author: COX, J,

text:
    New Castle Area Transit Authority v. Franus

      Louis M. Perrotta, for plaintiff.
    Mark F. McKenna, for defendant North Coast Commercial Roofing System of Pa. Inc.
    August 30, 2006
   COX, J,

Before the court for disposition are the preliminary objections to plaintiff’s complaint filed by the defendant, North Coast Commercial Roofing Systems of Pennsylvania Inc. Plaintiff, New Castle Area Transit Authority, filed a voluminous complaint on April 29, 2005 alleging generally that the roof constructed at the new transit authority building and bus garage was leaking water and causing damage to the building as a result of those leaks. In its complaint, plaintiff pleaded various counts against the defendant, North Coast, including Count VII — breach of contract, Count VIII — quantum meruit, Count IX — breach of implied warranty, Count X — breach of express warranty, Count XI — negligence and Count XII — negligent design. In response to the complaint, the defendant, North Coast, filed preliminary objections to two (2) Counts. The first preliminary objection is in the nature of legal insufficiency of a pleading — demurrer, under Pa.R.C.P. 1028(a) (4), to Count VII — breach of contract, and a motion for more specific statement, which the court will treat as a preliminary objection in the nature of insufficient specificity in a pleading under Pa.R.C.P. 1028(a)(3), regarding Count X — breach of express warranty.

This action stems from the design and construction of a new office and maintenance facility for the plaintiff at 311 Mahoning Avenue, New Castle, Pennsylvania. The defendant North Coast is a distributor of commercial roofing products, including those products manufactured by another defendant, Atas International Inc., and was the only distributor of those roofing products in the geographical region serving Lawrence County, Pennsylvania. As such, the approved roofing materials from Atas were purchased through North Coast by another defendant who was to install the roof, Panther Associates and Supply Corporation. The office and maintenance facility was subsequently constructed and is now utilized by the plaintiff, however, plaintiff complains of numerous leakage problems with the roof supplied by North Coast. The court will turn first to the initial preliminary objection in the nature of a demurrer regarding the breach of contract claim.

A preliminary objection in the nature of a demurrer tests the legal sufficiency of the complaint. Jefferies v.

Hoffman, 417 Pa. 1, 4, 207 A.2d 774, 775 (1965); Sexton v. PNC Bank, 792 A.2d 602 (Pa. Super. 2002). A demurrer tests the legal sufficiency of a complaint and sets forth the assertion that the pleading does not establish a cause of action upon which relief can be granted. Sutton v. Miller, 405 Pa. Super. 213, 592 A.2d 83 (1991); Amal gamated Transit Union v. Port Authority of Allegheny County, 71 Pa. Commw. 600, 601-602, 455 A.2d 1265, 1266 (1983). The question presented by a demurrer is whether, based upon the facts averred, the law says with certainty that no recovery is possible. Hess v. Gebhard & Co. Inc., 769 A.2d 1186, 1194 (Pa. Super. 2001); Edwards v. Germantown Hospital and Phatak, 736 A.2d 612 (Pa. Super. 1999). Simply stated, in ruling upon a demurrer, the issue for the court is whether the complaint states a cause of action. Clouser v. Shamokin Packing Company, 240 Pa. Super. 268, 361 A.2d 836 (1976).

Preliminary objections in the nature of a demurrer require the court to resolve the issues solely on the basis of the pleading; no testimony or other evidence outside of the complaint may be considered to dispose of the legal issues presented by a demurrer. Morley v. Gory, 814 A.2d 762, 764 (Pa. Super. 2002) (citing Mistick Inc. v. Northwestern National Casualty Company, 806 A.2d 39 (Pa. Super. 2002).

The standard of review is to determine whether the complaint adequately states a claim for relief under any theory of law. To evaluate a demurrer under this standard, the court must accept as true all material averments of the complaint and may sustain the demurrer only if the law will not permit a recovery. The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Morley v. Gory, supra. The court must accept all material facts set forth in the complaint as well as all inferences reasonably deducible therefrom as true. Powell v. Drumheller, 539 Pa. 484, 489, 653 A.2d 619, 621 (1995). When ruling upon preliminary objections in the nature of a demurrer, the court must accept as true all well-pleaded facts and all reasonable inferences therefrom. Sweatt v. Department of Corrections, 769 A.2d 574, 576 (Pa. Commw. 2001). In considering the demurrer, every well-pleaded material fact set forth in the complaint, as well as all inferences reasonably deducible therefrom, must be taken as admitted. Clouser v. Shamokin Packing Company, supra.

For purposes of the review of the complaint, only well-pleaded material facts are admitted and not conclusions of law. McKeeman v. Corestates Bank N.A. and Security Abstract of Pa. Inc., 751 A.2d 655 (Pa. Super. 2000). A demurrer does not admit the pleader’s conclusions of law. Clouser v. Shamokin Packing Company, supra. When deciding whether to sustain a demurrer, the court’s examination and analysis is limited to the complaint. Looking only at the complaint, the court must make a determination as to the sufficiency of facts pled and whether, if said facts are ultimately proven, recovery is certain. Hess v. Gebhard & Co. Inc., supra. The test is whether it is clear from all the facts pled that the pleader will be unable to prove facts legally sufficient to establish his or her right to relief. League of Women Voters v. Commonwealth, 692 A.2d 263 (Pa. Commw. 1997).

Preliminary objections, the end result of which would be the dismissal of a cause of action, should be sustained only in cases that are free and clear from doubt. Bower v. Bower, 531 Pa. 54, 611 A.2d 181 (1992). A demurrer may only be granted in a case that is so free from doubt a trial would be a fruitless exercise. Hess v. Gebhard & Co. Inc., supra. Preliminary objections on the grounds of legal insufficiency should be sustained when it appears with certainty that the law permits no recovery under the allegations pled and any doubts in the determination should be resolved by overruling the objection. Willet v. Pennsylvania Medical Catastrophe Fund, 549 Pa. 613, 702 A.2d 850 (1997). Where a doubt exists as to whether a demurrer should be sustained, this doubt should be resolved in favor of overruling it. Morley v. Gory, supra; Edwards v. Germantown Hospital and Phatak, supra; Powell v. Drumheller, supra. If the complaint shows that the claim is devoid of merit, the demurrer should be sustained. But if there is any doubt as to whether the demurrer should be sustained, such doubt should be resolved in favor of refusing to enter it. Clouser v. Shamokin Packing Company, supra.

The defendant North Coast contends that the plaintiff has failed to aver sufficient material facts that the plaintiff is a third-party beneficiary under any contract in which North Coast supplied the Atas roofing materials for the new facility. There are no averments in the complaint that there was any contract directly between the plaintiff and North Coast. Thus, plaintiff is seeking to be determined a third-party beneficiary under the contract between North Coast and defendant, Panther, which was the roofing installation subcontractor. An examination of the complaint reveals the following facts alleged against North Coast.

In the general body of the complaint, plaintiff alleges that North Coast is a distributor of commercial roofing products, including Atas roofing products. In paragraph 33, plaintiff contends that it was a third-party beneficiary to any contractor agreement involving construction of the new facility. Regarding the specific counts against North Coast, the complaint avers that North Coast was the only distributor for the Atas roofing system in this geographical area and thus provided the Atas roofing materials for the new facility. The roofing materials were supplied from North Coast to Panther pursuant to an agreement reached between those parties, however, plaintiff has been unable to determine at this stage whether said agreement was in writing. Plaintiff avers that North Coast had knowledge that the roofing materials were being supplied for the benefit of the plaintiff. Plaintiff alleges in paragraph 146 that it was a third-party beneficiary between North Coast and Panther. Plaintiff avers in paragraphs 61 and 64 that North Coast provided comments and changes to the Atas roof drawings in April of2001 and that the roof drawings contained feedback from North Coast from April 17, 2001. Based on these averments, plaintiff claims a cause of action for breach of contract against defendant North Coast, as a third-party beneficiary.

For a number of years the doctrine enunciating the status of third-party beneficiaries was set forth in Spires v. Hanover Fire Insurance Company, 364 Pa. 52, 70 A.2d 828 (1950). The Supreme Court held that in order to be a third-party beneficiary entitled to recover on a contract, it is not enough that it be intended by one of the parties to the contract and the third person that the latter should be a beneficiary, but both parties to the contract must so intend and must indicate that intention in the contract. A promisor cannot be held liable to an alleged beneficiary of a contract unless the latter was within his contemplation at the time the contract was entered into and such liability was intentionally assumed by him in his undertaking; the obligation to the third-party must be created, and must affirmatively appear, in the contract itself.

This rule was relaxed somewhat in Guy v. Liederbach, 501 Pa. 47, 459 A.2d 744 (1983). The Supreme Court acknowledged that under the current Pennsylvania law, for a third-party beneficiary to have standing to recover on a contract, both parties, promisor and promisee, must express an intention that the third-party be a beneficiary to whom the promisor’s obligation runs in the contract itself. In Guy, the Supreme Court adopted section 302 of the Restatement (Second) of Contracts. Spires was overruled to the extent that it stated and established the exclusive test for third-party beneficiaries. In Guy, the Supreme Court set forth a two-part test for determining whether one is an intended third-party beneficiary: (1) the recognition of the beneficiary’s right must be “appropriate to effectuate the intention of the parties,” and (2) that performance must “satisfy an obligation of the promisee to pay money to the beneficiary” or “the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promise’s performance.” The first part of the test sets forth a standing requirement. For any suit to be brought, the right to performance must be “appropriate to effectuate the intentions of the parties.” This general condition precedes the application of the second part of the test, which defines the intended beneficiary as either a creditor beneficiary or a donee beneficiary. The standing requirement leaves discretion with the trial court to determine whether recognition of third-party beneficiary status would be “appropriate.” If the two steps of the test are met, the beneficiary is an intended beneficiary “unless otherwise agreed between promisor and promisee.” The court expressed the opinion that the Restatement (Second) of Contracts section 302 provided an analysis of third-party beneficiaries which pennitted a properly restricted cause of action for beneficiaries such as the one in the Guy case.

