring suit in the name of the partners of Lefta, and in the names of the trustees of the Auger Trusts. Defendants concede that they will not be prejudiced by allowing substitution at this stage of the litigation, and acknowledge that nothing about the merits of this case will change as a result. Defendants are not in jeopardy of losing claims that they wished to bring against any party or potential party, and there is no risk that any judgment obtained will not be subject to res judicata in theoretical future litigation. Substitution, therefore, would merely correct a pleading defect that would not alter the facts or issues raised in this action, or put defendants in an unfair position of litigating against new claims or previously unknown, new parties. Not only was plaintiffs’ mistake substantively immaterial for purposes of this action, but the complaint did, in fact, put defendants on notice regarding the trustees and partners in each entity. In addition, defendants concede they have never been in doubt about the identities of these parties since the litigation commenced, and have taken no steps to assert any claims against any of the trusts, trustees, partnerships, or partners.

Furthermore, our recommendation is guided by the fact that the court enjoys broad discretion to permit substitution, and to determine whether substitution should be permitted in accordance with the requirements of Rule 17 that the request for substitution be reasonable in time, and as a result of a reasonable mistake. In this case, it is submitted that the court should exercise its discretion to permit substitution in this case, construe the reach of Rule 17 in accordance with the cardinal admonition set forth in Rule 1 that the Federal Rules should be “construed and administered to secure the just ... determination of every action and proceeding,” and deny defendants’ motion for summary judgment on this procedural ground, and grant plaintiffs’ motion for leave to substitute pursuant to Rule 17.

B. Statute of Limitations

Next, defendants assert that plaintiffs claims for legal malpractice sounding in tort were brought after the statute of limitations governing these claims expired. Plaintiffs have brought legal malpractice claims under both contract and tort theories of liability. (Doc. 1, Counts I and II.) Under Pennsylvania law, malpractice tort claims are subject to a two-year statute of limitation, 42 Pa. Cons. Stat. Ann. § 5524, whereas contract claims that sound in malpractice are subject to a four-year limitations period, 42 Pa. Cons. Stat. Ann. § 5525. As part of an incremental attack on each of these claims defendants first argue that under a tort theory, plaintiffs’ claims are untimely, since the alleged breach occurred on December 27, 2005, nearly four years before this case commenced.

“Pennsylvania favors strict application of statutes of limitations.” Knopick v. Connelly, 639 F.3d 600, 606 (3d Cir.2011) (citing Glenbrook Leasing Co. v. Beausang, 839 A.2d 437, 441 (Pa.Super.Ct.2003)). “Whether a statute has run on a claim is usually a question of law for the trial judge, but where the issue involves a factual determination, the determination is for the jury.” Knopick, 639 F.3d at 607 (citations omitted).

In a case addressing the event that triggers the statute of limitations in the context of a legal malpractice action, the Third Circuit summarized as follows:

The trigger for the accrual of a legal malpractice action is not the realization of actual loss, but the occurrence of a breach of duty. Wachovia Bank, N.A. v. Ferretti, 935 A.2d 565, 572, 2007 PA Super 320 (Pa.Super.Ct.2007). Under the occurrence rule, “the statutory period commences upon the happening of the alleged breach of duty.” Id. at 572 (quoting Robbins & Seventko Orthopedic Surgeons, Inc. v. Geisenberger, 449 Pa.Super. 367, 674 A.2d 244, 246-47 (Pa.Super.Ct.1996)). Where a plaintiff could not reasonably have discovered his injury or its cause, however, Pennsylvania courts have applied the discovery rule to toll the statute of limitations. Wachovia, 935 A.2d at 572-74 (citing Pocono Int’l Raceway v. Pocono Produce, Inc., 503 Pa. 80, 468 A.2d 468, 471 (Pa.1983)). Where the discovery rule does apply, the two-year period on legal malpractice actions begins to run where the plaintiff knew or in the exercise of reasonable diligence should have known of the injury and its cause. Crouse v. Cyclops Indus., 560 Pa. 394, 745 A.2d 606, 611 (Pa.2000).

