author: KOPRIVA, J.,

text:
    United Services Automobile Association v. Rieker

      C.P. of Blair County,
    no. 2002 GN 4721.

      Stephen J. Poljak, for plaintiff.

      Joseph J. Nypaver, for defendant.
    February 8, 2005
   KOPRIVA, J.,

PROCEDURAL HISTORY

Plaintiff filed a complaint commencing this declaratory judgment action on November 15,2002. In the complaint, plaintiff seeks a declaration that defendant is not entitled to first-party benefits under the terms of an insurance policy issued by United Services Automobile Association (USAA) to defendant’s mother, Theresa Rieker.

A related claim regarding plaintiff and defendant underwent extensive mediation and, by agreement, the parties placed this matter on hold pending the mediation results. Eventually, the parties indicated their desire to resume both matters through the litigation process. We appreciate the parties’ sincere efforts to find their own resolution to these cases.

On October 4, 2004, plaintiff filed a motion for summary judgment and a supporting brief. Defendant filed her brief in opposition to the motion on October 29, 2004.

On November 10,2004, the court held atrial by court on this matter, at which time defendant filed proposed findings of fact, followed by defendant’s proposed conclusions of law and supplemental proposed findings of fact, December 20,2004. Plaintiff then filed its proposed findings of fact and conclusions of law filed December 22,2004. We find all outstanding issues in this case ripe for disposition.

FACTUAL HISTORY

Defendant was involved in a motor vehicle accident on July 4, 2000. As a result of the accident, defendant suffered various injuries for which medical treatment was necessary. During this time defendant resided with her mother, Theresa Rieker.

At the time of the accident, the automobile defendant was operating was covered under an automobile policy issued by USAA Casualty Insurance Company (USAA CIC), a wholly owned subsidiary of the plaintiff. The USAA CIC policy provided first-party benefit-medical expense coverage in the amount of $10,000. Theresa had a USAA policy which provided first-party benefits-medical expense coverage in the amount of $100,000. As a result of the medical treatments she received, defendant incurred medical expenses, which were submitted to USAA CIC for payment under that policy’s medical expense coverage. The amount of defendant’s medical expenses exhausted the $10,000 medical expense coverage under the USAA CIC policy.

Following the exhaustion of the USAA CIC medical expense coverage, defendant made a claim for medical expense coverage under the USAA policy issued to her mother, Theresa. Plaintiff started paying medical bills for defendant as an insured under Theresa’s policy on June 1, 2001. In October or November 2002, plaintiff, through legal counsel, reviewed the issue of defendant’s entitlement to first-party benefits under her mother’s policy and determined that its initial decision to provide defendant with first-party benefits under Theresa’s policy was made in error. USAA advised defendant of its determination and advised that no further coverage would be provided. Thereafter, USAA filed the instant declaratory judgment action on November 15, 2002.

DISCUSSION

Plaintiff argues that defendant is not entitled to first-party benefits under the USAA policy issued to Theresa because defendant is not at the first level of priority under the Pennsylvania Motor Vehicle Financial Responsibility Act §1713. Defendant propounds that plaintiff has relied on case law that has been expressly overruled regarding priority payment of first-party benefits. Defendant also argues that the priority provision of the USAA policy only comes into play if there is another insurer as opposed to another policy. Defendant further avers that USAA and USAA CIC acted as one entity or one insurer, which would cause the priorities of policies section of the USAA policy to not take effect. Plaintiff asserts that it does not matter if USAA and USAA CIC are the same or separate insurers because neither under the USAA policy priorities of policies provision, nor under the Act, would plaintiff be required to pay the defendant first-party benefits as a matter of law.

The Act

Section 1713 of the Act indicates that a person who suffers an injury arising out of the use of a motor vehicle shall recover first-party benefits against the applicable insurance coverage in the following order of priority:

“(a)

“(1) For a named insured, the policy on which he is a named insured.

“(2) For an insured, the policy covering the insured.

“(b) Multiple sources of equal priority. — The insurer against whom a claim is asserted first under the priorities set forth in subsection (a) shall process and pay the claim as if wholly responsible ....”

Plaintiff points the court to Laguna v. Erie Insurance Group, 370 Pa. Super. 308, 536 A.2d 419 (1988), to explain the meaning of section 1713 of the Act. Plaintiff looks to Laguna to support their proposition that you cannot collect first-party benefits against insurers at different levels of priority. Defendant avers that Laguna is overruled by Neilson v. Nationwide Insurance Company, 738 A.2d 490 (Pa. Super. 1999). We note Neilson states “We, in this en banc decision ... expressly overrule ... that portion of Laguna discussing stacking of first-party benefits.” Id. at 493. (emphasis added) Since the en banc Superior Court only expressly overruled the section of Laguna discussing the stacking of first-party benefits, the portion of Laguna discussing the order of priority of first-party benefits is still in force and effect. In fact, the Laguna court stated:

“The provision of section 1713(b) regarding procedures to be followed in the event of multiple sources of coverage is limited to sources of equal priority. Since the statute explicitly treats the issue of multiple sources of coverage among insurers of equal priority, its silence regarding insurers at different priority levels indicates that contribution in this context is not an issue. The logical interpretation of the limitation of section 1713(b) to insurers at an equal priority level is that insureds are not entitled to benefits from multiple sources at different priority levels.” Laguna, 370 Pa. Super. at 313, 536 A.2d at 421. (emphasis added)

In this case, defendant was covered by the USAA CIC policy as a named insured, which would make USAA CIC the first level of priority for payment of first-party benefits under the Act, section 1713(a)(1). Defendant would also be covered under the USAA policy issued to Theresa as an insured relative. As an “insured,” defendant would then hold the USAA policy as a second level of priority policy under the Act, section 1713(a)(2).

Therefore, applying the Laguna reasoning, the defendant would not be entitled to first-party benefits of the USAA policy because defendant is insured through this policy at the second level of priority under the Act. The ruling in Neilson only applies to first-party benefit claims made against one of several carriers of equal priority under the Act, section 1713. Neilson, 738 A.2d at 493. Since in this case defendant has unequal levels of priority in relation to the two policies, Neilson is inapplicable.

USAA Policy, Priorities of Policies Provision

The USAApolicy provides “We will pay the first-party benefit in accordance with the order of priorities set forth by the Act. We will not pay if there is another insurer at a higher priority level.... The priority level is:

“First: The insurer providing benefits to the covered person as a named insured.

“Second: The insurer providing benefits to the covered person as a family member who is not a named insured under another policy providing coverage under the Act . . . .” USAA policy, Part B — First-party benefit, priorities of policies provision.

Under the priorities provision, the insurer at the first priority level would be USAA CIC since the defendant is a named insured in that policy. The USAA policy would not be at the second level of priority because the defendant, although covered as a family member, is a named insured under another policy, USAA CIC, providing coverage under the Act. As a result, USAA is not a second level priority insurer pursuant to the contract language, “family member who is not a named insured under another policy ....”

Therefore, under this USAA policy, the plaintiff would not have to pay first-party benefits to the defendant because the USAA CIC policy was at the first level of priority and the provision clearly states that plaintiff will not pay if there is another insurer at a higher priority level.

The court does not need to address whether USAA and USAA CIC are one entity because under the Act and the USAA priorities of policies provision, plaintiff would not be responsible for first-party benefits.

Equitable Estoppel and Waiver

Defendant argues that the doctrine of equitable estop-pel applies because her medical expenses were paid by plaintiff for almost a year and a half, plaintiff never issued a reservation of rights letter to defendant regarding payment, and defendant relied on plaintiff’s conduct and act of providing coverage when making decisions regarding her health insurance, which resulted in its lapse. Defendant further avers that the affirmative defense of waiver applies because of the willful and conscious failure of USAA to issue a reservation of rights letter.

“The elements of estoppel are: (1) misleading words, conduct or silence by the party against whom the estop-pel is asserted, (2) unambiguous proof of reasonable reliance on the misrepresentation by the party seeking to assert the estoppel, and (3) no duty of inquiry on the party seeking to assert estoppel. If all the foregoing are present, a court of equity may prevent the party who misled the other from denying his words or conduct.” Stolarick v. Stolarick, 241 Pa. Super. 498, 509, 363 A.2d 793, 799 (1976).

Without the element of reliance on some conduct of the party sought to be estopped, prejudice, an essential element of estoppel, cannot be proved. 14 Summ. Pa. Jur. 2d Insurance §10:3. To demonstrate the requisite prejudice, the insured must show that he or she acted, or refrained from acting, in reliance on some conduct of the insurer. Id. “It is well-established... that the burden rests on the party asserting the estoppel to establish such estoppel by clear, precise and unequivocal evidence.” Blofsen v. Cutaiar, 460 Pa. 411, 417, 333 A.2d 841, 844 (1975).

Defendant argues that the first element of equitable estoppel, misleading words, conduct or silence by the party against whom the estoppel is asserted, is satisfied by defendant’s exhibit 1, the payment log, showing the payment of first-party medical bills for the period of June 1, 2001 through November 25, 2002. Also, defendant avers that exhibits 3,4 and 5 constitute further proof that the decision to provide coverage by USAA was made only after a review of the terms of the policy and legal analysis was performed by USAA’s in-house counsel. Defendant has proven through the above that plaintiff engaged in misleading words and conduct in regard to payment of defendant’s medical bills.

We now turn to the second element which states unambiguous proof of reasonable reliance on the misrepresentation by the party seeking to assert the estoppel must be present for equitable estoppel to apply. Defendant argues that this element is established by exhibit 7, a fax wherein USAA accepted and confirmed its duty of coverage to defendant’s health insurer in 2001. Defendant further maintains that defendant’s testimony at trial also establishes reasonable/justifiable reliance on US AA’s conduct.

