author: NEALON, J,

text:
    Barcola v. Hourigan, Kluger & Quinn P.C.

      C.P. of Lackawanna County,
    nos. 02 CV 338, 03 CV 2329.

      Daniel L. Thistle, for plaintiffs.

      Jeffrey B. McCarron, for defendant.
    December 29, 2006
   NEALON, J,

Plaintiffs have instituted this legal malpractice action against their former counsel who unsuccessfully litigated a medical malpractice claim on their behalf and allege that counsel allowed the statute of limitations governing their related products liability claim to expire while counsel pursued the medical malpractice suit. Plaintiffs have served requests for admissions in this legal malpractice action seeking to have their former counsel admit the nature and extent of the male plaintiff’s injuries as well as the resulting economic and non-economic damages, based upon assertions and statements that were made by former counsel in the medical malpractice case filings and submissions. Since counsel did not personally vouch for the truthfulness and accuracy of the representations and arguments made on behalf of the plaintiffs in zealously advocating their medical negligence claim, counsel is not estopped from contending in this legal malpractice suit that the male plaintiff was not injured as alleged. Rather, the plaintiffs must satisfy their burden of proving “the case within the case” in this legal malpractice proceeding by establishing the alleged injuries and damages by expert medical testimony and other competent evidence.

I. FACTUAL BACKGROUND

On March 12, 1997, plaintiff Robert Barcola was allegedly injured while working as a carpenter at a construction site when a fellow employee accidentally bumped into Barcola with a pneumatic nail gun causing it to discharge a barbed nail into his right buttock. Bar-cola was transported to the Community Medical Center (CMC) where he was treated by William J. Dempsey M.D., who extracted the bent nail from Barcola’s buttock. Barcola reportedly developed a severe sciatic nerve injury which allegedly causes constant, unrelieved pain and has rendered him fully disabled and unable to work as a carpenter. (Docket entry no. 4 in 04 CV 2329, ¶¶4-6.)

On April 14, 1998, Barcola retained the law firm of Hourigan, Kluger & Quinn P.C. (HK&Q) and executed two contingent fee agreements. Barcola and HK&Q signed a “Medical Negligence Contingent Fee Contract Involving Forwarding Counsel” with respect to a possible malpractice claim against Dr. Dempsey and CMC. (Id., exhibit B.) In addition, the parties jointly executed a separate “Complex Litigation Contingent Fee Contract” concerning a potential products liability claim against the pneumatic nail gun manufacturer, Bostitch, a Division of Techtronics Inc. (Id., exhibit A.)

On July 2, 1998, HK&Q commenced a malpractice suit on behalf of Barcola against Dr. Dempsey and CMC. (See docket entry no. 1 in no. 98 CV 3150.) No products liability action was filed against Bostitch within two years of Barco la’s injury on March 12,1997. Barcola contends that when the malpractice case was called for trial in April 2001, substitute counsel from HK&Q tried the case rather than the HK&Q attorney “who had handled the case all along and to [Barcola’s] knowledge was the attorney who was supposed to try the case.” (Docket entry nos. 4 and 11, ¶21 in no. 03 CV 2329.) On May 1,2001, the jury in the medical negligence case found that Dr. Dempsey and CMC were not negligent and thereby rendered a defense verdict in that matter. (Docket entry no. 66 in no. 98 CV3150.)

Following the malpractice verdict, Barcola met with members of HK&Q and was apparently advised that HK&Q would send Barcola’s file to a Texas attorney who was experienced in nail gun litigation. (Docket entry nos. 4 and 11, ¶22 in no. 03 CV 2329.) On September 11, 2001, J. Gregory Marks, Esquire, of Irving, Texas forwarded correspondence to HK&Q which read:

“Thank you for the opportunity to review the potential case of Barcola v. Bostitch. Unfortunately, due to the statute of limitations problem, I have decided not to take on this case. Therefore, I am enclosing the documents that you have previously provided me.

“Please keep me in mind for any other nail gun cases that you may have in the future. These cases can be very lucrative if given the right circumstances.” (Docket entry no. 12, exhibit A in no. 03 CV 338.) On September 14, 2001, HK&Q transmitted a letter to Barcola referencing a telephone conversation “with Mr. Gregory Marks on Thursday, September 6, 2001” and stating that “[a]fter a lengthy review of your case, Mr. Marks has declined to take on representation.” (Id., exhibit B.) HK&Q subsequently forwarded another letter to Barcola on September 20, 2001 indicating that “[b]ecause Mr. Marks has declined to take on representation of your products liability case, we are at this time closing our file.” (Id.)

Barcola maintains that he contacted Attorney Marks to inquire “why he was not interested in the products liability case” and was advised “by Mr. Marks that he thought there was an excellent products liability case but that [HK&Q] had done nothing to preserve the statute of limitations and, therefore, the lawsuit was barred.” (Docket entry no. 4, ¶26 in no. 03 CV 2329.) According to Barcola, “[t]his was the first time that [Barcola] had learned that the case could not be brought because [HK&Q] failed to file an action on his behalf in the products liability case.” (Id.) Barcola also asserts that when HK&Q first referred his products liability claim to Attorney Marks, HK&Q recommended “that he file the action in Mississippi because Mississippi had a six-year statute of limitations.” (Id., ¶27.) Barcola avers, however, that “[t]he Mississippi legislature changed the statute of limitations from six years to three years in the early 1990s.” (Id.)

On January 21, 2003, Barcola instituted this legal malpractice action against HK&Q. Barcola avers that the nail gun was defectively manufactured without a protective device that would have prevented it from firing on contact while the trigger was depressed. (Id., no. 4.) In Count I of the complaint, Barcola alleges that HK&Q was negligent for failing: (a) to properly investigate his product liability claim; (b) to ascertain and preserve evidence in support of that claim; and (c) to timely file a civil action against the pneumatic nail gun manufacturer within the two-year statute of limitations. (No. 03 CV 2329, docket entry no. 4, ¶¶34-35.) Barcola advances a breach of contract claim in Count II of the complaint and asserts that HK&Q did not comply with the “withdrawal of counsel” provisions contained in its own contingency fee agreement by advising Barcola that HK&Q was “not going to file an action within the applicable statute of limitations” or was otherwise “withdrawing from the products liability action.” (Id., ¶¶40-42.) HK&Q denies Barcola’s claims and avers in its new matter that, inter alia, Barcola is collaterally estopped from “asserting a contention or establishing a fact which is different from a contention or fact which [Barcola] agreed existed or which [Barcola] asserted in other proceedings in which [Barcola] . . . was a party.” (Id., no. 11,¶¶69-70.)

During the course of discovery, Barcola served 12 requests for admissions upon HK&Q pursuant to Pa.R.C.P. 4014, and HK&Q served its responses and objections to those initial requests on August 16, 2006. In request for admission no. 1, Barcola seeks HK&Q’s stipulation that on March 12, 1997, Barcola “was shot in the mid-line of the right buttock with a 2 1/2 inch barbed nail fired by a Bostitch pneumatic nail gun.” Although HK&Q has admitted in its answer “that a nail penetrated the right buttock” of Barcola on March 12, 1997, it maintains that it is without sufficient information “to allow [HK&Q] to admit or deny the source of the nail.” (Docket entry no. 19 in no. 03 CV 2329, exhibit D, p. 2.)

Requests for admissions nos. 2-4 seekHK&Q’s admission that Barcola suffered disabling and permanent injuries “as a result of being struck in the right buttock by the 2 1/2 inch barbed nail fired by a Bostitch pneumatic nail gun . .. .” (Id., pp. 2-3.) HK&Q has denied the requested admissions and further avers that Barcola did not suffer the severe and permanent injuries identified in the requests. (Id.) Barcola’s requests for admissions nos. 5 through 10 solicit HK&Q’s admissions that Barcola has sustained and will continue to suffer certain economic and non-economic damages. In its response, HK&Q affirmatively denies that Barcola has sustained or will suffer the described harm. (Id., pp. 4-5.)

Barcola’s requests for admissions nos. 11 and 12 reference the life care plan of Robert Voogt and the economic report of Andrew Verzilli Ph.D., who were retained as expert witnesses by HK&Q in the malpractice litigation against Dr. Dempsey and CMC. Barcola requests admissions that Mr. Voogt’s report “accurately sets forth the medical expenses and required medical care which resulted from Robert Barcola’s nail gun injury” and that Dr. Verzilli’s report “accurately sets forth Robert Bar-cola’s loss of earnings and earning power as a result of the injury sustained in the nail gun injury.” (Id., p. 5.) HK&Q has replied by denying that the medical services identified in Mr. Voogt’s report “were for Robert Bar-cola’s nail injury, or were reasonable and necessary.” (Id.) As for Dr. Verzilli’s report, HK&Q states that it “did not accurately set forth loss of earning and earning power sustained by Robert Barcola.” (Id., p. 6.)

Barcola subsequently served a supplemental set of requests for admissions which attach discovery responses and expert reports that were submitted by HK&Q in conjunction with the medical malpractice action. Supplemental request no. 1 asks HK&Q to admit that the answers to interrogatories that it filed in Barcola v. Dempsey/CMC “were true, accurate and honest answers.” (Docket entry no. 19, exhibit E, p. 1.) HK&Q has answered that request by stating that the answers to interrogatories 3,12, 13,15,16, 18 and 19 are true. As for the answers to interrogatories 2, 4, 5, 7, 9(f), 10 and 11, HK&Q merely admits that those discovery responses “correctly state the contention of [Barcola] in the underlying medical malpractice action.” HK&Q apparently has not expressly admitted or denied Barcola’s request with regard to the answers to interrogatories 1, 6, 8, 14 and 17. HK&Q further states in its response to supplemental request for admission no. 1 that Barcola “is able to work” and “is not disabled due to the alleged injury.” (Id., pp. 1-2.)

Barcola’s supplemental requests for admissions nos. 2, 3 and 4 seek admissions by HK&Q that the pretrial reports of Dr. Richard Paul Bonfiglio, Keystone Rehabilitation Inc., and Albert D. JanerichM.D., are “true and accurate.” HK&Q has replied to those requests by admitting only that the attached documents are true and correct copies of the designated reports. HK&Q additionally responds that “[i]f the request relates to all the information in the report, then this request is unreasonably burdensome, oppressive, compound and not a permissible use of a request for admission.” (Id., pp. 2-3.)

On September 6,2006, Barcola filed a motion seeking to compel HK&Q to admit the foregoing requests for admissions “without qualification.” Barcola submits that requests for admissions nos. 1 -10 are verbatim recitations of allegations made by HK&Q in its medical malpractice suit filings whereas requests for admissions nos. 11-12 and supplemental requests for admissions nos. 1 through 6 are predicated upon the reports of experts retained by HK&Q in that matter. Barcola posits that “[h]aving represented to this court in a prior proceeding that the reports of [HK&Q’s] selected medical experts . .., vocational experts, life care experts and answers to interrogatories were true and accurate, [HK&Q] cannot now in this proceeding deny that they were.” (Docket entry no. 19, ¶¶14-16.) Barcola bases his argument upon Pa.R.C.P. 1023.1 and Rule 3.3 of the Rules of Professional Conduct.

