author: SHEERER, Member,

text:
    Office of Disciplinary Counsel v. Toll

      Disciplinary Board Docket no. 20 D.B. 1987, 64 D.B. 1988.
    December 29, 2004
   To the Honorable Chief Justice and Justices of the Supreme Court of Pennsylvania:

SHEERER, Member,

Pursuant to Rule 218(c)(5) of the Pennsylvania Rules of Disciplinary Enforcement, the Disciplinary Board of the Supreme Court of Pennsylvania submits its findings and recommendations to your honorable court with respect to the above-captioned petition for reinstatement.

I. HISTORY OF PROCEEDINGS

On December 9, 2003, R. Elliott Toll filed a petition for reinstatement to the bar of the Supreme Court of Pennsylvania. Petitioner was disbarred on consent by order of the Supreme Court dated July 22, 1988.

A reinstatement hearing was held on June 16, 2004, before Hearing Committee 2.05 comprised of Chair Michael S. Dinney, Esquire, and Members Mary G. McLaughlin Davis, Esquire and Jerry R. Knafo, Esquire. Petitioner was represented by Samuel C. Stretton, Esquire.

The Hearing Committee filed a report on October 4, 2004 and recommended that the petition for reinstatement be granted.

No briefs on exceptions were filed by the parties.

This matter was adjudicated by the Disciplinary Board at the meeting of November 17,2004.

II. FINDINGS OF FACT

The board makes the following findings of fact:

(1) Petitioner is R. Elliott Toll. He was bom in 1948 and was admitted to the practice of law in Pennsylvania in 1974. He resides at 1345 Jaimison Lane, Meadow-brook, PA 19046. His current business address is Prudential Fox & Roach Realtors, 500 Old York Road, Suite 200, Jenkintown PA 19046.

(2) Petitioner was disbarred on consent on July 22, 1988. The disbarment was based on the acts of misconduct described below.

(3) Petitioner misled a client, Irene Uhrig, by telling her that she had won her arbitration matter and the other side appealed, when in fact she lost the case and petitioner appealed it. Petitioner continued to mislead his client through the appeal process, until ultimately his client terminated petitioner’s representation and obtained a new lawyer.

(4) In 1988, petitioner pleaded guilty to one count of mail fraud, one count of aiding and abetting, and one count of obstruction of justice.

(5) The criminal conviction arose out of a scheme whereby petitioner’s friend, Dr. Marc Jaffe, submitted inflated medical bills on petitioner’s personal injury cases. Petitioner subsequently submitted the inaccurate bills to insurance companies. Petitioner knew the bills were inaccurate. Petitioner also instructed Dr. Jaffe to destroy certain records relevant to a federal grand juiy subpoena.

(6) Petitioner was sentenced to five years incarceration to be followed by five years probation, and served 17 months in a federal penitentiary. He successfully completed his probation and paid all fines and costs including a federal fine of approximately $50,000 and restitution of $150,000.

(7) After petitioner’s release from prison, his wife purchased a car wash business in New Jersey and petitioner worked there managing that business until it was sold in May 2002.

(8) After the car wash business was sold, petitioner took a real estate course and was licensed as a real estate agent. Because of his felony conviction, he had to have a character hearing, which he successfully passed and was licensed.

(9) Petitioner is currently associated with the real estate agency of Prudential Fox & Roach in Jenkintown, Pennsylvania.

(10) Petitioner buys property for himself and his wife through the brokerage and then manages the real estate investments.

(11) Petitioner’s involvement with the real estate business sparked his interest in regaining his law license.

(12) During his disbarment, petitioner continued his involvement with his synagogue, Beth Shalom, in Elkins Park, Pennsylvania. He has also become involved with the Meadowbrook Ridal Civic Association.

(13) As an active attorney prior to his disbarment, petitioner was very involved in community matters, such as the Lions Club, Bucks County Democratic Club and the Navy League. Petitioner’s primary focus after his disbarment was his wife and two children.

(14) Petitioner has fulfilled ail of the required Continuing Legal Education courses for reinstatement.

(15) Petitioner reviews the advance sheets and reviews all of the Continuing Legal Education materials provided to him.

(16) Petitioner hopes to practice in the area of real estate law, if he is reinstated to practice.

(17) Petitioner has no judgments or liens of record against him.

(18) Petitioner expressed sincere remorse for his misconduct and indicated that he has learned from his mistakes and will never repeat them.

(19) Petitioner presented a number of excellent character witnesses who testified in support of his reinstatement.

(20) These witnesses included Saul Langsam, Esquire; Madeleine Kaufman, Esquire; Steven Kitty, Esquire; Albert Dubitsky, a social worker; Neil Fine, a business consultant; Rana Lang, a school teacher; Toni-Lee Beigel, a certified public accountant; Catherine Fofana, a cashier at the car wash business owned by petitioner’s wife; Diane Lapat, a school teacher; Evelyn Toll, petitioner’s mother; and Carol Toll, petitioner’s wife.

(21) These witnesses described petitioner as a hardworking, responsible person who has accepted responsibility for his actions and has shown true remorse.

(22) These witnesses did not hesitate to recommend petitioner for reinstatement, and do not perceive his reinstatement to be detrimental to the public interest.

III. CONCLUSIONS OF LAW

(1) The misconduct for which petitioner was disbarred is not so egregious as to preclude immediate consideration of his petition for reinstatement.

(2) Petitioner has demonstrated, with clear and convincing evidence, that he possesses the moral qualifications, competency and learning in the law necessary to practice law in the Commonwealth of Pennsylvania.

(3) Petitioner’s resumption of the practice of law will not be detrimental to the integrity of the bar nor subversive of the interest of the public.

IV. DISCUSSION

This matter is before the Disciplinary Board on a petition for reinstatement filed by R. Elliott Toll. Petitioner was disbarred on consent on July 22, 1988, by order of the Supreme Court of Pennsylvania. This disbarment was based on petitioner’s criminal conviction of mail fraud, aiding and abetting and obstruction of justice, as well as his misconduct in a client matter.

Petitioner’s request for reinstatement to the bar after disbarment is initially governed by the standard set forth by the Supreme Court of Pennsylvania in Office of Disciplinary Counsel v. Keller, 509 Pa. 573, 506 A.2d 872 (1986). As a threshold matter, the board must determine whether petitioner has demonstrated that his breach of trust was not so egregious that it precludes him from reinstatement.

Careful review of the record and the case law persuades the board that petitioner has met the Keller threshold. There are Pennsylvania cases regarding criminal convictions for similar misconduct in which the Supreme Court has held that the Keller standard was met. In the recent matter of In re Joseph Robert Rydzewski, no. 287 disciplinary docket no. 3, no. 158 D.B. 1996 and 105 D.B. 1998 (Pa. March 30, 2004), the petitioner was reinstated after disbarment where his underlying misconduct was conviction of mail fraud and theft due to a conversion of law firm funds. In the case of In re Perrone, 565 Pa. 563, 777 A.2d 413 (2001), although not reinstating the petitioner, the Supreme Court found that he met the Keller threshold, despite his conviction of theft by deception, tampering with public records, securing execution of documents, and unsworn falsification to authorities.

Petitioner’s misconduct in the instant matter appears to be of a nature similar to the misconduct in the cited cases.

Having concluded that petitioner’s misconduct is not so egregious as to preclude consideration of his petition for reinstatement, the board must now determine whether petitioner has met his burden of proving by clear and convincing evidence that his resumption of the practice of law at this time will not have a detrimental impact on the integrity and standing of the bar, the administration of justice, or the public interest, and that he has the moral qualifications, competency and learning in the law required for admission to practice law in Pennsylvania. Pa.R.D.E. 218(c)(3)(i). In order to make this determination, the board must consider the amount of time that has passed since petitioner was disbarred, as well as his efforts at rehabilitation. In re Verlin, 557 Pa. 47, 731 A.2d 600 (1999).

Petitioner has been without a license to practice law for approximately 16 years. This is a very lengthy period and is sufficient to dissipate the taint of petitioner’s misconduct on the integrity of the bar and the public interest. The uncontroverted evidence presented at the hearing clearly and convincingly demonstrates that petitioner has worked to rehabilitate himself.

Petitioner served his time in prison and fulfilled all requirements of his probation, and paid large fines and restitution in full. He managed a car wash employing 40 people for many years. After the sale of the car wash, he obtained his real estate license. For that license, petitioner underwent a character hearing due to the fact that he had a felony conviction on his record. Petitioner presently works for Prudential Fox & Roach in Jenkintown and has been successful in this venture. He attributes his interest in readmission to the bar to his real estate work. While petitioner acknowledges that he was more involved in his community prior to his disbarment, his focus post-disbarment was on his wife and two children, who were young at the time of the disbarment. Petitioner did maintain his active involvement in synagogue activities and has become involved in the Meadowbrook Ridal Civic Association. There is no evidence of any post-disbarment misconduct by petitioner.

Petitioner is current on his requirements for Continuing Legal Education and reads the advance sheets to keep apprised of the current law. He plans to do real estate law if reinstated.

Petitioner testified credibly to his remorse and the regret he feels for his misconduct. Petitioner presented many credible character witnesses who support his reinstatement.

The board finds that petitioner has demonstrated that he engaged in a qualitative period of rehabilitation during his lengthy term of disbarment. Petitioner has met his burden of proving that he has the moral qualifications, learning and competence to practice law and his resumption of the practice of law will not have a detrimental impact on the integrity and standing of the bar, the administration of justice, or the public interest. The board recommends that the petition for reinstatement be granted.

V. RECOMMENDATION

The Disciplinary Board of the Supreme Court of Pennsylvania unanimously recommends that petitioner, R. Elliott Toll, be reinstated to the practice of law.

The board further recommends that, pursuant to Rule 218(e), Pa.R.D.E., petitioner be directed to pay the necessary expenses incurred in the investigation and processing of the petition for reinstatement.

Board Member Nordenberg did not participate in the November 17,2004 adjudication.

ORDER

And now, March 11, 2005, upon consideration of the report and recommendations of the Disciplinary Board of the Supreme Court of Pennsylvania dated December 29, 2004, the petition for reinstatement is granted.

Pursuant to Rule 218(e), Pa.R.D.E., petitioner is directed to pay the expenses incurred by the board in the investigation and processing of the petition for reinstatement.


source: Caselaw Access Project

author: WETTICK JR., A.J,

license: Public Domain

text:
    Hutchinson v. Jackson

      Jeffrey T. Morris, for plaintiff Hutchinson t/d/b/a Cheer-On.

      Catherine A. Conley, for plaintiffs Schlemmer and Vogel.