Upon review of the trial transcript, the evidence establishes that the decision to allow defendant’s Educators Mutual insurance policy to lapse was actually made by her employer and not defendant herself. Moreover, defendant did not pay the premiums for either the Educators Mutual policy or the UPMC policy that she enrolled in after the lapse of Educators Mutual, but rather her employer did so. Defendant testified that the Educators Mutual policy lapsed at the end of 2001. Following the lapse of the policy, defendant obtained alternate health care insurance provided by UPMC in the early months of 2002. Defendant went on to testify that she agreed with the decision to allow the Educators Mutual policy to lapse, but does not state a reason why she obtained UPMC health insurance a few months later. If defendant believed that she did not need the Educators Mutual coverage because she had USAA coverage, it is reasonable to assume that the same belief should have been present when her employer subscribed to the UPMC policy. USAA did not advise the defendant of its decision to cease payments of first-party benefits under Theresa’s policy until October 2002. By that time the UPMC policy had been in place for several months. Evidently, the defendant believed that she needed the UPMC policy during the time that she was receiving benefits from USAA. It is apparent from the facts of this case that the decision to allow the Educators Mutual policy to lapse and obtain the UPMC policy had nothing to do with the coverage provided at that time by USAA under Theresa Rieker’s policy. There is no clear evidence that defendant acted or failed to act in reliance of plaintiff’s payment of first-party benefits under Theresa’s policy. Therefore, the elements of equitable estoppel are not met and defendant’s argument fails for lack of reasonable reliance.

An implied waiver exists only when the elements of estoppel are present. Id. One who sets up an implied waiver must show that he or she changed their position in reliance on the insurance company’s act of waiver. Sack v. Glens Falls Insurance Co., 360 Pa. 424, 61 A.2d 852 (1948). The doctrine can only be invoked when the conduct of the company has induced action or reliance. Id. “An initial payment by an insurer of an insured’s claim does not constitute a waiver of the insurer’s right to terminate payments after a counseled review, where the case is still active at the time of cessation of the payments ....” 14 Summ. Pa. Jur. 2d Insurance §10:28.

An implied waiver does not exist in this action because the elements of estoppel are not present.

An expressed waiver does not exist because mere payment of first-party benefits by USAA to defendant for one and a half years does not constitute an expressed waiver. Also, defendant’s reliance on exhibit 6 to show evidence of an expressed waiver is not compelling. Exhibit 6, a letter dated June 26, 2001, merely states “[a]t this time there are no bills being disputed by USAA.” We determine this document alone does not rise to the level of an expressed waiver of plaintiff’s right to challenge their continued payment of first-party benefits to defendant under Theresa’s policy.

Promissory Estoppel

Promissory estoppel is defined as a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person, and which does induce such action or forbearance that is binding, and there is no other way to avoid injustice but to enforce the promise. Restatement (Second) of Contracts, section 90, adopted in Travers v. Cameron County School District, 117 Pa. Commw. 606, 544 A.2d 547 (1988).

As previously discussed in our analysis of reliance for estoppel purposes, defendant has similarly not proven that there was action or forbearance by her based upon plaintiff’s payment of first-party benefits, under the USAA policy for a year and a half. Therefore the doctrine of promissory estoppel does not apply.

Laches

Defendant argues that the doctrine of laches applies because USAA started providing coverage for defendant’s continuing medical expenses only after it analyzed the policy in question and conducted a thorough legal analysis. Defendant states if USAA had a legitimate question of its rights and obligation under the policy, it should, and could, have raised those issues a year and five months earlier, before USAA started paying for defendant’s continuing medical expenses.

Laches will apply when one is guilty of lack of due diligence in failing to institute or prosecute his proceedings. Klein v. Walton, 413 Pa. Super. 150, 156, 604 A.2d 1064, 1067 (1992). “[I]n order to prevail on an assertion of laches, respondents must establish: (a) a delay arising from petitioner’s failure to exercise due diligence; and, (b) prejudice to the respondents resulting from the delay.” In re Estate of Scharlach, 809 A.2d 376, 382-83 (Pa Super. 2002). Prejudice means a party must change his position to his detriment in order to invoke this doctrine. Id. at 383. Laches should not be applied in favor of a person who has not taken required action on his own. Id. The question of whether a claimant is barred by laches is factual and must be determined by an examination of the circumstances. Tredyffrin-Easttown School District v. Valley Forge Music Fair, 156 Pa. Commw. 178, 186, 627 A.2d 814, 818 (1993).

Since we determine defendant has not proven that she changed her position (i.e. reliance) to her detriment, laches does not apply.

Conclusion

In applying either the Act or the USAA policy priorities of policies provision, the defendant is not entitled to first-party benefits paid by the plaintiff. Estoppel, waiver, and laches do not apply to the facts of this case because all of these legal theories rest on reliance by the prom-isee based on action of the promisor, and there is simply insufficient evidence that defendant relied to her detriment on the actions of plaintiff.

For all of these reasons, we enter the following:

ORDER

And now, February 8,2005, it is ordered, directed and decreed, plaintiff has no legal or contractual obligation to provide first-party benefits coverage to defendant under the policy no. *****_**_***_****_* issued by plaintiff to defendant’s mother, Theresa Rieker.

      . The court entered its decision regarding the motion for summary judgment on November 9, 2004, a day before the scheduled trial by court, granting partial summary judgment to the plaintiff. At trial, counsel requested that the court vacate its summary judgment decision so that appeal periods coincide between the trial and the motion for summary judgment. The court vacated its summary judgment opinion and order dated November 9, 2004, and ruled that the court shall enter rulings of law and fact on all matters upon receipt of briefs.

      . The Act at section 1717 is not discussed because it is inapplicable to the case currently before the court. Section 1717 only applies to prohibit the stacking of first-party benefits of multiple motor vehicle policies. For example, if the defendant were asking for $110,000, instead of $90,000, then section 1717 would prohibit the adding of the two policies together to reach the $110,000. See Neilson v. Nationwide Insurance Company, 738 A.2d 490 (Pa. Super. 1999).


source: Caselaw Access Project

author: FREEDBERG, P.J.,

license: Public Domain

text:
    Wilson Area School District v. Skepton

      C.P. of Northampton County,
    no. C0048CV2001002431.

      Dominic S. Brocchi, for plaintiffs.

      Joseph Leeson Jr., for defendant, Safeco Ins. Co. of America.
    February 1, 2005
   FREEDBERG, P.J.,

This matter is before the court on the summary judgment motion of Safeco Insurance Company of America. This is an action by the Wilson Area School District against defendants claiming alleged construction defects at the Wilson Senior Fligh School building. On June 3, 1992, the school district entered into a general construction contract with Franklin E. Skepton as general contractor. Construction was completed in 1994. Safeco Insurance Company of America issued a performance bond on behalf of Skepton naming the plaintiff school district as obligee as required by the Public Works Contractors’ Bond Law of 1967, 8 P.S. §191 et seq. The performance bond was accepted by the plaintiff as part of its contractual relationship with Skepton. The bond was issued to provide assurance to plaintiff that Skepton would faithfully perform the construction contract. A provision of the bond states:

“Now, therefore, the terms and conditions of this bond are and shall be that if: (a) the principal well, truly and faithfully shall comply with and shall perform the agreement in accordance with the contract documents, at the time and in the manner provided in the agreement and in the contract documents, and if the principal shall satisfy all claims and demands incurred in or related to the performance of the agreement by the principal or growing out of the performance of the agreement by the principal, and if the principal shall indemnify completely and shall save harmless the obligee and all of its officers, agents and employees from any and all costs and damages which the obligee and all of its officers, agents and employees may sustain or suffer by reason of the failure of the principal to do so, and if the principal shall reimburse completely and shall pay to the obligee any and all costs and damages which the obligee and all of its officers, agents and employees may incur by reason of any such default or failure of the principal; and (b) if the principal shall remedy, without cost to the obligee, all defects which may develop during the period of one year from the date of completion by the principal and acceptance of the obligee of the work to be performed under the agreement in accordance with the contract documents, which defects, in the sole judgment of the obligee or its legal successors in interests, shall be caused by or shall result from defective or inferior materials or workmanship, then this bond shall be void: otherwise, this bond shall be and remain in force and effect.”

The parties agree that the construction was completed in 1994. In its answer to the motion for summary judgment, plaintiff has admitted that in 1999, in connection with a visual survey, it observed various construction defects in the Wilson High School Building five years after completion of construction of the building, and five years after plaintiff had occupied the building for daily use. In answers to interrogatories, plaintiff admitted it discovered construction defects in 1997. The instant suit was filed in 2001.

Defendant Safeco asserts that it is entitled to summary judgment because by contract its responsibility is limited to defects which develop within one year of completion and acceptance of the project. Thus, it asserts that, since the project was completed and accepted in 1994, the obligation is to remedy those defects which appeared within one year of that date. Plaintiff’s response is twofold. First, it asserts that this precise issue was decided adversely to Safeco in a motion for judgment on the pleadings so that the issue may not be/revisited by another judge of the court of common pleas on a motion for summary judgment. Second, it argues that the doctrine of “nullem tempus occurrit republicae” precludes assertion of the one-year time limit by Safeco.

A. COORDINATE JURISDICTION RULE

Plaintiff contends that the denial of the motion for judgment on the pleadings which raised the issue now before the court precludes revisiting the issue. The motion for judgment on the pleadings was decided by another judge of this court who ruled that the doctrine of “nullem tem-pus occurrit republicae” prevented Safeco from invoking the one-year limitation period contained in the bond.

In Ryan v. Berman, 572 Pa. 156, 813 A.2d 792, 795 (2002), the Supreme Court set forth the following regarding the coordinate jurisdiction rule:

“The salient case on the coordinate jurisdiction rule is Commonwealth v. Starr, 541 Pa. 564, 664 A.2d 1326 (1995). It states the rule as follows: ‘[Jjudges of coordinate jurisdiction sitting in the same case should not overrule each others’ decisions.’ Id. at 573, 664 A.2d at 1331. ‘Departure ... is allowed only in exceptional circumstances such as where there has been an intervening change in the controlling law, a substantial change in the facts or evidence giving rise to the dispute in the matter, or where the prior holding was clearly erroneous and would create a manifest injustice if followed.’ Id. at 575-76, 664 A.2d at 1332. The rule serves ‘not only to promote the goal of judicial economy’ but also ‘(1) to protect the settled expectations of the parties; (2) to insure uniformity of decisions; (3) to maintain consistency during the course of a single case; (4) to effectuate the proper and streamlined administration of justice; and (5) to bring litigation to an end.’ Id. at 574, 664 A.2d at 1331. It is manifest that a judge may not lightly overrule the prior decision of another judge of the same court. In some circumstances, however, application of the rule can ‘thwart the very purpose the rule was intended to serve, i.e., that judicial economy and efficiency be maintained. ’ Salerno v. Philadelphia Newspapers Inc., 377 Pa. Super. 83, 88, 546 A.2d 1168, 1170 (1988). Thus we said in Starr that departure from the rule of coordinate jurisdiction is allowed ‘where the prior holding was clearly erroneous and would create a manifest injustice if followed,’ 541 Pa. at 576, 664 A.2d at 1332. Applying the rule of coordinate jurisdiction too rigidly, therefore, can undermine the purposes which justify the rule.”

