author: RUBENSTEIN, J.,

text:
    Deesch v. Perdon Associates

      Robert Scandone, for appellants Perdón Associates Inc. and Norwood.

      Stephen L. Needles, for appellee Borough of Morris-ville.

      December 19, 2007
   RUBENSTEIN, J.,

Appellants Perdón Associates Inc., and Quincey Norwood appeal from this court’s order of September 18, 2007, denying their motion for an adjudication of civil contempt against the Borough of Morrisville for violation of the order entered by this court on March 15, 2007.

PROCEDURAL AND FACTUAL BACKGROUND

A class action lawsuit was commenced by the residents of the Cambridge Crossing/Melvin Court subdivision in Morrisville, Bucks County, on March 1, 2000, against the principal developer, Perdón Associates Inc. and its president, Quincey Norwood. Thirteen other defendants and/or additional defendants were also named in this lawsuit.

In 1993, Perdón Associates Inc. entered into a written development plan improvement agreement with the Borough of Morrisville and the Morrisville Borough Council to construct the Cambridge Crossing residential subdivision, also known as Melvin Court, located in Morrisville, Bucks County, Pennsylvania. After the Cambridge Crossing subdivision was substantially completed in December 1998, Perdón began selling the subdivided lots to the public. (See additional defendant’s memorandum contra motion of defendant to enforce mutual release and settlement agreement.)

On August 14, 1999, after a “100 year storm,” a devastating flood occurred at Cambridge Crossing which resulted in severe damage to many of the residents’ homes and associated property. Id. Plaintiffs also allegedly experienced additional flooding on September 16, 1999, because of Hurricane Floyd. Asserting that the flooding resulted from an improperly sized and constructed drainage and retention basin which led to excessive storm water discharge, the Cambridge Crossing residents sought relief by filing a class action lawsuit against Perdón, the principal developer, and several other defendants, including Elmtree Inc., Patrick Flannagan, McGrath Construction, Pickering, Corts and Summerson Inc. and Taylor, Wiseman and Taylor. These other defendants were essentially subcontractors and engineers involved with the design, construction, and/or completion of the Cambridge Crossing subdivision. {Id.; see generally, plaintiffs’ complaint.)

In their original complaint, plaintiffs alleged negligence (Count I), nuisance (Count II), negligent performance of contract (Count III), and breach of warranty against all defendants (Count IV). (See id.) Count II, nuisance, was subsequently withdrawn with the filing of an amended complaint on August 22, 2000. (See plaintiffs’ amended complaint.)

On April 27, 2000, Perdón Associates Inc. and Quincey Norwood obtained a writ to join the Borough of Morrisville, Steven Ronzano, Lawrence J. Kerrigan, Pennoni Associates Inc., La Piazza Azzura Inc., and Antonio Mannino as additional defendants. (Defendants’ writ to join additional defendants.)

On April 24, 2001, Perdón Associates Inc. and Quincey Norwood filed a joinder complaint against the additional defendants, in which it alleged that neighbors Ronzano and Kerrigan constructed a fence with Borough of Morrisville’s approval that “acted as a dam, causing and/or greatly exacerbating the alleged flooding at Cambridge Crossing.” The joinder complaint also alleged that the Borough of Morrisville placed a grate on the discharge basin causing it to clog which “severely exacerbated the alleged flooding at Cambridge Crossing,” and that in 1997, the La Piazza Azzura Plaza (an adjacent shopping center) improperly diverted surface water from its “natural drainage contours” and “unreasonably and unnecessarily increased the quantity of water discharged upon Cambridge Crossing during the alleged flood at issue.” (Defendants’joinder complaint.)

On June 18, 2001, additional defendants, Antonio Mannino and La Piazza Azzura Inc., filed a writ to join William G. Major Associates Inc., an engineer, as an additional defendant. The complaint to join additional defendant, William G. Major Associates Inc., was subsequently filed on October 9, 2001, and asserted counts for breach of contract, negligence and breach of warranty. (Additional defendants’ complaint to join additional defendant, William G. Major Assoc. Inc.)

After a protracted series of cross claims, counterclaims, replies, preliminary objections, motions, hearings and orders, the parties expressed interest in entering into mediation before the Honorable Robert J. Mellon of this court. (Letter from Darin R. Morgan, Esquire to Honorable Robert J. Mellon of 5/29/03.) Settlement conferences were conducted by Judge Mellon on August 1, 2003 and September 9, 2003, after which the parties indicated that they “reached an agreement in principle to settle the case” and requested a stay of proceedings pending the submission of a written settlement agreement. (Letter from Darin R. Morgan, Esquire to Honorable Alan M. Rubenstein of 9/22/03.)

A stipulation of settlement was then filed on February 2, 2004, and a motion for discontinuance/settlement pursuant to Pa.R.C.P. 1714 was filed on February 17, 2004. This court then entered an order and final judgment of dismissal with prejudice on March 16, 2004, which adopted and incorporated all of the terms of the written stipulation. (Stipulation of settlement; order and final judgment.)

This stipulation provided inter alia that in consideration for the release of “all released claims against all released persons” and a covenant not to sue those released persons, plaintiffs and class members would receive a “settlement fund” of $120,000 which would be placed into an escrow account maintained by plaintiffs’ counsel. In addition, the stipulation provided that:

“(3) The Borough of Morris ville, an additional defendant in this action, will modify the storm water management system within 90 days of execution of this stipulation of settlement by, among other things: adjusting or removing part of the storm water grate in the retention basin; creating a large hole in the concrete outlet box; and constructing and/or improving the drainage swale which was put in immediately after Hurricane Floyd in 1999 on the easement between 213 and 215 Melvin Avenue South. The borough will perform these modifications at its own costs of approximately $8,800, and these modifications will be made regardless of whether the court approves this settlement.” (Stipulation, pp. 7-9.)

Notice of proposed termination of this court case was sent to the parties on April 21,2006, but on June 9,2006, Perdón Associates Inc. filed a petition to enforce the mutual release and settlement agreement against additional defendant Borough of Morrisville alleging that the borough failed to comply with the terms of paragraph 3 of the stipulation, supra.

Perdón also asserted in its petition to enforce that “[t]he remedial work referred to in paragraph 3 of the stipulation of settlement was also the subject matter of a related legal action captioned Perdon Associates Inc. v. Morrisville Borough Council and Morrisville Municipal Authority, no. 00-04866-24-5” which was “tentatively settled in writing on or about March 28, 2003 under a mutual release and settlement agreement.” (Motion of Perdón Associates Inc. to enforce the mutual release and settlement agreement ¶¶5, 6.)

In that case, Perdón had filed a complaint against the Borough of Morrisville and the Morrisville Municipal Authority for violating the original development plan improvement agreement for Cambridge Crossing/Melvin Court, alleging breach of contract, unjust enrichment and wrongful conversion of a letter of credit. The Borough of Morrisville then filed a counterclaim against Perdón for negligence and breach of contract. (See mutual release and settlement agreement.) The mutual release and settlement agreement, however, only resolved the issues between Perdón and the Borough of Morrisville, and on March 25,2003, the Honorable David W. Heckler of this court issued an order in which “the court now finds generally in favor of defendant Morrisville Municipal Authority and against plaintiff on the complaint.” Perdón filed a motion for a new trial which was denied by the court on June 24, 2003. This case was subsequently terminated on October 11, 2007.

The aforementioned mutual release and settlement agreement “entered into by and between Perdón Associates Inc. and Morrisville Borough Council, on its own behalf and on behalf of the Borough of Morrisville,” provided in part:

“For and in consideration of the following payments, concessions and obligations, the borough and Perdón agree to mutually release each other from liability for the claims set forth in the litigation, as more fully set forth herein:
“(1) The borough shall release the sum of $81,756.33 from the proceeds of the letter of credit held in escrow at Fleet Bank since its redemption in 2000, and shall tender to Perdón a check for said amount made payable to ‘Quincey Norwood’;
“(2) The borough shall apply the balance of the letter of credit escrow funds (approximately $8,884.06) to the cost of the following remedial work to be performed by personnel and/or employees of the borough:
“(a) removal of the concrete outlet box located in the detention basin at the Cambridge Crossing/Melvin Court subdivision; and
“(b) burial of a certain cable conduit at the Cambridge Crossing/Melvin Court subdivision, currently exposed, to its proper depth of 18 inches;
“(3) Within 30 days of the completion of the work described in paragraph (2) above, the borough shall provide Perdón with a detailed invoice showing all charges for the time and materials related to said work and, after reimbursing itself for said charges from the letter of credit escrow balance, the borough shall release the remainder of said funds by tendering to Perdón a check for said remainder made payable to ‘Quincey Norwood. ’ Borough covenants and agrees that under no circumstances will the cost of said remedial work exceed $5,000;
“(4) The borough will also deposit in its account the previously uncashed “Perdón Associates Inc.” certified check for $10,000, originally delivered to the borough on or about January 4, 1999. If and when said check clears, the borough will then issue its own check in the amount of $10,000 to ‘Quincey Norwood.’ In the event that said check cannot be cashed or otherwise negotiated, the borough’s sole obligation under this paragraph (4) shall be the return of the check itself to Perdón, without any further payment from borough; and
“(5) The borough will promptly accept full dedication of all common areas and public improvements in the Cambridge Crossing/Melvin Court development, retroactive to January 12, 1999, as more fully described in the deeds of dedication previously provided to the borough by Perdón. To the extent that new or revised deeds of dedication are necessary, the parties hereto pledge to cooperate in their preparation.”