Id. Thus, as construed by the United States Court of Appeals for the Third Circuit, Pennsylvania law holds that claims for legal malpractice run from the moment of the alleged breach, but Pennsylvania law also recognizes an exception to the occurrence rule in legal malpractice cases known as the “discovery rule,” which applies “when the injured party is unable, despite the exercise of diligence, to know of his injury or its cause.” Id. at 609 (footnote omitted). Where applicable, “the discovery rule tolls the running of the statute of limitations until a plaintiff is put in a position to discover the injury and its cause, either through inquiry or retention of a new lawyer.” Id. Even in such a case, however, “[kjnowledge may also be imputed to plaintiffs when an adverse action is taken against them, be it through a court order or through a third party action, thus initiating the running of the statute of limitations at that time.” Id.

A plaintiff bears the burden of proving that the discovery rule applies to a given claim. See Smith v. Carey Canadian Mines, Ltd., 609 F.Supp. 639, 642 (E.D.Pa.1985). The standard of reasonable diligence that a plaintiff must demonstrate in discovering a claim is an objective one. See Dalrymple v. Brown, 549 Pa. 217, 701 A.2d 164, 167 (Pa.1997). If “something exists to trigger inquiry, then the plaintiff must demonstrate that he conducted an investigation, and despite doing so, did not discover his injury.” Knopick, 639 F.3d at 612 (internal citations omitted).

In this case, defendants contend that any breach of legal duty occurred in late December 2005, when the issue regarding the certifications arose, and when plaintiffs allege Hurley breached his legal obligations to them to ensure that the certifications were signed, and that the closing did not occur until such time as they had been executed and incorporated. Thus, as a threshold matter, defendants argue that the statute has long since run on these claims.

Defendants also assert plaintiffs should have reasonably known that the guaranty certifications from Community Bank were not signed or made part of the loan closings by February 2006, when plaintiffs received copies of the executed loan documents. Defendants contend that the absence of the guaranty certifications was, at minimum, sufficient to trigger a duty to exercise reasonable diligence to discover any failure to act on the part of defendants.

In addition, defendants argue that plaintiffs were on reasonable notice of the issues regarding the certifications, not only because plaintiffs had raised the issue immediately prior to the loan closings and, but also because a similar issue had arisen with respect to the loan taken out in 2004 to fund construction of the Courtyard by Marriott Hotel that was erected as part of the Gateway Gettysburg project. Defendants thus argue that the claims are untimely regardless of whether the discovery rule is applied, because even if the discovery rule applies, plaintiffs have failed to show that they conducted any investigation despite having had good reason to do so.

For their part, plaintiffs argue that the statute of limitations did not run until 2009, when they suffered harm by first making payments on the Productions and Theater Loan guaranties. Plaintiffs argue that until that time, there was only the theoretical possibility that they would have to pay, and thus plaintiffs were not injured, and the statute could not have begun to run. We disagree with plaintiffs’ suggestion that the statute of limitations did not begin to run until plaintiffs were actually injured in 2009, since we find that under Knopick and Pennsylvania law, legal malpractice claims begin to run from the moment of the alleged breach.

However, plaintiffs also argue that even if the “occurrence” rule applies, there are disputed issues of fact that exist with respect to whether plaintiffs reasonably should have discovered defendants’ alleged negligence, and the question of whether the discovery rule applies to save plaintiffs’ claims should await consideration by a jury.

Upon due consideration, we agree with plaintiffs that disputed questions of fact exist with respect to whether and when the discovery rule applies to this tort claim for malpractice, and as to whether plaintiffs should reasonably have been expected to investigate and discover Hurley’s alleged breach of duty by failing to have obtained signed copies of the guaranty certifications from the bank prior to closing the transactions, or in permitting the loans to close before ensuring that the certifications were incorporated into the loans. To be sure, there are arguments favoring both sides with respect to the running of the statute of limitations, as reflected in the commendable briefs filed by both defendants and plaintiffs, and as reflected during the spirited argument held before the court on August 6, 2012.

