author: KENNEY SR., J.,

text:
    Chadwick v. Chadwick

      C.P. of Delaware County,
    no. 92-19535.

      Albert Momjian, for plaintiff.

      H. Beatty Chadwick, pro se.
    October 27, 2004
   KENNEY SR., J.,

— Pending before the court are claims for equitable distribution of marital property, counsel fees and costs, and a de novo appeal from a master’s findings with respect to plaintiff’s request for alimony pendente lite.

I. FINDINGS OF FACT

(1) The parties were married on March 31,1977, and separated in or about September of 1992.

(2) The complaint in divorce was filed on November 23, 1992.

(3) A bifurcation order was subsequently entered, and a final decree in divorce was entered on November 15, 2001.

(4) The plaintiff had not previously been married. A prior marriage of the defendant ended in divorce in 1977.

(5) There were no children born of the marriage.

(6) The plaintiff was born on October 30,1954, and is 49 years of age. She has an undergraduate degree from Dickinson College.

(7) The defendant was born on June 21, 1936, and is 68 years of age. He has an undergraduate degree from the University of Pennsylvania, and a law degree from the Law School of the University of Pennsylvania.

(8) The plaintiff enjoys good health.

(9) The defendant has been diagnosed with a recurrence of malignant lymphoma, although he appeared to be in good health at the time of trial. Dr. John Durocher testified that his illness will likely grow more serious, and that his life expectancy is uncertain.

Employment

(10) The plaintiff is currently self-employed as an artist. She developed her skills during the marriage, and the defendant was supportive of her work. Marital funds were contributed to her training, but were not extraordinary in amount, and were made pursuant to an understanding of the parties with respect to the roles and contributions of each in and to the marriage.

(11) Prior to separation, plaintiff had begun to show her work in at least one important Philadelphia gallery, and she now has an affiliation with a gallery near her home in Maine.

(12) Her recent income has varied, but has averaged in the range of $40,000 to $50,000 per year since separation. Her earnings have enabled her to purchase a home in Maine at a foreclosure sale. She is only able to afford to carry catastrophic health care insurance, however.

(13) Since separation, plaintiff has been able to accumulate only a modest separate estate.

(14) The defendant was employed by I. U. International for eight years prior to the marriage and for 11 years during the marriage, ending in 1988.

(15) He, initially, was assistant general counsel to I. U. International, and, eventually, was its general counsel for a number of years. During that period of time his income was between $100,000 per year and $200,000 per year.

(16) Subsequent to his position at I. U. International, he was a practicing attorney and had other employment and earned approximately $100,000 per year.

(17) For a short time prior to the parties’ separation he chose to be employed at a salary which was significantly less than his prior earnings or his earning capacity.

Date of Marriage

(18) On or about the date of the marriage, the plaintiff was a recent college graduate and owed approximately $5,000 in consideration of student loans. The loan balances were paid in full during the marriage from marital funds.

(19) The court considers this to be a nominal amount given the assets and earnings of the parties during coverture.

(20) The defendant possessed investment accounts and cash on the date of the marriage which he contends were valued at $225,000 and $17,000 respectively, along with an IRA whose date of marriage value was unclear. He maintained these assets in his name alone but contributed marital funds to them during the marriage. These assets also appreciated during the marriage.

(21) The defendant also brought substantial and valuable items of personalty to the marriage which he regards to be his separate property.

(22) Prior to the marriage, the defendant owned a home in Bala Cynwyd, Pennsylvania, which he sold, and the proceeds of which were utilized in the purchase of the first marital home in September of 1977. That home, and a subsequent marital home located at 280 South Roberts Road, Bryn Mawr, Pennsylvania, purchased in July of 1991, were owned as tenants by the entireties.

(23)Prior to the marriage, the defendant also owned a summer cottage in Frankfort, Michigan. This property was never jointly-titled. The defendant argues that this property has no value, and cannot be conveyed, because he has granted his first wife the right to use it for three weeks each summer. His first wife testified, however, that there are no documents memorializing the grant, and that she has not used the property since 1978 or 1979. No proofs as to any appreciation during coverture were made at trial.

Period of Coverture

(24) During the marriage, the parties enjoyed a very comfortable style of life, regularly entertaining and being entertained, living in an expensive and well-furnished home in a nice neighborhood, enjoying the summer cottage, and traveling to France, Italy, Greece, Hawaii, and the Southwest, among other destinations.

(25) The parties accumulated a limited amount of personal property during the marriage, including vehicles and motorcycles.

(26) Defendant also had very substantial income during this time, including a generous severance from I. U. International.

Date of Separation

(27)Plaintiff separated from defendant in or about September of 1992, and took a limited number of items of personalty with her when she left, including some of her paintings and drawings. She eventually received two marital vehicles.

(28) The largest part of the personalty contained in the marital home, including essentially all of the furnishings brought to the marriage by the defendant, was left in the possession of the defendant.

(29) The parties made only vague and limited proofs as to the remaining marital personalty and the court, therefore, is unable to make more specific findings as to it.

(30) The court finds, however, that the major items of personalty brought to the marriage by the defendant, and which remained in his possession after separation, remained his separate property.

(31) Defendant also retained four motorcycles after separation.

(32) The plaintiff had an investment account with U.S.A.A. on the date of separation, with a balance approximating $2,500, and an IRA with a value approximating $23,000. Neither party offered more recent values at trial.

(33) The defendant had investment accounts in his name alone valued at $1,593,925 on the date of separation, of which he acknowledges $1,037,925 to be marital. He therefore acknowledges 65.11 percent to be marital. These were the successors to the accounts maintained on the date of the marriage.

(34) The IRA possessed by the defendant on the date of the marriage was valued at $846,939 on the date of separation, and he acknowledges $645,585 to be marital. He therefore acknowledges 76.22 percent to be marital.

(35) The plaintiff contends that both the investment accounts and this IRA are entirely marital pursuant to the holding in Verholek v. Verholek, 741 A.2d 792 (Pa. Super. 1999), in that, despite their maintenance in defendant’s name alone, marital funds were contributed to them.

(36) On the date of separation the defendant also possessed an IRA account valued at approximately $40,000 which he acknowledges to be marital.

(37) Defendant testified that, after a transfer to Maison Blanche Limited, he retained sums approximating $100,000, including the IRA valued at $40,000.

(38) Accepting defendant’s analysis, 65.11 percent of these sums, or $39,066, was marital.

(39) Finally, no proofs were made at trial with respect to any marital debt.

Alimony Pendente Lite

(40) On or about February 25,1993, a master appointed by the court recommended to the court that an order of alimony pendente lite be entered, payable by defendant to plaintiff, effective January 27,1993. The master’s finding was entered as an order of the court on February 26, 1993, and the defendant made a timely request for a hearing de novo by the court.

(41) The parties, subsequently, entered into an agreement whereunder defendant’s marital individual retirement account was redeemed and the sum of $40,000 was paid to plaintiff as alimony pendente lite in return for plaintiff’s agreement that defendant’s liability for further alimony pendente lite would be determined as part of these equitable distribution proceedings.

(42) The court finds that the plaintiff’s earnings or earning capacity for purposes of alimony pendente lite were approximately $30,000 per year, less approximately 20 percent in tax liability, or $2,000 per month, from the date of separation until 1999, when she began to have more significant earnings from sales of her work. Thereafter, through and including 2001, she earned an average of $57,000 per year, less approximately 20 percent in tax liability, or $3,800 per month.

(43) Husband refused to disclose his income for 1993 and thereafter.

(44) The court finds that the defendant’s earnings or earning capacity for purposes of alimony pendente lite were $100,000 per year, less approximately 20 percent in tax liability, or $6,667 per month.

(45) Defendant admits to termination payments at or about the time of the alimony pendente lite proceedings of $6,402 per month after taxes. This sum is exclusive of the income from the Robert L. Montgomery trusts.

(46) The defendant has failed to pay any alimony pendente lite to the plaintiff with the exception of the sum of $40,000 received by agreement from the defendant’s IRA.

(47) Defendant’s normal date of retirement, at age 65, would have been June 21, 2001.

Fair Rental Value

(48) After the date of separation, the defendant continued his residence at the marital home until August of 1994.

(49) The parties agreed at trial that the fair rental value of the marital home during that time was $2,500 per month. The parties also agreed that any claim of plaintiff for the fair rental value of the home would be for a period of 22 months.

(50) The defendant’s uncontradicted testimony was that, during that time, he paid a mortgage of approximately $680 per month and property taxes of about $500 per month, along with additional sums in consideration of maintenance and utilities. Defendant’s testimony with respect to the sums paid in consideration of maintenance was essentially limited to an estimated amount and lacked specificity sufficient to show how the amount was determined, whether the amount was reflective of consistent expenditures, or whether the plaintiff benefited from them.

(51) The court finds, therefore, that defendant is entitled to a credit in the amount of $1,180 per month in consideration of payment of the marital mortgage and property taxes.

(52) The court also finds that, for purposes of determining the fair rental value of the marital home, and the credit to defendant for his expenditures, plaintiff’s interest in the home should be considered to be 50 percent.

Marital Home

(53) The marital home was sold during the course of these proceedings, and, pursuant to an order of this court, the net proceeds thereof, in the amount of $329,494.83, were placed in an escrow account with plaintiff’s counsel as escrow agent.

(54) The plaintiff contends that all of these funds are marital by reason of the titling of the two marital homes as tenants by the entireties.

(55) The defendant contends that the proceeds of the marital home were 85.44 percent marital.

Transfers

(56) Prior to the separation, on or about August 30, 1990, the defendant entered into a joint venture agreement with an entity known as Maison Blanche Limited, a corporation having its offices in Gibraltar, and made an initial investment therein in the amount of $5,000. The joint venture agreement allowed Maison Blanche Limited to make capital calls against the defendant in an amount not to exceed $2,750,000.

(57) The defendant testified that, during the pendency of the alimony pendente lite proceedings between the parties, Maison Blanche Limited made a capital call of him in the amount of $2,502,000.

(58) The defendant did not communicate to the plaintiff or her counsel that such a capital call had been made.

(59) The defendant testified that, prior to February 25, 1993, he transferred the sum of $2,502,000 to Maison Blanche Limited, in response to the capital call, which sum included a substantial amount of marital assets. Except as is identified elsewhere herein, this was almost all of the parties’ financial assets, marital and non-marital.

(60) Plaintiff disputes that all of this sum was actually transmitted to Maison Blanche Limited.

(61) Defendant testified that the transfer was partly in cash and partly in the form of securities.

(62) The transfer was made from defendant’s investment accounts and from the IRA created by him prior to the marriage.

