author: DJERASSI, J.,

text:
    JDR Acquisition, LLC v. Mitts Milavec, LLC

      Gary M. Samms, for plaintiff.

      Geoffrey Paul Huling, Maurice R. Mitts, Dexter R. Hamilton and Arthur P Fritzinger, for defendants.
    Nov. 17, 2014
   DJERASSI, J.,

Defendant law firm contracted with plaintiff court reporter to record and transcribe eleven depositions for a federal civil case. The law firm then refused to pay and argues that the bill should be paid directly by their client. Following a bench trial, this court found otherwise. There is a valid contract between the law firm and the court reporter, and the client was not a party to their agreement. The law firm’s argument that agency law shields them from paying the money is inapplicable. The law firm clearly contracted for the services that were performed. Additionally, public policy makes attorneys responsible for court reporting bills unless there is an express waiver by the attorney. There was no waiver in this case.

Mitts Law, LLC, then operating as Mitts Milavec, LLC, represented Devon IT in a federal case in the U.S. District Court for the Eastern District of Pennsylvania, Devon IT, Inc., et al. v. IBM Corp., et al (No. 2:10-cv-2899-JHS). Maurice Mitts, Esq. was the managing partner at Mitts Milavec and is now managing partner at its legal successor, Mitts Law. We will refer to defendant law firm as “Mitts Milavec” going forward.

On March 4, 2011, Mitts Milavec agreed to a written retainer with Devon IT covering the IBM Corp. federal litigation in which Mitts Milavec promised to pay for litigation expenses going forward. (N.T. 3/21/14, p. 55-56). Mr. Mitts understood “litigation expenses” to include court reporting expenses. (N.T. 3/21/14, p. 56). No other fee agreement superseded the March 2011 agreement. (N.T. 3/21/14, p. 58).

In November 2011, Ms. Charissa Ray, staff member and business developer for JDR Acquisition, LLC (“JDR Acquisition”) d/b/a James DeCrescenzo Reporting, LLC, met with Mr. Mitts over lunch. They discussed potential court reporting services for Mitts Milavec in connection with the Devon IT case. The lunch was followed up by another meeting involving Mr. Mitts, Ms. Ray and JDR Acquisition’s principal, James DeCrescenzo (“DeCrescenzo”), along with an unnamed Mitts Milavec associate. Atthis second meeting, an agreement was reached between Mitts Milavec and JDR Acquisition. The deal included specific discounts offered by JDR Acquisitions to win the business. These included lowered prices for each transcript page, expedited delivery, free deposition DVD copies and free hand delivery of transcripts. (N.T. 3/21/14, p. 18). Ultimately, JDR Acquisition provided court reporting services on the Devon IT case to Mitts Milavec at in-state and out-of-state locations including New York, Connecticut and Washington, D.C. JDR Acquisitions also modified its customary online repository procedures to accommodate the specific needs of the Mitts Milavec firm forth & IBM Corp. litigation. (N.T. 3/21/14, p. 12).

The agreement was orally approved by Mr. Mitts on behalf of his law firm, Mitts Milavec. Neither Mr. Mitts nor anyone else from Mitts Milavec told JDR Acquisition personnel that they intended someone else to pay JDR’s bills. No principals, agents or employees of JDR Acquisition ever communicated to corporate representatives of Devon IT about arrangements for court reporting services made with Mitts Milavec in connection with IBM Corp. (N.T. 3/21/14, p. 14). In January 2012, JDR Acquisition delivered court reporting services for eleven depositions in IBM Corp. Each deposition notice was sent by Mitts Milavec. When JDR Acquisition finished its work on IBM Corp., Mr. Mitts sent an email to Ms. Ray, writing, “Thank you for all your support and great efforts, we deeply appreciate you and your company.” (N.T. 3/21/14, pp. 16-17) (emphasis added).

JDR Acquisitions sent invoices to Mitts Milavec for this work but was never paid. JDR Acquisition inquired but never received a response until the filing of this lawsuit. (N.T. 3/21/14, pp. 15, 16-17).

At the time of this action, JDR Acquisition was owed $31,428.60 for unpaid court reporting services.

II. PROCEDURAL HISTORY

On April 29, 2013, plaintiff filed a second amended complaint alleging breach of oral contract, quantum meruit, and unjust enrichment against defendants Mitts Milavec, Mitts Law, LLC, and Maurice R. Mitts, Esq., individually.

On March 21, 2014, we heard a bench trial, and on March 25, 2014, filed findings of fact and conclusions of law. The law firm breached an oral contract with its court reporter, and we awarded damages including interest in the amount of $35,363.50. No liability was found against Maurice R. Mitts, Esq. in his individual capacity.

On April 4, 2014, defendants filed timely post-trial motions which were denied on May 22,2014. Defendants appealed on June 18, 2014, and their timely 1925(b) Statement was filed on July 25, 2014.

III. LEGAL ISSUES ON APPEAL

At the outset, defendants have waived two appellate issues for lack of specificity in their 1925(b) Statement. Defendants claimed the following:

1. “The trial court erred in entering a verdict in favor of plaintiff JDR Acquisition d/b/a James DeCrescenzo Reporting, LLC (“DeCrescenzo”) and against Mitts Law. See order of March 25, 2014.”
2. “The trial court erred in denying the motion by defendant Mitts Law, LLC f/k/a Mitts Milavec, LLC for post-trial relief pursuant to Rule 227.1. See order of May 21, 2014.”

See defendant’s 1925(b) Statement.

Neither claim specifies grounds, and each is waived for failure to comply with Pa. R.A.P. 1925(b). All Rule 1925(b) statements “must be specific enough for the trial court to identify and address the issue an appellant wishes to raise on appeal.” In re A.B., 63 A.3d 345, 350 (Pa. Super. 2013) (internal citations omitted). “When a court has to guess what issues an appellant is appealing, that is not enough for meaningful review.” Com. v. Dowling, 778 A.2d 683, 686 (Pa. Super. 2001).

Issues 1 and 2 are therefore waived. See Majorsky v. Douglas, 58 A.3d 1250, 1258 (Pa. Super. 2012), reargument denied (Feb. 1,2013), appeal denied, 70 A.3d 811 (Pa. 2013), cert. denied, 134 S. Ct. 910 (2014).

Three issues remain: 1) whether there was a factual basis to conclude that Mitts Milavec entered into a binding contract with JDR Acquisition; 2) whether agency law or contract law governs; and 3) whether liability was a question of law rather than fact.

A. An Oral Contract Existed Between Mitts Milavec And JDR Acquisition for Court Reporting Services In The Devon IT v. IBM Corp. Case.

Mitts Milavec argues there was no factual basis to support a finding that it had entered into a binding contract with JDR Acquisition. The law firm’s claim is based on proof that JDR Acquisition knew Devon IT had retained Mitts Milavec for the IBM Corp. case before signing on as court reporters. Mitts Milavec argues it is not liable to JDR Acquisition because they had implicitly agreed that the law firm’s client would pay them directly. However, neither law nor evidence supports this.

1. A contract exists between JDR Acquisition and Mitts Milavec.

Clear evidence establishes that Mitts Milavec and JDR Acquisition had entered into a contractual agreement. In particular, the written retainer agreement between the law firm and client Devon IT was persuasive.

To establish that an oral contract exists and is enforceable, the following must be proven: 1) both parties manifested an intention to be bound by the terms of the agreement; 2) the terms of the agreement were sufficiently definite to be specifically enforced; and 3) there was mutuality of consideration. Pennsy Supply, Inc. v. Am. Ash Recycling Corp. of Pennsylvania, 895 A.2d 595, 600 (Pa. Super. Ct. 2006); see also Redick v. Kraft, Inc., 745 F.Supp. 296, 300 (E.D.Pa. 1990) (applying Pennsylvania law); McCormack v. Jermyn, 40 A.2d 477,479 (Pa. 1945) (outlining elements for enforcing an oral contract). A decision by the parties to keep a contract in oral form does not make the contract unenforceable. Shovel Transfer & Storage, Inc. v. Pennsylvania Liquor ControlBd., 739 A.2d 133, 138 (Pa. 1999); see also Restatement of Contracts (Second) § 27.

