author: NANOVIC, PJ,

text:
    Mizenko v. McDonald’s Restaurants of Pennsylvania, Inc.

      C.P. of Carbon County,
    No. 08-0574.

      Michael J. Cefalo, James J. Albert and Karl J. Kwak, for plaintiff.

      Joseph J. Bottiglieri, Mark A. Lockett and Michael L. Ozalas, for defendant.
    April 19, 2012
   NANOVIC, PJ,

Before us is plaintiff’s post-trial motion following a jury verdict in favor of defendant. In his motion, plaintiff claims we erred in what we instructed the jury (i.e., the standard of care applicable to children) and in what we failed to instruct (i.e., spoliation), and further erred in excluding expert testimony which plaintiff sought to present and in denying plaintiff’s request to call certain former employees of defendant as of cross-examination. Each of these issues will be discussed in the order advanced by plaintiff.

FACTUAL AND PROCEDURAL BACKGROUND

On October 30, 2005, the plaintiff, Eugene Mizenko (“Mizenko”), and his friend, Stephen O’Firer, pulled into the parking lot of a McDonald’s restaurant located along Blakeslee Boulevard in Lehighton, Carbon County, Pennsylvania, to ask directions to a destination they were going to in neighboring Schuylkill County. Both were driving motorcycles. After receiving directions from a patron at McDonald’s, and while driving through the parking lot the same way they had entered, Mizenko hit his brakes and fell to the ground, sustaining injuries. According to Mizenko, the cause of his fall was a wet greasy substance, like black ice, on the surface of the parking lot, which caused him to skid and lose control.

Shortly before the accident, Charles Shafer (“Shafer”), an employee of McDonald’s, had emptied the contents of a shop vac onto the lot near the area where Mizenko fell. In dispute among other issues was whether Shafer knew or should have known the contents of the shop vac, which contained not only dirty water and rocks, but also grease. The shop vac was used to clean the floors at the restaurant, including, at times, cleaning grease around the cooking areas. Also in dispute was whether Mizenko’s conduct contributed to his fall. According to McDonald’s, based upon a deposition later given by O’Firer, after receiving the patron’s directions, Mizenko gunned the engine of his motorcycle, accelerated through the parking lot, and had to suddenly stop to avoid hitting another vehicle exiting a parking space.

As a result of the accident, Mizenko filed a civil action in the Court of Common Pleas of Philadelphia County on June 29, 2006. In his complaint, Mizenko alleged negligence and recklessness against the defendant, McDonald’s Restaurant of Pennsylvania, Inc. (“McDonald’s”), and sought compensatory, as well as punitive damages. On January 09, 2007, McDonald’s filed an answer with new matter, which denied all material averments of the complaint, and alleged, among other defenses, comparative negligence. Mizenko replied to the new matter on January 29, 2007.

Several months later, on June 13, 2007, McDonald’s filed a petition to transfer venue based on forum non conveniens. McDonald’s request was granted by order dated July 30, 2007, with the transfer to this court being completed on March 10, 2008.

A jury trial began on February 7, 2011, and ended on February 18, 2011, when a verdict was rendered in favor of McDonald’s and against Mizenko. On February 25, 2011, Mizenko filed the instant post-trial motion, seeking judgment notwithstanding the verdict and a new trial. For the reasons which follow, we deny Mizenko’s motion in full.

DISCUSSION

We begin with our standard of review. In Harman ex rel. Harman v. Borah, 562 Pa. 455, 756 A.2d 1116 (2000), our Supreme Court explained that

[tjhere is a two-step process that a trial court must follow when responding to a request for new trial. First, the trial court must decide whether one or more mistakes occurred at trial. These mistakes might involve factual, legal, or discretionary matters. Second, if the trial court concludes that a mistake (or mistakes) occurred, it must determine whether the mistake was a sufficient basis for granting a new trial. The Harmless Error Doctrine underlies every decision to grant or deny a new trial. A new trial is not warranted merely because some irregularity occurred during the trial or another trial judge would have ruled differently; the moving party must demonstrate to the trial court that he or she has suffered prejudice from the mistake.

Id. at 1122 (citations omitted). With this standard in mind, we address each of Mizenko’s claimed errors.

A. Child Standard of Care

Mizenko argues first that we erred in charging the jury under Pennsylvania Suggested Standard Instruction 3.12 (now numbered as 13.130), the standard of care applicable to children, in evaluating Shafer’s conduct.

Shafer was 17 years old at the time of the accident. In judging his conduct, McDonald’s requested that we instruct the jury on the standard of care applicable to children, which we did over Mizenko’s objection. (N.T. 02/17/11, pp. 139-40).

On this issue, the instruction given was as follows:

In this case, you are concerned with the care taken or not taken by Charles Shafer, who was 17 years old at the time of the accident. The law does not hold children to the same standard of care as adults. A child is required to exercise the ordinary care appropriate for a child. Specifically, he or she is held to that measure of care that other children of the same age, experience, capacity, and development would ordinarily exercise under similar circumstances.
In applying this standard, the law has placed children of different ages in different categories. Once a child has reached the age of 14, the law presumes that he or she has the capacity to appreciate danger and to exercise care. With respect to a child 14 years of age or over, and Mr. Shafer was 17 years old, the law puts upon him or her the burden of showing lack of intelligence, prudence, foresight, or restraint such as is usual in those of his or her age.

(N.T. 2/17/11, pp. 168-9). This instruction was accompanied by the following instruction on vicarious liability:

In this case, it is admitted that Charles Shafer was at the time of the occurrence acting as an employee of McDonald’s and was engaged in furthering the interest, activities and affairs or business of McDonald’s. McDonald’s is liable for the negligence or recklessness of its employees occurring while the employee is acting in the course and within the scope of his employment.
Therefore, if you find Charles Shafer was either negligent or reckless in emptying the contents of the shop vac onto McDonald’s parking lot, then you must also find McDonald’s to have been equally negligent or reckless.

(N.T. 02/17/11, pp. 171-2).

Mizenko argues that, as a corporation, McDonald’s should not reap the benefit of a child standard forjudging conduct for which it can be held responsible.