The Guy case involved the drafting of a will and whether an intended beneficiary under the will could sue the attorney drafting the will. This case was one of first impression where a named beneficiary of a will, who was also named executrix, has a cause of action against the attorney who drafted the will and directed her to witness it, where the fact that she witnessed a will voided her entire legacy and her appointment as executrix under then existing New Jersey law. The Supreme Court held that a negligence cause of action for professional malpractice did not arise, however, a named legatee of a will may bring suit as an intended third-party beneficiary of the contract between the attorney and the testator for the drafting of a will which specifically names the legatee as a recipient of all or part of the estate. The Supreme Court held that the grant of standing to a narrow class of third-party beneficiaries seems “appropriate” under Restatement (Second) of Contracts section 302 where the intent for benefit is clear and the testator is unable to enforce the contract.

Subsequent to Guy, our Superior Court has had an opportunity to review the doctrine of third-party beneficiary. In Manor Junior College v. Kaller’s Inc., 352 Pa. Super 310, 507 A.2d 1245 (1986). Manor Junior College, entered into a written contract with Kaller’s Inc. in which Kaller’s Inc. was to install a new roof on a college building. Kaller’s Inc. then subsequently entered into an unwritten agreement with John J. Spencer Roofing Inc. for that company to provide the labor necessary to replace the old roof with the new one. After problems arose with the installation of the new roof, Manor Junior College brought suit against both Kaller’s Inc. and Spencer. Spencer was dismissed from the lawsuit at the trial level and an appeal followed. The Superior Court noted the long-standing rule for designation of a third-party beneficiary as clearly established by Spires v. Hanover Insurance Company, supra. The Superior Court acknowledged that the Guy case also set forth an acceptable method to determine third-party beneficiary but indicated that the Supreme Court has repronounced the basic principle established in Spires and that the new test was restricted to a “narrow class” and was seen as a supplement to the Spires standard. Guy was interpreted to be limited to cases involving a legatee and a situation which either closely resembles the subject of the Guy case or is as compelling. The Superior Court then went on to apply the Spires test and ruled that a party does not become a third-party beneficiary unless both parties to the contract express an intention to benefit the third-party in the contract itself.

A later panel of the Superior Court in Marsteller Community Water Authority v. P.J. Lehman Engineers, 413 Pa. Super. 387, 605 A.2d 413 (1992), also followed both the Spires and Manor Junior College cases. That court also held that a party is not a third-party beneficiary of a contract unless a contract states an intent to benefit the third-party. The fact that the obligee knows that he will perform the contracted-for services for a third-party is not, in itself, sufficient to vest the third-party with standing to sue on the contract. This case concurs with the prior Superior Court case in Manor Junior College in interpreting the Guy case.

This court concurs with the interpretation of Guy by the two subsequent Superior Court cases. Guy should be interpreted narrowly, otherwise, almost any party could be a third-party beneficiary, despite a contract not including that party. Nearly anyone having construction done could be a third-party beneficiary by virtue of the contractor entering into an agreement with a supplier for building materials. The first part of the two-prong test in Guy is not met in that recognition of the beneficiary’s right must be “appropriate to effectuate the intention of the parties.” In this situation, the intention of the parties is simply for the sale and purchase of roofing materials. It is clearly not the intention of both parties to have a third-party beneficiary be so intertwined with the contract. The party seeking to be a third-party beneficiary has a remedy against the party with whom he engaged with directly for the services and supplies. This additional cause of action by a third-party beneficiary would be unnecessary, as a cause of action already exists against the one party who dealt directly with the beneficiary and that party could further join the other party as an additional defendant if appropriate. This was not an option in the Guy case, thus its expansion of the Spires rule was proper for that situation. The Guy court acknowledged that the trial court should have discretion to determine the recognition of third-party beneficiary status and merely limited the application of Spires and did not completely overrule it.

In the case sub judice the legal conclusion pleaded by the plaintiff averred that it was a third-party beneficiary to all contracts is not admitted by the defendant North Coast. The only material facts set forth in the complaint alluding to North Coast acknowledging that plaintiff was a third-party beneficiary are averments that comments and changes were made by North Coast to the Atas roof drawings. The content of these comments and changes are not set forth, so the court has no knowledge whether they were minor or major changes, whether they referenced the plaintiff, or Panther, or what the contents were. The court determines that this is insufficient to establish a right to relief.

Even if the rule set forth in Restatement (Second) of Contracts section 302 was proper under this case, plaintiff has failed to meet the first step of the test for determining party beneficiary. The Supreme Court indicated that the trial court was to determine standing. In this case, the recognition of the plaintiff’s right must be appropriate to effectuate the intention of North Coast and Panther. There are no material facts presented to the court to refute that the only intention of North Coast and Panther was to sell and purchase the roofing products between themselves. Each side clearly receives a benefit in the transaction. This was not the case in Guy in that the scrivener of the will clearly intended that the legatee be a beneficiary of the contract between counsel and the scrivener so that the legatee would receive her inheritance upon the scrivener’s death. Nowhere in this case is there any intention shown that the plaintiff was considered by North Coast to be a party of the contract or foreseen as a beneficiary under the contract.

Therefore, the preliminary objection as to legal insufficiency of a pleading shall be sustained as to Count VII — breach of contract.

The next preliminary objection is termed a motion for more specific statement as to breach of express warranty claim against North Coast. North Coast asserts that plaintiff has failed to expressly allege an express warranty in its complaint. The only paragraph addressing breach of express warranty in the complaint is paragraph 173, which avers that North Coast expressly affirmed to the plaintiff that it could provide roofing materials which would be merchantable, fit for their particular purpose and free from structural and design defects. This paragraph merely utilizes the language of 13 Pa.C.S.A. §2313(a)(1), which states that:

“Section 2313. Express warranties by affirmation, promise, description or sample

“(a) General rule. — Express warranties by the seller are created as follows:

“(1) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.”

Subparagraph (b) of section 2313 indicates that formal words or a specific intention are not required in order to make an express warranty.

To create an express warranty, the seller must expressly communicate the terms of the warranty to the buyer in such a manner that the buyer understands those terms and accepts them. Goodman v. PPG Industries Inc., 849 A.2d 1239, (Pa. Super. 2004), appeal granted, 582 Pa. 699, 871 A.2d 191 (2005), affirmed, 584 Pa. 537, 885 A.2d 982 (2005).

In the complaint, the averment is that North Coast expressly affirmed to the plaintiff that it could provide roofing products. There are no material facts set forth in the complaint as to whether this expressed affirmation was oral or written, the manner in how it was communicated to the plaintiff, as North Coast was involved merely as a supplier of Atas roofing materials to Panther, and there are no averments it was the plaintiff who understood the communication and accepted that communication as an express warranty. Utilizing the phrase “expressly affirmed” is merely a legal conclusion. As such, there are no material facts at this stage alleged in the complaint which would establish plaintiff’s right to relief under the theory of breach of express warranty against the defendant North Coast. Therefore, the preliminary objection in the nature of insufficient specificity in a pleading shall also be sustained.

For the foregoing reasons, the preliminary objections to plaintiff’s complaint filed by defendant North Coast Commercial Roofing Systems of Pennsylvania Inc. shall be sustained.

ORDER

Now August 30,2006, in accordance with the accompanying opinion and after consideration of the preliminary objections to the plaintiff’s complaint filed by the defendant, North Coast Commercial Roofing Systems of Pennsylvania Inc., it is hereby ordered, adjudged and decreed as follows:

(1) The defendant’s preliminary objection in the nature of legal insufficiency of a pleading — demurrer is sustained to the extent that plaintiff’s cause of action set forth in Count VII — breach of contract is dismissed.

(2) Defendant’s preliminary objection entitled motion for specific statement as to breach of express warranty claim against North Coast, which is in the nature of a preliminary objection alleging insufficient specificity in a pleading, regarding Count X — breach of express warranty, is sustained. Plaintiff may file an amended complaint as to Count X — breach of express warranty, only, within 20 days after notice of this order of court.

(3) Any additional oral argument scheduled on the preliminary objections filed by defendant, North Coast Commercial Roofing Systems of Pennsylvania Inc. was inadvertent and is hereby canceled as this court has ruled on the preliminary objections by virtue of this order of court and accompanying opinion.

(4) The prothonotary shall serve a copy of this order of court upon counsel of record.


source: Caselaw Access Project

author: FRIEDMAN, J,

license: Public Domain

text:
    Bankers Trust Co. of California v. Eaborn

      John P. Liekar Jr., for plaintiff.

      Jerrold S. Kulback, for defendant Presidential Financial Corp.

      Daniel L. Sautel, for defendants Eaborn.

      T. Lawrence Palmer, for defendants Commw. of Pa. and Pa. Dept, of Revenue.
    June 27, 2006
   FRIEDMAN, J,

Plaintiff has filed a motion for summary judgment in the captioned action to quiet title. The motion gives rise to two questions, one involving whether the subordination agreement at issue contains a latent ambiguity which requires parol evidence to explain, the other involving whether or not a lender owes any duty of good faith to a prior lender who subordinated its lien to that of the later lender.

The undisputed facts are as follows: the Eaborns (guarantors) own an ongoing and apparently successful business. Over the years they guaranteed loans to the business, giving mortgages on their residence to plaintiff’s predecessor, Ameriquest, and defendant Presidential Financial Corporation of Delaware Valley as security for the guaranty. The business loans were accomplished via factoring agreements whereby the business’ accounts receivables were the primary security for what was effectively a line of credit.

The business’ first factoring arrangement (at least for purposes of the instant motion) was with Presidential. At some point, the business decided to refinance its debt to Presidential by entering into a new factoring agreement with Ameriquest (later acquired by Bankers Trust, plaintiff herein). As part of the second lending arrangement, Ameriquest asked Presidential to subordinate its prior mortgage lien on the Eaborns’ residence to the new lien of Ameriquest. Presidential agreed and after some negotiations, a document, the subordination agreement at issue, was signed. The actual date of signing was after Ameriquest had closed the loan with the business.

In response to plaintiff’s motion for summary judgment, Presidential filed an affidavit of its president, Robert J. Vanaman Jr., who had signed the subordination agreement. He says that, as is the custom in the money-lending industry, the maximum amount subordinated was $270,000, exclusive of interest, late fees, and attorney fees, none of which were expressly added to the principle amount of the Presidential loan to be subordinated, as would “typically” be the case. His affidavit does not attach any such typical form agreement, a deficiency that plaintiff argues fails to raise a disputed fact sufficient to defeat its motion.