First, both Mitts Milavec and JDR Acquisition mutually agreed that JDR would perform court reporting services at Mitts Milavec’s direction in connection with the IBM Corp. case. Indeed, the law firm requested — and the court reporters agreed to — specific financial and operational concessions to win the business. These included speedy delivery and DVD services for the convenience of the law firm and lower than customary prices for each transcript page. (N.T. 3/21/14, p. 18).

Second, the oral terms of their agreement were sufficiently specific to be enforceable — JDR Acquisition would perform court reporting services for Mitts Milavec on the IBM Corp. case, and Mitts Milavec was responsible for the bill.

Testimony by representatives of JDR Acquisition show an implied understanding, a promise that Mitts Milavec would pay their court reporters directly. On behalf of JDR Acquisition, Ms. Ray testified that her understanding of their agreement for services was that Mitts Milavec would be paying directly. (N.T. 3/21/14, p. 13). She testified that JDR Acquisition’s standard operating procedure was to send its invoices to the law firms that hired them. She said, “My understanding in this case is the same as in every other client that I have ever dealt with or brought in, and that’s that the firm hires us to do court reporting services and the firm pays us.” (N.T. 3/21/14, p. 13-14) (emphasis added). She also testified that no one at Mitts Milavec ever suggested that anyone other than the law firm would be paying JDR Acquisition’s invoices. (N.T. 3/21/14, p. 15).

Similarly, James DeCrescenzo, JDR Acquisition’s principal, testified it was his understanding, too, that Mitts Milavec would be paying directly. (N.T. 3/21/14, p. 31-32). He testified that the understanding “...was implied, just like it is implied with every relationship with a lawyer, that they manage the litigation, they direct who to hire and who to fire, and the service provider is ultimately going to get paid.” (N.T. 3/21/14, p. 37).

Mr. DeCrescenzo testified:

“I would never enter into an arrangement with anybody other than the lawyer and his firm...I have been a court reporter for over 40 years, sir, I have never entered into an agreement with the lawyer’s client. They are not my clients, I don’t know who they are; I have no relationship with them. I have never spoken with anybody from Devon or Devon IT, I don’t know if they are creditworthy or not. I deal with lawyers, and I have always dealt only with lawyers.”

(N.T. 3/21/14, p. 34-35).

DeCrescenzo’s testimony was convincing. JDR Acquisition officiated, reported and transcribed eleven depositions in various states after relying on an oral contract with an implied term, standard in the industry, that the law firm would pay court reporting costs and then obtain reimbursement from their clients.

The actions of Mitts Milavec also show the firm understood that the terms of the oral agreement meant it would pay JDR Acquisition directly. Mitts Milavec, not Devon IT, sent out notices for the depositions, and Mitts Milavec’s office address was the billing address for all JDR Acquisition invoices. (N.T. 3/21/14, p. 22-24). Mitts Milavec had sole authority on decisions about what happened to the transcripts or who had access to them. An example was Mitts Milavec’s authorization that JDR Acquisition grant Devon IT access to its online repository of depositions. (N.T. 3/21/14, p. 25-26). JDR Acquisition conducted depositions for other firms in the IBM Corp. case, sent invoices to those law firms, and received payment directly from the attorneys. (N.T. 3/21/14, p. 43).

Persuasive also was evidence that Mitts Milavec never advised JDR Acquisition that the court reporting invoices were sent to the law firm in error, nor did the firm advise either JDR Acquisition or Devon IT that they were not paying — until JDR Acquisition filed this lawsuit. (N.T. 3/21/14, p. 15,34-35,40).

Mitts Milavec’s claim is further contradicted by its own written legal retainer fee agreement with Devon IT. The document assigns financial responsibility for litigation expenses to the law firm, specifically stating that “from the date of this agreement [March 4,2011] going forward, all litigation expenses that will be incurred by [Mitts Milavec] to represent the Devon Entities in these Cases will be paid by [Mitts Milavec].” See Plaintiff’s Exhibit 16.

At trial, Maurice Mitts, Esq. admitted that court reporting services were considered “litigation expenses” under the fee agreement which had not been superseded. (N.T. 3/21/14, p. 56, 58).

Finally, there was consideration between the parties. JDR agreed to perform court reporting services for monetary compensation from Mitts Milavec.

JDR Acquisition and Mitts Milavec formed an oral contract under which JDR Acquisition would perform court reporting services for monetary compensation from Mitts Milavec. No relief is due on this claim.

2. Mitts Milavec breached its contract for court reporting services with JDR Acquisition.

A contract is breached when a valid contract exists, a duty imposed by said contract is unmet and damages are the consequence. CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa. Super. Ct. 1999).

In reliance on its contract with Mitts Milavec, JDR Acquisition performed court reporting services valued at $35,363.51 including interest.

B. Mitts Milavec Is Liable Under Agency Law.

Mitts Milavec argues that agency law should control this case and that if applied, agency law makes Devon IT entirely liable for JDR Acquisition’s bill. Though this seems to be a question of first impression in Pennsylvania, a majority trend nationally favors attorney liability where a client/law firm retainer holds the law firm responsible for litigation services.

Agency law follows two lines of thought on this issue, both agreeing that law firms are liable for the cost of court reporting services when the firm contracts for them with the court reporters themselves and have promised their clients that they would cover litigation expenses.

The first line holds an attorney liable for court reporting services only if the attorney has expressly agreed to be bound in its retainer. See Cahn v. Fisher, 805 P.2d 1040, 1042 (Ariz. Ct. App. 1990) (attorney not liable to court reporter absent express agreement); see also Petrando v. Barry, 124 N.E.2d 85 (Ill. App. Ct. 1955) (same).

Under this agency theory, Mitts Milavec expressly agreed to pay for litigation services, including court reporting, through its own retainer with Devon IT. Mr. Mitts testified that the fee agreement was not only valid but was indeed the only applicable retainer for the federal litigation. (N.T. 3/21/14, p. 56, 58). Mitts Milavec is therefore liable to JDR Acquisition. There are no contradictory written agreements, and the law firm expressly agreed to pay litigation expenses in its signed March 4,2011, retainer fee agreement with Devon IT.

The second theory of agency law — and the one most commonly applied nationally — holds that attorneys are liable for court reporting services absent an express disclaimer because attorneys generally exercise control over the litigation and are therefore more akin to independent contractors than agents. McCullough v. Johnson, 816 S.W.2d 886, 888 (Ark. 1991) (holding that an attorney is responsible to a service provider in the absence of a disclaimer because it reflects modem litigation practices and allows court reporters to confidently regard themselves as dealing with the attorney, not the client); see also Ingram v. Lupo, 726 S.W.2d 791, 796 (Mo. App. 1987) (explaining that routine practice around the country is for law firms to pay court reporters and this is done for policy reasons to benefit smooth court operations). Efficient court administration puts accountability on attorneys unless they have negotiated an express disclaimer in favor of their clients promise to pay.

This view is adopted in the Restatement (Third) of Law Governing Lawyers (2000). On the subject of a lawyer’s liability to third persons, the Comment to §30(2) states:

Even when the client is a disclosed principal, a lawyer is liable for the compensation of a court reporter, printer, expert, appraiser, surveyor, or other person the lawyer has hired who provides goods or services used by lawyers, and who when doing so reasonably relies on the lawyer’s credit as stated in Subsection (2)(b). Liability attaches unless the lawyer disclaims liability or the circumstances show that the third person did not rely on the lawyer’s credit, for example if the lawyer was inside legal counsel of the client. Merely disclosing the client’s name does not convey that the client rather than the lawyer is to pay. Such persons are likely to rely on the credit of the lawyer because they regularly deal with lawyers, while investigating the reliability of the client might be costly.

