author: NEALON, J.,

text:
    Rizzo v. MSA, Inc.

      C.P. of Lackawanna County,
    no. 06 CV 3330.

      Samuel M. Sanguedolce, for plaintiff.

      Michael R Mey, for defendant.
    November 5, 2010
   NEALON, J.,

Following a non-jury verdict in favor of plaintiff Bryan Rizzo (“Rizzo”) on his direct claim and in favor of defendant MSA, Inc. (“MSA”) on its counterclaim, both parties filed motions for post-trial relief seeking judgment in their favor with respect to the other party’s verdict against them. The credible evidence at trial established that: (1) the parties mutually agreed to extend the original completion date for their real estate transaction due to construction delays attributable to a third party contractor; (2) Rizzo breached the parties’ amended agreement by refusing to close on the revised settlement date; (3) MSA suffered consequential damages as a result of Rizzo’s breach; (4) Rizzo paid for certain extra-contractual improvements to the property which enhanced its value for later sale by MSA; and (5) it was inequitable for MSA to retain the benefit of those enhancements without payment of value to Rizzo. As a consequence, neither party has demonstrated the right to judgment notwithstanding the verdicts entered against them and their requests for post-trial relief under Pa. R.C.P. 227.1(a)(2) will be denied.

I. PROCEDURAL HISTORY

Rizzo commenced this litigation against MSA on July 10, 2006, after Rizzo declined to consummate the parties’ real estate transaction and MSA refused to refund Rizzo’s deposit or reimburse him for extra-contractual work that Rizzo financed. A certificate of readiness was filed on January 20, 2010 and following a status conference before the undersigned on February 25, 2010, an order was issued scheduling this matter for a non-jury trial on June 3, 2010. (Docket entry nos. 1, 39-40) At the request of counsel for Rizzo, the trial was later postponed to July 7, 2010. (Id., No. 43) During the bench trial on that date, testimony was received from Rizzo and MSA’s President, Justin Sulla, Esquire, and various exhibits were admitted into evidence.

Based upon the credible evidence presented during the non-jury trial, a verdict in the amount of $42,345.04 was entered in favor of Rizzo and against MSA on his unjust enrichment claim only, representing his unrefunded down payment and the value of the extra-contractual improvements to the subject property that were provided by Rizzo. With regard to MSA’s counterclaim against Rizzo, a verdict was entered in favor of MSA in the sum of $37,691.23 for its lost profit and other consequential damages related to Rizzo’s failure to consummate the parties’ agreement. The contractual damages to be paid to MSA were ordered to “bear interest at the legal rate of 6 percent per annum under 41 P.S. §202 from the date that payment became due.” (Id, No. 48) Therefore, not including MSA’s accrued statutoiy interest, the non-jury verdict yielded a net award of $4,653.81 ($42,345.04 less $37,691.23) in favor of Rizzo.

On July 19, 2010, Rizzo filed a motion for post-trial relief requesting the entry of judgment in his favor with respect to MSA’s counterclaim. (Id., No. 49) On July 20, 2010, an order was issued directing Rizzo to file his supporting brief by no later than August 24, 2010 and requiring MSA to submit its opposing brief 15 days thereafter on September 8, 2010. In addition, the order of July 20, 2010 scheduled oral argument on the post-trial motion for September 22, 2010 at 1:30 PM. (Id., No. 50)

On July 26, 2010, MSA filed its answer to Rizzo’s post-trial motion and also filed its own motion for post-trial relief seeking judgment in its favor with regard to Rizzo’s unjust enrichment verdict. (Id., Nos. 51-52) Rizzo filed an answer to MSA’s post-trial motion on August 5, 2010, (Id., No. 53), but did not file his supporting brief on August 24,2010 as required by the order of July 20,2010. Rizzo did not submit his supporting brief until September 17, 2010, 24 days after the court imposed deadline of August 24, 2010. (Id., No. 56) In the interim, MSA filed its brief in support of its post-trial motions on August 25, 2010. (Id., No. 55)

Although the undersigned and counsel for MSA were present for the scheduled oral argument on September 22, 2010, Rizzo’s counsel did not appear for that oral argument. MSA filed its opposing brief on September 28, 2010, within 15 days of Rizzo’s belated submission of his brief ((Id., No. 57) At that time, the parties’ post-trial motions became ripe for disposition.

II. FACTUAL BACKGROUND

In 2005, MSA was engaged in the business of purchasing real estate, constructing residential homes on that land, and thereafter selling the newly constructed residences and accompanying land to third parties. (Transcript of Proceedings (T. P.) on 7/7/2010, pp. 20-21) At that time, MSA regularly contracted with KAB construction (“KAB”) to build homes on MSA’s properties for eventual sale to third parties. {Id., pp. 22-25) On September 23, 2005, MSA entered into an agreement of sale with Rizzo by virtue of which Rizzo agreed to purchase a Jefferson Township property upon which a residence would be constructed by KAB and sold to Rizzo for the sum of $387,000.00. (Joint pre-trial order (“JPO”) dated 7/2/10, pp. 1,9; T. P. 7/7/10, pp. 31-32)

Under the terms of the parties’ agreement, Rizzo made a down payment of $5,000.00 and the closing was scheduled to be conducted on January 31, 2006. (JPO, pp. 2,9; plaintiff’s exhibit No. 1) Paragraph 5 of the agreement notes that “time is of the essence” and provides that the settlement date of January 31, 2006 could “only be extended by mutual written agreement of the parties.” (T. P. 7/7/10, pp. 32-38; plaintiff’s exhibit No. 1, p. 2 of 22) The agreement also contains a mortgage contingency clause making the sale contingent upon Rizzo obtaining mortgage financing of $309,600.00 for a thirty year term at an interest rate not to exceed 6.5 percent. (Plaintiff’s exhibit No. 1, p. 2 of 22; JPO, pp. 2, 9) The mortgage contingency provision obligated Rizzo to “make a completed, written mortgage application for the mortgage terms stated above” within ten days of September 23, 2005. (Plaintiff’s exhibit No. 1, p. 2 of 22) Furthermore, paragraph 6(C) states that if Rizzo “fail[ed] to cooperate in good faith in processing the mortgage loan application” and did not secure the requisite mortgage loan commitment as a result, Rizzo would be deemed “in default of this agreement.” (Id. ) Finally, the mortgage contingency clause provides that if Rizzo did not secure a mortgage commitment by November 30, 2005, the parties “agree[d] to extend the mortgage commitment date until [MSA] terminates this agreement by written notice to [Rizzo].” (Id.)

In anticipation of a closing date on or before January 31, 2006, MSA retained KAB to build Rizzo’s home. (JPO, pp. 2, 9; T. P. 7/7/10, pp. 55, 66) As per the parties’ understanding, Rizzo dealt directly with KAB relative to any changes or additions to the construction contract specifications. (JPO, pp. 2,9) In that regard, Rizzo paid KAB $34,500.00 for a concrete driveway, landscaping, a concrete sidewalk, hardwood flooring, and kitchen cabinets that were not included in the MSA-Rizzo contract. (Docket entry no. 48; JPO,pp. 4,10) Additionally, Rizzo purchased $2,845.09 worth of appliances which were installed in the Jefferson Township property. (Docket entry no. 48)

Because of financial problems that were being experienced by KAB, the home construction did not progress on a timely basis and the residence was not substantially completed by January 31,2006. (T. P. 7/7/10, pp. 45-46) However, for several months after January 31, 2006, Rizzo continued to participate in the construction process and visited the construction site on a frequent basis. (Id, pp. 100,154; defendant’s exhibit No. 2, p. 64) During that same time period, Rizzo never alleged that MSA had breached the parties’ agreement by failing to close by January 31,2006, and to the contrary, consistently indicated that he intended to proceed with the closing after that date. (T. R 7/7/10, pp. 150, 155; defendant’s exhibit no. 2, pp. 64-65)

Rizzo did not obtain a mortgage commitment prior to the original closing date of January 31,2006. (Defendant’s exhibit no. 2, pp. 65-66) Moreover, although Rizzo secured apre-qualification letter from WachoviaBank onMarch 14, 2006 and an interest rate disclosure letter from Quicken Loans on March 23,2006, he did not complete and submit a written mortgage application to a lender at that time. (T. P. 7/7/10, pp. 39-40, 65-67; plaintiff’s exhibit nos. 16,17) In fact, Rizzo did not secure a mortgage commitment until June 14, 2006. (Defendant’s exhibit no. 3, pp. 1-2)

On April 7, 2006, a certificate of occupancy was issued for the home, thereby reflecting that the residence was substantially completed. (T. P. 7/7/10, pp. 41-42; plaintiff’s exhibit no. 3) However, on April 26,2006, Rizzo prepared and forwarded a “Real Estate Closing Statement” to MSA outlining his complaints regarding KAB and setting forth a list of items that he required to be completed in order to conclude the transaction. (Defendant’s exhibit no. 3, pp. 3-7) On May 7, 2006, Rizzo mailed a letter to MSA stating that “[t]he house can close in less than one week and we will both be done with this” if MSA agreed to “reduce the selling price to $340,000.00.” (Defendant’s exhibit no. 7) While Rizzo’s correspondence was highly critical of KAB, Rizzo represented that he “would definitely recommend [MSA] due to your willingness to set this straight.” (Id.)