HK&Q opposes Barcola’s motion to compel and argues that there “is no basis under Pennsylvania law for [Barcola’s] contention that, because an attorney advocated a particular position on behalf of his client based on certain evidence, he is precluded from advocating a different position based on competing evidence in a subsequent legal malpractice action brought against him by the client.” (No. 03 CV 338, docket entry no. 25, p. 1.) Citing Siebert v. Nusbaum, 167 F.3d 166 (3d Cir. 1999) (applying New Jersey law), HK&Q maintains that it is not “barred by estoppel and waiver principles from taking a position different from that taken in the underlying [malpractice] litigation.” (Id., no. 29, p. 2.) Noting that Barcola must establish that he would have prevailed in a products liability suit in order to recover damages in this legal malpractice action, HK&Q submits that Barcola is seeking to circumvent his “burden to establish the ‘case within the case’ by attempting to bind [HK&Q] to contentions or positions asserted on behalf of [Barcola] in the underlying [malpractice] action.” (Id., no. 25, p. 4.)

II. DISCUSSION

(A) Standard of Review

Under Pa.R.C.P. 4014(a), a party may serve upon another party a written request for the admission “of the truth of any matters within the scope of Rules 4003.1 through 4003.5 ... that relate to statements or opinions of fact or of the application of law to fact, including the genuineness, authenticity, correctness,... or receipt of any document described in the request.” The purpose of this discovery tool is “to clarify and simplify the issues raised in prior pleadings in order to expedite the litigation process.” Christian v. Pennsylvania Financial Responsibility Assigned Claims Plan, 454 Pa. Super. 512, 521, 686 A.2d 1, 5 (1996), appeal denied, 548 Pa. 678, 699 A.2d 733 (1997). Requests for admissions must relate to factual matters since conclusions of law are not within the permissible scope of requests under Rule 4014. Brindley v. Woodland Village Restaurant Inc., 438 Pa. Super. 385, 395-96, 652 A.2d 865, 870-72 (1995) (requests which sought admissions that attached medical records and bills reflected reasonable and necessary treatment for injuries caused by subject accident were improper since they called for legal conclusions); Dwight v. Girard Medical Center, 154 Pa. Commw. 326, 333, 623 A.2d 913, 916 (1993) (requested admission that adequate and proper medical treatment had been provided was not within permissible scope of requests for admissions.) Any facts admitted by a party in response to a request for admission are treated as judicial admissions for purposes of the pending proceeding. Duquesne Light Company v. Woodland Hills School District, 700 A.2d 1038, 1054 (Pa. Commw. 1997), appeal denied, 555 Pa. 722, 724 A.2d 936 (1998). The party who served the requests for admissions may move to determine the sufficiency of an adversary’s answers, and “[i]f the court determines that an answer does not comply with the requirement of [Rule 4014], it may order either that the matter is admitted or that an amended answer be served.” Pa.R.C.P. 4014(c).

(B) Legal Malpractice Burden of Proof

In order to establish a claim of legal malpractice against a civil litigator, the aggrieved client must demonstrate: (1) employment of the attorney or other basis for a duty; (2) the failure of the attorney to exercise ordinary skill and knowledge; and (3) that such negligence was the proximate cause of damage to the former client. Kituskie v. Corbman, 552 Pa. 275, 281, 714 A.2d 1027, 1029-30 (1998); Nelson v. Heslin, 806 A.2d 873, 876 (Pa. Super. 2002), appeal denied, 574 Pa. 761, 831 A.2d 600 (2003). A lawyer may assume an implied duty to represent or advise a client regarding collateral matters, but can avoid the imposition of such unintended duties by adequately advising the client in writing that the representation will be confined to specific matters. See Jones v. Bresset, 41 D.&C.4th 60, 70-73 (Lacka. Cty. 2000) (dismissing legal malpractice action where client had hired attorney solely for purposes of securing an accounting in bankruptcy action and attorney had advised client in writing that his representation would not include investigation or pursuit of potential malpractice claim against prior counsel). See also, Maloy, Proximate Cause: The Final Defense in Legal Malpractice Cases, 36 Univ. Memphis L. Rev. 655, 663 n. 37 (spring 2006) (discussing Bresset, supra). As noted above, Barcola contends that HK&Q agreed in writing to investigate and prosecute a products liability claim on his behalf, but negligently allowed the statute of limitations to expire, thereby deviating from the applicable standard of care and breaching the relevant provisions of the parties’ fee agreement.

An essential element to a cause of action for legal malpractice is proof of actual loss, as opposed to a breach of a professional duty causing only nominal damages, speculative harm or the threat of future harm. Kituskie, 552 Pa. at 281, 714 A.2d at 1030; Rizzo v. Haines, 520 Pa. 484, 504-505, 555 A.2d 58, 68 (1989); Nelson, supra. Therefore, to succeed with a legal malpractice claim, the plaintiff must prove that [s]he had a viable cause of action against the party [s]he wished to sue and that the attorney [s]he hired was negligent in prosecuting or defending that underlying case. Poole v. W.C.A.B. (Warehouse Club Inc.), 570 Pa. 495, 499-500, 810 A.2d 1182, 1184 (2002); Nelson, supra. In the context of a legal malpractice action, such proof of actual loss is often referred to as proving “the case within the case.” Poole, 570 Pa. at 500, 810 A.2d at 1184; Brubacher Excavating Inc. v. W.C.A.B. (Bridges), 575 Pa. 168, 174 n.2, 835 A.2d 1273, 1277 n.2 (2003).

To successfully prove his “case within the case”, Bar-cola must establish that: (1) the nail gun was defective; (2) the defect existed at the time that the nail gun left the hands of the manufacturer or seller; and (3) Barcola suffered damages as a result of the defect. See Davis v. Berwind Corp., 547 Pa. 260, 267, 690 A.2d 186, 190 (1997); Glodzik v. Whink Products Co., 61 D.&C.4th 241, 247 (Lacka. Cty. 2003). In his requests for admissions, Barcola seeks to use representations made by HK&Q in the medical malpractice filings and discovery to satisfy his burden of proving that he has suffered certain injuries and sustained particular losses as a result of the nail gun incident. Neither party has cited, nor has our independent research revealed, any Pennsylvania case law directly addressing the narrow issue of whether statements made by former counsel on behalf of a client in a prior proceeding are binding upon or admissible against that same lawyer in a subsequent legal malpractice action.

Barcola premises his motion to compel upon Rule 3.3(a) of the Rules of Professional Conduct, 42 Pa. C.S., and Pa.R.C.P. 1023.1(c)(3). Rule 3.3(a) requires an attorney to treat a tribunal with candor and prohibits counsel from knowingly making a false statement of material fact to a tribunal or offering evidence that the lawyer knows to be false. See Wilson, Doctrinal Malfunction: Spoliation and Products Liability Law in Pennsylvania, 69 Temp. L. Rev. 899,924-25 (summer 1996.) Pa.R.C.P. 1023.1 is patterned after Fed.R.C.P. 11 and provides that an attorney’s signature on a pleading, written motion or other paper which is directed to the court constitutes a certification “to the best of that person’s knowledge, information and belief, formed under an inquiry reasonable under the circumstances,” that the factual allegations contained therein have evidentiary support. Pa.R.C.P. 1023.1(c)(3). See also, McNeil v. Jordan, 586 Pa. 413, 445 n.25, 894 A.2d 1260, 1279 n.25 (2006).

However, lawyers also have an “overriding duty of zealous representation of a client’s interest”, Reese v. Danforth, 486 Pa. 479, 485, 406 A.2d 735, 738 (1979), and “an obligation to put their clients’ interests ahead of their own.” In re Cendant Corporation Securities Litigation, 404 F.3d 173, 186 (3d Cir. 2005). The explanatory comment to Rule 3.1 of the Rules of Professional Conduct states that attorneys have “a duty to use legal procedure for the fullest benefit of the client’s cause” and the corresponding responsibility to “make good faith arguments in support of their clients’ positions.” See Weston, Court-Ordered Sanctions of Attorneys: A Concept that Duplicates the Role of Attorney Disciplinary Procedures, 94 Dick. L. Rev. 897, 923 (summer 1990). That same comment further provides that an attorney’s arguments and actions in that regard are not frivolous or devoid of good faith “even though the lawyer believes that the client’s position ultimately will not prevail.” See G. C. Murphy Company v. M. Goldfarb-My Florist Inc., 11 D.&C.4th 614, 623 (Alleg. Cty. 1991). Cf. Talamini v. Allstate Insurance Company, 470 U. S. 1067, 1071 n.11 (1985).

The explanatory comment to Rule 3.3 of the Rules of Professional Conduct similarly states that “[a] lawyer acting as an advocate in an adjudicative proceeding has an obligation to present the client’s case with persuasive force.” In advocating the client’s case, the attorney must often rely upon assertions made by the client with respect to contested liability and damages issues. As the comment to Rule 3.3 recognizes, “litigation documents ordinarily present assertions by the client, or by someone on the client’s behalf, and not assertions by the lawyer.” R.P.C. 3.3, explanatory comment. Thus, although Rule 3.3 imposes a duty of candor upon counsel, the explanatory comment distinctly notes that counsel is not required “to vouch for the evidence submitted in a cause . . . .” Id. Furthermore, since “[t]he prohibition against offering false evidence only applies if the lawyer knows that the evidence is false,” “[a] lawyer’s reasonable belief that evidence is false does not preclude its presentation to the trier of fact.” Id. Hence, while a lawyer must make a reasonable pre-filing inquiry before signing a court filing and may not knowingly make a false representation to the court, counsel does not customarily guarantee the veracity of assertions made on behalf of the client.

For example, in Norris v. Lee, 1994 WL 143119 (E.D. Pa. 1994), counsel for the plaintiffs sought to withdraw representation on the grounds that counsel had “lost some faith in the full veracity and validity of their clients’ cause, and [we]re concerned that there may have been some possible tinkering with the truth.” In denying the motion to withdraw, the federal district court cited the comment to Rule 3.3 and remarked:

“As professional trial lawyers, hired courtroom gladiators, they cannot always expect to be favored with the heartwarming luxury of knowing for a fact that their clients are the ones in the right. They simply get hired to go into court and fight the good fight.... Lawyers serve not as judge or jury, but as stewards of their clients’ cause, and as such, in our adversary system, they serve a vital purpose, giving litigants the process that is their due.

“. . . That is the way the system works — and generally works well. The reality is that the professional advocate who gets too quickly squeamish at the thought of representing a less that utterly lustrous cause might wish to consider another line of work.” Id. at *1.