Interwoven into the terms of this mutual release and settlement agreement were the preliminary requirements of the development plan improvement agreement of November 9, 1993, which provided in pertinent part:

“(9) In the event developer establishes both a letter of credit and a cash escrow security account (ESA), the amount of $5,000 cash shall be the minimum amount on deposit with the borough in the ESA account at all times in order to pay for administrative, engineering and legal costs.
“(10) When the amount in the ESA falls below $2,000, then the developer shall deposit an amount sufficient to pay all administrative, engineering and legal costs and fees to maintain the minimum $5,000 balance until the final 10 percent maintenance fund has been released by the council. The borough shall, at the time it issues the certificate of completion to the developer, deliver to the developer a written itemized statement of all such costs incurred by the borough in regard to the work completed together with any remaining balance in the ESA.
“(11) As the borough receives each payment to replenish an ESA which has fallen below minimum levels pursuant to the foregoing paragraphs no. 9 and no. 10 from the developer, the borough shall deduct 5 percent from each payment for administrative costs prior to depositing the payments in the ESA account. However, the borough shall not deduct 5 percent from the initial cash sum which establishes and opened the ESA.”

In its motion to enforce, Perdón asserted that the Borough of Morris ville had failed to complete the remedial work referred to in the mutual release and settlement agreement, and had failed to provide “a written itemized statement of the escrow security account, together with any remaining balance in the escrow security account.” Thereafter, following a flurry of answers, amended answers and replies, as well as a rule to show cause issued by the Honorable Robert J. Mellon of this court, we issued the following order:

“And now, March 15,2007, upon consideration of the motion of Perdón Associates Inc. to enforce the mutual release and settlement agreement, it is hereby ordered that:
“(1) Additional defendant Borough ofMorrisville shall abide by all terms of the mutual release and settlement agreement entered into by the parties in civil action no. 00-04866-24-5 within 20 days from the date of this order.
“(2) Additional defendant Borough ofMorrisville shall also provide Perdón Associates Inc. with an itemized statement of the escrow security account as agreed to by the parties in the development plan improvement agreement.
“(3) It is further ordered that additional defendant Borough ofMorrisville shall pay court costs, interest and attorney fees to movant Perdón Associates Inc., as provided in 42 Pa.C.S. §2503(7), the amount to be determined at a further hearing upon petition of Perdón Associates Inc. If Borough ofMorrisville complies with the terms as ordered in paragraphs 1 and 2 above, this order of court costs, interests, and attorney fees shall be automatically rescinded.”

On April 2, 2007, counsel for the Borough of Morrisville sent documentation to Perdón delineating the borough’s compliance with this court’s order. Enclosed with the cover letter were inter alia: photographs showing the removal of the concrete outlet box along with an assertion that the cable conduit had been properly buried to a depth of 18 inches; a check for $3,884.06 made payable to Perdón Associates Inc. ; “logs, records, bills, checks and receipts” for the remedial work performed by the borough; and “itemized statements, plus bills, invoices and receipts, showing deposit and withdrawal activity in the Melvin Court/Cambridge Crossing escrow security account from 1993 to present.” Also included were copies of the borough’s check for $81,756.33 made payable to Quincey Norwood, a letter from the borough to the Bucks County Recorder of Deeds transmitting eight deeds of dedication for the Cambridge Crossing common areas and public improvements, and the borough’s check for $10,000 made payable to Quincey Norwood. (Letter from Stephen L. Needles, Esquire to Harry Glosser Jr., Esquire of 4/2/07.)

Perdón replied to the borough on April 11, 2007, and insisted that the borough had not complied with this court’s order of March 15, 2007. (Letter from Harry Glosser Jr., Esquire to Stephen L. Needles, Esquire of 4/11/07.) After apparently failing to receive a satisfactory response from the borough, Perdón filed a motion for contempt against the Borough of Morrisville on May 9, 2007.

In its motion for contempt, Perdón claimed that the borough failed to comply with this court’s order of March 15, 2007 for the following reasons:

“(a) No itemized statement as directed in the court order of March 15, 2007 was provided. Raw data supplied was both incomplete and not an accurate accounting sufficient to determine or calculate what balance remained in the escrow security account.
“(b) No balance check as agreed by the parties in the development plan improvement agreement was provided, even though the raw data forwarded in alleged compliance showed expenditures by respondent in the amount of $ 16,666.48 and movant had made deposits of $48,400. The raw data and documentation supplied in the alleged itemized statement required in the parties’ development plan improvement agreement specifically failed to include all deposits made by movant.
“(c) The logs, records, bills, checks and receipts for man-hours, equipment-hours, material and other costs expended by respondent that were referred to in the respondent’s alleged compliance with the detailed invoices in accordance with the parties’ mutual release and settlement agreement were for work outside the delineated terms and conditions of the parties’ mutual release and settlement agreement and included modifications to grading and other work that did not qualify for deductions to movant’s escrow deposit made in accordance with the parties’ mutual release and settlement agreement.
“(d) No costs or detailed invoices were provided regarding the removal of the concrete box or any work that was specifically authorized in the parties’ mutual release and settlement agreement. Therefore, no costs or invoices were deductible from movant’s escrow account because no invoices were provided within the time frame set out in the court order of March 15, 2007.” (See motion of Perdón Associates Inc. for contempt ¶5.)

After carefully reviewing the documentation submitted by both parties, and determining that the Borough of Morrisville had substantially complied with this court’s order of March 15,2007, in accordance with the mutual release and settlement agreement and the provision of an itemized statement of the escrow security account, this court denied Perdon’s motion for contempt on September 17, 2007.

On October 15, 2007, Perdón Associates Inc. and Quincey Norwood filed a notice of appeal to the Superior Court of Pennsylvania. On October 22, 2007, this court ordered appellants to file a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b)(1). Appellants filed their statement of errors on November 9, 2007.

In their statement of errors appellants assert the following verbatim:

“Because the order appealed from simply denied appellants’ motion for adjudication of civil contempt without stating the reasons or findings of fact underlying the order this statement can identify the errors only in general terms pursuant to Pennsylvania Rule of Appellate Procedure 1925(b)(4)(vi).
“The errors complained of on appeal are:
“(1) The trial court abused its discretion in failing to hold the appellee Borough of Morrisville in contempt for violating the court’s order of March 15, 2007.
“(2) The findings of fact of the trial court necessary to hold that the Borough of Morrisville was not in contempt for violation of the order of March 15, 2007, were not supported by substantial evidence.
“(3) The trial court erred in its application of the law to the facts to determine that the Borough of Morrisville was not in contempt for violation of the court’s order of March 15, 2007.
“(4) The trial court erred in finding that the appellee did comply with the court’s order of March 15, 2007 to ‘abide by all terms of the mutual release and settlement agreement entered into by the parties’ because the record established as a matter of law:
“(a) Appellee failed to provide a complete and detailed history of work done in connection with the removal of the concrete outlet box located in the detention basin at the Cambridge Crossing/Melvin Court subdivision and burial of a certain conduit at the Cambridge Crossing/Melvin Court subdivision to 18 inches required under the mutual release and settlement agreement; and,
“(b) Much of the documentation for logs, records, bills, checks, labor and other costs allegedly expended by the appellee that was supplied by the appellee in alleged compliance with the March 15,2007 order was for work done outside of the delineated terms and conditions of the mutual release and settlement agreement and not in connection with the work outlined in the settlement agreement (removal of concrete box and burial of certain cable conduit).
“(c) Appellee placed in evidence only a single invoice, the amount of $769.36, properly attributable to the work within the terms and conditions of the mutual release and settlement agreement, leaving a balance of the escrow under that release in the amount of $8,114.70. It is undisputed that that balance of the escrow funds established under the mutual release has not been refunded to appellants.
“(5) The trial court erred in finding that the appellee was not in contempt when the evidence of record clearly indicated that the documentation supplied by appellee did not constitute detailed invoices as a matter of law.
“(6) The trial court erred in finding that appellee was not in contempt when the documentation supplied by appellee clearly indicated charges for work done outside of the terms of the parties’ mutual release and settlement agreement.
“(7) The trial court erred in finding that the appellee was not in contempt and was in compliance with Item 2 of the March 15, 2007 order directing the appellee to provide appellants with an itemized statement of the escrow security account, as set forth in the development plan and improvement agreement, because the finding was not supported by substantial evidence in the record.
“(8) The trial court erred as a matter of law in finding that the appellee was not in contempt when the appellee failed to return the balance of the escrow security account and where the raw documentation provided by appellee supported expenses incurred by the appellee in an amount of no more than $37,000, thereby leaving a balance in the escrow security account of $10,949.77 belonging to appellants. It is undisputed that this balance has not been returned to appellants.
“(9) The trial court erred as a matter of law in finding the appellee was not in contempt when the appellee failed to return funds in the two escrow accounts legally belonging to appellants.
“(10) As a matter of law, the evidence of record is insufficient to justify a decision that the appellee was not in contempt of the court’s order of March 15, 2007.”