      Philip V. McCalister and Matthew L. Prather, for defendants Jackson, Crissman, Gorrell, Ruggieri and Stake.

      Paula A. Koczan, for defendant P.ottschaefer.

      Jason A. Snyder man, for defendants Purdue.

      Amy Ponpipom, for defendants Abbott.
    May 25, 2005
   WETTICK JR., A.J,

The issue addressed in this opinion is whether a court should strike a complaint as a sanction for a violation of Rule 1023.1 where the motion for sanctions is based on grounds that would be a basis for dismissal of the complaint under the Rules of Civil Procedure governing preliminary objections, judgments on the pleadings, or summary judgments.

In Hutchinson v. Jackson, plaintiff filed a complainin equity based on the following allegations: Plaintiff traded and did business as Cheer-On. Defendants were plaintiff’s employees until her business suffered damage from flooding. At that time, defendants falsely advised coaches and clientele that plaintiff was permanently going out of business. Simultaneously, defendants formed a new cheer academy which utilized unique cheer and dance routines developed by plaintiff. They persuaded virtually all of plaintiff’s clientele to attend the new academy.

A primary defense of defendants is that plaintiff had announced to defendants and others that she was permanently going out of business.

A hearing was set on plaintiff’s request for preliminary injunctive relief. On the date of the hearing, the parties entered into a consent order which provided that defendants would not utilize the names “Cheer-On” and “Hawks” in connection with any business in which they are presently engaged or establish in the future, and that all other issues for monetary and permanent injunctive relief are reserved for later disposition.

There have been no additional court hearings. No party has filed any motions for summary judgment.

Defendants have filed a motion for sanctions pursuant to Pa.R.C.P. 1023.1 et seq., which is a subject of this opinion and orders of court. In this motion, defendants aver that the evidence, including writings prepared by plaintiff, establishes that plaintiff told defendants that her business was closed and that they were no longer needed. Pursuant to Pa.R.C.P. 1023.2, defendants’ counsel sent plaintiff’s counsel a written notice and demand to withdraw the complaint. More than 28 days have passed and plaintiff has failed to do so. The relief that defendants seek is an order striking each count within plaintiff’s complaint and the award of reasonable attorney fees associated with the defense of the allegations set forth in the complaint.

Motions for sanctions filed in Schlemmer v. Rottschaefer at GD04-007810 by the Purdue and Abbott defendants, pursuant to Rule 1023.1 et seq., are the second subject of this opinion and orders of court.

The claims against these defendants arise out of injuries that plaintiffs sustained from pain medicine manufactured and distributed by these defendants. In their motions, defendants state that six of the eight causes of action asserted against them (negligence, strict liability for failure to warn, strict liability for defective products, violations under the Restatement (Second) of Torts §402B, fraud, and violation of the Consumer Fraud Act) are barred by the two-year statute of limitations and the two remaining counts (breach of implied and express warranties) fail to state a cause of action. The motion alleges that allegations in the complaint and sworn testimony under oath of plaintiff Corey Rose Schlemmer, during the criminal prosecution of Dr. Rottschaefer, establish that plaintiffs knew or should have known that their alleged injuries resulted from a pain medicine of the defendants well outside the two-year statute of limitation applicable to six of the eight counts asserted against Purdue and Abbott. The motion also alleges that the breach of the implied warranty claim is without merit because it is settled law that such claims are not recognized against a prescription drug company (Makripodis v. Merrell-Dow Pharmaceuticals Inc., 361 Pa. Super. 589, 523 A.2d 374 (1987)), and the breach of express warranty claim is without merit because plaintiff never alleges that she relied on (or even saw) any express warranty before ingesting the pain medicine.

On September 10, 2004, counsel for defendants sent plaintiffs’ counsel a writing setting forth their position that the warranty claims are not recognized under Pennsylvania law and the remaining claims are time-barred. Defendants’ counsel set forth their intent to file motions for sanctions if the complaint was not withdrawn within the 28-day period set forth in Rule 1023.2(b). The motions allege that the complaint was not withdrawn.

The relief that the Purdue and Abbott defendants seek is the dismissal of each count in the complaint as to these defendants and reimbursement for all costs, including counsel fees, incurred to defend the action.

In both cases, defendants rely on the provision within Pa.RC.P. 1023.4(a)(2) that a sanction imposed for violation of Rule 1023.1 may include “the striking of the offensive litigation document or portion of the litigation document.”

In the Hutchinson litigation, I may award sanctions under Rule 1023.1 et seq. only if I find that there is no genuine issue of any material fact as to a necessary element of each cause of action, and that the behavior of plaintiff’s counsel warrants the imposition of sanctions under Rule 1023.1 etseq.

In the Schlemmer litigation, I may award sanctions under Rule 1023.1 et seq. only if I find (as to the claims governed by a two-year limitation period) that plaintiff’s testimony has established that the lawsuit was not timely filed and that, as to the breach of warranty claims, the complaint on its face fails to state a cause of action; and, in addition, that the behavior of plaintiffs’ counsel warrants the imposition of sanctions under Rule 1023.1 et seq.

In both lawsuits, defendants already have remedies to obtain dismissal of the complaints under other Pennsylvania Rules of Civil Procedure that do not require any consideration of the behavior of plaintiffs’ counsel. In Hutchinson, defendants may obtain a summary judgment dismissing the entire complaint upon a showing that there is no genuine issue of any material fact as to a necessary element of the cause of action. See Pa.R.C.P. 1035.2(1). In the Schlemmer case, dae remedy is the filing of a motion for summary judgment as to the claims governed by the two-year limitation period, and the filing of a motion for judgment on the pleadings as to the breach of warranty claims.

The provision in Rule i 023.4(a)(2) permitting a court to strike a litigation document is not intended to be a substitute for an existing remedy that will provide to a party the relief that the party seeks under Rule 1023.4(a)(2). Rule 1023.4(a)(2) was never intended to create an undefined procedure for dismissing a complaint that is a substitute for an established procedure that will provide the same relief.

I recognize that the sanctions defendants seek include both the striking of the complaint and the award of counsel fees. The court orders which I am entering only deny defendants’ requests to strike plaintiffs’ complaints because of the availability of an established procedure that will provide the same relief. In this opinion, I am not addressing the issue of whether the additional sanctions that defendants seek (i.e., the award of counsel fees) may be imposed pursuant to Rule 1023.1 et seq. in proceedings in which defendants seek dismissal of plaintiffs’ complaints through motions for judgment on the pleadings or summary judgment.

For these reasons, I enter the following orders of court:

ORDER

On May 25,2005, it is hereby ordered that the portion of defendants’ motion for sanctions filed pursuant to Pa.R.C.P. 1023.1 et seq., seeking the striking of plaintiff’s complaint is dismissed.

ORDER

On May 25, 2005, it is hereby ordered that the portions of the Purdue and Abbott defendants’ motions for sanctions filed pursuant to Pa.R.C.P. 1023.1 et seq., seeking the striking of plaintiffs’ complaint as to these defendants is dismissed.

      . This is not an entirely correct statement of the law. Private actions for violations of the Unfair Trade Practices and Consumer Protection Law, 73 P.S. §201-1 et seq., are governed by a six-year limitation period. Keller v. Volkswagen of America Inc., 733 A.2d 642, 646 n.9 (Pa. Super. 1999), citing Gabriel v. O’Hara, 368 Pa. Super. 383, 534 A.2d 488 (1987).


author: NEALON, J.,

text:
    Busy Bee Inc. v. Wachovia Bank

      Steve M. Coren, for plaintiff.

      Elizabeth K. Ainslie, for defendant.
    May 6, 2005
   NEALON, J.,

Defendant Wachovia Bank N.A., successor by merger to Corestates Bank N.A., has filed a motion in limine raising a novel evidentiary issue which has not yet been addressed by an appellate court in Pennsylvania: Whether the net worth of the successor corporation (Wachovia) or the net worth of the predecessor corporation and original tort-feasor (Corestates) is the appropriate measure of “the wealth of the defendant” for purposes of assessing punitive damages? Defendant contends that, since the jury found that Corestates had engaged in outrageous conduct in 1995 and 1996, and Wachovia became the successor by merger to Corestates in 2001, only the net worth of Corestates is relevant to the dual goal of punishing the tort-feasor and deterring it from committing such conduct in the future. However, since punitive damages also serve to deter the actions of like-minded tortfeasors, and Wachovia’s wealth reflects the defendant’s current ability to pay any punitive damages award secured by the plaintiffs, the net worth of Wachovia is likewise relevant. Therefore, the parties will be permitted to introduce evidence of Wachovia’s wealth in 2005 and Corestates’ wealth in 1995-1996, and to present their respective arguments to the jury as to why the wealth of either the successor bank or the predecessor bank is more appropriate proof of the “wealth of the defendant” in this case.

I. FACTUAL BACKGROUND

Plaintiffs instituted this lender liability suit based upon the actions of Corestates Bank N.A., in connection with letters of credit and a revolving line of credit that the plaintiffs had obtained for their wholesale and retail shoe businesses which operated under the name of B. Levy & Son. B. Levy’s claims are predicated upon Corestates’ conduct in 1995 and 1996 which allegedly forced B. Levy into bankruptcy on July 27, 1996. See Busy Bee Inc. v. Corestates Bank N.A., 67 D.&C. 4th 496, 499-509 (Lacka. Cty. 2004). On October 27, 1997, B. Levy filed a complaint against Corestates charging it with breach of contract, breach of fiduciary duty, fraudulent misrepresentation and negligent misrepresentation, and seeking the recovery of compensatory and punitive damages. Id. at 509. On April 28,1998, First Union Corporation acquired Corestates, and on September 1. 2001, Wachovia Bank N.A. acquired First Union and thereby became the successor by merger to Corestates. (See defendant’s motion to limit evidence on punitive damages, ¶¶7-9.) However, during the ensuing 44 months, Corestates remained as the only named defendant in this case.

Prior to trial, Corestates’ motion to bifurcate the liability and damages phases of the trial was granted, and a liability trial was conducted from September 13,2004 through September 30,2004. In response to special verdict interrogatories, the jury found that Corestates had breached contractual and fiduciary duties and had committed fraudulent and negligent misrepresentations, and that such conduct had caused harm to B. Levy. With regard to B. Levy’s claim for punitive damages, the liability trial jury further found that Corestates’ tortious conduct was outrageous. After post-trial efforts to resolve this matter proved futile, the damages portion of this trial was scheduled for May 9, 2005. See Busy Bee Inc. v. Corestates Bank N.A., 106 Lacka. Jur. 24, 25 (2005).