Barcola’s reliance upon Rule of Professional Conduct 3.3(a) and Pa.R.C.P. 1023.1(c)(3) is misplaced. The relevant disciplinary rules, accompanying comments and governing case law reflect that the zealous advocate’s presentation of evidence and argument in support of the client’s cause does not constitute a binding, personal attestation or verification of the truthfulness and accuracy of those assertions. In advancing the client’s claims, an attorney is generally required to rely upon information provided by the client and others. See Pa.R.C.P. 1023.1, explanatory comment (noting that the reasonableness of counsel’s pre-filing inquiry depends upon “whether the signer had to rely on a client for information as to the facts underlying the pleading, motion, or other paper ____”). By way of illustration, in connection with a limited tort claim, counsel and the client’s treating physician may be compelled to rely upon the client’s subjective complaints and symptoms in attempting to establish the existence of a “serious injury” under 75 Pa.C.S. §1705. See Hames ex rel. Hames v. Philadelphia Housing Authority, 737 A.2d 825, 829 (Pa. Commw. 1999) (stating that Washington v. Baxter, 553 Pa. 434, 719 A.2d 733 (1998) declined to adopt a standard “that objective medical evidence is required in order to cross the serious injury threshold” in a limited tort case). According to Barcola’s logic, if that attorney is later sued for negligently causing the client to lose that personal injury claim, counsel’s good faith assertion of a “serious injury” in the limited tort case should be admissible against counsel in the legal malpractice suit. If statements and arguments made by counsel in furtherance of a client’s claim were routinely deemed to constitute binding admissions against a lawyer in a subsequent legal malpractice action, it could conceivably have a chilling impact upon the vigor and resulting effectiveness of counsel’s advocacy.

Although no Pennsylvania court has addressed this specific issue in a reported decision, the reasoning of the United States Court of Appeals for the Third Circuit in Seibert is instructive and persuasive. In that case, an automobile accident victim was denied underinsured motorist (UIM) benefits after his counsel settled his third-party liability claim against the tort-feasor without first securing the UIM carrier’s written consent to settle in compliance with the UIM policy provisions. Not unlike Pennsylvania, New Jersey requires a plaintiff in a legal malpractice action to establish: “(1) the existence of an attorney-client relationship creating a duty of care upon the attorney; (2) breach of that duty; and (3) proximate causation of damages.” Seibert, 167 F.3d at 168. Although the attorney in Seibert conceded that he was negligent in settling the tort claim without first complying with the consent to settle clause in the UIM policy, he asserted that the client did not suffer actual loss as a result. Id., at 169. However, the New Jersey district court granted summary judgment in favor of the client and awarded damages. Id.

On appeal, the client argued that since his former counsel had pursued a claim for benefits against the UIM carrier, the attorney was precluded from maintaining in the legal malpractice case that the client could not recover UIM benefits under the policy. The Third Circuit disagreed with that argument and held:

“[W]e reject [the client’s] contention that [counsel] is barred by estoppel and waiver principles, by reason of having brought the action against Travelers, from contending that Travelers’ policy did not afford [the client] underinsured motorist coverage. Naturally, a plaintiff’s attorney in filing an action takes the position that the action is justified. If the attorney through some error precludes the case from being litigated on the merits, then the concept of a trial within a trial is not consistent with estopping the attorney from contending that if he had not made an error in any event he could not have been successful.” Id. at 172. See also, Nahigian, Defense to Legal Malpractice Claims, 2 J.Leg. Advoc. & Pract. 197, 201 (2000) (citing Seibert and stating that “[t]o preclude an attorney from asserting that pursuit of the legal remedy would have been ultimately unsuccessful would be inconsistent with the concept of a trial within a trial.”).

Barcola’s proffered use or admission of statements made by HK&Q in the medical malpractice filings and submissions would also contravene well-established evidentiary principles. In attempting to prove the viability of his products liability claim under “the case within the case” requirement, Barcola may only introduce that evidence which HK&Q could have offered in a products liability action. Since the cause of Barcola’s alleged injury is beyond the knowledge or expertise of the average layperson, HK&Q would have been obligated to present competent medical expert testimony establishing, to a reasonable degree of medical certainty, that Barcola’s claimed injury was caused by the nail gun (as opposed to Dr. Dempsey’s negligence.) See e.g., Cauthorn v. Owens Corning Fiberglas Corp., 840 A.2d 1028, 1038-39 (Pa. Super. 2004); Brown v. Herman, 445 Pa. Super. 305, 312-14, 665 A.2d 504, 508 (1995), aff’d, 547 Pa. 352, 690 A.2d 232 (1997). Any statements made by HK&Q regarding the alleged permanency or effect of Barcola’s injuries would not have been admissible in a hypothetical products liability suit litigated by HK&Q. See Commonwealth v. Perillo, 474 Pa. 63, 68, 376 A.2d 635, 638 (1977) (“ ... evidence comes from the mouths of witnesses and not from statements made by counsel ....”); Commonwealth v. Joseph, 848 A.2d 934, 941 (Pa. Super. 2004) (court properly “instructed the jurors that the lawyers’ statements were not to be considered testimony or evidence . . . .”). Accord, Pa. SSJI (Civ.) 1.36 (3d ed. 2005) (admonishing jurors that opening statements and closing arguments by counsel are not evidence). Nor can they be admissible in the products liability “case within the case” which must be litigated by Barcola. For that evidentiary reason, Barcola may not use his requests for admissions to satisfy his burden of proving, through medical expert testimony, that his alleged injury was caused by the product at issue.

Finally, many of Barcola’s requests for admissions seek binding stipulations that Barcola suffered disabling and permanent injuries as a result of the nail fired by a Bostitch pneumatic nail gun, and that Barcola sustained certain economic and non-economic losses as a result of those injuries. However, PIK&Q’s submissions in the medical malpractice suit asserted that Barcola’s injuries and damages were caused by the negligence of Dr. Dempsey and CMC, rather than the mere firing of the barbed nail from the pneumatic nail gun. Moreover, requested admissions of this nature relate to proximate causation issues and call for legal conclusions which are not appropriate matters for requests for admissions. See Brindley, supra; Dwight, supra.

Based on the foregoing, HK&Q’s responses to Bar-cola’s requests for admissions are sufficient under Rule 4014, and Barcola’s motion to compel HK&Q to admit the requests for admissions without qualification will be denied. An appropriate order follows.

ORDER

And now, December 29, 2006, upon consideration of “plaintiffs’ motion to compel defendant Hourigan, Kluger & Quinn P.C. to admit requests for admissions,” the memoranda of law submitted by the parties and the oral argument of counsel on October 23, 2006, and based upon the reasoning set forth in the foregoing memorandum, it is hereby ordered and decreed that “plaintiffs’ motion to compel defendant Hourigan, Kluger & Quinn RC. to admit requests for admissions” is denied.

      . Since the suit filed on January 21,2003 named “Hourigan, Kluger & Quinn” as the defendant, (see no. 03 CV 338, docket entry no. 1), Barcola filed a second action on June 5, 2003 identifying the professional corporation “Hourigan, Kluger & Quinn P.C.” as the defendant. (See no. 03 CV 2329, docket entry no. 1.) By order dated November 25, 2003, Judge Trish Corbett allowed Barcola to amend the caption in no. 03 CV 338 “to change the designation of the defendant law firm from Hourigan, Kluger & Quinn to Hourigan, Kluger & Quinn P.C.” (No. 03 CV 338, docket entry no. 12.) For ease of reference, we will refer to the named defendant as HK&Q.

      . A former client who wishes to pursue a civil action for damages against a criminal defense attorney must establish: (1) employment of the attorney; (2) reckless or wanton disregard of the accused’s interests on the part of the attorney; (3) that the attorney’s culpable conduct was the proximate cause of the harm, i.e., “but for” the attorney’s actions, the accused would have obtained an acquittal or a complete dismissal of the charges; (4) as a result of that harm, the accused has suffered damages; and (5) the accused has pursued post-trial remedies and obtained relief which was dependent upon attorney error. Bailey v. Tucker, 533 Pa. 237, 250-51, 621 A.2d 108, 115 (1993); Woolaver v. Farrell, 100 Lacka. Jur. 48, 51-52 (1998).

      . The comment also acknowledges, however, that “an assertion purporting to be on the lawyer’s own knowledge, as in an affidavit by the lawyer or in a statement in open court, may properly be made only when the lawyer knows the assertion is true or believes it to be true on the basis of a reasonably diligent inquiry.” Id. Barcola’s motion to compel is based upon the medical malpractice pleadings which were verified by Barcola rather than HK&Q, the pretrial memorandum and discovery responses submitted by HK&Q in that case, and the reports authored by damage experts retained by HK&Q in that matter. Bar-cola has not submitted any transcripts or affidavits containing factual assertions that were purportedly made by HK&Q based upon HK&Q’s own knowledge. Compare Office of Disciplinary Counsel v. Price, 557 Pa. 166, 173-74, 732 A.2d 599, 603 (1999).


source: Caselaw Access Project

author: JOHNSON, J,

license: Public Domain

text:
    MCI WorldCom Communications Inc. v. Atiyeh

      C.P. of Lehigh County,
    no. 2004-C-1405.

      Gerald E. Burns, for plaintiff.

      Nicholas R. Sabatine III, for defendants Atiyeh, U.S. TalkCheap.com LLC and U.S. Direct Inc.
    November 29, 2006
   JOHNSON, J,

INTRODUCTION

Before the court for disposition is the plaintiff’s complaint filed on May 28, 2004. A non-jury trial was held on August 21-23,2006. Plaintiff, MCI WorldCom Communications Inc. (MCI) filed suit against Dennis Atiyeh, U.S. TalkCheap.com LLC (USTC), U.S. Direct Inc. (USD), Irish Call Centers Limited and Jamaica Call Centers Limited (against both of whom MCI obtained a default judgment on April 25, 2005), English Sports Information Processors Ltd. and English Sports Betting Inc. (both of whom were never served with process in this lawsuit).

MCI seeks compensation for telecommunications services.

FINDINGS OF FACT

(1) Atiyeh is an adult individual who resides at 5828 Park Valley Road, Schnecksville, PA.

(2) MCI, now known as Verizon Business, is a global telecommunications company that provided, among other things, local and long distance telephone service.

(3) USD was a telecommunications company with offices at 850 Third Street, Whitehall, PA and 730 Boulevard, Kenilworth, NJ.

(4) USD was owned and controlled by Dennis Atiyeh.

(5) USD engaged in the sale of prepaid telephone calling cards.

(6) On January 4, 2002, Atiyeh, in his capacity as president of USD, executed a credit application on a form provided by MCI in which he represented that USD’s estimated monthly usage with MCI would be $10,000 and listed himself as president of USD. (Exhibit 46.)

(7) As part of the credit application process with MCI, USD submitted a balance sheet as of June 18, 2002.

(8) On July 10, 2002, MCI and USD entered into a telecommunications service agreement for the sale and purchase for certain telecommunications services (MCI/ USD agreement). Under the MCI/USD agreement, MCI agreed to provide switched telecommunications services to USD, and USD agreed to pay for those services according to the terms of the agreement. (Exhibit 1.)

(9) On July 19,2002, USD filed for Chapter 11 bankruptcy protection. (Exhibits 52, 59.)

(10) Atiyeh directed that the July bankruptcy petition be filed on behalf of USD.

(11) USD began receiving services from MCI in August of 2002. By the end of August, it had exceeded its credit limit, and billed over $140,000. (Exhibit 53.)

(12) USD failed to make payments according to the terms of the USD contract.

(13) USD received weekly invoices of its account that were addressed to “Atiyeh President of U.S. Direct.” (Exhibits 62, 63, 65-67, 69, 71, 72, 75, 78, 81, 83, 85, 90, 98.)

(14) MCI threatened to shut off service to USD due to USD’s failure to cure its delinquencies. (Exhibits 86, 100, 129.)

(15) Atiyeh represented to MCI that USD intended to cure its delinquencies. (Exhibit 45.)