This echoes Mizenko’s argument at the time of trial that the intent of instruction 13.130 is to protect a child from liability under an adult standard, not to provide a shield to a corporate defendant who has hired a child. (N.T. 02/17/11, pp. 142-43, 208-209). Such argument, however, misses the mark.

It fails to distinguish between negligence in the hiring or supervision of a child, for which an adult standard of care may well be applicable, and the negligence or recklessness of a child, for which an employer may be held vicariously liable. Stated otherwise, the issue was whether Shafer himself was negligent or reckless, and whether such negligence or recklessness could be attributed to McDonald’s. (N.T. 02/17/11, p. 143).

The theory of vicarious liability, requiring some relationship between Shafer, who is asserted to be negligent or reckless, and McDonald’s, an employer acting through its employees, imputes Shafer’s asserted negligence or recklessness onto McDonald’s because of their employee-employer relationship. See D’Errico v. DeFazio, 763 A.2d 424, 431 (Pa.Super. 2000) (“[A]n employer is held vicariously liable for the negligent acts of his employee which causes injuries to a third party, provided that such acts were committed during the course of and within the scope of employment.”) (quotation marks and citation omitted). Pursuant to this theory, we charged the jury with analyzing the conduct of Shafer, not that of McDonald’s.

The charge on the standard of care for children fourteen years of age or older was applicable in this case given Shafer’s age and Mizenko’s theory of liability based on Shafer’s alleged tortious conduct. It instructed the jury to examine Shafer’s conduct when addressing the issue of negligence or recklessness, and explained to the jury, in accordance with the law, that notwithstanding Shafer’s age, he was presumptively capable of negligence and recklessness and that the burden of showing otherwise was on him. We find nothing in the charge which was confusing, misleading or unclear. Cf. Stewart v. Motts, 539 Pa. 596, 606, 654 A.2d 535, 540 (1995) (stating the standard for evaluating the sufficiency and adequacy of a jury instruction). Furthermore, notwithstanding Mizenko’s claim that this instruction held Mizenko to a higher standard of care in proving McDonald’s liability, no prejudice was suffered since the jury determined both that McDonald’s was negligent and that its conduct was a factual cause of the accident.

B. Exclusion of Expert Witness Testimony

Mizenko’s second argument concerns our decision to exclude opinion testimony of Mizenko’s expert, Dr. Stephen Wilcox, an expert in the field of human factors.

Dr. Wilcox was proffered by Mizenko to render an opinion on whether Shafer acted recklessly in dumping the contents of the shop vac onto McDonald’s parking lot. Preliminary to this testimony, Dr. Wilcox authored a report, dated March 22, 2010, whereby he opined that:

1. What Mr. Shafer did constituted reckless conduct, in that he knowingly and intentionally created a hazard....
2. That it should have been obvious to Mr. Shafer that he was creating a hazard.
3. That it was further reckless for Mr. Shafer to fail to examine the result of throwing the fluid onto the travel surface.

(Wilcox Report, p.5). On February 1, 2011, McDonald’s filed a motion in limine seeking to preclude Dr. Wilcox’s testimony and report arguing that the jury did not require his expertise in understanding the subject matter; Dr. Wilcox was not qualified to render the opinions expressed; and Dr. Wilcox’s opinions would invade the province of the jury.

Argument was held on McDonald’s motion on February 4, 2011, resulting in an order dated February 7, 2011, which deferred ruling on the motion until after we had an opportunity to review Dr. Wilcox’s trial deposition. On February 8, 2011, in chambers, we explained to counsel that we believed Dr. Wilcox could not express an opinion on recklessness for the following reasons: first, the facts are not of a type that require expert testimony to be understood by the jury; second, Dr. Wilcox lacked the expert qualifications to form the opinions sought to be elicited; and third, permitting Dr. Wilcox to express an opinion characterizing the mental state of Shafer and his conduct as being reckless would invade the province of the jury. (N.T. 02/08/11, pp. 74-8). On February 9, 2011, after giving Mizenko’s counsel a further opportunity to determine whether any portion of Dr. Wilcox’s testimony could be salvaged, we sustained McDonald’s objection.

In his present motion, Mizenko contends that the law in this Commonwealth allows an expert to testify to the ultimate issue; hence, Dr. Wilcox should have been permitted to render his opinion that Shafer’s actions were reckless. The preclusion of his testimony and report, Mizenko argues, resulted in reversible error as it impeded the jury from finding McDonald’s reckless. We disagree.

Expert opinions are intended to assist the jury to understand the evidence or to determine a fact in issue when the nature of the case involves scientific, technical or other specialized knowledge beyond that possessed by a layperson. Pa.R.E. 702; see also Commonwealth v. Nasuti, 385 Pa. 436, 443, 123 A.2d 435, 438 (1956) (“Expert testimony is admissible in all cases, civil and criminal alike, when it involves explanations and inferences not within the range of ordinary training, knowledge, intelligence and experience.”). They are not intended to usurp the function of the jury: to determine the credibility of witnesses, to judge the case as a whole, or to make findings which the juiy is equally capable of making on its own. This applies separate and apart from whether the opinion sought to be elicited from an expert “embraces an ultimate issue to be decided by the trier of fact.” Pa.R.E. 704.

An expert is not permitted to opine on issues of credibility, yet this is exactly what Dr. Wilcox would have done. In his trial deposition, as in his report, Dr. Wilcox testified what he thought must have been obvious to Shafer. Dr. Wilcox further put forth as fact that Shafer knew, or should have known, that the shop vac contained grease. (Wilcox Trial Deposition, pp.22-24, 34, 41-46). Yet, Shafer himself testified to not knowing the contents of the shop vac until they were dumped out; when he noticed dirty water and rocks, not grease.

“[A]n expert cannot weigh contradictory evidence and place his imprimatur upon a particular version.” Kozak v. Struth, 515 Pa. 554, 560, 531 A.2d 420, 422-23 (1987) (“In Pennsylvania, experts have not been permitted to speak generally to the ultimate issue nor to give an opinion based on conflicting evidence without specifying which version they accept. These principles have been designed to permit the expert to enlighten the jury with his special skill and knowledge, but leave the determination of the ultimate issue for the jury after it evaluates credibility.”) (emphasis added); see also Commonwealth v. Delbridge, 578 Pa. 641, 667, 855 A.2d 27, 42 (2003) (“Credibility is an issue uniquely entrusted to the common understanding of laypersons. The teaching of [Commonwealth v. Dunkle, 529 Pa. 168, 602 A.2d 830 (1992)] is that expert testimony will not be permitted when it attempts in any way to reach the issue of credibility, and thereby usurp the function of the factfinder.”).