On December 12, 2007, the Superior Court of Pennsylvania entered a per curiam order transferring this appeal to Commonwealth Court.

This opinion is filed pursuant to Pennsylvania Rule of Appellate Procedure 1925(a).

DISCUSSION

The central claim in appellants’ statement of errors is that there was insufficient evidence to find that the Borough of Morrisville complied with our order of March 15, 2007, and therefore the borough should have been found in contempt of that order.

“The scope of review of [the Commonwealth Court of Pennsylvania] when considering an appeal from the denial of [a] motion for civil contempt is limited to a consideration of whether the trial court abused its discretion or committed an error of law. American Federation of State County and Municipal Employees v. Lehigh County, 115 Pa. Commw. 642, 645, 541 A.2d 46, 47 (1988). “Discretion is abused when the course pursued represents not merely an error of judgment, but where the judgment is manifestly unreasonable or where the law is not applied or where the record shows that the action is a result of partiality, prejudice, bias or ill will.” Chadwick v. Caulfield, 834 A.2d 562, 567 (Pa. Super. 2003).

In applying this standard of review to the instant case, this court first notes that “[i]t is well-settled that there are certain elements necessary to support a finding of civil contempt, namely: that the contemnor had notice of the specific order or decree which he disobeyed; that the act constituting the contemnor’s violation was volitional; and that the contemnor acted with wrongful intent.” Marian Shop Inc. v. Baird, 448 Pa. Super. 52, 55-56, 670 A.2d 671, 673 (1996).

Furthermore,

“‘[t]o be punished for contempt, a party must have violated a court order.’... In order to support a finding of contempt, the order or decree which the contemnor has been held to have violated, must be definite, clear, and specific — leaving no doubt or uncertainty in the mind of the contemnor of the prohibited conduct.... Because the order forming the basis for civil contempt must be strictly construed, any ambiguities or omissions in the order must be construed in favor of the defendant. In such cases, a contradictory order or an order whose specific terms have not been violated will not serve as the basis for a finding of contempt____Additionally, the mere showing of noncompliance of a court order or misconduct, is never sufficient, alone, to prove contempt.” Id. at 56, 670 A.2d at 673. (internal citations omitted) (emphasis in original)

Finally, the Superior Court of Pennsylvania has stated:

“The objective of a civil contempt proceeding is remedial and judicial sanctions are employed to coerce the defendant into compliance with the court’s order, and in some instances to compensate the complainant for loss sustained. In civil contempt cases, the complaining party has the burden of proving non-compliance with the court order by a preponderance of the evidence. To be punished for civil contempt, a party must have violated a court order. The order that forms the basis for the contempt process in civil proceedings must be definitely and strictly construed. Any ambiguity or omission in the order forming the basis for the civil contempt proceeding must be construed in favor of the defendant. Where the order is contradictory or the specific terms of the order have not been violated, there is no contempt....
“Generally, ‘ [i]n order to hold one in civil contempt, a five-step process must be followed: (1) a rule to show cause why an attachment should not issue, (2) an answer and hearing, (3) a rule absolute, (4) a hearing on the contempt citation, and (5) an adjudication.’. . . Fulfillment of all five factors is not mandated, however. ‘ [Wjhen the contempt proceedings are predicated on a violation of a court order that followed a full hearing, due process requires no more than notice of the violations alleged and an opportunity for explanation and defense.’
“Civil contempt has as its dominant purpose enforcement of compliance with an order of the court, for the benefit of the party in whose favor the order runs. The contemnor may eventually purge him/herself by complying with the order. When a party complains that there has been noncompliance with a court order, and that the other party should be held in civil contempt, the complaining party bears the burden of proving the contempt by a preponderance of the evidence.” Wood v. Geisenhemer-Shaulis, 827 A.2d 1204, 1207-1208 (Pa. Super. 2003). (internal citations omitted)

In applying these principles to the instant case and in denying Perdon’s motion for contempt, this court concluded that there was no “wrongful intent” or any “volitional violation” on the part of the Borough of Morrisville of this court’s order of March 15, 2007.

The record indicates that on April 2,2007, the Borough of Morrisville provided appellants, Perdón Associates Inc. and Quincey Norwood, with sufficient documentation confirming their compliance with our order.

According to our order, the Borough of Morrisville shall abide by all terms of the mutual release and settlement agreement pursuant to civil action no. 00-04866-24-5 within 20 days from the date of the order, and the Borough of Morrisville shall provide Perdón Associates Inc. with an itemized statement of the escrow security account as agreed to in the development plan improvement agreement.

The terms of the mutual release and settlement agreement pursuant to civil action no. 00-04866-24-5 required the borough to: (1) release the sum of $81,756.33 from the proceeds of the letter of credit in the form of a check payable to “Quincey Norwood”; (2) apply the balance of the letter of credit escrow funds of approximately $8,884.06 to remedial work to be performed by the borough including removal of the concrete outlet box and burial of the cable conduit to 18 inches; (3) provide Perdón with a detailed invoice showing all charges for said work, and under no circumstances would said work exceed $5,000; (4) provide Quincey Norwood with a check for $10,000 after depositing and clearing a previously uncashed check from Perdón Associates Inc. for $10,000 in its own account; and (5) accept full dedication of all common areas and public improvements.

Each of these five requirements were completed. The record reveals that the borough delivered: (1) a check for $81,756.33 made payable to Quincey Norwood; (2) “logs, records, bills, checks and receipts” for the remedial work performed by the borough; (3) “itemized statements plus bills, invoices and receipts, showing deposit and withdrawal activity in the Melvin Court/ Cambridge Crossing escrow security account from 1993 to present”; (4) a borough check for $ 10,000 made payable to Quincey Norwood; (5) a copy of the letter from the borough to the Bucks County Recorder of Deeds transmitting eight deeds of dedication for the Cambridge Crossing common areas and public improvements; and (6) a check for $3,884.06 made payable to Perdón Associates Inc.

This court noted that the check for $3,884.06 represented the balance of the letter of credit escrow funds (approximately $8,884.06) after the subtraction of the $5,000 for the cost of the remedial work to modify the concrete outlet box, as agreed to in paragraph 2 of the mutual release and settlement agreement.

Finally, the Borough of Morrisville was required to provide Perdón Associates Inc. with an itemized statement of the escrow security account. The borough subsequently submitted a new “summary of activity” or itemized statement for the Melvin Court/Cambridge Crossing escrow security account on June 28,2007. This “summary of activity” reveals each legitimate transaction that occurred within the account beginning on July 29, 1992 and ending on May 31,2007, and reveals a closing balance of $72. This court also noted that the Borough of Morrisville did not deduct, despite being entitled to do so, its 5 percent administrative fee for each deposit by Perdón to maintain the $5,000 balance in the escrow account while the Cambridge Crossing project progressed.

In consideration of all of these factors, this court did not find that the Borough of Morrisville “volitionally violated with wrongful intent” the terms of our order of March 15, 2007. We therefore denied Perdon’s motion for contempt.


source: Caselaw Access Project

author: WETTICK JR., A.J.,

license: Public Domain

text:
    Koppel v. Case

      Deborah D. Olszewski, for plaintiffs Koppel.

      James R. Schadel, for defendants Case, Mlakar, Celin and Metropolitan Ear, Nose and Throat Specialists.

      Robert A. Goldman, for plaintiff McNeff.

      Regis M. McClelland, for defendants Janicijevic, Medi-Help P.C., and CVS Pharmacy Inc.
    November 20, 2007
   WETTICK JR., A.J.,

Both lawsuits raise the issue of whether a court, more than 30 days after the entry of a final judgment in a defendant’s favor on a plaintiff’s medical malpractice claim, may grant sanctions against an attorney pursuant to Pa.R.C.P. 1042.7 for improperly certifying that an appropriate licensed professional has supplied a written statement that there exists a reasonable probability that the care, skill, or knowledge experienced or exhibited in the treatment, practice, or work that is the subject of the complaint, fell outside acceptable professional standards and that such conduct was a cause in bringing about the harm.

Rule 1042.7(a) provides that if a defendant against whom the plaintiff has filed a certificate of merit is dismissed from the case through voluntary dismissal, verdict, or order of court, the plaintiff, within 30 days of the written request of that defendant, shall provide him or her with the written statement obtained from the licensed professional upon which the certificate of merit as to that defendant was based. However, if a plaintiff’s claims against other licensed professionals are still pending, the written statement shall be produced within 30 days of resolution of all claims against the other licensed professionals.