The coordinate jurisdiction rule does not preclude our addressing the issue raised in the summary judgment motion currently pending before us. The ruling relied upon by plaintiff occurred in a motion for judgment on the pleadings. In Goldey v. Trustees of the University of Pennsylvania, 544 Pa. 150, 675 A.2d 264 (1996), the Supreme Court held that the coordinate jurisdiction rule applied to bar consideration of “the same kind” of motion as had previously been decided by another judge in the case. It stated at 155-56, 675 A.2d at 267:

“When the motions differ in kind, as preliminary objections differ from motions for judgment on the pleadings, which differ from motions for summary judgment, a judge ruling on a later motion is not precluded from granting relief although another judge has denied an earlier motion.” See also, Salerno v. Philadelphia Newspapers Inc., 377 Pa. Super. 83, 546 A.2d 1168 (1988), and Austin J. Richards Inc. v. McClafferty, 371 Pa. Super. 269, 538 A.2d 11 (1988).

B. SUMMARY JUDGMENT STANDARDS

Upon close of the pleadings and completion of pertinent discovery, the court is empowered to enter summary judgment as a matter of law whenever there is no genuine issue of any material fact as to a necessary element of the cause of action, or where the party who bears the burden of proof at trial has failed to produce evidence sufficient to require the claim to be submitted to a jury. SeePa.R.C.P. 1035.2.

Proper grant of summary judgment hinges upon an evidentiary record that either discloses that the material facts are undisputed or an evidentiary record that contains insufficient evidence to make out aprima facie cause of action. See Basile v. H & R Block Inc., 777 A.2d 95, 100-101 (Pa. Super. 2001). A plaintiff’s failure to adduce evidence to substantiate any element of the claim entitles the defendant to summary judgment as a matter of law. See Ertel v. Patriot-News Co., 544 Pa. 93, 674 A.2d 1038 (1996).

In passing upon any motion for summary judgment, we must review the record in the light most favorable to the non-moving party, we must afford the non-moving party the benefit of all reasonable inferences arising from the evidence, and we must resolve all doubts in favor of the non-moving party. See Basile, 777 A.2d at 101.

C. DISCUSSION

Defendant Safeco contends that the provision of the performance bond in issue is a statement of the extent of coverage provided, i.e., all defects which develop during the period of one year from the acceptance of the completed work under the contract. Plaintiff characterizes the clause as establishing a limitation period for commencing an action, i.e., a contractual adoption of the one-year statute of limitation period for commencing actions on performance bonds. 42 Pa.C.S. §5523(3).

We need not decide which characterization is correct because, under either, defendant Safeco is entitled to summary judgment on the undisputed facts. If Safeco is correct that the provision sets forth its coverage responsibilities, then an action against Safeco is precluded because plaintiff has pleaded the defects developed more than a year after acceptance of the completed project in 1994. If plaintiff is correct that the provision is a contractual adoption of the statute of limitations period of one year for suits on a performance bond, then the action is precluded, because plaintiff has conceded that the action was commenced more than a year after discovery of the defects.

In an attempt to avoid dismissal of the case, plaintiff asserts that the provision is a nullity because of the doctrine of “nullem tempus occurrit republicae.” In Duquesne Light v. Woodland Hills School District, 700 A.2d 1038 (Pa. Commw. 1997), the Commonwealth Court set forth the following discussion of the doctrine at 1051:

“Nullem tempus occurrit regi (‘time does not run against the king’) permits a political subdivision of the Commonwealth to circumvent the applicable statute of limitations. Altoona Area School District v. Campbell, 152 Pa. Commw. 131, 618 A.2d 1129 (1992), petition for allowance of appeal denied, 535 Pa. 639, 631 A.2d 1010 (1993). In Altoona, the court held:

“ ‘ [T]he privilege of nullum tempus does not, in the absence of express provision, extend to municipalities, counties or other political subdivisions unless such political subdivisions are seeking to enforce strictly public rights, that is, when the cause of action accrues to them in their governmental capacity and the suit is brought to enforce an obligation imposed by law as distinguished from one arising out of an agreement voluntarily entered into by the defendant.’ Id., 152 Pa. Commw. at 137, 618 A.2d at 1132. (emphasis added)

“A school district is apolitical subdivision of the Commonwealth. School District of Philadelphia v. Twer, 498 Pa. 429, 447 A.2d 222 (1982). As such, a school district may invoke the doctrine of nullum tempus. However, in order to defeat the applicable statute of limitations, the right sought to be enforced must be strictly public as well as imposed by law. Altoona; Mount Lebanon School District v. W.R. Grace & Company, 414 Pa. Super. 455, 607 A.2d 756 (1992).” (emphasis in original)

A school district may properly invoke the doctrine of “nullem tempus occurrit republicae” to defeat a statute of limitations when a district is seeking to recover damages for defects in construction of a school building housing school children of the Commonwealth. Stroudsburg Area School District v. R.K.R. Associates/Architects, 417 Pa. Super. 85, 611 A.2d 1276 (1992).

Relying on this law, plaintiff contends that the provision at issue is a nullity. Unquestionably, the school district could defeat the assertion that the action is time-barred if the limitation period had its origin in a statute. However, in the instant case the limitation period is contractual. The doctrine of “nullem tempus occurrit republicae” is waivable by the sovereign. Township of Indiana v. Acquisitions & Mergers Inc., 770 A.2d 364 (Pa. Commw. 2001). Further, parties may adopt a limitation of action period by contract. Insurance Company of North America v. Carnahan, 446 Pa. 48, 284 A.2d 728 (1971), and Stewart v. North Carolina Mutual Life Insurance Company, 187 Pa. Super. 270, 144 A.2d 507 (1958).

Safeco sought to limit its exposure by contractually incorporating a one-year limitation of action provision consistent with 42 Pa.C.S. §5523(3). By doing so, it sought to avoid the school district invoking the doctrine of “nullem tempus occurrit republicae.” The school district agreed to the contractual provision, thereby waiving its right to assert the doctrine. Each gained something by the agreement. Safeco limited the duration of its exposure. The school district reduced costs because a bond of unlimited duration would be more expensive than one of limited duration. To accept the argument that the school district could render the provision a nullity by invoking the doctrine of “nullem tempus occurrit republicae” would have a significant impact on governmental efforts to reduce the costs of public works.

“It is basic that the obligations of a surety under a bond cannot be extended beyond the plain import of the words used. Obligations not imposed by the terms of the bond cannot be created by judicial construction or interpretation which extends the terms beyond their normal meaning.” Miller v. Commercial Electric Construction Inc., 223 Pa. Super. 216, 297 A.2d 487 (1972); see also, Peter J. Mascaro Co. v. Milonas, 401 Pa. 632, 166 A.2d 15 (1960). To accept the plaintiff’s argument would be to ignore precedent and read out of the contract the express provision agreed to by the parties.

Wherefore, we enter the following order of court:

ORDER

And now, February 1, 2005, it is hereby ordered that the motion for summary judgment of defendant Safeco Insurance Company of America is granted. Judgment is entered in its favor.

      . The term is synonymous with “nullem tempus occurrit regi.”


author: KISTLER, J,

text:
    Commonwealth v. Stewart
    C.P. of Centre County,
    no. 2004-1585.

      Lance T. Marshall, for Commonwealth.

      Joseph L. Amendola, for defendant.
    February 3, 2005
   KISTLER, J,

Presently before this court is Deborah M. Stewart’s (defendant) petition for writ of habeas corpus.

BACKGROUND

On May 21, 2004, defendant was driving in the Ramada Inn parking lot on South Atherton Street in State College. Defendant’s vehicle allegedly struck another vehicle as she attempted to exit the parking lot. A witness, who had seen the accident, noted the vehicle’s license plate number and its make and model. The witness then notified the police. The police ran a background check on the license plate. This background check produced the defendant’s name and address. Based on this information, the police dispatched Officer R.L. Hendrick to the residence.

There was no answer at the residence, so the officer waited on the street for defendant to arrive. Soon after-wards, the officer saw the vehicle come down the road and turn into the residence. The officer then approached the vehicle in defendant’s garage. He noticed that defendant’s eyes were watery and her breath smelled of beverage alcohol. The officer also noticed defendant’s child in the back seat. The child was strapped into a child’s safety seat. There is no evidence suggesting that the child was in the back seat at the time of the accident in the Ramada Inn parking lot.

Believing defendant may be intoxicated, the officer administered a portable breath test. Defendant failed the test and the officer took defendant into custody for driving under the influence of alcohol. The officer transported defendant to the Mount Nittany Medical Center for a blood extraction. The results of this extraction revealed that defendant’s blood alcohol content was .12 percent.

The officer testified that he did not notice any erratic or dangerous driving behavior on the part of defendant. The officer also did not indicate that defendant had violated any portion of the Motor Vehicle Code. Defendant was subsequently charged with driving under the influence of alcohol, accident involving damage to an unattended vehicle, and endangering welfare of children.

DISCUSSION

Defendant does not contest the charges of driving under the influence of alcohol or accident involving damage to an unattended vehicle. The only issue to be resolved is defendant’s writ of habeas corpus with respect to the endangering welfare of children charge. Defendant contends that the Commonwealth cannot establish either on a prima facie level or at trial that defendant is guilty of the aforementioned charge.

“A prima facie case consists of evidence, read in the light most favorable to the Commonwealth, that sufficiently establishes both the commission of a crime and that the accused is probably the perpetrator of that crime.” Quoting Commonwealth v. Miller, 810 A.2d 178, 180 (Pa. Super. 2002). A prima facie case consists of evidence that would warrant submission of that evidence to the jury. Id., citing Commonwealth v. Packard, 767 A.2d 1068, 1070-71 (Pa. Super. 2001), appeal denied, 566 Pa. 660, 782 A.2d 544 (2001).