On April 29, 2005, the parties filed a stipulation to substitute Wachovia as the named defendant in this case, and by order dated April 29, 2005, the caption of this case was amended to reflect Wachovia as the named defendant, as successor by merger to Corestates. In anticipation of the damages trial, Wachovia filed a “motion to limit evidence on punitive damages” asserting that any “net worth” evidence in conjunction with B. Levy’s punitive damages claim should be restricted to Corestates’ net worth in 1995 and 1996. (See defendant’s motion to limit evidence on punitive damages, ¶¶15-17.) Documentation which has been produced pursuant to Pa.R.C.P. 4003.7 reflects that “Corestates’ total shareholders’ equity was $2.6 billion in 1995 (exhibit 1 at 58), $3.6 billion in 1996 (exhibit 2 at 58) and $3.2 billion in 1997 (exhibit 3 at 12)” whereas “Wachovia’s total shareholders’ equity was $32.4 billion as of December 31, 2003 (exhibit 4 at 78).” (Defendant’s brief in support of motion to limit evidence on punitive damages, pp. 5-6.)

Wachovia submits that since the primary goal of punitive damages is to punish the tort-feasor for its egregious conduct and to deter the tort-feasor from similar conduct in the future, “evidence of wealth must be limited to the tort-feasor’s wealth.” (Id., p. 3.) Wachovia argues that Corestates was the sole tort-feasor in this case and that “Wachovia is a twice removed successor by merger, with no connection to plaintiffs or to plaintiffs’ alleged wrongs” and “did nothing more than purchase the tortfeasor organization after the events at issue.” (Id., pp. 1, 4.) According to Wachovia, “permitting the jury to consider the wealth of a subsequent innocent and uninvolved acquirer will have the perverse impact of deterring large corporations from purchasing smaller businesses.” (Id., p. 4.) Hence, Wachovia posits that “[t]he financial assets of Wachovia or First Union are not probative of Corestates ’ wealth” under Pa.R.E. 401 and should be excluded as “unfairly prejudicial” under Pa.R.E. 403. (Id., p. 6.)

B. Levy counters that Wachovia’s net worth is relevant since the mergers of Corestates, First Union and Wachovia were consummated pursuant to the federal Bank Merger Act. That statute requires Wachovia to assume all liabilities of the predecessor banks, Corestates and First Union, and further provides that Wachovia is deemed to be “the same corporation” as each bank which participated in the mergers. B. Levy maintains that Wachovia is, therefore, considered to be “the tort-feasor” by virtue of the federal Bank Merger Act such that the net worth of Wachovia is relevant for purposes of punitive damages. Wachovia’s evidentiary objection will be addressed without the benefit of any appellate precedent which is directly applicable.

II. DISCUSSION

(A) Standard of Review

Wachovia asserts that evidence of its net worth is not relevant to B. Levy’s punitive damages claim and that any putative relevance is outweighed by the danger of unfair prejudice. Evidence is deemed relevant under Pa.R.E. 401 if it has “any tendency to make the existence of any fact that is of consequence to the determination of the action more or less probable than it would be without the evidence.” Commonwealth v. Levanduski, 2005 WL 729662, *8, ¶25 (Pa. Super. 2005). Accord, Commonwealth v. Boczkowski, 577 Pa. 421, 443, 846 A.2d 75, 88 (2004) (evidence is relevant “if it tends to establish a material fact, makes a fact at issue more or less probable, or supports a reasonable inference supporting a material fact____”); Commonwealth v. Johnson, 874 A.2d 66, 72 (Pa. Super. 2005). “A trial court has wide discretion in ruling on the relevancy of evidence and its rulings will not be reversed absent an abuse of discretion.” Fidler v. Cunningham-Small, 871 A.2d 231, 234 (Pa. Super. 2005). An abuse of discretion is not merely an error of judgment, and instead requires “the overriding or misapplication of the law, or the exercise of judgment that is manifestly unreasonable, or the result of bias, prejudice, ill will or partiality, as shown by the evidence of record.” Carroll v. Avallone, 869 A.2d 522, 525 (Pa. Super. 2005).

Relevant evidence may be excluded under Pa.R.E. 403 if its probative value is outweighed by, inter alia, the danger of unfair prejudice. Commonwealth v. Serge, 58 D.&C.4th 52, 61 (Lacka. Cty. 2001), aff’d, 837 A.2d 1255 (Pa. Super. 2003), appeal granted in part, 858 A.2d 1159 (Pa. 2004). Prejudice “does not mean detrimental to a party’s case, but rather, an undue tendency to suggest a decision on an improper basis.” Pittsburgh Construction Co. v. Griffith, 834 A.2d 572, 585 (Pa. Super. 2003), appeal denied, 578 Pa. 701, 852 A.2d 313 (2004). Therefore, the exclusionary rule set forth in Pa.R.E. 403 “is limited to evidence so prejudicial that it would inflame the jury to make a decision based upon something other than the legal propositions relevant to the case.” Commonwealth v. Broaster, 863 A.2d 588, 592 (Pa. Super. 2004). Such a determination is likewise within the sound discretion of the trial court, Boykin v. Brown, 868 A.2d 1264, 1266 (Pa Super. 2005), and the reviewing court “on appeal will accord a large measure of discretion to the trial court regarding the admission or exclusion of evidence.” Gigus v. Giles & Ransome Inc., 868 A.2d 459, 463 (Pa. Super. 2005).

(B) Relevancy of Defendant’s Net Worth

The public policy underlying Pennsylvania law on punitive damages is relevant to the question of whether Wachovia’s net worth is admissible. Punitive damages may be awarded in this Commonwealth for conduct “that is outrageous, because of the defendant’s evil motive or [its] reckless indifference to the rights of others.” Hutchison ex rel. Hutchison v. Luddy, 870 A.2d 766, 770 (Pa. 2005). Punitive damages are not regarded as additional compensation but, as the name suggests, are considered purely penal in nature. G.J.D. by G.J.D. v. Johnson, 552 Pa. 169, 172, 713 A.2d 1127, 1129(1998). The stated purpose of punitive damages is to punish a tort-feasor for outrageous conduct and to deter the tortfeasor and other like-minded individuals from engaging in similar conduct in the future. Hutchison, supra; Phillips v. Cricket Lighters, 852 A.2d 365, 373 (Pa. Super. 2004); Judge Technical Services Inc. v. Clancy, 813 A.2d 879, 888 (Pa. Super. 2002).

In assessing punitive damages, the trier of fact should consider: (1) the character of the defendant’s act; (2) the nature and extent of the harm suffered by the plaintiff; and (3) the wealth of the defendant. Kirkbride v. Lisbon Contractors Inc., 521 Pa. 97, 102, 555 A.2d 800, 803 (1989) (citing Restatement (Second) of Torts §908(2)); Hollock v. Erie Insurance Exchange, 842 A.2d 409, 419 (Pa. Super. 2004). But see Reading Radio Inc. v. Fink, 833 A.2d 199, 215 (Pa. Super. 2003) (“evidence ofwealth is not mandatory to establish a claim for punitive damages.”). A defendant’s net worth has been recognized “as a valid measure of its wealth” for purposes of punitive damages. See Sprague v. Walter, 441 Pa. Super. 1, 61-63, 656 A.2d 890, 920 (1995), appeal denied, 543 Pa. 730, 673 A.2d 336 (1996); Rutkowski v. Allstate Insurance Co., 69 D.&C.4th 10, 45 (Lacka. Cty. 2004); Ogozaly v. American Honda Motor Co. Inc., 67 D.&C.4th 314, 332 (Lacka. Cty. 2004).

Wachovia does not contest its legal responsibility for payment of any punitive damages awarded by the jury based upon the outrageous conduct of Corestates. It is undisputed that the Corestates-First Union and First

Union-Wachovia merger agreements contain the assumption-of-liability language mandated by the federal banking statute governing mergers of national banks. Section 215a(a)(4) of that statute states that any merger agreement involving the merger of national banking associations or state banks into a single national banking association must “provide that the receiving association shall be liable for all liabilities of the association or state bank being merged into the receiving association . ...” 12 U.S.C. §215a(a)(4). Section 215a(e) further provides that “[t]he corporate existence of each of the merging banks or banking associations participating in such merger shall be merged into and continued in the receiving association, and such receiving association shall be deemed to be the same corporation as each bank or banking association participating in the merger.” 12 U.S.C. §215a(e). Consequently, since a successor bank is deemed to be “the same corporation” as the merging banks and is responsible “for all liabilities” of the merging banks, Wachovia is clearly liable for any punitive damages award in this case. See Culbreath v. First Tennessee Bank N.A., 44 S.W.3d 518, 525 (Tenn. 2001) (“If we were to interpret ‘all liabilities’ in 12 U.S.C. §215a(a)(4) to exclude punitive damages, we would be ignoring the ordinary meaning of the word ‘all’ ”); Douglas v. Bank of New England/Old Colony N.A., 566 A.2d 939, 941 (R.I. 1989) (holding that successor bank was liable for punitive damages award against predecessor bank in light of assumption-of-liability language required by 12 U.S.C. §215a(a)(4) and reasoning that the “merger resulted in the infusion of the blood of [the predecessor banks] into the veins of the successor corporation, Bank of New England/Old Colony N.A.”). Cf. Commonwealth v. Lavelle, 382 Pa. Super. 356, 378, 555 A.2d 218, 229 (1989) appeal denied, 524 Pa. 595, 568 A.2d 1246 (1989) (de facto successor corporation was criminally liable under Pennsylvania law for the offenses committed by its predecessor in interest).

Nevertheless, Wachovia submits that the primary object of punitive damages is to punish the culpable tortfeasor, Corestates, and to deter it from comparable conduct in the future, such that only the wealth of Corestates should be considered by the jury. While it is true that a punitive damages award is designed to punish and deter the tort-feasor, punitive damages also serve to deter others from engaging in similar conduct. For example, Pennsylvania law allows for the recovery of punitive damages against a decedent’s estate even though the deceased tort-feasor may no longer be punished or deterred and the decedent’s blameless heirs will be deprived of their inheritance as a result. See G.J.D., supra at 176, 713 A.2d at 1131 (“Although the decedent . . . will not be punished or deterred from committing further... egregious acts, the imposition of punitive damages upon his estate may serve to deter others from engaging in like conduct.”). The deterrence of others is equally applicable in the context of corporate mergers or acquisitions and “may well deter other corporations from seeking to merge with other companies which have engaged in reckless conduct. . . and thereby have the potential for the imposition of punitive damages.” Celotex Corp. v. Pickett, 490 A.2d 35, 38 (Fla. 1986). The existence of such successor liability may positively influence the conduct of predecessor companies or banks which wish to remain marketable for future mergers or acquisitions. See Man v. Raymark Industries, 728 F. Supp. 1461, 1471 (D. Hawaii 1989) (“Realization that their companies will sell for less, or not at all, if they engage in reckless behavior provides an incentive for acquisition candidates to conform their behavior to socially acceptable norms.”).