I. KOPPEL LITIGATION

Plaintiffs’ complaint included medical malpractice actions against Dr. Celin and his professional corporation (Metropolitan) based on Dr. Celin’s alleged failure to detect plaintiff-wife’s thyroid cancer. The complaint was filed on January 26,2005, and certificates of merit signed by Peter J. Pietrandrea, counsel for plaintiffs, were filed on March 28, 2005.

On April 13,2006, Dr. Celin and Metropolitan filed a motion for summary judgment based on a court order barring expert testimony because of plaintiffs’ failure to furnish any expert reports. Unbeknownst to defendants, on April 12, 2006, Attorney Pietrandrea (counsel for plaintiffs) had filed a praecipe to discontinue as to all defendants.

On June 15, 2006, counsel for Celin/Metropolitan requested Attorney Pietrandrea to provide the written statement that supported the certificates of merit which he filed as to Dr. Celin and Metropolitan. On July 5,2006, he provided a case study report prepared by Dr. Qin Eisler. Upon review of the report, Celin/Metropolitan filed a motion for sanctions. At oral argument on the motion, counsel for Attorney Pietrandrea raised the defense that this court may not grant relief pursuant to Rule 1042.7 because of the discontinuance. Counsel argued that the discontinuance on April 12, 2006 was a final judgment and a common pleas court may modify a final judgment only within 30 days after the entry of the final judgment.

In this litigation, Dr. Celin could not have sought sanctions pursüant to Rule 1042.7 until he was provided with the written statement upon which Attorney Pietrandrea based the certificates of merit which he filed. Under Rule 1042.7(a), Dr. Celin was not entitled to the statement until 30 days of a written request by Dr. Celin to provide this statement. Dr. Celin could not make this written request until he was dismissed through a voluntary dismissal. A voluntary dismissal is a final judgment. Thus, if I were to accept the argument of counsel for Attorney Pietrandrea, sanctions could never be imposed pursuant to Rule 1042.7 in the situation in which a plaintiff voluntarily dismisses all claims.

Furthermore, there are numerous other situations, including the following, in which a plaintiff could avoid the imposition of sanctions pursuant to Rule 1042.7 if sanctions must be awarded within 30 days of the entry of the judgment:

Example 1 — Pursuant to a motion for summary judgment filed by the only defendants in the case, a judgment is entered on August 11 dismissing the entire case as to each physician defendant. This judgment is a final judgment as of August 11 and the defendant could not have made the 30-day request to the plaintiff’s attorney prior to the entry of the judgment on August 11. Example 2 — A verdict is entered in favor of the defendants. The plaintiff files a motion for post-trial relief. Since a claim is not resolved while a motion for post-trial relief is pending, the request to provide the statement cannot be made until the entry of a court order denying the motion for post-trial relief. As soon as the court denies the motion, the plaintiff may file a praecipe for entry of judgment for the defendant.

The case law upon which Attorney Pietrandrea relies does not support his contention that sanctions cannot be awarded against him pursuant to Rule 1042.7. I agree with the statement that the voluntary dismissal entered on April 12, 2006 is a final judgment and that I can modify this judgment only within 30 days of its entry. However, the imposition of sanctions pursuant to Rule 1042.7 is not a modification of the April 12, 2006 judgment. Instead, the imposition of sanctions constitutes a resolution of a collateral matter that is not covered by the judgment.

Celin/Metropolitan’s request for sanctions pursuant to Rule 1042.7 is governed by the recent opinion of the Pennsylvania Supreme Court in Miller Electric Company v. DeWeese, 589 Pa. 167, 907 A.2d 1051 (2006). Miller Electric had obtained a judgment against De-Weese. DeWeese was president of Birmingham Bistro Inc. Miller Electric instituted garnishment proceedings against Birmingham, asserting that it was entitled to attach property held by Birmingham and to garnish compensation and benefits paid by Birmingham to DeWeese. On February 14, 2002, the trial court entered a verdict in favor of Birmingham, finding that its assets were exempt from garnishment. The following day, Birmingham filed a motion for counsel fees, citing 42 Pa.C.S. §2503(3) which entitles a garnishee who is found to have in his or her possession or control no indebtedness due to or property of the defendant to collect reasonable counsel fees as part of the taxable costs of the matter.

On February 26, 2002, Miller filed a motion for post-trial relief. The trial court did not enter an order disposing of the motion within the 120-day period of Pa.R.C .P. 227.4 which states that a final judgment may be entered where a court does not within 120 days enter an order disposing of the motion. On June 27,2002, the prothonotary entered a final judgment pursuant to a praecipe to enter judgment filed by Birmingham. Neither party filed an appeal from the entry of this judgment.

On July 10,2002, the trial court entered an order denying Birmingham’s February 15 motion for attorney fees. On August 8,2002, Birmingham filed a notice of appeal from the July 10 order. Miller Electric moved to quash the appeal as untimely, arguing that the notice of appeal was filed more than 30 days after the final judgment entered on June 27, 2002. The Pennsylvania Superior Court granted Miller’s motion and quashed the appeal. The Pennsylvania Supreme Court reversed.

The Supreme Court reviewed the Superior Court’s reasoning. The Superior Court relied on 42 Pa.C.S. §5505 which provides that except as otherwise provided or prescribed by law, a court may modify or rescind any order within 30 days after its entry. The Superior Court concluded that requests for counsel fees under 42 Pa.C.S. §2503 are part of the principal claim and must be determined as part of that claim. Consequently, a trial court may act on a motion for fees only within 30 days from the final judgment. The Superior Court based its ruling on its prior rulings in First National Bank of Northeast v. Gooslin, 399 Pa. Super. 496, 582 A.2d 1054 (1990), and Freidenbloom v. Weyant, 814 A.2d 1253 (Pa. Super. 2003), where the Superior Court ruled that a cause of action for attorney fees cannot exist independent of the principal claim and therefore the judgment disposing of the principal claim is the final judgment for purposes of appeal.

The Supreme Court rejected the reasoning of the Superior Court that Birmingham’s motion for counsel fees and other sanctions could not be considered because of the finality of the June 27, 2002 judgment.

The court’s analysis began with the language of 42 Pa.C.S. §2505(3) which permits the award of counsel fees if a garnishee “is found to have in his possession or control no indebtedness due to or other property of the debtor.” Under this provision, counsel fees may be awarded only if the garnishee is the prevailing party. A garnishee cannot be the prevailing party until a final determination has been made that the garnishee has “no indebtedness due to or other property of the debtor.” This means that Birmingham’s status as the prevailing party was not perfected until the time for appeal from the June 27.2002 order expired. This, in turn, means that the June 27.2002 date cannot be the date of a judgment disposing of the garnishee’s request for counsel fees because it is the first day on which the garnishee can raise a claim for counsel fees. Thus, the final order for purposes of awarding counsel fees based on section 2503(3) is the date of a court order disposing of the motion for counsel fees. The court said: “We agree that the judgment entered in June 27, 2002 was the final judgment in the underlying garnishment action, but we cannot say it was the final order with regard to the motion for fees.” Miller Electric, supra, 907 A.2d at 1056.

The present case presents the same situation. Celin/ Metropolitan could not file a motion for sanctions until they had reviewed the written statement upon which the certificate of merit was based. Plaintiffs were not obligated to furnish the written statement until 30 days of the written request or 30 days of resolution of all claims against all professionals, whichever is later. Thus, it was not possible for Dr. Celin to even file a motion for sanctions based on Rule 1042.7 within 30 days of the entry of the final judgment {i.e., the voluntary discontinuance of the case).

Furthermore, the present case, in comparison to DeWee se, presents a more compelling justification for allowing post-judgment proceedings to extend beyond the 30-day period after the voluntary discontinuance. In the present case, Celin/Metropolitan is not seeking to alter or amend the judgment. To the contrary, Celin/Metropolitan is seeking sanctions against a person who is not a party to the lawsuit, namely counsel for the plaintiffs. Also, the claim for relief is not based on the merits — or lack thereof — of the claims and defenses raised in the underlying action. The right to relief is based on an unrelated issue: Did plaintiffs’ counsel obtain a written statement from an appropriate licensed professional that (i) there exists a reasonable probability that the care, skill, knowledge, or experience exhibited in the treatment, practice, or work that is the subject of the complaint fell outside acceptable professional standards and (ii) such conduct was a cause of bringing about the harm?

For these reasons, I will consider the merits of Celin/ Metropolitan’s motion to impose sanctions.

In their complaint, the Koppels allege that on October 17, 2000, Dr. Celin, upon referral of the other two defendant-physicians, examined plaintiff-wife with respect to thyroid nodules. Three years later, she was diagnosed with papillary thyroid cancer. Plaintiffs’ claim against Dr. Celin is that he failed to diagnose the existence of thyroid cancer when plaintiff-wife exhibited all signs, symptoms, and conditions of this disease.

The certificates of merit which Attorney Pietrandrea filed as to Dr. Celin and Metropolitan Ear, Nose and Throat were based on a March 23, 2005 report of Qin Eisler, M.D., Ph.D. She lists her specialty as “Medical research and analysis.” Prior to filing the certificate of merit, Attorney Pietrandrea received Dr. Eisler’s CV. The complete CV contains the following information:

Qin Eisler, M.D., Ph.D.