On June 12, 2006, MSA transmitted a certified mail letter to Rizzo demanding that Rizzo close on the parties’ real estate transaction within two weeks. (Defendant’s Exhibit No. 3, pp. 10-11) On that same date, Rizzo’s counsel transmitted a letter to MSA confirming that Rizzo had been advised by MSA “on June 9 that he must close ‘within two weeks.’” (Id., p. 12) In his correspondence, Rizzo’s counsel demanded that MSA return Rizzo’s down payment of $5,000.00 and reimburse Rizzo for “the cost of the upgrades to your property” which Rizzo had furnished through KAB. (Id.) The parties’ ensuing negotiations proved to be futile and Rizzo instituted this suit on July 10, 2006.(Docket entry No. 1)

MSA subsequently listed the subject property for sale at an advertised price of $449,000.00, which price exceeded the MSA-Rizzo price by $62,000.00. (T. P. 7/7/10, p. 84; plaintiff’s exhibit No. 8) Although MSA had not utilized the services of a realtor for the MSA-Rizzo transaction, they were required to retain a realtor to list the Jefferson Township property for sale after Rizzo declined to conclude the parties’ transaction. (T. P. 7/7/10, pp. 80-81) On January 24, 2007, MSA sold the property to Zhong M. Geng and Hui X. Hou for the sum of $365,000.00. (Id., pp. 51-52, 191; defendant’s exhibit nos. 4-5) In the interim period between June 2006 and January 24, 2007, MSA incurred utility expenses of $1,091.23 to maintain the property and also paid a real estate commission of $14,600.00 on the MSA-Geng/Hou sale. (Defendant’s exhibit no. 6)

In his amended complaint, Rizzo advanced a cause of action for breach of contract and asserted that MSA “breached the contract by failing to convey title to the property on or before January 31, 2006.” (Docket entry no. 6, ¶25) Rizzo alternatively averred that he is entitled to damages from MSA based upon the doctrine of unjust enrichment. (Id., ¶27-28) In its responsive pleading, MSA set forth a counterclaim seeking damages for its lost profit on the parties’ aborted transaction, the real estate commission it paid in conjunction with the substituted sale on January 24, 2007, additional utility expenses incurred to maintain the property between June 2006 and January 2007, and interest costs attributable to Rizzo’s breach of contract. (Docket entry no. 16, ¶¶34-37)

Since the parties had mutually modified the original closing date of January 31, 2006 and Rizzo had breached his mortgage application obligation prior to that date, a verdict was not entered in his favor with respect to his breach of contract claim predicated upon the initial closing date of January 31, 2006. Nevertheless, inasmuch as he had provided MSA with a driveway, sidewalk, landscaping, hardwood flooring, kitchen cabinets and appliances under circumstances making it inequitable for MSA to retain those benefits without payment of value, a verdict was entered in Rizzo’s favor “only on his claim for unjust enrichment in the amount of $42,345.04 representing his down payment of $5,000.00, the value of the extra-contractual improvements to the subject property in the amount of $34,500.00 for a concrete driveway, landscaping, a concrete sidewalk, hardwood flooring, and kitchen cabinets, and $2,845.04 for appliances that were purchased by [Rizzo] and installed in the subject property prior to its sale by [MSA] on January 24, 2007.” (Docket entry no. 48, pp. 1-2) As for MSA’s counterclaim, a breach of contract verdict was entered in its favor “in the amount of $37,691.23 comprised of the lost profit of $22,000.00 on the MSA, Inc. - Bryan Rizzo Agreement ($387,000.00 price - $365,000.00 actual sales price = $22,000.00), the real estate commission of $14,600.00, and $1,091.23 for utility expenses paid relative to the subject property from the date that the sale to [Rizzo] was scheduled to occur until the eventual sale of the property to Zhong M. Geng and Hui X. Hou on January 24,2007.” (Id., at p. 2) MSA’s breach of contract damages were ordered to bear 6 percent interest per annum from the date that payment was due. {Id.)

Rizzo now seeks JNOV relative to MSA’s breach of contract verdict against him. Rizzo claims that MSA “breached when the property was not prepared to close on the ‘time is of the essence’ settlement date.” (Plaintiff’s brief in support, p. 5) According to Rizzo, “once [MSA] breached, Mr. Rizzo was absolved of his duties to perform under the contract” and “was not obligated to perform in any way as above set forth.” {Id., pp. 7, 9) MSA counters that Rizzo agreed to extend the original closing date based upon KAB’s dilatorious actions, only to later breach the parties’ revised agreement by failing to close in June 2006. (Defendant’s reply brief, pp. 5-6)

MSA similarly requests JNOV as to Rizzo’s unjust enrichment verdict and asserts “that Rizzo failed to establish either a benefit conferred upon MSA or that any benefit was unjustly retained by MSA.” (Id., p. 10) Relying upon D.A. Hill Co. v. Cleve Trust Realty Investors, 524 Pa. 425, 573 A.2d 1005 (1990), MSA argues that judgment must be entered in its favor on Rizzo’s unjust enrichment claim. (Defendant’s brief in support, pp. 5-7) MSA baldly asserts that “Rizzo produced absolutely no evidence that the monies he expended resulted in any increase in the value to the home.” (Defendant’s reply brief, p. 12) Last, MSA contends that “Rizzo has not sustained his burden of proof or even adducing (sic) any evidence to show that MSA was either enriched or that it was enriched (sic), thus, as a matter of law, this court should reverse its award of unjust enrichment.” (Id, p. 13) The parties’ JNOV requests will be addressed seriatim.

II. DISCUSSION

(A) STANDARD OF REVIEW

Both parties seek to vacate the verdicts entered against them and request the entry of judgment in their favor pursuant to Pa. R.C.P. 227.1(a)(2). Judgment notwithstanding the verdict (JNOV) may be entered upon two bases: one, the movant is entitled to judgment as a matter of law, and/or two, the evidence was such that no two reasonable minds could disagree that the outcome should have been rendered in favor of the movant. Reott v. Asia Trend, Inc., 2010 WL3636231 at *2 (Pa. Super. 2010); Busy Bee, Inc. v. Wachovia Bank, N.A., 2006 WL 723487 at * 18 (Lacka. Co. 2006), aff'd., 932 A.2d248 (Pa. Super. 2007), app. denied, 598 Pa. 778, 959 A.2d 318 (2008). With the first, a court reviews the record and concludes that even with all factual inferences decided adverse to the movant, the law nonetheless requires a verdict in favor of the moving party. Lockley v. CSX Transportation, Inc., 2010 WL 3529808 at * 7 (Pa. Super. 2010); White v. Behlke, 2009 WL 1904102 at * 8 (Lacka. Co. 2009), aff’d., No. 1213 MDA2009 (Pa. Super. Oct. 12, 2010). Whereas with the second, the court reviews the evidentiary record and concludes that the evidence was such that a verdict for the movant was beyond peradventure. Mirizio v. Joseph, 2010 WL 1645965 at *3 (Pa. Super. 2010); Bradford Forest Products, Inc., v. Amity & Co., Inc., 2002 WL 34098013 at *5 (Lacka. Co. 2002), aff’d, 844 A.2d 1274 (Pa. Super. 2003), app. denied, 578 Pa. 693, 851 A.2d 141 (2004). JNOV should be entered only in the clearest of cases, and if any basis exists upon which the court could have properly made its award, then that verdict must be affirmed. Scampone v. Grane Healthcare Co., 2010 WL 2780315 at * 9 (Pa. Super. 2010); Millan v. Petsmart, 2006 WL 2065405 at * 6 (Lacka. Co. 2006), aff’d., 935 A.2d 32 (Pa. Super. 2007).

The findings of the judge in a non-jury trial are given the same weight and effect as a jury verdict such that an appellate court will not disturb the trial court’s factual findings on the basis that the appellate court would have reached a different conclusion. Ruthrauff Inc. v. Ravin, Inc., 914 A.2d 880, 888 (Pa. Super. 2006), app. denied, 599 Pa. 711, 962 A.2d 1197 (2008). In a bench trial, “assessments of credibility and conflicts in evidence are for the trial court to resolve.” Sovereign Bank v. Valentino, 914 A.2d 415, 420 (Pa. Super. 2006); Tailor v. Tailor, 2010 WL 1779341 at * 1-2 (Lacka. Co. 2010). For that reason, the trial judge, as factfinder, is free to believe all, part or none of the evidence presented. Ruthrauff, Inc., supra; Sovereign Bank, supra; Sayer v. Demkosky, 2008 WL 1926734 at * 3 (Lacka. Co. 2008). Governed by this standard of review, the merits of the parties’ requests for JNOV will be addressed.

(B) RIZZO’S JNOV REQUEST

Rizzo claims that he cannot be liable for breach of contract as a matter of law inasmuch as he was purportedly absolved of all contractual duties once MSA failed to consummate the closing on January 31, 2006. To succeed with its cause of action for breach of contract, MSA was required to establish: (1) the existence of an agreement, including its essential terms; (2) Rizzo’s breach of a duty imposed by that agreement; and (3) damages suffered by MSA from the breach. McShea v. City of Philadelphia, 995 A.2d 334,340 (Pa. 2010); Busy Bee Inc., supra at *26. When a party fails to perform any obligation imposed by the parties’ agreement, the lack of performance is deemed a breach of the agreement creating that obligation. John B. Conomos, Inc. v. Sun Co., Inc., 831 A.2d 696, 707-708 (Pa. Super. 2003), app. denied, 577 Pa. 697, 845 A.2d 818 (2004); Millan, supra at *7.

A written agreement may be orally modified under Pennsylvania law, even when the contract expressly provides that all modifications must be in writing. ADP, Inc. v. Morrow Motors, Inc., 969 A.2d 1244, 1249 (Pa. Super. 2009). “Our Supreme Court has recognized that ‘even though the time fixed in an agreement for settlement is stated to be of the essence of the agreement, it may be extended by oral agreement or be waived by the conduct of the parties and where the parties treat the agreement as in force after the expiration of the time specified for settlement, it becomes indefinite as to time and neither can terminate it without reasonable notice to the other.’” Davis v. Northridge Development Associates, 622 A.2d 381, 385 (Pa. Super. 1993) (quoting Warner Company v. MacMullen, 381 Pa. 22, 29,112 A.2d 74, 78 (1955)), app. denied, 537 Pa. 623, 641 A.2d 588 (1994). The testimonial and documentary evidence clearly demonstrated that Rizzo and MSA both agreed to waive the “time is of the essence” settlement date of January 31,2006. See, Empire Properties, Inc. v. Eqaireal, Inc., 674 A.2d 297, 303 (Pa. Super. 1996). Rizzo had not even made application for a mortgage as of that date and continuously represented and acted as though he intended to proceed with the revised closing throughout the spring of 2006. As such, Rizzo’s post-trial claim that MSA breached the parties’ agreement by failing to close on January 31, 2006 is wholly devoid of merit.