At trial, Mitts Milavec cited Rayvid v. Burgh, 37 Misc.2d 963 (Dist. Ct. Nassau Co. 1962), for the proposition that attorneys are agents of their clients when it comes to retaining the services of a court reporter. In preparing conclusions of law, this court learned that defendant’s cited case is not controlling law in New York. Ray vid once stood for the proposition that absent an agreement providing otherwise, New York attorneys could not be held liable for the services of a court reporter under an old rule stated in Bonynge v. Field, 81 N.Y. 159 (1880). However, in 2005, a statute was passed abrogating Rayyid and Bonynge, assuring that attorneys are responsible for court reporter fees absent an express disclaimer. See McKinney’s General Business Law sec. 399-c effective Nov. 15,2005). In doing so, New York has implemented policy first articulated by New York courts in Urban Court Reporting v. Davis, 158 A.D. 401 (Sup. Ct. App. 1st 1991) (“It is both illogical and unnecessary to compel the reporter to proceed against a client he or she has not dealt with, probably never saw... this burden may more conveniently and appropriately be placed upon the attorney...”). More recently, the statute has been applied to assure court reporters the right to sue both attorneys and their clients under certain circumstances. See Elisa Drier Reporting Corp v. Global Naps Networks, Inc., 84 A.D.3d 122 (Sup. App. 2nd 2011).

We conclude that JDR Acquisition has stated enforceable causes of action and is entitled to damages under both contract and agency law.

C. The Court Correctly Characterized Questions Of Fact And Law.

Finally, Mitts Milavec argues we erred by finding they had given an implied promise to pay JDR Acquisition directly. They claim we confused law and fact and say they owe nothing. However, the existence of an implied promise is a factual finding which is itself an element of quantum meruit under contract law. JDR Acquisition relied on Mitts Milavec and is still waiting to get paid.

IV. CONCLUSION

Judgment should respectfully be affirmed in the amount of$35,363.50.

      . See Thomas & Thomas Court Reporters, L.L.C. v. Switzer, 810 N.W.2d 677, 684 (Neb. 2012); see also People v. Eamick, 168 P.3d 519, 520 (Colo. 2007); Matter of Peters, 332 N.W.2d 10, 17 (Minn. 1983) (same); Molezzo Reporters v. Patt, 579 P.2d 1243, 1244 (Nev. 1978); Burt v. Gahan, 220 N.E.2d 817 (Mass. 1966) (same); Free v. Lankford & Associates, Inc., 643 S.E.2d 771 (Ga. Ct. App. 2007) (attorney who asked court reporter to transcribe deposition of opposing party in litigation is responsible for court reporter payment); Boesch v. Marilyn M. Jones & Associates, 712 N.E.2d 1061, 1063 (Ind. Ct. App. 1999); Arden

        Properties v. Anderson, 473 N.W.2d 924 (Minn. App. 1991) (attorney is liable to court reporter independent of recourse to client reimbursement after indicating to court that satisfactory financial arrangements had been made for transcript and attorney ordered service); Blake v. Ingraham, 540 N.E.2d 759, 760 (Ohio App. 1989).


source: Caselaw Access Project

author: NEALON, J.,

license: Public Domain

text:
    Wayne Bank v. Anstey

      C.P. of Lackawanna County,
    No. 14 CV 104

      Kimberly D. Martin, for plaintiff.

      Mark J. Conway, for defendants.
    Nov. 17, 2014
   NEALON, J.,

On September 8, 2010, the chief justice of the Supreme Court of Pennsylvania directed the president judges of the county courts to consider creating mortgage foreclosure diversion programs “to effectively deal with the large number of foreclosure filings relating to single family residential properties, and to present a means by which these cases could be worked out by mutual agreement of the parties, when possible.” Samuel W. Milkes, “Mortgage Foreclosure Division Programs: An Aid to Homeowners and Lenders —A case management tool for courts,” 83 Pa.B.A.Q. 93, 94 (My 2012). The accompanying announcement that was issued by the Administrative Office of the Pennsylvania Courts stated that mortgage foreclosure mediation programs assist in “saving families’ homes and helping lenders avoid the need to foreclose and take possession of property.” Id. In June 2009, Lackawanna County implemented its Residential Mortgage Foreclosure Diversion Program (“the Diversion Program”), which “is designed to serve the dual purpose of keeping homeowners and their families in their homes while transforming nonperforming loans into performing loans again under terms that homeowners can realistically afford.” Wells Fargo Bank v. Okrah, 2014 WL 68256, at *6 (Lacka. Co. 2014). Borrowers who opt to participate in the Diversion Program have the opportunity to participate in court-supervised conciliation conferences with their lenders in an effort to negotiate mutually agreeable loan modification agreements. Id. at *2. As part of a global resolution, lenders often agree to extend the term of the original loan and to spread the repayment of the total arrearages due over the additional monthly payments created by the extended term, and in the process, to allow lenders to recoup their past arrearages during the extended life of the loan while enabling compliant borrowers to remain in their homes. See James Haggerty, “court hopes to cut rising foreclosures,” The Times-Tribune, February 28, 2009 at pp. A1, A8.

Defendants, Archie Anstey and Jane Anstey (“the Ansteys”), operated a 47-acre farm in Benton Township until Mr. Anstey became “severely disabled with a massive stroke” more than five years ago. (Transcript of Proceedings (T. P.) on 7/18/14 at p. 2; T. P. 8/21/14 at p. 2). Through a series of transactions in 2008 and 2009, the Ansteys purchased their current residence at 214 Willow Road, Dalton, for $257,500.00, sold their 47-acre farm for $255,000.00, and fully satisfied the original mortgage on their Dalton home by July 24, 2009. (Instrument nos. 200828876, 200917101 and 2009191872 recorded in the Lackawanna County Recorder of Deeds Office). Since Mr. Anstey’s ongoing healthcare treatment included aquatic therapy, the Ansteys explored the prospect of installing a small indoor rehabilitation pool in their mortgage-free home. (T. P. 7/18/14 at p. 2; T. P. 8/21/14 at p. 2). At that time, and continuing to the present, the Ansteys subsided on'Social Security disability benefits as their sole means of income. (T. P. 7/18/14 atpp. 4-5; T. P. 8/21/14 atp. 10).

To finance the construction of their therapeutic aquatic facility, the Ansteys entered into a “line of credit” agreement with North Penn Bank on March 22, 2010, providing for advances up to $50,000.00. (Docket entry no. 1, Exhibit B). The line of credit contains a “draw period” of five years during which the Ansteys “may request advances,” and a “repayment period” of twelve years. (Id. at ¶ 3). The North Penn Bank agreement requires monthly payments by the Ansteys from March 22, 2010, through March 21,2027, but does not itemize the exact amount of those variable interest monthly payments. (Id. at ¶ 13). The contract further states that North Penn Bank has “secured [the Ansteys’] obligations under this line of credit by taking a security interest...in...the dwelling and real property located at 214 Willow Road, Dalton, PA 18414,” and that in the event of the Ansteys’ default, North Penn Bank “may terminate this line of credit and make all or any part of the amount owing by the terms of this agreement immediately due.” (Id., at ¶¶ 18, 22). On March 22, 2010, the Ansteys also provided North Penn Bank with an “open-end mortgage” on their Willow Road property securing their repayment of their Line of Credit debt to North Penn Bank. (Docket entry no. 1, Exhibit A).

According to the mortgage foreclosure complaint that has been filed by plaintiff, Wayne Bank, the Ansteys made 41 monthly payments of $532.43 per month from March 2010 to August 2013. (Docket entry no. 1 at ¶¶ 3, 7). Unfortunately, the Ansteys’ son-in-law was diagnosed with Stage IV pancreatic cancer in 2013, and the Ansteys’ daughter and son-in-law were required to move into the Ansteys’ home due to their son-in-law’s inability to work and concomitant need for constant care. (T. P. 7/18/14 at pp. 2-3; T. P. 8/21/14 atpp. 3,10). As aresult ofthat increased burden upon the Ansteys’ limited financial resources, the Ansteys were unable to make their monthly mortgage payments in the fall of 2013. (Id.). After the Ansteys missed three mortgage payments on September 27,2013, October 27, 2013, and November 27, 2013, totaling $1,597.29 in the aggregate, Wayne Bank forwarded an “Act 91 Notice” letter to the Ansteys on November 29,2013. (Docket entry no. 1, Exhibit C).