In seeking to characterize Shafer’s conduct as reckless - a mixed question of law and fact, not simply a factual one - Dr. Wilcox sought to opine on facts which do not require the opinion of an expert for the jury to understand and evaluate, and in doing so, further sought to invade the province of the jury in the application of law to fact. Cf. Houdeshell v. Rice, 939 A.2d 981 (Pa. Super. 2007) (upholding trial court’s ruling precluding expert testimony as to what a defendant should have done, as no specialized knowledge was required for jury to determine whether defendant acted negligently). To this end, Mizenko was asking the expert to offer an opinion on “all the evidence,” and to j udge for the jury and conclude on its behalf that Shafer was reckless. Cf. Kozak, 531 A.2d at 422 (“[t]he [expert] witness can not be asked to state his opinion upon the whole case, because that necessarily includes the determination of what are the facts, and this can only be done by the jury.”); see also Commonwealth v. Daniels, 480 Pa. 340, 352, 390 A.2d 172, 178 (1978) (endorsing excluding from evidence a statement by a witness which “amounts to no more than an expression of his general belief as to how the case should be decided.”).

Finally, the question of whether Shafer acted recklessly is not a complex issue requiring expert testimony. See Commonwealth v. Brown, 544 Pa. 406, 420, 676 A.2d 1178, 1184 (1996) (“[t]he purpose of expert testimony is to assist in grasping complex issues not within the ordinary knowledge, intelligence and experience of the jury.”) (quotation marks and citation omitted). On the contrary, it is a matter of ordinaiy knowledge, intelligence, and experience that can be described to the jury and evaluated by them without the need of an expert. See Burton v. Horn & Hardart Baking Co., 371 Pa. 60, 64, 88 A.2d 873, 875 (1952) (“[e]xpert testimony is inadmissible when the matter can be described to the jury and the condition evaluated by them without the assistance of one claiming to possess special knowledge upon the subject.”).

On all these bases, we find that Dr. Wilcox’s proffered expert testimony was properly excluded from consideration by the jury.

C. Refusal to Allow Cross Examination of Former Employees

Mizenko next contends that we erred in denying his request to ask leading questions of former employees of McDonald’s called by Mizenko on direct examination as part of his case-in-chief.

At the outset of Mizenko’s case, Mizenko called four former employees of McDonald’s who were employed by McDonald’s at the time of the accident. As to each, Mizenko sought permission to call them as of cross-examination and to ask leading questions. McDonald’s objected. In sustaining the objection, we determined that unless there was some reason to believe, beyond their mere status as former employees, that the witnesses were hostile, adverse, or prejudiced either against Mizenko or in favor of McDonald’s, there was no basis to permit leading questions on Mizenko’s direct examination.

The general rule is that leading questions are not permitted on direct examination. However, the Pennsylvania Rules of Evidence, Rule 611(c), provides in part: “When a party calls a hostile witness, an adverse party or a witness identified with an adverse party, interrogation may be by leading questions.” (emphasis added). As is apparent from this language, the rule permits, it does not require, the use of leading questions in the circumstances described.

The danger of leading questions is a perversion of the truth: having the examiner’s questions become the testimony of the witness. When leading questions are permitted, it is to compensate for some disadvantage or other circumstance which has been balanced against this danger. In the context of cross-examination generally, the witness has moments earlier committed to a version of the facts, often contrary to that of the examiner’s client, which the examiner .seeks to analyze, test, challenge, undermine, and sometimes, emphasize. Similarly, leading questions of an adverse or hostile witness are intended, to some measure, as a counterweight against a witness who either has a motive or a personal bias which may color his testimony.

None of the four witnesses at issue is an adverse party or has been shown to have an interest adverse to Mizenko. While at one time, each was employedby McDonald’s, none was so employed at the time of trial. Such employment as existed was low to mid-level. None of the individuals were owners, officers or directors of McDonald’s. Moreover, each employee’s past employment with McDonald’s and the positions held were made apparent to the jury.

Nor were any of these witnesses hostile. None exhibited any personal animosity or disrespect to Mizenko or his counsel. When questioned, each responded to the questions asked without being evasive, argumentative or sarcastic. Neither the tone nor the manner of their responses were anything but civil. Cf. Commonwealth v. Lambert, 765 A.2d 306, 356 (Pa.Super. 2000) (“’[H]ostility’ require[s] a showing of surprise during the witness’s testimony or an obvious lack of cooperation, reluctance or evasiveness in answering questions.”) (quoting trial court).

While we agree with Mizenko that Rule 611(c)’s language permitting leading questions of “a witness identified with an adverse party” expands the use of leading questions beyond that to a hostile witness or an adverse party, this does not automatically open the door to ask leading questions of any person who has or had some relationship with an adverse party, no matter the nature or extent of that relationship. To be sure, in some contexts the identity with the adverse party may be apparent on its face: a spouse, a business associate, or another with an interest in the outcome of the case tied to that of the adverse party. Cf. 42 Pa.C.S.A. § 5935 (authorizing the calling as of cross-examination of an adverse party or a person having an adverse interest).

Such identity, however, is not apparent when the relationship between the calling party and the witness is that between an employer and a former employee. This is even more so, as here, when the employment positions held were low to mid-level, the separation from employment occurred years earlier, and the reasons for that separation may well bear on what attitude the witness holds to his or her former employer. In such circumstances, we do not believe it can be presumed without more that the former employee identifies, as a matter of law, with the adverse party. Cf. Kauffman v. Carlisle Products Co., 323 A.2d 750 (Pa. Super. 1974) (holding a defendant’s truck driver who was not a party to personal injury litigation arising out of an automobile-truck collision was not subject to being called as of cross-examination by plaintiff’s counsel).