It is true that a material breach by one party to a contract entitles the non-breaching party to suspend contractual performance. See, Widmer Engineering, Inc. v. Dufalla, 837 A.2d 459, 467 (Pa. Super. 2003), app. denied, 578 Pa. 701, 852 A.2d 313 (2004); Busy Bee, Inc., supra at *57. The parties’ agreement obligated Rizzo to submit a completed, written mortgage application within ten days of September 23, 2005. Rizzo did not make any such application until June 14, 2006. Therefore, three months prior to the original closing date of January 31, 2006, Rizzo breached the mortgage contingency clause of the parties’ agreement. In the eyes of the law, he could not be classified as a “non-breaching party” entitled to suspend further contractual performance as of January 31, 2006.

The credible evidence demonstrated that Rizzo had agreed through his words and actions to purchase the subject property in the late spring 2006, but breached that enforceable promise by refusing to consummate the transaction in June 2006. By letter dated June 12, 2006, MSA’s president warned Rizzo that MSA would incur additional expenses, including the services of a realtor, if Rizzo refused to close in June 2006. (Defendant’s exhibit no 3, p. 11) The evidence further established that MSA incurred those consequential damages and its lost profit as a result of Rizzo’s breach. Accordingly, MSA satisfied its burden of proof with respect to its breach of contract claim, and Rizzo has not demonstrated that the law requires a verdict in his favor on MSA’s contract claim or that the evidence was such that a verdict in his favor was beyond peradventure.

(C) MSA’S JNOV REQUEST

In his sole breach of contract claim, Rizzo alleged that MSA breached the parties’ agreement “by failing to convey title to the property on or before January 31, 2006.” (Docket entry no 6, ¶ 25) As noted above, the parties mutually extended that completion date due to KAB’s delays and Rizzo’s concomitant failure to fulfill his contractual mortgage application obligation by that date. Hence, there was no credible evidentiary basis upon which to conclude that MSA was contractually liable for not closing the transaction by January 31, 2006. Notwithstanding that fact, a verdict was entered in favor of Rizzo on his alternate theory of unjust enrichment. MSA contends that Rizzo’s unjust enrichment claim was insufficient as a matter of law.

A claim for unjust enrichment arises from a quasi-contract which “imposes a duty, not as a result of any agreement, whether expressed or implied, but in spite of the absence of an agreement, when one party receives unjust enrichment at the expense of another.” Stoeckinger v. Presidential Financial Corp. of Delaware Valley, 948 A.2d 828, 833 (Pa. Super. 2008). The elements of unjust enrichment are “benefits conferred on defendant by plaintiff, appreciation of such benefits by defendant, and acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value.” Safe Auto Insurance Company v. Berlin, 991 A.2d 327, 336 n. 6 (Pa. Super. 2010); DTK Ventures, L.P. v. Russo, 2006 WL 2988463 at * 7 (Lacka. Co. 2006). The most significant element of the doctrine of unjust enrichment is whether the enrichment of the defendant is unjust. Berlin, supra; Northeast Fence & Iron Works, Inc. v. Murphy Quigley Co., Inc., 933 A.2d 664, 669 (Pa. Cmwlth. 2007), app. denied, 596 Pa. 755, 947 A.2d 737 (2008).

To recover under an unjust enrichment theory, the plaintiff must demonstrate that the defendant “either wrongfully secured or passively received” a benefit that it would be unconscionable for the defendant to retain. EBC, Inc. v. Clark Bldg. Systems, Inc., 618 F.3d 252, 273 (3rd Cir. 2010); Limbach Co., LLC v. City of Philadelphia, 905 A.2d 567, 575 (Pa. Cmwlth. 2006) (quoting Torchia v. Torchia, 499 A.2d 581, 582 (Pa. Super. 1985)); Buntz v. Peperno, 2008 WL 693590 at * 8 (Lacka. Co. 2008). Whether the doctrine applies depends upon the particular factual circumstances of each case. Berlin, supra; Filippi v. City of Erie, 968 A.2d 239, 242 (Pa. Cmwlth. 2009). In determining if the doctrine applies, the focus is not on the intention of the parties, but rather on whether the defendant has been unjustly enriched. Filippi, supra; Northeast Fence & Iron Works, 933 A.2d at 668-69. Where unjust enrichment is found, “the law implies a quasi-contract which requires the defendant to pay to plaintiff the value of the benefit conferred.” Northeast Fence & Iron Works, supra at 669.

It is undisputed that a direct contractual relationship existed between MSA and KAB in that MSA specifically retained KAB to build Rizzo’s home, as MSA had done on other construction projects. (T. P. 7/7/10, pp. 22-25, 55, 66; JPO, pp. 2, 9) MSA had direct dealings with KAB throughout the course of the Rizzo construction and was fully cognizant of the extra-contractual additions to the home that had been requested and financed by Rizzo. (Defendant’s ehibit no 3, pp. 3-11) More importantly, MSA also injected itself into the Rizzo-KAB dispute concerning completion of the extra-contractual items and became actively involved with ensuring the completion of most of that work by KAB. In his letter to Rizzo dated June 12, 2006, MSA’s president acknowledged the “difficulty” that Rizzo was experiencing with KAB’s completion of that additional work and further confirmed that MSA had “work[ed] with [Rizzo] and KAB to get these items achieved, which most of [Rizzo’s extra-contractual] items have been completed, as a result of [MSA’s] efforts....” (Id., p. 11).

When MSA later assumed exclusive control of the property and listed it for sale, MSA retained the benefit of the extra-contractual items that had been purchased by Rizzo. The credible direct and circumstantial evidence established that those extras enhanced the value of the property. Indeed, when MSA advertised the home and land for sale, it published a listing price that exceeded the MSA-Rizzo contract price by $62,000.00. Consequently, the credible proof demonstrated that MSA either wrongfully secured or passively received a benefit of $37,345.04 in extra-contractual improvements and appliances, not including Rizzo’s contractual down payment of $5,000.00.

Despite the foregoing evidentiary record, MSA avers that the holding in D. A. Hill Co. dictates that judgment must be entered in MSA’s favor on Rizzo’s unjust enrichment claim. In D.A. Hill Co., a construction lender foreclosed on aparcel of partially-developed property after the developer defaulted on the lender’s construction loan, and unpaid subcontractors instituted an unjust enrichment action against the lender on the theory that the lender had been unjustly enriched by obtaining possession of the project for less than its full value. The lender denied that it had been enriched since it had paid the developer various amounts, although those sums had not been remitted to the subcontractors, and the subcontractors had failed to acknowledge the payouts under the loan that the lender had made to the developer prior to its foreclosure on the property. In accepting the lender’s position, the Supreme Court reasoned that the subcontractors had not shown “the existence of a benefit” since “the subcontractors failed to establish that the value of the improved property at the time of foreclosure exceeded amounts already advanced by [lender] on the construction loan.” D.A. Hill Co., 524 Pa. at 433-434, 573 A.2d at 1010.

The court in D.A. Hill Co. cited Meehan v. Cheltenham Township, 410 Pa. 446, 189 A.2d 593 (1963) and the Restatement of Restitution §110 (1936) as having created a two part test for unjust enrichment to be applied “in a case where a subcontractor has provided services and chattels to an owner who had no direct contractual relationship to the subcontractor....” Id., at 432, 573 A.2d at 1009 (emphasis added). In such a case, “(1) any benefit conferred must...be measured by the value of the benefit to the owner...and (2) the owner’s retention of the benefit without paying any compensation to the subcontractor would not be unjust if the owner did not contract directly with or mislead the subcontractor.” Id. (emphasis added) Thus, a critical component of the holding in D.A. Hill Co. was the absence of any direct contractual relationship between the owner/lender and the unpaid subcontractors.

Subsequent appellate precedent has distinctly recognized that distinguishing feature of the D.A. Hill Co. analysis. In Limbach Co., supra, a contractor sued the city of Philadelphia and its industrial authority to recover for unpaid work that the contractor had performed on airport terminals pursuant to a contract with U.S. Airways. In reversing the trial court’s dismissal of the contractor’s unjust enrichment claim against the city and its industrial authority, the Commonwealth Court analyzed D.A. Hill Co. and Meehan and concluded that “[t]he real question is whether the property owner had direct dealings with the subcontractor, which caused the subcontractor to perform work.” Limbach Co., 905 A.2d at 577. Since the city and industrial authority were intimately involved with the airport terminal construction and maintained a reversionary interest in the project, the Commonwealth Court found that the city and industrial authority were not mere lenders like CleveTrust in D.A. Hill Co. and instead could be liable to the contractor for unjust enrichment based upon the services that the contractor provided to U.S. Airways. Id., at 577-578. Accord, Northeast Fence andiron Works, 933 A.2d at 670-671.

D.A. Hill Co. and its progeny would be controlling if Rizzo, or even KAB, sought to recover unjust enrichment damages from the property owners, Zhong M. Geng and Hui X. Hou, for the value of any extra-contractual work performed on the Jefferson Township property. Like the owners/lenders in D.A. Hill Co. and Meehan, Geng and Hou had no direct contractual relationship with either KAB or Rizzo. Geng and Hou also had no involvement with the construction extras requested by Rizzo and performed by KAB, and that additional work was completed long before Geng and Hou purchased the property. Therefore, pursuant to D.A. Hill Co. and Meehan, Geng and Hou could not be liable to Rizzo for unjust enrichment in the absence of proof that Geng or Hou somehow misled Rizzo or KAB.

However, in contrast to the property owners and subcontractors who litigated the unjust enrichment claims in D.A. Hill Co. and Meehan, MSA and KAB did have a direct contractual relationship, as did MSA and Rizzo. Moreover, unlike the lender/owner in D.A. Hill Co. which had paid the developer for the subcontractors’ work (even though the developer did not remit those monies to the subcontractors), MSA never paid Rizzo or KAB for the extra-contractual improvements made to the property. As a result, D.A. Hill Co. and Meehan are clearly inapplicable to Rizzo’s unjust enrichment claim against MSA.

The uncontroverted evidence established that direct contractual relationships existed between MSA-KAB for the construction of the home and MSA-Rizzo for the purchase of the property. MSA was closely involved with the construction project and had continuous contact and dealings with both KAB and Rizzo. Further, MSA was aware that the extra-contractual items had been installed in the home and was even responsible for ensuring their completion. Those additional improvements that were financed by Rizzo enhanced the value of the property that was sold by MSA. MSA passively received the benefit of those enhancements under circumstances that would make it unconscionable and inequitable for MSA to retain that benefit without payment of value to Rizzo.