(63) As of January 31, 1993, defendant’s investment account and the IRA initially funded prior to the marriage had a value of $2,527,197.

(64) It appeared to the court from the proofs made at trial that all of the IRA maintained by the defendant on the date of the marriage was transferred.

(65) Defendant testified that he retains his interest in Maison Blanche Limited, and that it is that interest which is before the court for equitable distribution.

(66) On or about April 8, 1993, the sum of $869,106 from the transferred assets was wired to an account of National Financial Services Corporation in favor of H.B. Chadwick, account no. *********_

(67) At the instruction of the defendant, the foregoing sum was then invested in three annuities purchased from American Slcandia, North American Security Life, and Nationwide Life Insurance Co., in the amounts of $289,666.66, $289,666.67, and $289,772.67, respectively. Each such annuity named as annuitant “H.B. Chadwick,” and designated as beneficiaries on the death of H.B. Chadwick, William C. Chadwick and John Chadwick, the sons of the defendant herein.

(68) The defendant failed to advise the plaintiff that he had received and reinvested these funds.

(69) The defendant, on the contrary, continued to represent to the plaintiff and the court that all of the transferred funds were in the possession of Maison Blanche Limited.

(70) The foregoing annuities qualified as investments in a qualified plan such that sums rolled-over to them from the defendant’s IRA did not become subject to imposition of federal income tax or penalty.

(71) The purchase of the foregoing annuities was accomplished within 60 days of the transfer of the defendant’s IRA, in the exact amount of the IRA, allowing the reinvestment to be made without tax consequences or penalty for calendar year 1993.

(72) Defendant has failed and refused to disclose to the plaintiff his income tax returns for calendar year 1993 and thereafter.

(73) On or about April 29, 1994, at the plaintiff’s request, this court entered an order enjoining the defendant from further assigning, concealing, secreting, or dissipating marital assets, freezing certain assets in defendant’s name, or held for his benefit, and directing certain financial institutions to produce any and all documentation reflecting accounts held in defendant’s name or for his benefit.

(74) In or about May of 1994, at the written request of “H. B. Chadwick” all three annuities were liquidated and the proceeds thereof paid to him.

(75) A proceeds check in the amount of $291,403.17, issued by North American Security Life Insurance Co., was endorsed “For: deposit only in Banco Mercantil del Istmo S.A. acct. H.B.Chadwick.”

(76) A proceeds check in the amount of $296,389.47, issued by Nationwide Life Insurance Company was endorsed “For deposit only in Banco Mercantil del Istmo S.A. para depositar a la accunta de H. B. Chadwick.”

(77) Defendant acknowledges the occurrence of the above transactions, but claims that, at all times material thereto, he acted as a “straw party” with respect to the funds for Maison Blanche Limited.

(78) He also argued at trial that the transferred funds remain invested with Maison Blanche Limited.

(79) On or about July 22, 1994, the court entered an order again enjoining the defendant from assigning, concealing, secreting, or dissipating marital assets, directing the return of the $2,500,000 transferred by the defendant out of the United Slates in February 1993, within 24 hours, to an account to be maintained by counsel for the plaintiff pending further proceedings, directing the sale of the marital home located at 280 Roberts Road, Bryn Mawr, PA, directing the payment of counsel fees to plaintiff in the amount of $75,000, enjoining defendant from leaving the jurisdiction of the courts of the Commonwealth, and directing defendant to surrender his passport to the court.

(80) The defendant, thereafter, failed to return any part of the $2,502,000 in compliance with the court’s order of July 22, 1994.

(81) Arthur H. Felderstein, CPA, CFE, CVA, a certified public accountant, and financial analyst, having been qualified as an expert in the area of security valuation, testified that, had the assets maintained in the accounts at Wheat First Securities/Butcher and Singer on behalf of defendant been maintained therein, and not transferred to Maison Blanche Limited and other destinations, the value of the assets contained therein on January 31,1993, in the amount of $2,527,197, left so invested, and with all dividends received in cash and reinvested in 3-month T-bills, compounded quarterly, would have had a value of $8,189,909, before taxes, as of April 30, 2004.

(82)If, as he testified, defendant transferred the cash and securities contained in his investment account and IRA, Mr. Felderstein testified accurately as to the current value of those assets.

(83)Based on the foregoing, the court finds that $868,985 of the $2,502,000 claimed to have been transferred to Maison Blanche Limited, or 34.73 percent, was in the form of defendant’s IRA. Accordingly, $1,633,015, or 65.27 percent, was in the form of defendant’s investment accounts.

(84)Accordingly, the court deems it to be equitable to regard that 34.73 percent of the appreciation of the transferred fund was allocable to the IRA, and calculates the current value of the IRA as follows:

Appreciated fund $8,189,909
Transferred fund $2.502.000
Appreciation $5,687,909
% allocable to IRA x .3473
Appreciation of IRA $ 1,975,411
IRA $ 868.985
Current value of IRA, transferred and appreciated $2,844,396

(85)The court further deems it equitable to regard that 65.27 percent of the appreciation of the transferred fund was allocable to the investment account, and calculates the current value of the investment account as follows:

Appreciation $5,687,909
Appreciation of IRA C$1.975.411)
Appreciation of investment accounts $3,712,498
Investment accounts transferred $1,633.015
Current value of investment accounts, transferred and appreciated $5,345,513
IRA $2,844,396
Investment accounts $5.345.513
Appreciated amount $8,189,909

(86)On or about July 27, 1994, the defendant executed a quitclaim deed whereby the summer cottage located in Frankfort, Michigan, was conveyed to H. Beatty Chadwick and William C.T. Chadwick as joint tenants with right of survivorship. Such a conveyance is inconsistent with defendant’s position that the property could not be conveyed, and, accordingly, has no value.

(87)On or about October 10, 1996, H. Beatty Chadwick and William C.T. Chadwick executed a quitclaim deed conveying the premises located in Frankfort, Michigan, to H.B.C. Corporation, a Delaware corporation.

(88)The court finds that the defendant has repeatedly acted to hide assets in order to defeat proper equitable distribution of the marital estate.

(89) On November 2, 1994, the defendant’s having failed to comply with the order of July 22, 1994, this court entered an order adjudicating the defendant to be in contempt, and directed the defendant’s incarceration pending compliance with the order.

(90) Defendant, thereupon, failed to appear to serve his term of incarceration.

(91) Thereafter, the defendant was arrested and incarcerated pursuant to the order of November 2, 1994.

(92) The defendant has continued to fail to comply with the orders of this court, and he remains incarcerated.

(93) During the course of his incarceration, the defendant, while maintaining that he has no assets or funds enabling him to comply with the court’s order, has consulted and/or retained a substantial number of attorneys.

(94) During the course of his incarceration, the defendant, while maintaining that he has no assets or funds enabling him to comply with the court’s order, has filed the various proceedings identified hereinafter.

(95) During the course of his incarceration, the defendant, while maintaining that he has no assets or funds enabling him to comply with the court’s order, has filed a defamation action in the courts of the state of Delaware.

(96) During the course of his incarceration, the defendant, while maintaining that he has no assets or funds enabling him to comply with the court’s order, has filed an action in the state courts of the state of Maine.

(97) During the course of his incarceration, the defendant, while maintaining that he has no assets or funds enabling him to comply with the court’s order, has filed an action in the federal courts of the state of Maine.

(98) On December 30, 2003, the Honorable Kevin F. Kelly of this court entered an order respecting the disposition by H. Beatty Chadwick of the $2,502,000, which provided, in pertinent part, as follows:

“Regarding the period of time up to and including the date of H. Beatty Chadwick’s most recent contempt evidentiary hearing immediately prior to the instant action’s of the equitable distribution trial, any and all salient findings of fact regarding inter alia the existence, location, control, constructive or otherwise by H. Beatty Chadwick and/the value of the $2,502,000, in whole and/or part, initially transferred by H. Beatty Chadwick to Maison Blanche Limited in Gibraltar named by the trial court in these related contempt proceedings, inter alia shall be considered the law of the case and, hence, no evidence contrary to these findings of fact shall be permitted to be introduced at any hearing in the above-captioned matter concerning the equitable distribution of the marital state at bar.”

(99) The court took judicial notice of the opinion of the Superior Court dated August 23, 1996, of the notes of testimony of a proceeding before the Honorable Joseph Battle conducted on August 17, 1995, and of the findings made by Judge Battle in his opinion of September 20, 1995.

(100) The court takes judicial notice of the fact that this court has repeatedly found that the defendant maintains control over the transferred funds.

(101) The defendant h as also agreed that all of the prior proceedings before the court may be considered to be a part of the record in this case.

(102) Defendant’s testimony, that the transfer to Maison Blanche Limited was a legitimate response to a capital call, was not credible or worthy of belief.

(103) The signatures on the checks, annuity documents, and redemption correspondence were the signatures of the defendant.

(104) Defendant’s testimony that he acted as a straw party of Maison Blanche Limited and received and reinvested the transferred funds on that basis was not credible or worthy of belief. On the contrary, defendant received the funds in his own right and utilized them for his own purposes.

(105) The transfer of the funds to Maison Blanche Limited and their return and reinvestment was done in fraud of the plaintiff and her rights in equitable distribution.

(106) Based on the evidence introduced at trial, it was clear to the court that defendant, at all times material hereto, has had control of the sums transferred to Maison Blanche Limited.

Escrow Accounts

(107) Defendant is also the income beneficiary of two trusts known as the Robert L. Montgomery trusts, which were established for his benefit.

(108) Some of the funds contained in the investment accounts on the date of separation were received from these trusts.

(109) On or about October 21,1994, the court entered an order requiring the income of the Robert L. Montgomery trusts to be paid into an escrow account with the plaintiff’s counsel as escrow agent.

(110) The defendant appealed the entry of the order of October 21, 1994, but the order has been upheld on appeal.

(111) Interest pertaining to, and the disbursements from, the escrow account related to the sale of the marital home have been as are set forth on exhibit A hereto.

(112) The funds related to the income distributions from the Robert L. Montgomery trusts are in accordance with exhibit B hereto.

(113) The parties desire that an appropriate sum from the escrow accounts be held in escrow to be applied to the costs of a jointly-commissioned search by the Honorable A. Leo Sereni, retired president judge of this court, with respect to the current status and location of the funds initially transferred to Maison Blanche Limited.

Counsel Fees and Costs

(114) The acts and omissions of the defendant related to the transfer of funds to Maison Blanche Limited and the attempt to protect the summer cabin have caused the plaintiff to incur an extraordinary amount of counsel fees and costs in her attempt to identify and secure marital assets for equitable distribution.