As conditions precedent to the commencement of a mortgage foreclosure action, the lender/mortgagee must furnish the borrower/mortgagor with mandatory notices in compliance with Act 91, the Homeowners Emergency Mortgage Act, 35 P.S. § 1680.402c et seq., and the Loan Interest and Protection Law (Act 6), 41 P.S. § 101 et seq. Act 91 requires a mortgagee who desires to foreclose to send notice to the mortgagor “advising the mortgagor of his delinquency...and that such mortgagor has thirty (30) days to have a face-to-face meeting with the mortgagee who sent the notice or a consumer credit counseling agency to attempt to resolve the delinquency...by restructuring the loan payment schedule or otherwise.” Beneficial Consumer Discount Co. v. Vukman, 621 Pa. 192, 198, 77 A.3d 547, 550 (2013) (quoting 35 P.S. § 1680.403c(a)-(b)(1)). Both the Superior Court and the Commonwealth Court have noted that “[t]he purpose of an Act 91 notice is to instruct the mortgagor of different means he may use to resolve his arrearages in order to avoid foreclosure on his property and also gives him a timetable in which such means must be accomplished.” Wells Fargo Bank. N.A. v. Monroe, 966 A.2d 1140, 1142 (Pa. Super. 2009) (quoting Fish v. Pennsylvania Housing Fin. Agency, 931 A.2d 764, 767 (Pa. Cmwlth. 2007)).

“An Act 6 Notice enables a financially troubled residential homeowner to learn exactly what sum of money is necessary to cure the mortgage default,” Wells Fargo Bank, N.A. v. Spivak, 2014 WL 5493965, at *5 (Pa. Super. 2014), and “offers homeowners with residential mortgages a measure of protection from overly zealous residential mortgage lenders.” Id. at *4 (quoting In re Graboyes, 223 Fed. Appx. 112, 114 (3d Cir. 2007)). “Remedies for a defective Act 6 notice include setting aside the foreclosure or denying a creditor the ability to collect an impermissible fee.” Id. “[T]he stated purpose of Act 91 — to provide emergency mortgage assistance — is markedly different from the purpose of Act 6 — to offer homeowners with residential mortgages a measure of protection from overly zealous residential mortgage lenders.” Id. at *8. Nevertheless, “when both the Act 6 and Act 91 notices are required, it is sufficient to issue a combined Act 6/91 notice.” Id. at n.18 (citing 35 P.S. § 1680.403c).

The only pre-filing notice contained in the court record is Exhibit “C” to Wayne Bank’s foreclosure complaint, which is comprised of pages 1, 2 and 5 of Wayne Bank’s letter to the Ansteys on November 29,2013. (Docket entry no. 1, Exhibit C). Based upon the limited number of pages provided, it cannot be determined whether Wayne Bank fully complied with Act 91 by furnishing the information required by 35 P.S. § 1680.403c. Moreover, the three pages of Exhibit C do not reflect that any Act 6 notice was provided as mandated by 41 P.S. § 403. Absent proof of that statutorily required notice, Wayne Bank may not foreclose upon the Ansteys’ Willow Road property. See Spivak, supra, at *4.

Once the Ansteys allegedly failed to make a fourth mortgage payment on December 27, 2013, and became $2,129.72 in arrears, Wayne Bank instituted this mortgage foreclosure action by the filing of a complaint on January 6, 2014. (Docket entry no. 1 at ¶ 7). Under Pennsylvania Rule of Civil Procedure 1147(a)(1), amortgage foreclosure complaint must set forth “the parties to and the date of the mortgage, and of any assignments, and a statement of the place of record of the mortgage and assignments.” Pa.R.C.P. 1147(a)(1). Additionally, “[cjopies of such assignments must be attached to the complaint, or incorporated by reference if recorded.” 4 Goodrich Amram 2d § 1147(1): 2 (Sept. 2014). Furthermore, “[i]f the mortgage is a residential mortgage under Act No. 6 of 1974, 41 P.S. § 101, the complaint should set forth an averment of compliance with the provisions of Section 403 of Act No. 6,41 P.S. § 403.” Pa.R.C.P. 1147(a)(6), Official Note.

Wayne Bank’s complaint baldly avers that “Wayne Bank, assignee of North Penn Bank (“Bank”), is a Pennsylvania corporation with its principal offices at 717 Main Street, Honesdale, PA 18431.” (Docket entry no. 1 at ¶ 1). Wayne Bank does not (a) identify itself as the “legal owner” of the Ansteys’ mortgage, (b) describe the date and place of record of the mortgage assignment, or (c) alternatively aver that it is unable to attach the assignment to the complaint pursuant to Pa.R.C.P. 1019(i) since the parties are in the process of formalizing the assignment. See U. S. Bank N. A. v. Mallory, 982 A.2d 986, 992-993 (Pa. Super. 2009) (“fatal defect” warranting striking of default judgment did not exist since mortgage assignee averred that it “is now the legal owner of the mortgage and is in the process of formalizing an assignment of same,” and that the mortgage and assignment “are matters of public record and are incorporated herein by reference in accordance with Pa.R.C.P. 1019(g).”). To compound the apparent assignment deficiency further, the complaint alleges that “[tjhe.said Mortgage has not been assigned.” (Docket entry no. 1 at ¶ 4). Moreover, although Wayne Bank’s complaint references the “mortgage dated March 22, 2010,” it avers in the same paragraph that “[o]n March 22, 2011. [the Ansteys] executed and delivered a note in the principal amount of fifty thousand and 00/100 ($50,000.00) dollars payable in monthly installments of five hundred thirty-two and 43/100 ($532.43) dollars per month....” (Docket entry no. 1 at ¶ 3) (emphasis added). Needless to say, a mortgage which pre-dates the secured debt by one year is fraught with enforcement issues. See Courtney v. Ryan Homes. Inc., 345 Pa. Super. 109, 117, 497 A.2d 938, 942 (1985) (“Amortgage and an accompanying note are separate obligations,” and “[t]he note is evidence of the debt; and the mortgage provides collateral security for the debt.”).

In its sole reference to a pre-filing notice, the mortgage foreclosure complaint states that “Notice of the Emergency Assistance Act of 1983 Housing Bill No. 500, Act 91, and notice of intent to foreclose were sent by [Wayne Bank] to the [Ansteys], copies of which are attached hereto, made a part hereof and labeled Exhibit ‘C.’” (Docket entry no. 1 at ¶ 8). This averment does not reference any compliance with the statutory notice required by Act 6, 41 P.S. § 403, even though the official note to Rule 1147(a)(6) expressly states that a residential mortgage foreclosure “complaint should set forth an averment of compliance with the provisions of Section 403 of Act 6, 41 P.S. § 403.” Nor do the three pages of Wayne Bank’s letter dated November 29, 2013, which are attached to the complaint as Exhibit “C,” make any reference to Act 6 or its required notice. (Docket entry no. 1, Exhibit C at pp. 1,2, 5).

Wayne Bank’s complaint does aver that as a result of the Ansteys’ failure to make four loan payments totaling $2,129.72, Wayne Bank accelerated “the entire debt due” and demanded judgment in the amount of $51,148.23, comprised of principal of $49,570.21, interest of $815.96, and late charges of $762.06. (Docket entry no. 1 at ¶¶ 9-10). The prayer for relief in the mortgage foreclosure complaint not only seeks a monetary judgment against the Ansteys in the amount of $51,148.23, but also demands judgment “in mortgage foreclosure” so as to enable Wayne Bank to sell the Ansteys’ residential property to satisfy the outstanding debt. (Id. at p. 3). After Wayne Bank served the mortgage foreclosure complaint upon the Ansteys on January 22, 2014, and thereafter filed a notice of praecipe to enter judgment by default, Wayne Bank sought and secured the entry of a default judgment against the Ansteys in the amount of $51,148.23 on March 27, 2014. (Docket entry nos. 2-4).

Once the default judgment was entered, the Ansteys retained counsel on a pro bono basis, (T. P. 8/21/14 atp. 2), who promptly filed a request on April 21, 2014, seeking a conciliation conference under the diversion program. (Docket entry no. 5). The conciliation conference was originally scheduled for June 13,2014, but was continued to July 18, 2014, at the request of Wayne Bank. (Docket entry nos. 6-7). During the initial conciliation conference, the Ansteys’ counsel reported that the Ansteys’ son-in-law had died on July 17,2014, at age 42, such that the Ansteys were unable to attend the conference. (T. P. 7/18/14 at p. 2). Noting that the Ansteys’ aggregate arrearages as of that date were merely $5,324.30, and that the value of the Ansteys’ home was between $250,000.00 and $300,000.00, the undersigned scheduled this matter for another conciliation conference on August 21, 2014, and directed the Ansteys’ counsel to determine whether there was any life insurance applicable to the son-in-law which could provide funds to satisfy the Ansteys’ arrearages. (Id. at pp. 2, 5-9).