The circumstances of this case did not entitle Mizenko to call McDonald’s former employees as of cross-examination for purposes of asking leading questions. Moreover, we believe a review of the full testimony given by each of these witnesses reveals that no prejudice or injustice has been sustained by Mizenko in restricting the form of questioning.

D. Spoliation - Refusal of Adverse Inference Charge

Lastly, Mizenko asserts this court erred in refusing to instruct the jury on Pennsylvania Suggested Standard Jury Instruction 5.06 (now numbered as 5.60) with respect to McDonald’s alleged spoliation of evidence.

The factual basis for this request is McDonald’s Customer Incident Report, a one-page form designed for information to be completed on both sides. During discovery, the defense provided Mizenko with a copy of the report completed on the face side only. Defense counsel informed Mizenko that they could not locate the original document and were unable to determine whether the reverse side of the form was ever completed. It was thought that the original document may have been misplaced or destroyed when the restaurant’s building was extensively renovated several years earlier. (N.T. 02/16/11, pp. 122-23). In any event, a copy of the reverse side of the reporting form in blank was supplied so Mizenko would know what information might be missing.

In requesting the charge, Mizenko argued that the fact McDonald’s was unable to produce the second-side of the original report was in and of itself sufficient to support a spoliation instruction. Having found that this failure resulted in minimal prejudice, if any, we denied Mizenko’s request for an adverse inference instruction.

In Schroeder v. Department of Transportation, 551 Pa. 243, 710 A.2d 23 (1998), our Supreme Court listed certain factors to be considered in determining whether a party should be sanctioned when potentially relevant evidence within that party’s control or possession has been lost or destroyed:

(1) the degree of fault of the party who altered or destroyed the evidence;
(2) the degree of prejudice suffered by the opposing party, and
(3) the availability of a lesser sanction that will protect the opposing party’s rights and deter similar conduct.

Id. at 27; see also Croydon Plastic Co., Inc. v. Lower Bucks Cooling & Heating, 698 A.2d 625, 629 (Pa. Super. 1997) (“The decision whether to sanction a party, and if so the severity of such sanction, is vested in the sound discretion of the trial court.”), appeal denied, 553 Pa. 689, 717 A.2d 1028 (1998); Creazzo v. Medtronic, Inc., 903 A.2d 24, 28-30 (Pa.Super. 2006) (discussing the above-referenced spoliation-of-evidence standards).

With respect to fault, we agree with Mizenko that McDonald’s is responsible for the loss of the original document and not knowing whether the second side of the report was ever completed. Erika Markley recalled filling out the report shortly after the accident and then handing it to someone at McDonald’s. She believed, but could not recall for certain whether or not she in fact completed the reverse side of the form. Unfortunately, it was not known who the report was given to, what became of the original, or why a copy was only kept of one side. Having found that McDonald’s was responsible for this lack of relevant information, we also found, based upon the evidence of record, that there was no evidence of bad faith or a deliberate decision to conceal or destroy relevant information.

As to the second prong of the test, we found a relatively low level, if any, prejudice resulting from the absence of the second side of the report. The second side contained three sections to be completed, if relevant, entitled: 5. Alleged Playplace/Playland Incident; 6. Alleged Premium/Promotional Product Incident; and 7. Alleged Customer Accident/Property Damage. Clearly, the only relevant section is Section 7: Alleged Customer Accident/Property.

The first line of section 7 asks for the “type of incident,” with one of the following to be circled: “customer accident,” “property damage,” or “other.” The next two lines ask the shift manager to “describe customer accident/property damage” and “describe any hazards or conditions which may have contributed” to the incident, with space for information to be inserted. In finding little, if any, prejudice resulted to Mizenko from the absence of this information in the report, we note first that not only was it uncertain whether the reverse side of the incident report was ever completed, but also that the information responsive to these inquiries was equally, if not better, known to Mizenko. In addition: the local police in Mahoning Township were contacted, arrived within approximately fifteen minutes of the accident, and spent over an hour at the scene observing conditions and conducting an investigation. Pictures of the parking lot surface and what Mizenko contended was the cause of his fall, were taken by either Mizenko or O’Firer within an hour of the accident and were used extensively at trial. None of the witnesses disputed what was depicted in these pictures. Finally, the last inquiry under Section 7 of the form asks for “recommended corrective action” which Shafer and other witnesses testified it consisted of cleaning the effected area with a degreaser solvent.

In light of these findings, we found that a charge on spoliation was unjustified under the circumstances. Cf. Mount Olivet Tabernacle Church v. Edwin L. Wiegand Division, 781 A.2d 1263, 1273 (Pa. Super. 2001) (holding that the trial court did not abuse its discretion in not giving a spoliation instruction since the loss of evidence from the fire scene was not attributable to any negligence or bad faith on the part of the offending party and relatively little prejudice was proven to have occurred).

CONCLUSION

Having determined that no error of law or abuse of discretion was committed, and further determined, after a review of the whole record, that even absent the foregoing, the likelihood of prejudice is minimal, we deny Mizenko’s motion in full.

      . By Stipulation filed on July 20, 2007, the parties agreed to discontinue the action for punitive damages with prejudice.

      . The jury found both parties negligent, attributing 20 percent of casual negligence to McDonald’s and 80 percent to Mizenko, thereby precluding Mizenko from recovering damages.

      . In his motion, Mizenko, requests both judgment notwithstanding the verdict and a new trial. Mizenko’s request for judgment notwithstanding the verdict is misplaced. “A JNOV can be entered upon two bases: (1) where the movant is entitled to judgment as a matter of law; and/or, (2) the evidence was such that no two reasonable minds could disagree that the verdict should have been rendered for the movant.” Oxford Presbyterian Church v. Weil-McLain Co. Inc., 815 A.2d 1094, 1099 (Pa. Super. 2003) (quotation marks and citation omitted). Since the issues raised in Mizenko’s post-trial motion are based on allegedly erroneous evidentiary rulings and jury instructions, to which the only correct remedy is the grant of a new trial, Mizenko’s request for judgment n.o.v. will be denied.