When charging an accused with endangering the welfare of children, the Commonwealth must prove that the accused “knowingly endangered the welfare of a child by violating a duty of care, protection or support.” 18 Pa.C.S. §4304; see also, Commonwealth v. Martir, 712 A.2d 327, 328 (Pa. Super. 1998), citing Commonwealth v. Cottam, 420 Pa. Super. 311, 344-45, 616 A.2d 988, 1005 (1992). Aperson acts “knowingly” with respect to a material element of an offense when: (1) he is aware that his conduct is of the nature or that such circumstances exist; and (2) he is aware that it is practically certain that his conduct will cause such a result. 18 Pa.C.S. §302(b)(2); see also, Commonwealth v. Wallace, 817 A.2d 485 (Pa. Super. 2002).

The Commonwealth supports its position by citing Commonwealth v. Retkofsky, 860 A.2d 1098 (Pa. Super. 2004). The court in Retkofsky confirmed the lower court’s decision which found the defendant guilty of endangering the welfare of children. The defendant in Retkofsky attempted to flee the police on an all-terrain vehicle (ATV). The defendant traveled at a rate of 45 miles per hour on a residential street while his 9-year-old son was on the back. The child was not restrained, but rather hung onto the body of the defendant. The court reasoned that the defendant knew he was endangering the welfare of the child because the defendant was “surely aware” that something could “dart out” in front of the ATV, “to precipitate [the vehicle to] swerve and/or crash, with the likely result of injuiy to appellant’s barely-protected son.” Id. at 1100.

This court does not find that the current facts are similar to the facts in Retkofsky. In the current case, defendant was not attempting to flee from the police, nor was she driving an ATV while her child held onto her waist for restraint. As such, Retkofsky cannot be deemed persuasive.

In the current case, this court does not believe that defendant knowingly endangered the child. The facts do not suggest that it was practically certain that the child would have been harmed as a result of defendant’s intoxication. The officer testified that he did not observe defendant drive erratically, unsafely, or exceed the posted speed limit. The officer also testified that he saw defendant’s child sitting in a restrictive child’s car seat. Similarly, there is no evidence that the child was in the back seat at the time of the accident in the Ramada Inn parking lot. As such, this court finds that the evidence, taken in the light most favorable to the Commonwealth, is insufficient to establish that defendant knowingly violated any duty of care, protection or support she owed to her child. Committing the offense of driving under the influence, without more, is not a sufficient basis, alone, to support a conviction for endangering the welfare of children.

ORDER

And now, February 3, 2005, defendant’s petition for writ of habeas corpus is hereby granted, and the charge of endangering the welfare of children is hereby dismissed.


author: MINORA, J,

text:
    Kowalewski v. Whittington

      C.P. of Lackawanna County,
    no. 2003 CV 2991.

      P Timothy Kelly, for plaintiff.

      Timothy P. Polishan, for defendant.
    January 18, 2005
   MINORA, J,

I. INTRODUCTION

This matter was tried before the undersigned without a jury on September 17,2004. The parties were given an opportunity to submit written post-trial briefs and the matter is now ripe for decision.

By way of background, the plaintiff claims she was employed as a bookkeeper for Zazzera’s Market in Carbondale, Pennsylvania.

In November of 2000, the market was purchased by Patrick Whittington. After Mr. Whittington purchased the market, some cash flow difficulties arose.

Mr. Whittington had mentioned the cash flow difficulties to Mrs. Kowalewski and she claims she lent certain monies to Mr. Whittington and/or his corporation totaling $36,900.

She claims she did receive some payment on the debt in the amount of $2,063.24, leaving abalance on the loan of $34,836.76.

Her theory is that the debt was incurred by both the corporation, P. Whittington Inc. and that Mr. Whitting-ton, through his partial repayment of the loan and also representations made to Mrs. Kowalewski, guaranteed the corporation, thus personally obligating him or the indebtedness to Mrs. Kowalewski.

The defense admits the corporation is liable for the debt (see N.T. 9/17/04 p. 30) but disputes that Mr. Whittington is individually liable for the debt due to the fact there are no writings (notes, memos, etc.) to indicate such and take it out of the Statute of Frauds, 33 P.S. §3.

II. GENERAL FINDINGS AS PER PA. RULE OF CIVIL PROCEDURE 1038(b)

Initially we note that, in a bench trial, the judge sits as the finder of fact and must determine the credibility of the witnesses and the probative value of the evidence presented. Bonenberger v. Nationwide Mutual Insurance Company, 791 A.2d 378, 381 (Pa. Super. 2002). As the sole assessor of credibility, the judge in a non-jury trial is free to believe all, part or none of the testimony or evidence submitted by the parties. In re Funds in the Possession of Conemaugh Township Supervisors, 562 Pa. 85, 89, 753 A.2d 788, 790 (2000); L.B. Foster Co. v. Charles Caracciolo Steel & Metal Yard Inc., 777 A.2d 1090, 1093 (Pa. Super. 2001). The factual findings set forth below are based upon the testimony and exhibits which have been determined to be competent, credible and relevant. See also, Ciccone v. Sposito, 104 Lacka. Jur. 389, 390 (2003).

In the case at hand, the credible and/or undisputed evidence indicates that plaintiff was employed at Zaz-zera’s Food Center for an excess of 30 years. In November of 2000, Zazzera’s became owned by a corporation known as P. Whittington Inc. Prior to the time Whittington took over the operation of Zazzera’s Food Center, Zazzera’s Food Center was a profitable ongoing concern.

Soon after defendant had assumed the operation of Zazzera’s Food Center, defendant began to experience cash flow difficulties. In April 2001, plaintiff began loaning defendants various sums of money in an attempt to assist defendants through their financial difficulties. Over the course of time, plaintiff lent to defendant the sum of $36,900. No note or other evidence of indebtedness was executed by defendants in favor of plaintiff and all of plaintiff’s checks were made payable either to P. Whittington Inc. or Zazzera’s Food Center.

Between April 2001 and February 2002, the period within which plaintiff was loaning the aforesaid sums to defendants, individual defendant, Patrick Whittington, made various representations and promises to plaintiff that he would personally repay plaintiff the aforesaid monies. In fact, at various times, Mr. Whittington did pay to plaintiff the sum of $2,063.24. The said payments were made either in cash or by checks issued from Mr. Whittington’s personal account. No repayment was made to plaintiff from the corporate assets of P. Whittington Inc. Presently, there is an outstanding balance on defendant’s obligation to plaintiff of $34,836.76.

The corporate defendant has acknowledged its indebtedness to plaintiff and its obligation to repay to plaintiff the said sums of money. Therefore, this court will enter a judgment in favor of plaintiff and against the corporate defendant based upon the acknowledgments of the corporate defendant.

The individual defendant denies an obligation to repay plaintiff the said sums of money. The individual defendant raises as a defense the bar of the Statute of Frauds, 33 P.S. §3. The individual defendant also alleges that there was a failure of consideration to support his promise to plaintiff to repay the sums of money lent to said defendants.

The Statute of Frauds provides:

“No action shall be brought whereby to charge any executor or administrator, upon any promise to answer damages out of his own estate, or whereby to charge the defendant, upon any special promise, to answer for the debt or default of another, unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person by him authorized.” 33 P.S. §3.

Plaintiff contends that the above Statute of Frauds does not apply as the main object of the promise by Patrick Whittington, the individual defendant, was to serve his own pecuniary or business purpose. Biller v. Ziegler, 406 Pa. Super. 1, 593 A.2d 436 (1991); Thomas A. Armbruster Inc. v. Barron, 341 Pa. Super. 409, 491 A.2d 882 (1985). The leading object rule applies whenever a promisor, in order to advance some pecuniary or business purpose of his own, purports to enter into an oral agreement even though that agreement may be in the form of a provision to pay the debt of another. Biller v. Ziegler, supra at 8, 593 A.2d at 439, citing cases. We agree with the plaintiff’s contentions regarding the “leading object” rule.

The testimony of plaintiff during a trial held in the above matter was to the effect that the corporate defendant was experiencing severe cash flow problems which would adversely impact its ability to continue in business. Plaintiff’s testimony was uncontradicted. In order to sustain the business activities of the corporate defendant, the individual defendant induced plaintiff to lend the aforesaid sums of money in order to keep the corporate defendant in business. Further, beginning in July 2001, the individual defendant began making partial repayment of the debt to plaintiff, all the while promising her that he would pay the debt that was due and owing. The partial repayments to plaintiff by the individual defendant from his personal funds served as further inducement to plaintiff to lend additional monies to defendant. Plaintiff testified at time of trial that it was always her understanding that the individual defendant would stand responsible for the debt then and there due and owing.

The present situation involves an individual who was an officer/shareholder of the defendant corporation. In this case, Patrick Whittington was an 80 percent shareholder of defendant corporation and also president of the corporation. As in the Armbruster case, the business was a fledgling business. Although Zazzera’s Food Center had been in business for a long period of time before the time Mr. Whittington had taken over the business, Mr. Whittington was new to the business and new to the food center business. In his case, the Zazzera business can be considered a fledging business. Based upon the uncon-tradicted testimony of plaintiff, had plaintiff not lent the aforesaid sums of money to the business at the behest of Mr. Whittington, the business would have failed as the payroll would not have been paid, the electricity bill would not have been paid, and the warehouse from which stock was purchased would not service the Zazzera account. The individual defendant received a direct pecuniary benefit from the actions of plaintiff in lending the said sums of money to defendants.

Defendants also contend that there is failure of consideration for the individual defendant’s promise to repay the money owed to plaintiff. Plaintiff contends, and we agree, that the individual defendant did indeed receive a benefit in making the said promise. As president of the corporation and an 80 percent shareholder in the corporation, the individual defendant would have lost his investment in the business had plaintiff not lent the said sums of money to defendants. See Schroyer v. Wally, 96 Pa. Super. 234 (1929).

We are of the opinion that the facts of this case take the matter out of the protection of the Statute of Frauds (33 P.S. §3) and certainly there was inducement and benefit by and for the individual defendant making him personally liable for the debt as well as the corporation.