The fact that MSA subsequently sold the Jefferson Township property for $365,000.00 does not alter the net award in Rizzo’s favor in the amount of $4,653.81. Following Rizzo’s refusal to close on the parties’ transaction in June 2006, MSA had a duty to mitigate its losses by taking reasonable actions to reduce or eliminate any damages attributable to the breach of contract. See, Delliponti v. DeAngelis, 545 Pa. 434, 443, 681 A.2d 1261, 1265 (1996). The credible evidence demonstrated that after MSA received the benefit of the extra-contractual improvements totaling $37,345.04, it listed the property for sale at $449,000.00, but accepted a purchase price of $365,000.00. Under the circumstances, MSA failed to reasonably mitigate its contractual damage by selling the property for a more reasonable price that reflected Rizzo’s extra-contractual improvements.

Although MSA’s failure to mitigate $37,345.04 of its damages was not specified as an alternate basis for the net award in the non-jury verdict of July 8, 2010, the verdict may be affirmed on any valid grounds, including those that were not originally relied upon by the trial court. See, Szymanowski v. Brace, 987 A.2d 717, 725 & n. 8 (Pa. Super. 2009), app. denied, 997 A.2d 1179 (Pa. 2010). Whether upon a finding of unjust enrichment or a failure to mitigate, Rizzo is entitled to a credit of $37,345.04 for the extra-contractual items and appliances that he furnished to MSA. In either event, MSA has not established its entitlement to the drastic remedy of JNQV. See, Scampone, supra (if any basis exists upon which the court could have properly made its award, the lower court verdict must be affirmed).

ORDER

And now, November 5, 2010, upon consideration of “plaintiff’s motion for post-trial relief pursuant to Pa. R.C.P. 227.1” and “defendant MSA, Inc.’s post-trial motion,” the memoranda of law submitted by the parties and the credible evidence introduced during the bench trial, and based upon the reasoning set forth in the foregoing memorandum, it is hereby ordered and decreed that:

1. The motion for post-trial relief filed by plaintiff Bryan Rizzo is denied;

2. The motion for post-trial relief filed by defendant MSA, Inc. is denied;

3. Judgment is entered in favor of plaintiff Bryan Rizzo and against defendant MSA, Inc., on the plaintiff’s direct claim in the amount of $42,345.04, and in favor of defendant MSA, Inc. and against plaintiff Bryan Rizzo in the amount of $37,691.23, plus interest at the rate of 6 percent per annum from the date payment was due, on the defendant’s counterclaim; and

4. A net judgment is entered in favor of plaintiff Rizzo in the amount of $4,653.81, not including statutory interest to be calculated on the counterclaim award in favor of defendant MSA, Inc. in the amount of $37,691.23.

      . Without objection, MSA’s Exhibit Nos. 1 through 7 were admitted into evidence. (T. P. 7/7/10, pp. 196-197).

      . Rizzo’s “Real Estate Closing Statement” acknowledges that the original completion date “was revised” by the parties on numerous occasions due to delays attributable to KAB. (Defendant’s Exhibit No. 3, P-3)

      . Since Rizzo’s unjust enrichment claim concerns additional work that was performed outside any promises made in the MSA-Rizzo Agreement, the existence of a written contract between MSA and Rizzo does not preclude Rizzo from recovering on his unjust enrichment claim. Ruthrauff, Inc., 914 A.2d at 893.

      . According to Limbach, the D.A. Hill Co. court also deemed it significant that the subcontractors in that case “had voluntarily waived their rights to mechanics’ liens and went forward without being protected by a performance bond.” Limbach Co., 905 A.2d at 577 n. 10. As per Limbach, the D.A. Hill Co. court “characterized this decision as a calculated decision that carried a certain amount of risk, and that it would be ‘manifestly unfair’ to restructure the contractual arrangement so as to shift the risk onto CleveTrust.” Id. (quoting D.A. Hill Co., 524 Pa. at 434, 573 A.2d at 1010).


source: Caselaw Access Project

author: PARISI, J.,

license: Public Domain

text:
    Commonwealth v. Zakzuk-Deulofeut
    C.P. of Berks County,
    no. CP-06-CR-3103-2009.

      Alisa R. Hobart, for Commonwealth.

      Jill M. Scheidt, for defendant.
    November 9, 2010
   PARISI, J.,

The defendant appeals this court’s order denying his post-sentence motion to withdraw his nolo-contrendre plea. The defendant entered anolo-contendere plea to one count of possession of a small amount of marijuana/30 grams or less entered on March 5,2010 following the close of the commonwealth’s case at a non-jury trial. The defendant was sentenced to pay a fine in the amount of $200.00. The defendant was represented by George Gonzalez, Esquire (defense counsel) at his bench trial, plea, and sentencing. The defendant filed the motion on April 27, 2010. On August 10, 2010, this court held a hearing on the motion. On September 14, 2010, this court denied the defendant’s motion. On October 12, 2010, the defendant filed a notice of appeal.

The defendant raises the following claim on appeal:

1. Whether trial counsel was constitutionally incompetent in failing to advise appellant of the deportation consequences of pleading nolo contendere to possession of marijuana pursuant to Padilla v. Kentucky, 130 S.Ct. 1473, 176 L.Ed.2d284 (2010)?

Defendant’s concise statement of matters complained of on appeal, 10/25/10.

The defendant contends he is entitled to withdraw his plea of nolo contendere pursuant to the Supreme Court’s recent decision in Padilla v. Kentucky, 130 S.Ct. 1473, 176 L.Ed.2d 284 (2010). Padilla held that the failure of a criminal defense attorney to advise his non-citizen client of the immigration consequences of a guilty plea renders the defense attorney incompetent under the first prong of the ineffective assistance of counsel test set forth in Strickland v. Washington, 466 U.S. 668 (1984). Under Strickland’s two-prong test, counsel is deemed ineffective when: (1) their representation falls below an objective standard of reasonableness; and (2) the defendant demonstrates there is a reasonable probability that, but for counsel’s unprofessional errors, the result of the proceeding would have been different. Id.

In Padilla, defense counsel provided his non-citizen client with incorrect advice regarding the immigration consequences of pleading guilty to a marijuana trafficking offense. 130 S.Ct. at 1478. In reaching its decision, the Supreme Court stated deportation. is a severe penalty and recognized that our law has enmeshed criminal convictions with the penalty of deportation given the broad class of offenses for which a conviction results in automatic deportation. Id. at 1481. The court found it “most difficult” to divorce the penalty from the conviction in the deportation context, and concluded that advice regarding the immigration consequences of a guilty plea falls under the Sixth Amendment right to effective assistance of counsel. Therefore, defense counsel had an obligation to advise his client that the offense to which his client was pleading guilty would result in deportation since the consequences of pleading guilty could easily be determined from reading the text of the removal statute. Id. at 1483.

The court further opined that “[w]hen the law is not succinct and straightforward...a criminal defense attorney need do no more than advise a noncitizen client that pending criminal charges may carry a risk of adverse immigration consequences.” Id. However, rather than granting the defendant a new trial, the Supreme Court remanded the case stating whether the defendant was entitled to relief depended on whether he had been prejudiced by counsel’s action. Id.

The defendant in the present case, a non-citizen, is not entitled to relief as trial counsel satisfied his constitutional obligations under Padilla. Additionally, even if trial counsel’s actions were deemed to fall below the standard in Padilla, the defendant is not entitled to relief as he has not demonstrated that trial counsel’s actions prejudiced him.

Given the holding in Padilla, criminal defense attorneys are required to accurately inform a non-citizen defendant of the deportation consequences of pleading guilty when the law is clear that the offense will result in automatic deportation. When the law is unclear, however, a defense attorney must advise his client that pleading guilty may result in adverse immigration consequences to meet their constitutional obligations under Padilla.

Prior to the charge being filed in the present case, trial counsel successfully represented the defendant in a cancellation of deportation hearing following a conviction for a possessory drug offense in 2008. At the hearing on the defendant’s motion to withdraw his plea, trial counsel testified that he was unsure about what effect the prior cancellation of deportation would have in a subsequent immigration hearing if the defendant pled nolo contendere to possession of a small amount of marijuana in this case. After researching the issue and conferring with other immigration attorneys, trial counsel remained uncertain about the risk of deportation. Because the law in this area was unclear, trial counsel was simply required to advise the defendant that a plea of nolo contendere could result in deportation under Padilla. Trial counsel fulfilled this obligation, as the credible evidence in the record establishes defense counsel advised the defendant prior to accepting the plea, that a plea of nolo contendere could result in deportation. Consequently, defense counsel’s representation did not fall below an objective standard of reasonableness.

Furthermore, the record from the defendant’s nolo contendere plea colloquy establishes that the defendant was adequately informed of the possible immigration consequences of his plea. (Notes of testimony, nolo contendere plea colloquy, March 5,2010, at p. 20-21) The defendant prepared and signed a statement accompanying defendant’s request to enter a nolo contendere plea with trial counsel’s assistance. On page 1, paragraph 4 of this document, the defendant indicated that he is not a United States citizen and understood that by entering his plea "[he] may be deported or face other actions which may affect [his] ability to remain in the United States." The defendant signed this document at the bottom of page one and also at the end of the document. He further stated on the record that he understood everything in the document and he did not have any questions about its content. Id. at 21. Additionally, trial counsel provided his signature at the end of the document indicating that he had explained the defendant’s rights to him as they were set out in the document. Based on all ofthese circumstances, trial counsel did not render ineffective assistance under Padilla.

Additionally, the Supreme Court determined, in Padilla, that a defendant seeking relief on the basis of their defense counsel failing to properly advise them of the immigration consequences of a plea must also establish the additional element of prejudice to obtain relief. Accordingly, even if a reviewing court finds that defense counsel’s actions in this case fell below an objective standard of reasonableness, the defendant is not entitled to relief unless he further establishes that counsel’s actions prejudiced him. Moreover, to establish ineffective assistance of counsel under Pennsylvania law, a defendant must demonstrate (1) their underlying claim is of arguable merit; (2) the course of conduct pursued by counsel did not have some reasonable basis designed to effectuate the client’s interests; and (3) counsel’s actions prejudiced the defendant. Commonwealth v. Hammond, 953 A.2d 544, 556 (Pa. Super. 2008).