Medical Research and Analysis

EDUCATION AND PRACTICES:

1979-1984 Medical degree and internship. Bengbu Medical School, China

1984-1987 Master degree in medical biology, the Chinese Academy of Preventive Medicine, Beijing.

1988-1990 Ph.D. in medical biology, the Chinese Academy of Preventive Medicine, Beijing.

1991 Post-doctoral program, the University of Montpellier and the University of Perpignan, France.

1992-1994 Associate professor/researcher, the Chinese Academy of Preventive Medicine, Beijing.

1995- Residing in U.S., studying cases on trial or under investigation through the various programs of Court TV.

2002- Medical-legal consulting.

Pa.R.C.P. 1042.3 requires aplaintiff’s attorney to sign and file a certificate of merit stating that “an appropriate licensed professional” has filed a written statement. The note to Rule 1042.3(a)(1) requires the person filing the statement “be an expert with sufficient education, training, knowledge and experience to provide credible, competent testimony, or stated another way, the expert who supplies the statement must have qualifications such that the trial court would find them sufficient to allow that expert to testify at trial. For example, in a medical professional liability action against a physician, the expert ... should meet the qualifications set forth in section 512 of the Medical Care Availability and Reduction of Error (MCARE) Act, 40 P.S. §1303.512.” Underthis Act, the expert must possess an unrestricted physician’s license to practice in at least one state or the District of Columbia and be engaged in (or retired within the past five years) from active clinical practice or teaching. In addition, the expert must practice in the same subspecialty (or in a subspecialty which has a substantially similar standard of care) as the defendant-physician.

Dr. Eisler’s resume states that she obtained a medical degree in China in 1984 and that she has been residing in the United States since 1995. For the seven-year period from 1995 to 2002, the only activity listed in the CV is “studying cases on trial or under investigation through the various programs of Court TV.” From 2002, the only activity listed is medical-legal consulting. There is no information in the resume which suggests that she has engaged in the practice of medicine since 1995. Furthermore, there is no information which suggests that she has a license to practice medicine in the United States.

Assuming that Dr. Eisler has some field of expertise, it is not listed in the CV and any attorney reviewing the CV would have had absolutely no reason to believe that Dr. Eisler practiced in the same or a related field as the defendant-physician.

It would be impossible for any attorney who reviewed the CV and the Rules of Civil Procedure governing certificates of merit (Pa.R.C.P. 1042.1-1042.8) to conclude in good faith that a certificate of merit may be based on any report issued by Dr. Eisler.

Furthermore, even if Dr. Eisler was qualified to issue a report, the case study report that she issued does not meet either requirement of Rule 1042.3. It does not state that there exists a reasonable probability that the care, skill or knowledge exercised or exhibited by Dr. Celin in the treatment, practice or work that is the subject of the complaint fell outside acceptable professional standards. In addition, it does not state that such conduct was a cause in bringing about the harm.

Dr. Eisler described the treatment furnished by Dr. Celin at page 3 of the report:

“(1) Upon referral of Dr. Case, Dr. Scott Celin saw the patient, apparently as a consultant on 10/09/2000. Dr. Celin belongs to Metropolitan Ear, Nose and Throat Associates. It does not appear that Dr. Celin is a specialist in endocrinology or oncology, although Dr. Celin may be clinically involved with thyroid gland which is located in the neck area.
“(2) Dr. Celin believed that the patient ‘appears to have a stable thyroid exam by ultrasound presently has no physical exam abnormalities or symptoms to suggest malignancy.’ Dr. Celin felt that the right thyroid nodule was essentially unchanged and needs no further workup presently, and it was unnecessary to perform a needle biopsy despite of the suggestion made by the radiologist who performed the ultrasound (probably on 09/20-21/2000, Passavant Hospital, see Table I).”

The only opinions that she rendered are set forth at pages 9, 11 and 12 of the report:

“(4) Thyroid papillary carcinoma...
“Dr. Case did refer the patient to Dr. Celin, an ear, nose and throat doctor who may be not identified as an endocrinologist or an oncologist and had a partially incorrect opinion in this case....
“Re: Dr. Scott Celin
“An ear, nose and throat doctor. If Dr. Celin was identified as an specialist but irrelevant to this case, his opinion would be considered as a second opinion, in which he recommended to monitor the suspicious thyroid nodule by ultrasound only. The patient went to see him once(?) His professional liability in this case could be argued.
“Conclusions ...
“Dr. Scott Celin’s professional liability in the case could be argued.”

No attorney could in good faith conclude that this report constitutes a statement that there exists a reasonable probability that the care, skill, or knowledge exercised by Dr. Celin fell outside professional standards. Furthermore, Dr. Eisler’s report never discusses whether the professional liability that “could be argued” was a cause in bringing about plaintiff’s harm.

The filing of a certificate of merit without a statement of an appropriate licensed professional completely undermines the purpose of the rule that a professional not be required to defend a case that has not been favorably reviewed by an appropriate licensed professional. It would have been possible for the Supreme Court to draft a rule requiring the statement to be attached to the certificate of merit. Such a requirement was not imposed because the Supreme Court assumed that lawyers can be trusted to pursue only cases for which they have obtained a statement required under Rule 1042.3. Preservation of the integrity of the rule requires that significant sanctions be imposed where there is a flagrant disregard of the requirements of this rule.

I now consider the specific sanctions that should be imposed based on my finding of a flagrant violation of Rule 1042.3. Under Rule 1042.7(b), a court may impose “appropriate sanctions, including sanctions provided for in Rule 1023.4.” The sanctions that may be imposed under Pa.R.C.P. 1023.4 include reasonable attorneys’ fees, other expenses, and ordering payment of a penalty into the court.

Because Dr. Celin and his medical group should never have been forced to defend this case, I am awarding the counsel fees and costs which the insurance carrier for Dr. Celin/Metropolitan incurred of $6,967.94.

I am also awarding attorneys’ fees and costs not to exceed $2,000 that Dr. Celin has incurred in pursuing this motion for sanctions.

The evidence supports a finding that Dr. Celin made increased insurance premiums in the amount of $8,277 because of this litigation. I am requiring the payment of these premiums because the premium would not have been increased if the certificate of merit had not been filed.

Finally, I am requiring Attorney Pietrandrea to make a donation of $2,000 to Operation Smile (http://www. operationsmile.org).

II. McNEFFv. MEDI-HELP — GDQ3-244S6

A jury entered a verdict in favor of Dr. Janicijevic and his medical corporation on November 27,2006. Plaintiff did not file a motion for post-trial relief. Pursuant to a praecipe filed by Dr. Janicijevic, the prothonotary entered a judgment against the plaintiff and in favor of Dr. Janicijevic on December 5,2006. On the same date, counsel for Dr. Janicijevic formally requested plaintiff to provide the written statement from a licensed physician that allegedly formed the basis for counsel’s certificate of merit. Plaintiff refused to provide a copy of the statement. On May 11, 2007, defendant filed a motion to compel. On July 21, 2007,1 denied the motion. My court order denying the motion included a statement that defendant had obtained a final judgment through the filing of a praecipe for entry of a judgment on December 5, 2006.

I entered my court order denying the discovery request because there was no reason for Dr. Janicijevic to file a praecipe for the entry of a judgment based on the verdict on December 5,2006. If he intended to pursue sanctions, he should have delayed taking steps for the entry of a final judgment until after resolution of any requests for sanctions sought pursuant to Rule 1042.7.

Prior to the entry of my July 21, 2007 court order, the parties did not cite and I did not consider Miller Electric Company v. DeWeese, supra. In Miller Electric, the garnishee filed a praecipe to enter a judgment on the verdict while its request for counsel fees was pending. In that case, there was no reason for the garnishee to praecipe for judgment until its ancillary motion was decided. Consequently, I find that Miller Electric is controlling and that I erred in denying relief on the ground that Dr. Janicijevic entered judgment even though he intended to seek sanctions under Rule 1042.7.

I also denied Dr. Janicijevic’s motion to compel the production of the written statement on which the certificate of merit was based because plaintiff had included an expert report in his pretrial statement and had at trial presented expert testimony that was sufficient for plaintiff’s case to proceed to a jury. I saw no need for the court to become involved in a situation in which an appropriate licensed professional had offered testimony that the defendant-physician’s care, skill, or knowledge exercised in the treatment of the patient fell outside acceptable professional standards and was a cause in bringing about the patient’s harm.

However, upon further review, I conclude that my ruling is inconsistent with the provisions of Rule 1042.7(a). This rule explicitly provides that the plaintiff shall provide a written statement upon which the certificate of merit is based upon the written request of a defendant who is dismissed from the case through “verdict.”