(115) These include, but are not limited to, services in the identification and valuation of the transferred assets, proceedings to locate the assets upon their initial transfer to Gibraltar, proceedings in Gibraltar in connection with the transfer, proceedings and depositions in New York and other jurisdictions tracing the transfer of moneys to the annuities and thereafter, proceedings to assert a lien against the cabin, proceedings seeking to enjoin further dissipation of marital assets and effect their recovery, and proceedings to enforce the various orders of this court enjoining further dissipation of marital assets and seeking their recovery.

(116) Specifically, in its review of the time records submitted by plaintiff’s counsel, the court notes the following:

“11 Habeas corpus and similar petitions in the court of Common Pleas of Delaware County;
“6 Petitions or appeals filed in the Superior Court related to defendant’s incarceration;
“8 proceedings brought in the Supreme Court of Pennsylvania;
“6 proceedings brought in the United States District Court;
“4 proceedings before the Third Circuit Court of Appeals; and
“2 proceedings brought before the United States Supreme Court, including a King’s Bench proceeding.”

(117) The court also notes that this court entertained a petition for writ of ne exeat and scheduled hearings on a monthly basis at which defendant was given the opportunity to comply with the orders of this court, and which counsel for the plaintiff was obliged to attend.

(118) This court also considered petitions for furlough from the Delaware County Prison and proceedings with respect to defendant’s capacity and the appointment of a guardian on his behalf.

(119) Plaintiff and her counsel had no option other than to prepare for and address all of these proceedings.

(120) Given the sheer volume of the proceedings, their novelty, and their submission over a protracted period of time, plaintiff and her counsel had little choice other than to involve multiple members of the Schnader firm and to continually review the file and the prior proceedings.

(121) Prior to the commencement of trial, the plaintiff had incurred counsel fees and costs in the amount of $1,879,738.82, against which payments on account in the amount of $225,638.76, had been made, leaving a balance due and owing in the amount of $1,654,100.06.

(122) Approximately $29,000 in fees was incurred in connection with proceedings in the courts of Gibraltar related to the location and return of transferred funds.

(123) During the period of representation, in addition to the proceedings herein, the defendant filed, and plaintiff’s counsel, or its local counsel, defended defamation actions in the states of Delaware and Michigan and a civil rights action in the state of Maine.

(124) Plaintiff’s counsel testified that plaintiff incurred fees in the following approximate amounts: the Delaware proceedings- — $12,000, and the Maine proceedings — $8,000. The exact amount incurred in connection with the Michigan proceedings was not testified to, but the court finds that it was not consequential, at least in relative terms, given the fact that it, and at least part of the Gibraltar fees, was paid from a prior award of $150,000, of which approximately $125,000 was credited against the invoices of the Schnader firm.

(125) Defendant argues that counsel fees are not properly to be awarded herein for representation in those matters.

(126) Defendant also argues that counsel fees incurred in connection with a protection from abuse action, proceedings before the Disciplinary Board, and in connection with various press and other interviews are not properly to be awarded herein.

(127) The court’s review of the Schnader time records reveals that services rendered in connection with the protection from abuse action, the proceedings before the Disciplinary Board, in connection with various press and other interviews, and in connection with unfairly duplicative reviews of the file or conferences involving plaintiff’s counsel was nominal.

(128) In what is likely an overabundance of caution on behalf of the defendant, the court finds that non-compensable charges cannot conceivably exceed 20 percent of the charges made.

(129) The defendant, finally, argues that counsel fees are not properly awarded herein for proceedings before the appellate courts of the Commonwealth, the federal courts of the Third Circuit, and the United States Supreme Court, even though those proceedings related solely to his incarceration for failure to obey the orders entered by this court herein requiring the return of the transferred assets in order that equitable distribution be accomplished.

(130) Plaintiff’s counsel estimates that 60 percent of the foregoing total of fees and costs has been incurred in the course of the litigation related to defendant’s incarceration for failure to comply with the orders of this court entered in furtherance of these divorce proceedings.

(131) The issues presented in this matter with respect to the identification and valuation of marital property, its division, plaintiffs’ claims for alimony pendente lite and permanent alimony, and her claims for counsel fees and costs, were not novel or difficult of resolution if addressed and presented properly by the parties.

(132) The court finds that, given the issues presented herein, plaintiff should not have incurred counsel fees in excess of $30,000, if the matter had been addressed and presented properly and without the issues presented by the transfer, even if the matter had been presented to the master and appealed and presented again to the court.

(133) The plaintiff has not heretofore had the financial ability to pay all of the counsel fees and costs related to this action, particularly given the defendant’s conduct herein.

(134) As noted, the plaintiff has not received any payments of alimony pendente lite during the interim period other than the $40,000 paid by agreement.

(135) The court identifies and values the marital estate as follows:

Escrow account maintained at First Union Bank funded with the proceeds of the sale of the marital home (as of 3/24/04, net of sums previously distributed to the parties and net of $25,000 to be escrowed
hereunder) $ 77,181
Plaintiff’s IRA $ 23,000
Plaintiff’s U.S.A.A. account $ 2,500
Defendant’s IRA $ 40,000
Defendant’s checking account $ 1,000
Plaintiff’s checking account $ ' 500
Joint savings account $ 2,000
Automobiles $ 1.6,275
Motorcycles $ 10,500
Marital funds retained by defendant, after the transfer ($60,000x65.11%) $ 39,066
Funds previously received by plaintiff from the real estate escrow account $ 232,000
Funds previously received by defendant from the real estate escrow account $ 45,000
Marital IRA assets transferred by defendant to Maison Blanche Limited ($2,844,396 x 76.22%) $ 2,167,999
Marital investment account assets transferred by defendant to Maison Blanche Limited ($5,345,513 x65.11%) $ 3.480.463
Total $ 6,137,484

(136) The plaintiff has already received the following assets of the marital estate:

Plaintiff’s checking account $ 500
Joint savings account $ 2,000
Plaintiff’s IRA $ 2,500
Plaintiff’s U.S.A.A. account $ 23,000
Automobiles $ 16,275
Distributions — real estate escrow account $ 232.000
Total $ 276,275

(137)The defendant has already received the following assets of the marital estate:

Defendant’s checking account $ 1,000
Defendant’s IRA $ 40,000
Motorcycles $ 10,500
Marital assets contributed to Maison Blanche Limited $ 5,648,462
Accounts retained by defendant $ 39,066
Distributions — real estate escrow account $ 45.000
Total $ 5,784,028

(138) The sum of $140,587 remained in an escrow account maintained at PNC Bank funded from the proceeds of the income distributions from the Robert L. Montgomery trusts, as of March 24, 2004.

(139) Plaintiff has already received the sum of $ 108,772 from the escrow account funded by the income from the Robert L. Montgomery trusts.

(140) Defendant, by his testimony and arguments herein, has demonstrated to the court that he will not comply with the order to be entered in connection herewith.

(141) On or about August 23, 1994, judgment was entered by the court in favor of the plaintiff, and against the defendant, in the amount of $290,000, in order to protect the claims of the plaintiff for equitable distribution. Tt remains unsatisfied.

(142) Defendant has appeared herein pro se and has presented his case capably.

II. CONCLUSIONS OF LAW

(1) The court has subject matter jurisdiction over this action and personal jurisdiction over the parties.

(2) During the marriage, each party assumed the role, and made the financial and personal contributions, expected by the other during the course of the marriage, and neither is entitled to any adjustment therefor in the division of the marital estate.

(3) The major pieces of marital personalty brought by the defendant to the marriage retained their character as separate property. They have been retained by him. The remaining marital personalty has been retained and divided by the parties in a way which the court deems to be equitable, and which requires no further adjustment.

(4) The defendant made a gift to the marriage of the proceeds from the sale of his prior residence. Accordingly, the escrow account established from the proceeds of the sale of the home is deemed to be marital in its entirety.

(5) A fair rental value of the marital home in the amount of $2,500 per month, for a period of 22 months, is marital property to be divided between the parties.

(6) Plaintiff should be awarded one-half of the fair rental value of the marital home, and be charged with one-half of defendant’s payment of the mortgage and property taxes for that period of time.

(7) The cabin in Michigan owned by the defendant prior to the marriage is his separate property.

(8) Defendant’s conveyance of his interest in the cabin in Michigan was made in fraud of the plaintiff and in order to defeat her rights in equitable distribution.

(9) The order of this court dated December 30, 2003, respecting possession and control by the defendant of certain of the marital assets, is properly to be recognized herein.

(10) The holding of Verholek is inapposite to this matter, and the calculation of the marital portion of the investment account and his pre-marital IRA proposed by defendant in exhibit H-l 6, while not perfect, is found to be equitable under the circumstances.

(11) Defendant’s transmission of the sum of $2,502,000 to Maison Blanche Limited, without the knowledge or agreement of the plaintiff, was made in an attempt to defraud the plaintiff herein and constituted a dissipation of marital property.

(12) Defendant’s transmission of the sum of $2,502,000 to Maison Blanche Limited, and his failure to return or account for the funds, was dilatory, obdurate, and vexatious within the meaning of 42 Pa.C.S. §2503(7), and entitles the plaintiff to an award of counsel fees as a sanction.

(13) Defendant’s transmission of the sum of $2,502,000 to Maison Blanche Limited, and his failure to return or account for the funds, was arbitrary, vexatious, and in bad faith within the meaning of 42 Pa.C.S. §2503(9), and entitles the plaintiff to an award of counsel fees as a sanction.

(14) In addition, by his transmission and refusal to return those funds, defendant prolonged the litigation and caused plaintiff substantial and unnecessary counsel fees incurred in seeking to discover marital assets and effect compliance with the orders of this court.

(15) An award of counsel fees and costs is required herein in order to promote fair administration of justice and serve the purposes of the Divorce Code.

(16) An award of counsel fees and costs is also required herein in order that plaintiff not be placed at a financial disadvantage and be placed on par with defendant.

(17) Inasmuch as defendant’s imprisonment was due to his own voluntary failure to comply with various orders of this court, his earnings and/or earning capacity should not be deemed to have been diminished thereafter for purposes of determination of his equitable share of the marital estate or calculation of alimony pendente lite payable to the plaintiff.

(18) The court considers that the counsel fees and costs incurred by the plaintiff in contesting defendant’s various attempts to terminate his incarceration herein, although incurred in part in connection with proceedings in the appellate courts of the Commonwealth, the federal courts of the Third Circuit, and the United States Supreme Court, have been incurred within the context of these divorce proceedings and are compensable under the provisions of the Divorce Code, in addition to being compensable as a sanction.