      . See Kuhns v. Brugger, 390 Pa. 331, 340, 135 A.2d 395, 401 (1957), which outlines the three categories that minors are placed in, according to their age, as follows:
      [M]inors under the age of seven years are conclusively presumed incapable of negligence; minors over the age of fourteen years are presumptively capable of negligence, the burden being placed on such minors to prove their incapacity; minors between the ages of seven and fourteen years are presumed incapable of negligence, but such presumption is rebuttable and grows weaker with each year until the fourteenth year is reached.

        Id.

      . Although at one point in Mizenko’s brief, in support of his post-trial motion, Mizenko argues that the Court should farther have instructed that McDonald’s may be held responsible not only for the vicarious liability of Shafer, but also for its negligent supervision. This was not the basis of Mizenko’s objection at the time of trial. (N.T. 02/17/11, pp.142-43). Nor did Mizenko expand on this objection after the court’s closing instructions were given and before the jury retired to deliberate. (N.T. 02/17/11, pp.208-209). See Burke v. Buck Hotel, Inc., 742 A.2d 239, 243 (Pa.Cmwlth. 1999) (requiring that the specific reason for objection to the court’s instructions upon which a party bases its claim of error be made in order to preserve this issue for review, noting, however, that it is not necessaiy to take a specific exception in order to preserve for review the trial court’s refusal to give a requested instruction); cf. Commonwealth v. Pressley, 584 Pa. 624, 632, 887 A.2d 220, 225 (2005) (holding, under the rules of criminal procedure, that a specific objection following the jury charge is necessaiy to preserve an issue concerning the instructions, even where points for charge were submitted by a defendant and denied by the trial court).

      . To the extent Mizenko argued Dr. Wilcox’s testimony addressed the implementation and enforcement of McDonald’s safety procedures, we found such testimony went beyond the four comers of his report. The expert report focused on the issue of recklessness; as a result, if allowed to testify, Dr. Wilcox would have been limited to discussing only those factors relevant to expressing an opinion on Shafer’s alleged reckless conduct.
      Pursuant to Pennsylvania Rule of Civil Procedure 4003.5(c), “an expert witness may not testify on direct examination concerning matters which are either inconsistent with or go beyond the fair scope of matters testified to in discovery proceedings or included in a separate report.” Woodward v. Chatterjee, 827 A.2d 433, 441 (Pa.Super. 2003) (quotation marks and citation omitted). The Explanatory Comment to the rule further states that: “Where the full scope of the expert’s testimony is presented in the answer to interrogatories or the separate report, as provided in subdivisions (a)(1) and (2), this will fix the permissible limits of his testimony at the trial.” Significant, also, is that on this issue, Mizenko’s brief in support of his post-trial motion addresses only his intent to use Dr. Wilcox’s testimony to show that McDonald’s acted recklessly, not for any other purpose. (Mizenko Brief in Support of Post-Trial Motion, P-6).

      . These were Dorothy VanStrander, Amanda Pointon, Erica Markley Kugler, and Shafer. Ms. VanStrander was last employed by McDonald’s on October 31, 2005. With respect to the other three employees, several years had passed between the time of their last employment by McDonald’s and the time of trial.

      . In Commonwealth v. Lambert, 765 A.2d 306, 360-61 (Pa.Super. 2000), the Pennsylvania Superior Court stated:
      [A] witness, other than a party [,] is not considered adverse simply because his testimony is adverse to the calling party. As the term is understood in this context, a witness is adverse to the calling party if the witness has an interest in the issue being tried, and his interest would be increased or promoted if the calling party’s adversary prevails. Thus, if the witness is not a party and has no “legal” interest in the outcome of the proceedings, then the witness is not an adverse witness. Whether a witness’ interest is adverse to the calling party is a factual determination within the trial court’s discretion.
      (citations omitted).

      . In sustaining McDonald’s objection, we expressly left open the possibility for Mizenko to ask leading question if any of the witnesses were shown to be evasive, non-responsive, uncooperative or partial to McDonald’s. (N.T. 02/08/11, p.72). Cf. Commonwealth v. Bibbs, 970 A.2d 440, 453 (Pa.Super. 2009) (“A witness may be treated as hostile by the party calling him where the testimony of the witness is unexpected, contradictory to earlier statements, harmful to the party calling the witness, and where an injustice would result if the request to treat the witness as hostile is denied.”).
      To the extent Mizenko argues McDonald’s also should have been precluded from asking leading questions of these same witnesses, such objection was neither raised at the time of trial nor included in Mizenko’s post-trial motion.
      It is axiomatic that, in order to preserve an issue for review, litigants must make timely and specific objections during trial and raise the issue in post-trial motions. Granting or denying an untimely objection lies in the discretion of the trial court. Requiring a litigant to make a timely, specific objection during trial ensures that the trial court has a chance to correct alleged trial errors. We have stressed that “[w]aiver is indispensable to the orderly functioning of our judicial process and developed out of a sense of fairness to an opposing party and as a means of promoting jurisprudential efficiency by avoiding appellate court determinations of issues, which the appealing party has failed to preserve.”
      Harman ex rel. Harman v. Borah, 562 Pa. 455, 471, 756 A.2d 1116, 1124-25 (2000) (citations omitted).

      . Ms. Markley testified this was the first time she completed an incident report. She left McDonald’s and began a new job approximately two weeks after the accident. After filling out the report and handing it to someone at McDonald’s, she assumed it was sent in, but did not know. Whether only the face side of the report was copied and sent, another possibility, is unknown.

      . At trial, Mizenko testified that the pictures were taken by O’Firer. However, in O’Firer’s trial deposition, O’Firer testified the pictures were taken by Mizenko.

      . Also worth noting is that Mizenko was not prohibited from presenting evidence or arguing this issue to the jury. As discussed in Mount Olivet Tabernacle Church v. Edwin L. Wiegand Division, 781 A.2d 1263, 1269 (Pa.Super. 2001), “the evidentiary rationale [for the spoliation inference] is nothing more than the common sense observation that a party who has notice that [evidence] is relevant to litigation and who proceeds to destroy [evidence] is more likely to have been threatened by [that evidence] than is a party in the same position who does not destroy the document.” (quotation marks and citation omitted). The jury instructions received by the jury expressed and included the jury’s right to make inferences from the evidence presented. (N.T. 02/17/11, pp.149-50).


source: Caselaw Access Project

author: TUCKER, J.,

license: Public Domain

text:
    DiLacqua v. City of Philadelphia

      Elise Bruhl, for appellant.