Furthermore, the wealth of the defendant is considered to be relevant to a punitive damages claim because, inter alia, it bears upon the defendant’s ability to pay an award of punitive damages. See DiSalle v. P.G. Publishing Co., 375 Pa. Super. 510, 570-71, 544 A.2d 1345, 1376-77 (1988), appeal denied, 521 Pa. 620, 557 A.2d 724 (1989), cert. denied, 492 U.S. 906 (1989); Berry v. Anderson, 348 Pa. Super. 618, 626-27, 502 A.2d 717, 721 (1986) (“Courts recognize that punitive damages, to effectively deter reprehensible conduct, must be tailored to an individual’s ability to pay.”). Accord, Dunn v. Hovic, 1 F.3d 1371, 1384 (3d Cir. 1993) (denying remittitur request and finding that the punitive damages “award fixed by the trial court was well within [defendant’s] ability to pay . . . .”), cert. denied, 510 U.S. 1031 (1993); Bemer Aviation Inc. v. Hughes Helicopter Inc., 621 F. Supp. 290, 300 (E.D. Pa. 1985) (“In addition to the potential harm that a defendant’s conduct poses, juries are allowed to consider the defendant’s ability to pay when assessing an award of punitive damages.”), aff’d, 802 F.2d 445 (3d Cir. 1986); In re Solfanelli, 230 B.R. 54, 70 (M.D. Pa. 1999) (stating that award of punitive damages rested on assessment of pertinent factors, including the “creditor’s ability to pay”), aff’d sub nom., Solfanelli v. Corestates Bank N.A., 203 F.3d 197 (3d Cir. 2000). The Restatement position, which has been adopted by the Supreme Court of Pennsylvania, see Chambers v. Montgomery, 411 Pa. 339, 344-45, 192 A.2d 355, 358 (1963), expressly recognizes that “[t]he wealth of the defendant is also relevant, since the purposes of exemplary damages are to punish for a past event and to prevent future offenses, and the degree of punishment or deterrence resulting from a judgment is to some extent in proportion to the means of the guilty person.” Restatement (Second) of Torts §908, comment e. The current ability to pay a punitive damages award remains a pertinent factor even if the culpable tort-feasor is no longer available to punish or deter. See G.J.D., supra at 177, 713 A.2d at 1131 (“The jury can then consider the value of the deceased tort-feasor’s estate in arriving at a proper assessment of punitive damages.”). It is the net worth of Wachovia, not Corestates, which reflects the current ability to pay B. Levy’s punitive damages award.

Unfortunately, there is a paucity of decisional precedent addressing the specific issue raised by Wachovia regarding the admissibility of a successor corporation’s net worth. In Baker v. National State Bank, 312 N.J. Super. 268, 711 A.2d 917 (1998), judgment aff’d and remanded, 161 N.J. 220, 736 A.2d 462 (1999), the successor bank argued that the jury should have been instructed to base its punitive damages “on the value of the [predecessor] bank at the time of its wrongdoing ....” Id., at 292, 711 A.2d at 930. The trial judge charged the jury with respect to the value of the predecessor bank at the time of its merger with the successor bank and the most recent value of the successor bank as of the date of trial. Finding that the ability to pay “implies current ability to pay,” the New Jersey Superior Court concluded that “the jury was correctly instructed on punitive damages.” Id. at 294, 711 A.2d at 930. The Supreme Court of New Jersey affirmed the Superior Court ruling in Baker, but remanded the matter to the trial court to consider whether the punitive damages award violated due process in light of the standards enumerated in BMW of North America Inc. v. Gore, 517 U.S. 559 (1996). See Baker v. National State Bank, 161 N.J. 220, 231, 736 A.2d 462, 468 (1999). The trial court subsequently held that the remitted award of $1.8 million in punitive damages did not violate the successor bank’s substantive due process rights, and that ruling was affirmed by the Superior Court of New Jersey on appeal. See Baker v. National State Bank, 353 N.J. Super. 145, 165, 801 A.2d 1158, 1170 (2002) (“Punitive damages awards are exceptionally fact-specific, dependent on the conduct involved and, even more importantly, the wealth of the defendant.”).

The only other reported decision analyzing this narrow issue is Thomas v. E.J. Korvette Inc., 329 F. Supp. 1163 (E.D. Pa. 1971), rev’d on other grounds, 476 F.2d 471 (3d Cir. 1973). In that case, U.S. District Judge John P. Fullam permitted the plaintiff to introduce into evidence the net worth of both the successor corporation and the original tort-feasor. Following a verdict in favor of the plaintiff, the successor corporation asserted in its post-trial motion “that it was error to admit into evidence the $155,600,000 net worth of Spartan Industries Inc., the successor to E.J. Korvette Inc., defendant.” Id. at 1169. In rejecting the successor corporation’s argument, Judge Fullam reasoned that “the deterrence rationale of punitive damages makes it logical to conclude that the net worth of the successor corporation, the present defendant, would be the relevant circumstance.” Id. at 1170. See also, Culbreath, 44 S.W.3d at 523 (noting that the trial court “found that an award of 1 percent of [the successor bank’s] net worth was appropriate and therefore awarded $9,000,000 in punitive damages.”).

Both parties have articulated legitimate policy reasons why the net worth of the predecessor bank (Corestates) and the successor bank (Wachovia) should be deemed relevant and admissible. As Wachovia notes, Corestates alone has been found to be the culpable party, and, for that reason, Corestates’ wealth is relevant for purposes of punishment and deterrence. On the other hand, Wachovia is now considered to be the tort-feasor, and Corestates, by operation of the federal Bank Merger Act and the net worth of Wachovia, also reflects the current ability to pay any punitive damages award. Additionally, if banks realize that a successor bank’s wealth will be admissible in a punitive damages claim premised upon a predecessor bank’s conduct, it may encourage banks to act more responsibly in order to make themselves more attractive targets for merger suitors. As a consequence, the admission into evidence of a successor bank’s net worth may serve to deter other banks from engaging in conduct comparable to Corestates’ actions in this case.

There may be occasions in which the defendant may prefer to introduce evidence of the successor corporation’s wealth as it relates to the ability to pay a punitive damages award. It is conceivable that a corporation with a high profit margin and net worth could merge with another larger corporation, and that, due to a variety of unforeseen economic and industry-related factors, the successor corporation could later experience a dramatic decline in revenues or profitability. As a result, the struggling successor corporation could be forced to downsize its operations, sell assets or take other drastic measures in an effort to avoid bankruptcy. In that event, the net worth of the successor corporation could ultimately be less than the original value of the predecessor corporation. Any plaintiff seeking to recover punitive damages based upon the predecessor corporation’s conduct would undoubtedly seek to introduce the predecessor corporation’s greater net worth on the grounds that the predecessor corporation was the true tort-feasor. Conversely, the successor corporation would argue that its lesser wealth is more relevant in that case because it determines the current ability to pay the punitive damages award. Thus, the same policy arguments being advanced by Wachovia and B. Levy would apply with equal force if the successor corporation’s wealth was less than the net worth of the predecessor corporation.

Wachovia has not cited any case law which has precluded evidence of a successor corporation’s value in a punitive damages case involving the conduct of a predecessor corporation. B. Levy’s punitive damages complaint was filed against Corestates six months prior to its acquisition by First Union an.d four years before the Wachovia-First Union merger. Because Wachovia recognized that it would be liable under the federal Bank Merger Act for any punitive damages recovered by B. Levy in this litigation, it was foreseeable to Wachovia at the time that it acquired Corestates ’ assets and liabilities that its own wealth would be relevant in this matter. Accordingly, for the reasons set forth above, the wealth of Wachovia and Corestates is relevant under Pa.R.E. 401.

Counsel for the parties will be entitled to argue to the jury that either the net worth of Corestates or Wachovia is the more appropriate factor to be considered when assessing “the wealth of the defendant.” In accordance with Pa. SSJI (Civ.) 14.02 (2nd ed.), the jury will be instructed that “[t]he amount of punitive damages awarded must not be the result of passion or prejudice against the defendant on the part of the jury.” The jury will also be charged that a punitive damages award in Pennsylvania must not be “the product of arbitrariness or unfettered discretion.” Hollock, supra, 842 A.2d at 419 (quoting Shiner v. Moriarty, 706 A.2d 1228, 1241 (Pa. Super. 1998)). Defense counsel’s policy arguments and the instructions on the law should nullify any alleged danger of unfair prejudice from the introduction of Wachovia’s net worth. Hence, relevant evidence of Wachovia’s wealth is not outweighed by the danger of unfair prejudice, and the defendant’s “motion to limit evidence on punitive damages” will be denied.

ORDER

And now, May 6, 2005, upon consideration of “defendant’s motion to limit evidence on punitive damages,” the memoranda of law submitted by the parties and the oral argument of counsel, and based upon the reasoning set forth in the foregoing memorandum, it is hereby ordered and decreed that defendant’s motion to limit evidence on punitive damages is denied and that the jury will be permitted to hear evidence of the wealth or net worth of both Wachovia Bank N.A. in 2005 and Corestates Bank N.A. in 1995-1996.

      . Several courts and commentators have questioned the propriety of imposing punitive damages on a successor corporation as a result of the actions of a predecessor in interest, where the successor corporation is not the product of a statutory merger or has not expressly assumed the predecessor’s liabilities. See e.g., Martin v. Johns-Manville Corp., 322 Pa. Super. 348, 371-72, 469 A.2d 655, 667 (1983), rev’d on other grounds, 508 Pa. 154, 494 A.2d 1088 (1985) (per Hutchinson, J., with one justice concurring and four justices concurring in result); Gower v. Savage Arms Inc., 166 F. Supp.2d 240, 248 (E.D. Pa. 2001); Slawotsky, The Impropriety of Levying Punitive Damages on Innocent Successor Corporations, 38 Duq. L.Rev. 49 (fall 1999); Levenstam & Lynch, Punitive Damages Awards Against Successor Corporations: Deterrent of Malicious Torts or Legitimate Acquisitions?, 26 Tort & Ins. L.J. 27 (fall 1990).