(19) Plaintiff is entitled to alimony pendente lite in the amount of $1,867 per month from the date of filing of her petition, January 27,1993, until January of 1999, and to alimony pendente lite in the amount of $ 1,147 per month from January of 1999 until June 1,2001, the normal date of defendant’s retirement at age 65, less the sum of $40,000 which has already been paid to her. Defendant is therefore liable to plaintiff for unpaid alimony pendente lite in the amount of $165,820, less $40,000, or a remaining balance of $125,820.

(20) In considering the criteria set forth in section 3502(a) of the Divorce Code, the court considered the following factors to be significant:

“(a) This was a substantial marriage lasting some 15 1/2 years. Accordingly, the plaintiff is entitled to a substantial portion of the marital estate.
“(b) At the time of separation, each party enjoyed good health and was fully employable. Defendant’s earning capacity was far greater than that of plaintiff. He has now attained and passed the normal age of retirement, however.
“The court considered the matter of the defendant’s current health. Even if it were clear that the defendant will not hereafter enjoy good health, he is now beyond the age of retirement and will not likely suffer any loss of future ability for capital acquisitions as a result.
“(c) The court finds that the contributions to the training and earning power of the plaintiff by the defendant were modest and consistent with plaintiff’s agreed role in the marriage, and not such as to require any significant adjustment in the award of the marital estate.
“(d) Following separation, defendant’s opportunity for future acquisitions of capital was much greater than that of the plaintiff.
“(e) Plaintiff earns a middle class living. Defendant has reached the age of retirement, but has assets under his control which will enable him to live comfortably. Additionally, he is the income beneficiary of two trusts which generated income of approximately $24,000 in calendar year 2003.
“(f) The defendant was the source of many of the marital assets, having gifted some to the marriage and, while having retained some assets as his separate property, has been the source of appreciated assets which are marital under the Divorce Code. Defendant, by his own account, has taken control over the sum of $2,502,000, before appreciation. These sums continue to be under his control.
“(g) The parties enjoyed a very comfortable standard of living during the marriage.”

(21) The judgment heretofore entered by this court in favor of the plaintiff and against the defendant in the amount of $290,000 was entered in order to secure the rights of the plaintiff, and not as an award of her share of the marital estate to her.

ORDER

And now, October 27, 2004, it is hereby ordered as follows:

(1) Each party is awarded 50 percent of the marital estate. Accordingly, each party is awarded the sum of $3,068,742, together with 50 percent of all interest earned on the real estate escrow account up to and including the date of its liquidation.

(2) The marital estate is awarded as follows:
To plaintiff: $ 3,068,742
Plaintiff’s checking account ($ 500)
Joint savings account ($ 2,000)
Plaintiff’s IRA ($ 23,000)
Plaintiff’s U.S.A.A. account ($ 2,500)
Automobiles ($ 16,275)
Funds previously received by plaintiff ($ 232,000)
Real estate escrow account ($ 77.1811
Balance $ 2,715,286
Less: Funds received from trust escrow account ($ 108.7721
Balance to be paid to plaintiff $ 2,606,514
To defendant:
Defendant’s checking account $ 1,000
Defendant’s IRA $ 40,000
Motorcycles $ 10,500
Assets retained $ 39,066
Marital assets transferred to Maison Blanche Limited $ 5,648,462
Distributions — real estate escrow account $ 45.000
Total $ 5,784,028
Defendant’s award ($ 3.068.7421
Balance to be paid to plaintiff $ 2,715,286
Less: Funds paid from trust escrow account ($ 108.7721
Balance to be paid to plaintiff $ 2,606,514

(3) The balance to be paid by the defendant to the plaintiff hereunder shall be paid within 30 days of the date hereof.

(4) Defendant is awarded the interest in the investment in Maison Blanche Limited. Any excess in the value of the interest in Maison Blanche Limited over and above the sum of $8,189,909 shall be divided into marital and non-marital components by the methodology employed herein, and the marital component(s) shall be divided equally.

(5) Any increase in the value of the escrow accounts since the date of their valuation herein shall, similarly, be divided equally between the parties but paid to the plaintiff with appropriate credit to the defendant.

(6) Each party is awarded the marital personalty retained by him or her.

(7) Defendant shall also pay plaintiff the sum of $14,520, representing one-half of the fair rental value of the marital home during her dispossession therefrom, less one-half of the mortgage and property tax payments made by defendant during that time, within 30 days of the date hereof.

(8) Defendant shall pay plaintiff the sum of $125,820 in consideration of past due alimony pendente lite within 30 days of the date hereof.

(9) No award of permanent alimony is made.

(10) The defendant shall pay counsel fees to the plaintiff in the amount of $1,463,790 within 30 days of the date hereof. This amount is calculated as follows:

$ 1,879,738 total counsel fees and costs
($ 20,000) incurred in non-divorce matters
($ 30.0001 plaintiff’s normal responsibility
$ 1,829,738 fees and costs allocable to the divorce action
_x .80 adjustment for incidental matters and any duplication
$ 1,463,790 counsel fees to be paid by defendant

(11)The remaining balance of the escrow account funded by the interest of the Robert L. Montgomery trusts, including any interest thereon, shall be paid to plaintiff in consideration of the award made to her hereunder.

(12) Any and all sums paid by or on behalf of defendant to plaintiff hereunder shall be first applied to the award of marital property and counsel fees and costs hereunder, and last to payment of past due alimony pendente lite.

(13) The plaintiff is awarded a lien and charge against the funds transmitted by defendant to Maison Blanche Limited, and all appreciation and income attributable thereto, in whatever form those funds may have taken in the interim, pursuant to the provisions of 23 Pa.C.S. §3502(b), in order to effect compliance with this order.

(14) The plaintiff is awarded judgment against the defendant in the amount of $4,210,644. This sum represents the equitable distribution award made herein, together with the awards for fair rental value, past due alimony pendente lite, and counsel fees and costs, less the balance of the escrow account funded with the income from the Robert L. Montgomery trusts. The prior judgment of this court in the amount of $290,000 is to be considered merged herein and of no force and effect.

(15) The Robert L. Montgomery trusts shall continue to make all income payments due to the defendant to the plaintiff, and, additionally, when permitted under the trust instruments, the Robert L. Montgomery trusts shall make any payments of principal due to the defendant to the plaintiff, for so long as any of the obligations imposed upon the defendant under the terms of this order shall remain unsatisfied.

(16) Defendant shall post security in the amount of $4,210,644 in order to insure compliance with the terms of this order.

(17) Defendant shall pay plaintiff interest at the legal rate on all sums required to be paid under the terms of this order, until such sums have been paid in full.

(18) The sum of $25,000 shall be held in escrow by counsel for the plaintiff, as agent for the parties, and applied against the fees and costs of the search of the Honorable A. Leo Serení for the status and location of the funds initially transferred to Maison Blanche Limited. Any sums not so expended shall be considered to be a part of the marital estate, but shall be paid to the plaintiff in satisfaction of tire award made to her herein.

(19) The parties shali execute any and all documents reasonably required in giving effect to the provisions of this order.

EXHIBIT A

Barbara Chadwick

Escrow funds from sale of280 Roberts Road United Valley Bank — AJCno. ***-*****

08/08/96 Original deposit (proceeds from $329,494.83 the sale of 280 Roberts Road)

08/30/96 Interest $981.93

09/30/96 Interest $1,338.19

Bank balance 09/30/96 $331,814.95

03/28/97 Disbursement to S. Wydrzynski $800

07/07/97 Disbursement to SHS&L $150,000

($5,000 sent to'Marrache & Co. and $9,295.68 sent to Miller Johnson Snell & Cummiskey)

10/01/96- Interest $14,765.18

10/19/97

Bank balance 10/19/97 $195,780.13

First Union Bank — A/C no. *************

10/20/97 Opening balance (transferred from United Valley Bank) $195,780.13

Interest earned 10/31/97 to 10/27/99 $11,032.33

$206,812.46

Disbursements

09/24/98 Hickey, Hickey et al. $10,000

John O’Brien, M.D. J.D. $5,000

10/28/98 Dr. Timothy Michals $3,000

01/28/99 Hickey & Bellanzani $15,000

Schnader Harrison $15,000

09/08/99 Hickey & Bellanzani $15,000

Schnader Harrison $ 15,000

$78,000

Bank balance 10/27/99 $128,812.46

11/30/99 Interest $326.77

12/31/99 Interest $317.35

01/31/00 Interest $317.31

02/29/00 Interest $297.49

03/31/00 Interest $318.76

04/28/00 Interest $288.59

05/31 /00 Interest $340.94

Bank balance 05/31/00 $131,019.67

06/29/00 Check $15,000

06/30/00 Interest $469.75

07/13/00 Check $15,000

07/31/00 Interest $400.61

08/31/00 Interest $380.40

09/29/00 Interest $357.15

10/31/00 Interest $395.54

11/30/00 Interest $372.21

12/29/00 Interest $361.08

01/31/01 Interest $404.54

02/22/01 Debit transaction $ 154.43

02/28/01 Interest $332.79

Bank balance 02/28/01 $104,339.31

03/15/01 Interest $322.93

03/08/01 Check no. 1001 $450

03/15/01 Check no. 1002 $7,000 $7,450

Bank balance 03/30/01 $97,212.24

04/30/01 Interest $291.90

Bank balance 04/30/01 $97,504.14

05/03/01 Interest $276.97

Bank balance 05/31/01 $97,781.11

06/29/01 Interest $259.81

Bank balance 06/29/01 $98,040.92

07/31/01 Interest $287.49

Bank balance 07/31/01 $98,328.41

08/31/01 Interest $272.26

Bank balance 08/31/01 $98,600.67

09/28/01 Interest $219.26

Bank balance 09/28/01 $98,819.93

10/31/01 Interest $204.04

Bank balance 10/31/01 $99,023.97

11/30/01 Interest $162.91

Bank balance 11/30/01 $99,185.88

12/31/01 Interest $162.71

1.2/31/01 Federal withholding tax $49.63

' Bank balance 12/31/01 $99,299.96

01/31/02 Interest $143.93

01/31/02 Federal withholding tax $43.18

Bank balance 01/31/02 $99,400.71

02/28/02 Interest $128.95

02/28/02 Federal withholding tax $38.69

Bank balance 02/28/02 $99,490.97

03/29/02 Interest $133.68

03/29/02 Federal withholding tax $40.10

Bank balance 03/31/02 $99,584.55

04/19/02 Interest $65.48

Bank balance 04/19/02 $99,649.13

First Union High Performance Money Market— A/C no **************

04/19/02 Opening balance (transferred from A/C * * * * * * * * * * * * *) $99,649.13