(16) MCI entered into several repayment plans with USD through Atiyeh, but USD failed to make payments pursuant to the terms of those plans. (Exhibits 53, 73, 74, 89, 93, 102.)

(17) USD’s July 2002 bankruptcy was dismissed on September 24, 2002. (Exhibit 126.)

(18) On October 4,2002, MCI sent a demand disconnection notice to Atiyeh and USD. (Exhibit 124.)

(19) On October 11,2002, USD again filed for Chapter 11 bankruptcy protection. (Exhibits 64, 127.)

(20) Atiyeh directed the filing of USD’s October 2002 bankruptcy petition.

(21) USD’s October 2002 bankruptcy was dismissed on November 26, 2002. (Exhibits 79, 127.)

(22) After USD’s October 2002 bankruptcy was dismissed, MCI terminated USD’s service. (Exhibit 100.)

(23) In an attempt to collect the monies owed by USD, MCI filed an action in the District Court of Tulsa County, Oklahoma. (Exhibit 112.) (Oklahoma action.)

(24) In the Oklahoma action, judgment was entered in favor of MCI and against USD in the amount of $1,732,401.87, plus allowable interest and costs (USD judgment). (Exhibit 112.)

(25) The USD judgment was transferred to the Court of Common Pleas of Lehigh County, Pennsylvania and was indexed at docket no. 2003-N-0959. (Exhibit 112.)

(26) No payments have been made, nor have any assets been recovered, to satisfy the USD judgment.

(27) The defendants did not produce any corporate records for USD, nor did they satisfactorily explain the absence of corporate records for USD.

(28) Atiyeh is listed as USD’s sole (100 percent) shareholder in USD’s first bankruptcy petition and is listed as USD’s sole director, president and shareholder in USD’s second bankruptcy petition. (Exhibits 64 at USD00047 and 00060; 128.)

(29) An October 25,2002 letter from Atiyeh to Joshua Fondren identifies Atiyeh as CEO of USD. (Exhibit 68.)

(30) A November 7, 2002 letter from MCI to Atiyeh regarding USD’s payment obligations is addressed to Atiyeh as president of USD. (Exhibit 73.)

(31) MCFs weekly billing account reports were addressed to Atiyeh as president of USD. (Exhibits 62 at USD00178; 65 at USD00173; 67 at USD00161; 69 at USD00154; 71, 72 atUSD00139; 75, 78 atUSD00125; 81 atUSD00118; 83 atUSDOOllO; 85, 90, 98.)

(32) Atiyeh identified himself as president of USD in a letter he sent by email to Josh Fondren of MCE (Exhibit 45.)

(33) Atiyeh hired the employees of USD.

(34) Atiyeh directed the employees of USD in their work.

(35) Atiyeh determined which bills to pay on USD’s behalf.

(36) Atiyeh also owned and controlled several companies including the following: U.S. TalkCheap.com LLC (USTC), Fisheries of the Future, Telephone USA, and English Sports Information Processors (ESIP).

(37) USD was merely a facade for the operations of Atiyeh.

(38) USD failed to keep proper corporate records or to observe corporate formalities.

(39) Despite MCFs requests, neither Atiyeh nor USD produced any documents in discovery in this case. Specifically, neither USD nor Atiyeh produced any tax returns and/or documents regarding the corporate form or structure of Atiyeh’s companies including minutes, resolutions, by-laws, articles of incorporation, registrations to do business and/or stock transfer books, general ledgers, journals, financial statements, balance sheets, income statements, profit and loss statements and/or cash flow statements.

(40) Atiyeh was ordered by the court to produce tax returns, corporate formation documents and accounting documents in discovery, but he failed to do so.

(41) MCI requested that Atiyeh produce these tax returns, corporate formation documents and accounting documents at time of trial, but he failed to do so.

(42) No evidence of the existence of any tax returns, accounting records or corporate formation documents for USD, USTC or any other companies owned and controlled by Atiyeh were produced, nor was any explanation for their absence given.

(43) No tax returns, accounting records or corporate formation documents existed for USD.

(44) USD was never incorporated in any state.

(45) USD never held any corporate meetings nor issued any dividends.

(46) Atiyeh did not consistently use payrolls or issue W2s or 1099s for USD.

(47) Donald Scorese never audited USD’s accounts and never prepared a financial statement for USD.

(48) USD filed no tax returns.

(49) The employees of USD were not paid at regular intervals.

(50) USD operated from the same address, had the same employees and had the same people in control as other companies owned and controlled by Atiyeh.

(51) USD employees and/or contractors did not have any sort of written employment agreement.

(52) USD and the other companies owned and controlled by Atiyeh operated interchangeably without regard for proper corporate form.

(53) Atiyeh caused USD assets to be commingled with assets of other companies owned and controlled by Atiyeh.

(54) During the years 2002 and 2003, the following bank accounts existed for companies owned and controlled by Atiyeh:

(a) USD had an account with Wachovia from 4/23/01 - 2/8/02. (Exhibit 13 at WAC0001, 32.)

(b) Atiyeh Publishing had an account with Wachovia from 12/12/00-2/8/02. (Exhibit 15 at WAC437, 473.)

(c) Telephone USA had an account with Wachovia from 1/1/02-1/15/03. (Exhibit 17 at WAC3304, 3363.)

(d) Fisheries of the Future had an account with Wachovia from 1/1/02-11/12/02. (Exhibit 20 at WAC3246, 3282.)

(e) USD had four accounts with PNC from 11/12/02-12/31/02. (Exhibits 21, 24, 26, 28.)

(f) US TalkCheap.com had an account with PNC from 11/12/02-3/31/03. (Exhibit 22.)

(g) Two USD accounts with Fleet from 2/21/02 to 10/31/02 and from 1/03 to 5/03. (Exhibits 34 and 36.)

(56) USD, Atiyeh and other companies owned and controlled by Atiyeh commingled funds, engaged in intercompany transfers and used the funds of one company to pay the debts of another.

(57) The following transactions are examples of the foregoing:

(a) A $15,000 US Treasury bail refund check made out to Atiyeh was deposited in USD’s account. (Exhibit 14 at WAC1860.)

(b) Atiyeh directed that funds from an ESIP bank account in Jamaica be used to pay part of USD’s debt to MCI. (Exhibits 49, 50, 54, 55.)

(c) USTC issued more than $ 15,000 in checks to USD, at Atiyeh’s direction. (Exhibit 23 at PNC00297, 00323.)

(d) Checks made out to Telephone USA, USTC, Las Vegas Sports News and Cash were deposited into USD’s Fleet bank account. (Exhibit 37 at FLT0026,28,30,4345, 73-76.)

(e) Checks made out to Telephone USA were deposited in USD’s Wachovia account. (Exhibit 14 at WAC1405-1407, 1854-1856, 1864-1865.)

(f) Checks from USD were made out to Cash (signed by Atiyeh) and Atiyeh. (Exhibit 14 at WAC2050, 2055-2056, 2064.)

(g) A wire transfer from USD was sent to an account at Toronto Dominion Bank with the beneficiary listed as English Sports Services (ESS) and the originator listed as Atiyeh. (Exhibit 14 at WAC2233.)

(h) Money orders addressed to USD were deposited in Telephone USA’s account. (Exhibit 18 at WAC0921922, 936.)

(i) Checks made out to USD were deposited in Telephone USA’s account and Fisheries of the Future’s account. (Exhibits 18 at WAC0730-733, 796, 871-872, 892-894, 924-926, 931, 975-982, 987-988, 995, 998-1003, 1033, 1047-1049, 1059, 1061; 19 at WAC2487, 3018-3020.)

(j) Checks from Atiyeh Publishing were made out to USD, ESS and Fisheries of the Future. (Exhibits 16 at WAC1313, WAC1358, WAC1361-1362, 1385-1386; 111.)

(k) Checks from ESS were made out to Fisheries of the Future and Telephone USA. (Exhibit 31 at PNC00703, 707, 717, 723; exhibit 33 at PNC895, 903, 1035, 1037, 1039, 1041,1043,1045,1047,1049, 1051,1053,1055, 1057.)

(l) Checks from Telephone USA were made out to Fisheries of the Future and were deposited in Telephone USA’s account and Fisheries of the Future’s account. (Exhibits 18 at WAC3235; 19 at WAC3243.)

(m) A check to ESIP was deposited in Fisheries of the Future’s account. (Exhibit 19 at WAC3086.)

(n) Checks from Atiyeh Publishing were made out to Cash and to Telephone USA. (Exhibit 16 at WAC1398; exhibit 31 at PNC901.)

(o) A check to Atiyeh Publishing was deposited in USD’s account. (Exhibit 14 at WAC 1852-1853.)

(p) Checks to Dennis Atiyeh were deposited in Atiyeh Publishing’s, and Fisheries of the Future’s accounts. (Exhibit 16 at WAC 1316; exhibit 19 at WAC2512,25 97, 2929.)

(q) A check to Telephone USA was deposited in Atiyeh Publishing’s account. (Exhibit 16 at WAC 1336.)

(r) A check to Atiyeh was made out by Telephone USA. (Exhibit 33 at PNC1225.)

(s) Checks from Atiyeh were made out to Fisheries of the Future and Telephone USA. (Exhibit 31 at PNC699702, 711, 721, 723-732; exhibit 33 at PNC897, 899, 905.)

(t) Checks to Cash were deposited in USD’s account. (Exhibit 37 at FLT0026, 28, 30.)

(58) Atiyeh directed Super M&M, a customer of USD that purchased phone cards, to write checks to Telephone USA, Fisheries of the Future and Dennis Atiyeh for amounts owed to USD during the period of USD’s bankruptcies (July 19,2002 through September 24,2002 and October 11, 2002 through November 26, 2002), as follows:

(a) 8/9/02 check for $15,000 (exhibit 19 at WAC2707);

(b) 8/12/02 check for $40,000 (exhibit 19 at WAC2814);

(c) 8/20/02 check for $20,000 (exhibit 19 at WAC2932); h. 9/17/02 check for $20,000 (exhibit 18 at WAC866); i. 9/23/02 check for $18,230 (exhibit 18 at WAC870); j. 10/22/02 check for $26,000 (exhibit 18 at WAC923); k. 10/16/02 check for $86,000 (exhibit 18 at WAC930); 1. 10/27/02 check for $80,000 (exhibit 18 at WAC990).

(59) Atiyeh took money from USD to pay for the expenses of another company controlled by Atiyeh.

(60) There is no evidence or documentation to justify or document any loan between USD and any other company controlled by Atiyeh, nor to document or justify any intercompany transfer between and among the companies owned and controlled by Atiyeh.

(61) Atiyeh used funds of companies he owned and controlled to pay his personal expenses.

(62) USD was undercapitalized, and maintained insufficient funds in relation to the expenses it could reasonably expect to incur.

(63) USD maintained insubstantial funds in its bank accounts. (Exhibit 21 at PNC0026-29, 48-57.)

(64) USD had cash shortages and cash flow problems and Atiyeh did not keep cash in USD.

CONCLUSIONS OF LAW AND FURTHER FINDINGS OF FACT

(1) In deciding whether alter ego liability exists, the concern is whether the corporate form is a sham, constituting a facade for the operations of the dominant shareholder. Village at Camelback Property Owners Association Inc., 371 Pa. Super. 452, 461, 538 A.2d 528, 533 (1988).