      . The Pennsylvania Banking Code of 1965, 7 P.S. §101 et seq., similarly states that a merging bank “shall cease as a separate entity but shall continue in” the successor corporation and that “[a]ny claim existing or action pending” against the merging bank “may be prosecuted to judgment as if the merger or consolidation had not taken place or the resulting institution may be substituted in its place.” 7 P.S. §§ 1606(c) and (1).


author: JAMES, J,

text:
    Municipal Authority of the Town of Bloomsburg v. Pennsylvania Pooled Risk Insurance for Municipal Entities

      Gary E. Norton, for plaintiff

      Brian P Gabriel, for the defendant.
    May 19, 2005
   JAMES, J,

Plaintiff Municipal Authority of the Town of Bloomsburg operates the town’s sewage disposal system. Defendant “Penn Prime Trust” is plaintiff’s insurer under a liability insurance policy. On July 30, 2004, plaintiff filed a complaint against defendant seeking declaratory judgment. In particular, plaintiff seeks an order directing that defendant provide plaintiff with defense coverage (attorney’s fees) for two actions. One action was brought by the Pennsylvania Department of Environmental Protection (DEP) through its order of October 31, 2001. The second claim was a related federal lawsuit brought by Paul Cunningham and Anna Cunningham, individually and as guardians of Scott Cunningham, and Clayton Hulsizer III, filed February 12, 2003.

This matter is before this court to consider both plaintiff’s motion for summary judgment and defendant’s motion for summary judgment. The issue in each summary judgment motion is whether or not the “pollution” exclusion to coverage under the terms of the insurance policy abrogates defendant’s duty to provide a defense to the DEP claim and to the Cunningham claim under the facts of this case. A relevant sub-issue is whether other provisions of the policy also specifically exclude the DEP’s claim from coverage.

RELEVANT FACTS

In March 2001, the Cunninghams detected odors at their home on Cherry St., Bloomsburg, Pennsylvania. DEP conducted an investigation and issued an order dated July 31, 2001, directing plaintiff to cease directly accepting industrial wastewater from Milco, a local industry. The order also directed plaintiff to “submit a written plan and schedule for the replacement and/or repair of any remaining compromised sanitary sewer lines that convey industrial wastewater from the Milco facility to the STP [sewage treatment plant].” Said order was pursuant to the Air Pollution Control Act (35 P.S. §4001 et seq.) and the Clean Streams Law (35 P.S. §691.1 et seq.). DEP alleged that certain chemicals were escaping plaintiff’s pipes and that the “source of the majority of contaminants detected in air samples” is the “effluent originating from the Milco facility.” DEP said, “[t]he effluent appears to leave the Milco facility warm and begin offgassing vapors as it streams through the sewer system. The vapors escape the sewer through the cracks and disjointed pipes located near the affected residence and enter the slag.”

Plaintiff appealed DEP’s order. The parties settled the matter by stipulation. It was agreed that plaintiff and Milco had complied with DEP’s orders relative to the discharge and acceptance “of industrial wastewater from the Milco facility into the authority’s sanitary sewer system.”

Plaintiff acknowledged that the pipes had been cracked. They were repaired.

On February 12,2003, the Cunninghams filed a complaint in federal court against plaintiff and Milco. In their “factual allegations” in the complaint, the Cunninghams allege the following:

“(8) Prior to March 2001, and thereafter, the defendant, Milco Industries Inc., knew or should have known that it was discharging dangerous wastewater, residual chemical waste and effluent which contained hazardous substances from its facility into the public sewer system operated by the co-defendant, Bloomsburg Municipal Authority, upstream from the residence of the plaintiffs.
“(9) Prior to March 2001, and thereafter, the sanitary sewers owned and maintained by the defendant, Municipal Authority of the Town of Bloomsburg, transported said wastewater, effluent, residual chemical waste and hazardous substances to a treatment facility via a piping system through and near defendant’s property.
“(10) The sanitary sewer system operated and maintained by the defendant, Municipal Authority, was in poor condition and allowed leakage of the wastewater, effluent vapors, residual chemical waste and hazardous substances into the ground around the plaintiffs’ properties, causing fumes, wastewater, and odors to seep into their property, causing permanent contamination of their real property.
“(11) The defendant, Milco Industries Inc., never obtained a permit for discharge of this wastewater, effluent, residual chemical waste and hazardous substances as required by the Solid Waste Management Act and the Federal Regulations.
“(12) As a result of the combination of the poor sanitary sewers and the discharge of dangerous residual chemical waste, hazardous substances and effluent from the Milco facility, the plaintiffs’ properties became permanently contaminated. Those chemicals included, but are not limited to, benzene, chloroform, toluene, trimethylebenzene, chlorotoluene and other chemicals, some of which are carcinogens.
“(13) The discharge of said effluent, wastewater, residual chemical waste and hazardous substances causes rashes, headaches, respiratory infections, and other health problems which will result in future medical monitoring of the plaintiffs.
“(16) As a direct result of the contamination of plaintiffs’ property, they have been forced to evacuate their homes and to incur various expenses for the cleanup and response costs.
“(17) The plaintiffs have expended various sums of monies in attempting to resolve the toxic waste pollution caused by the defendants and are seeking reimbursement for same.”

Subsequently, the Federal District Court dismissed the Cunninghams’ claims against plaintiff and Milco.

STANDARD OF REVIEW

“Ordinary summary judgment procedures are applicable to declaratory judgment actions.” Keystone Aerial Surveys Inc. v. Pennsylvania Property & Casualty Insurance Guaranty Association, 777 A.2d 84, 88 (Pa. Super. 2001). Summary judgment is properly granted in either of two circumstances: “(1) whenever there is no genuine issue of material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or (2) if, after the completion of discovery relative to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury.” Pa.R.C.P. 1035.2.

APPLICABLE LAW

“It has long been the law in Pennsylvania that the nature of the allegations contained in a complaint control whether an insurer must defend a policyholder.” Roman Mosaic & Tile Co. v. Aetna Casualty & Surety Co., 704 A.2d 665, 668 (Pa. Super. 1997). (emphasis in original) In other words, “[i]t is not the actual details of the injury, but the nature of the claim which determines whether the insurer is required to defend.” Springfield Twp. v. Indemnity Insurance Co. of North America, 361 Pa. 461, 464, 64 A.2d 761, 762 (1949).

The Pennsylvania Superior Court recently outlined the appropriate analysis for determining whether an insurer has a duty to defend its insured:

“[The court] must compare the allegations in the complaint with the provisions of the insurance contract and determine whether, if the complaint allegations are proven, the insurer would have a duty to indemnify the insured. ... In the event that the complaint alleges a cause of action which may fall within the coverage of the policy, the insurer is obligated to defend----In making this determination, the factual allegations of the complaint are taken to be true and the complaint is to be liberally construed with all doubts as to whether the claims may fall within the coverage of the policy to be resolved in favor of the insured.” Unionamerica Insurance Co. Ltd. v. J.B. Johnson, 806 A.2d 431, 433-34 (Pa. Super. 2002). (internal citations omitted) Mark I Restoration SVC v. Assurance Company of America, 248 F. Supp.2d 397, 399-400 (2003). Thus, it is the complaint itself and the allegation contained in the complaint that we need to examine to determine if there is a duty to defend.

In addition, the analysis of the complaint must be done in light of contract analysis and interpretation. In other words, the court must analyze the insurance contract in light of the allegations in the complaint to determine if there is a duty to defend. The process to analyze a pollution exclusion in an insurance contract is set forth in detail in the Pennsylvania Supreme Court case of Madison Construction Company v. Harleysville Mutual Insurance Company, 557 Pa. 595, 735 A.2d 100 (1999). Madison has been summarized and followed in subsequent cases. “Recently, this court summarized many principles relating to the proper interpretation of pollution exclusions, as follows:

“Interpretation of an insurance contract is a matter of law. See Madison Const. Co. v. Harleysville Mut. Ins. Co., 557 Pa. 595, 606, 735 A.2d 100, 106 (1999). Our standard of review, therefore, is plenary. Young v. Equitable Life Assurance Society of the United States, 350 Pa. Super. 247, 504 A.2d 339, 341 (1986). Where, as in this case, ‘an insurer relies on a pollution exclusion as the basis for its denial of coverage and refusal to defend, the insurer has asserted an affirmative defense and, accordingly, bears the burden of proving such defense.’ Madison, 557 Pa. at 605, 735 A.2d at 106.

“In interpreting the language of a policy, the goal is ‘to ascertain the intent of the parties as manifested by the language of the written instrument.’ See Madison, 557 Pa. at 606, 735 A.2d at 106. Indeed, our Supreme Court has instructed the ‘polestar of our inquiry ... is the language of the insurance policy.’ Id.

“When construing a policy, ‘words of common usage ... are to be construed in their natural, plain and ordinary sense ... and we may inform our understanding of these terms by considering their dictionary definitions’ and where ‘the language of the [policy] is clear and unambiguous, a court is required to give effect to that language,’ 557 Pa. at 606-608, 735 A.2d at 106-108. (citations omitted) However, ‘where a provision of a policy is ambiguous, the policy provision is to be construed in favor of the insured and against the insurer, the drafter of the agreement.’ Id. Thus, while a court will not ‘distort the meaning of the language or resort to a strained contrivance in order to find an ambiguity,’ it must find that ‘contractual terms are ambiguous if they are subject to more than one reasonable interpretation when applied to a particular set of facts.’ Id.

“Under Madison, we must determine whether the specific substance at issue is a pollutant within the meaning of the particular insurance contract. Id., 735 A.2d at 107. The Supreme Court directed that:

“The pertinent inquiry is not... whether the policy’s definition of ‘pollutant*' is so broad that virtually any substance, including many useful and necessary products, could be said to come within its ambit. Rather, guided by the principle that ambiguity (or the lack thereof) is to be determined by reference to a particular set of facts, we focus on the specific product at issue.

“Id. Moreover, when the question is one of contract interpretation, public policy arguments are irrelevant. 557 Pa. at 611 n.8, 735 A.2d at 108 n.8.

“Finally, under Madison, we must determine whether the requisite causation has been demonstrated. 557 Pa. at 610-13, 735 A.2d at 109-10. Absent causation between the alleged pollutant and the injury, the claim would be outside of a pollution exclusion clause. Id.” Municipality of Mt. Lebanon v. Reliance Insurance Co., 778 A.2d 1228, 1231-32 (Pa. Super. 2001).

In summary, this court must first determine what the precise liability allegations are from the complaint, and then determine from the insurance contract whether these allegations are excluded from coverage. In this case, in order to decide whether the pollution exclusion negates coverage, this court must determine whether, from the record and applicable law, the pollutants are “toxins” that can and allegedly did cause damages.