      Mark E. Gottlieb and Meghan K. Finnerty, for appellee.
    May 9, 2012
   TUCKER, J.,

I. Summary

This matter comes before the court on appeal from an order of the court overruling a decision of the City of Philadelphia, Board of Pensions and Retirement. The Board of Pensions and Retirement (hereinafter referred to as “appellant”) disqualified Rosemary DiLacqua (hereinafter referred to as “appellee”) from receiving pension benefits and terminated benefits under the City of Philadelphia Deferred Retirement Option Plan (hereinafter referred to as “DROP”). DROP is a program whereby eligible city employees may elect to make an irrevocable commitment to separate from civil service and to retire no later than four (4) years after entering the program; employees receive DROP payments upon separation from civil service. The Philadelphia Code § 22-310. Pursuant to Pennsylvania Local Agency Law and the Philadelphia Code, appellee appealed appellant’s decision to disqualify her from retirement benefits because of a conviction of honest services mail fraud, which has since been held to be unconstitutional by the United States Supreme Court, to the Philadelphia County Court of Common Pleas. 2 Pa.C.S. § 754; The Philadelphia Code § 22-1201; §1202. A hearing was held in the Philadelphia County Court of Common Pleas on February 7, 2012 wherein appellant’s decision to disqualify appellee from retirement benefits was overruled by the court.

On February 27, 2012, appellant filed this timely appeal. The court ordered appellant to file a concise statement of matters complained of on appeal pursuant to Pa.R.A.P. 1925(b) (“1925(b) statement”). On March 14, 2012, appellant timely filed a response wherein appellant raises the following issues on appeal:

1. This court should have affirmed the board’s conclusion that Rosemary DiLacqua’s (“DiLacqua”) criminal actions directed that she be disqualified from receipt of pension benefits under Pennsylvania law.
2. This court should have affirmed the board’s conclusion that DiLacqua’s criminal actions directed that she be disqualified from receipt of pension benefits under the Philadelphia Code.
3. This court should have rejected DiLacqua’s attempts to lodge a collateral attack on her criminal conviction before the board and before this court.
4. This court should have ruled that DiLacqua’s criminal conviction for the federal crime of mail fraud, 18 U.S.C. § 1341 & 1346, is substantially the same as the state crime of theft by deception, 18 Pa. C.S. § 3922, as set forth in the State Public Employee Pension Forfeiture Act, 43 P.S. § 1311 et seq.
5. This court should have ruled that the criminal conviction DiLacqua incurred in her role as president of the Board of Directors of the Philadelphia Academy Charter School, a public charter school in Philadelphia, should result in the forfeiture of her pension.
6. This court should have respected the factual findings and credibility determinations of the fact-finder, the board, rather than making its own factual findings and credibility determinations.
7. For the foregoing reasons, this court should have affirmed the board’s decision and upheld DiLacqua’s disqualification from receipt of pension benefits.
8. The board reserves the right to raise additional issues to the extent such additional issues are presented by this court’s opinion.

After careful review, the court finds these claims without merit. As appellant’s paragraphs 5, 7 and 8 are redundant, the court will address the remaining five (5) paragraphs. 1925(b) Statement. First, the court finds that appellant committed an error of law when it decided to disqualify and terminate Appellee’s pension benefits based on a guilty plea and conviction which has since been deemed unconstitutional by the Supreme Court of the United States. Appellant terminated appellee’s pension benefits because she plead guilty to honest services mail fraud, which appellant determined triggered the disqualification of appellant from receiving her pension under the Philadelphia Code. In June of 2010, the Supreme Court of the United States held that convictions of honest services mail fraud outside of bribeiy and kickbacks are unconstitutional. The United States Supreme Court’s holding fundamentally altered the analysis that appellant must take in deciding whether an employee is disqualified from receiving their pension under the Philadelphia Code. Appellant denied appellee’s appeal of her disqualification in April of 2011, which was after the United States Supreme Court’s June 24, 2010 decision. Based on the change in intervening law, the appellant’s decision to terminate appellee’s benefits was an error of law.

Second, and similarly, this court finds that appellant committed an error of law when it decided to disqualify and terminate appellee’s pension benefits based on a now unconstitutional federal conviction for honest services mail fraud. Appellant determined that appellee’s guilty plea and conviction for honest services mail fraud was substantially similar to an enumerated section of the Pennsylvania Forfeiture Act, namely the crime of theft by deception. The Supreme Court of the United States held that convictions of honest services mail fraud are limited to bribes and kickbacks; any conviction for honest services mail fraud beyond bribes and kickbacks is unconstitutional as of June 2010. Appellant terminated Appellee’s benefits in April of 2011. The United States Supreme Court’s holding fundamentally altered the analysis for which crimes are substantially similar to the Pennsylvania Forfeiture Act. Appellant denied appellee’s appeal of her pension forfeiture in April of 2011, which was after the United States Supreme Court’s June 24, 2010 decision.

Based on the change in intervening law, the appellant’s decision was in error. The salient facts in this matter are as follows:

II. Facts

Appellee was employed as a full time police officer with the City of Philadelphia from 1984 to 2009. Certified Record (09/06/2011) (“Findings of the Board of Pensions and Retirement”). During that period, she was promoted to the rank of detective. Id; brief of appellant (10/04/2011). Simultaneously, from the year 2000 to 2008, appellee served as the president of the Board of Directors of the Philadelphia Academy Charter School (hereinafter referred to as “Charter School”); this was an unpaid volunteer position at the school where appellee’s autistic son was a student. Certified record (09/06/2011 )(“Findings of the Board of Pensions and Retirement”); Brief of Appellant (10/04/2011). As board president, appellee was responsible for overseeing the Charter School’s operations, including approving major expenditures and employee salaries. Certified Record (09/06/201 l)(“Findings of Board of Pensions and Retirement”). While serving on the Charter School’s board, appellee entered into three (3) financial arrangements with the founder of the school. Brief of appellant (10/04/2011). Flowever, appellee did not disclose those financial arrangements to the board of the Charter School of which she was President. Id.