I cannot ignore the language of the rule on the ground this is an unintentional result. A literal reading of Rule 1042.7(a) is consistent with the purpose of the requirement that a plaintiff obtain a written statement of an appropriate licensed professional before the plaintiff may proceed with a professional liability action. See Womer v. Hilliker, 589 Pa. 256, 266-67, 908 A.2d 269, 275-76 (2006), where the court said that nothing should transpire in a medical malpractice action until the plaintiff has obtained a certificate of merit supporting the allegations in the plaintiff’s complaint.

ORDER

On November 20, 2007, upon consideration of the motion for sanctions of Scott Celin M.D., and Metropolitan Ear, Nose and Throat Associates, it is hereby ordered that within ninety 90 days:

(1) Attorney Peter J. Pietrandrea shall pay counsel fees and costs incurred in the defense of the underlying lawsuit in the amount of $6,967.94;

(2) Attorney Pietrandrea shall pay counsel fees and costs that Dr. Celin incurred in pursuing his motion for sanctions in an amount not to exceed $2,000;

(3) Attorney Pietrandrea shall pay Dr. Celin $8,277 for increased insurance premium payments; and

(4) Attorney Pietrandrea shall donate the sum of $2,000 to Operation Smile and shall file an affidavit of compliance.

ORDER

On November 20,2007, upon consideration of defendants’ statement of errors complained of on appeal, it is recommended that the Pennsylvania Superior Court reverse my ruling and remand the matter to this court in order that this court may compel plaintiff to furnish the written statement upon which plaintiff’s certificate of merit is based.

      . Possibly, the request could not be made until the expiration of the 30-day appeal period.

      . The case law construes this provision to mean that a common pleas court may modify or rescind a final judgment only within 30 days of its entry. Orie v. Stone, 411 Pa. Super. 481, 601 A.2d 1268 (1992).

      . The evidence in these proceedings has established that Dr. Eisler never had a license to practice in the United States.

      . In his deposition, Attorney Pietrandrea testified that after talking to Dr. Eisler he believed that she was a licensed practicing physician but that she had no specialty. He also testified that he now knows that she did not have a license to practice medicine in the United States. (T. 39-40.)

      . The difference between imposing sanctions under Rule 1023.4 and Rule 1042.7 is that the sanctions under Rule 1023.4 are limited to those specifically described in the rule while Rule 1042.7(b) provides that a court may impose whatever sanctions it deems to be appropriate, including those provided in Rule 1023.4.

      .1 find to be credible the testimony of Charles Parker, Director of Underwriting Compliance for PMSLIC Insurance Company, that the 2006 premium increased an additional $8,277 because of the Koppel lawsuit. (5/17/2007 deposition T. 14,49-50.) While the premium would not have increased if Dr. Celin had not also been involved in a prior incident, the direct cause of the $8,277 increase was the Koppel litigation.

      . It appears that plaintiff’s attorney refused to furnish the statement to defendant’s attorney only because he believed that he was not required to do so. At oral argument, he was prepared to have me read the statement.


author: SHEPPARD JR., J.,

text:
    The Pyrites Company v. Century Indemnity Company

      Michael Conley, Pamela D. Hans and Darin J McMullen, for plaintiff.

      Peter F. Rosenthal and Patricia B. Santelle, for defendants.
    December 12, 2007
   SHEPPARD JR., J.,

Before this court are two motions for partial summary judgment filed by plaintiff, The Pyrites Company Inc., and a cross motion for partial summary judgment filed by defendants, Century Indemnity Company et al. For the reasons discussed, the cross motion for partial summary judgment filed by Century is granted with respect to the count for breach of fiduciary duty. That count is dismissed. Otherwise, the motions are denied. Genuine issues of material fact preclude a ruling on those remaining motions.

I. BACKGROUND

Pyrites seeks indemnification for its past, present and future costs to clean up two contaminated industrial sites located in the state of Delaware. The two sites are commonly known as the Potts and Halby sites.

Pyrites owned and operated the Potts site as an ore refining facility from 1916 to the 1970s. Concurrently, Pyrites also owned a section of the Halby site that included a tidal marsh known as the Lagoon. Today the Potts and Halby sites, including the Lagoon, are contaminated with arsenic. Following the discovery of the contamination, the Delaware Department of Natural Resources and Environmental Control (DNREC) placed the Potts site under its jurisdiction; similarly, the Environmental Protection Agency (EPA), having jurisdiction over all tidal marshes, asserted its jurisdiction over the Halby site and its Lagoon. Pyrites, in an effort to avoid prosecution by the local and federal authorities, agreed to participate in the remediation plans administered by DNREC and the EPA.

Pyrites asserts that it was insured by Century or by Century’s predecessors from 1966 to 1974, and that the pertinent four general liability policies provide coverage for the costs of cleaning up the Potts and Halby sites. Pyrites asserts that it notified Century of the Potts and Halby sites environmental claims in 1991 and 1993 respectively, but that Century refused to defend or indemnify. Consequently, Pyrites sued Century for breach of contract (Count I), violation of 42 Pa.C.S. §8371 (Count II), and breach of fiduciary duty (Count III).

II. CENTURY’S CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT IS GRANTED AS TO COUNT III (BREACH OF FIDUCIARY DUTY)

Century seeks to dismiss Count III of the complaint by asserting, inter alia, that under Delaware law there is no fiduciary relationship between insurer and insured. This court, upon a choice-of-law analysis, agrees.

a. Choice-of-Law Analysis

In Pennsylvania, a court engaged in choice-of-law analysis must first determine whether the laws of the competing state differ from those of the forum state. If the court finds no difference, then any further analysis becomes unnecessary. However, if the court determines that a conflict of laws exists, then the court must “analyze the governmental interests underlying the issue” to identify the state with the “greater interest in the application of its laws.” In resolving conflict-of-law issues in insurance contract cases, Pennsylvania follows the “flexible conflicts methodology.” Under this methodology, the court must apply the law of the state with the most significant contacts or relationships with the particular issue. In applying this process, the court does not simply count the parties’ contacts with the competing states; rather, it identifies the jurisdiction with the greater interest by measuring the quality of each contact. However, the court will not engage in a choice-of-law analysis indiscriminately; instead, the court will proceed with this analysis only in the presence of conflicts of substantive law — namely, in the presence of laws which fix the parties’ rights and duties to a judicial proceeding, as opposed to procedural laws which lay down how the parties may have their rights enforced, and their duties imposed, in a judicial proceeding.

Here, application of the “flexible conflicts methodology” reveals that Delaware is the state with the greater interests in the application of its laws because the quality of the parties’ contacts with Delaware outweighs the quality of any contact with Pennsylvania. First, at the time when the policies were issued, Pyrites was a Delaware, not a Pennsylvania corporation; second, the alleged contamination-affected industrial sites are located entirely in Delaware; and third, the DNREC, not an equivalent Pennsylvania agency, asserted jurisdiction over the contamination. In short, although Century is a Pennsylvania corporation, the quality of the parties’ contacts with Delaware requires application of that state’s substantive law.

b. The Delaware Law on Fiduciary Duty

In Delaware, an insurer owes no fiduciary duty to the insured. In fact, “the term fiduciary duty overstates the essential relationship arising out of a contract of insuranee.” Thus, the “concept of a fiduciary relationship, which derives from the law of trusts, is more aptly applied in legal relationships where the interests of the fiduciary and the beneficiary incline toward a common goal in which the fiduciary is required to pursue solely the interests of the beneficiary in the property.”

In Corrado, supra, the insured agreed to pay retroactive insurance premiums to the insurer, Hartford, based on the annual amounts of workmen’s compensation claims paid by that carrier. Following presentation of a certain claim of injury, and after investigation, Hartford paid the claim and submitted a retroactive bill to Corrado for the full amount. Corrado refused to pay on grounds that a claim capable of triggering a retroactive premium must “be measured by the standards of a fiduciary.”

In denying the existence of a fiduciary duty, the Supreme Court of Delaware reasoned that “[t]he relationship of insurer and insured... arises contractually with each party reserving certain rights under the contract, the resolution of which often leads to litigation [and that] ... [t]his expected clash of interests is clearly not compatible with the concept of fiduciary.” In short, the court reasoned that the parties’ interests in an insurance contract do not align, and that such asymmetry of interests negates the formation of a fiduciary duty.

Similarly here, Pyrites and Century, between 1966 and 1974, entered into four separate insurance contracts that carved out certain asymmetrical rights between the two parties. Consequently, under the law of Delaware, the contractual relationship between Century and Pyrites precluded not only a perfect alignment of interests, but also the formation of a fiduciary duty between the two parties.

For these reasons, this court finds that under the law of Delaware there is no fiduciary duty between Century and Pyrites under the pertinent insurance contracts. Consequently, Century’s cross motion for partial summary judgment is granted as to Count III. The court will enter a contemporaneous order consistent with this opinion.