04/24/02 Interest $32.44

Bank balance 04/24/02 $99,681.57

05/24/02 Interest $162.35

Bank balance 05/24/02 $99,843.92

06/26/02 Interest $178.89

$100,022.81 Bank balance 06/25/02

07/25/02 Interest $159.66

Bank balance 07/25/02 $100,182.47

08/26/02 Interest $163.88

Bank balance 08/26/02 $100,346.35

09/26/02 Interest $147.54

Bank balance 09/26/02 $100,493.89

10/28/02 Interest $152.53

Bank balance 10/28/02 $100,646.42

11/26/02 Interest $129.98

Bank balance 11/26/02 $100,776.40

12/26/02 Interest $115.20

Bank balance 12/26/02 $100,891.60

01/28/03 Interest $125.76

Bank balance 01/28/03 $101,017.36

02/26/03 Interest $107.60

Bank balance 2/26/03 $101,124.96

03/26/03 Interest $104.00

Bank balance 03/26/03 $101,228.96

04/24/03 Interest $107.83

Bank balance 04/24/03 $101,336.79

05/27/03 Interest $122.84

Bank balance 05/27/03 $101,459.63

06/25/03 Interest $106.68

Bank balance 06/25/03 $101,566.31

0712510?) Interest $72.26

Bank balance 07/25/03 $101,638.57

08/25/03 Interest $71.31

Bank balance 08/25/03 $101,709.88

09/25/03 Interest $66.90

Bank balance 09/25/03 $101,776.78

10/27/03 Interest $71.40

Bank balance 10/27/03 $101,848.18

11/25/03 Interest $64.75

Bank balance 11/25/03 $101,912.93

12/24/03 Interest $64.79

Bank balance 12/24/03 $101,977.72

01/28/04 Interest $78.09

Bank balance 01/28/04 $102,055.81

02/25/04 Interest $64.75

Bank balance 02/25/04 $102,118.29

03/24/04 Interest $62.41

Bank balance 03/24/04 $102,180.80

EXHIBIT B

Barbara Chadwick

PNC Bank Checks

Received from the Robert L. Montgomery Trust 6 & 7

no. 6 no. 7

12/15/94 4,639.60

01/12/95 4,830.27 7,500.16

04/06/95 4,617.77

07/11/95 4,956.50 8,268.29

10/05/95 4,622.23

01/11/96 4.547.32 7,990.71

04/04/96 4,424.30

07/12/96 3,416.93 7,186.55

10/03/96 4,575.76

01/03/97 4,898.07 8,486.58

04/04/97 4,380.01

07/08/97 3,510.45 7,066.95

10/14/87 4,654.62

01/07/98 5,162.83 8,799.51

04/02/98 5.626.32

07/06/98 3,293.68 7.457.68

10/08/98 3.699.14

01/13/99 4,827.61 8,835.99

04/06/99 3,633.05

10/06/99 3.568.00

03/15/00 3.925.71 7.241.98

04/10/00 4,407.29

07/13/00 3.951.00 7.664.68

10/12/00 4,230.22

01/05/01 4,390.47 7,182.39

04/07/01 5.057.72

07/10/01 4,202.42 7.511.99

10/10/01 4,040.39

01/15/02 3,607.75 6,246.06

04/05/02 4,025.44

07/11/02 3,540.68 6,094.72

10/10/02 3,535.53

01/09/03 4,413.96 6,133.68

04/09/03 3,319.68

07/10/03 7,479.15

10/10/03 2,653.55

01/13/04 3,911.42 5,598.32 $293,228.99

04/14/04 2,412.11

Totals $164,404.16 $131,236.94 $295,641.10


source: Caselaw Access Project

author: KISTLER, J.,

license: Public Domain

text:
    Frank v. Mailboxes Etc.

      C.P. of Centre County,
    no. 2003-1373.

      Samuel Frank Jr., pro se.

      Chena L. Glenn-Hart, for defendant.
    November 5, 2004
   KISTLER, J.,

-The subject of this opinion and order is defendant’s brief in opposition to plaintiff’s motion for summary judgment. Defendant is being sued for allegedly breaching a contract. In particular, plaintiff contends that defendant disposed of certain documents that were contracted to be copied. As a result of not having the documents, plaintiff alleges that he missed a filing date for an appeal and was ultimately denied access to the court system.

It is plaintiff’s position that there are no genuine issues of material fact because defendant breached their contract by disposing of his documents. Plaintiff contends that he entered into a contract with defendant whereby defendant would copy certain documents for a fee. Plaintiff alleges the contract price for the copying services was $144.05, which he paid in full. Plaintiff is currently incarcerated at SCI Rockview, and was going to use the documents in support of an appeal. Plaintiff alleges that, due to defendant’s actions, he missed his appeal deadline and that defendant therefore “denied him access to the courts.” As such, plaintiff is seeking damages in an unspecified amount.

Defendant, on the other hand, contends that there is a genuine issue of material fact. Defendant suggests that the price for copying is a material term in the contract. Since there is a disagreement regarding this term, there is a question regarding whether or not the parties formed a valid contract.

The disputed issue in this case is whether a discrepancy between the parties regarding the cost of services would require a court to deny a motion for summary judgment.

Defendant supports its position by contending that it is undetermined whether or not a contract existed between the parties. Defendant notes a discrepancy regarding the price for the copying to suggest that there may not have been a contract for defendant to breach. As such, there are genuine issues of material fact to be determined.

First, defendant presents a letter from Stacy Foster, defendant’s employee. This letter states that the contract price for the copying was $245.35, to be paid in full. Second, defendant offered evidence showing what plaintiff contended the price to be. This evidence was in the form of an SCI Rockview cash transaction receipt from plaintiff. The amount of this receipt was in the amount of $144.05, and was “paid in full.” Moreover, defendant alleges that plaintiff has failed to show that there are no genuine issues of material fact suggesting that there was a contract that could have been breached. As such, defendant contends that, because the price is material and essential to this dispute, there exists a genuine issue of material fact that goes to the heart of plaintiff’s breach of contract action.

Summary judgment is proper when there are no genuine issues of material fact as to a necessary element of the cause of action or there are defenses that could be established by additional discovery or expert reports. Pa.R.C.P. 1035.2(1). It is the burden of the moving party to show that there are no genuine issues of material fact. Anderson v. Moore, 437 Pa. Super. 642, 645, 650 A.2d 1090, 1092 (1994). The court must examine all of the evidence in the light most favorable to the non-moving party, and any doubt must be resolved against the moving party. Id. at 645, 650 A.2d at 1092-93. Summary judgment may only be granted where reasonable minds could not differ, Askew by Askew v. Zeller, 361 Pa. Super. 35, 42, 521 A.2d 459, 463 (1987), and unless the case is free from doubt. Anderson, 437 Pa. Super, at 645, 650 A.2d at 1092-93.

In addition, for a valid contract to exist, it must have all of the elements of a contract. An enforceable contract exists when there is an offer, acceptance, and consideration or mutual meeting of the minds. Jenkins v. County of Schuylkill, 441 Pa. Super. 642, 648, 658 A.2d 380, 383 (1985). A meeting of the minds occurs when both parties mutually agree to the same terms. This agreement is evidenced by the offer and acceptance. Mountain Properties Inc. v. Tyler Hill Realty Corp., 161 A.2d 1096, 1101 (Pa. Super. 2001). All terms in the contract must be mutually agreed upon. Onyx Oils & Resins Inc. v. Moss, 367 Pa. 416, 420, 80 A.2d 815, 817 (1951).

In the current case, this court is convinced that there was no meeting of the minds regarding the contract price. The discrepancy in the contract price creates doubt as to the actual price of the copying service, as well as the existence of a valid contract. On the one hand, defendant has presented Stacy Foster’s letter suggesting that the contract price is $245.35. On the other hand, plaintiff has introduced his SCI Rockview cash transaction receipt suggesting that the contract price is $144.05. Viewing these documents in the light most favorable to defendant, it is clear that the price for the copies is disputed. Set Anderson, 437 Pa. Super, at 645, 650 A.2d at 1092-93, supra. It is not possible to determine whether or not a breach of contract has occurred until it is determined what the terms of the contract are. This court believes that more investigation and discovery would be necessary before it can rule on the breach of contract issue. As such, plaintiff’s motion for summary judgment would not be appropriate on this issue.

Next, this court will briefly address the issue of plaintiff’s alleged denial to the court system. It would appear that plaintiff is attempting to bring a negligence claim; however, this court finds that plaintiff has failed to show that there are no genuine issues of material fact present. It is unsure whether or not defendant could be held solely responsible for plaintiff’s failure to timely file an appeal. Thus, summary judgment would not be appropriate on this issue because the issue is not free from doubt.

SUMMARY

Pursuant to Pennsylvania Rule of Civil Procedure 1035.2(1), if after all the evidence is presented and viewed in the light most favorable to the non-moving party, and there are no genuine issues of material fact, summary judgment may be granted. However, if there is a dispute regarding the cost for services in a contract, summary judgment is not appropriate because the cost is a material and essential term in a contract. If the contract price is disputed, it is questionable whether there was a mutual meeting of the minds between the parties. Likewise, if a plaintiff fails to show a clear causal relationship between missing a filing deadline and the breach of a contract, a motion for summary judgment cannot be granted. For these reasons, plaintiff’s motion for summary judgment on both issues is hereby denied.

ORDER

And now, November 5,2004, it is hereby ordered that plaintiff’s motion for summary judgment is hereby denied for failure to show that there are no genuine issues of material fact at hand.


author: COHEN, G.D., J.,

text:
    Pollack v. Skinsmart Dermatology and Aesthetic Center P.C.

      David E. Landau and Michael D. Shaffer, for plaintiff.

      Alfred J. Monte Jr. and V Erik Peterson, for defendant.
    October 5,2004
   COHEN, G.D., J.,

— Presently before the court are the plaintiff’s motion for partial summary judgment and the defendants’ motion for summary judgment. Plaintiff is Andrew Pollack M.D. d/b/a Philadelphia Institute of Dermatology (PID). Defendants are Skinsmart Dermatology and Aesthetic Center PC., Toby Shawe M.D., Sarny Badawy M.D. and Natalie Wilson.

BACKGROUND

The conflict between the parties stems from the defendants use of a list of patients to start a medical practice.

Dr. Pollack is the sole proprietor of PID, which offers dermatological services to patients throughout the Philadelphia area. Dr. Shawe’s association with the practice began in 1994 and lasted until August 21, 2002. Dr. Badawy’s tenure with PID ran from 1998 until August 21, 2002. Ms. Wilson was an employee of PID, serving as Dr. Pollack’s medical assistant from 1987 until August 16, 2002.