DISCUSSION

The DEP order consistently alleged liability based on alleged chemical emissions from plaintiff’s sewer system. “Six of the chemicals are carcinogens, and the majority are listed as skin/eye/respiratory irritants following acute exposure to vapors.” (DEP order of July 31, 2001, paragraph X.) In the DEP order, there are no independent allegations of negligence or liability except for the discharge of these pollutants.

Likewise, in their complaint, the Cunninghams allege liability based on chemicals escaping from plaintiff’s leaking sewer system. They specifically say:

“(12) As a result of the combination of the poor sanitary sewers and the discharge of dangerous residual chemical waste, hazardous substances and effluent from the Milco facility, the plaintiffs’ properties became permanently contaminated. Those chemicals included, but are not limited to, benzene, chloroform, toluene, trimethylebenzene, chlorotoluene and other chemicals, some of which are carcinogens.”

DEP’s order and the Cunninghams’ complaint limit their liability allegations to the discharge of chemicals. Thus, we must analyze the insurance policy to determine whether such allegations impose a duty upon defendant to defend the claim and suit.

The policy in question contains the following provisions:

“(IX) General exclusions applicable to all coverages, i.e., [tjhese coverage provisions do not apply to:
“(B) Claims or suits arising in whole or in part out of the actual, alleged or threatened discharge, dispersal, seepage, release, migration or escape of pollutants;...
“Section IX General Exclusions Applicable To All Coverages, exclusion B does not apply to bodily injury or property damage to a building or its contents caused by actual exposure to sewage resulting from (i) the reverse flow of such sewage from within any sewage facility that you own, operate or maintain; or (ii) the escape of sewage from any fixed conduit that you own, operate or maintain, but only if the escape occurs away from the land you own or lease. This exception to the pollution exclusion does not apply to the following:
“(4) Bodily injury or property damage resulting from any radioactive or toxic material in such sewage.” (emphasis provided)

In summaiy, under the terms of the insurance policy, claims or suits arising in whole or in part from the discharge or escape of pollutants are excluded from coverage unless the escape or discharge is from a “fixed conduit” (broken pipe in this case). However, there is no coverage if the damage results from “toxic material in such sewage.” In this case, the controlling question is whether the alleged chemicals are toxic. The defendant insurance company had the burden of proof. “Where an insurer relies on a policy exclusion as the basis for its denial of coverage and refusal to defend, the insurer has asserted an affirmative defense and, accordingly, bears the burden of proving such defense.” Madison, supra, 557 Pa. at 605, 735 A.2d at 106.

By the terms of the definition in the policy, pollutants include “chemicals.” “Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

The next question is whether the chemicals (i.e., pollutants) are toxic. Black’s Law Dictionary (Seventh ed. 1999) defines “toxic” as “having the character or producing the effects of a poison: produced by or resulting from a poison; poisonous.” Benzene, chloroform and toluene are designated as “toxic pollutants” by the federal government. 40 C.F.R. §401.15. Based on the undisputed record (DEP order of July 31,2001, paragraph X), six of the 12 chemicals found at the Cunninghams’ property “are carcinogens,” and the “majority are listed as skin/eye/respiratory irritants following acute exposure to vapors.” According to a DEP report of May 21,2001:

“The results of this evaluation indicate that immediate detrimental health effects may be experienced by the residents of 815 Cherry Street due to exposure to the chemical vapors detected in their home. The majority of chemicals exceeded their health-based criteria (i.e., RBCs) are listed as skin/eye/respiratory irritants following acute exposure to vapors. In addition, six of the above-listed chemicals are considered carcinogens. Based on these results, the residents should not occupy this residence until the source of vapors can be identified and mitigated. Additional monitoring following mitigation of the source of vapors should be conducted prior to reoccupying the home to confirm that concentrations of these chemicals have been reduced to safe levels.”

Indisputably, these chemicals are poisonous and harmful, i.e., toxic. This court finds that the chemicals alleged in the DEP order and in the Cunningham complaint are toxic within the terms of the insurance contract and the pollutant exclusion. There is no ambiguity.

The final question in this analysis, then, is whether the alleged toxins allegedly caused the damages complained of, thus making the pollution exclusion applicable. The complaint itself alleges causation in paragraphs 13 through 17, asserting that the toxic chemicals caused physical damage, property damage, and economic damage. The alleged cause of these damages by the alleged chemicals is consistent with the chemicals’ federal designation as “toxic pollutants” and with DEP’s expert’s opinion that these chemicals are carcinogens and causes of skin/eye/respiratory irritation following acute exposure to their vapors. This court finds that the chemicals alleged in the complaint are toxic and can cause the damages alleged. The pollution exclusion applies and the defendant has no duty to provide plaintiff with a defense to the DEP action and the Cunningham suit.

However, plaintiff suggests that the Cunninghams and DEP alleged other grounds for recovery based on negligence. Specifically, they suggest that plaintiff was independently negligent for maintaining and using a “poor” sanitary sewer system, i.e., one with broken and cracked pipes. However, additional claims of negligence must be “independent” of liability based on the toxic pollutant. See Madison, supra, 557 Pa. at 611, 735 A.2d at 109. The broken pipes were not independent of the pollutant’s escape and discharge. They were an integral and “inescapable” part of the alleged liability. The complaint itself says that the “combination” of the broken pipe and chemicals caused the damages. Moreover, the insurance contract itself provided that the pollutant exclusion applies to “claims or suits arising in whole or in part’ (emphasis provided) from the escape or discharge of pollutants. The broken and cracked pipes are part of the alleged liability based on the escape and discharge of toxic pollutants and do not give rise to a separate and independent theory of recovery.

The Cunninghams’ complaint and the DEP order are claims and/or suits for liability arising from the escape and/or discharge of toxic pollutants which can and allegedly did cause damage. The insurance contract’s pollution exclusion applies. Defendant has no duty to defend the DEP claim and the suit by the Cunninghams.

ORDER

And now, May 19, 2005, plaintiff’s summary judgment motion is denied. Defendant’s summary judgment motion is granted. The pollution exclusion in the insurance contract applies. Defendant has no duty to defend the DEP claim and the Cunningham suit against plaintiff.

      . Defendant also asserts that it was not given proper notice of the DEP and Cunningham claims. This court finds that notice was properly given early in the proceedings, on March 3,2001, and March 26, 2001, and on several subsequent occasions.

      . As a result of this decision, the issue of whether or not other insurance policy exclusions negate defendant’s duty to defend against the DEP claim is moot.


author: GOLDBERG, J.,

text:
    Commonwealth v. Senzick

      Kelly Jo Slone, assistant district attorney, for Commonwealth.

      David H. Knight, for appellant.
    May 5, 2005
   GOLDBERG, J.,

Defendant, Albert Senzick, urges us to declare unconstitutional certain provisions of the recently enacted driving under the influence statute. For the reasons set forth below, we find Senzick’s challenge to the constitutionality of the new DUI statute to be without merit. Accordingly, we uphold the statute and deny Senzick’s motion.

The stipulated facts of this case are as follows. On July 17,2004, at 7 p.m., Senzick collided into a concrete barrier while driving his vehicle on Route 13 in Falls Township, Bucks County. He reported the collision at 7:02 p.m. and, by 7:04 p.m., Officer Bryan White arrived at the scene of the accident. Senzick appeared intoxicated and failed a field sobriety test. He was then transported to Frankford Hospital for a blood test to determine his blood alcohol content. The test was completed at 8:20 p.m., and the results showed that at the time of testing, Senzick had a BAC of .18 percent. Senzick was then charged with driving under the influence of alcohol under 75 Pa.C.S. 83802(a)(1) and §3802(c).

On January 24, 2005, Senzick filed a motion to declare section 3 802(c) unconstitutional, and a hearing was held on this issue on February 3,2005. In support of his motion, Senzick argued that section 3802(c) was impermissibly vague and overly broad in that it does not require proof of BAC at the actual time of driving. Senzick also made an offer of proof that his toxicology and pharmacology expert, Dr. Gary Lage, would testify that his BAC at the time of driving was below .16 percent. The Commonwealth objected to such testimony, arguing that under section 3802(c), the proper inquiry was an individual’s BAC at the time of testing and that BAC at the time of driving was irrelevant. We took the Commonwealth’s objection under advisement and permitted the testimony. Dr. Lage testified that, based on information provided to him by Senzick, in his opinion, Senzick’s BAC at the time of driving would have been approximately .14 percent to .15 percent.

After careful consideration and for the reasons set forth below, we now uphold the constitutionality of section 3802(c).

The relevant portions of the statute at issue are as follows:

“Section 3802. Driving under influence of alcohol or controlled substance
“(a) General impairment.—
“(1) An individual may not drive, operate or be in actual physical control of the movement of a vehicle after imbibing a sufficient amount of alcohol such that the individual is rendered incapable of safely driving, operating or being in actual physical control of the movement of the vehicle.
“(2) An individual may not drive, operate or be in actual physical control of the movement of a vehicle after imbibing a sufficient amount of alcohol such that the alcohol concentration in the individual’s blood or breath is at least 0.08 percent but less than 0.10 percent within two hours after the individual has driven, operated or been in actual physical control of the movement of the vehicle.
“(b) High rate of alcohol. — An individual may not drive, operate or be in actual physical control of the movement of a vehicle after imbibing a sufficient amount of alcohol such that the alcohol concentration in the individual’s blood or breath is at least 0.10 percent but less than 0.16 percent within two hours after the individual has driven, operated or been in actual physical control of the movement of the vehicle.
“(c) Highest rate of alcohol. — An individual may not drive, operate or be in actual physical control of the movement of a vehicle after imbibing a sufficient amount of alcohol such that the alcohol concentration in the individual’s blood or breath is 0.16 percent or higher within two hours after the individual has driven, operated or been in actual physical control of the movement of the vehicle.”

Senzick only challenges the constitutionality of section 3802(c).

Initially, we note that when analyzing the constitutionality of a statute, there is a strong presumption that the statute does not violate the constitution. Moreover, there is a heavy burden of persuasion upon one who challenges the constitutionality of a statute. Commonwealth v. Barud, 545 Pa. 297, 681 A.2d 162 (1996). While penal statutes are to be strictly construed, we are not required to give the words of a criminal statute their narrowest meaning or disregard the evident legislative intent of the statute. A statute, therefore, will only be found unconstitutional if it “clearly, palpably and plainly” violates the constitution. Id. at 304, 681 A.2d at 165.