(2) A party seeking to pierce the corporate veil on an alter ego theory must establish that the controller ignored the separate status of the controlled corporation and so dominated and controlled its affairs that its separate existence was a sham. Garden State Tanning Inc. v. Mitchell Manufacturing Group Inc., 55 F. Supp.2d 337, 344-45 (E.D. Pa. 1999).

(3) It is the plaintiff’s burden to establish by a preponderance of the evidence that alter ego liability exists. Wheeling-Pittsburgh Steel Corp. v. Intersteel Inc., 758 F. Supp. 1054, 1058 (W.D. Pa. 1990).

(4) The factors to be considered in determining whether alter ego liability exists are: (1) whether corporate formalities have been observed and corporate records kept; (2) whether officers and directors other than the dominant shareholder himself actually function; and (3) whether the dominant shareholder used the assets of the corporation as his own. Village of Camelback, 371 Pa. Super. at 461, 538 A.2d at 533. The plaintiff is not required to prove fraud in order for the corporate existence to be disregarded. Id.

(5) Additional factors that can be considered are: (1) whether the corporation was undercapitalized; (2) whether the equity owners failed to adhere to corporate formalities; (3) whether the corporation and its equity owners substantially intermingled corporate and personal affairs; (4) non-payment of corporate dividends; (5) insolvency of the debtor corporation; (6) siphoning of corporate funds by the dominant shareholders; (7) non-functioning of the other officers or directors of the corporation; (8) lack or absence of corporate records; (9) intermingling of funds; (10) the fact that the subservient corporation is merely a facade for operations of a dominant shareholder; and (11) whether the equity owners used the corporate form to perpetrate fraud or a fundamental unfairness exists. Lumax Industries Inc. v. Aultman, 543 Pa. 38, 42, 669 A.2d 893, 895 (1995); American Bell Inc. v. Federation of Telephone Workers, 736 F.2d 879, 886 (3d Cir. 1984); Pearson v. Component Technology Corp., 80 F. Supp.2d 510, 523 (W.D. Pa. 1999).

(6) Overall, no single factor is determinative. Connors v. Peles, 724 F. Supp. 1538, 1558 (W.D. Pa. 1989).

(7) A balancing approach is to be employed, and the weight of all factors is important in determining what equity requires. Id.; Village at Camelback, 371 Pa. Super. at 461, 538 A.2d at 533.

(8) Assets of corporations owned by the same principal(s) are considered to be commingled when they are utilized without regard for the corporations’ separate existences and only for the benefit of the principal(s). Talens Landing Inc. v. M/V Ventures II, 656 F.2d 1157, 1160-61 (5th Cir. 1981); Quad/Graphics Inc. v. Fess, 548 F. Supp. 966, 969 (D.C. Wis. 1982).

(9) Atiyeh was the sole, dominant and controlling shareholder of USD.

(10) The assets and funds of Atiyeh, USD, and the other companies owned and controlled by Atiyeh were all interrelated and commingled, thus, destroying their independent corporate identities.

(11) Atiyeh, USD and the other companies owned and controlled by Atiyeh engaged in intercompany transfers.

(12) Atiyeh had the ability to direct the transfer of funds between USD and other companies owned and controlled by Atiyeh.

(13) A corporation is considered to be undercapitalized when its capital is not proportionate to the obligations it undertakes. Trustees of Nat. Elevator Industry Pension v. Lutyk, 140 F. Supp.2d 447,458 (E.D. Pa. 2001); Connors, 724 F. Supp. at 1561.

(14) USD was insolvent and undercapitalized because its capital was not proportionate to the obligations it undertook.

(15) Siphoning of funds occurs when a corporation’s assets are diverted to satisfy obligations owed to shareholders, officers, and other corporate insiders instead of outside creditors. Lutyk, 140 F. Supp.2d at 458.

(16) This factor is especially relevant when the diversion of funds occurs at a time when the corporation’s finances are “troubled.” Id.

(17) USD’s funds were siphoned by Atiyeh to satisfy Atiyeh’s and the companies’ obligations.

(18) Corporations are required to maintain certain formalities and records to bolster the fictional separateness between the corporation and its constituents. Lutyk, 140 F. Supp.2d at 460.

(19) Closely-held corporations are held to a relaxed standard, but they should at least maintain: tax returns, accounting books, insurance records, bank records, a registered office, articles of incorporation, by-laws, issuable stock certificates, regular director and shareholder meetings, and corporate meeting books. Id. at 460; Connors, 724 F. Supp. at 1564.

(20) USD and Atiyeh disregarded corporate formalities and kept no records.

(21) In order to justify piercing the corporate veil, there must be some degree of injustice or fundamental unfairness in preserving the corporate veil. Lutyk, 140 F. Supp.2d at 460.

(22) An element of injustice exists in this matter because all the factors necessary to pierce USD’s corporate veils have been shown.

(23) Atiyeh is the alter ego of USD, and is liable for all of its debts and judgments.

(24) This court takes judicial notice of the fact that, on November 26, 2003, a judgment was entered in this court at docket no. 2003-N-0959 in favor of MCI and against USD for USD’s breach of the MCI/USD agreement in the amount of $1,732,401.87 plus interest at six percent. See Krenzel v. SEPTA, 840 A.2d 450, 454 at n.6 (Pa. Commw. 2003).

(25) Atiyeh is liable as alter ego of USD for the $ 1,732,401.87 USD judgment plus interest at the rate of six percent calculated from November 26,2003, the date of entry of the USD judgment.

(26) To prove fraud, the plaintiff must prove, by clear and convincing evidence, that the defendant made a misrepresentation with knowledge of its falsity and with the intent of misleading the plaintiff to rely on it, that the plaintiff justifiably relied on such misrepresentation and that, the plaintiff was damaged as a proximate result. Pa. Standard Jury Instruction 13.14; Shane v. Hoffman, 227 Pa. Super. 176, 324 A.2d 532 (1974).

(27) Plaintiff’s burden of proof as to fraud has not been met.

(28) Plaintiff’s burden of proof as to negligent misrepresentation has not been met.

(29) Plaintiff’s burden of proof as to conversion has not been met.

(30) The doctrine of res judicata bars relitigation of the same cause of action between parties and their privities. Dempsey v. Cessna Aircraft Co., 439 Pa. Super. 172, 653 A.2d 679 (1995). Res judicata bars not only relitigation of issues which were raised but also issues or arguments which might have been raised. Mintz v. Carlton House Partners, 407 Pa. Super. 464, 595 A.2d 1240 (1991).

(31) In order for res judicata to apply, four elements must be present: (1) identity of the thing sued for; (2) identity of the cause of action; (3) identity of persons and parties to the actions; and (4) identity of the quality or capacity in the persons for or against whom the claim is made. Stewart v. Tomis Development Co., 315 Pa. Super. 63, 461 A.2d 636 (1983).

(32) The first two elements are not in dispute in the instant action and Atiyeh has been found by this court to be the alter ego of USD, which was a party to the action which resulted in the USD judgment.

(33) “When a party has obtained judgment against a corporation, and sues individuals to enforce the judgment, the individuals are in privity with the judgment if they are in privity with the corporation.” Minnesota Mining & Manufacturing Co. v. Egly, 1989 WL 55384 (E.D. Pa.) at *2; Le Cabaret 481 Inc. v. Municipality of Kingston, 2005 WL 114171 (M.D. Pa.) at 6.

(34) When a plaintiff obtains a judgment against a corporation, but is unable to collect because of the corporation’s insolvency, that plaintiff may then sue an individual owner seeking recovery for the judgment and who will be liable for the judgment if he is found to be the alter ego of the corporation. Dudley v. Smith, 504 F.2d 979 (5th Cir. 1974).

(35) In determining whether res judicata will apply, the essential inquiry is whether the ultimate and controlling issues have been decided in a prior proceeding in which the present parties actually had an opportunity to appear and assert their rights. Callery v. Municipal Authority of Blythe Township, 432 Pa. 307, 243 A.2d 385 (1968); Stevenson v. Silverman, 417 Pa. 187, 208 A.2d 786 (1965); Dempsey v. Cessna Aircraft Company, 439 Pa. Super. 172, 653 A.2d 679 (1995); In re Private Road in Union Township, 148 Pa. Commw. 522, 611 A.2d 1362 (1992); Fiore v. Commonwealth, Department of Environmental Resources, 96 Pa. Commw. 477, 508 A.2d 371 (1986).

(36) In the Oklahoma action, the ultimate and controlling issues involved in the instant case were decided. The subject matter of that action was the same breach of the same MCI/USD agreement by USD for the same period of time. In the Oklahoma action, both MCI and USD actually had an opportunity to appear and assert their rights, even though, ultimately, a default judgment was entered against USD. USTC was not named as a defendant in that action and so did not have that opportunity, but there has been insufficient evidence presented to sustain any claim by MCI against USTC. Atiyeh was not named as a defendant in that action, but since we have found that he is the alter ego of USD, he, like USD, had the opportunity to appear and assert his rights. Therefore, the doctrine of res judicata applies to all contract claims and quasi-contract claims in plaintiff’s complaint.

DISCUSSION

Pursuant to the findings set forth above, the court makes following dispositions of the six specific counts in plaintiff’s complaint:

Count I — Alter ego liability for judgment — MCI against Dennis Atiyeh, U.S. TalkCheap, ICC, JCC, ESIP and ESB

As to Atiyeh, MCI has met its burden of proof of a preponderance of the evidence as to the claim set forth in Count I and, therefore, Count I is sustained as against Atiyeh as the alter ego of USD. As to the remaining defendants, MCI has failed to meet its burden of proof and Count I is, therefore, dismissed as to all defendants other than Atiyeh.

Count II — Breach of contract — MCI against all defendants

As to USD and Atiyeh as the alter ego of USD, the claim set forth in Count II is barred by the doctrine of res judicata and Count II is, therefore, dismissed as to USD and Atiyeh. As to the remaining defendants, the plaintiff has failed to meet its burden of proof and Count II is, therefore, dismissed as to all defendants other than Atiyeh.

Count III — Quantum meruit — MCI against all defendants

As to USD and Atiyeh as the alter ego of USD, the claim set forth in Count III is barred by the doctrine of res judicata and Count III is, therefore, dismissed as to USD and Atiyeh. As to the remaining defendants, the plaintiff has failed to meet its burden of proof and Count III is, therefore, dismissed as to all defendants other than Atiyeh.

Count IV — Unjust enrichment — MCI against all defendants

As to USD and Atiyeh as the alter ego of USD, the claim set forth in Count IV is barred by the doctrine of res judicata and Count IV is, therefore, dismissed as to USD and Atiyeh. As to the remaining defendants, the plaintiff has failed to meet its burden of proof and Count IV is, therefore, dismissed as to all defendants other than Atiyeh.

Count V — Fraud—MCI against all defendants

MCI has not met its burden of proof of clear and convincing evidence as to the claim set forth in Count V. The evidence is not so clear, direct, weighty, and convincing that the court can reach a clear conviction, without hesitancy, of the truth of the precise facts in issue related to MCI’s claim that the defendants acted fraudulently or made fraudulent misrepresentations to MCI. Therefore, Count V is dismissed.