As owner of PID, Dr. Pollack was responsible for its operation and management, including rent, salaries, equipment, medical supplies, other overhead, and staffing. Neither of the doctors had any management responsibilities, nor did they have any ownership interest in PID. Rather, both doctors worked at PID as independent contractors and received a certain percentage of the income collected by PID for each patient they treated.

At the practice, each patient was billed under PID’s name and PID controlled the flow of funds generated by the patients. All patient files and information were maintained at PID. A database composed of every patient seen at the practice was kept on PID’s computer system, which only certain PID employees could access in its entirety. In addition, each physician who practiced at PID had an appointment book that was maintained by PID employees.

In late 2001, Dr. Pollack discussed the sale of the majority of PID’s practice locations with Drs. Shawe and Badawy. Negotiations continued through the following summer. Both sides hired attorneys and Dr. Pollack had his practice appraised. A tentative agreement was reached in June 2002.

On August 5, 2002, Dr. Shawe presented Dr. Pollack with resignation letters for both herself and Dr. Badawy. Prior to this date, the doctors had PID staff members make copies of the appointment books assigned to each of them and printouts of certain portions of the database (such information, the patient list). The doctors sought the information germane to any patients either had seen at PID.

Following their departure from PID, the doctors established Skinsmart as their new practice. Although Skinsmart opened its doors on September 3,2002, a lease had been executed before the doctors final day at PID. On August 8, 2002, while all were still affiliated with PID, the doctors offered Ms. Wilson a job with Skinsmart.

The patient list was used by Ms. Wilson to call patients, previously scheduled for procedures at PID, to reschedule them to Skinsmart. Drs. Shawe and Badawy also called patients and sent out a mailing to both patients and referring physicians informing them about Skinsmart. A substantial number of the patients at Skinsmart came from the patient list and resulted in profits to Skinsmart of approximately $700,000.

DISCUSSION

Pursuant to Pa.R.C.P. 1035.2, a party may move for summary judgment when (1) there is no genuine issue of material fact as to a necessary element of the cause of action or defense or (2) 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. The court must review the entire record in the light most favorable to the nonmoving party and resolve all genuine issues of material fact against the moving party. Basile v. H&R Block Inc., 563 Pa. 359, 365, 761 A.2d 1115, 1118 (2000).

Both parties have moved for summary judgment. Plaintiff moves for partial summary judgment on Counts I, III, and IV of his amended complaint and for summary judgment on Counts III and IV of defendants’ amended counterclaim. Defendants move for summary judgment on all counts of plaintiff’s amended complaint.

Plaintiff’s Amended Complaint

Count I of plaintiff’s amended complaint asserts a claim for misappropriation of trade secrets. To establish this claim, the plaintiff must show: (1) the existence of a trade secret; (2) that it was of value to him and important in the conduct of his business; (3) that by reason of discovery or ownership he had the right to the use and enjoyment of the secret; and (4) that the secret was communicated to the defendants while they were in a position of trust and confidence under such circumstances as to make it inequitable and unjust for them to disclose it to others, or to make use of it themselves, to the prejudice of plaintiff. See e.g., Gruenwald v. Advanced Computer Applications Inc., 730 A.2d 1004, 1012-13 (Pa. Super. 1999).

The plaintiff must define the contested trade secret. There is no precise test for determining whether certain information is a trade secret. Competing policies lay beneath this area of the law: “The right of a business person to be protected against unfair competition stemming from the usurpation of his or her trade secrets must be balanced against the right of an individual to the unhampered pursuit of the occupations and livelihoods for which he or she is best suited.” Fidelity Fund Inc. v. DiSanto, 347 Pa. Super. 112, 120, 500 A.2d 431, 436 (1985). For this reason, to qualify for protection, the information “must be the particular secrets of the complaining employer, not general secrets of the trade in which he is engaged.” Renee Beauty Salon Inc. v. Blose-Venable, 438 Pa. Super. 601, 607-608, 652 A.2d 1345, 1349 (1995). Additionally, an employee possesses his aptitudes, skills, and subjective knowledge, even if gained in the course ofhis employment. Christopher M’s Hand Poured Fudge Inc. v. Hennon, 699 A.2d 1272, 1275 (Pa. Super. 1997).

Pennsylvania courts use the definition of trade secret contained in the Restatement (First) of Torts §757, comment b. Felmlee v. Lockett, 466 Pa. 1, 9, 351 A.2d 273, 277 (1976). Both the Restatement and precedent indicate that certain customer lists are considered trade secrets. A.M. Skier Agency Inc. v. Gold, 747 A.2d 936, 940 (Pa. Super. 2000); Felmlee. Several factors provide guidance for determining whether certain information is a trade secret: “(1) the extent to which the information is known outside of the owner’s business; (2) the extent to which it is known by employees and others involved in the owner’s business; (3) the extent of measures taken by the owner to guard the secrecy of the information; (4) the value of the information to the owner and to his competitors; (5) the amount of effort or money expended by the owner in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.” Tyson Metal Products Inc. v. McCann, 376 Pa. Super. 461, 465, 546 A.2d 119, 121 (1988).

Against this backdrop, it is clear the patient list is a trade secret, worthy of protection. As conceded by defendants, the confidentiality of patient information ensures that it remain unknown to those outside the practice and makes the patient list valuable. (Def. memo. 14 n.8.) Although this concession is enough to establish the patient list as a made secret, the other Tyson Metal factors also support this outcome. Through the substantial efforts of plaintiff, the patient list was compiled over numerous years, (plf. aff., ¶4), and contained 20,000 names with related information. (4/5/04 Pollack dep. tr. 58.) PID spent money for computers, software, and employees to keep and maintain the patient list. (Plf. aff., ¶4; 3/30/04 Wilson dep. tr. 13.) Within the offices of PID, the information was not universally known or accessible. Not every staff member, including the practicing physicians, could pull the records. (4/5/04 Pollack dep. tr. 35.) Defendant Wilson did not have access to them, (3/30/04 Wilson dep. tr. 13), and the doctors relied on other PID employees to access the patient list. (1/16/04 Wiley dep. tr. 81, 83; 1/26/04 Shawe dep. 39; 9/29/02 Badawy dep. tr. 40; 3/30/04 Wilson dep. tr. 16.) These same factors demonstrate that plaintiff sought to protect the secrecy of the information.

The plaintiff must demonstrate that the trade secret has value and importance to him and his business. As noted above, defendants acknowledge the value of the patient list to PID’s practice. In addition, plaintiff relied upon the patient list as the core component of his practice. (4/5/04 Pollack dep. tr. 18.)

To have the rights to the use of the trade secret, the plaintiff needs to show he either discovered or owned the trade secret. Plaintiff compiled the patient list over numerous years. The patient list was maintained on PID’s computers by PID’s employees. Plaintiff’s tax returns show that PID was owned solely by plaintiff. (Plf. exhibit F.) These facts establish plaintiff’s ownership of the patient list.

The final element of a misappropriation claim focuses on the relationship between the parties. Under Pennsylvania law, the duty not to disclose trade secrets arises from either a restrictive covenant or a confidential employment relationship. Christopher M’s Hand Poured Fudge Inc. v. Hennon, 699 A.2d 1272, 1276 (Pa. Super. 1997). There are no contracts guiding the parties in this case. It is clear, however, that the doctors had a confidential relationship while working at PID. They treated patients on behalf of PID and accessed the patients’ confidential medical records in order to provide treatment. For Wilson, her position as a PID employee establishes the necessary relationship between herself and plaintiff.

As for the misuse of this information, defendant Wilson copied the patient list for Dr. Badawy. (3/30/04 Wilson dep. tr. 16.) At the direction of the doctors, she used the patient list to call patients to reschedule them from PID to Skinsmart. (3/30/04 Wilson dep. tr. 27, 28.) The doctors used the patient list to open their practice, (def. memo. 4-6), and to contact patients. (1/26/04 Shawe dep. tr. 65; 9/29/02 Badawy dep. tr. 89.)

As outlined above, plaintiff has established each element of a claim for misappropriation of trade secrets against the individual defendants. Nonetheless, defendants challenge this outcome on two fronts. First, defendants assert that the patient list was not a trade secret because certain names on the patient list may not have exclusively belonged to PID. Defendants’ argument minimizes the additional efforts of PID in organizing and compiling the contact and other information for each patient. At bottom, this argument does not counter the finding that the patient list is a trade secret, but impacts the issue of damages. Second, defendants propose a standard of conduct for misappropriation of trade secrets higher than the law requires without any justification. Therefore, the court shall grant partial summary judgment to plaintiff on Count I against the individual defendants, limited to the issue of liability for the claim of misappropriation of trade secrets.

Count II of plaintiff’s amended complaint brings a claim for tortious interference with contractual relations. To prove this claim, the plaintiff must demonstrate that “(1) there is an existing contractual relationship between the plaintiff and a third party; (2) the defendant interfered with the performance of that contract by inducing a breach or otherwise causing the third party not to perform; (3) the defendant was not privileged to act in this manner; and (4) the plaintiff suffered pecuniary loss as a result of the breach of contract.” Al Hamilton Contracting Co. v. Cowder, 434 Pa. Super. 491, 497, 644 A.2d 188, 191 (1994). The keystone of this claim is a current contractual relationship between the plaintiff and another. Id. Plaintiff has presented no evidence that any such contract exists. Instead, plaintiff merely cites the dissent in Moses v. McWilliams, 379 Pa. Super. 150, 177, 549 A.2d 950, 964 (1988), without noting the different focus of that court, in an attempt to create an issue of material fact. Therefore, the court shall grant summary judgment to the defendants on Count II and dismiss the claim.

Count III of plaintiff’s amended complaint makes a claim for unjust enrichment. To establish unjust enrichment, a plaintiff need demonstrate three elements: (1) benefits conferred on defendant by plaintiff; (2) appreciation of such benefits by defendant; and (3) acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value. Mitchell v. Moore, 729 A.2d 1200, 1203 (Pa. Super. 1999). In determining whether the doctrine applies, the focus is not on the intention of the parties, but on the result. Ameripro Search Inc. v. Fleming Steel Co., 787 A.2d 988, 991 (Pa. Super. 2001). This makes it critical that the enrichment of the defendant be unjust. Styer v. Hugo, 422 Pa. Super. 262, 268, 619 A.2d 347, 350 (1993).