Presidential also contends that Ameriquest had a duty to accept the partial payments proffered (by either the Eaborns or their business) instead of exercising its contractual right not to do so, thereby raising the debt guaranteed by the Eaborns far above the fair market value of their house. Eaborns join strongly in this aspect of Presidential’s response. Defendants cite the Kentucky case of Rainier v. Mount Sterling Nationwide Bank, 812 S.W.2d 154 (Ky. 1991) in support oftheir contention that plaintiff, notwithstanding its contractual right to refuse partial payments from the Eaborns, had a duty to Presidential not to damage the security for Presidential’s subordinate lien.

The Supreme Court of Kentucky, when faced with a factual situation very similar to the instant case, held as follows:

“We recognize the rule that, as between the two of them, a creditor receiving payments from his debtor, without any direction as to their application, may apply them to any legal debt, secured or unsecured, which he holds against his debtor. Straub v. Chemical Bank, Ky. App., 608 S.W.2d 71 (1980). But where a third-party creditor executes a subordination agreement in favof of said creditor, the latter has an implied duty under equitable principles to apply the payment it receives from the debtor in a manner which does not prejudice the third-party creditor’s subordinated security interest.” 812 S.W.2d at 157. (emphasis added)

In the instant case, by refusing to accept partial payments of the amount in default, plaintiff breached its implied duties of good faith and fair dealing both to Presidential (under the subrogation agreement) and to the Eaborns (under the mortgage agreement).

The court agrees with defendants that the Pennsylvania Supreme Court would probably follow the analysis of the Kentucky decision. There is no apparent business justification for plaintiff’s refusal to accept partial payments and its insistence on only payments in full. Plaintiff’s belief (expressed during oral argument on this motion) that acceptance of a partial payment could be viewed as a full cure of a default by the debtor seems to be illogical and unfounded. The court’s review of Pennsylvania law reveals no basis for plaintiff’s stated reason. In fact, the well-respected Pennsylvania treatise by Professor Kenneth E. Grey, Mortgages in Pennsylvania (2nd Ed.) states clearly to the contrary:

“Atender to the mortgagee-lender of considerably less than the full amount in default does not effectuate a cure or bring the mortgage current. Hence, the lender need not initiate new foreclosure proceedings, but can simply reissue its writ of execution.”

Here, of course, there has not been any writ of execution issued, nor has there even been a foreclosure action filed, so even the relatively minor cost of reissuing a writ is irrelevant to plaintiff’s business reasons for not accepting partial tenders.

CONCLUSION

Plaintiff is not entitled to summary judgment and the case must proceed to trial. Plaintiff will have to prove, inter alia, that Mr. Vanaman’s signature on the letter of June 27,2001 (Bates no. AMER000006) is not a forgery, as Mr. Vanaman contends. Plaintiff will also have to adduce sufficient evidence to prove there was a valid business reason for its refusal to accept partial payments of the amount in default. Presidential will also have the opportunity to prove the custom in the industry as described in Mr. Vanaman’s affidavit. The Eaborns will have the opportunity to prove the times and amounts of any tenders they made to plaintiff.

See order filed herewith.

ORDER

And now, to-wit, June 27,2006, after consideration of plaintiff’s motion for summary judgment and defendants’ responses thereto, the motion is denied.


author: CHESLOCK, J,

text:
    In re Whidden

      Vanya Dugalic, for joint petitioners Scott L. Whidden and Freedom Financial Solutions LLC.
    February 27, 2006
   CHESLOCK, J,

I. FINDINGS OF FACT

(1) Scott L. Whidden is the beneficiary of an annuity owned by Erie Insurance Group and issued by Erie Family Life Insurance Company.

(2) The structured settlement provides payment to petitioner, Scott L. Whidden as follows:

Guaranteed lump sum payment in the amount of $36,750 due payable on December 15, 2001;

Guaranteed lump sum payment in the amount of $41,750 due payable on December 15, 2006;

Guaranteed lump sum payment in the amount of $46,750 due payable on December 15,2011;

Guaranteed lump sum payment in the amount of $51,750 due payable on December 15, 2016;

Guaranteed lump sum payment in the amount of $56,750 due payable on December 15, 2021;

Guaranteed lump sum payment in the amount of $61,750 due payable on December 15, 2026;

Guaranteed lump sum payment in the amount of $66,750 due payable on December 15, 2031;

Guaranteed lump sum payment in the amount of $71,750 due payable on December 15, 2036; and

Guaranteed lump sum payment in the amount of $76,750 due payable on December 15, 2041.

(3) Scott L. Whidden entered into a purchase agreement with the joint petitioner, Freedom Financial Solutions LLC, its successors or assigns, to purchase a structured settlement as follows: one lump sum in the amount of $51,750payableon December 15,2016 and one lump sum payment in the amount of $56,750 payable on December 15, 2021. The purchase agreement between payee, Scott L. Whidden, and the buyer, Freedom Financial Solutions LLC, is dated September 15, 2005.

(4) Payee, Scott L. Whidden, further executed a disclosure statement pursuant to title 40 P.S. §4003 on September 1, 2005.

(5) Payee, Scott L. Whidden, is unwilling to wait the passage of time for the next two lump sum payments being December 15, 2016 and December 15, 2021 in order to have a down payment for a residence for his family. Mr. Whidden is currently married to Allison L. Whidden and resides at 3 Frable Road, Brodheadsville, PA 18322. They reside together with their two children, Aeryainne, age 6, and Riley, age 5.

II. DISCUSSION

Following legislative hearings, which disclosed considerable concern about the abuse of transfers of structured settlement payments by citizens of this Commonwealth, the General Assembly has enacted, and the governor signed, the “Structured Settlement Protection Act” on February 11,2000. The Act provides in pertinent part as follows:

“Conditions to transfers of structured settlement payment rights

“(a) Petition. — No transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment to any transferee of structured settlement payment rights unless the payee has filed a petition requesting such transfer and the petition has been granted by final order or decree of a court of competent jurisdiction based on such court’s express written findings that:

“(3) The payee has established that the transfer is in the best interests of the payee or his dependents.

“(4) The payee has received or expressly waived in a separate written acknowledgment signed by the payee, independent legal advice regarding the implications of the transfer, including consideration of the tax ramifications of the transfer.

“(5) If the transfer would contravene the terms of the structured settlement:

“(i) the transfer has been expressly approved in writing by:

“(A) the payee, the structured settlement obligor and the annuity issuer, provided, however, that such approval may not be unreasonably withheld and further provided that the structured settlement obligor and the annuity issuer shall be required to consent to the transfer if the transferee has agreed to indemnify the structured settlement obligor and annuity issuer from all liabilities arising from the factoring transaction and compliance or noncompliance with this act and further provided that if at the time the payee and the transferee propose to enter into the transfer agreement a favorable tax result is in effect, then the approval of the annuity issuer and the structured settlement obligor shall not be required; and

“(B) any court or responsible administrative authority that previously approved the structured settlement; and

“(ii) signed originals of all approvals required under subparagraph (i) have been filed with the court from which the authorization of the transfer is being sought and originals or copies have been furnished to the payee, the structured settlement obligor and the annuity issuer.” (40 P.S. §4003.)

After carefully evaluating the testimony of the payee, Scott L. Whidden, of the structured settlement agreement, we conclude that it should be approved. Scott L. Whidden indicated to the court that he has obtained the services of an accountant and/or financial advisor in requesting this transfer. The transfer is requested for down payment of a home to be purchased for the Whidden family and that the home buyer’s market is favorable for the purchase of a new home at this time. Given the circumstances as well as the underlying facts contained in the petition, we believe it would be in the best interest of the payee, Scott L. Whidden, to have joint petitioner, Freedom Financial Solutions LLQ purchase two lump sum payments, the first in the amount of $51,750 due payable on December 15, 2016 and the second in the amount of $56,750 due payable on December 15, 2021.

III. CONCLUSIONS OF LAW

(1) The evidence has established that the transfer is in the best interest of the payee, Scott L. Whidden.

(2) The transfer is approved to Freedom Financial Solutions LLC.

DECREE

And now, February 22,2006, it is hereby ordered and decreed that Erie Insurance Group and Erie Family Life Insurance Company are hereby authorized to remit a portion of payee, Scott L. Whidden’s structured settlement in one lump sum payment in the amount of $51,750 due payable on December 15, 2016 and one lump sum payment in the amount of $56,750 due payable on December 15,2021 to Structured Settlement Funding LLC, tax ID no. 37-1497103, P.O. Box 13238, Newark, NJ 07101-3238. The death of the payee, Scott L. Whidden, prior to the due date of the last transferred payment shall not effect the transfer of the transferred payment from payee to Freedom Financial Solutions LLC and the payee understands that he is giving up his right and the right of his heirs, successors and/or beneficiary to the transferred payments as set forth above.

It is further ordered and decreed that Erie Insurance Group and Erie Family Life Insurance Company are to issue a formal acknowledgment letter of the transfer within 20 days from the receipt of this decree. The formal acknowledgement letter shall be delivered to Freedom Financial Solutions LLC at 200 Congress Park Drive, Suite 201, Delray Beach, FL 33445.


author: LASH, J,

text:
    Butch v. Berks County Board of Assessment Appeals

      Alfred K. Hettinger, for appellant.

      Edwin L. Stock, for appellee.
    August 30, 2006
   LASH, J,

The appellant, Anthony F. Butch, has appealed from the decision of the Board of Assessment Appeals of Berks County assessing real estate owned by taxpayer in the amount of $377,700. Butch claims that the action taken by the board increasing the assessment on the property constitutes a spot assessment. Butch also argues that the board’s action was impermissible on the basis of collateral estoppel. Finally, Butch disputes the valuation. On June 12, 2006, this court bifurcated the legal issues from the valuation issue and scheduled trial on the legal issues, held on August 28, 2006.

The court enters the following findings of fact:

I. FINDINGS OF FACT

(1) Appellant, Anthony F. Butch, is an adult individual who resides at 555 Locust Street, Mertztown, Long-swamp Township, Berks County, Pennsylvania 19539.

(2) The Berks County Board of Assessment Appeals is located at the Berks County Services Center, Third Floor, 633 Court Street, Reading, Berks County, Pennsylvania 19601.