ORDER

And now, December 12, 2007, upon consideration of plaintiff’s and defendants’ cross motions for partial summary judgment, the respective memoranda in support and opposition, all matters of record, and after oral argument and in accord with the opinion filed contemporaneously with this order, it is ordered that:

(1) the motion for partial summary judgment no. 032230, filed by plaintiff The Pyrites Company Inc., is denied;

(2) the motion for partial summary judgment no. 032232, filed by plaintiff The Pyrites Company Inc., is denied;

(3) the motion for partial summary judgment no. 032198, filed by defendants Century Indemnity Company et al., is denied in part and granted in part, and the claim of breach of fiduciary duty asserted against defendants is dismissed.

      . Ratti v. Wheeling Pittsburgh Steel Corp., 758 A.2d 695, 702 (Pa. Super. 2000).

        . Id.

      . Id.

      . Caputo v. Allstate Insurance Co., 344 Pa. Super. 1, 6, 495 A.2d 959, 961 (1985).

        . Id.

      . Wilson v. Transportation Insurance Co., 889 A.2d 563, 571 (Pa. Super. 2005).

      . Crosse v. BCBSD Inc., 836 A.2d 492, 494 (Del. 2003).

        . Corrado Brothers Inc. v. Twin City Fire Insurance Co., 562 A.2d 1188, 1192 (Del. 1989).

      . Id. at 1190-92.

      . Id.

      . The remaining motions implicate disputed issues of material fact.


author: GEARY, J.,

text:
    Zentz v. Harne

      Boyd Spencer, for plaintiffs.

      Louis Schmitt Jr., for defendant.

      June 21, 2007
   GEARY, J.,

This case comes before us on preliminary objections to plaintiffs’ second amended complaint filed by defendant, Mary Ann Harne. On January 22, 2007, we entered an order denying Ms. Harne’s preliminary objection in the nature of a demurrer. We now write to state the rationale for our decision.

In what appears to be a case of first impression in Pennsylvania, we are asked to determine whether a stepson may bring an action for negligent infliction of emotional distress after witnessing an accident in which his stepfather was severely injured. For the reasons stated herein, we hold that a stepparent/stepchild relationship can serve as the basis for a negligent infliction of emotional distress cause of action when it is established that the stepparent stands in loco parentis to the stepchild.

This case arises from a motor vehicle accident that occurred on June 26, 2004 on Route 56 in Ogle Township, Somerset County, Pennsylvania. Plaintiff, Zachary S. Zentz was riding his Yamaha motorcycle westbound on Route 56 behind another motorcycle ridden by Gregory Warner. Mr. Warner was riding his motorcycle behind another motorcycle ridden by Ms. Harne. Ms. Harne lost control of her motorcycle, crossed the center-line and grazed the left rear side of a pickup truck driven eastbound on Route 56 by defendant, Anthony Koposko. After Ms. Harne grazed Mr. Koposko’s truck, the truck swerved into the westbound lane and struck Mr. Zentz’s motorcycle, causing him extensive physical injury.

Plaintiff, Mrs. Roni Zentz and minor-plaintiff Benjamin Black witnessed the accident while riding in a vehide driven by Mrs. Zentz that was following directly behind the motorcycle operated by Mr. Zentz. Benjamin is the stepson of Mr. Zentz. His biological father, Thomas Black, and his mother separated in 1992 and were divorced in 1996. Benjamin was 1 year old when his natural father left. Mr. and Mrs. Zentz married in 1997 and Benjamin has lived with his mother and Mr. Zentz since. For the past nine years Benjamin and Mr. Zentz have resided in the same household and have developed a relationship akin to that of a father and son.

Among other claims made by the plaintiffs, Benjamin filed an action against Ms. Harne for negligent infliction of emotional distress. Ms. Harne filed a preliminary objection in the nature of a demurrer asserting that, as a matter of law, the stepfather/stepson relationship between Mr. Zentz and Benjamin is insufficiently close to support an action for negligent infliction of emotional distress.

We begin our analysis by stating the applicable standard of review. The Pennsylvania Rules of Civil Procedure provide that any party may file preliminary objections to any pleading. Pa.R.C.P. 1028(a). Preliminary objections should be sustained only when the law will not permit a remedy, “and where any doubt exists, that doubt should be resolved by a refusal to sustain the preliminary objections.” P.J.S. v. Pennsylvania State Ethics Commission, 669 A.2d 1105, 1108 (Pa. Commw. 1996). The Pennsylvania Supreme Court has set the standard of review for granting preliminary objections in the nature of a demurrer as follows:

“All material facts set forth in the [pleading at issue] as well as all inferences reasonably deducible therefrom are admitted as true. The question presented by the demurrer is whether, on the facts as averred, the law says with certainty that no recovery is possible. Where a doubt exists as to whether a demurrer should be sustained, this doubt should be resolved in favor of overruling it.” Core-states Bank N.A. v. Cutillo, 723 A.2d 1053, 1057 (Pa. Super. 1999), citing Mahoney v. Furches, 503 Pa. 60, 66, 468 A.2d 458, 461-62 (1983).

The test is whether it is clear from all of the facts pleaded that the pleader will be unable to prove facts legally sufficient to establish his or her right to relief. Bourke v. Kazaras, 746 A.2d 642 (Pa. Super. 2000), appeal denied, 564 Pa. 722, 766 A.2d 1242 (2000).

“The basis of recovery for a claim of negligent infliction of emotional distress is the traumatic impact of viewing the negligent injury of a close relative.” Love v. Cramer, 414 Pa. Super. 231, 234, 606 A.2d 1175, 1177 (1992). “[A] cause of action for negligent infliction of emotional distress must be addressed in terms of foreseeability.” Turner v. Medical Center, Beaver, PA Inc., 454 Pa. Super. 645, 650, 686 A.2d 830, 832 (1996). We are to apply the following three-part test to determine whether a plaintiff’s injuries were reasonably foreseeable by the defendant:

“(1) Whether plaintiff was located near the scene of the accident as contrasted with one who was a distance away from it. (2) Whether the shock resulted from a direct emotional impact upon plaintiff from the sensory and contemporaneous observance of the accident, as contrasted with learning of the accident from others after its occurrence. (3) Whether plaintiff and the victim were closely related, as contrasted with an absence of any relationship or the presence of only a distant relationship.” Sinn v. Burd, 486 Pa. 146, 170-71, 404 A.2d 672, 685 (1979), quoting Dillon v. Legg, 69 Cal. Rptr. 72, 80, 441 P.2d 912, 920 (1968).

At issue in the instant case is whether a stepfather/ stepson relationship can be deemed sufficiently close to meet the “closely related” standard set forth in the third prong of the test established in Sinn. Citing Armstrong v. Paoli Memorial Hospital, 430 Pa. Super. 36, 633 A.2d 605 (1993), Ms. Harne argues that the tort of negligent infliction of emotional distress exclusively applies to those who observe injury to “close family members”; and because Mr. Zentz does not stand in any legally recognized family relationship to Benjamin, he cannot, as a matter of law, be deemed a “close family member.” Ms. Harne further asserts that, as a matter of policy, Pennsylvania should limit negligent infliction of emotional distress claims to those involving “close, legally recognized” family relationships because to do otherwise is to invite a flood of claims to be filed by persons whose relationships to the injured are more remote than that which exists in the instant case.

Benjamin counters that we should look beyond the legal relationship between two people in determining whether persons are closely related; we should also consider the nature of the relationship. Specifically, Benjamin asserts that, although Mr. Zentz is not his natural or adoptive father, Mr. Zentz has stood in loco parentis to him for nearly 10 years and it is the nature of that relationship between them that makes them close. Finally, Benjamin argues that the “flood of claims” argument made by Ms. Flame has already been considered and rejected by the Supreme Court in Sinn v. Burd.

There are but a few appellate cases in Pennsylvania that purport to describe what constitutes “closely related” for purposes of the test established in Sinn. The spectrum spans from the acceptance of a mother/child relationship in Sinn and a sister/sister relationship in Turner v. Medical Center, Beaver, PA Inc., 454 Pa. Super. 645, 686 A.2d 830 (1996), to the rejection of a cousin relationship in Blanyar v. Pagnotti Enterprises Inc., 451 Pa. Super. 269, 679 A.2d 790(1996).

In Sinn, a mother witnessed her minor daughter being struck and killed by an automobile. The court held that a mother/child relationship satisfies the “closely related” standard, but the court defined “closely related” only insofar as it contrasted it with situations in which no relationship or only a distant relationship exists. Sinn, at 172, 404 A.2d at 685. Indeed, the court specifically declined to address what other relationships may fall within the “closely related” standard.

“As stated earlier, see note 15, we need not here consider the case where the mother is notified of the accident by another. Nor do we consider the situation where the relationship between the plaintiff-bystander and the accident victim is more remote. These are questions which may properly be left for another day. Jurisprudentially, the remote and unexpected can best be excluded by reaching these issues on a more appropriate record.” Id. at 173 n.21, 404 A.2d at 686 n.21.

In. Blanyar v. Pagnotti Enterprises Inc., 451 Pa. Super. 269, 679 A.2d 790 (1996), a child witnessed the drowning death of his cousin. At issue was whether a cousin relationship could serve as the basis of a claim for negligent infliction of emotional distress. Noting that a Pennsylvania appellate court had not yet addressed the “closely related” standard, the court reasoned that the standard should be narrowly construed to include only persons who are members of the injured person’s immediate family.