In anticipation of the second conciliation conference, Wayne Bank filed a status report on August 6, 2014, in which it stated that “[Wayne Bank] has reviewed all the documents that were previously submitted by the [Ansteys] and is not currently offering a loan modification.” (Docket entry no. 9). At the second conference, the Ansteys’ counsel reported that there was no life insurance coverage for the son-in-law’s death, but that the Ansteys’ daughter had retained separate counsel who had filed a social security disability claim on her behalf. (T. P. 8/21/14 at pp. 3-4). Since the Ansteys had made 41 monthly payments before their default, such that there original loan was capable of being extended for several additional years, the undersigned recommended that Wayne Bank “put the arrears on the back end” and extend the term of the original note to incorporate additional, but affordable, payments that would ultimately make the Bank whole. (Id. at p. 6). However, Wayne Bank’s counsel replied that Wayne Bank was “not willing to do that.” (Id.). The Ansteys’ counsel alternatively suggested that the Ansteys “make three monthly payments” immediately, that Wayne Bank stay the foreclosure proceedings for three months, and that the parties return for another conciliation in late November 2014 to determine whether the Ansteys’ daughter had been awarded social security disability benefits, such that the Ansteys would be “able to reinstate the mortgage” by paying all past arrears. (Id. at p. 7).

By order dated August 21, 2014, a third conciliation conference was scheduled for October 31, 2014, and Wayne Bank was directed to submit a status report by October 17, 2014. (Docket entry no. 10). In its status report of October 17, 2014, Wayne Bank again stated that it “has reviewed all the documents that were previously submitted by the [Ansteys] and is not agreeable to a loan modification.” (Docket entry no. 13). During the ensuing conference, Wayne Bank’s counsel indicated that although the Ansteys’ total arrearages to date were $7,454.02 (14 monthly payments x $532.43/month), with late charges and counsel fees, “the total amount due is $10,736.08.” (T. P. 10/31/14 at p. 5). The undersigned once again suggested that the Bank extend the remaining line of credit repayment term by twenty months as a means of repaying the arrearages (i.e., 20 additional payments of $532.43/month) and resuming the Ansteys’ monthly loan payments. (Id. at pp. 5-6). In response. Wayne Bank’s counsel replied that “[t]he bank isn’t willing to modify,” prompting the undersigned to state “I’m at a loss to understand” why Wayne Bank is “not willing to do what eveiy other local lender I’ve ever had any experience with [in the diversion program] is willing to do” in order to resolve a mortgage foreclosure dispute. (“Id. at pp. 7-8). Consequently, another conciliation conference was scheduled for November 21, 2014, and Wayne Bank’s Vice President of Residential Lending, John Saunders, was ordered to attend the conference in person pursuant to Lacka. Co. R.C.P. 1143.1(e). (Docket entry no.ll).

Wayne Bank’s website represents to the public that “Wayne Bank takes pride in still having the friendly personal touch that has been our hallmark [since] when we began as a simple storefront operation in 1871.” (See https ://www. waynebank. com/index.php/about-us). In light of the ostensible defects in Wayne Bank’s mortgage foreclosure complaint with respect to (a) averments of the place of record of the relevant assignment of the Ansteys’ mortgage to Wayne Bank, (b) the attachment of any such assignment to the complaint or its incorporation by reference if recorded, (c) compliance with the notices mandated by Act 6 and Act 91, and the (d) erroneous averment of the date of the line of credit agreement, Wayne Bank should be “willing to modify” the Anstey s’ indebtedness in fulfillment of its self-proclaimed “friendly personal touch.” See David R. Greenberg, “Neglected Formalities in the Mortgage Assignment Process and the Resulting Effects on Residential Foreclosures,” 83 Temp. L. Rev. 253 (Fall 2010). Yet, when Wayne Bank filed its latest status report on November 7, 2014, it once again stated that it “is not agreeable to a loan modification.” (Docket entry no. 14).

Based upon the foregoing, and in accordance with Lacka. Co. R.C.P. 1143.1(e), it is imperative that a duly authorized financial representative of Wayne Bank attend the conciliation conference on November 21, 2014, to show cause why, in light of the foregoing issues involving its pleadings and consequent default judgment, Wayne Bank deems it necessary to expose a residential property, which is valued between $250,000.00 and $300,000.00, to a sheriffs sale to satisfy 14 delinquent monthly payments totaling $7,454.02. For that reason, Wayne Bank’s Executive Vice President, Chief Financial Officer and Secretary, William S. Lance, will be ordered to attend the conciliation conference on November 21, 2014, at 1:30 PM.

And now, this 17th day of November, 2014, it is hereby ordered and decreed that:

1. William S. Lance, Executive Vice President, Chief Financial Officer and Secretary of Wayne Bank, shall attend the conciliation conference on Friday, November 21,2014 at 1:30 PM, with complete authority to negotiate a loan modification agreement with the defendants, as required by Lacka. Co. R.C.P. 1143.1(e); and

2. Since William S. Lance is being directed to attend the conciliation conference as the designated representative of Wayne Bank pursuant to Lacka. Co. R.C.P. 1143.1(e), it is unnecessary for John Saunders to attend, and for that reason, paragraph no. 2 of the order dated October 31, 2014, is vacated.


author: HERTZBERG, J,

text:
    Inklovich v. Johnson

      C.P. of Allegheny County,
    Nos. AR 13-1407; 1613 WDA 2014

      Justin R. Lewis, for plaintiff.

      Anthony C. Mengine and Brittani R. Hassen, for defendant.
    Nov. 21, 2014
   HERTZBERG, J,

On June 5, 2011 defendant Phil Johnson (“landlord” hereinafter) and plaintiff Joshua Inklovich (“tenant” hereinafter) entered into a written agreement for the rental of the residence located at 218 Frederick Ave FRONT, Sewickley, Pa 15143. See Exhibit A from 7/22/2014 trial (“Exhibit A” hereinafter). The term of the agreement was three years, from July 1,2011 to June 30,2014, with a $1,500 security deposit and monthly rent of $1,500. The agreement required tenant to pay landlord $1,500 for the last month’s rent prior to occupancy and then an additional $3,000 after occupancy in $250 per month installments for the $1,500 security deposit and a second month’s rent in advance. See Exhibit A, pp. 7-8. Hence, tenant had to provide landlord with a total of $4,500, or the equivalent of three months of rent, for security against damage to the residence and default in the payment of rent. Landlord requested the provision for payment of two months of rent in advance when he found tenant had a low credit score, and tenant was agreeable to satisfying landlord’s concern over the credit score by paying the two months of rent in advance. See transcript of non-jury trial, 7/22/2014 (“T.” hereinafter), pp. 55-58.

Tenant paid landlord $1,500 prior to occupancy and each of the $250 per month installment payments after occupancy until landlord received the additional $3,000. Tenant also paid landlord each $1,500 monthly rental payment when due until a dispute arose between them. Landlord testified credibly that tenant seemed satisfied until July of 2012 when lightning felled a tree near the residence, damaging tenant’s automobile, and tenant’s losses were not covered by either landlord’s or tenant’s insurance. T, pp. 81-84. In December of 2012, while continuing to occupy the residence, tenant stopped paying his rent to landlord and allegedly paid the rent into an “escrow” account in tenant’s name at a bank. T, pp. 154-155; Exhibit D from 7/22/2014 trial.

On December 13, 2012 tenant sued landlord in a Magisterial Court. After the Magisterial District Justice decided the dispute in favor of landlord, tenant appealed to the Court of Common Pleas of Allegheny County. Tenant filed a complaint against landlord on April 22, 2013 requesting monetary damages arising from landlord’s alleged breaches of warranties of habitability and quiet enjoyment as well as a declaration that the rental agreement was void and unenforceable. Landlord filed a counterclaim requesting $1,500 per month rent from December of 2012. On August 30, 2013, tenant’s counsel notified landlord’s counsel that tenant had vacated the residence. A compulsory arbitration panel then heard the dispute but awarded tenant no monetary damages and instead found tenant owed landlord $12,300.