Count VI — Negligent misrepresentation — MCI against all defendants

MCI has not met its burden of proof of a preponderance of the evidence as to the claim set forth in Count VI. The court is not persuaded that it is more probably accurate and true than not that any of the defendants made negligent misrepresentations to MCI. Therefore, Count VI is dismissed.

Count VI — Conversion—MCI against all defendants (Note: This is the 7th count, but.is mis-numbered in the complaint as the second VI.)

MCI has not met its burden of proof of a preponderance of the evidence as to the claim set forth in Count VI. The court is not persuaded that it is more probably accurate and true than not that any of the defendants committed a conversion of MCI’s rights in property, including, but not limited to, telecommunications facilities and airtime minutes. Therefore, Count VI (7th count) is dismissed.

CONCLUSION

Based upon the foregoing, judgment is entered in favor of plaintiff MCI WorldCom Communications Inc. and against defendant Dennis Atiyeh in the amount of $1,732,401.87 plus interest at the rate of six percent, calculated from November 26, 2003, the date the USD judgment was transferred to the Court of Common Pleas of Lehigh County, Pennsylvania.

ORDER

And now, November 29,2006, after non-jury trial on plaintiff’s complaint against defendants, Dennis Atiyeh, U.S. TalkCheap.com LLC and U.S. Direct Inc., and for the reasons set forth in the accompanying opinion; it is ordered that Count I is sustained against defendant Dennis Atiyeh, Counts II, III, IV, V, VI and VI (7th count) are dismissed, and judgment is entered in favor of plaintiff MCI WorldCom Communications Inc. and against defendant Dennis Atiyeh in the amount of $1,732,401.87 plus interest at the rate of 6 percent, calculated from November 26, 2003.


author: PLATT, J,

text:
    Commonwealth v. Nigro

      C.P. of Lehigh County,
    no. 2310 of 2005.

      M. Eric Schoenberg and Jennifer A. Buck, deputy attorneys general, for Commonwealth.

      Craig B. Neely, for defendant.
    June 26, 2006
   PLATT, J,

After a jury trial before the undersigned, the within defendant, Gordon Nigro, was found guilty of Count 2 of an Information charging him with Workers’ Compensation Insurance Fraud, in violation of the Act of June 2, 1915, P.L. 736, no. 338, §1102, added July 2, 1993, P.L. 190, no. 44, §20, as amended, 77 P.S. § 1039.2(10). Prior to sentencing, which occurred on March 16,2006, a pre-sentence report was prepared by the Probation Office of Lehigh County. The defendant was sentenced to undergo imprisonment for a period of not less than three months nor more than 23 months in Lehigh County Prison, and ordered to pay the costs of prosecution and make restitution to the Public Service Mutual Insurance Company in the sum of $6,066.34. The defendant was granted immediate work release. No post-sentence motions were filed. A timely appeal was filed by the defendant from the judgment of sentence on March 22,2006. After sentencing, privately retained counsel for the defendant requested that bail be continued since his client intended to file an appeal. Bail, pending and conditioned on filing an appeal, was set at $15,000 cash or surety. The defendant posted that bail, and complied with the further condition thereof that a timely appeal be, in fact, filed.

On March 27, 2006,1 entered an order directing the defendant to file a concise statement of matters complained of on appeal within 14 days as provided in Pa.R.A.P. 1925(b).

A document entitled “defendant’s concise statement of matters complained of on appeal, pursuant to Pa.R.A.P. 1925(b),” was filed by the defendant with the clerk of courts — criminal on April 10, 2006, but a copy was not served on the trial judge. The allegations of the 1925(b) statement can be broken down into three categories: a challenge to the sufficiency of the evidence, a challenge to the weight of the evidence and a challenge to the alleged manner in which the jury deliberations were conducted.

I. SUFFICIENCY OF THE EVIDENCE

In his statement, the defendant contends, as he similarly did at trial, that the Commonwealth proved all of the elements of the Workers’ Compensation Fraud in violation of 77 P.S. §1039.2(10) except that his failure to report his employment to the compensation carrier was knowingly and with intent to defraud the insurer. See 1925(b) statement, ¶¶6 through 30. He acknowledges, however, that he did submit a form to the earner on July 23, 2002, falsely indicating that he was not employed at the time, when in fact he was employed. 1925(b) statement ¶8. He then argues: (a) that the jury must have found that he did not do this with the requisite mens rea since they acquitted him of the other counts of the Information; and (b) that there was no direct evidence culpability other than the form submitted to the carrier on July 23, 2002. 1925(b) statement, ¶¶15, 20.

Defendant, Gordon Nigro, injured his neck while moving a refrigerator in the Episcopal House, a senior citizen housing facility located in the City of Allentown, Lehigh County, Pennsylvania, on November 11,2000. Mr. Nigro had been employed by Episcopal House as a maintenance assistant since September 4, 2000. As a result of that injury, the defendant filed a claim for workers’ compensation. It was medically determined that the defendant was totally disabled and unable to work, and the defendant started receiving workers’ compensation benefits. As permitted by law, the insurance carrier requested that the defendant submit to an independent medical examination (IME) in November of 2001. Defendant said he could not make that examination because he had a cold and was not feeling well. A second IME was scheduled in December 2001, but the defendant failed to show for that appointment. The carrier petitioned the workers’ compensation court to compel the examination, and before the matter was heard, the defendant agreed to the IME and submitted to it on March 12,2002. The medical examiner determined that the defendant was no longer totally disabled and able to work at a modified duty position — his disability was then only partial. Because his employer had no such work for him, the carrier, on April 26,2002, notified the defendant that he should look for other employment. Commonwealth exhibit 2. Mr. Nigro did not respond to this notice. On July 2, 2002, the carrier sent the defendant three documents by certified mail: Commonwealth exhibits 3, 4 and 5, respectively a cover letter, a form to verify if he were employed and a form to verify earnings. Defendant completed and returned those forms to the carrier. In his response on the forms, the defendant asserted that he was not employed or self employed and that he had not received any income from employment, all of which was untrue since the defendant was employed virtually full-time by a former employer, Fresenius, a medical holding company which, inter alia, provides dialysis services. Mr. Nigro was employed by Fresenius from April 29, 2002 to September 22, 2002, working 35 to 40 hours per week while collecting full disability workers’ compensation.

A person commits a violation of section 20 of 77 P.S. § 1039.2(10) if he “knowingly and with intent to defraud, fails to make the report [of his employment as] required under section 311.1.” (77 P.S. §631.1.) There was certainly evidence from which the jury could find that the act of not reporting his employment was knowing and with the intent to defraud from the fact that his disability was changed from full to partial and that he was so notified by the carrier; from the fact that he continued to collect full disability after that notice and while gainfully employed almost 40 hours per week; and from the fact that he completed forms under penalty of law indicating that he was neither employed nor receiving wages. This is true despite his testimony that he carelessly and inaccurately made those reports to the carrier.

When reviewing a sufficiency of the evidence claim:

“[A]n appellate court must view all the evidence and all reasonable inferences arising therefrom in the light most favorable to the Commonwealth as the verdict winner in order to determine whether the evidence was sufficient to enable the fact-finder to find that all the elements of the offenses were established beyond a reasonable doubt.” Commonwealth v. Hall, 549 Pa. 269, 280, 701 A.2d 190, 195 (1997), cert. denied, 523 U.S. 1082, 118 S.Ct. 1534, 140 L.Ed.2d 684 (1998). “Amere conflict in the testimony does not render the evidence insufficient, ... because it is within the province of the fact-finder to determine the weight to be given to the testimony and to believe all, part, or none of the evidence.” Commonwealth v. Moore, 436 Pa. Super. 495, 501, 648 A.2d 331, 333 (1994).

II. WEIGHT OF THE EVIDENCE

This challenge is contained in H 31 through 33 of the 1925(b) statement. Not much need be said about the challenge to the weight of the evidence other than it has been waived for failure to file a post-sentence motion in the case.

“Weight of the evidence claims must be raised via oral, written, or post-sentence motions in the trial court for the issue to be preserved for appeal. Pa.R.Crim.P. 607; Commonwealth v. Hodge, 441 Pa. Super. 653, 660, 658 A.2d 386, 389 (1995). Appellant failed to raise the weight of the evidence with the trial court. Accordingly, the issue is waived.” Commonwealth v. O’Bidos, 849 A.2d 243, 252 (Pa. Super. 2004). See also, Comment, Pa.R.Crim.P. 697 (Challenges to the weight of the evidence). (“The purpose of this rule is to make it clear that a challenge to the weight of the evidence must be raised with the trial judge or it will be waived.”)

III. ALLEGATIONS OF IRREGULARITIES REGARDING JURY DELIBERATIONS

These challenges are contained in ¶¶34 through 55 of the 1925(b) statement. The defendant’s allegations in this regard are that the jury was required to deliberate for too long a period, allegedly 10 hours, and that the trial judge coerced them into reaching a verdict by implying that the jury would have to deliberate all night and into the weekend if they did not reach a verdict. The defendant also alleges that certain notes from the jury to the trial judge were not made known to the litigants and that the court should have declared a mistrial because the jury was hopelessly deadlocked. See 1925(b) statement, ¶¶40 through 44, 47, 52. In addition, the defendant challenges the jury verdicts on the various counts as being inconsistent.

Concerning the length of jury deliberations, Commonwealth v. Bridges, 563 Pa. 1, 43-44, 757 A.2d 859, 881-82 (2000), stated:

“It is well-settled law that the amount of time that a jury is kept together to deliberate is another matter that is within the discretion of the trial judge, whose decision will only be reversed for an abuse of discretion or evidence that the verdict was the product of coercion of an overworked or fatigued jury. Commonwealth v. Chester, 526 Pa. 578, 587 A.2d 1367 (1999), cert. denied, 502 U.S. 959, 112 S.Ct. 422, 116 L.Ed.2d 442 (1991); Commonwealth v. Johnson, 542 Pa. 384, 668 A.2d 97 (1995). In Johnson, this court listed some factors to consider when determining whether the trial court abused its discretion: ‘the charges at issue, the complexity of the issues, the amount of testimony to consider, the length of trial, the solemnity of the proceedings and indications from the jury on the possibility of reaching a verdict.’ Id. at 108.”

Contrary to the defendant’s bald allegations, there is absolutely no evidence in this case that the verdict reached was a product of coercion or of an overworked or fatigued jury. The amount of time the jurors deliberated in this case was very reasonable. During their deliberations, the jurors were fed and allowed to take breaks from their deliberations. They returned to the courtroom and their questions were answered to the satisfaction of the jurors and counsel for the parties. Ultimately, the jurors appeared fresh when they returned with the verdict. This testimony in this trial took one day, and the closings, charge and deliberations took another. There was never any indication from the jury that they were deadlocked or that they could not reach a verdict. There was never any coercion of the jury by the court; nor was there ever a motion for a mistrial made by counsel for the defendant.

The notes of testimony covering what occurred after the jury began deliberating have been transcribed and are contained in a separate volume of the record marked “Notes of jury questions.” This record constitutes the sum and substance of all communications with the jury after the deliberations began. All notes to the judge were brought to the attention of the parties in open court; and all communications with the jury by the court were made in court in the presence of the defendant and counsel for the parties. There were no other communications. There was no coercion of the jury to reach a verdict. There were no threats about keeping the jury late.