Appellee accepted, received and/or solicited three (3) payments and/or loans in connection with the Charter School: (i) a $15,000 loan from the founder of the Charter School to appellee in March 2002 to pay for legal representation for her husband; (ii) a gift of approximately $10,000 from the founder of the Charter School in August 2007 to appellee to assist appellee in paying her daughter’s college tuition; and (iii) a $9,000 loan from the founder of the Charter School in January 2005 issued directly to appellant’s sister. Certified record (09/06/2011) (“Findings of the Board of Pensions and Retirement”); Brief of appellant (10/04/2011). During this same period of time, appellee approved expenditures, bonuses and salary increases to the benefit of the founder and CEO and other Charter School staff without Charter School Board approval. Certified Record (09/06/201 l)(“Findings of the Board of Pensions and Retirement”).

The Charter School underwent a federal investigation into the activities of the founder and CEO, as well as other individuals associated with the Charter School. Brief of appellant (10/04/2011). Appellee’s acceptance, receipt and solicitation of the undisclosed funds was uncovered during the federal investigation. Id. In July of 2009, the United States filed an information charging appellee with “honest services” mail fraud, in violation of 18 U.S.C. § 1341 (“Frauds and Swindles”) and 18 U.S.C. § 1346 (Definition of “Scheme or Artifice to Defraud” includes honest services fraud) for failing to report the loans and payments on her annual state financial interest form pursuant to the Pennsylvania Ethics Act; and for failure to disclose these matters to the Charter School Board. Certified Record (“United States District Court for the Eastern District...Count Four...Information”); 65 Pa. C.S. §§ 1104(a), 1105, 1109(b). Specifically, appellee was charged with causing a letter from the Charter School to be delivered by United States mail to an outside auditing firm stating that “there were no material transactions that had not been properly recorded in the accounting records underlying the financial statements and that [appellee] was not aware of any fraud or suspected fraud at [the Charter School].” Certified Record (“United States District Court for the Eastern District...Count Four...Information”).

Shortly thereafter, on July 21, 2009, appellee entered a guilty plea to one count of honest services mail fraud in the Federal District Court for the Eastern District of Pennsylvania. Certified Record (09/06/2011 )(Ex. Dilacqua Record 5- “Transcript of the July 21, 2009 Arraignment/ Plea Hearing of Rosemary DiLacqua”). Appellant did not plead guilty to theft, bribery or any other crimes. Id. No restitution was ordered. Certified record (09/06/2011) ((Ex. Dilacqua Record 2”). Appellee was sentenced on December 15, 2009. Certified record (09/06/2011) (“Findings of the Board of Pensions and Retirement”). Appellee was neither charged with, nor pled, nor found guilty of any violations of the Pennsylvania Penal Code. Id.

Appellee voluntarily terminated her employment with the City of Philadelphia as a police and prosecution detective effective June 19, 2009 as required by her participation in the city’s DROP program. Certified Record (09/06/20 ll)(“Findings of the Board of Pensions and Retirement”). Upon separation, appellee began to receive her DROP payments. Id. On June, 20, 2009, appellee began to receive retirement benefits based on her more than twenty (20) years of credited service with the City of Philadelphia. Id.

On March 3, 2010, appellant received notification that appellee had pled guilty to federal honest services mail fraud; appellant voted to disqualify appellee from receipt of further pension benefits on March 18, 2010 pursuant to the Pennsylvania Pension Forfeiture Act and the Philadelphia Code. Id.

Appellee appealed appellant’s decision on March 30, 2010; an appeal hearing was held at the Board of Pensions on December 8, 2010, wherein appellee was unavailable to testify. Certified Record (09/06/20ll)(Ex. Dilacqua Record 3-4). On June 24, 2010, the United States Supreme Court published a decision holding the crime of honest services fraud in the nature of conflict of interests as unconstitutional. United States v. Skilling, 130 S. Ct. 2896 (U.S. 2010). On April 28, 2011, after further review, appellant approved the disqualification and termination of appellee’s pension benefits. Certified Record (09/06/20 ll))(“Findings of the Board of Pensions and Retirement”). Appellee commenced an appeal in the Philadelphia County Court of Common Pleas on May 20, 2011. A hearing on appeal was held on February 7, 2012 wherein the court overruled appellant’s decision to disqualify and terminate appellee’s pension benefits.

III. Legal Analysis

1. Appellant erred in concluding that appellee’s criminal actions directed that she be disqualified from receipt of pension benefits under Pennsylvania law.

It is well settled that the scope of review for agency appeals is limited to three determinations where there is a complete record. Under Pennsylvania Local Agency Law, a court may proceed under one or two standards of review. 2 Pa.C.S. § 754 (2012). When the record is incomplete, the court may either hear the appeal de novo or remand the proceedings back to the agency to complete the record. Id. However, upon the filing of a complete record, the court’s review is limited to determining: 1) whether the agency’s decision violated constitutional rights; 2) whether the agency’s necessary findings of fact are supported by substantial evidence in the record; and 3) whether the agency committed an error of law. 2 Pa.C.S. §754(b). A reviewing trial court exceeds the statutory standard of review when, upon a complete record, it make its own factual findings and credibility determinations. Davis v. Civil Serv. Comm’n of Phila., 820 A.2d 874, 878 (Pa. Cm with., 2001).

The City of Philadelphia, as authorized by its Home Rule Charter, enacted a local law to govern retirement and benefits of city employees. Phila. Home Rule Charter; Philadelphia Code § 22-101; §22-102. Under the Philadelphia Code, and specifically the Public Employees Retirement Code (hereinafter referred to as “Retirement Code”), a city employee is subject to disqualification from receiving retirement benefits, except a return of contribution paid into the retirement system, if such an employee:

(a)(1) pleads or is finally found guilty, or pleads no defense, in any court, to any of the following:
(.2) Acceptance of a bribe for the performance, or affecting the performance or for the non-performance of the employee’s official duties, or the offering or giving of a bribe to any other City employee or employee of the Commonwealth or of the United States for the performance or affecting the performance or for the non-performance of the employee’s official duties;
(.3) Engaging in graft or corruption incident to or in connection with the employee’s office or employment constituting a violation of the laws ofthe commonwealth or the United States;
(.4) Theft, embezzlement, willful misapplication, or other illegal taking of funds or property of the City, or those of any official agency of the City, or agency, engaged in performing any governmental function for the city or the commonwealth;
(.5) Malfeasance in office or employment.