Tenant then filed an appeal from the arbitration award, and I presided over the non-jury trial. I also found tenant was not entitled to any monetary damages but that tenant owed landlord $9,250. Tenant filed a motion for post-trial relief, which I denied. Tenant then filed a notice of appeal to the Superior Court of Pennsylvania and a “rule 1925(b) concise statement of errors complained of on appeal” (“concise statement” hereinafter). This opinion will next address each error that tenant alleges I made. See Pa. R.A.P. No. 1925(a).

Tenant first argues that landlord “breached paragraph 42(b) of the lease” (Concise statement, ¶ nos. 2 and 3), which obligates landlord to comply “with all state, county and/or municipal codes.” I agree with tenant that landlord breached this provision since the Pennsylvania Landlord and Tenant Act prohibits security deposits in excess of two months during the first year and in excess of one month during the second year of any residential lease. See 68 Pa.C.S.§ 250.511a. I do not, however, agree with tenant’s implicit argument that because of this breach landlord forfeits his claim to all rent due him under the lease. The PennsylvaniaLandlord and tenant act provides no guidance on an appropriate remedy when a landlord requires too large of a security deposit. Id. I decided a partial forfeiture was appropriate and reduced landlord’s damages by the “unpaid rent between the date tenant vacated the premises and the end date of the lease.” 7/23/2014 findings. Thus, as a result of the security deposit exceeding the amount permitted by law, I prohibited landlord from claiming any rent from September 1,2013 to June 30,2014, a forfeiture of as much as $15,000 (ten months at $1,500 per month equals $15,000).

The doctrine of “substantial performance” protects landlord’s right to compensation for at least the rent during tenant’s occupancy unless the breach amounts to a material failure of performance. See Sgarlat v. Griffith, 349 Pa. 42, 36 A.2d 330 (1944). Tenant testified he needed the excess security deposit to move out of the residence before the end of the term and be able to invoke the “opt-out” provision of the lease. See Exhibit A, p. 7, ¶ no. 50(g) (“This contract may be terminated by tenant without cause or additional penalty at any time...between 07-02-2013 and 08-02-2013 with 30 days written notice and a liquidated damages payment of $1,550.00...”) However, tenant failed to prove any damages from being unable to leave the residence sooner, since tenant testified only that he was able to purchase a home, but not that the purchase reduced his housing expense. T., p. 65. In any event, tenant’s testimony on the issue was not credible but instead was merely an “after-the-fact” effort to establish financial injury when none was incurred. Thus, the holding of the excess security deposit was a technical, inadvertent, or unimportant defect and not a material failure of performance. Id. Hence, even though landlord technically breached the contract, my decision to compensate him for rent during tenant’s occupancy was correct.

Tenant next argues that landlord breached the implied “warranty” of quiet enjoyment. See concise statement, ¶ nos. 4 and 6. A landlord breaches the covenant of quiet enjoyment by wrongful conduct that interferes with the tenant’s possession of the leased premises. See Kohl v. PNC Bank Nat. Ass’n, 590 Pa. 151, 912 A.2d 237 (2006). A classic example of a breach of the covenant of quiet enjoyment is when a landlord locks a tenant out of the leased premises. See Minnich v. Kauffman, 265 Pa. 321, 108 A.2d 597 (1919). In these proceedings, tenant did not specify particular conduct of landlord that interfered with tenant’s possession of the residence during the trial, and the motion for post trial relief and the concise statement generally allege a breach of the covenant without specifying any wrongful conduct. The complaint identifies seven items that allegedly violate the covenant, but none involve any interference by landlord with tenant’s possession of the leased premises. Since tenant failed to specify any conduct that interfered with tenant’s possession of the premises, I properly found the covenant of quiet enjoyment was not breached.

Tenant next argues that landlord breached the implied warranty of habitability and paragraph 42(a) of the lease, which similarly obligates landlord to keep the premises habitable. See concise statement, ¶ nos. 5 and 6. A defect that prevents a dwelling from being used for habitation constitutes a breach of the implied warranty of habitability. Pugh v. Holmes, 486 Pa. 272, 405 A.2d 897 (1979). A breach of the implied warranty of habitability claim is not valid unless the tenant gives the landlord notice of the defect and a reasonable opportunity for repair. Id. Between tenant’s testimony and the Allegheny County Health Department October 24, 2012 Inspection Report admitted into evidence at trial (see trial Exhibit C), at least twelve items are described that could be defects. However, none of tenant’s testimony about alleged defects was credible. In addition, the Health Department’s January 22, 2013 Inspection Report (Trial Exhibit F), made after landlord had a reasonable opportunity for repair, noted that' the only two items remaining are “minor” and are. “not used to determine fitness for human habitation.” Trial Exhibit C. In any event, landlord provided credible testimony that those two items remaining, a loose heat duct and a screen that allegedly allowed squirrels to enter the attic, were either repaired by contractors or never a problem. See T, pp. 51, 78-80 and 84-87. Therefore, my determination that landlord did not breach the implied warranty of habitability or the lease habitability provision was correct.

Tenant next argues I should have awarded him attorney fees under paragraph 32(a) of the Lease, which provides that landlord is “responsible for all legal and collection costs associated with a breach of this agreement by landlord provided written notice of such breach has been given landlord and landlord has failed to cure.” See concise statement, ¶ no. 7; exhibit A. However, landlord cured the habitability defects that tenant gave notice of in tenant’s 11/26/12 letter (see Trial Exhibit D) and in the health department’s October 24, 2012 inspection report. While the excess security deposit constitutes a technical breach of contract, tenant’s four page 11/26/12 letter admitted into evidence as Trial Exhibit D neither notifies landlord of this breach or requests that all or part of the security deposit be returned. Tenant then initiated litigation against landlord, and due to tenant’s decision to withhold payment of rent while occupying the residence for nine months, it was landlord who incurred “collection costs.” Since landlord cured any breach of the lease that he was notified of and tenant had no “collection costs,” my decision to deny tenant an award of attorney fees was correct.

Tenant next argues I should have found “the lease to have been terminated pursuant to Paragraph 40.” Concise statement, ¶ no. 8. Lease paragraph no. 40 states:

Any items of this agreement that are not followed will result in a termination of this agreement. The remaining payments of this contract become due and payable upon such termination.

Hence, had I found the Lease was terminated, the rent until the end of the lease remains due. Therefore, whether or not the lease was terminated is inconsequential, and my failure to make such a finding was not erroneous.

Tenant next argues I should not have awarded landlord damages. See concise statement, ¶ no. 9. Since tenant does not provide further elaboration on this argument, I must presume the reason tenant argues Landlord should not have been awarded damages is landlord’s alleged breaches of the warranties and of the lease. As explained above, the technical breach of the lease from the excess security deposit does not justify a forfeiture of rent owed landlord during tenant’s occupancy and there was no breach of either the covenant of quiet enjoyment or the implied warranty of habitability. Therefore, my decision to award landlord damages was correct.

Tenant’s final argument is that my decision to offset the security deposit from landlord’s damages was incorrect because I should have doubled the amount of the security deposit. Tenant makes this argument in reliance on 68 P.S. §250.512(c). For a proper analysis of this argument, 68 P.S. §250.512 subsections (a) and (b) must be scrutinized along with subsection (c). Here are all three subsections:

(a) Every landlord shall within thirty days of termination of a lease or upon surrender and acceptance of the leasehold premises, whichever first occurs, provide a tenant with a written list of any damages to the leasehold premises for which the landlord claims the tenant is liable. Delivery of the list shall be accompanied by payment of the difference between any sum deposited in escrow, including any unpaid interest thereon, for the payment of damages to the leasehold premises and the actual amount of damages to the leasehold premises caused by the tenant. Nothing in this section shall preclude the landlord from refusing to return the escrow fund, including any unpaid interest thereon, for nonpayment of rent or for the breach of any other condition in the lease by the tenant.
(b) Any landlord who fails to provide a written list within thirty days as required in subsection (a), above, shall forfeit all rights to withhold any portion of sums held in escrow, including any unpaid interest thereon, or to bring suit against the tenant for damages to the leasehold premises.
(c) If the landlord fails to pay the tenant the difference between the sum deposited, including any unpaid interest thereon, and the actual damages to the leasehold premises caused by the tenant within thirty days after termination of the lease or surrender and acceptance of the leasehold premises, the landlord shall be liable in assumpsit to double the amount by which the sum deposited in escrow, including any unpaid interest thereon, exceeds the actual damages to the leasehold premises caused by the tenant as determined by any court of record or court not of record having jurisdiction in civil actions at law. The burden of proof of actual damages caused by the tenant to the leasehold premises shall be on the landlord.