(3) Intervenor, Brandywine Heights Area School District, is a school district with a principal office at 103 Old Topton Road, Mertztown, Longswamp Township, Berks County, Pennsylvania. Brandywine Heights Area School District filed its notice of intervention on May 18, 2006.

(4) Taxpayer is the record owner of a property located at 555 Locust Street, Mertztown, Longswamp Township, Berks County, Pennsylvania (property).

(5) The property is located in the Brandywine Heights School District.

(6) The property is identified by the Berks County Assessment Office by pin number 59-5473-18-20-8377.

(7) Butch purchased the property on August 31,1995. At that time, the property was unimproved.

(8) In September 1995, Butch began constructing a residence on the property. This construction took almost two years. Eventually on April 13, 1998, Butch began occupying the property.

(9) In constructing the dwelling, Butch obtained all the necessary permits from Longswamp Township, including a building permit.

(10) Although the necessary permits were duly issued by Longswamp Township, neither the board nor the Assessment Office of Berks County were ever notified of the existence of the permits, nor received a copy of same.

(11) The Assessment Office requires that municipalities forward all building permits to the Assessment Office.

(12) The Assessment Office was unaware of the construction of the residence until sometime in 2005, when Butch placed his home up for sale.

(13) By notices mailed on August 23, 2005, the Assessment Office notified Butch of the imposition of a new assessment for the property, based upon the improvements, at $377,700. The explanation provided in the notice was “added dwelling.” Notices were sent for tax years 2002, 2003, 2004 and 2005.

(14) Butch appealed these determinations and the matters were scheduled for a hearing.

(15) The Assessment Office has a policy that in circumstances where an improvement is made to a property and the Assessment Office does not become aware of the improvement and, therefore, does not reassess at the earliest possible time, through no fault of the property owner, the Assessment Office will not impose reassessment retroactively.

(16) Upon review, the Assessment Office determined that the aforesaid policy applied to this case and, therefore, the reassessments for 2002, 2003 and 2004 were voided. Notice to Butch of the voiding of the reassessments for these three years was sent on October 25, 2005. The reassessed value for 2005 remained at $377,700.

(17) On February 27,2006, a hearing was held before the board. On March 8, 2006, the board issued a final notice to Butch setting forth that the assessment on the property would remain at $377,700, effective January 1, 2005 for county and township and July 1, 2005 for school.

(18) On March 22, 2006, Butch appealed the board’s determination to the Court of Common Pleas.

II. DISCUSSION

Generally speaking, once a valuation has been established for a taxable property, the valuation cannot be changed unless the change is the result of a countywide reassessment. “Spot reassessment,” or selective reassessment, is the “reassessment of a property or properties that are not conducted as part of countywide revised reassessment and which creates, sustains or increases disproportionately among the properties’ assessed value.” 72 P.S. §5342.1, Radecke v. York County Board of Assessment, 798 A.2d 265, 267 (Pa. Commw. 2002). However, assessors may change the assessed valuation on real property when improvements are made. 72 P.S. §5347.1.

Butch’s contention is that the reassessment on the improvements should have occurred in 1998, when the residence was first completed. When the property was finally reassessed in 2005, the reassessment was untimely, and constituted a spot assessment. Butch cites Radecke, supra, for the proposition that “a change in assessment must come when the improvements are made and not at an arbitrary time in the future.” Radecke, supra at 268.

The Radecke holding is distinguishable. In Radecke, the improvements in question were made prior to a countywide reassessment conducted in 1996. For whatever reason, the improvements were not considered in the reassessment. Subsequently, after Mr. Radecke purchased the property, a county appraiser inspected the property and discovered the improvements, eventually seeking an increased assessment. The failure of the York County Assessment Office to consider the property in determining valuation at the time of reassessment is not the type of error that can be revisited because it would constitute a spot assessment.

In contrast, in the within matter, there was no countywide reassessment or any other action taken by the Assessment Office from the time the residence was constructed until the action taken in 2005. As such, the improvements were never considered in the valuation of the property. The fact that the County Assessment Office did not act prior to 2005 does not preclude them from doing so now. Apparently, the Assessment Office had no knowledge of the improvements because it had never received a copy of the building permit issued for the construction and was never notified by the township, Butch, nor anyone else.

Neither the General County Assessment Law, nor the law specifically dealing with Counties of the Second Class A and Third Class, impose a statute of limitations on reassessment arising from the construction of improvements to real property. Butch appears to argue to the contrary, citing 72 RS. §5020-205(b), which states that property “shall not be valued or assessed for purposes of real property taxes until (1) occupied, (2) conveyed to a bona fide purchaser, or (3) 30 months from the first day of the month after which the building permit was issued or, if no building permit or other notification of improvement was required, then from the date construction commenced.” However, this provision simply states that new residential construction is not ripe for assessment until the occurrence of one of the enumerated triggering events. It does not address limiting the time a taxing body has to act on reassessment after an improvement has been made.

In the alternative, Butch argues that the action taken by the board in voiding the reassessments for 2002,2003 and 2004 prohibit the board from reassessing the property for 2005 on the basis of collateral estoppel. In his brief, Butch correctly cites the test for collateral estoppel provided in Office of Disciplinary Counsel v. Kiesewetter, 585 Pa. 477, 484, 889 A.2d 47, 50-51 (2005). In Kiesewetter, the Pennsylvania Supreme Court states:

“The doctrine of collateral estoppel precludes relitigation of an issue determined in a previous action if: (1) the issue decided in the prior case is identical to the one presented in the later action; (2) there was a final adjudication on the merits; (3) the party against whom the plea is asserted was a party or in privity with a party in the prior case; (4) the party or person privy to the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding; and (5) the determination in the prior proceeding was essential to the judgment. Office of Disciplinary Counsel v. Duffield, 537 Pa. 485, 492, 644 A.2d 1186, 1189 (1994). Collateral estoppel relieves parties of the cost and vexation of multiple lawsuits, conserves judicial resources, and, by preventing inconsistent decisions, encourages reliance on adjudication. Shaffer v. Smith, 543 Pa. 526, 673 A.2d 872, 875 (1996), citing Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 415, 66 L.Ed.2d 308 (1980).”

Collateral estoppel does not apply because there has been no final adjudication on the merits. The reassessments for 2002, 2003 and 2004 were withdrawn by the Assessment Office in accordance with its policy not to penalize property owners who did nothing to conceal the increased value of the property. The reassessment for these three years were never submitted to the board or to the court for adjudication. Accordingly, no determination was ever made whether the property could have been reassessed for 2002, 2003 or 2004.

This court holds that the property was properly reassessed, that the reassessment did not constitute a spot assessment, and that the doctrine of collateral estoppel was inapplicable. Accordingly, the board’s ruling was proper.

We enter the following order:

ORDER

And now, August 30,2006, upon consideration of the appeal of Anthony R. Butch for determination that the action of the Berks County Board of Assessment Appeals constituted spot assessment or that the action of the board was improper on the basis of collateral estoppel, and after trial held, this court finds that the reassessment conducted by the board for January 1, 2005 for county/ township and July 1, 2005 for school was proper.

A status conference is scheduled on the issue of valuation for October 10, 2006 at 9:30 a.m.


author: WORTHINGTON, J.,

text:
    Wichek v. Wichek

      Jeffrey J. Kash, for plaintiff.

      James F. Marsh, for defendant.
    March 29, 2006
   WORTHINGTON, J.,

Norbert R. Wichek and Winifred M. Wichek were married on June 18,1988. On January 28,2002, Mr. Wichek filed a complaint requesting a divorce pursuant to sections 3301(c) and 3301(a)(6) of the Pennsylvania Divorce Code and equitable distribution of real and personal property.

On February 6,2003, both parties and their respective counsel attended a master’s hearing in front of Robert C. Lear, Esquire on February 6,2003. At the time of the hearing, both parties filed affidavits of consent. The parties were able to resolve their economic claims through negotiations between counsel prior to the date of the master’s hearing. As such, the terms of the property settlement agreement were read into the record at the master’s hearing. The relevant portion of the agreement provides:

“[T]he defendant will keep all of her [Hoffman-La-Roche] 401(k) accounts, and the plaintiff will be keeping all of his [Hoffman-LaRoche] 401(k) accounts ...

“Each party will keep their respective [Hoffman-La-Roche] 401(k) accounts, and each party will waive any claim or claims to said accounts ...

“Each party will keep their own pension and will release any right, title or interest which they might have in the other party’s pension.” N.T., 2/6/2003 at 5.

On February 28,2003, this court entered a final decree in divorce. The parties’ property settlement agreement was approved and adopted, but not merged in the decree and the parties were directed to carry out the terms of their agreement.

On May 12, 2005, Mrs. Wichek died. At the time of her death, Mr. Wichek was still listed as the beneficiary of her Hoffman-LaRoche 401(k) account. On or about June 21, 2005, Mr. Wichek received a letter from Hoffman-LaRoche advising him that he was entitled to certain benefits as a result of Mrs. Wichek’s death, namely her savings plan and Roche retiree death benefit. Mr. Wichek completed and returned the necessary income tax withholding election form provided to him by HoffmanLaRoche and Hoffman-LaRoche subsequently sent him a check in the amount of $74,420.50.

On September 9, 2005, counsel for the estate of Winifred M. Wichek filed a petition to enforce divorce master’s recommendation requesting that this court direct Mr. Wichek to pay the estate of Winifred M. Wichek any and all of Mrs. Wichek’s 401(k) funds that were paid to him by Hoffman-LaRoche. In addition, counsel requested that this court order Mr. Wichek to pay reasonable counsel fees in the amount of $500.

Mr. Wichek filed an answer to the petition to enforce divorce master’s recommendation on October 3, 2005. In his answer, Mr. Wichek averred that the property settlement agreement applied strictly and exclusively to the distribution of marital assets. Mr. Wichek further argued that it was not unreasonable to conclude that Mrs. Wichek had intentionally left Mr. Wichek’s name as the beneficiary of her Hoffinan-LaRoche 401(k) account.