Finally, the defendant argues that the jury verdicts on the various counts were “inconsistent.” The defendant was only convicted on one of the four counts contained in the Information. He was acquitted of presenting false, incomplete or misleading information, receiving total disability benefits while employed and theft by deception. As the Superior Court recently noted:

“‘[Ijnconsistent verdicts, while often perplexing, are not considered mistakes and do not constitute a basis for reversal.’ Commonwealth v. Petteway, 847 A.2d 713, 718 (Pa. Super. 2004). (citations omitted) Rather, ‘[t]he rationale for allowing inconsistent verdicts is that it is the jury’s sole prerogative to decide on which counts to convict in order to provide a defendant with sufficient punishment.’ Commonwealth, v. Miller, 441 Pa. Super. 320, 326, 657 A.2d 946, 948 (1995). (citations omitted) ‘When an acquittal on one count in an indictment is inconsistent with a conviction on a second count, the court looks upon the acquittal as no more than the jury’s assumption of a power which they had no right to exercise, but to which they were disposed through lenity. Thus, this court will not disturb guilty verdicts on the basis of apparent inconsistencies as long as there is sufficient evidence to support the verdict. ’ Petteway, supra. Commonwealth v. Frisbie, 889 A.2d 1271, 1273 (Pa. Super. 2005).

ORDER

And now, June 26, 2006, the record being complete, it is ordered that the clerk of courts — criminal for Lehigh County transmit this record to the prothonotary of the Superior Court forthwith.

      . “Knowingly and with intent to defraud, fails to make the report required under section 311.1 [77 P.S. §631.1],” by not reporting, in the language of Count 2 of the Information, “his employment to Public Service Mutual Insurance Company while receiving total disability benefits from that company.”

      . The 1925(b) statement which consists of 10 typed pages, and contains 55 numbered paragraphs, some with multiple sub-paragraphs, is far from concise.

      . The rule requires such service, and further provides that “[a] failure to comply with such direction may be considered by the appellate court as a waiver of all objections to the order, ruling or other matter complained of.” See also, Commonwealth v. Schofield, 585 Pa. 389, 393, 888 A.2d 771, 774 (2005), “ failure to comply with the minimal requirements of Pa.R.A.P. 1925(b) will result in automatic waiver of the issues raised.”

      . At trial, defendant testified that, when he filed reports with the insurance carrier regarding whether or not he was employed or had received earnings, he said “no” without really reading the reports.

      . Commonwealth exhibit 5.

      . 77 P.S. §631.1, which provides: “Employe’s report to insurer; verification form
      “(a) If an employe is receiving compensation under section 306(a) or (b), the employe shall report, in writing, to the insurer . .. [i]f the employe has become or is employed or self-employed in any capacity.”

      . Count 1,77 P.S. §1039.2(2).

      . Count 3, 77 P.S. §1039.2(11).

      . Count 4,18 Pa.C.S. §3922(a)(l) and (3).


author: VARDARO, J,

text:
    Commonwealth v. Williams

      C.P. of Crawford County,
    no. MD 198-2006.

      Craig A. Howe, for Commonwealth.

      Bruce A. Barrett, for defendant.
    August 10, 2006
   VARDARO, J,

This matter has come before the court for a summary appeal hearing regarding an alleged violation of section 1371 of the Motor Vehicle Code (75 Pa.C.S. §1371). That section states the following:

“Operation following suspension of registration.-—

“(a) General rule. — No person shall operate and no owner shall permit to be operated upon any highway of a vehicle the registration of which has been suspended.”

The only testimony elicited at the time of the summary appeal hearing came from the arresting officer, Corporal Edward Kightlinger of the Meadville City Police Department. Corporal Kightlinger testified that at approximately 9:15 p.m. on April 21, 2006, he was on routine patrol in a marked police vehicle in full uniform. He was stopped at the intersection of Arch Street and the Meadville bypass behind a vehicle that he ultimately determined was being driven by the defendant. Both vehicles were in a lane to make a left-hand turn to go south on the bypass and apparently heavy rain was falling at the time. When the defendant’s vehicle made the turn, he did not go all the way to the southbound lane and, therefore, was going south in the northbound lane. Corporal Kightlinger observed the brake lights on the defendant’s vehicle light up and then the defendant’s vehicle was put into reverse and he got into the correct lane to go southbound on the Meadville bypass.

The officer pulled the defendant’s vehicle over and asked for his driver’s license, registration and insurance card, asking him if he understood why he had been stopped. The defendant apparently did indicate that he realized that he had turned south into the northbound lane, but attributed his error to the hard rain that was falling.

Corporal Kightlinger determined that the defendant’s driver’s license was valid, but that the registration for the vehicle the defendant was driving was suspended due to an insurance cancellation. The corporal noted that the vehicle was not registered to the defendant so he went back to the defendant to ask him to clarify that issue.

The defendant indicated that the vehicle was his sister’s from Bradford and that he was using it. He further indicated to the officer that he didn’t realize that the registration was expired, called his sister on a cell phone immediately and Corporal Kightlinger spoke with her on the telephone.

Apparently the defendant’s sister indicated that she did not know that the registration was suspended, but that she had changed insurance companies, apparently resulting in some lapse of insurance coverage in the past. She indicated she did not know she had to return the license plate to the Department of Transportation when she did not have insurance and then renew the insurance coverage.

The officer testified that there was, in fact, valid insurance on the vehicle on April 21,2006, and that a registration sticker indicating that the registration was good through June 2006 was on the license plate on the vehicle the defendant was driving.

DISCUSSION

The plain language of section 1371 would seem to indicate that a person operating the motor vehicle with a suspended registration is guilty of this offense whether or not that person has knowledge of the suspension of the registration.

There are no appellate or even county court cases that address that issue.

We, therefore, will consider this issue as a case of first impression, at least in Crawford County.

In doing so, we look to appellate court decisions regarding other sections of the Motor Vehicle Code that are worded similarly.

Section 1543(b) of the Motor Vehicle Code (75 Pa. C.S. 1543(b)), which addresses driving while operating privileges are suspended or revoked DUI related, states the following:

“(b) Certain offenses.—

“(1) A person who drives a motor vehicle on a highway or trafficway of this Commonwealth at a time when the person’s operating privilege is suspended or revoked as a condition of acceptance of Accelerated Rehabilitative Disposition for a violation of section 3802 (relating to driving under the influence or controlled substance) or the former section 3731, because of a violation of section 1547(b)(1) (relating to suspension for refusal) or 3802 or former section 3731 or is suspended under section 1581 (relating to driver’s license compact for an offense substantially similar to a violation of section 3802 or former section 3731 shall, upon conviction, be guilty of a summary offense ....”

Obviously, that subsection of the Motor Vehicle Code, similar to section 1371, seems to indicate that the Commonwealth does not have to prove that a defendant had knowledge of the suspension, revocation or cancellation of that defendant’s operating privilege to prove a defendant guilty of this offense.

The Superior Court of Pennsylvania, however, in addressing criminal culpability for a violation of section 1543(b), has clearly held that actual notice of the driver’s license suspension is necessary for a defendant to be convicted for a violation of that subsection. Commonwealth v. Brewington, 779 A.2d 525 (Pa. Super. 2001).

As the court pointed out in that case, actual notice can be inferred by circumstantial evidence, but in the case before us it is conceded by the Commonwealth that the defendant did not have actual notice that the registration was suspended when he was driving his sister’s vehicle.

The Superior Court of Pennsylvania has reached a similar conclusion that “actual notice” is necessary for a conviction under section 1606 of the Vehicle Code (75 Pa.C.S. § 1606) regarding the suspension of a commercial driver’s license and again, a review of the language of that statute would seem to indicate a defendant could be convicted regardless of his knowledge or “actual notice” of the suspension. Commonwealth v. Rose, 820 A.2d 164 (Pa. Super. 2003).

We, thus, conclude that the same logic must apply to a violation of section 1371. That conclusion is particularly compelling in this case where the defendant was not the owner of the vehicle; there was what appeared to be a valid registration card in the vehicle; the vehicle had a license plate with what appeared to have a valid sticker on it and there was a valid insurance card in the vehicle. Further, there was no indication that the defendant had “actual knowledge” that the registration had been suspended for the vehicle.

Accordingly, we will enter the following verdict:

VERDICT

And now, August 10, 2006, after a summary appeal hearing, for the reasons we have set forth in the attached memorandum, we find that the defendant is not guilty of violating section 1371 of the Motor Vehicle Code.

Any fines or costs that have been paid by the defendant that are refundable fines and costs shall be refunded to him by the clerk of courts forthwith.


author: SHEPPARD JR., J,

text:
    AAV Inc. v. Dav El Reservations System Inc.

      C.P. of Philadelphia County,
    August Term 2006,
    no. 1525.

      Maurice R. Mitts, for plaintiffs.

      Alan C. Promer, for defendants.
    April 2, 2007
   SHEPPARD JR., J,

Before the court are defendant’s preliminary objections to plaintiff’s complaint. For the reasons discussed, the preliminary objections are sustained, in part. The dispute between AAV and Dav El Services Inc. is subject to arbitration.

DISCUSSION

This disputes involves an agreement for limousine services between plaintiff AAV and defendant Dav El Services. According to the complaint, the agreement was first executed in 1980 and was subsequently renewed in 1998. Plaintiffs allege that the agreement was wrongfully terminated in May 2004 by all of the Dav El defendants, and allege further that, following this wrongful termination, defendants wrongfully gave bookings to other limousine services, including defendants Celebrity Limousine Service Inc. and Eagle Limousine Inc.

Defendants filed preliminary objections arguing, inter alia, that this court lacks jurisdiction over the matter in that the parties agreed to submit the dispute to arbitration. 42 Pa.C.S. §7303 states:

“A written agreement to subject any existing controversy to arbitration or a provision in a written agreement to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity relating to the validity, enforceability or revocation of any contract.” 42 Pa.C.S. §7303.

Judicial inquiry in determining whether a suit must proceed to arbitration requires a determination as to whether: (1) a valid agreement to arbitrate exists between the parties and, if so, (2) whether the dispute involved is within the scope of the arbitration provision. Smith v. Cumberland Group Ltd., 455 Pa. Super. 276, 284, 687 A.2d 1167, 1171 (1997); Messa v. State Farm Insurance Company, 433 Pa. Super. 594, 597, 641 A.2d 1167, 1168 (1994); PBS Coal Inc. v. Hardhat Mining Inc., 429 Pa. Super. 372, 376-77, 632 A.2d 903, 905 (1993).

Here, the agreement contains a valid agreement for arbitration under paragraph 27, which states:

“Any controversy, dispute, or question arising out of, in connection with, or in relation to this agreement or out of, in connection with or in relation to this agreement or its interpretation, performance or nonperformance or any breach thereof shall be determined by arbitration conducted in New York City in accordance with the existing rule of the American Arbitration Association, and judgment upon any award, which may include an award of damages, may be entered in the highest state or federal court have [sic] jurisdiction. Nothing contained herein shall in any way deprive the Franchisor of its right to obtain injunctive or other equitable relief as previously set forth herein in lieu of arbitration.” Compl. at exhibit 1 at ¶27.