(emphasis added)

Landlord’s credible, undisputed testimony established that tenant left the premises in good condition and the security deposit was not withheld due to physical damage. T., pp. 145-146. Subsection (c) above, which doubles a landlord’s liability for an improperly held security deposit, applies only to a security deposit withheld due to physical damages to the premises. A landlord is not obligated to provide a written list to the tenant and there is no doubling of any part of the security deposit when it is withheld due to the tenant’s nonpayment of rent. See McEvilly v Tucci, 239 Pa. Super. 474, 479 n. 4, 362 A.2d 259, 261 n. 4 (1976). Therefore, I was correct in not doubling the security deposit amount that I offset from landlord’s damages.

      . Tenant deposited no funds into escrow with the department of court records under Magisterial District Judges Rule 1008 entitled “appeal as supersedeas.” Tenant also deposited no funds into escrow under 35 P.S.§1700-1 entitled “dwellings unfit for habitation.” At trial, tenant’s counsel reported that he became the holder of the funds that tenant had previously been putting in an account in tenant’s name. T., pp. 154-155.

      . I calculated this verdict by determining tenant owed landlord nine months of rent at $1,500 per month, which equals $13,500.1 subtracted $4,250, which was the security deposit and prepaid rent less $250 for personalty tenant bought from landlord. I arrived at a net amount owed to landlord of $9,250.

      . Tenant explicitly made this argument in his “motion in limine for partial summary judgment” on the record immediately before the trial. See T., pp. 3-13.

      . In paragraph no. 10 of the complaint tenant alleges landlord’s failure to provide GFCI outlets in the bathroom, vent the dryer, cap the gas lines, provide handrails and repair a fence breached both the covenant of quiet enjoyment and the warranty of habitability. In paragraph no. 12 of the complaint tenant alleges a tree on the premises that fell and damaged his automobile and landlord’s failure to adequately respond to numerous service requests breached the covenant of quiet enjoyment.


author: ANDERSON, /.,

text:
    Van Horn v. Nearhoof
    C.P. of Lycoming County,
    No. No. 13-02,279

      Nov. 21, 2014
   ANDERSON, /.,

Before the court is plaintiffs’ claim for breach of contract based upon an alleged oral agreement with their daughters, defendants Candice Nearhoof (hereinafter “Candace”) and Paula Moser (hereinafter “Paula”). As part of an estate or asset protection plan, plaintiffs transferred essentially all of their property to their daughters and their grandchildren; the property included rental properties, non-income producing property, and some personal property. Plaintiffs allege the property was transferred with the agreement and understanding that they would continue to receive income as necessary for their own support. Plaintiffs contend sums of money were paid to them from 2004 through 2011 but that a dispute between the two daughters resulted in a split of the jointly-held properties and that after the split, only Paula continued to provide support to them; Candace refused and has. not provided any further monies, thus resulting in the instant claim. A trial was held on October 31, 2014, and the court now makes the following:

FINDINGS OF FACT

1. In late 2003 and early 2004, plaintiffs transferred substantially all of their real estate holdings to their daughters and their grandchildren as part of an estate or asset protection and retirement plan.

2. The property included a 10 unit apartment building, transferred in November 2003, and three mobile home lots, transferred in February 2004, all of which produced income.

3. Prior to the transfers, plaintiffs had used income from the apartment building and mobile home lots to provide for some of their expenses.

4. The transfers were made with the understanding and agreement of all parties that plaintiffs would continue to receive income from the apartment building and mobile home lots to provide for their support.

5. The properties transferred to Candace and Paula were deeded into both names, as tenants in common.

6. In December 2003, Candace and Paula opened a joint bank account to manage the rental properties.

7. For seven years and four months, starting with a check dated January 14, 2004 and ending with a check dated May 23,2011, Candace wrote checks payable to her parents in multiples of $700 from the rental account. This amount had not been discussed or agreed upon prior to the transfer of the apartment building but was agreed upon or at least acquiesced in following that transfer and did precede the transfer of the mobile home lots.

8. Sometime in early to mid-2011, Candace and Paula had a falling out and decided to divide the properties by each deeding her interest in certain properties to the other.

9. On October 3, 2011, the properties were divided and deeds were executed except that — at the direction of Candace — the deed to the river lot was not executed at that time. Title to that property remains in joint names.

10. On October 3, 2011, the apartment building was deeded to Paula and the mobile home lots were deeded to Candace. A mortgage on the apartment building was assumed by Paula. The mobile home lots were not encumbered.

11. Since the check dated May 23, 2011, Candace has not provided any further monies to her parents. Paula has been making payments to her parents of $350 per month, representing half of the previous $700 monthly payment.

DISCUSSION

Plaintiffs’ breach of contract action is based on their contention that prior to the transfers, and as consideration therefor, Paula and Candace agreed to pay them $700 per month and have failed to do so since May 2011. Plaintiffs seek $14,350, calculated at the rate of $350 per month since that date, taking into consideration that Paula has continued to make payments of $350 per month. The court cannot find that there was an agreement to pay $700 per month in exchange for transfer of the properties, however. Therefore, the claim for a sum certain must fail.

Plaintiffs are not without a basis for relief, however. Where a deed is given in consideration of support, upon the grantee’s failure or refusal to furnish support in accordance with the promise, equity will decree cancellation or rescission on equitable terms. Shook v. Bergstrasser, 51 A. 2d 681 (Pa. 1947). Courts treat deeds having such a consideration in the nature of an executory contract and place the burden on the grantee to show full performance of his agreement to support the grantor. See Borys v. Halko, 188 A. 539 (Pa. Super. 1936); Dreisbach v. Serfass, 17 A. 513 (Pa. 1889); Davis v. Martin, 8 Pa. Super. 133 (1898). In the instant case, it is clear that the deeds to Candace and Paula were given “in consideration of support” and that Candace has failed to furnish support in accordance with her promise.

Accordingly, the court draws the following:

CONCLUSIONS OF LAW

1. Candace Nearhoof’s refusal to provide support to plaintiffs after May 23, 2011, constitutes a failure of consideration given in exchange for transfer of the properties to her from plaintiffs.

2. Plaintiffs are entitled to the return of the interest in the properties deeded to Candace.

VERDICT

And now, this day of November 2014, for the foregoing reasons, judgment on plaintiffs’ claim for breach of contract is hereby entered in their favor and against defendants Candace and Richard Nearhoof. Within sixty (60) days of this date, the Nearhoofs are directed to execute the documents necessary to transfer their interests in the properties previously transferred to Candace Nearhoof by plaintiffs in 2003 and/or 2004 back to plaintiffs.

Judgment on plaintiffs’ claim for breach of contract is hereby entered in favor of additional defendants Paula Van Horn Moser and Jerome Moser.

Additional defendant Paula Van Horn Moser’s cross-claim against defendants Candace and Richard Nearhoof for specific performance is hereby dismissed as moot.

      . Also before the court is additional defendant Paula Moser’s request for specific performance seeking transfer to herself of Candice Nearhoof’s interest in a river lot based on an alleged oral agreement to divide the properties previously deeded to both of them by their parents.

      . Plaintiffs transferred their home to their grandson, Brock Near-hoof, Candace Nearhoof’s son, and reserved a life estate for themselves.

      . While plaintiffs have asked the court to find an agreement to pay a specific amount, it does not appear that any such agreement was reached prior to the transfer. Rather, the agreement was simply to provide support.