On November 18, 2005, a hearing was held on the petition to enforce divorce master’s recommendation and both parties submitted hearing memoranda. On November 21,2005, we entered an order directing Mr. Wichek to deposit the sum of $60,000 or the balance of the distribution of Mrs. Wichek’s 401 (k) and pension plans into an escrow account held by counsel for both parties pending a disposition in this matter. The petition to enforce divorce master’s recommendation is now before us.

We note at the outset that the estate of Winifred M. Wichek was raised on June 21,2005, and Mrs. Wichek’s son, Scott Johnson, was named the executor of her estate. OnNovember 10,2005, counsel for the estate ofWiniffed M. Wichek filed a motion to substitute for a deceased party requesting that this court allow the estate of Winifred M. Wichek to proceed on behalf of Mrs. Wichek in this matter. The divorce code provides that if one of the parties dies after the decree of divorce has been entered, but prior to the final determination of the property rights and interests of the parties, the personal representative of the deceased party shall be substituted as a party as provided by law and the action shall proceed. 23 Pa.C.S. §3323(d). At the hearing on November 18, 2005, Mr. Wichek’s counsel stipulated that the estate of Winifred M. Wichek should be substituted for the original defendant Winifred M. Wichek pursuant to 23 Pa.C.S. §3323(d).

The Pennsylvania Probate Code provides that:

“If a person domiciled in this Commonwealth at the time of his death is divorced from the bonds of matrimony after designating his spouse as beneficiary of a life insurance policy, annuity contract, pension or profit-sharing plan or other contractual arrangement providing for payments to his spouse, any designation in favor of his former spouse which was revocable by him after the divorce shall become ineffective for all purposes and shall be construed as if such former spouse had predeceased him unless it appears from the wording of the designation, a court order or a written contract between the person and such former spouse that the designation was intended to survive the divorce... Any former spouse to whom payment is made shall be answerable to anyone prejudiced by the payment.” 20 Pa.C.S. §6111.2. (emphasis added)

This provision of the Probate Code is applicable to the estates of decedents who died on or after December 16, 1992. Layne v. Layne, 442 Pa. Super. 398, 659 A.2d 1048 (1995). Since Mrs. Wichek died on May 12, 2005, this section of the Probate Code is applicable to her estate.

In the instant matter, Mr. and Mrs. Wichek were divorced on February 23, 2003. At the time of Mrs. Wichek’s death, she had failed to remove Mr. Wichek as the beneficiary of her Hoffinan-LaRoche 401 (k) account. Pursuant to the terms of section 6111.2 of the Probate Code, we find that it is clear that the designation of Mr. Wichek as the beneficiary of Mrs. Wichek’s 401(k) account is ineffective for all purposes and therefore, the designation shall be construed as if Mr. Wichek had predeceased Mrs. Wichek. Furthermore, Mr. Wichek has failed to produce any evidence to demonstrate that Mrs. Wichek intended the beneficiary designation to survive the parties’ divorce.

On the contrary, the property settlement agreement that was read into the record on February 6,2003, establishes that Mrs. Wichek intended to revoke the beneficiary designation. “In construing a [property settlement] agreement a court must adopt that construction which gives effect to the parties’ reasonable and probable intent, in view of the surrounding circumstances and purposes of the contract.” Litwack v. Litwack, 289 Pa. Super. 405, 407, 433 A.2d 514, 515 (1981). After reviewing the parties’ settlement agreement, it is apparent that it is a comprehensive agreement designed to settle all of the parties’ property claims, including the parties’ respective Hoffman-LaRoche 401(k) accounts. The agreement specifically provided that each party would retain his/ her own 401(k) account and waive any claim to the other’s 401(k) account. Additionally, each party agreed to relinquish any right, title or interest which he/she may have in the other party’s pension.

In his hearing memorandum, Mr. Wichek relies on Equitable Life Assurance Society of the United States v. Stitzel, 299 Pa. Super. 199, 445 A.2d 523 (1982), for the proposition that a property settlement agreement does not necessarily revoke a beneficiary designation. In Stitzel, the parties entered into a property settlement agreement which provided in pertinent part that the parties would waive “any and all claims,... actions, causes of action ... of whatsoever kind or nature, for or because of any matter or thing done, omitted, or suffered to be done by said other party prior to and including the date hereof.. . .” Id. at 201, 445 A.2d at 524. The court determined that such general language in a property settlement agreement was insufficient to waive the designation of the beneficiary. Id.

First of all, it is important to recognize that Stitzel was decided in 1982, approximately 10 years before the enactment of section 6111.2 of the Probate Code. Secondly, unlike the parties in Stitzel, the parties in the instant matter specifically stated that each would relinquish his/ her claim to the other’s Hoffman-LaRoche 401(k) account. “Although general language in a separation/settlement agreement will not revoke a beneficiary designation, the language in this case is not general.” Roth v. Roth, 413 Pa. Super. 88, 94, 604 A.2d 1033, 1036 (1992); see also, Layne v. Layne, 442 Pa. Super. 398, 404-405, 659 A.2d 1048, 1051 (1995). As such, we find that the express language used by the parties was sufficiently specific to revoke the beneficiary designation. The balance of Mrs. Wichek’s 401(k) account that is currently being held in escrow shall be released to the estate of Winifred M. Wichek. Within 30 days of the entry of this order, Mr. Wichek shall pay the estate of Winifred M. Wichek the remaining balance of Mrs. Wichek’s 401(k) account that was not being held in escrow, plus interest at the legal rate of 6 percent. In his hearing memorandum, counsel for the estate of Winifred M. Wichek further argues that since the law and facts in this case are clearly in favor of the estate, Mr. Wichek should be directed to pay counsel fees in the amount of $500.

“Generally, litigants are responsible for their own counsel fees unless otherwise permitted by statutory authority, agreement of the parties, or some other recognized exception to the general rule.” Hart v. Arnold, 884 A.2d 316, 342 (Pa. Super. 2005), citing Chatham Communications Inc. v. General Press Corporation, 463 Pa. 292, 344 A.2d 837 (1975). Atrial court may award reasonable counsel fees to a participant “as a sanction against another participant for dilatory, obdurate or vexatious conduct during the pendency of a matter.” 42 Pa.C.S. §2503(7).

In the instant matter, both parties were represented by counsel and both parties knowingly and voluntarily entered into a comprehensive property settlement agreement in which both parties specifically retained their own Hoffman-LaRoche 401(k) accounts while they waived any claims they might have to the other’s Hoffman-La-Roche 401(k) accounts. Furthermore, section 6111.2 of the Probate Code clearly governs this situation and as such, Mr. Wichek was on notice that the Hoffman-La-Roche beneficiary designation was ineffective for all purposes. Section 6111.2 further states that “[a]ny former spouse to whom payment is made shall be answerable to anyone prejudiced by the payment.” 20 Pa.C.S. §6111.2.

We find that Mr. Wichek blatantly violated section 6111.2 of the Probate Code, as well as the parties’ property settlement agreement. As a result, the estate of Winifred M. Wichek was prejudiced and forced to incur legal fees in order to resolve the situation. As such, we find that an award of reasonable counsel fees is appropriate in this matter. Within 30 days from the entry of this order, Mr. Wichek shall pay the estate of Winifred M. Wichek $500 in counsel fees.

ORDER

And now, March 29, 2006, upon consideration of the estate of Winifred M. Wichek’s petition to enforce divorce master’s recommendation, we enter the following order:

(1) Pursuant to section 6111.2 of the Probate Code, the beneficiary designation listed on Mrs. Wichek’s Hoffinan-LaRoche 401(k) account is ineffective for all purposes.

(2) The balance of Mrs. Wichek’s Hoffinan-LaRoche 401(k) account that is being held in escrow shall be released to the estate of Winifred M. Wichek.

(3) Within 30 days from the entry of this order, Mr. Wichek shall pay the estate of Winifred M. Wichek the remaining balance of Mrs. Wichek’s 401(k) account that was not being held in escrow, approximately $14,000, plus interest at the legal rate of 6 percent.

(4) Within 30 days from the entry of this order, Mr. Wichek shall pay the estate of Winifred M. Wichek $500 in reasonable counsel fees.

      . This figure represented the gross amount of the 401(k) in the amount of $93,025.63 minus the $18,605.13 that was withheld for federal tax purposes.

      . Hoffman-LaRoche sent Mr. Wichek a check in the amount of $74,420.50. At the time of the hearing on November 18, 2005, Mr. Wichek had spent approximately $ 14,000. On November 21,2005, we issued an order directing Mr. Wichek to place the balance of Mrs. Wichek’s 401 (k) account in an escrow account.


author: CHESLOCK, J.,

text:
    Grant v. Daubenspeck

      Marion Munley, for plaintiffs.

      Bernard T. Kwitowski, for defendant Jamie Daubenspeck.

      Edward Daubenspeck, pro se.
    July 25, 2006
   CHESLOCK, J.,

On March 24,2006, plaintiffs, Patricia Grant and Jessie Grant, her husband, filed the instant action against the defendants, Jamie Daubenspeck and Edward Daubenspeck, concerning an accident which occurred on or about June 27, 2004, on State Route 209 in Chestnuthill Township, Monroe County, Pennsylvania. On April 20,2006, the defendant, Jamie Daubenspeck, filed preliminary objections to plaintiffs’ complaint and filed a praecipe for oral argument with the court. Oral argument was scheduled before the court on June 5, 2006, and briefs having been filed by the parties, this matter is now before the court for disposition.

Pennsylvania Rule of Civil Procedure 1028(a)(2)(3), (b) states that preliminary obj ections may be filed by any party to a pleading and limited to the following grounds:

“(a)(2) failure of a pleading to conform to law or rule of court or inclusion of scandalous or impertinent matter;

“(3) insufficient specificity in a pleading;

“(b) All preliminary objections shall be raised at one time. They shall state specifically the grounds relied upon and may be inconsistent. Two or more preliminary objections may be raised in one pleading.”

Daubenspeck’s first preliminary objection is in the nature of a motion to dismiss plaintiffs’ complaint for improper service pursuant to Pa.R.C.P. 1028(a)(1). However, this court having been advised that Daubenspeck has been served by publication in the Northampton County Reporter and The Express-Times, this matter is now moot.