The defendant in this case is not entitled to relief under either federal or Pennsylvania law as trial counsel’s actions had a reasonable basis and the defendant has failed to demonstrate that trial counsel’s actions prejudiced him.

The evidence presented by the commonwealth at the defendant’s bench trial was more than sufficient to support the defendant’s conviction of possession of a small amount of marijuana. Reading Police Officer Tina Fallstich entered the defendant’s apartment in response to a domestic dispute. She observed the defendant hand a young child a green item when she asked to search the defendant. The child subsequently gave the item, a small packet of marijuana, to Officer Fallstich. After weighing the commonwealth’s evidence and the defense’s strategy, trial counsel believed that the defendant would be convicted if the case went to this court for verdict. Given the nebulous state of law regarding deportation in the context of this case and his belief that a conviction was imminent based on the commonwealth’s evidence, trial counsel determined the defendant’s best chance to avoid deportation was no longer to seek an acquittal at trial, but to enter a plea of nolo contendere. Moreover, the evidence in the record established that the defendant already had actual knowledge that his plea could result in deportation, as the judge at his 2008 deportation hearing warned him that he could be deported if he got into trouble again.

Under the circumstances, trial counsel’s actions had a reasonable basis designed to effectuate the defendant’s best interests. Given the evidence presented at trial, the defendant has not established a reasonable probability that the immigration consequences would have been different if counsel had told the defendant that a plea of nolo contendere to possessing a small amount of marijuana would automatically result in deportation. As a result, the defendant was not prejudiced when trial counsel advised him to take this plea and stated that it “could go either way” with regard to deportation.

Therefore, relief is not warranted under Pennsylvania law nor under the ineffectiveness standard established in Strickland and expanded upon in Padilla.

For the foregoing reasons, this court respectfully requests that the defendant’s appeal be denied.

      . 35 P.S. § 780-113(a)(31).

      . Since the defendant’s motion was filed after the ten-day time limit in Pa. R. Crim. P. 720 and the thirty-day time limit in 42 Pa. C.S.A. §5503, the motion should be treated as a request for relief under Pennsylvania’s Post-Conviction Relief Act (PCRA), 42 Pa. C.S.A. §9541 et seq.

      . This court recognizes that the defendant’s motion to withdraw his plea is predicated on an ineffective assistance of counsel claim which must be brought under 42 Pa. C. S.A. §9545 et seq. Section 9543 requires, as a procedural matter, that a defendant seeking relief under the PCRA be serving a sentence of imprisonment, probation, or parole. While the defendant in this case was only sentenced to pay a fine, we will nevertheless address the merits of the defendant’s claims, as the Padilla court determined that deportation is no longer a collateral consequence of a criminal conviction and counsel’s conduct in this regard is a basis for ineffectiveness under the Sixth Amendment.

      . Under 8 U.S.C.A. § 1227(a)(2)(B)(i), any alien convicted of an offense relating to controlled substances, other than a single offense involving possession for one’s own use of 30 grams or less of marijuana, is deportable. Here, trial counsel stated he was unsure whether the cancellation of deportation wiped away the prior possession offense for purposes of mandatory deportation. Trial counsel indicated that his independent research on this issue did not reveal a clear answer and that his discussions with other immigration attorneys yielded a split of opinions.

      . This court notes that trial counsel’s actions were especially reasonable given that when the defendant entered his plea on March 5, 2010, trial counsel did not have the benefit of the Supreme Court’s decision in Padilla as this decision was not entered until March 31, 2010. Commonwealth v. Frometa, 555 A.2d 92 (Pa. 1989), which held that defense counsel is not ineffective for failing to inform their clients of the immigration consequences of accepting a plea because these consequences were collateral to the criminal conviction, was the controlling law at the time of the defendant’s plea. Padilla subsequently overruled Frometa.

      After considering the answers which the defendant gave at his plea colloquy and the answer’s provided by the defendant in his statement accompanying defendant’s request to enter a nolo contendere plea, this court finds the defendant entered his plea knowingly, intelligently, and voluntarily.


author: LAWRENCE, Member,

text:
    Office of Disciplinary Counsel v. Corcoran
    Disciplinary Docket no. 74 DB 2009.
   To the Honorable Chief Justice and Justices of the Supreme Court of Pennsylvania:

June 22, 2010

LAWRENCE, Member,

Pursuant to rule 208(d)(2)(iii) of the Pennsylvania Rules of Disciplinary Enforcement, the Disciplinary Board of the Supreme Court of Pennsylvania (“Board”) herewith submits its findings and recommendations to your honorable court with respect to the above-captioned petition for discipline.

I. mSTORY OF PROCEEDINGS

On May 18, 2009, Office of Disciplinary Counsel filed a petition for discipline against Richard M. Corcoran. The petition charged respondent with violations of the Rules of Professional Conduct and Rules of Disciplinary Enforcement arising out of allegations that respondent engaged in misconduct in three separate matters. Respondent filed an answer to petition on June 30, 2009.

A disciplinary hearing was held on October 1, 2009, before a District IV hearing committee comprised of Chair Edwin W. Smith, Esquire, and members David S. Posner, Esquire, and Henry M. Casale, Esquire. Respondent represented himself.

The hearing committee filed a report on February 12, 2010 and concluded that respondent violated the rules as charged in the petition for discipline. The committee recommended that respondent be disbarred from the practice of law.

No briefs on exception were filed by the parties.

This matter was adjudicated by the disciplinary board at the meeting on April 14, 2010.

II. FINDINGS OF FACT

The board makes the following findings of fact:

1. Petitioner, whose principal office is located at Pennsylvania Judicial Center, 601 Commonwealth Ave., Suite 2700, P.O. Box 62485, Harrisburg, Pennsylvania, is invested pursuant to Rule 207of the Pennsylvania Rules of Disciplinary Enforcement,with the power and the duty to investigate all matters involving alleged misconduct of an attorney admitted to practice law in the Commonwealth of Pennsylvania and to prosecute all disciplinary proceedings in accordance with the various provisions of the aforesaid rules.

2. Respondent is Richard M. Corcoran. He was born in 1967 and was admitted to practice law in the Commonwealth of Pennsylvania in 1995. His attorney registration address is 106 N. Center St., Ebensburg, Pa. 15931. He is subject to the jurisdiction of the disciplinary board of the Supreme Court of Pennsylvania.

3. Respondent has a record of prior discipline consisting of an informal admonition administered in 2005 for violations of RPC 1.3,1.4(a) and 8.4(d).

4. Since 2006, respondent has been a sole practitioner and has worked part-time for the public defender’s office in Cambria County.

Charge I

5.As of May 26, 2005, respondent was representing Kathryn Griffiths (formerly Weber) in a divorce action filed on her behalf against Richard Weber, in the Court of Common Pleas of Mercer County.

6. By order of May 26,2005, Judge Christopher J. St. John ordered that the sum of $1,687.50 be paid by Mercer County to attorney John Regule, the court-appointed master, for his service in the Weber divorce action.

7. Pursuant to that order the prothonotary of Mercer County paid $1,687.50 to Mr. Regule.

8. By order of August 14,2006, concerning the Weber action, Judge St. John directed in part, that:

a. the escrowed monies from the sale of the marital residence and personal property being held by respondent in escrow shall be distributed with the balance of master’s fees and costs paid first from the proceeds;
b. respondent was required to contact the prothonotary’s office to secure the total amount owing; and
c.the balance of the escrowed proceeds be divided equally between the parties.

9. On September 7, 2006, respondent deposited into his IOLTA account at Ameriserv Financial, the proceeds of a check in the amount of $31,108.72 issued by attorney Dennis Govachini and annotated “ Weber v. Weber Escrow account.”

10. The check represented the proceeds for the sale of the Webers’ marital residence and personal property, which had been held in Attorney Govachini’s IOLTA account.

11. Respondent did not pay any funds to the Mercer County prothonotary for the master’s fees and costs as ordered by the court.

12. Respondent commingled the fees owed to him from the client with the amounts held in the IOLTA account.

13. After the above check cleared, on September 22, 2006, respondent was entrusted to hold in his IOLTA account at least $1,956.50 on behalf of Ms. Weber and Mr. Weber, representing the balance of the marital property proceeds.

14. As of September 27, 2006, respondent was representing Douglas Lidwell in a divorce action against Mary Ann Lidwell, in the Court of Common Pleas of Cambria County.

15. On September 27,2006, respondent deposited into his IOLTA account the proceeds of a check in the amount of $14,336.15 issued to him by Mr. Lidwell.

16. Mr. Lidwell provided respondent with the $14,336.15 so he could pay those funds to attorney Robert Petyak, Mary Ann Lidwell’s attorney, pursuant to a court-approved master’s report as part of the resolution of equitable distribution in the divorce.

17. As of September 27, 2006, respondent was entrusted to hold in his IOLTA account at least $ 16,292.65: $1,956.50 on behalf of Ms. Weber and Mr. Weber and $14,336.15 on behalf of Mr. Lidwell and Ms. Lidwell.

18. According to the master’s report, the Lidwells were to cooperate in executing any and all documents necessary for the transfer of assets to the parties and the division of the assets was to be accomplished within 45 days of the request of the other party to execute the necessary documents.

19. In a letter to respondent dated October 2, 2006, attorney Petyak stated that he and Ms. Lidwell were making a formal request that Mr. Lidwell execute all documentation and respondent’s client had 45 days.

20. The $14,336.15 should have been paid by respondent to attorney Petyak on behalf of Ms. Lidwell in December 2006.

21. Respondent did not pay attorney Petyak the monies due Ms. Lidwell in December 2006 because he did not have the funds to do so.

22. On about November 7, 2006, the law firm of Goldberg, McCafferty & McKeever in Philadelphia sent respondent and his wife, Michelle Corcoran, a notice that it was attempting to collect a debt owed to Washington Mutual, its client, in the amount of $14,134.54. This amount was necessary in order to make respondent’s mortgage current and respondent was informed that unless he paid this amount, a sheriff’s sale was scheduled on respondent’s residence on December 8, 2006.