      . In light of this disposition, it is unnecessary to address Paula’s request that Candace transfer the river lot to her based on their alleged oral agreement.


author: MASSIAH-JACKSON, J,

text:
    Kronfeld v. Sugarhouse HSP Gaming, LP

      David C. Woloshin, Dina S. Ronsayro and Jordan Schlossberg, for plaintiff.

      Dolores RoccoKulp and Timothy A. Kulp, for defendant.
    Dec. 9, 2014
   MASSIAH-JACKSON, J,

A. FACTUAL BACKGROUND and PROCEDURAL HISTORY

On August 10, 2013, Michael Kronfeld and his wife, Nadia, were gambling at Sugarhouse Casino in Philadelphia, Pa. At about 2:00 a.m., Mr. Kronfeld collapsed. While Sugarhouse waited for Emergency Paramedics, employees commenced first-aid. The Fire Department rescue personnel arrived and transported Mr. Kronfeld to the hospital where he later died.

Mr. Adi Kronfeld, one of Mr. Kronfeld’s children, was appointed the administrator of Michael Kronfeld’s Estate. This wrongful death and survival act litigation was commenced in September, 2014, alleging negligence by the Sugarhouse Casino and its employees.

Preliminary objections in the nature of a demurrer have been filed by the defendant-Sugarhouse. See, Rule 1028(a) (4) of the Pennsylvania Rules of Civil Procedure.

For all the reasons set forth below, the demurrer is sustained in Part with prejudice where, as here, the law says with certainty that the duty of defendant-Sugarhouse to Michael Kronfeld is solely to provide first aid and to summon medical assistance. The demurrer is overruled as to paragraphs 39d and f, and related allegations.

B. LEGAL DISCUSSION

The elements of a cause of action in negligence are: 1) a duty on the part of the defendant to conform to a certain standard of conduct with respect to the plaintiff, 2) a failure by the defendant to so conform, 3) proximate cause — that is, a reasonably close causal connection between the defendant’s conduct and some resulting injury to the plaintiff, and, 4) actual loss or damage suffered by the complainant. See generally, Prosser and Keeton, §30 (5th Ed. 1984); Prosser, Law of Torts, §30 (4th Ed. 1971).

In this case, plaintiff-Kronfeld alleges that defendantSugarhouse and its employees breached the following duties of care set forth in paragraph 39 of the complaint:

a. Failing to swiftly and adequately begin resuscitation efforts;
b. Failing to swiftly and adequately perform resuscitation efforts begun by defendant Sugarhouse’s employees and/or agents;
c. Failing to swiftly and adequately summon those other agents and/or employees who could render proper assistance;
d. Failing to swiftly and adequately summon professional assistance;
e. Failing to meet its duty to ensure the safety of business invitees; and
f. Failing to exercise reasonable care based upon the circumstances.

Only sub-parts 39d and 39f arguably present a viable cause of action for this plaintiff.

In Pennsylvania, which has adopted Restatement (Second) of Torts, §314A, defendant-Sugarhouse as a possessor of land who holds it open to the public owes a duty to its patrons, as follows:

“l)(a) to give [members of the public] first aid after it knows or has reason to know that they are ill or injured, and to care for them until they can be cared for by others.”

The Superior Court explained in Campbell v. Eitak, Inc., 893 A.2d 749 (Pa. Superior Ct. 2006), that simply by classifying a plaintiff as a business invitee does not establish the particular duty owed to the patron by the business. The Appellate Court rejected arguments identical to those made herein by plaintiff-Kronfeld: assertions that failures of training, the absence of policies of procedure to respond to emergencies, and negligent undertaking caused the harm and/or increased the injuries. Summary judgment was affirmed with a declaration, at 893 A.2d at 753:

“In the absence of any legislative pronouncement, we hold that the prompt summoning of medical assistance satisfies a restaurant’s duty to a patron who is choking. By calling 911 within minutes of Campbell’s reported distress [defendant] discharged its duty to [the patron] as a matter of law.”

Plaintiff-Kronfeld’s assertion that the restatement is applicable only to restaurants and not to other businesses is baseless. The Campbell Court clearly held that the duty of care per Section 314A is imposed on any possessor of land who holds it open to the public. 893 A.2d at 753:

“.. . because we find that [the business] discharged its duty to its patron by summoning medical assistance within a reasonable time, we conclude that the trial court neither committed an error of law nor abused its discretion in granting summary judgment...”

Plaintiff-Kronfeld’s complaint alleges that Sugarhouse employees failed to begin or perform resuscitation and use an AED device. The Pennsylvania Supreme Court declined to impose such a duty on businesses and affirmed a trial court’s grant of summary judgment. In Atcovitz v. Gulph Mills Tennis Club, Inc., 812 A.2d 1218 (Pa. 2000), the court held at 1224:

“. ... the existence of a civil immunity provision for Good Samaritans who use an AED in an emergency situation cannot impose a duty on a business establishment to acquire, maintain, and use such a device on its premises.
Neither the EMS Act nor the AED Good Samaritan Act imposed a duty upon Gulph Mills to acquire, maintain, and use an AED....Because Gulph Mills did not owe a duty to carry an AED, [plaintiffs] could not have established a prima facie claim of negligence.”

After considering Section 314A of the restatement, including comment f and the pertinent case law of this and other jurisdictions, this court concludes that from all the facts pleaded in the complaint, plaintiff-Kronfeld fails to state a claim on which relief may be granted as to defendant-Sugarhouse, its agents or employees as set forth in paragraphs 39a, b, c, or e, and related allegations of negligence, respondeat superior and negligent hiring, training and supervision.

Next, plaintiff-Kronfeld summarily asserts that even if employees are protected by the legislature, corporate defendant-Sugarhouse is not statutorily immune as per Pennsylvania’s Good Samaritan Civil Immunity Law, 42 Pa. C.S.A. §8332. Taking the allegations in the complaint as true, Sugarhouse employees made multiple efforts to assist the stricken guest even as emergency paramedics were called. This plaintiff has not alleged conscious lack of diligence or intentional harm or a failure to act in good faith. Nor has plaintiff alleged any conduct which rises to recklessness or gross negligence.

The statute grants immunity to “any person” who renders emergency care. Where a statute itself does not define “person,” we look to Pennsylvania’s Statutory Construction Act, 1 Pa. C.S.A. §1991, which states that “person,” “includes a corporation, partnership, limited liability company...” Plaintiff-Kronfeld has failed to state a claim for negligent undertaking or respondeat superior per Restatement (Second) of Torts, §323. The corporate defendant is statutorily immune from liability.

Finally, to the extent that plaintiff-Kronfeld suggests that the defendant increased a risk of cardiac events by “cultivating, maintaining and/or encouraging an environment of sensory stimulation and excitement,” this court concludes such a proposal falls under the rules applicable to theatres, amusement parks, sports facilities and more e.g. Jones v. Three Rivers Management, 394 A.2d 546 (Pa. 1978); Beck v. Stanley Co., 50 A.2d 306 (Pa. 1947); Loughran v. The Phillies, 888 A.2d 872 (Pa. Superior Ct. 2005). The expected and inherent risks of going to a casino, if any, cannot create a duty nor would it be proper for such a suggestion to go to a jury. Nor can this plaintiff claim that Sugarhouse is an insurer of its patrons.

C. CONCLUSION

If after discovery the facts confirm that Sugarhouse Casino discharged its duty to Michael Kronfeld by summoning medical assistance within a reasonable time, dispositive motions may be appropriate. At this juncture, it is clear that the demurrer is sustained in part.

ORDER

And Now, this 9th day of December, 2014, after consideration of the preliminary objections filed by Sugarhouse HSP Gaming, L.P., and plaintiffs response thereto, and, for the reasons set forth in the memorandum filed this date, it is hereby ordered that the demurrer is sustained with prejudice pursuant to Rule 1028(a)(4) as it relates to all allegations of negligence, respondeat superior and negligent hiring, training and supervision, in paragraphs 39a, b, c, and e, and those allegations are dismissed with prejudice. The demurrer is overruled as to paragraphs 39d and f. See, Restatement (Second) of Torts §314A.

Defendant shall file an answer to plaintiffs complaint within twenty (20) days from the date this order is docketed. See also, order dated November 7, 2014.