Daubenspeck’s next preliminary objection is in the nature of a motion to strike the words “reckless” and “wanton” from plaintiffs’ complaint. Plaintiffs’ complaint at paragraphs 15, 16 and 20 avers that Daubenspeck’s conduct was gross, wanton and reckless. Daubenspeck argues that this language in plaintiffs ’ complaint is devoid of fact which demonstrates his conduct rises to the level of reckless, wanton or gross negligence. We believe Daubenspeck objects to these words to avoid the potential of punitive damages being awarded to plaintiffs. In this regard, the Pennsylvania courts have adopted the Restatement (Second) of Torts, section 908. According to section 2 of the Restatement (Second) of Torts, punitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others. The Pennsylvania Supreme Court has found that “[pjunitive damages must be based on conduct which is ‘malicious,’ ‘wanton,’ ‘reckless,’ ‘willful’ or ‘oppressive.’” Feld v. Mirriam, 506 Pa. 383, 395, 485 A.2d 742, 747-48 (1984) quoting Hughes v. Babcock, 349 Pa. 475, 37 A.2d 551 (1944). In short, the conduct must be outrageous and the actor must be in the state of mind to carry out the intentional, reckless or malicious act. Id. “Reckless indifference to the rights of others” means that the “actor has intentionally done an act of unreasonable character, in disregard of a risk known to him or so obvious that he must be taken to have been aware of it, and so great as to make it highly probable that harm would follow.” Smith v. Brown, 283 Pa. Super. 116, 120, 423 A.2d 743, 745 (1980), quoting Evans v. Philadelphia Transportation Co., 418 Pa. 567, 212 A.2d 440 (1965); see also, Martin v. Johns-Mansville Corp., 508 Pa. 154, 494 A.2d 1088 (1985).

Instantly, plaintiff argues that Daubenspeck’s actions were reckless and wanton, that the allegations in the complaint are appropriate and Daubenspeck’s preliminary objections should be denied. In support of their argument, they cite the case of Smith v. Brown, 283 Pa. Super. 116, 423 A.2d 743 (1980). In Smith, the defendant struck plaintiff’s minor child with her car. The Smith complaint averred that the defendant drove her car in a wanton and reckless manner and demanded punitive damages. Specifically, plaintiff Smith alleged that the defendant was driving too fast for the conditions and that she did not have her car under proper and adequate control. Id. at 119, 423 A.2d at 745. However, the Superior Court concluded that plaintiff failed to plead any facts that indicated that the defendant’s conduct was outrageous and failed to put the defendant on notice as to what outrageous conduct was alleged. The complaint simply stated conclusions, not facts, and the Superior Court affirmed the trial court’s decision to strike plaintiff’s claim for punitive damages.

In the instant matter, after careful review of the complaint, we find no facts that support the allegations of wanton or recklessness being pled in the complaint. Plaintiffs’ complaint alleges that Daubenspeck fell asleep while operating his vehicle. We find that plaintiffs’ complaint fails to aver sufficient facts specifying the outrageous conduct which would include the terms reckless or wanton in the complaint. There is simply no factual averment which would support the words “reckless” or “wanton” in the complaint or for the imposition of punitive damages. Accordingly, we will sustain Daubenspeck’s preliminary objection in this regard.

The final preliminary objection filed in this matter is in the nature of a motion to strike paragraph 16(j) of plaintiffs’ complaint. Daubenspeck argues that this paragraph contains general, vague and boilerplate allegations of negligence against him.

It is the function of a pleading to put the opponent on notice of what he will be called upon to meet at trial and to define the issues for trial. See 2 Goodrich-Amram 2d, §1019:2.1 (2001). Pa.R.C.P. 1019(a) requires the content of pleading to set forth material facts on which the cause of action or defense is based in a concise and summary form. “The purpose of [1019(a)] is to require the pleader to disclose the ‘material facts’ sufficient to enable the adverse party to prepare his case.” Baker v. Rangos, 229 Pa. Super. 333, 349, 324 A.2d 498, 505 (1974), citing Landau v. Western Pennsylvania National Bank, 445 Pa. 217, 225, 282 A.2d 335, 339 (1971). The Baker court further stated that, “[a]negations will withstand challenge under 1019(a) if (1) they contain averments of all the facts the plaintiff will eventually have to prove in order to recover . . . and (2) they are ‘sufficiently specific so as to enable defendant to prepare his defense.’” Id. at 350, 324 A.2d at 505-506. (citations omitted) “Pa.R.C.P. 1019(a) has been construed to mean that the complaint must not only apprise the defendant of the claim being asserted, but it must also summarize the essential facts to support the claim.” Krajsa v. Keypunch Inc., 424 Pa. Super. 230, 235, 622 A.2d 355, 357 (1993). (citation omitted)

In reviewing the plaintiffs’ complaint, we find that paragraph 16(j) lacks specificity and should be stricken from plaintiffs’ complaint. Plaintiff must set forth specifically what rules of the road or statute Daubenspeck violated. Without the specific law, Daubenspeck will not be able to prepare a proper defense. Hence, we will sustain his preliminary objection on this issue.

In view of the foregoing, we enter the following order:

ORDER

And now, July 25,2006, upon consideration of defendant Jamie Daubenspeck’s preliminary objections and the plaintiffs’ response thereto, it is hereby ordered the defendant Jamie Daubenspeck’s preliminary objections are sustained. It is further ordered that the words “reckless” and “wanton” shall be stricken from paragraphs 15, 16 and 20 and that paragraph 16 (j) be stricken from plaintiffs’ complaint.


author: NEWMAN, Member,

text:
    Office of Disciplinary Counsel v. Levine

      Disciplinary Board Docket no. 163 D.B. 2004.
    February 13, 2006
   To the Honorable Chief Justice and Justices of the Supreme Court of Pennsylvania:

NEWMAN, Member,

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

I. HISTORY OF PROCEEDINGS

On October 28,2004, Office of Disciplinary Counsel filed a petition for discipline against Michael Levine, respondent. The petition charged respondent with failing to provide competent representation to clients in three separate immigration matters in the State of Florida. On December 17, 2004, a stipulation in lieu of answer was filed jointly by petitioner and respondent.

A disciplinary hearing was held on February 28,2005, before a District III Hearing Committee comprised of Chair Charles Owen Beckley, II, Esquire, and Members Lawrence B. Abrams, III, Esquire, and William A. Fetterhoff, Esquire. Respondent appeared pro se.

Following the submission of briefs by the parties, the Hearing Committee filed a report on August 29, 2005, finding that respondent engaged in professional misconduct and recommending that he be suspended for a period of one year and one day.

Abrief on exceptions was filed on September 28,2005, by counsel for respondent, Samuel D. Miller, III, Esquire, who entered his appearance on September 9, 2005. A brief opposing exceptions and motion to reopen the record was filed by petitioner on October 17, 2005.

This matter was adjudicated by the Disciplinary Board at the meeting on November 9, 2005.

II. FINDINGS OF FACT

The board makes the following findings of fact:

(1) Petitioner, whose principal office is located at 200 North Third Street, Suite 1400, Harrisburg, Pennsylvania 17101, is invested, pursuant to Rule 207 of the Pennsylvania Rules of Disciplinary Enforcement, with the power and 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 brought in accordance with the various provisions of the aforesaid rules.

(2) Respondent, Michael Levine, was bom in 1943 and was admitted to practice law in the Commonwealth in 1975. He maintains his office at 1133 S. University Dr., Suite 211, Plantation, FL 33324. He is subject to the disciplinary jurisdiction of the Disciplinary Board of the Supreme Court.

(3) Respondent has a prior history of discipline consisting of a private reprimand with conditions imposed in 1997. A one-year period of probation was also imposed. During the probation, a practice monitor was appointed to review respondent’s handling of funds and maintenance of records and to file a report every two months. Respondent failed to comply with his probation and it was extended for an additional year. Respondent’s psychiatric problems were a factor in determining that private discipline was appropriate.

Charge I — Theresa Jolly Matter

(4) In October 2001, Theresa Jolly, formerly known as Theresa Knowles, went to respondent to help change her immigration status to become a permanent resident. Ms. Jolly’s sister, Pauline Holland, had filed a petition on Ms. Jolly’s behalf to change her status in 1979. However, Ms. Jolly had been unaware that Ms. Holland had arranged an appointment with the Immigration and Naturalization Service (INS) to change her status in 1979, until she came across a letter which had been in her mother’s possession until her death. Ms. Jolly wanted to know whether it was still possible to change her status.

(5) At a meeting in October 2001, which was attended by respondent, Ms. Jolly and two others, respondent advised Ms. Jolly that if her application was still open, she could complete the process to become a permanent resident in the United States or in the Bahamas through the Bahamas Embassy. Respondent further advised her that her husband and children could become permanent residents as a result of her status, as long as her children were less than 21 years old.

(6) At that meeting, respondent advised Ms. Jolly that he would charge her $3,000 to get her and her family’s status changed. Respondent requested a $1,500 deposit from Ms. Jolly.

(7) On May 2, 2002, Ms. Jolly paid $500 toward her retainer.

(8) On May 13, 2002, Ms. Jolly gave respondent an additional $2,000 and signed a retainer agreement.

(9) On May 13, 2002, respondent advised Ms. Jolly that her file was in the federal archives, and that he needed to look for the file. Respondent estimated that it would take about six to eight months to finish this immigration work if Ms. Jolly stayed in the United States. Ms. Jolly told respondent that she preferred to complete the process from the Bahamas.

(10) On May 31, 2002, Ms. Jolly and her two sons went to respondent’s office. Respondent requested that Ms. Jolly pay him an additional $2,400 as a filing fee. Ms. Jolly paid respondent $2,400 that day.

(11) Respondent deposited the money shortly thereafter.

(12) In June 2002, Ms. Jolly called respondent on numerous occasions to check on the status of her case. Respondent advised her that he went to get her file from the archives and he was not able to see the supervisor.

(13) On June 18, 2002, respondent hand-delivered a letter to Stephanie Black at the INS and requested that she pull Ms. Jolly’s file and check the status of her case.

(14) On July 2, 2002, respondent telephoned Ms. Jolly to tell her that the file was active, but he had not obtained it.

(15) Ms. Jolly received an invoice dated July 10,2002, requesting an additional $1,500.

(16) After receiving the invoice, Ms. Jolly telephoned respondent to complain because she had received a bill requesting the balance of payment when respondent had not completed any of the work.