23. On November 8, 2006, at respondent’s request, Ameriserv Financial wire transferred $14,134.54 from respondent’s IOLTA account to an account at First Trust Bank in Philadelphia on behalf of the Goldberg firm to prevent the Corcoran residence from being sold at the sheriff’s sale. Ameriserv also charged respondent a $25 wire fee for the transfer.

24.Respondent did not have the authority or consent of Mr. Weber and Ms. Weber, Mr. Lidwell and Ms. Lidwell or attorney Petyak on Ms. Lidwell’s behalf to use any of the $14,134.54 from respondent’s IOLTA account to pay respondent’s personal mortgage obligation and had no knowledge that respondent did so.

25. After the wire transfer was made and the wire transfer fee was charged, the balance in respondent’s IOLTA account was out of trust.

26. From November 8, 2006 through April 12, 2007, the balance in respondent’s IOLTA account was less than $16,292.65, with the lowest balance being $1,519.28 from March 27 through March 30 and April 10 through April 12, 2007. This was $14,773.37 less than the amount entrusted to respondent on behalf of the Webers and the Lidwells.

27. On about January 26, 2007, attorney Petyak, on behalf of Ms. Lidwell, filed a petition for contempt against Mr. Lidwell in part because respondent did not pay Ms. Lidwell the $14,336.15 she was entitled to receive from the amount that had been entrusted to respondent in his IOLTA account.

28. A hearing on the petition for contempt was held on March 5, 2007, at which respondent, Mr. Petyak, and the Lidwells were present. At that time, respondent told Judge F. Joseph Leahey, in part, that:

a. Mr. Lidwell would pay Ms. Lidwell the $10,000 by certified check and an additional $500 to pay Mr. Petyak for attorney’s fees within 30 days;
b. Within that time, Mr. Lidwell would pay Ms. Lidwell the “cash value” of the life insurance policy, which was $4,336.15.

29. On March 5, 2007, the balance in respondent’s IOLTA account was $2,413.56.

30. At the conclusion of the contempt hearing, Judge Leahey stated that the colloquy as referenced in the transcript would be entered as an order of court and if the order was not complied with the parties could be found in contempt.

31. When respondent did not pay the $14,336.15 to Ms. Lidwell and the $500 to Mr. Petyak within the agreed upon 30 days, Mr. Petyak filed a second petition for contempt against Mr. Lidwell on April 13, 2007.

32. Based upon the second petition for contempt, Judge Leahey issued an order, dated April 16,2007, directing, in part, that:

a. A rule was issued upon Mr. Lidwell to show cause why he should not be held in contempt of court for failing to pay the $14,336.15 to Ms. Lidwell and the $500 to Mr. Petyak;
b. Mr. Lidwell was directed to file an answer to petition within 20 days;
c. If no answer was filed by the return date, the court may make the rule absolute and hold Mr. Lidwell in contempt; and
d. The rule was returnable and ahearing was scheduled for May 9, 2007.

33. On May 4,2007, respondent hand-delivered to Mr. Petyak a check dated May 4, 2007, drawn on his IOLTA account, in the amount of $14,836.15, made payable to Mr. Petyak as attorney for Ms. Lidwell.

34. Along with that check, respondent hand-delivered his May 4, 2007 cover letter to Mr. Petyak, in which he stated that as the check was enclosed, the hearing set for May 9, 2007 could be cancelled.

35. When respondent gave Mr. Petyak the check, there were insufficient funds in his IOLTA account for that check to clear.

36. As of May 8, 2007, respondent was representing Denise Polites in a divorce action against Paul Polites, in the Court of Common Pleas of Cambria County.

37. In March 2007, criminal charges of simple assault, harassment, and disorderly conduct were pending against Mr. Polites regarding his conduct toward Mrs. Polites.

38. Respondent and counsel for Mr. Polites came to an agreement that Mrs. Polites would not press charges against Mr. Polites if he agreed to pay Mrs. Polites $4,000 for medical bills relating to injuries she sustained as a result of Mr. Polites’ conduct.

39. Mr. Polites agreed that $3,000 would be paid to respondent on behalf of Mrs. Polites and the remaining $1,000 would be made available when criminal charges were dismissed against Mr. Polites.

40. On May 8, 2007, as part of a total deposit of $4,925.50, respondent deposited $3,000 into his IOLTA account on behalf of Mrs. Polites.

41. The check in the amount of $3,000 was dated March 13, 2007 and was signed by attorney Kevin Persio, and was drawn on his law firm’s trustee account and made payable to respondent as attorney for Mrs. Polites.

42. Respondent received the proceeds of the $3,000 check.

43. Respondent did not pay the $3,000 to Mrs. Polites.

44. Mrs. Polites repeatedly asked respondent when she would receive the proceeds of the $3,000 check.

45. Although respondent deposited the proceeds of the $3,000 check into his IOLTA account on May 8, 2007, respondent misrepresented to Mrs. Polites on each occasion that he had not yet received the monies.

46. In November 2007, Mrs. Polites again contacted respondent to inquire as to the status of the $3,000.

a. Respondent misrepresented to Mrs. Polites that he had not received the $3,000;
b. Mrs. Polites informed respondent that Mr. Polites told her that he paid the check in March 2007 and Mr. Polites had given her and her son a copy of the check;
c. Respondent then acknowledged that he had received the $3,000;
d. Respondent then misrepresented to her that the $3,000 was in his escrow account;
e. Respondent told Mrs. Polites to meet with him on Christmas Eve at his law office and he would provide her with a check; and
f.Mrs. Polites went to respondent’s office on Christmas Eve and respondent did not appear.

47. Respondent explained that he retained the $3,000 that was entrusted to him on behalf of Mrs. Polites and applied it to an outstanding balance due respondent for Mrs. Polites past legal fees.

48. Mrs. Polites did owe respondent an unspecified amount for past service.

49. Respondent did not have a fee agreement with Mrs. Polites that would have authorized him to retain any amount from the amount that was entrusted to him on behalf of Mrs. Polites; respondent never presented Mrs. Polites with a bill for past services; and respondent failed to inform Mrs. Polites that he had transferred the $3,000 to his private use as compensation for legal service he had provided to Mrs. Polites.

50. As of May 8, 2007, respondent was entrusted to hold $760 on behalf of his client Dana Pugh. Respondent retained this $760 as compensation for legal services even though he did not send Mr. Pugh a bill for his services or follow the appropriate procedure to transfer funds that he was maintaining in his IOLTA account to his private use as compensation for legal services that respondent provided to Mr. Pugh.

51. Respondent did not have the authority or consent of Ms. Weber and Mr. Weber, Mrs. Polites, or Mr. Pugh to use any of their funds entrusted to respondent for purposes other than for their benefit and they had no knowledge that he did so.

52. After respondent’s check to Mr. Petyak cleared on May 9, 2007, respondent was entrusted to hold in his IOLTA account at last $5,716.50: $1,956.50 on behalf of Ms. Weber and Mr. Weber; $3,000 on behalf of Mrs. Polites; and $760 on behalf of Mr. Pugh.

53. On May 9,2007, the balance in respondent’s IOLTA account was $1,939.79, which was at least $3,776.71 less than the $5,716.50 entrusted to him on behalf of the Webers, Mrs. Polites and Mr. Pugh.

54. From May 9, 2007 through December 31, 2007, the balance in respondent’s IOLTA account was less than $5,716.50, except for June 1 through June 21 and August 9 through August 15, due to unrelated deposits into his IOLTA account.

55. By order dated October 23, 2007 as to the Weber divorce action, Judge St. John ordered, in part, that:

a. Paragraph 13(a) of the court’s order of August 14, 2006 is supplemented to provide that the master’s fees and costs that are to be paid from the escrowed monies is in the amount of $2,006.25;
b. Plaintiff’s counsel [respondent] shall pay the sum of $2,006.25 to the prothonotary of Mercer County as is provided in paragraph 13(a) within ten days of the date of this order; and
c. The prothonotary shall forward a copy of this order to Richard M. Corcoran, Esquire, counsel for plaintiff and to Joseph M. Joseph, counsel for the defendant.

56.Respondent received a copy of the order of October 23, 2007.

57. Respondent did not pay the Mercer County prothonotary the $2,006.25, or any portion thereof.

58. In late April 2008 the Pennsylvania Lawyers Funds for Client Security awarded and paid $2,006.05 to the Mercer County prothonotary based on Ms. Weber’s claim filed with the fund.

59. Respondent has not paid $2,006.25 to the fund.

60. As of December 31, 2007, respondent was still entrusted with $5,716.50 on behalf of the Webers, Mrs. Polites and Mr. Pugh.

Charge II

61. On April 9, 2003, Kathryn Weber retained respondent to represent her in the ongoing divorce action filed on her behalf against Richard Weber in the Court of Common Pleas of Mercer County. The above findings of fact reference this action.

62. Although respondent had not represented Ms. Weber before, he did not communicate to her in writing the basis of that representation or inform Ms. Weber of his fee before or within a reasonable time after commencing the representation.

63. According to Ms. Weber, the primary dispute in the equitable distribution of marital property was whether a wrongful death case settlement in the amount of $250,000 that was paid to her husband was a marital asset and if so, what portion was due to Ms. Weber.

64. At Ms. Weber’s first meeting with respondent, he showed her legal precedent that he advised supported her claim that the settlement was a marital asset.

65. By May 15, 2003, Ms. Weber had paid respondent his required $1,000 retainer fee.

66. Respondent entered his appearance on behalf of Ms. Weber on June 11, 2003.

67. On March 1, 2005 the master’s hearing was held.

68. On May 26, 2005, the master submitted his report to the court and sent a copy to respondent.

69. The master ruled that while the death benefit was a marital asset, Ms. Weber was only entitled to receive $5,000 of this benefit.

70. Ms. Weber requested that respondent file exceptions to the report and respondent agreed to do so.

71. Respondent did not file the exceptions until June 7, 2005, which was one day after the ten-day time limit.

72. Respondent did not file a brief in support of the exceptions.

73. By an order dated September 6, 2005, Judge St. John directed that respondent obtain a transcript of the master’s hearing and provide it to the court.