III. NON-JURY VERDICT

Therefore, based on the above, a non-jury verdict is entered against both Patrick Whittington individually and d/b/a Zazzera’s Market and P. Whittington Inc. in the amount of $34,836.76 plus legal interest from the date of this verdict.

So ordered, January 18, 2005.


author: LEVIN, S.J.,

text:
    McShea v. City of Philadelphia

      Steven Angstreich for plaintiffs.

      Michael Eichert and Christopher McCabe, for defendant.
    December 31, 2004
   LEVIN, S.J.,

Plaintiffs are a class of current and former employees of defendant, the City of Philadelphia, who, during the period 1987 through 1994, participated in the city’s Employees’ Deferred Compensation Plan, which was established in accordance with Internal Revenue Code section 457. Plaintiffs claim in this action that the city was grossly negligent in managing the plan, which gross negligence constitutes a breach of the city’s contract with the plaintiffs, as set forth in the plan documents. After hearing the evidence presented at trial by plaintiffs and the city, the court makes the following findings of fact and conclusions of law with respect to each of the plaintiffs’ claims that the city’s actions constituted gross negligence.

I. THIRD-PARTY ADMINISTRATOR FEES PAID TO PUBLIC EMPLOYEES’ BENEFIT SERVICES CORPORATION (PEBSCO)

A. Findings of Fact

The plan was established pursuant to City Council Ordinance no. 996 on October 27,1982.

On June 22, 1984, the city contracted with PEBSCO to serve as third-party administrator for the plan. Under that contract, PEBSCO earned an annual fee of 98 basis points on asset value plus $15 per plan participant.

Between 1984 and 1992, the contract between PEBS-CO and the city was renewed and modified several times with the annual fee declining to 90 basis points on assets over $75 million.

When the city issued a request for proposals in 1988, PEBSCO’s proposal contained the lowest annual fees.

In 1985, the total asset value of the plan was $1,237,000, and in 1992, it was $89,811,211.65.

Third-party administrators tend to charge higher fees when a plan is new because a new plan contains fewer assets, and because the administrator incurs more costs to manage it than a mature plan.

B. Conclusions of Law

The annual fees PEBSCO charged to the plan from 1984 through 1992 were high, but still reasonable.

The city was not grossly negligent, in breach of its contract with the plaintiffs, by agreeing that the plan would pay PEBSCO’s annual fees, except as to the surrender fee set forth in section III below.

II. PEOPLE’S UNIVERSAL LIFE INSURANCE POLICIES (PULIPS)

A. Findings of Fact

1. Commissions

PEBSCO began selling PULIPs to plan participants in 1987 and ceased doing so only when the insurance option was discontinued by the city in July 1992.

The plan documents required the city to obtain city council’s approval of the contract under which PEBSCO would offer PULIPs as an investment product to the plan participants.

The city did not obtain city council’s approval of the contract under which PEBSCO would offer PULIPs as an investment product to the plan participants.

PEBSCO’s contract with the city prohibited PEBSCO from offering for sale any product which was not commission neutral.

PEBSCO’s agents earned a high commission on the sale of PULIPs to the plan participants. The commission was equal to the first year of premiums paid by the plaintiffs, plus 5 percent of each yearly premium thereafter. PEBSCO continued to collect its full annual fee for plan administration without any offset for the commissions collected on the sale of life insurance.

The amount of commissions earned by PEBSCO’s agents with respect to the sale of PULIPs to plan participants was approximately $1 million, as set forth in a letter of November 16, 1992, from the city’s director of finance, Stephen P. Mullin.

PEBSCO never informed the plan participants that PEBSCO’s agents earned a commission on the sale of PULIPs.

The plan participants were put on notice that PEBS-CO’s agents were earning commissions on the sale of PULIPs in 1993, when the city filed suit against PEBS-CO in federal court.

2. Taxability

The plan participants paid the premiums for the PULIPs with pre-tax dollars, and the death benefits payable to the plan participants’ beneficiaries were taxable, unlike traditional life insurance policies.

PEBSCO did not disclose to the plan participants before a new disclosure form was approved in 1991, that any withdrawal or payment of death benefits would be taxable as ordinary income under the universal life option.

There was no evidence offered by the city to prove when the new disclosure forms were first used. In fact, Cynthia Douglas testified that she was unaware of the taxability of the insurance benefits, although she was responsible for dealing with PEBSCO and their disclosures to the plan participants.

Disclosure of the taxability of the death benefits was contrary to the interest of PEBSCO’s agents because it would have made it harder for them to sell the policies, on which they made commissions.

The testimony of plaintiffs’ expert, Mr. Rosen, that the use of PULIPs in the deferred compensation plan was inappropriate and that they should not have been offered, was credible.

Mr. Rosen’s use of the concept “buy term and save the difference” to set damages is rejected. Mr. Rosen’s assumption that plan members would allot the same amount of money, buy the term insurance with the reduced premium, and save the additional amount by investment, is not realistic.

In 1993, after the sale of new policies was discontinued, when the city filed suit against PEBSCO in federal court, the plan participants were put on notice that the death benefits paid on the PULIPs would be taxed.

The testimony of the city’s expert witness, Mr. Mc-Alpine, that if the plan participants invested in PULIPs for 20 years or more, the tax consequences of such investment to the plan participants were not significantly better or worse than if they had purchased life insurance with after-tax dollars on which the death benefits were not taxable, was credible, but not relevant.

B. Conclusions of Law

The PULIPs were not a suitable investment product for the plaintiffs and should not have been sold to the plaintiffs by PEBSCO.

PEBSCO’s sale of PULIPs to the plaintiffs was a breach of PEBSCO’s contract with the city, as the life insurance option was designed to produce significant commission income to PEBSCO’s agents at a high cost to plan participants who purchased the policies.

The city was grossly negligent, in breach of its contract with the plaintiffs, when it failed to obtain city council’s approval of the PULIPs as an investment product to be offered to plaintiffs.

The city was grossly negligent, in breach of its contract with the plaintiffs, by allowing PEBSCO to breach its contract with the city by selling PULIPs to the plaintiffs.

PEBSCO’s disclosure, in 1991, to new policyholders of the taxability of the death benefits to be paid under the PULIPs, through use of new plan-related forms, was insufficient to put plaintiffs on notice that they had a claim against the city.

Plaintiffs’ claim based on the taxability of the death benefits to be paid under the PULIPs is not barred by the four-year statute of limitations for contract actions.

Plaintiffs failed to sustain their burden of proving the amount of damages that they suffered as a result of the taxability of the death benefits to be paid under the PULIPs.

The four-year statute of limitations for contract actions does not bar plaintiffs’ claim based on the improper commissions earned by PEBSCO agents in connection with the sale of PULIPs to plaintiffs.

The plaintiffs suffered damages in the amount of approximately $1 million as a result of the commissions paid to PEBSCO agents in connection with the sale of PULIPs to plaintiffs.

III. THE SURRENDER FEE AND THE ADVISORS’FEES

A. Findings of Fact

In 1989, the city agreed, in its contract with PEBSCO, that PEBSCO would receive a surrender fee equal to 5 percent of certain plan funds if the contract was not renewed for at least one year beyond, or was terminated without cause before, June 23,1992.

Although the city offered some justification for the surrender provision contained in the 1986 agreement between PEBSCO and the city, there was none given for including the surrender fee in the 1989 agreement. In fact, the surrender fee was contrary to the advice and assumptions of Angela Dowd Burton and Douglas Smith in recommending PEBSCO as the low bidder in the 1988-1989 request for proposals.

In early 1992, the city hired Manuel Stamatakis as an investment advisor to the city.

Acting as advisor to the city, Mr. Stamatakis hired the law firm of Pepper Hamilton & Sheetz (PHS) to research a means to avoid paying the surrender fee to PEBSCO.

On December 31,1992, the city terminated the PEBS-CO contract for cause.

The city could have avoided liability for the surrender fee if it had continued PEBSCO’s contract for one year.

On January 5, 1993, the city commenced litigation against PEBSCO in federal court in which the city claimed that PEBSCO had breached its contract and breached its fiduciary duty to the plan by, inter alia, selling PULIPs to the plan participants (the federal PEBSCO suit).

PEBSCO counterclaimed in the federal PEBSCO suit for the surrender fee of approximately $2.5 million.

As part of the settlement of the federal PEBSCO suit, PEBSCO agreed to waive the surrender fee, and the city agreed to pay PEBSCO $200,000. This sum was paid by the city, not the plan participants, and is not claimed as damages in this suit.

The plan documents require that all consulting and legal fees charged to the plan and the plan participants be disclosed to the plan participants.

The city subsequently had the new plan administrator, The Copeland Companies, charge Mr. Stamatalcis’ fees and PHS’ fees to the plan without disclosing that fact to the plan participants.

Mr. Stamatalcis’ fees and PHS’ fees that were charged to the plan amounted to $729,391.66.

B. Conclusions of Law

The surrender fee was patently unreasonable.

The city was grossly negligent, in breach of its contract with the plaintiffs, by agreeing to the surrender fee in its contract with PEBSCO in 1989.

The fees to Mr. Stamatakis and PHS were the direct result of the agreement in 1989 to provide PEBSCO with a surrender fee.

The city was grossly negligent in breach of its contract with the plaintiffs by having Copeland charge Mr. Stamatakis’ fees and PHS’ fees to the plaintiffs without disclosing such fees to the plaintiffs.

As a result of the city’s gross negligence, plaintiffs suffered damages in the amount of $729,391.66.

IV. TRANSFER OF FUNDS TO CONSTITUTION LIFE

A. Findings of Fact

On September 29,1992, the city transferred $27,434,-962.38 in plan funds from Lincoln National Life Intermediate Participation Guaranties (IPGs) to Constitution Guaranteed Investment Contracts (GICs).

Constitution guaranteed a rate of 4.88 percent on the funds transferred to it. Lincoln was paying 6.8 percent on those funds and had guaranteed 6.25 percent through October 31, 1992 on the remaining $50 million of plan funds that it held.

The city did not undertake any analysis or put forth any justification for its decision to transfer the $27 million to Constitution.