The vagueness and overbreadth challenges at issue herein have been defined in the following terms:

“ ‘As generally stated, the void for vagueness doctrine requires that a penal statute define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitral’}' and discriminatory enforcement.’ ... Due process requirements are satisfied if the statute provides reasonable standards by which a person may gauge their future conduct....
“A statute is ‘overbroad’ if, by its reach, it punishes constitutionally protected activity as well as illegal activity. . . . The language of the statute in question literally encompasses a variety of protected lawful conduct.” Barud, 545 Pa. at 304-305, 681 A.2d at 165. (citations omitted)

With these presumptions and principals in mind, we turn to Senzick’s arguments. However, to place Senzick’s arguments in the proper context, we first review the Commonwealth’s prior DUI law.

Prior to 1996, the now-repealed 75 Pa.C.S. §3731 (a)(1) made it an offense to drive under the influence of alcohol to a degree that rendered the person incapable of safe driving, and 75 Pa.C.S. §3731(a)(4) made it an offense to drive while the amount of alcohol by weight in the blood of the person was. 10 percent or greater. Under section 3731(a)(4) the relevant inquiry was the person’s BAC at the time of driving. However, logistically, blood tests could never be taken at the time of driving. Instead, they were taken at some subsequent time after the driver had ceased driving and was taken into custody by the arresting officer.

Relatively consistent scientific evidence established that, after a person stops drinking, his BAC continues to rise to a peak level that occurs sometime between 30 minutes to 90 minutes after his last drink. Thus, it was possible for a person to be driving at a time when his BAC was below .10 percent and tested some time later when his BAC had risen to a level at or above .10 percent. While that person may not have performed any act that had been declared to be criminal (i.e., driving with a BAC at .10 percent or above), he could have been convicted of violating section 3731(a)(4) if his BAC rose above .10 percent at the time he was tested.

In Commonwealth v. Jarman, 529 Pa. 92, 601 A.2d 1229 (1992), and Commonwealth v. Modaffare, 529 Pa. 101, 601 A.2d 1233 (1992), our Supreme Court was presented with facts where this problem was highlighted. In both cases, the defendants were arrested for driving while under the influence of alcohol and were subsequently taken to area hospitals for blood tests. Jarman’s blood test, which was taken approximately one hour after he was stopped, revealed a BAC of .114 percent. Jarman, 529 Pa. at 94, 601 A.2d at 1230. Modaffare revealed a BAC of .108 percent approximately one hour and 50 minutes after he was stopped. Modaffare, 529 Pa. at 103, 601 A.2d at 1234. At trial, the Commonwealth’s expert witnesses testified that the defendants’ BAC may not have peaked until after the defendants had operated their motor vehicles.

In both cases, the court found that there was insufficient evidence to sustain convictions under 75 Pa.C.S. §3731 (a)(4). The court concluded that because: (1) there was a significant delay between the time the defendants were stopped and the time that their BAC was tested and (2) the blood tests revealed that the defendants’ BAC only minimally exceeded .10 percent at the time of testing, the evidence was insufficient to prove that the defendants’ BAC was .10 percent or higher at the time of driving. After these decisions, in order to gain DUI convictions based on a BAC of .10 percent or above, the Commonwealth was required to present scientific evidence that related a driver’s BAC at the time of testing back in time to what his BAC would have been at the time of driving.

In apparent response to Jarman and Modaffare, and in effort to avoid the relation back requirements established therein and the ensuing battle of experts, the legislature amended the DUI law to add a new subsection, section 3731(a)(5), which made it an offense to have a BAC of .10 percent or greater within three hours after driving. This new subsection was enacted in addition to section 3731(a)(4), which prohibited having a BAC of .10 percent or higher at the time of driving. Thus, after the effective date of the amendment, the Commonwealth potentially had two scenarios upon which a person could be prosecuted based on BAC levels: either where a person had a BAC of .10 percent or above at the time of driving or where a person had a BAC of .10 percent or above within three hours after driving.

In Commonwealth v. Barud, 545 Pa. 297, 681 A.2d 162 (1996), the constitutionality of section 3731(a)(5) was challenged. As in the instant action, the defense contended that section 3731 (a)(5) was overly broad and void for vagueness. In interpreting section 3731, the Supreme Court implicitly defined the conduct criminalized therein as having a BAC of .10 percent or above at the time of driving. It then held that section 3731(a)(5) was over-broad in that it could sweep legal conduct (i.e., driving with a BAC of .099 percent or below) into its ambit, since a conviction under that subsection depended upon BAC up to three hours after driving and did not require any proof of BAC at the time of driving.

The Barud court also held that section 3731(a)(5) was impermissibly vague, as it created confusion as to when a driver would need to be concerned about his BAC. The court noted that, prior to the amendment, there was a bright line rule that a person could not drive while operating a vehicle at a time when his BAC was .10 percent or greater. However, after the amendment, a person was required to predict his BAC at two different times — first at the time of driving and second within three hours after driving. The Supreme Court determined that these coexisting and alternative theories failed to provide a reasonable standard by which an ordinary person could contemplate his future conduct. As section 3731(a)(5) was both vague and overbroad, it was stricken as unconstitutional.

On September 30,2003, the legislature revised the DUI law by rescinding section 3731 and passing 75 Pa.C.S. §3802. The fundamental difference between the former DUI statute and the current DUI statute as it pertains to the issue before this court is that under the former law, BAC at the time of driving was an essential element of the offense, while under the current law it is not. Indeed, section 3802(a)(2) makes it an offense to drive after drinking a sufficient amount of alcohol to raise an individual’s BAC to at least 0.08 percent within two hours after driving. Sections 3802(b) and 3802(c) effectively criminalize the same conduct but increase the penalties for driving under the influence of successively higher BAC levels. Thus, DUI convictions under sections 3802(a)(2)— 3802(c) now require proof of BAC at the time of testing, which must occur within two hours of driving. Under these subsections, there is no need to prove BAC at the actual time of driving.

While our appellate courts have not yet analyzed the validity of section 3802, several trial courts have considered the issue and have upheld the constitutionality of the statute. In Commonwealth v. Nesbitt, Philadelphia M.C. no. 0402-1892 1/1, the Honorable William A. Meehan Jr. explained the basis for the change in the DUI law as follows:

“The shift in the legislature’s thinking in drafting section 3802(a)(2) is clear. The legislature recognized that intoxication is not a momentary state, but rather, a condition caused by the consumption of alcohol that can last over an extended period of time. That time period is the period during which the legislature is interested in deterring people from driving their vehicles. Because the legislature is not capable of determining the exact point each individual becomes impaired to the point of being unfit to drive, it created minimum guidelines that place the public on notice of the prohibited conduct and places the onus on the individual to monitor his or her drinking so that their blood alcohol concentration does not rise to 0.08 percent during that period.”

' Although stated in relation to subsection (a)(2), we find that Judge Meehan’s comments are equally applicable to subsection (c). In light of these considerations, we conclude that section 3802(c) is rationally related to the Commonwealth’s legitimate interest in keeping its highways safe.

Against this historical background, we consider Senzick’s constitutional arguments, which essentially adopt those raised in Barud, supra. At the outset, however, we note the common flaw that exists in each of Senzick’s arguments, which is that he presumes that BAC at the time of driving is still a relevant inquiry, as it was when Barud was decided. As section 3802(c) only prohibits having a BAC of .16 percent or above at the time of testing within two hours after driving, the reasoning and analysis set forth in Barud and adopted by Senzick is no longer applicable.

Senzick’s first contention is that section 3 802(c) is over-broad in that it is based on BAC at the time of testing, which will allow convictions for conduct that has not been declared to be criminal. By way of example, he states that:

“If a person operates a motor vehicle with a BAC below the legal limit and is stopped, the evidence could not sustain a conviction under section 3731 or section 3802. However, if that person’s level then rose above the legal limit (within three hours under section 3731 or two hours under section 3802) then he could be prosecuted and in fact would be convicted because he would not even be able to offer a defense.” (Senzick’s brief, p. 4.)

This argument is without merit because under section 3802(c) the prohibited activity is having a certain BAC at the time of testing, not at the time of driving. If the person in Senzick’s example was tested in a timely fashion and his BAC was above .16 percent at that time, he would have committed the act prohibited by the statute, and a conviction would be appropriate. As that is the only conduct that is criminalized under section 3802(c), the statute will only permit convictions for activity that has been criminalized. Thus, the statute is not overbroad, and the constitutional concerns raised in Barud are inapplicable.

Senzick next contends that section 3802(c) should be declared unconstitutional under the void for vagueness doctrine. As previously stated, the void for vagueness doctrine requires that a penal statute define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement. Commonwealth v. Mikulan, 504 Pa. 244, 470 A.2d 1339 (1983).

Senzick argues that section 3802(c) is impermissibly vague, as: “it is impossible for a motorist to know what if any section of section 3802 they violated because they do not know when the blood testing will be done. A motorist in Senzick’s situation could be innocent of DUI, guilty of DUI-general impairment section 3802(a)(2), guilty of DUI high rate of alcohol section 3802(b), or guilty DUI highest rate of alcohol section 3802(c) all depending on when the officer conducted the blood test.” (Senzick’s brief, p. 4.)

Thus, he concludes that the statute is not set forth with sufficient definiteness to allow ordinary people to understand what conduct is prohibited and that it also fails to discourage arbitrary and discriminatory enforcement.

The error in Senzick’s vagueness example is that it is quite clear what conduct the legislature has criminalized. By the plain terms of section 3802(c), an individual is guilty of DUI if a test of his blood or breath taken within two hours after driving reveals a BAC of. 16 percent or higher. Under section 3802(c), no other conduct is criminalized. As the statute limits the officer’s discretion in the timing of the blood or breath test to the period when BAC is likely to peak, the two-hour time limitation is not arbitrary, but rationally related to the Commonwealth’s interests. From a practical perspective, a shorter time limit which would further reduce an officer’s discretion may not be possible, given the time that may be required to transport a suspect to a hospital for the BAC test. Thus, we find the statute is sufficiently specific to guide future conduct and that its terms do not encourage arbitrary or discriminatoiy enforcement. For these reasons, we reject Senzick’s vagueness argument.

Lastly, we note that Senzick does not contend that he would not be guilty of DUI under a more narrowly drafted DUI statute or that he was confused as to what conduct was prohibited. To the contrary, his expert testified that at the time he was driving, Senzick had a minimum BAC of .14 percent. Thus, Senzick’s alleged dilemma is not, as in Barud, that he could be prosecuted under two sets of circumstances. Rather, even if we were to permit and accept his expert’s testimony, he would still be subject to prosecution under section 3802(b). The true thrust of Senzick’s contention regarding the timing of his BAC is that he should be entitled to a less severe penalty, a sentencing issue. As our legislature has deemed otherwise, we will defer to them and dismiss this assertion.