(17) During that conversation respondent advised Ms. Jolly that he had not yet obtained her file.

(18) On August 5,2002, Ms. Jolly terminated respondent’s representation, and requested a refund of her money. She advised respondent that he could keep $500 even though in her view he had done nothing to earn it.

(19) At the time of respondent’s termination, he had still not received the file from the INS.

(20) Respondent requested that Ms. Jolly mail him her receipts, which she sent. Respondent then called and advised Ms. Jolly that he could not refund all of her money at one time. He then promised to refund between $500 and $700 by August 10, 2002.

(21) Respondent failed to refund any monies by August 10, 2002. Respondent requested that Ms. Jolly come to his office alone on the following Monday. Ms. Jolly was uncomfortable with the request and refused to do so. Respondent then promised to send her funds within three weeks, but failed to do so.

(22) Ms. Jolly informed respondent that she had spoken to the Florida Bar about his conduct. Respondent informed her that as a result of her communicating with the Florida Bar, he would have to deal with her in a way he did not want to. Respondent advised Ms. Jolly he would not refund her money until she came to his office and signed papers.

(23) When respondent found out that Ms. Jolly had filed a complaint with the Florida Bar, he wrote a letter to her dated September 12,2002, requesting that she and her sister come to his office. Respondent advised Ms. Jolly that he was prepared to return her filing fees at that time.

(24) Ms. Jolly filed a complaint with the Pennsylvania Office of Disciplinary Counsel in September 2002.

(25) Respondent met with Ms. Jolly on October 25, 2002. At that time, respondent agreed that he owed Ms. Jolly $3,900. Respondent paid Ms. Jolly $500, and agreed to send her $750 weekly until the balance was paid in full. However, after promising to refund the balance to Ms. Jolly, respondent never made any payments.

(26) In February 2003, respondent proposed that if Ms. Jolly agreed to withdraw her disciplinary complaint, he would make payment to her. She did not withdraw her complaint and respondent never made any payments to her.

(27) At this time, J. Kerrington Lewis, Esquire, represented respondent in this matter. Mr. Lewis was informed by respondent’s wife that respondent had taken care of the matter with Ms. Jolly.

(28) By letter dated March 11,2003, Mr. Lewis advised petitioner that he was representing respondent and respondent had refunded $4,500 to Theresa Jolly.

(29) By letter dated August 4,2003, petitioner advised Mr. Lewis that Ms. Jolly denied that respondent had refunded any money to her.

(30) By letter dated August 11, 2003, Mr. Lewis informed petitioner that respondent had only refunded $500 to Ms. Jolly.

(31) There was a miscommunication between respondent’s wife and Mr. Lewis. Respondent did not intend to misrepresent to Mr. Lewis that all of the money had been repaid.

(32) The Pennsylvania Lawyers Fund for Client Security awarded Ms. Jolly’s claim in the amount of $4,900.

(33) Respondent had been making monthly payments of $400 per month to the Lawyers Fund for Client Security. As of October 22,2004, respondent had made principal payments of $3,200 to the Lawyers Fund for Client Security and still owed $1,700, excluding interest. Respondent currently owes approximately $1,900 to the Lawyers Fund for Client Security.

Charge II — Sergo Charles Matter

(34) In 1999, Sergo Charles was placed in removal proceedings by the INS, and he retained respondent to represent him.

(35) Respondent requested a $1,500 retainer, which Mr. Charles paid.

(36) On August 24, 1999, respondent entered his appearance in Mr. Charles’ case.

(37) On May 24, 2000, respondent represented Mr. Charles at a hearing in the removal proceedings where removability was established.

(38) The hearing was continued until October 3,2000, and then rescheduled for January 29, 2001. At the hearing on January 29,2001, the immigration judge considered Mr. Charles’ applications for asylum, withholding and torture convention relief.

(39) At the hearing, respondent attempted to introduce into evidence a marriage license and birth certificates, which were written in Creole, without a translation.

(40) Since respondent did not have a certified translation of these documents, the judge refused their admission.

(41) Respondent later attempted to introduce Mr. Charles’ military ID card without a certified translation. Respondent also attempted to introduce certain x-rays without any medical testimony of the type of injuries that were shown on the x-rays.

(42) At the end of the hearing, the judge recessed the case before cross-examination of respondent’s client, to give respondent an opportunity to enter additional corroborating testimony, including a doctor’s report on the x-ray; a translation of the documents that respondent had attempted to introduce; an affidavit; and testimony from one Adeska Schiller.

(43) The hearing was postponed until May 3,2001, at which time:

(a) Respondent failed to produce any of the evidence that he stated he would provide at the previous hearing;

(b) Respondent advised the judge he had just received a letter from Mr. Charles’ wife and a cassette from Haiti, both of which were in Creole;

(c) Respondent requested that the judge accept the cassette and letter in Creole even though respondent had not followed the rules of evidence for admissibility;

(d) Respondent attempted to introduce ID cards written in Creole;

(e) Respondent asked for another continuance to further document his client’s case;

(f) The judge stated on the record that respondent had been given Mr. Charles’ three ID cards and respondent agreed to provide certified translations 10 days prior to the next hearing;

(g) Respondent agreed to obtain the testimony of Adeska Schiller and a declaration from Mrs. Charles;

(h) The judge further noted that respondent took notes of all that was required of his client;

(i) Respondent advised the court he would translate the letter and the cassette tape and get in touch with Mr. Charles’ wife and Adeska Schiller;

(j) The judge made clear that respondent needed copies of the tape and certified transcripts of the tape for the trial attorney, the court and for himself;

(k) The judge reminded respondent that all documents must be submitted 10 days prior to the hearing;

(l) The judge adjourned the hearing to give respondent an opportunity to submit an affidavit from Mr. Charles, which had to be submitted by August 17, 2001.

(44) Respondent told Sergo Charles to get in touch with his office to get the items translated. Mr. Charles believed respondent would handle it.

(45) Respondent told the judge he would get the items translated.

(46) The court scheduled the next court date for October 15, 2001 at 1 p.m.

(47) On October 15,2001, respondent failed to appear on Mr. Charles’ behalf in Immigration Court.

(48) On the day of the hearing, Mr. Charles telephoned respondent to advise him he was on his way to court.

(49) Respondent advised Mr. Charles that he would no longer represent him and asked him to come to respondent’s office.

(50) Mr. Charles went to respondent’s office and respondent handed his file to him, and told Mr. Charles he would no longer represent him. Respondent did not return x-rays, cassettes, and other items that were in respondent’s possession, because respondent did not recall that he had those items as they were not in Mr. Charles’ file.

(51) Respondent did not provide an explanation for his actions.

(52) Mr. Charles attended his immigration hearing without counsel.

(53) When Mr. Charles arrived at court, he discovered that respondent had not submitted a translated version of the affidavit, the cassette or other documents that he had previously given to respondent.

(54) The judge granted an additional postponement until December 19, 2001, after Mr. Charles explained that respondent had the affidavit and cassette.

(55) Mr. Charles retained new counsel.

(56) Mr. Charles’ new counsel was denied a continuance to allow corroborating evidence. All relief was denied and Mr. Charles was ordered removed to Haiti. Successor counsel did succeed in having Mr. Charles’ case reopened.

(57) Respondent failed to return Mr. Charles’ transcript of the cassette and affidavit until February 27, 2002.

(58) It took respondent four months to return documents that were relevant to his client’s case, and he made no effort to have those documents translated.

(59) Respondent failed to return other items to Mr. Charles until August 22, 2002; 10 months after respondent told Mr. Charles he would no longer represent him.

Charge III — Karen Mahfood Matter

(60) Lesa Fearon-Harris retained respondent to represent her daughter, Karen Mahfood, also known as Karen Mark, in a deportation hearing scheduled for October 31, 2003; to file an application for cancellation of removal; and to file any necessary adjustment of status papers.

(61) Respondent appeared at an immigration hearing on October 30,2003, on behalf of Ms. Mahfood. At that time, respondent requested additional time to prepare the case, and a new court date was scheduled for September 1,2004.

(62) Respondent was ordered to submit Ms. Mahfood’s application for cancellation of removal on or before December 31, 2003.

(63) Respondent agreed to represent Ms. Mahfood for $4,000. Ms. Fearon-Harris signed a fee agreement on October 23, 2003 and paid respondent a portion of his requested fee. Respondent agreed that she could pay the balance at a later date.

(64) Sometime in December 2003, Ms. Mahfood came to respondent’s office to discuss the case.

(65) On December 22,2003, Ms. Mahfood brought to respondent’s office the remaining documents and information that respondent said he needed to file the papers.

(66) Respondent informed his client that he had everything he needed in order to file the case and he would try to get it filed as quickly as possible.

(67) Ms. Mahfood’s paperwork was ready to be filed on December 23, 2003.

(68) Respondent was hospitalized overnight on December 30, 2003, due to his bipolar condition and was discharged on December 31,2003.

(69) Respondent required electric shock therapy on January 2, 2004, as aftercare treatment.

(70) Respondent failed to file the application for cancellation of removal by December 31, 2003.

(71) At no time prior to December 31, 2003, did respondent advise his client that he would not be able to timely file the application for cancellation of removal.

(72) On January 6, 2004, U.S. Immigration Judge J. Daniel Dowell entered an abandonment order, nearly a week after the time had expired to file the application for cancellation of removal.

(73) Judge Dowell noted that respondent did not request additional time to file and failed to provide any other timely explanation for his failure to file the application.

(74) Judge Dowell ordered that Karen Mahfood be removed from the United States to Jamaica.

(75) Respondent did not notify his client of Judge Dowell’s order dated January 6, 2004.

(76) On January 7, 2004, respondent filed a motion to reopen the case and accept a late filing. In that motion respondent claimed that he was sick from December 28 through December 31, 2003. Respondent did not include any documentation concerning his medical condition.

(77) On January 8,2004, Judge Dowell denied respondent’s motion to reopen and accept late filing.

(78) Respondent failed to advise his client that he filed a motion to reopen the case and it was denied.

(79) On January 12, 2004, respondent filed a motion to reconsider the judge’s order, in which respondent filed a document, consisting of a one-sentence letter from a physician that indicated respondent had been admitted to a medical facility for one night and was discharged on December 31, 2003.