Each component of unjust enrichment has been established against the doctors and Skinsmart. It is clear the patient list is a benefit. It was the core of plaintiff’s practice and plaintiff and the doctors engaged in negotiations for the sale of the patient list and other assets of PID. (Def. memo. 4; plf. exhibit F.) The defendants made use of the patient list in setting up Skinsmart. Finally, the patient list was a trade secret and defendants took it from plaintiff without compensation. There is no evidence that defendant Wilson received any benefit from the patient list.

Defendants contend that there can be no unjust enrichment in this case because there was no misappropriation of trade secrets and ethical duties required the taking of the patient list. As explained previously, the patient list was a trade secret and the defendants wrongfully acquired it. As raised, the ethical argument does not create an issue of material fact because it does not impact any of the elements of this claim. Therefore, the court shall grant summary judgment to the plaintiff on Count III against the doctors and Skinsmart on the issue of liability alone.

Count IV of plaintiff’s amended complaint brings a claim for breach of the implied duty of loyalty. The duty of loyalty is a component of the agent-principal relationship. “[A]n agent owes a duty of loyalty to his principal, and in all matters affecting the subject of his agency, he must act with the utmost good faith in the furtherance and advancement of the interests of his principal.” Sylvester v. Beck, 406 Pa. 607, 610, 178 A.2d 755, 757 (1962).

In order to breach the duty of loyalty, the defendants must have been agents of PID. Three elements establish an agency relationship: (1) the manifestation by the principal that the agent shall act for him; (2) the agent’s acceptance of the undertaking; and (3) the understanding of the parties that the principal is to be in control of the parties. Basile v. H & R Block Inc., 563 Pa. 359, 367, 761 A.2d 1115, 1120 (2000). For defendant Wilson, her agency status is created by her position as a PID employee. The doctors challenge their characterization as agents and assert that they were merely independent contractors. Although there was no contractual relationship between the doctors and PID, the record shows that they treated patients at PID, (def. memo. 22), PID managed the billing for all patients they saw there, (1/16/04 Wiley dep. tr. 16-18), PID paid all overhead, (9/29/02 Shawe dep. tr. 15; 7/29/02 Badawy dep. tr. 31), and they were paid by PID. (9/24/02 Pollack dep. tr. 20-22, 25-26; 9/ 29/02 Shawe dep. tr. 43; 9/29/02 Badawy dep. tr. 34-35.) These facts establish an agency relationship for the doctors. There is no indication that Skinsmart could in any manner be an agent of plaintiff.

In the context of this agency relationship, the individual defendants’ unauthorized use of the patient list to establish Skinsmart is a clear breach of their duty of loyalty to PID. In addition, the doctors breached this duty by conceding they took patients from PID they did not bring to the practice. (Def. memo. 8, 26.) For defendant Wilson, giving a copy of the patient list to Dr. Badawy while employed by PID violates this duty, as do her phone calls attempting to reschedule PID patients.

Defendants rely upon the Restatement of Agency to show that an agent has no duty to its former principal following the termination of the agency relationship. Restatement (Second) of Agency §396. This section of the Restatement, however, emphasizes that the duty of the agent not to compete with the principal using the latter’s trade secrets outlasts the agency relationship. Id. at comment b (“Such assets a former agent cannot properly use for his own purposes.”). Since the patient list constitutes a trade secret this latter application of the principle applies and the defendants cannot evade their duty to PID. Although the damages caused by the breach cannot be determined at present, the court shall grant partial summary judgment on the issue of liability against the individual defendants on Count TV.

Defendants ’Amended Counterclaim

Count ITT of defendants’ amended counterclaim asserts a claim for fraud. To establish a claim for fraud, a claimant must prove the following: “(1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the reliance.” Gibbs v. Ernst, 538 Pa. 193, 207, 647 A.2d 882, 889 (1994). (footnote omitted) The parties dispute whether it is necessary for the claimant to rely on the misrepresentation under this claim.

Defendants assert that the reliance element is established whenever the person misled acts in such a manner as to harm the claimant. Although the defendants rely upon Klemow v. Time Inc., 466 Pa. 189, 352 A.2d 12 (1976), to support this position, nowhere does this case make such a statement. Rather, the Klemow court noted that to prove fraud, a claimant must show that it “acted in reliance on the defendant’s misrepresentations.” Id. at 197 n.17, 352 A.2d at 16 n.17. Defendants also look to the case of Feingold v. Greenstone, 11 D.&C.3d 172, 177 (Phila. Cty. 1979), which noted that one element of the tort “is the requirement that the recipient of the fraudulent misrepresentation justifiably rely on the misrepresentation to the detriment of plaintiff.” The cited proposition, however, is not as broad as defendants believe. The Feingold court’s statement was a paraphrase of Borelli v. Barthel, 205 Pa. Super. 442, 445, 211 A.2d 11, 13 (1965), which clearly indicates that the claimant must rely on the misrepresentation.

Defendants have produced no evidence that they relied on plaintiff’s misrepresentation. Instead, they argue that two patients of the doctors were the recipients of plaintiff’s misrepresentations. (9/29/02 Shawe dep. tr. 62; 1/16/04 Wiley dep. tr. 56-57.) This evidence fails to establish defendants’ reliance on the misrepresentation. Therefore, summary judgment shall be granted to the plaintiff on Count III of the amended counterclaim.

Count IV of defendants’ amended counterclaim brings a claim for replevin. To establish this claim, a party needs to show that (1) he has title to property and (2) another party has unlawful possession of that property. Wilson v. Highway Service Marineland, 274 Pa. Super. 391, 395, 418 A.2d 462, 464 (1980). Here, the contested property includes two framed paintings, a Mayo stand, a stereo and alarge cryac gun. (Def. amended conntercl aim ¶ 102.) To prove the second element of this claim, defendants contend that plaintiff’s changing of the locks to PID’s offices is an unlawful act. Since this action occurred after the doctors had resigned and departed from PID, (9/ 29/02 Shawe dep. tr. 8-9), it is not unlawful. Therefore, summary judgment shall be granted to plaintiff on Count IV of defendants’ amended counterclaim.

ORDER

And now, October 5, 2004, upon consideration of plaintiff’s motion for partial summary judgment (control no. 042247), defendants’ motion for summary judgment (control no. 042178), and the replies and responses thereto, it is hereby ordered and decreed as follows:

(1) On Count I of plaintiff’s amended complaint, partial summary judgment is granted on the issue of liability only against defendants Shawe, Badawy, and Wilson;

(2) Count II of plaintiff’s amended complaint is dismissed;

(3) On Count III of plaintiff’s amended complaint, partial summary judgment is granted on the issue of liability only against defendants Shawe, Badawy, and Skinsmart;

(4) On Count IV of plaintiff’s amended complaint, partial summary judgment is granted on the issue of liability only against defendants Shawe, Badawy, and Wilson; and

(5) Counts III and IV of defendants’ amended counterclaim are dismissed.

      . Defendants Susan Clegg, Terri Dezzi, Susan Fitzpatrick, Diane McCurdy, Joan Ward and Kristin Kane were dismissed from this matter by stipulation on June 4, 2004.

      . This claim is inapplicable to Skinsmart.

      . Pennsylvania courts have adopted the Restatement (Second) of Agency. See generally, Sylvester v. Beck, 406 Pa. 607, 178 A.2d 755 (1962) (citing Restatement); Basile v. H & R Block Inc., 563 Pa. 359, 761 A.2d 1115 (2000) (same).


author: PEREZOUS, J.,

text:
    Smith v. Reinhart Ford

      C.P. of Lancaster County,
    no. CI-03-03183.

      Edward M. Nass and William C. Bensley, for plaintiff.

      Jeffrey C. Sotland, for defendants.
    September 29, 2004
   PEREZOUS, J.,

— This matter is before the court on preliminary objections filed by defendants, Reinhart Ford, Reinhart-Flynn Inc., Chadd M. Turnbull, Nicholas J. Reinhart, A1 Dempsey and Carl Reinhart (collectively referred to as Reinhart), against the complaint of the plaintiff, Alice Smith. Specifically, the defendants contend that: (1) plaintiff’s allegations contained in Counts I, III, and IV of the complaint fail to state a claim upon which relief can be granted because such claims are barred by the economic loss doctrine; (2) plaintiff’s claims for punitive damages should be stricken because such damages are not allowed under the alleged facts; and (3) plaintiff’s claims for attorney fees should be stricken. For the following reasons, this court sustains, in part, and overrules, in part, the first preliminary objection, and overrules the second and third preliminary objections.

This case arose from the plaintiff’s purchase of a 1999 Ford Explorer from the defendants. On or about February 28,2002, plaintiff entered into a purchase agreement with the defendants regarding the Explorer. The gravamen of plaintiff’s complaint is that the defendants defrauded her by making certain misrepresentations about the vehicle. Plaintiff claims that the defendants sold her an Explorer that they knew or should have known was damaged in a prior accident, and concealed this information from her. Furthermore, she avers that the damage from the prior accident brings into question the safety and reliability of die vehicle, reduces its value, and necessitates constant repair and maintenance. Other misrepresentations alleged in the complaint concern the odometer reading, and the amount of mileage on the sport utility vehicle.

The plaintiff filed the complaint involved in this matter on or about April 21,2003. The complaint sets forth claims for relief based on theories of tort and contract law. Summarily, Count Í of the complaint includes claims for fraud based upon the defendants’ alleged misrepresentations. In Count II, plaintiff seeks relief on a breach of contract theory because of the defendants’ alleged failure to deliver the Explorer for which she contracted. Count III claims that the defendants were negligent in failing to take several measures. For instance, plaintiff claims that defendants negligently failed to discover defects in the vehicle, comply with state laws and regulations, hire and supervise competent personnel, and warn the plaintiff about the defects. In Count IV, plaintiff alleges a violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. Count V alleges a breach of the implied warranty of merchantability. Finally, Count VI includes a claim based upon a theory of negligent misrepresentation. On or about June 3, 2003, defendants filed preliminary objections to the complaint. The preliminary objections were re-filed on June 25, 2004.

Pennsylvania law is well-settled and, accordingly, “[preliminary objections in the nature of demurrers are to be sustained only where facts averred in a complaint are clearly insufficient to establish the pleader’s right to relief.” HCB Contractors v. Liberty Place Hotel Associates, 539 Pa. 395, 397, 652 A.2d 1278, 1279 (1995). In determining whether to grant a demurrer, the court must accept as true all of the well-pleaded material facts set forth in the complaint and all of the inferences fairly deducible from those facts. Small v. Horn, 554 Pa. 600, 608, 722 A.2d 664, 668 (1998). When doubt exists as to whether a demurrer should be sustained, the doubt should be resolved in favor of overruling the demurrer. Green v. Mizner, 692 A.2d 169, 172 (Pa. Super. 1997). Therefore, in considering the present preliminary objections, the court accepts as trae all of the well-pleaded facts set forth in the complaint, and will resolve all doubts in favor of Ms. Smith.