For all of the above reasons, we find that the challenged portion of the DUI statute, specifically 75 Pa.C.S. §3 802(c), is constitutional. Our order follows:

ORDER

And now, May 5, 2005, upon consideration of defendant Albert Senzick’s motion to declare certain provisions of the driving under the influence of alcohol (DUI) statute to be unconstitutional, the Commonwealth’s response thereto, and after a hearing thereon, it is hereby ordered that said motion is denied. It is further ordered that the Commonwealth’s objection to the testimony of defendant’s toxicology and pharmacology expert, Dr. Gary Lage, is sustained, and such testimony is stricken.

      . The Commonwealth’s DUI statute appears at 75 Pa.C.S. §3802. Senzick’s challenge is limited to the constitutionality of 75 Pa.C.S. §3802(c), which relates to driving after imbibing a sufficient amount of alcohol such that one’s blood or breath alcohol concentration is 0.16 percent or higher within two hours after driving.

      . Section 3802(a)(1) prohibits driving while impaired generally and section 3802(c) prohibits driving after drinking a sufficient amount of alcohol to raise one’s BAC to 0.16 percent or higher within two hours after driving. As section 3802(c) relates to driving under the influence of the highest rate of alcohol recognized by the statute, the penalties for violating this subsection are more severe than the penalties for violating section 3802(a)(1).

      . Such evidence was offered and accepted in cases such as Commonwealth v. Jarman, 529 Pa. 92, 601 A.2d 1229 (1992); Commonwealth v. Modaffare, 529 Pa. 101, 601 A.2d 1233 (1992); and Commonwealth v. Gonzalez, 519 Pa. 116, 546 A.2d 26 (1988).

      . The relevant portion of section 3731(a)(5) provided as follows:

        “Section 3731 Driving under influence of alcohol or controlled substance

      “(a) Offense defined. — A person shall not drive, operate or be in actual physical control of the movement of any vehicle:...
      “(5) if the amount of alcohol by weight in the blood of the person is 0.10 percent or greater at the time of a chemical test of a sample of the person’s breath, blood or urine, which sample is:
      “(0 obtained within three hours after the person drove, operated or was in actual physical control of the vehicle....”

      . Section 3802 became effective February I, 2004.

      . See for example, Commonwealth v. Brantner, Cumberland County CCP, no. CP-21-CR-2074-2004 (January 3, 2005); Commonwealth v. Kozo, Northampton County CCP, no. 1553-2004 (December 22, 2004); Commonwealth v. Ciccolo, Centre County L. J. VI, no. 50, p. 5 (October 2004); and Commonwealth v. Nesbitt, Philadelphia M.C. no. 0402-1892 1/1.


author: KUNSELMAN, PJ,

text:
    In re Antonini

      James J. Ross, for plaintiff.

      Douglas R. Nolan, for defendant.
    April 28, 2005
   KUNSELMAN, PJ,

In his appeal from his dismissal, Enrico Anthony Antonini has also requested a supersedeas. The respondent, Western Beaver Area School District and its board of directors, contends that no statute or procedural rule provides for a supersedeas in such a proceeding and so Antonini is not entitled to a supersedeas. Since neither the Local Agency Law nor the Public School Code provide for a supersedeas, we must determine if a supersedeas is available to Antonini. If so, we must then determine if he is entitled to one. A brief procedural and factual history is necessary to resolve the issue.

Antonini was the superintendent of schools for Western Beaver, having been hired as such in 1994. His initial contract was for a term of five years, which was renewed for an additional term of five years in 1999. On April 13, 2004, Antonini was offered a new contract for another five-year term, effective July 1, 2004, by the board of directors of Western Beaver. Antonini accepted the offer and is, therefore, under contract as superintendent of schools through June 30, 2009.

On October 8, 2004, the school board suspended Antonini with pay and hired outside counsel to investigate certain allegations against him. Antonini responded by filing an action in mandamus alleging that he had been suspended without a hearing, in violation of his due process rights. The court conducted a hearing on Antonini’s motion for peremptory judgment. The issue was whether Antonini had been guilty of serious misconduct so as to entitle the school board to suspend him without a due process hearing pursuant to Burger v. Board of School Directors of McGuffey School District, 576 Pa. 574, 839 A.2d 1055 (2003).

At the hearing, Western Beaver presented testimony and evidence concerning four allegations of serious misconduct: a handicapped restroom constructed late; the use of Title I funds for teachers’ education and training for certification as principal; a five-day notice requirement to board members of interviews of prospective employees; and a claim that tuition reimbursements to teachers from Title I funds exceeded amounts authorized by the collective bargaining agreement.

After hearing, we found that the handicapped accessible restroom was not completed until one week after school commenced because of a sewer problem, but that other handicapped accessible restrooms were available. We further found that, while Antonini had authorized the expenditure of Title I funds to provide training for teachers toward certification as principal, the expenditures were not disapproved by administrators of the program on both the state and federal level. We further found that Antonini had, in fact, given members of the school board five days notice of interviews of prospective employees but that one member had not actually read the notice on one occasion within the five-day period. Finally, we found that, while the reimbursement authorized by Antonini for payment to teachers for educational expenses from Title I funds did exceed the amounts authorized by the collective bargaining agreement, they were authorized by Title I regulations.

Flaving made those factual findings, we were compelled to conclude that Western Beaver failed to prove Antonini guilty of serious misconduct. Consequently, we were further required to conclude that Western Beaver was required to comply with section 1080 of the Public School Code, which authorized removal from office, after hearing, for neglect of duty, incompetency, intemperance, or immorality. 24 P.S. §10 — 1080. Flaving failed to do so, we found that Western Beaver suspended Antonini without proper cause and without due process and ordered his reinstatement.

Western Beaver appealed our decision to Commonwealth Court and, on Antonini’s petition, we vacated the automatic supersedeas provided by Pa.R.A.P. 1736. Western Beaver then petitioned Commonwealth Court to reinstate the automatic supersedeas. Flowever, our opinion in support of our order was adopted by Commonwealth Court and the application by Western Beaver was refused. Antonini was thereafter reinstated as superintendent by Western Beaver at a meeting of the school board.

The special counsel, who had been hired by Western Beaver, directed a letter to Antonini dated November 18, 2004. Therein, he notified Antonini of three allegations of conduct which, if accurate, would constitute grounds for termination. Antonini was directed to appear for a “Loudermill” hearing before special counsel to discuss the three allegations. The three allegations included: (1) use of school funds to pay tuition of two teachers in a principal certification program; (2) failure to complete construction of a restroom to serve the needs of a handicapped student; and (3) authorization of the construction of the restroom without seeking quotes for the work.

Subsequently, Western Beaver gave Antonini notice of a hearing before it on February 9, 2005, to determine if he should be dismissed. The statement of charges included the thee allegations set forth in notice of the “Loudermill” hearing, but added a fourth allegation. The fourth allegation was that the tuition payments referred to hereinabove were contrary to the terms of the collective bargaining agreement with the Western Beaver Education Association.

The notice of charges further stated that the conduct complained of:

(1) rendered Antonini incompetent to perform services as superintendent in that he had “exhibited deficiencies in personality, judgment and attitude”;

(2) was intemperate;

(3) was immoral;

(4) constituted neglect of duty in his repeated refusal to comply with the terms of the collective bargaining agreement;

(5) constitutes a pattern of unprofessional conduct.

Following a number of hearings, Western Beaver concluded that the charges, individually and in combination, constituted neglect of duty, incompetency, intemperance, immorality and were sufficient to sustain Antonini’s termination. Consequently, Western Beaver terminated Antonini on April 12, 2005. Antonini filed his appeal the following day. His request for a supersedeas was entertained but deferred since our local rule requires at least three business days notice of intent to seek such relief.

As we have observed hereinabove, neither the Local Agency Law nor the Public School Code provide for a supersedeas. Antonini relies upon a section of the Judicial Code to establish that right. The Judicial Code provides

“(a) General rule
“There is a right of appeal under this subsection from the final order ... of every ...
“(2) Government unit which is an administrative agency within the meaning of Section 9 of Article V of the Constitution of Pennsylvania to the court having jurisdiction of such appeals. An order is appealable under this paragraph notwithstanding the fact that it is not appealable under chapter 7 of title 2 (relating to judicial review)....
“(e) Supersedeas. — An appeal shall operate as a supersedeas to the extent and upon the conditions provided or prescribed by law....” 42 Pa.C.S. §5105(a) and (e).

Since section 5105(a)(2) relates to appeals from a government unit which is an administrative agency within the meaning of Section 9 of Article V of our Constitution, we must look at Section 9, Article V. That section provides, in relevant part, that “there shall also be aright of appeal... from an administrative agency to a court of record..., the selection of such court to be as provided by law; and there shall be such other rights of appeal as may be provided by law.” Constitution, Article 5, Section 9.

An “administrative agency” is not defined in the Constitution and we have found no statutory definition. However, as Commonwealth Court has observed, Article 5, Section 9 was not self-executing and required legislation to implement its provisions. One of the implementing statutes was the Local Agency Law. McDonald v. Penn Hills Township School Board, 7 Pa. Commw. 339, 342, 298 A.2d 612, 613 (1972).

Another law, the Administrative Agency Law, was enacted simultaneously with the Local Agency Law in the Act of 1978, April 28, P.L. 202, No. 53. The Administrative Agency Law is set out in subchapter A of chapter 5 (2 Pa.C.S. §§5501-508) and subchapter A of chapter 7 (2 Pa.C.S. §§701-704). See 2 Pa.C.S. §103(a). The Local Agency Law is set out in subchapter B of chapter 5 (2 Pa.C.S. §§551-555) and in subchapter B of chapter 7 (2 Pa.C.S. §§751-754). See 2 Pa.C.S. §105.

Under the Act, a “Commonwealth agency” is defined as “any executive agency or independent agency.” 2 Pa.C.S. §101. A “local agency” is defined as “a government agency other than a Commonwealth agency.” 2 Pa.C.S. § 101. A “government agency” is defined as “any Commonwealth agency or any political subdivision or municipal or other local authority, or any officer or agency of any such political subdivision or local authority.” 2 Pa.C.S. §101.

Under this definitional scheme, school boards are local agencies, not Commonwealth agencies. Rike v. Commonwealth, Secretary of Education, 508 Pa. 190, 194, 494 A.2d 1388, 1390 (1985). We must therefore conclude that Western Beaver is not an administrative agency within the meaning of Section 9 of Article V of the Constitution and therefore 42 Pa.C.S. §5105 does not apply. It follows that there is no right to a supersedeas.

ORDER

For the reasons set forth in the attached opinion, the request of Enrico Anthony Antonini for a supersedeas is denied.