The city did not obtain the approval of city council before contracting with Constitution to hold plan funds.

The city did not offer any proof that Constitution was accredited in Pennsylvania.

On November 19, 1992, Standard & Poor’s downgraded Constitution’s claims-paying ability from the contractually required A — minimum to BBB — .

On November 24, 1992, the city transferred $27,286,509.80 from Constitution to a State Street Bank and Trust Company account that did not earn any interest.

On December 4, 1992, the city transferred the $27 million from the State Street account into a John Hancock account earning 3.85 percent interest.

On January 4, 1993, the funds in the John Hancock account were invested in a GIC portfolio.

If the $27 million had not been transferred to Constitution and State Street, the plan participants would have earned $96,957.15 more in interest than they did from September 29, 1992 through January 4, 1993.

B. Conclusions of Law

The city was grossly negligent in breach of its contract with the plaintiffs when it decided to transfer $27 million in investments to Constitution.

The city was further grossly negligent in breach of its contract with the plaintiffs when it held the $27 million for eight days in an account that did not bear any interest.

But for the city’s gross negligence, the city would not have had to invest funds with John Hancock at the short-term rate of 3.85 percent.

As a result of the city’s gross negligence, plaintiffs were damaged in the amount of $96,957.15.

V. CHANGE OF INVESTMENT VEHICLES FROM IPGs TO GICs

A. Findings of Fact

In the spring of 1992, approximately $77 million of the plan’s funds were invested in Lincoln IPGs.

In 1992, Mr. Thomas Knox, the deputy mayor of Philadelphia, not the city’s finance director as required under the plan, determined that IPGs were not an appropriate investment vehicle for the plan participants in light of the fact that interest rates were low and expected to rise.

Later in 1992, the city set up an ad hoc committee, which included the finance director Stephen Mullin and the treasurer Kathy Engbertson, to evaluate the plan’s investment vehicles.

Based on the research conducted by members of the ad hoc committee, the committee recommended GICs as a more appropriate investment vehicle for the plan participants than IPGs in light of the fact that interest rates were low and expected to rise.

Lincoln offered a guaranteed 7.3 percent through 1994 if the city kept the approximately $77 million of the plan’s funds invested in Lincoln IPGs.

On January 4, 1993, the city invested approximately $77 million of the plan’s funds in a GIC portfolio.

After January 4, 1993, interest rates increased.

As a result of the subsequent increases in interest rates, the $77 million in plan funds that were invested in GICs earned approximately $3.5 million less in interest through 1994 than they would have if they had remained invested in Lincoln IPGs.

B. Conclusions of Law

The city was not grossly negligent, and not in breach of its contract with the plaintiffs, when it invested the $77 million that it had removed from IPGs in GICs.

VI. COPELAND’S FEES

A. Findings of Fact

The city entered into a contract with Copeland, effective January 1, 1993, under which Copeland would act as third-party administrator of the plan for an annual fee of 45 basis points on asset value.

In 1992, the plan’s asset value was $89,811,211.65, and in 1996 it had increased to $169,316,365.68.

B. Conclusions of Law

The fees Copeland charged to the plan from 1993 through 1996 were reasonable.

The city was not grossly negligent in breach of its contract with the plaintiffs by agreeing that the plan would pay Copeland’s fees.

ORDER

And now, December 31,2004, after trial without a jury in this matter, and in accordance with the findings of fact and conclusions of law issued contemporaneously herewith, it is hereby ordered that defendant, the City of Philadelphia, shall pay to plaintiffs $826,348.81, plus the amount of the commissions that the agents of Public Employee’s Benefit Services Corporation were paid in connection with the sale to the plaintiff class of People’s Universal Life Insurance Policies.


author: McFADDEN, J,

text:
    Lockman v. Easton Hospital

      C.P. of Northampton County,
    no. 1997-C-1795.

      Michael A. Snover, for plaintiff.

      Kevin H. Wright and Mark R. Zolfaghari, for defendants Javia and Subhashchandra Javia M.D., P.C.

      Gregory S. Nesbitt, for defendants Najmi and Easton Cardiovascular Associates P.C.

      Candy Barr Heimbach, for defendant Easton Hospital.
    December 9, 2004
   McFADDEN, J,

Presently before the court is a motion by plaintiff for reconsideration of orders precluding plaintiff’s experts, Robert Sklaroff M.D. and Thomas Sharon R.N. Also before this court are two separate motions filed by defendants. Defendants Moosa A. Najmi M.D. and Easton Cardiovascular Associates filed a motion in limine to preclude the testimony of plaintiff’s experts, Sheldon Margulies M.D. and Eric W. Fine M.D. Defendants Subhashchandra Javia M.D. and Subhashchandra Javia M.D., P.C. filed a motion in limine to preclude the testimony of plaintiff’s expert, Sheldon Margulies M.D.

The above motions were assigned to the Honorable F.P. Kimberly McFadden from the October 5, 2004 argument list. Following oral argument and review of the motions and memoranda submitted in relation thereto, this matter is now ready for disposition.

FACTUAL/PROCEDURAL HISTORY

This case arises out of a medical malpractice action brought by plaintiff, Dorothy Lockman, individually and on behalf of plaintiff’s decedent, Michael Lockman. On or about November 24, 1995, the plaintiff’s decedent, Michael Lockman, suddenly collapsed at his home. He was transported by ambulance to the Easton Hospital Emergency Room. Decedent then went into ventricular fibrillation, was resuscitated and intubated. Despite this, however, decedent fell into a coma. An EEG determined that decedent had suffered some brain stem dysfunction. Decedent was admitted to the hospital on a respirator and intubated. He was under the care of Moosa Najmi M.D., who was the attending physician and assigned to decedent’s case from the on-call rotation.

On or about November 28,1995, plaintiff, while in the waiting room of the ICU, suffered a syncopal episode. She was admitted to Easton Hospital and entered under the care ofMoosaNajmi M.D. Dr. Najmi requested a psychiatric consult from Subhashchandra Javia M.D. regarding plaintiff’s condition. Dr. Javia performed the consultation and reported that plaintiff suffered from major depression, adjustment disorder and marital conflict.

On or about November 29, 1995, decedent was taken off life support. He was pronounced dead at approximately 2:40 p.m. on November 30,1995.

Plaintiff filed a complaint against the above defendants on or about December 15, 1997. A third and final complaint was filed on January 14,1999. In the third amended complaint, plaintiff alleges that the defendants were negligent in their care and treatment of plaintiff and decedent.

On March 20, 2002, the Medical Care Liability & Reduction Act (MCARE Act) was signed into law. The provisions of the MCARE Act were activated within certain time periods, as designated by the MCARE Act. Section 512, addressing qualifications for expert testimony, became effective on May 19, 2002.

On June 28,2002, this court entered an order granting defendants’ motion for summary judgment. Then on July 2, 2002, this court certified this matter for immediate appeal, and on February 4, 2003, the Superior Court quashed the appeal pursuant to the request of defendant, Easton Hospital.

Plaintiff filed a motion to determine expert requirements to ascertain whether her experts would be precluded from testifying under the MCARE Act. At the time, plaintiff had already identified two experts, Sheldon Margulies M.D., a neurologist, and Eric W. Fine M.D., a consultative forensic psychiatrist.

In an opinion and order dated July 9, 2003, this court held that the MCARE Act, 40 P.S. §1303.512, was applicable to the instant action and was constitutional. This court, therefore, afforded plaintiff until October 1,2003 to secure new experts that complied with the MCARE Act and afforded defendants until November 11,2003 to secure their experts.

On or about October 1, 2003, plaintiff withdrew her original two experts and identified two new experts, Robert B. Sklaroff M.D., an internist/oncologist/hemo-tologist and Thomas A. Sharon, a registered nurse.

Defendants filed a motion in limine requesting that these experts be precluded from testifying against defendants. In an opinion and order dated January 8,2004, this court granted defendants’ motion in limine and precluded the testimony of Dr. Sklaroff and Nurse Sharon. In its opinion, this court stated that the purpose of the extension of time was to allow the plaintiff to produce new expert reports, regarding the issues already presented in the original expert reports, that would comply with the MCARE Act. The court was allowing the plaintiff time, if she determined her original experts were not qualified under the MCARE Act, to obtain experts who were qualified. The court was not granting plaintiff an opportunity to re-open the case and present new experts with new qualifications to raise entirely different issues than those presented by the current experts. This court then granted plaintiff an additional 60 days to produce expert reports that were in compliance with the MCARE Act and were in accordance with the issues and causes of action raised by plaintiff’s initial expert reports, so as not to permit plaintiff to raise new theories of liability.

Plaintiff then filed a motion for reconsideration, arguing that the January 8, 2004 court order allegedly precluded plaintiff from introducing any new expert testimony or reports. This court granted the motion for reconsideration on January 23,2004 and then issued a clarification opinion on February 4,2004. In the clarification opinion, this court reiterated that plaintiff could seek additional expert testimony, however any new experts identified by plaintiff were limited to the issues discussed by plaintiff’s original experts. Furthermore, this court granted plaintiff an additional 120 days to produce new experts.

Plaintiff then filed a petition for interlocutory appeal. On February 27, 2004, this court, again, granted plaintiffs’ motion for reconsideration. In an opinion and order dated March 1, 2004, this court reaffirmed that Dr. Sklaroff and Nurse Sharon were precluded from testifying. This court then afforded plaintiff an additional 120 days to produce expert reports against defendant that were in compliance with the MCARE Act and the issues and causes of action raised by the plaintiff’s initial expert reports prepared by Dr. Margulies and Dr. Fine.

Plaintiff then sought reconsideration of the March 1, 2004 order of court and also certification for an immediate appeal regarding the March 1, 2004 order of court. Plaintiff alleged that by excluding the new experts, the court is in reality placing a sanction order upon plaintiff and, therefore, defendants should be required to show prejudice. This court granted reconsideration of its March 1,2004 order on March 30,2004. Then, on April 8,2004, this court issued its opinion and order, which determined that no sanction was imposed on plaintiff, and, therefore, denied plaintiff’s motion for reconsideration. This court reiterated that plaintiff must submit expert reports that qualify under the MCARE Act and that raise the same issues and causes of action as plaintiff’s original experts. This court also denied plaintiff’s petition to take interlocutory appeal. The Superior Court denied plaintiff’s petition for review on May 28, 2004.