74. Respondent did not provide Judge St. John with a transcript of the master’s hearing.

75. On April 7, 2006, Ms. Weber met with respondent about her divorce. At that time, respondent told her that he had papers for her to sign so the divorce could be finalized, and assured her that when the decree was entered the issue of equitable distribution would continue.

76. By order of April 19, 2006, Judge St. John:

a. dismissed the exceptions as untimely filed;
b. stated that a local rule required that a brief be filed, but respondent did not do so;
c. directed that as a sanction for ignoring the local rule, the court denied oral argument to Ms. Weber and considered the issues that she raised as waived;
d. stated that respondent did not file the original transcript or provide a copy to the court as ordered; and
e. adopted the findings of fact and conclusions of law contained in the master’s report.

77. On about May 18, 2006, respondent filed a notice of appeal with the Superior Court regarding Judge St. John’s April 19, 2006 order.

78. By order of June 26, 2006, the Superior Court ordered that appellant comply with Rule of Appellate Procedure 3517, concerning the requirement that a docketing statement be completed and filed.

79. On July 7,2006, respondent told Ms. Weber that he would not receive any substantive communication from the Superior Court concerning the appeal for “several months.”

80.Respondent did not timely file the required docketing statement.

81. By order of July 14, 2006, the Superior Court dismissed the appeal due to failure to comply with Rule of Appellate Procedure 3517, and ordered that respondent file a certification with the court within 10 days of the date of the order stating that the client had been notified of the entry of the order.

82. RespondentdidnotnotifyMs. Weber ofthe Superior Court’s order dismissing her appeal, and respondent did not file the required certification with the Superior Court.

83. Respondent sent to opposing counsel an August 1, 2006 letter that discussed concluding certain matters concerning the Weber divorce, including a disbursement of the monies held in escrow, and stated in the letter that if the final divorce decree was issued with the recommendations outlined by the master, the monies could be released.

84. Prior to sending the letter, respondent did not discuss concluding the equitable distribution issues with Ms. Weber.

85. After counsel for Mr. Weber filed the required documents with the prothonotary to finalize the divorce, a decree in divorce was issued on August 14, 2006.

86. The decree stated, in part, that the parties stipulated that the master’s report and recommendation and proposed order become part of the decree in divorce, and the parties affirmed that the master’s report and recommendation and proposed order were reaffirmed in their entirety.

87.The proposed order dated August 14, 2006, issued by Judge St. John, included the divisions of marital property between the Webers.

88. Judge St. John issued an order dated August 28, 2006, which directed that the net proceeds from the sale of the Webers’ marital residence be released to respondent and distributed in accordance with the court’s August 14, 2006 order, with each party receiving one-half of the proceeds.

89. On September 7,2006 respondent deposited into his IOLTA account the proceeds of the check in the amount of $31,108.72, issued by attorney Dennis Govachini, which represented the proceeds from the sale of the Weber’s marital residence and personal property.

90. On September 13, 2006, respondent filed a notice of appeal with the Superior Court regarding Judge St. John’s August 14, 2006 order.

91. During a meeting with Ms. Weber on September 13,2006:

a. Respondent told her that he had filed another appeal with the Superior Court;
b. Ms. Weber believed that the first appeal was still pending;
c. When Ms. Weber asked why he filed the appeal, respondent told her that he did so to cover all his bases, or words to that effect; and
d.Respondent told her that the divorce decree was final on August 14, 2006.

92. Respondent did not tell Ms. Weber that the first Superior Court appeal had been dismissed.

93. Respondent gave Ms. Weber a billing statement for his legal services for the divorce action, dated September 14,2006, and gave her a check for $8,351.61 for her share of the proceeds of the sale of the marital property.

94. Respondent’s billing statement reflects that he charged Ms. Weber 2.25 hours for preparing a post-hearing proposal at $100 per hour; 1.75 hours for preparing a brief on March 12, 2006 at $100 per hour; and $1,000 for “Retainer for Appeal” despite the fact that:

a. the brief reflected in this billing statement was not filed in a timely manner;
b. respondent did not file the required documents for the appeal to the Superior Court and it was dismissed;
c. the appeal was dismissed and respondent did not refund $1000 to Ms. Weber; and
d. respondent did not give credit to Ms. Weber for the $1,000 she paid him as a retainer in 2003.

95. By letter of September 18, 2006, concerning the Weber divorce, respondent represented to opposing counsel that:

a. the amount escrowed was $31,108.72 and of that sum “$ 1,5 87.50 was paid to the Prothonotary of Mercer County pursuant to the Master’s Recommendations,” leaving the balance of $29,521.22 to be disbursed evenly between the parties; and
b. he enclosed a check for $14,760.61 payable to him as attorney for Ms. Weber.

96. Respondent did not pay the prothonotary of Mercer County $1,587.50 or any portion thereof for the master’s fees and costs.

97. By letter to respondent dated October 23, 2006, the deputy prothonotary of the Superior Court informed respondent that he needed to file a docketing statement and failure to do so would result in an order dismissing the appeal.

98. Respondent did not file the required docketing statement on behalf of Ms. Weber.

99. By order of November 6, 2006, the Superior Court dismissed the appeal and directed respondent to file a certification with the court within ten days that he notified his client of the entry of the order.

100. Respondent did not notify Ms. Weber of the dismissal of her appeal nor did he file the required certification with the Superior Court.

101. From about January 9, 2007 until at least mid-February 2007, Ms. Weber telephoned respondent on several occasions about her legal matter.

102. On each occasion, Ms. Weber was not able to speak to respondent and left a message.

103. Respondent did not return any telephone calls or otherwise communicate with Ms. Weber.

104. In February 2007, Ms. Weber learned on her own that her appeals had been dismissed by the Superior Court and that the issue of equitable distribution of marital property had been concluded in August 2006.

Charge III

105. By letter dated September 18, 2007 sent by certified mail, Zygmont A. Pines, court administrator of Pennsylvania, informed respondent, in part, that:

a. He had not yet made the required payment of $175 or filed the required form for the assessment year ending June 30, 2008, which was due on or before July 1, 2007;
b. Rule 219(f), Pa.R.D.E., provided that if he did not complete the required form and submit the required fee with the late penalty of $100 within 30 days after date of notice, such failure would be deemed a request for transfer to inactive status and his name certified to the Supreme Court, which would immediately enter an order transferring him to inactive status; and
c. Rule 217, Pa.R.D.E., required him to notify his clients by registered or certified mail, return receipt requested, of his transfer to inactive status and consequent inability to act as an attorney after the effective date of such transfer.

106. The return receipt card reflected that the letter from Mr. Pines was received at respondent’s law office on September 24, 2007.

107. Respondent failed to send the disciplinary board a completed annual fee form and payment in a timely manner.

108. By letter dated November 15, 2007, Elaine M. Bixler, Secretary of the Disciplinary Board, informed respondent by certified mail that the Supreme Court had entered an order, dated November 15, 2007, transferring him to inactive status for failing to pay his annual assessment, effective on December 15, 2007.

109. Ms. Bixler’s November 15, 2007 letter enclosed a copy of the Supreme Court Order, Rules of Disciplinary Enforcement, and other pertinent information.

110. Respondent admitted that he received Ms. Bixler’s November 15, 2007 letter, but stated that he did not open the letter. Respondent submitted the unopened letter into evidence as “Respondent’s Exhibit 1.”

111. Respondent failed to give notice of his transfer to inactive status to all clients represented in pending matters, or litigation or administrative proceedings, and the attorney for each adverse party in litigation or proceedings by certified mail.

112. Respondent failed to file copies of notices and the return receipts with the Office of Secretary as required.

113. Within ten days after the effective date of the order, respondent failed to file the statement of compliance.

114. On December 15,2007 respondent was transferred to inactive status pursuant to order of the Supreme Court.

115. However, on December 15, 2007 respondent remained employed as a part-time public defender by the Cambria County Public Defender’s Office and also maintained a private law practice.

116. On December 18, 2007, respondent engaged in the practice of law by representing a public defender client and two private clients in court appearances before Cambria County Common Pleas Court President Judge Gerald Long.

117. On December 20, 2007, respondent engaged in the practice of law by representing five public defender clients in court appearances in Cambria County.

118. On December 20,2007, respondent engaged in the practice of law by representing a public defender client in Cambria County court.

119. Between December 26,2007 and January 4,2008, respondent engaged in the practice of law by representing private clients in court appearances and at hearings and by providing legal advice to clients.

120. Between December 18,2007 and January 4,2008, respondent did not inform the tribunal before which he was appearing, his clients, or opposing counsel that he had been transferred to inactive status and was unable to practice law.

121. On December 21,2007, LisaLazzari, Chief Public Defender of Cambria County, questioned respondent about his transfer to inactive status.

122. A lawyer is not considered by the Disciplinary Board to be on active status until the board verifies receipt of the completed attorney’s annual fee form, a check for the current license fee and any late fees, and an executed statement of compliance has been received from the lawyer.

123. Respondent did not initiate the required formal action to be transferred to active status until December 26,2007, when he claimed he sent the annual fee form and check to the board by means of expedited mail.

124. Suzanne E. Price, Attorney Registrar, did not receive respondent’s information on Thursday, December 27, 2007 or Friday, December 28, 2007. The office of the secretary/attorney registration was closed on December 31 and January 1 for the New Year’s holiday and Ms. Price did not return to work until January 7,2008, following her vacation.

125. Between December 26,2007 and January 7,2008, respondent did not contact anyone at the office of secretary/ attorney registration to verify whether he had been placed on active status.

126. Between January 2 and January 4, 2008, Ms. Lazzari asked respondent whether he was still on inactive status and respondent replied to her that “everything was alright,” or words to that effect.

127. January 2, 2008 was the earliest that respondent’s annual fee form and check could have been received by the disciplinary board and he could have been considered by the board to be on active status.

128. Respondent was not administratively transferred to active status until January 7, 2008.

129.In his submission to the disciplinary board, respondent certified that, pursuant to Rule 217(e), Pa.R.D.E., he had fully complied with the provisions of the Supreme Court’s order, dated November 15,2007, with the applicable provisions of the rules, and with applicable disciplinary board rules.