By way of one example, we note that defendants have argued that the facts show plaintiffs were concerned about the potential exposure under the guarantees, and had specifically brought this issue to Hurley’s attention immediately prior to the loan closings. Defendants thus contend that plaintiffs had good reason’ to examine the loan documents when they received copies of the closing binder in February 2006, to satisfy themselves that the guarantees were appropriate and, if not, to bring suit within the two year limitations period.

In contrast, plaintiffs observe that they had good reason to believe that Jack Hurley was looking out for their interests in connection with this transaction, and that he had provided them with assurances that the matter had been satisfactorily addressed. For this reason, plaintiffs maintain that it would be unreasonable to blame them as legal clients for failing to inspect the transaction documents in February 2006 after being reassured by the person they believed was serving as their legal counsel during this loan closing. Furthermore, plaintiffs point to facts suggesting that even Mr. Hurley remained entirely unaware of the omission of the certifications, and the inclusion of language exposing plaintiffs to a 50% aggregate guaranty, until sometime in 2008, when Mr. Hurley inspected the loan documents and first discovered that the certifications were not included. Plaintiffs thus suggest that since Hurley was the lawyer in charge of these documents, and yet was unaware for years of the omission, it would arguably be unreasonable to expect plaintiffs to discover it on their own.

In cases where a court concludes “that a jury could disagree as to whether [a plaintiff] reasonably knew or should have known of his injury [by a date certain],” summary judgment is inappropriate. Knopick, 639 F.3d at 616. Furthermore, there are examples from Pennsylvania caselaw that provide substantial support for entrusting to a jury questions regarding whether a client’s failure to discover an attorney’s breach was reasonable. See, e.g., Glenbrook Leasing Co. v. Beausang, 839 A.2d 437 (Pa.Super.Ct.2003) (where error in agreement of sale for office space in condominium complex was not discovered until six years after the sale, court found that it was unreasonable for clients to have discovered the omission of parking spaces as part of the deed, where the parking spaces had been included in the agreement of sale); Robbins & Seventko Orthopedic Surgeons, Inc. v. Geisenberger, 449 Pa.Super. 367, 674 A.2d 244 (Pa.Super.Ct.1996) (in case where attorneys negligently prepared pension plan documents in 1977, but the error was not brought to clients attention until 1983, the court found it would be unreasonable to expect plaintiffs to have discovered the error, and their injury, until they were notified about it in 1983). These cases suggest, at minimum, that any question about whether plaintiffs should have had reason to discover' — or even investigate — the omission of the bank certifications in 2006 should await the factfinder’s consideration of the evidence.

Without expressing any further opinion as to the strengths of the parties’ arguments or construction of the facts as to this issue, we conclude that disputed issues of fact remain with respect to whether plaintiffs’ claim for legal malpractice sounding in tort was timely filed, and such disputes should await resolution by a jury.

C. Jack Hurley’s Alleged Legal Representation of Plaintiffs

Defendants next contend that there are insufficient facts to support plaintiffs’ allegations that Jack Hurley was, in fact, serving as plaintiffs’ legal counsel with respect to general or discrete matters in connection with the Theater or Productions Loans. Since an attorney-client is a prerequisite to any claim for legal malpractice, defendants contend that plaintiffs’ malpractice claims in Counts I and II of the complaint necessarily fail.

Plaintiffs respond by citing to numerous factual disputes in the evidentiary record that demonstrate what they argue was an objectively reasonable belief that Mr. Hurley had undertaken their legal representation with respect to obtaining the certifications from the lender, and that he was continuing to serve as their lawyer when he facilitated the loan closing without having first obtained executed copies of the certifications that he drafted. We agree with plaintiffs that disputed questions exist that make summary judgment unwarranted on this ground, which is plainly dependent on numerous factual issues that the parties hotly dispute, and w