Plaintiff now seeks to reintroduce the expert testimony of Dr. Margulies and Dr. Fine, as well as reconsider the use of Dr. Sklaroff and Nurse Sharon as experts. Defendants seek to preclude the testimony of Dr. Margulies and Dr. Fine, as well as uphold this court’s earlier decision precluding Dr. Sklaroff and Nurse Sharon.

We will discuss each in turn.

STATUTE

“40 P.S. §1303.512. Expert qualifications.

“(a) General rule. — No person shall be competent to offer an expert medical opinion in a medical professional liability action against a physician unless that person possesses sufficient education, training, knowledge and experience to provide credible, competent testimony and fulfills the additional qualifications set forth in this section as applicable.

“(b) Medical testimony. — An expert testifying on a medical matter, including the standard of care, risks and alternatives, causation and the nature and extent of the injury, must meet the following qualifications:

“(1) Possess an unrestricted physician’s license to practice medicine in any state or the District of Columbia

“(2) Be engaged in or retired within the previous five years from active clinical practice or teaching.

“Provided, however, the court may waive the requirements of this subsection for an expert on a matter other than the standard of care if the court determines that the expert is otherwise competent to testify about medical or scientific issues by virtue of education, training or experience.

“(c) Standard of care. — In addition to the requirements set forth in subsections (a) and (b), an expert testifying as to a physician’s standard of care also must meet the following qualifications:

“(1) Be substantially familiar with the applicable standard of care for the specific care at issue as of the time of the alleged breach of the standard of care.

“(2) Practice in the same subspecialty as the defendant physician or in a subspecialty which has a substantially similar standard of care for the specific care at issue, except as provided in subsection (d) or (e).

“(3) In the event the defendant physician is certified by an approved board, be board certified by the same or a similar approved board, except as provided in subsection (e).

“(d) Care outside specialty. — A court may waive the same subspecialty requirement for an expert testifying on the standard of care for the diagnosis or treatment of a condition if the court determines that:

“(1) the expert is trained in the diagnosis or treatment of the condition, as applicable; and

“(2) the defendant physician provided care for that condition and such care was not within the physician’s specialty or competence.

“(e) Otherwise adequate training, experience and knowledge. — A court may waive the same specialty and board certification requirements for an expert testifying as to a standard of care if the court determines that the expert possesses sufficient training, experience and knowledge to provide the testimony as a result of active involvement in or full-time teaching of medicine in the applicable subspecialty or a related field of medicine within the previous five-year time period.”

DISCUSSION

1. Plaintiff’s Motion for Reconsideration of Orders Precluding the Testimony of Plaintiff’s Experts, Dr. Sklaroff and Nurse Sharon

At issue in this case is whether this court should reconsider its previous decision precluding Dr. Sklaroff and Nurse Sharon from testifying.

It shall be noted that, according to the Superior Court in Herbert v. Parkview Hospital, 854 A.2d 1285, 1292 (Pa. Super. 2004), based “on its plain language, the MCARE Act reflects the legislature’s preference for the testimony of expert witnesses who share the relevant area of expertise with the defendant physician.” The Superior Court further stated that the trial court has discretion in determining whether to admit testimony from a doctor with expertise in another specialty that “has a similar standard of care for the specific care at issue.” Id. at 1294. (emphasis in original) Plaintiff contends that this court should have considered whether the preclusion of Dr. Sklaroff’s and Nurse Sharon’s testimony was, in effect, a sanction order and, therefore, prejudice to the defendant should have been considered.

Plaintiff argues that the decision in Steinfurth v. LaManna supports this conclusion. See 404 Pa. Super. 384, 590 A.2d 1286 (1991). In Steinfurth, the Superior Court considered an appeal from the trial court’s decision granting the defendant’s motion for summary judgment. The plaintiffs in that case failed to submit a timely expert report. Thereafter, the defendants filed a motion for summary judgment, which was granted. The Superior Court concluded that summary judgment was premised upon a sanction order precluding the plaintiffs from introducing expert testimony. Therefore, the court held that the sanction was disproportionate to the default, which was the untimely report. Id. at 391, 590 A.2d at 1289.

This case, however, is factually different than Stein-furth. After deciding that the MCARE Act was applicable to the instant case, this court, in its order on July 9, 2003, afforded plaintiff until October 1, 2003 to secure new experts that complied with the MCARE Act, if she determined that her current experts, Dr. Margulies and Dr. Fine, were not qualified under the MCARE Act. On October 1,2003, plaintiff withdrew her original experts and identified Dr. Sklaroff and Nurse Sharon. Defendants then filed a motion in limine to preclude plaintiff’s new experts, because the new experts were raising additional issues and causes of action not raised by the original experts. After numerous opinions and orders, this court issued an order on March 1, 2004 granting defendants’ motion in limine and precluding plaintiff’s experts, Dr. Sklaroff and Nurse Sharon. In the March 1, 2004 order, this court granted plaintiff an additional 120 days to produce expert reports that were to be in compliance with both the MCARE Act and the issues and causes of actions raised by the original expert reports prepared by Sheldon Margulies M.D. and Eric W. Fine M.D.

Thus, plaintiff’s reliance on Steinfurth is misplaced. Plaintiff, unlike the plaintiff in Steinfurth, was given additional time, on numerous occasions, to introduce expert testimony that is both in compliance with the MCARE Act and raises the same issues and causes of action as raised by plaintiff’s original experts. Therefore, because this court has given plaintiff additional time to secure experts, this court has not imposed a sanction order on plaintiff. Because this court did not impose a sanction on plaintiff, prejudice to the defendants need not be considered.

Plaintiff also relies on Herbert v. Parkview Hospital, in her motion for reconsideration, asserting that the decision in Herbert stands for the proposition that a plaintiff’s expert does not necessarily have to be of the same subspecialty as the defendant physician if the criticized care at issue is outside of the defendant’s subspe-cialty. Rather, an expert in a different subspecialty may testify as to the standard of care at issue as of the time of the alleged breach. We do not disagree with this proposition. However, as we discussed above, this court precluded Dr. Sklaroff and Nurse Sharon because they raised issues and causes of action different than those raised by plaintiff’s original experts. Therefore, we hold that plaintiff’s motion for reconsideration of the orders precluding the testimony of Dr. Sklaroff and Nurse Sharon is denied.

To allow this testimony would, in effect, grant plaintiff an opportunity to re-evaluate her case at this late juncture to present opinions not previously offered.

2. Clarification of July 9, 2003 Order

Defendants, MoosaNajmi and Easton Cardiovascular Associates, ask for clarification of this court’s July 9, 2003 order, which stated that MCARE is applicable to this case. Defendants assert that although this order does not explicitly prohibit the testimony of Dr. Margulies and Dr. Fine, it does prohibit their testimony by implication.

The July 9, 2003 order merely granted plaintiff until October 1,2003 to secure experts that complied with the MCARE Act. This order was qualified by this court’s order on January 8, 2004, which provided that if plaintiff determined her original experts were not qualified under the MCARE Act, she would be granted additional time to obtain experts who were qualified.

Thus, rather than disposing of this issue based on the July 9,2003 order without the January 8,2004 order, we will address each of defendants’ contentions in turn.

3. Defendants ’, Moosa Najmi and Easton Cardiovascular Associates, Motion in Limine To Preclude Plaintiff’s Experts, Dr. Margulies and Dr. Fine

Defendants’ motion to preclude plaintiffs experts is based on the MCARE Act, quoted at length above. Specifically, defendants assert that because Dr. Margulies, a neurologist, does not practice in the same subspecialty as defendant Najmi, a cardiologist, Dr. Margulies should be precluded from testifying. Furthermore, defendants assert that Dr. Fine, a psychiatrist, should be precluded from testifying against defendant Najmi.

Plaintiff has asserted in response that the “subspecialty requirement only applies if the care being criticized is care involving the special training and practice for which the subspecialty was created.” (Plaintiff’s brief in opposition to defendants’ motion to preclude at 6.)

It is not disputed that Dr. Margulies and Dr. Fine are not in the same subspecialty as Dr. Najmi. However, as plaintiff asserts in her response brief, the care at issue does not involve the subspecialty of cardiology, which is the subspecialty of defendant Najmi. Rather, plaintiff asserts that the care at issue was the decision to terminate life support and the manner of doing so.

Furthermore, plaintiff asserts that the standard of care of a neurologist or a psychiatrist is no different from an internist’s standard of care when engaging in the process for making end of life decisions. Plaintiff relies on Herbert v. Parkview, 854 A.2d 1285 (Pa. Super. 2004), to support this proposition. In Herbert, an internist was qualified to testify as an expert against the defendant, a nephrologist. The defendant in Herbert was to prepare the patient/decedent for dialysis treatment. The defendant did not examine the decedent’s mouth and throat, although it had been noted earlier by an intake nurse that the decedent had been grasping at his throat and appeared to be having trouble breathing. See id. at 1286-87. The decedent later was found to have a large piece of steak in his throat. The steak was removed, however, decedent developed an infection and later died. For trial, the plaintiff introduced the testimony of an internal medicine physician. The defendant nephrologist argued that the plaintiff should present the testimony of a nephrologist pursuant to the MCARE Act. The Superior Court ruled, however, that the specific care at issue as of the time of the alleged breach was not based on the subspecialty of nephrology, but rather the issue was whether the defendant should have diagnosed and treated the decedent’s respiratory problems. Therefore, plaintiff’s expert was permitted to testify, “based on his expertise in internal medicine and critical care, to the standard of care applicable to a physician with internal medicine and critical care experience who encounters a patient under such conditions.” Id. at 1294.

Thus, based on the ruling in Herbert, plaintiff asserts that “although Michael Lockman went to the hospital originally for cardiac arrest, the care being criticized has nothing to do with the subspecialty of cardiology.... It is therefore clear that there is no basis to exclude the testimony of Drs. Margulies or Fine, merely because they are not in the subspecialty of cardiology. Clearly, the plaintiffs’ experts are familiar with end of life issues and how they are to be handled. The standard of care is not different on this issue, and therefore, with respect to the specific care at issue, the plaintiffs’ experts are competent to express an opinion on the standard of care.” Plaintiff’s brief in opposition to defendants’ motion to preclude at 10.