“Our research discloses no Pennsylvania appellate decision where the term ‘closely related’ has been at issue .... Although the decision is not an easy one, we conclude that, given our Supreme Court’s narrow construction of the second factor of the Sinn v. Burd test, we believe our high court would also narrowly construe this third factor to allow recovery only to a defined class of bystanders, that is, members of the injured person’s immediate family.” Id. at 272-73, 679 A.2d at 791.

The court then went on to note that the California Supreme Court defined “closely related” in a similar manner, limiting actionable claims to those involving “relatives residing in the same household, or parents, siblings, children and grandparents of the victim.” Id. at 275, 679 A.2d at 793, quoting Thing v. LaChusa, 48 Cal.3d 644, 257 Cal. Rptr. 865, 771 P.2d 814 (1989).

Applying the “immediate family” standard to the facts before it, the Blanyar court held that a cousin relationship cannot serve as the basis of a claim for a negligent infliction of emotional distress.

“In the present case the only averment in appellants’ complaint regarding the relationship between the minor plaintiff and the victim is as follows: ‘(6) Plaintiff and his cousin Derrick Hittinger, a minor of approximately the same age as plaintiff, were very close friends.’ Taken as true, this averment is an insufficient basis for recovery for the tort of negligent infliction of emotional distress as a matter of law. The plaintiff is not a member of the victim’s immediate family, and, in the alternative, even were we to accept the modified definition of ‘closely related’ in Thing, supra, there is no averment that the boys lived together as a family unit.” Id. at 278, 679 A.2d at 794.

Six months after the decision in Blanyar, a different panel of the Superior Court addressed the issue in Turner v. Medical Center, Beaver, PA Inc., supra, a case involving a plaintiff who was forced to witness her sister vaginally deliver a lifeless fetus without medical assistance. Faced with the question of whether siblings are “closely related”, the court’s analysis followed a decidedly different track than did the Blanyar court. Rather than adopt the “immediate family” standard set forth in Blanyar, the court focused on the contrasting language used in Sinn.

“While no Pennsylvania case law addressing the negligent infliction of emotional distress has defined the term ‘immediate family’, we note the Supreme Court in Sinn did require the plaintiff and the victim be ‘closely related, as contrasted with an absence of any relationship or the presence of only a distant relationship.’ (internal citation omitted) Here, appellant is both a blood relative and close family member. Nothing in the Blanyar opinion persuades this court that ‘closely related’ should be limited to a spouse, parent or child. FN2

“FN2. We note Blanyar v. Pagnotti Enterprises Inc., 451 Pa. Super. 269, 679 A.2d 790 (1996), citing Thing v. LaChusa, 48 Cal.3d 644, 668, 257 Cal. Rptr. 865, 880, 771 P.2d 814, 829 (1989), acknowledges the California Supreme Court definition of‘closely related’ as ‘relatives residing in the same household, or parents, siblings, children, and grandparents of the victim. ’ Blanyar at 276, 679 A.2d at 793. (emphasis added)” Turner at 653, 686 A.2d at 833-34.

Because our Supreme Court has not defined “closely related” and different panels of the Superior Court have seemingly taken divergent approaches to resolving the issue, we are left with no concrete guidance to look to in deciding whether a stepfather/stepson relationship, by itself, is sufficiently close to meet the “closely related” standard. With that said, we note that it is beyond question that a parent may seek damages for negligent infliction of emotional distress when forced to witness the injury of his or her child. We believe the principles that permit recovery in that situation apply equally to situations in which the roles are reversed. That is to say, we find it reasonably foreseeable that a child may sustain emotional injury if forced to witness the injury of a parent; this is particularly evident when one considers that children are generally less emotionally equipped to cope with such a tragedy than are adults.

Because we find it foreseeable that a child may sustain emotional injury under such circumstances, we need not resolve the issue of whether a stepfather/stepson relationship, by itself, satisfies the “closely related” test. Rather, we believe the focus of our analysis must shift to whether Mr. Zentz and Benjamin shared a “parent/child” relationship with one another for purposes of Benjamin’s negligent infliction of emotional distress claim.

No Pennsylvania appellate court has defined the terms “parent” or “child” in the context of a negligent infliction of emotional distress claim. However, our Supreme Court has recently considered the matter in the context of a child custody action. In Peters v. Costello, 586 Pa. 102, 891 A.2d 705 (2005), the court addressed whether a non-biological grandparent who has stood in loco parentis to one of the parents of a child has standing to seek contact with that child under the Grandparent Visitation Act, 23 Pa.C.S. §§5311-13. The court’s analysis of the issue included an examination of the following definitions of “grandparent” and “parent”:

“On the specific point at issue, however, we note that the statute does not define the term ‘grandparent.’... In construing the term, this court must look to the ‘common and approved usage’ of the term ‘grandparent.’... Webster’s Third New International Dictionary defines ‘grandparent’ as ‘a parent’s parent.’ . . . The same dictionary defines ‘parent’ as follows: ‘la: one that begets or brings forth offspring: Father, Mother; b[law] (1): a lawful parent (2): a person standing in loco parentis although not a natural parent. . . .’ See also, The Merriam Webster Dictionary (1997), 535 (defining ‘parent’ as ‘ 1: one that begets or brings forth offspring: FATHER, MOTHERf;] 2: one who brings up and cares for another’’).” Id. at 115, 891 A.2d at 713. (internal citations omitted) (emphasis in original)

Adopting the above as the common definitions of the terms “grandparent” and “parent”, the court concluded that because the “appellees stand in loco parentis to [the mother of the child], they are the parents of [the child’s] mother, and therefore, [the child’s] grandparents.” Id.

Although the Peters court adopted the above definition of “parent” in the context of a custody case, we find this definition to be a generally valid one. The definition takes into consideration that there are a growing number of nontraditional families within society today in which children are parented by someone other than a biological or adoptive parent. More importantly, it recognizes that there is more to being a parent than the biological or legal relationship one shares with a child; there is also the care and affection one provides that child. Thus, for purposes of our inquiry in the instant case, we will rely on the definition of “parent” adopted by the Peters court.

We now turn to the alleged relationship in the instant case. As already noted, Benjamin does not allege that Mr. Zentz is his biological or adoptive father. Rather, he asserts that Mr. Zentz stands in loco parentis to him. Our Supreme Court has defined in loco parentis this way:

“The phrase in loco parentis refers to a person who puts himself in the situation of the lawful parent by assuming the obligations incident to the parental relationship without going through the formality of legal adoption. The status of in loco parentis embodies two ideas; first, the assumption of the parental status, and, second, the discharge of parental duties.” Commonwealth ex rel. Morgan v. Smith, 429 Pa. 561, 565, 241 A.2d 531, 533 (1968).

The plaintiffs’ first amended complaint alleges that: Mr. Zentz and Benjamin’s mother, Roni Zentz, are married; Mr. Zentz, Mrs. Zentz and Benjamin have resided together since 1997; Mr. Zentz has developed a fatherly relationship withBenjamin; and Benjamin has had almost no contact with his natural father since 1992. Accepting all of the plaintiffs’ averments, and the reasonable inferences therefrom, as true, we are satisfied that the complaint sets forth sufficient facts to support a finding that Mr. Zentz stands in loco parentis to Benjamin. We, therefore, conclude that the alleged relationship between Benjamin and Mr. Zentz is sufficiently close to meet the “closely related” standard. Thus, Ms. Hame’s preliminary objection in the nature of a demurrer must be denied.

As a final matter, we address Ms. Harne’s policy argument that Pennsylvania should limit negligent infliction of emotional distress claims to those involving “close, legally recognized” family relationships because the absence of such a limitation will invite a flood of claims from parties who have lesser relationships. We note initially that we believe an in loco parentis relationship is a close, legally recognized family relationship. Furthermore, we are persuaded by Benjamin’s assertion that the Supreme Court has already rejected the “flood of litigation” policy argument. In Sinn, the court addressed the argument in the context of their decision to allow bystander recovery. As the court noted:

“[T]he fundamental concept of our judicial system [is] that any [caseload] increase should not be determinative or relevant to the availability of a judicial forum for the adjudication of impartial individual rights. ‘It is the business of the law to remedy wrongs that deserve it, even at the expense of a “flood of litigation”; and it is a pitiful confession of incompetence on the part of any court of justice to deny relief upon the ground that it will give the courts too much work to do. ’ We obviously do not accept the ‘too much work to do’ rationale.” Sinn, supra at 163, 404 A.2d at 681. (internal citation omitted)

We find the above principles clearly applicable to Ms. Harne’s policy argument and we reject the argument on that basis.

      . Ms. Harne does not challenge the sufficiency of the complaint with respect to the first two prongs of the Sinn test.

      . We acknowledge that the Peters court expressly noted that the in loco parentis doctrine has been invoked “almost exclusively in matters of child custody.” Peters at 111 n.1, 891 A.2d at 710 n.1.