In their initial preliminary objection, defendants demur to plaintiff’s claims for relief based upon theories of fraud, negligence and Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL). Defendants contend that such claims are barred by the economic loss doctrine. This is not the case, however. The economic loss doctrine bars the plaintiff’s negligence claim, but the doctrine does not bar plaintiff’s fraud or UTPCPL claims. Therefore, this court sustains, in part, and overrules, in part, this preliminary objection.

First, the economic loss doctrine bars plaintiff’s negligence claim found in Count III of the complaint: In Pennsylvania, the doctrine “precludes recovery for economic losses in a negligence action where the plaintiff has suffered no physical or property damage.” First Republic Bank v. Brand, 50 D.&C.4th 329, 340 (2000). See e.g., Spivack v. Berks Ridge Corp. Inc., 402 Pa. Super. 73, 78, 586 A.2d 402, 405 (1990); Aikens v. Baltimore & Ohio R.R. Co., 348 Pa. Super. 17, 20, 501 A.2d 277, 279 (1985). When the doctrine applies, the plaintiff’s recovery for pure economic loss is limited to an action on the contract. New York State Electric and Gas Corporation v. Westinghouse Electric Corporation, 387 Pa. Super. 537, 551, 564 A.2d 919, 926 (1989). Such is the case when a product “fails to conform.” Id. The foundation of this doctrine rests in a “concern for maintaining the separate spheres of the law of contract and tort.” Id. at 550, 564 A.2d at 925 (citing East River S.S. Corp. v. Transamerica Delaval Inc., 476 U.S. 858, 870-73, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986)). Thus, when a plaintiff seeks recovery for pure economic harm, courts will not entertain a theory of recovery that is based on negligence.

Here, in Count III of plaintiff’s complaint, Ms. Smith sets forth a claim based solely on negligence. Based on the foregoing discussion, it is well settled in Pennsylvania that such a claim is barred by the economic loss doctrine. Thus, plaintiff’s averments in Count III fail to state a claim upon which relief can be granted, and defendants’ first preliminary objection is sustained, in part.

Second, the economic loss doctrine does not bar plaintiff’s fraud claim found in Count I of the complaint. Although Pennsylvania courts apply the doctrine to cases dealing with negligence, courts have chosen not to apply the doctrine in cases dealing with fraudulent misrepresentation. In First Republic Bank, the court noted, “[wjhile the economic loss doctrine applies to claims based on a defendant’s negligence, it is far from clear that the doctrine applies to intentional torts.” First Republic Bank, 50 D.&C.4th at 342. In determining whether to apply the doctrine, that court recognized that some courts have broadened the doctrine’s scope to include tortious behavior other than negligence. Id. However, it declined to apply the doctrine to fraudulent misrepresentation. Id. at 345.

In making its decision, First Republic Bank relied on the convincing logic of a Wisconsin federal court. As the Wisconsin court stated, “[although it makes sense to allow parties to allocate the risk of mistakes or accidents that lead to economic losses, it does not make sense to extend the doctrine to intentional acts taken by one party to subvert the purpose of a contract.” Stoughton Trailers Inc. v. Henkel Corp., 965 F. Supp. 1227, 1236 (W.D. Wis. 1997). Even assuming that conceivable contractual provisions could allocate the risk of intentional deception, such provisions would “not be conducive to amicable commercial relations.” Id.

Here, accepting as true all of the well-pleaded facts of the complaint, and drawing all inferences from those facts in favor of the plaintiff, she made out a claim of fraudulent misrepresentation. As the Stoughton court stated, “it does not make sense to extend the doctrine to intentional acts taken by one party to subvert the purpose of a contract.” Id. As a result, plaintiff’s fraud claim is not barred by the economic loss doctrine, and defendant’s first preliminary objection is overruled, in part.

Finally, the economic loss doctrine does not bar plaintiff’s UTPCPL claim found in Count IV of the complaint. Even though the Third Circuit ruled that the doctrine barred such claims, and predicted that the Pennsylvania Supreme Court would rule likewise,. Werwinski v. Ford Motor Co., 286 F.3d 661, 679-80 (3d Cir. 2002), Pennsylvania state courts have refused to apply the doctrine to UTPCPL claims. E.g., Oppenheimer v. York, 2002 WL 31409949 at 5-6 (Pa. Com. PI.); Zwiercan v. General Motors Corp., 58 D.&C.4th 251 (2002). It is important to note that lower federal court decisions that construe state law are not binding on state courts; they are merely persuasive. Hutchison ex rel. Hutchison v. Luddy, 763 A.2d 826, 837 n.8 (Pa. Super. 2000). As such, this court chooses to follow the reasoning of the Pennsylvania state courts in determining that the economic loss doctrine does not bar plaintiff’s UTPCPL claims.

It is logically sound to rule that such a claim is not barred. Plaintiff’s UTPCPL claims do not allege negligence, but focus on the defendants’ allegedly deceptive misrepresentations. Courts have ruled that the economic loss doctrine does not apply to intentional tort claims. E.g., First Republic Bank, 50 D.&C.4th at 342. Similarly, the doctrine does not bar plaintiff’s UTPCPL claims regarding the defendants’ alleged misrepresentations. See Zwiercan, 58 D.&C.4th 251. In addition, “[t]he general purpose of the UTPCPL is to protect the. public from fraud and unfair or deceptive business practices.” Burke v. Yingling, 446 Pa. Super. 16, 22, 666 A.2d 288, 291 (1995). This purpose, moreover, is “to be liberally construed to prevent unfair or deceptive purposes.” Oppenheimer, 2002 WL 31409949 at 6 (citing Commonwealth v. Monumental Properties Inc., 459 Pa. 450, 460, 329 A.2d 812, 816-17 (1974)). Allowing the economic loss doctrine to bar plaintiff’s UTPCPL claim would eviscerate the purpose of the statute, which the legislature enacted with full knowledge of the existence of common-law contract remedies. Id. Knowing, then, of such remedies, and still providing relief under the UTPCPL, the legislature did not intend the economic loss doctrine to bar such relief. Accordingly, plaintiff’s UTPCPL claim is not barred by the economic loss doctrine, and defendants’ first preliminary objection is overruled, in part.

Defendants’ second preliminary objection, in the nature of a demurrer, seeks to strike plaintiff’s claim for punitive damages on the grounds that such damages are not allowed in this Commonwealth under the facts alleged. Accepting as true all of the well-pleaded facts, however, a claim for punitive damages is appropriate.

Punitive damages may be awarded by a jury for “torts that are committed willfully, maliciously, or so carelessly as to indicate [a] wanton disregard of the rights of the party injured.” G.J.D. by G.J.D. v. Johnson, 552 Pa. 169, 172, 713 A.2d 1127, 1129 (1998). (citation omitted) “Where [the plaintiff] in pleadings allege[s] facts that demonstrate the requisite state of mind, punitive damages may be awarded.” McDaniel v. Merck, Sharp & Dohme, 367 Pa. Super. 600, 623, 533 A.2d 436, 448 (1987). However, punitive damages are not appropriate in every case. Punitive damages are awarded to punish acts of “outrageous conduct” which are either the product of the “actor’s evil motive” or his “reckless indifference to the rights of others.” Hoffman v. Memorial Osteopathic Hospital, 342 Pa. Super. 375, 383, 492 A.2d 1382, 1387 (1985). Punitive damages are appropriate to punish and deter only extreme behavior, and in those rare instances in which they are justified, they are subject to strict judicial control. Martin v. Johns-Manville Corp., 508 Pa. 154, 169, 494 A.2d 1088, 1096 (1985).

Here, accepting as true all of the well-pleaded facts set forth in the complaint, punitive damages are appropriate. The defendants’ argument focuses on the “outrageousness” factor of the test for punitive damages. They neglect, however, to recognize that acts of “outrageous conduct” consist of those which are the product of the “actor’s evil motive.” Hoffman, 342 Pa. Super, at 383, 492 A.2d at 1387. In addition, Pennsylvania courts recognize that fraud and misrepresentation claims support punitive damages. E.g., McClellan v. Health Maintenance Organization of Pennsylvania, 413 Pa. Super. 128, 144, 604 A.2d 1053, 1061 (1992). As the McClellan court stated, “it is difficult to picture a fact pattern which would support a finding of intentional fraud without providing proof of ‘outrageous conduct’ to support an award of punitive damages.” Id. (citing Delahanty v. First Pennsylvania Bank N.A., 318 Pa. Super. 90, 130, 464 A.2d 1243, 1263 (1983)). Here, plaintiff alleged that the defendants made specific, intentional, knowing, and/or reckless misrepresentations concerning the status of the automobile. Accepting these facts as true, a jury could appropriately award punitive damages. Therefore, defendants’ second preliminary objection is overruled.

Defendants’ third, and final, preliminary objection seeks to strike plaintiff’s claim for attorney fees. It is important to note that this objection is contained within the defendants’ proposed order, but the defendants failed to address the issue airy further. Nevertheless, this court determines that plaintiff’s request for attorney fees is appropriate. In the complaint, plaintiff alleges that defendants violated the UTPCPL. This court determined that such a claim is not barred by the economic loss doctrine. Accepting plaintiff’s averments as tme, then, plaintiff’s request for attorney fees is proper. Section 201-9.2 of tire UTPCPL provides that a court may award the plaintiff reasonable attorney fees. 73 PS. §201-9.2. As such, this court overrules defendant’s preliminary objection seeking to strike plaintiff’s claim for attorney fees.

Accordingly, the court enters the following:

ORDER

And now, September 29, 2004, upon consideration of the preliminary objections filed by defendants, Reinhart Ford, Reinhart-Flynn Inc., Chadd M. Turnbull, Nicholas J. Reinhart, A1 Dempsey and Carl Reinhart, against the complaint of the plaintiff, Alice Smith, together with the briefs and supporting papers filed by the parties, it is hereby ordered that:

(1) Defendants’ preliminary objection on the grounds that Counts I, III, and IV of the complaint failed to state a claim upon which relief could be granted is sustained, in part, and overruled, in part, in accordance with this opinion;

(2) Defendants’ preliminary objection on the grounds that plaintiff’s claim for punitive damages should be stricken is overruled;

(3) Defendants’ preliminary objection on the grounds that plaintiff’s request for attorney fees should be stricken is overruled.