Defendants have not offered any arguments in response as to why plaintiff’s experts, Dr. Margulies and Dr. Fine, cannot testify as to the standard of care regarding the care that plaintiff asserts was at issue at the time of the alleged breach. Therefore, we must deny defendants’ motion to preclude plaintiff’s expert testimony as it pertains to Dr. Najmi and Easton Cardiovascular Associates.

4. Defendant Subhashchandra Javia’s Motion in Limine To Preclude Plaintiff’s Expert, Dr. Margulies

Defendant, Subhashchandra Javia, has also filed a motion in limine to preclude the testimony of plaintiff’s expert, Dr. Margulies, from testifying as to the standard of care owed by Dr. Javia.

Defendant asserts in his motion that Dr. Margulies, a neurologist, is in an entirely different medical field than defendant, a psychiatrist, and that Dr. Margulies and Dr. Javia are not approved by the same or similar medical boards. Furthermore, defendant asserts that there is no evidence that Dr. Margulies is in a subspecialty with a substantially similar standard of care for the specific care at issue.

Plaintiff has not responded to defendant’s motion, and therefore, defendant’s motion in limine to preclude plaintiff’s expert, Dr. Margulies, from testifying as to the standard of care owed by Dr. Javia is granted.

ORDER

And now, December 9, 2004, upon consideration of plaintiff’s motion to reconsideration of orders precluding plaintiff’s experts, and defendants’ motions in limine to preclude plaintiff’s experts, it is hereby ordered and decreed that:

(1) Plaintiff’s motion for reconsideration of orders precluding plaintiff’s experts, Dr. Sklaroff and Nurse Sharon, is hereby denied.

(2) Defendants’, Moosa A. Najmi M.D. and Easton Cardiovascular Associates, motion in limine to preclude the testimony of plaintiff’s expert, Dr. Margulies, is hereby denied.

(3) Defendants’, Moosa A. Najmi M.D. and Easton Cardiovascular Associates, motion in limine to preclude the testimony of plaintiff’s expert, Dr. Fine, is hereby denied.

(4) Defendants’, Subhashchandra Javia M.D., and Subhashchandra Javia M.D., P.C., motion in limine to preclude the testimony of plaintiff’s expert, Dr. Mar-gulies, is hereby granted.

(5) This matter is placed on the pretrial list of February 9, 2005 at 8:30 a.m. in courtroom 6.


author: WALLACH MILLER, J,

text:
    Scheiner v. Scheiner

      C.P. of Monroe County,
    no. 1 DR 2000.

      Jeffrey J. Kash, for plaintiff.

      Barry J. Cohen, for defendant.
    November 30, 2004
   WALLACH MILLER, J,

The parties are the parents of a 9-year-old daughter who lives primarily with plaintiff in Long Island. Plaintiff is a 41-year-old attorney licensed in three states who now works as a teacher’s aide in her daughter’s middle school and additionally works as an independent contractor revising a legal publication for a publisher. Defendant is a high school graduate who is a delivery man for Penny-Wise Fuel Company although presently on unemployment. Defendant’s expectation is that this is a short-term seasonal lay-off.

The parties divorced on October 8, 2003. Prior to the divorce, plaintiff filed for child support and defendant filed for spousal support. On September 19, 2001, the court ordered that neither party was entitled to support as the child support from defendant to plaintiff was offset by the spousal support to be paid by plaintiff to defendant.

On December 19,2003, plaintiff filed a petition for modification of the September 19,2001 order to eliminate her obligation to pay spousal support and to modify the child support order. The plaintiff was initially notified by the Monroe County Domestic Relations Office that the file was closed as no payments were due under the order. The Domestic Relations Office amended their position and a conference was scheduled for March 18, 2004. Plaintiff did not appear at the time set for the conference and the petition was dismissed. Plaintiff filed an appeal to the dismissal and requested a master’s hearing. The Domestic Relations Office, rather than scheduling a master’s hearing for a conference that never took place, reversed their dismissal of the petition and rescheduled the support conference for May 7, 2004. Following that conference, the defendant appealed the determination of the conference officer and a hearing was held before the support master on August 5, 2004.

Plaintiff now files exceptions to the master’s report.

Her first exception is whether the determination of May 7,2004 (the date of the rescheduled Domestic Relations conference) is the effective retroactive date for the support order when the petition for modification was filed on December 19,2003. Her second exception is whether the master erred in assessing the plaintiff an income of $62,500 per year.

On the first exception, the plaintiff argues December 19,2003, is the effective retroactive date for the support order. We disagree. Modification of a support order is to be retroactive to the date when modification initially was sought unless the court sets forth reasons for failing to do so on the record. Kelleher v. Bush, 832 A.2d 483 (Pa. Super. 2003); Holcomb v. Holcomb, 448 Pa. Super. 154, 670 A.2d 1155 (1996).

On March 18, 2004, the plaintiff was scheduled for a conference with the Domestic Relations Office. The defendant appeared at the scheduled time with his attorney ready to proceed. The plaintiff failed to appear. The Domestic Relations Office waited a reasonable amount of time before dismissing the petition. As the master noted, when he determined the retroactive date to be May 7, 2004, the date of the rescheduled conference, every litigant has an obligation to arrive on time and litigants should consider travel time and traffic conditions. In this instance, the plaintiff indicated no unusual circumstances that would excuse her failure to appear on time other than traffic. The reason is stated in the record and supports the retroactive date of May 7, 2004.

Additionally, plaintiff argues her claims under the December 19,2003 petition should have been preserved and she is being penalized for Domestic Relations’ action in dismissing her petition. She requested a hearing de novo as allowed under Pa.R.C.P. 1910.12, not a rescheduled conference. Relying on Warner v. Pollock, 434 Pa. Super. 551, 644 A.2d 747 (1994), the plaintiff argues that she does not need to have a reason for demanding the hearing and once a party demands a hearing she would be entitled to litigate as if it were the first proceeding. We find that reliance misplaced. In Warner, supra, the court reversed and remanded the case where the parties had a Domestic Relations hearing and father was denied a judicial hearing because he refused to assign reasons for the appeal.

Although the plaintiff need not have a reason to appeal the decision of the conference officer, Pa.R.C.P 1910.12 does require both parties attend an office conference and at the conclusion of the conference, if an agreement is not reached, the parties will then be given notice of a hearing date. At the August 5,2004 master’s hearing, the master stated had the Domestic Relations office placed plaintiff’s appeal on the hearing list, he would have sent the case back for conference anyway. (N.T. p. 2.) Plaintiff has not been penalized as a result of Domestic Relations’ actions. Plaintiff has had a conference, a master’s hearing and now judicial review of her case.

The second exception to the master’s report is the plaintiff’s imputed earning capacity of $62,500. “A person’s earning capacity is defined not as an amount which the person could theoretically earn, but as that amount which the person could realistically earn under the circumstances, considering his or her age, health, mental and physical condition and training.” Strawn v. Strawn, 444 Pa. Super. 390, 395, 664 A.2d 129, 132 (1995). The factors used in determining earning capacity are age, education, training, health, work experience, earning history and child care responsibilities. Pa.R.C.P. 1910.16-2(d)(4).

Plaintiff presently earns $58.50/day for 180 days of the school year ($10,854) for her work as a teacher’s aide at a middle school. She earns an additional $8,000 per year from Matthew Bender publishing company updating a publication. She reviews case law, treasury regulations and the Internal Revenue Code and incorporates them into the update for the periodical. (N.T. 14-15.) She has a license to practice law in New York, New Jersey and Pennsylvania. She has previously had a law practice from 1990-1998 which included real estate closings, drafting of wills, and estate administration. (N.T. 18.) Plaintiff describes her experience as limited, not doing litigation or handling complex matters. She has also worked as an editor for Matthew Bender from 1986-1993. (N.T. 18.) She has not applied for a position as an attorney in over a year (N.T. 35) and has decided not to make that her career. (N.T. 35.)

Plaintiff presently lives with her boyfriend and his parents in Long Island and most of her expenses are paid for by her boyfriend’s parents, thereby reducing her need to generate income. (N.T. 34.)

Plaintiff argues that, similar to Woskob v. Woskob, 843 A.2d 1247 (Pa. Super. 2004), where the court held that earning capacity should be based in reality not something which is nonexistent, her income potential is limited as she has hardly practiced law. She argues that she has not refused lucrative positions nor has she chosen lower paying work in order to increase defendant’s support obligation, and that she should not be assessed a lawyer’s salary just because she has a law degree.

She argues that defendant’s position that she has an earning capacity of $100,000 based on location and professional license is flawed and was rejected in Dennis v. Whitney, 844 A.2d 1267 (Pa. Super. 2004). There, the husband had a degree in engineering but had never worked as an engineer and there were no jobs in the engineering field where he lived. For the prior 10 years, the husband worked as a farmer. The Superior Court affirmed the income capacity as a farmer. We do not find the facts analogous because plaintiff does have experience as an attorney, and there is no evidence that the job opportunities for an attorney are not available in her area.

What is clear to the court is that the plaintiff is underemployed based on her education and experience. She has voluntarily ceased looking for employment as an attorney and chosen to work as a teacher’s aide. Child support is a shared responsibility requiring both parents to contribute to the support of their children in accordance with their relative incomes and ability to pay. Portugal v. Portugal, 798 A.2d 246 (Pa. Super. 2002). Plaintiff is capable of working as an attorney and has not demonstrated that work is not available in this field. Unfortunately, there was no evidence in the record to support the master’s determination that $62,500 is an appropriate earning capacity. Recognizing the difficulty presented in determining a realistic salary figure for the plaintiff, we remand this matter to the master for further hearing on this issue and advise that we are willing to accept telephonic testimony from a career service representative from New York-based law schools, or entry-level job postings from other sources that have been certified by the Career Services Office of a New York-based law school as indicative of plaintiff’s earning potential as an attorney.

Based on the foregoing, we enter the following order.

ORDER

And now, November 30,2004, plaintiff’s first exception is dismissed and plaintiff’s second exception is remanded to the master for a full evidentiary hearing to be scheduled by the Domestic Relations Office.