130. When respondent sent the executed statement of compliance to the board on December 26, 2007, he had not complied with the provisions of Rules 217(a),(b) and (c), Pa.R.D.E., which required that he provide notice to his clients and attorneys for each adverse party in litigation or administrative proceedings and all other required persons of his transfer to inactive status by certified mail and by filing the notices and return receipts with the office of secretary.

131. Respondent gave credible testimony at the disciplinary hearing.

132. When he opened his solo law practice in 2006 he had no secretary and by his own description he engaged in sloppy bookkeeping and his records were “horribly kept.” (N.T. 59; 62)

133. Respondent’s solo practice went from hectic to out of control and respondent felt constantly under pressure and allowed things to lapse. (N.T. 177)

134. Respondent admitted that he had no excuse for the misconduct and has learned a valuable lesson concerning the management of his law practice. (N.T. 66)

135. Respondent admits that his use of the $14,134.54 for his mortgage arrearages was an intentional act and he is extremely remorseful for it. (N.T. 69)

136. Respondent began consuming alcohol on a daily basis at a heavier rate than normal during the time frame of the misconduct. (N.T. 190)

137. Respondent has tried to stop drinking and has experienced relapses. He has contacted lawyers concerned for lawyers for advice and has attended Alcoholics Anonymous meetings, but does not currently do so. (N.T. 192, 194)

138. Prior to respondent’s practice difficulties, he was involved in community activities, such as coaching sports and a mock trial team.

139. Respondent demonstrated recognition of his wrongdoing and sincere remorse.

III. CONCLUSIONS OF LAW

By his conduct as set forth above, respondent violated the following rules of professional conduct and rules of disciplinary enforcement:

1. RPC 1.3 - A lawyer shall act with reasonable diligence and promptness in representing a client.

2. RPC 1.4(a)(3) - A lawyer shall keep the client reasonably informed about the status of the matter.

3. RPC 1.4(a)(4) - A lawyer shall promptly comply with reasonable requests for information.

4. RPC 1.5(b) - When the lawyer has not regularly represented the client, the basis or rate of the fee shall be. communicated to the client, in writing, before or within a reasonable time after commencing the representation.

5. RPC 1.15(a) - A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a client-lawyer relationship separate from the lawyer’s own property. Such property shall be identified and appropriately safeguarded. Complete records of the receipt, maintenance and disposition of such property shall be preserved for a period of five years after termination of the client-lawyer relationship or after distribution or disposition of the property, whichever is later.

6. RPC 1.15(b) - Upon receiving property of a client or third person in connection with a client-lawyer relationship, a lawyer shall timely notify the client or third person. A lawyer shall promptly deliver to the client or third person any property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.

7. RPC 5.5(a) - A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so.

8. RPC 8.4(c) - It is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit or misrepresentation.

9. RPC 8.4(d) - It is professional misconduct for a lawyer to engage in conduct that is prejudicial to the administration of justice.

10.Pa. R.D.E. 217(j)(4)(ii), (iv), (v), (vi) and (vii) - A formerly admitted attorney may not engage in any form of law-related activities in this Commonwealth except in accordance with the following requirements: (4) Without limiting the other restrictions in this subdivision (j), a formerly admitted attorney is specifically prohibited from engaging in any of the following activities: (ii) performing any law-related services from an office that is not staffed by a supervising attorney on a full-time basis; (iv) representing himself or herself as a lawyer or person of similar status; (v) having any contact with clients either in person, by telephone, or in writing, except as provided in paragraph (3); (vi) rendering legal consultation or advice to a client, and (vii) appearing on behalf of a client in any hearing or proceeding or before any judicial officer, arbitrator, mediator, court, public agency, referee, magistrate, hearing officer or any other adjudicative person or body.

IV. DISCUSSION

This matter is before the disciplinary board for consideration of charges against respondent that he misappropriated funds of clients, made misrepresentations to the court and his clients, neglected his clients’ matters, engaged in the unauthorized practice of law while on inactive status, failed to comply with actions required of an attorney placed on inactive status, and filed a false certification with the disciplinary board.

In a disciplinary proceeding, petitioner bears the burden of proving that an attorney engaged in misconduct by a preponderance of the evidence that is clear and satisfactory. Office of Disciplinary Counsel v. Surrick, 561 Pa. 167,749 A.2d 441 (Pa. 2000). Respondent admitted the majority of the allegations that were contained in the petition for discipline prior to the commencement of the hearing and those admissions were introduced into evidence at the hearing. Based on the respondent’s admissions and the evidence adduced at the hearing, the record demonstrates that petitioner has met its burden of proving respondent’s misconduct by clear and convincing evidence.

Respondent committed serious misconduct in three matters.The most serious misconduct is the misappropriation and mishandling of client funds as described in charge I of the petition for discipline. Respondent used funds in his IOLTA account in order to pay the past due amount on his and his wife’s mortgage in order to prevent their residence from being sold at a sheriff’s sale. Respondent used these funds without consent of his clients. Respondent fully admits that his use of the funds was intentional. Respondent was entrusted with funds on behalf of clients, such as Ms. Weber and Mrs. Polites,and misused them when he did not hold them inviolate in his IOLTA account. At various occasions during the time-frame in question there were insufficient funds in his account to cover the entrusted amounts.

Additionally, respondent engaged in other acts of misconduct which negatively impacted his clients. On multiple occasions, respondent failed to keep his clients apprised of the status of their cases and engaged in misrepresentations to his clients. For instance, he continued to tell Mrs. Polites that he did not have her check for $3,000 when in fact it had been received and he had used it for past due legal fees. Respondent misled Ms. Weber as to the status of her appeals to the Superior Court. Respondent failed to follow court procedures to the detriment of clients, as in his failure to timely file exceptions to a master’s report, and his failure to file required docketing statements with the Superior Court.

Respondent engaged in the unauthorized practice of law for a short period of time after he was transferred to inactive status by the Supreme Court. Even though it was his sole and exclusive responsibility to take action to activate his license, he failed to immediately do so and continued to engage in the practice of law without notifying his employer and the court of his status.

As stated above, the most serious act of misconduct is the misuse of client funds. The Supreme Court has firmly stated that commingling and conversion of entrusted funds is a serious breach of public trust. Office of Disciplinary Counsel v. Lewis, 493 Pa. 519, 426 A.2d 1138 (Pa. 1981). Public discipline generally is the sanction imposed on attorneys who engage in this egregious form of misconduct, often a lengthy suspension or disbarment. Office of Disciplinary Counsel v. Monsour, 549 Pa. 482, 701 A.2d 556 (Pa. 1997); Office of Disciplinary Counsel v. Lucarini, 504 Pa. 271, 472 A.2d 186 (Pa. 1983).

Likewise, the. court has made clear that practicing law while on inactive status is misconduct deserving of suspension, many times for at least one year and one day. An established line of cases reflects the court’s position that filing the attorney fee form and paying the annual fee, in addition to complying with continuing legal education requirements, are not mere ministerial acts. An attorney has an affirmative duty to know the status of his or her professional license and to comply with professional obligations. Office of Disciplinary Counsel v. Peter W. DiGiovanni, No. 26 DB 2008, No. 1468 Disciplinary Docket No. 3 (Pa. May 28, 2009); Office of Disciplinary Counsel v. Harry Curtis Forrest, Jr., 72 Pa. D. & C. 4th 339 (2004) As with all disciplinary cases, the specific facts of each case dictate whether suspension is necessary and for how long, or whether private discipline is more appropriate. One of the facts that is critical is the length of time the attorney engaged in the unauthorized practice. Herein, respondent’s unauthorized practice of law occurred during a very short time frame of approximately three weeks.

Respondent’s additional acts of client neglect and misrepresentation compound the already serious nature of his misconduct and increase the level of discipline that must be imposed.

Determining appropriate discipline involves not only considering prior cases, but analyzing and weighing the aggravating and mitigating factors present in a matter. Office of Disciplinary Counsel v. Foti, 69 Pa. D. & C. 4th 278 (2003). It is an aggravating factor that respondent received an informal admonition in 2005. In that matter, respondent failed to file a brief to the Superior Court, failed to notify his client of the dismissal of the appeal and failed to file the required certification with the Superior Court. This appears to have been a warning sign that respondent did not heed.

In his favor, respondent admitted many of the allegations against him prior to the disciplinary hearing. He was a candid witness at the hearing and expressed sincere remorse for his actions. He asserted his willingness to accept the ultimate discipline imposed by the court. Respondent detailed his beliefs that his poor office management and his heavy drinking contributed to his problems, but he did not try to excuse his misconduct. Indeed, while respondent gave credible testimony as to his alcohol use, we conclude that he did not present sufficient evidence for mitigation pursuant to the Braun standard. Office of Disciplinary Counsel v. Braun, 520 Pa. 157, 553 A.2d 894(Pa. 1989). Respondent’s actions are unacceptable and demand that public discipline be imposed.

The hearing committee has recommended disbarment. The board’s careful review of the record and case law suggests a different recommendation. Disbarment is reserved for the most egregious cases. Matter of Renfroe, 548 Pa. 101, 695 A.2d 401 (Pa. 1997). While there is no doubt that respondent’s conduct is extremely serious, the board is persuaded by his candor and remorse that a lesser discipline will serve equally well to impress upon respondent the implications of his actions. The board is persuaded that a three year period of suspension will protect the public and allow respondent the opportunity to consider his actions.

V. RECOMMENDATION

The Disciplinary Board of the Supreme Court of Pennsylvania recommends that the respondent, Richard M. Corcoran, be suspended from the practice of law for a period of three years.

It is further recommended that the expenses incurred in the investigation and prosecution of this matter are to be paid by the respondent.

ORDER

And now, September 20, 2010, upon consideration of the report and recommendations of the disciplinary board and dissenting opinion dated June 22, 2010, it is hereby ordered that Richard M. Corcoran is suspended from the bar of this commonwealth for a period of five years and he shall comply with all the provisions of Rule 217, Pa.R.D.E.

It is further ordered that respondent shall pay costs to the Disciplinary Board pursuant to rule 208(g), Pa.R.D.E.