The inquiry then is whether the instant dispute falls within the scope of the arbitration provision. Whether a particular dispute falls within a contractual arbitration provision is a matter of law for the court to decide. Shadduck v. Christopher J. Kaclik Inc., 713 A.2d 635, 637 (Pa. Super. 1998). Pennsylvania law advocates strict construction of arbitration agreements and dictates that any doubts or ambiguity as to arbitrability be resolved in favor of arbitration. Smith, 455 Pa. Super. at 284, 687 A.2d at 1171. The fundamental rule in construing a contract is to ascertain and give effect to the intention of the parties. Lower Frederick Township v. Clemmer, 518 Pa. 313, 329, 543 A.2d 502, 510 (1988). In order to determine the meaning of the agreement, the court must examine the entire contract, taking into consideration “the surrounding circumstances, the situation of the parties when the contract was made and the objects they apparently had in view and the nature of the subject matter.” Huegel v. Mifflin Construction Company Inc., 796 A.2d 350, 354 (Pa. Super. 2002).

This court finds that the broad arbitration provision at issue encompasses all of the stated claims between plaintiff AAV and defendant Dav El Services. Each claim turns — at least on some level — on whether Dav El Services violated and/or wrongfully terminated the agreement. Moreover, while the other defendants are not bound by the agreement, the outcome of the claims against them will be directly impacted by the decision whether Dav El Services breached the agreement.

All remaining claims in this action are stayed pending the resolution of this arbitration. Nothing in this order precludes any of the remaining defendants — or plaintiff ASV — from joining in the arbitration proceeding, if they so choose. Nor does this order prejudice the plaintiffs from pursuing equitable remedies once there has been a determination at the arbitration concerning the parties’ obligations under the agreement.

The court will enter a contemporaneous order consistent with this opinion.

ORDER

And now, April 2,2007, upon consideration of defendants’ preliminary objections, the response in opposition, the respective memoranda, all matters of record and in accord with the opinion being filed contemporaneously, it is ordered:

(1) Defendants’ preliminary objections are sustained, in part, as to the claims between plaintiff AAV and defendant Dav El Services. This matter is subject to arbitration pursuant to the written agreement between the parties.

(2) All further proceedings are stayed pending the resolution of this arbitration.

      . The Dav El defendants include: Dav El Reservations System Inc., Dav El Services Inc., Dav El New Jersey Inc.

      . Based on the allegations of the complaint, it is unclear why plaintiff ASV is a party to this lawsuit. The complaint indicates that ASV is a wholly-owned subsidiary of AAV (compl. at ¶3) and that Anthony S. Viscusi is president of both companies. (Id. at ¶11.) However, there is no specific explanation as to the basis for ASV’s standing in this lawsuit.


author: MOTTO, P.J.,

text:
    Brueckner v. Stewart
    C.P. of Lawrence County,
    no. 10617 of 2006, C.A.

      Dominic D. Salvatori, for plaintiff.

      Jeffrey A. Kubay, for defendant.
    December 20, 2006
   MOTTO, P.J.,

Before the court for consideration is defendant Adam C. Stewart’s preliminary objections filed in response to the plaintiffs’ complaint in the above-captioned case. For the following reasons the defendant’s preliminary objections are denied.

The complaint alleges that on May 27,2005, the plaintiffs, Flelen and David Brueckner, were involved in an automobile accident with the defendant. The complaint further alleges that plaintiff David Brueckner was driving on East Erie St. (US Route 6), near the intersection with Water St., in Linesville. Helen Brueckner, his wife, was a passenger. The plaintiffs allege that while defendant was driving behind their vehicle he failed to stop and suddenly, without warning, smashed into the rear of their car and fled the scene. Plaintiffs further allege that the defendant was intoxicated at the time of the accident. Paragraph 4 of the complaint states that the defendant made the following negligent choices: (a) following too closely, (b) crashing into plaintiffs’ car, (c) driving under the influence of alcohol, (d) accelerating when it was unsafe to do so, (e) driving too fast for conditions, (f) ignoring the traffic conditions around him, and (g) fleeing the scene without stopping, as required by law.

Count V, which incorporated paragraph 4, requests punitive damages, and claims that the “defendant acted with reckless indifference and disregard to the interests of the plaintiffs by driving under the influence of alcohol, crashing into the rear of the plaintiffs’ moving vehicle at a high rate of speed, and then fleeing the scene. This conduct was so outrageous, and in such willful and reckless disregard of both the interests of the driving public in general, and the plaintiffs in particular, that punitive damages are warranted to prevent or deter such wrongful conduct in the future.”

On June 1, 2006, defendant filed preliminary objections claiming that under the law of this Commonwealth plaintiffs’ complaint fails to sufficiently allege a claim for punitive damages. Further, the defendant claims that the facts as alleged in this case do not rise to the level of “certain factual circumstances” as contemplated by the case law of the Commonwealth to warrant the recovery of punitive damages. Oral arguments were heard by this court on October 30, 2006. The plaintiffs argue that a punitive damage claim is proper in this case.

When considering preliminary objections, the court must accept all material facts set forth in the complaint, as well as all inferences reasonably deducible therefrom as admitted and true, and decide whether, based upon the facts averred, recovery is impossible as a matter of law. See Wiernik v. PHH U.S. Mortgage Corporation, 736 A.2d 616 (Pa. Super. 1999). Preliminary objections should only be sustained in cases that are clear and free from doubt. See Pennsylvania AFL-CIO ex. rel. George v. Commonwealth, 563 Pa. 108, 757 A.2d 917 (2000); Butler v. Illes, 747 A.2d 943 (Pa. Super. 2000). It should be clear from all of the pleaded facts that the pleader will be unable to prove facts sufficient to legally establish a right to relief. Id. Any doubt should be resolved by refusing to sustain the objections. See Ellenbogen v. PNC Bank N.A., 731 A.2d 175 (Pa. Super. 1999).

The sole issue in the above matter is whether the allegations contained in the plaintiffs’ complaint are sufficient to make out a claim for punitive damages. The principal authority in Pennsylvania on whether punitive damages may be imposed on an intoxicated driver who causes injury to another is Focht v. Rabada, 217 Pa. Super. 35, 268 A.2d 157 (1970). In Focht, the defendant driver, while proceeding at an excessive speed down a crowded thoroughfare, struck an automobile which, in turn, struck the plaintiff pedestrian, causing personal injuries to the plaintiff. The trial court had ruled that evidence of defendant’s intoxication was inadmissible because it could not support an award of punitive damages. On appeal, the Superior Court vacated the lower court’s ruling and concluded that, “under the appropriate circumstances, evidence of driving while under the influence of intoxicating liquors may constitute a sufficient ground for allowing pimitive damages” pursuant to section 908 of the Restatement of Torts. Id. at 42, 268 A.2d at 161. The court went on the state that “driving while under the influence of intoxicating liquor, with its very great potential for harm and serious injury, may under certain circumstances be deemed ‘outrageous conduct’ and ‘a reckless indifference to the interest of others’ sufficient to allow the imposition of punitive damages.” Id. at 40, 268 A.2d at 160. The Superior Court thus remanded the case to the trial court to determine whether the offers of proof were sufficient to submit the issue of punitive damages to the jury.

Pennsylvania had adopted the law of punitive damages as set forth in section 908 of the Restatement of Torts and the comments thereunder. Chambers v. Montgomery, 411 Pa. 339, 192 A.2d 355 (1963). Section 908(1) provided that “punitive damages are damages, other than compensatory or nominal damages, awarded against a person to punish him for his outrageous conduct.” Comment (b) of the above section stated that “outrageous conduct” consists of acts done with a bad motive or with a reckless indifference to the interests of others. Punitive damages are thus recoverable when the act is done with reckless indifference as well as with bad motive or intent. Focht, supra at 38, 268 A.2d at 159.

The Focht court determined that the phrase “reckless indifference” derived its meaning from comment (d) of section 500 of the Restatement of Torts. That comment provided that if the actor’s conduct is such as to involve a high degree of chance that serious harm will result from it to anyone who is within such range is conclusive of the recklessness of his conduct toward them. Id. at 39, 268 A.2d at 159.

The court further determined that in certain factual circumstances, the risks presented by a drunken driver may be so obvious and the probability that harm will follow so great that outrageous misconduct may be established without reference to motive or intent. Id. at 41, 268 A.2d at 161.

The question before us in the case sub judice is whether the complaint sufficiently avers an “appropriate circumstance” for the award of punitive damages. Pennsylvania is a fact-pleading state, and a complaint must give a defendant both notice of the plaintiff’s claim and the facts essential to support the claim. Smith v. Brown, 283 Pa. Super. 116, 120, 423 A.2d 743, 745 (1980). The critical facts needed to support a claim for punitive damages from an intoxicated driver would be those showing outrageous conduct, i.e., reckless indifference of the rights of others. While the defendant contends that the operation of a vehicle while intoxicated by itself is not a sufficient factual circumstance under the standard contemplated by the law of this Commonwealth to support a claim for punitive damages, this court finds that the plaintiff in this case has asserted additional facts which sufficiently set forth a punitive damage claim.

In Count V of the complaint the plaintiffs assert that the defendant acted with reckless indifference and disregard to the interests of the plaintiffs by driving under the influence of alcohol, crashing into the rear of plaintiffs’ car while moving at a high rate of speed, and then fleeing the scene. According to the plaintiffs, a jury may find that the operation of a vehicle while under the influence of alcohol constitutes a sufficient reckless indifference to the safety of others to allow the imposition of punitive damages. Plaintiffs argue that inherent in driving under the influence of alcohol is the potential for harm and serious injury. Applying the above-stated law to the facts of this case, this court finds that the allegations in the complaint are sufficient evidence of outrageous conduct to support a claim for punitive damages. Since a genuine issue of material fact exists, defendant’s preliminary objections must be denied.

Drawing a line between pleading facts and evidence is difficult, but such lines must be drawn. In this case, to require plaintiffs to provide further detail would require them to plead evidence. Our rules of pleading only require pleading of facts adequate to enable the defendant to effectively prepare a defense. At this stage in the proceedings, the plaintiffs have pled facts which sufficiently set forth a claim for punitive damages where plaintiffs have pled that defendant, while intoxicated, drove at a high rate of speed into the rear of plaintiffs’ automobile and fled the scene. As such, defendant’s preliminary objection asking that the claim for punitive damages be stricken is denied.

The court does agree with defendant that a claim for punitive damages is not an independent cause of action, but rather an element of damages on the underlying cause of action for negligence in Counts One and Three. However, the court finds that no useful purpose would be served by requiring plaintiffs to file an amended complaint, and plaintiffs claim for punitive damages shall be addressed at trial as an element of damages relevant to Counts One and Three of the complaint.

ORDER

And now, December 20,2006, for the reasons set forth in the accompanying opinion of even date herewith, it is ordered and decreed that the defendant’s preliminary objections are denied. However, plaintiffs’ claim for punitive damages shall be considered as an element of damages relevant to Counts One and Three of plaintiffs’ complaint and not as independent cause of action. The defendant shall file an answer to the complaint within 20 days of the date that this order of court is docketed.

      . The case was subsequently settled and the trial court did not have to rule on the above issue.