(80) By order dated January 13, 2004, Judge Dowell denied respondent’s motion to reconsider, and noted that he had from October 30, 2003 to December 31, 2003 to ensure a timely filing and failed to do so.

(81) On January 14,2004, Ms. Fearon-Harris received a telephone call from Lizette Nazarewsky, respondent’s office manager, who advised her that respondent failed to file the application for cancellation of removal on time because he was sick.

(82) Ms. Nazarewsky also told Ms. Fearon-Harris that respondent filed a motion to reconsider, which had been denied. She told Ms. Fearon-Harris to come and pick up her file and get another attorney to represent her.

(83) On January 16,2004, Ms Fearon-Harris received a package from respondent’s office containing paperwork, including a letter dated January 14, 2004, the contents of which is summarized as follows:

(a) Respondent enclosed a copy of the order/decision of the immigration judge ordering Ms. Mahfood to be removed from the United States to Jamaica;

(b) Respondent acknowledged payment of $100 for the filing fees;

(c) Respondent advised Ms. Mahfood that her case had been ready to be filed on December 24,2003, but he had gotten sick and ended up in the hospital and did not file the application;

(d) Respondent filed the application for cancellation of removal on January 2, 2004 and a motion to accept late filing on January 6, 2004, which was denied by the court;

(e) On January 9,2004, respondent filed a second motion to reopen and accept late filing, which was also denied;

(f) Respondent advised Ms. Fearon-Harris to immediately retain another attorney to try to reopen the case and offered to refer her to another immigration attorney.

(84) Ms. Fearon-Harris retained Junior Farquharson, Esquire, who reviewed the paperwork and told her that as a result of respondent’s failure to file an application for cancellation of removal in a timely fashion, the court signed an order finding abandonment of relief and ordered Ms. Mahfood removed from the United States.

(85) Until that time, Ms. Mahfood did not know that the judge had entered an order to deport her.

(86) On January 22, 2004, Mr. Farquharson filed a motion to reopen and reconsider the order to be removed on behalf of Ms. Mahfood. Judge Dowell denied this motion on January 22, 2004.

(87) Respondent signed a waiver of his right to confidentiality in order to permit Office of Disciplinary Counsel to write a letter to Karen Mahfood’s new counsel, advising him that Office of Disciplinary Counsel was intending to take disciplinary action against respondent for his handling of Ms. Mahfood’s immigration matter. The letter was used as a basis for requesting the prosecution to file a joint motion to open Karen Mahfood’s case.

(88)The joint motion to open Karen Mahfood’s case was granted.

Other Facts of Record

(89) Respondent cooperated with petitioner by waiving personal service of the petition for discipline and by entering into a stipulation.

(90) Respondent was diagnosed with bipolar disorder in the 1990s and has suffered from depression most of his adult life.

(91) Respondent was hospitalized from January 23, 2003 until February 4, 2003 due to this illness.

(92) Respondent was treated for depression and underwent outpatient treatments at Florida Medical Center.

(93) Ely D. Pelta M.D. testified on respondent’s behalf. Dr. Pelta has been respondent’s treating physician since January 2003.

(94) Dr. Pelta believes respondent’s bipolar disorder is under control and his prognosis is relatively good, providing that he stays compliant with his medication.

(95) Dr. Pelta was only vaguely familiar with the nature of the complaints against respondent.

(96) Donald W. Edwards is an attorney in the State of Florida who has been a friend with respondent since 1984. He sees or talks to respondent on a daily basis.

(97) Mr. Edwards describes respondent as a competent attorney who has never been so depressed that he cannot practice law.

(98) Respondent provided 17 letters attesting to his good character. None of the individuals who provided the character letters indicated whether they were aware of the nature of the disciplinary charges against respondent.

(99) Respondent received a letter of concern on August 5, 2003, for the following conduct. Between 1995 and 1999, respondent negotiated with insurance companies on behalf of Florida clients when he was not licensed to practice law in Florida. Respondent entered a consent decree on June 18, 1998 with the Florida disciplinary authorities in which he agreed that he would not “forward letters appearing to be from an attorney, or otherwise practice law in Florida.” Respondent has complied with the consent decree.

(100) The other misconduct discussed in the letter of concern addressed the fact that respondent went on inactive status on July 1,1998 and represented 22 immigration clients while he was on voluntary inactive status in Pennsylvania from July 1, 1998 through November 1, 1998. Furthermore, respondent represented six individuals by appearing pro hac vice in Florida courts, which was legal at the time.

(101) Respondent’s position regarding his practice of law while on inactive status occurred because respondent had inadvertently checked the inactive box on his Annual Fee form and forgot to send the fee for his registration. Immediately upon notification by Disciplinary Counsel, respondent took the necessary steps to be reinstated to active status.

(102) Respondent was sued by Emmanuel Vileinor, who was the brother of one of respondent’s clients. Mr. Vileinor paid respondent $5,000 to help his brother on an immigration matter. Respondent failed to do anything to pursue his brother’s case. The case was settled for $3,500, and respondent made payments. Two of the checks that respondent wrote to pay the judgment amount were dishonored, but respondent eventually paid the entire debt of $3,500.

III. CONCLUSIONS OF LAW

By his conduct as set forth above, respondent violated the following Rules of Professional Conduct:

(1) R.P.C. 1.1 — A lawyer shall provide competent representation to a client.

(2) R.P.C. 1.3 — A lawyer shall act with reasonable diligence and promptness in representing a client.

(3) R.P.C. 1.4(a) — A lawyer shall keep a client informed about the status of a matter and promptly comply with reasonable requests for information.

(4) R.P.C. 1.4(b) — A lawyer shall explain a matter to the extent necessary to permit the client to malee informed decisions regarding representation.

(5) R.P.C. 8.4(d) — It is professional misconduct for a lawyer to engage in conduct that is prejudicial to the administration of justice.

(6) R.P.C. 1.15(b)- — Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other 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) R.P.C. 1.16(d) — Upon termination of representation, a lawyer shall takes steps to the extent reasonably practicable to protect a client’s interest, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned. The lawyer may retain papers relating to the client to the extent permitted by other law.

IV. DISCUSSION

This matter is before the board for consideration of a petition for discipline filed against respondent charging him with failing to provide competent representation to clients in three immigration matters in the State of Florida. The material facts are not in dispute. Respondent stipulated and the record supports his violation of the Rules of Professional Conduct set forth in the petition for discipline. There is no question that discipline must be imposed.

The parties made a joint recommendation of discipline to the Hearing Committee, agreeing that a three-month suspension from the practice of law and two years probation with conditions was appropriate. The recommendation further stated that the parties understood that the joint recommendation was not binding on the committee, the board or the Supreme Court. In fact, the Hearing Committee disagreed with the joint recommendation and instead recommended a suspension of one year and one day. The committee set forth its serious concerns regarding respondent’s competency to practice law, including its observation that respondent’s presentation of his own defense suggested his lack of competence.

Respondent raised exceptions to the committee’s basis for its recommendation and contends that he was merely being cooperative and non-confrontational by proceeding “informally.” Respondent further states that his competence as a legal practitioner is demonstrated by his proper filing of a motion to partially redact and partially seal record of disciplinary proceedings before the Hearing Committee on February 7, 2005. This motion was denied by the Hearing Committee by reason of respondent’s failure to pursue the issue.

Petitioner responded to respondent’s brief on exceptions by filing a brief opposing respondent’s brief on exceptions. Therein, petitioner made a motion to reopen the record to demonstrate that respondent did not draft respondent’s motion to partially redact and partially seal record of disciplinary proceedings, as Disciplinary Counsel in the matter provided respondent with a rough draft of such a motion. Petitioner’s motion to reopen the record is now before the board for consideration. The board will deny petitioner’s motion to reopen the record as the evidence sought to be considered bears little weight to the board’s review of the instant matter.

Review of the record demonstrates ample support for the Hearing Committee’s recommendation of suspension for one year and one day. In the Charles and Mahfood matters, respondent’s conduct could have denied those individuals an opportunity to have their cases determined on the merits, and resulted in deportation from the United States. Respondent’s manner of terminating his representation of Mr. Charles was appalling and demonstrated a total lack of concern for his client. Equally abrupt was his dismissal of Ms. Mahfood as his client. In the Jolly matter, respondent retained unearned fees, after agreeing to pay them back, and failed to meet his obligation to the Pennsylvania Lawyers Fund for Client Security.

Respondent suffers from bipolar disorder, a serious psychiatric illness. He presented the testimony of his doctor, Ely D. Pelta M.D., who gave his opinion on respondent’s prognosis. Dr. Pelta testified that the bipolar disorder should not prevent respondent from competent practice. Respondent’s friend, Donald W. Edwards, sees or talks with respondent on a daily basis and has never seen respondent so depressed that he is not able to practice law. The bipolar disorder may have created an atmosphere which exacerbated the problems respondent experienced in his practice in general, but there is no clear and satisfactory evidence that the disease substantially caused his misconduct. Respondent indicated other stress factors in his life, such as marital and financial problems and difficult clients, which may have impacted his ability to practice law in a competent fashion.

While the board is sympathetic to respondent’s situation, it has a direct charge to protect the public. Respondent cannot use his illness as an excuse or justification for his improper actions towards his clients. The board has already made allowances for respondent in his previous disciplinary matter by imposing a private reprimand and placing him on probation. Respondent failed to fulfill the conditions of the monitoring program. Probation is not an option in this matter. The board cannot allow the type of behavior exhibited in the instant matter to continue to occur. A suspension of one year and one day will allow respondent to review his practice and ascertain the best way of managing his illness and other personal difficulties while simultaneously giving his clients the professional representation he is required to give.

V. RECOMMENDATION

The Disciplinary Board of the Supreme Court of Pennsylvania unanimously recommends that the respondent, Michael Levine, be suspended from the practice of law for a period of one year and one day.

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, June 20, 2006, the application for leave to file petition for review nunc pro tunc is granted, and, upon consideration of the report and recommendations of the Disciplinary Board dated February 13, 2006, the petition for review and responses thereto, the request for oral argument is denied pursuant to Rule 208(e)(4), Pa.R.D.E., and it is hereby ordered that Michael Levine be and he is suspended from the bar of this Commonwealth for a period of one year and one day, 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.