Philadelphia Code § 22-1302(1)(a)(.2),(.3),(.4),(.5). An employee may be disqualified for pleading guilty, pleading no defense, or being found guilty of both state and federal crimes. Merlino v. Phila. Bd. of Pensions & Retirement, 916 A.2d 1231 (Pa. Cmwlth. 2007). The Retirement Code does not define terms in the disqualification provision. Therefore, Appellant must look to the underlying illegal act; common law definitions, including definitions from Black’s Law Dictionary; and approved usage of the terms in determining whether an employee’s conduct or crime pled to requires disqualification from retirement benefits under the Retirement Code. Merlino, 916 A.2d at 1235; Bellis v. Bd. of Pensions & Retirement, 634 A.2d 821 (Pa. Cmwlth. 1993)(appeal denied by Bellis v. Bd. of Pensions & Retirement, 539 Pa. 670, 652 A.2d 840 (1994); Osser v. City of Philadelphia, 503 A.2d 466, 469 (Pa. Cmwlth. 1986).

The court notes that while the appellant must analyze its factual findings in the above mentioned framework, the appellant must not lose sight of the relationship between the Philadelphia Retirement Code and the Pennsylvania Public Employee Pension Forfeiture Act (hereinafter referred to as “Forfeiture Act”). The Forfeiture Act governs pension forfeiture by public employees in Pennsylvania, which of course includes public employees in Philadelphia County. 43 PS. § 1313. While the appellant has authority to make determinations based on the Philadelphia Retirement Code, these determinations cannot conflict with the state forfeiture act. Specifically, the appellant must refrain from applying provisions of the Retirement Code in a manner that conflicts with the state Forfeiture Act.

The Supreme Court of Pennsylvania addressed this issue in Mazzo v. Bd. of Pensions v. Retirement of the City of Philadelphia, 531 Pa. 78, 611 A.2d 193 (1992), where the lower court upheld a portion of a section of the Retirement Code when that section conflicted with the state forfeiture act. At the time of Mazzo, the Retirement Code included a provision that made job reinstatement a prerequisite to receiving pension benefits after an employee is acquitted from crimes previously charged against them. Id. The Forfeiture Act did not contain such a prerequisite; in contrast, the Forfeiture Act mandated, as it does now, that benefits shall be reinstated upon being tried and found not guilty or upon the dismissal of the criminal charges. Mazzo, 611 A.2d at 195; 43 P.S. §1313.

The Forfeiture Act requires a conviction. 43 P.S. § 1313; Mazzo, 611 A.2d at 195-197. Without a conviction, neither forfeiture under the state act nor disqualification under the city code can be applied to appellee’s pension benefits. Appellant, rightfully so, concedes as much. N.T. (02/07/2012) at 25-30. To rule otherwise would result in a conclusion that is akin to that expressed by the dissent in Mazzo:

“The pension forfeiture statute was not intended to foreclose a municipality from denying retirement benefits for public officials and employees who have committed criminal conduct simply because the evidence falls short of the legal standard necessary for a criminal conviction. The pension forfeiture statute was intended to impose an additional civil penalty for criminal conduct involving a public office or public employment. In instances in which there has not been a criminal prosecution or conviction, a municipality should not be foreclosed from producing evidence of criminal conduct in a collateral civil proceeding that will affect the public officer’s or public employee’s right to receive retirement benefits.”

Mazzo, 611 A.2d at 197(emphasis added). This is not the law in Pennsylvania. Appellant may not apply the provisions of the Retirement Code in a manner that conflicts with the state Forfeiture Act, which requires a conviction for forfeiture of pension benefits. The court did not err in ruling that appellee was not disqualified from her pension benefits under Pennsylvania law.

2. Appellant erred in concluding that appellee’s criminal actions required that she be disqualified from receipt of pension benefits under the Philadelphia Retirement Code.

Turning back to the Philadelphia Retirement Code, the Appellant erred in determining that appellee’s guilty plea and subsequent conviction of federal honest services mail fraud constituted forfeiture of her pension benefits under the Retirement Code. Here, appellant contends that, as a matter of law, appellee’s conviction of federal honest services under the mail fraud section of the federal penal code resulted in appellee’s disqualification under sections (l)(a)(.2) — (a)(.5) of the Retirement Code. Certified Record (09/06/201 l)(“Findings of the Board of Pensions and Retirement”). Specifically, the appellant found that Appellee’s actions constituted:

(1) a bribe for the performance, or affecting the performance or for the non-performance of appellee’s duties (§22-1302(1 )(a)(.2));
(2) graft or corruption incident to or in connection with appellee’s office or
(3) employment (§ 22-1302(l)(a)(.3));
(4) theft, embezzlement, willful misapplication, or other illegal taking of funds or property (§ 22-1302(1) (a)(.4)); and
(5) malfeasance ((§ 22-1302(l)(a)(.5).

Certified Record (09/06/201 l)(“Findings of the Board of Pensions and Retirement”).

Appellant was charged with and pled guilty to honest services mail fraud in violation of 18 U.S.C. § 1341 (“Frauds and Swindles”). Under the Federal Crimes Code governing Mail Fraud and Other Offenses, whoever devises or intends to devise any “scheme or artifice to defraud”, and for the purpose of executing such scheme or artifice, “places in any post office or authorized depository for mail matter...shall be fined or imprisoned....” 18 U.S.C. § 1341. A scheme or artifice to defraud includes the deprivation of another of the “intangible right of honest services.” 18 U.S.C. §1346. Pursuantto the United States Supreme Court ruling in Skilling, section 1346 only includes bribery and kickback schemes. Skilling, 130 S. Ct. at 2927-29, 2931-33. Any interpretation of “scheme or artifice” beyond this limitation is an unconstitutional deprivation of due process. Id. (explaining that undisclosed self-dealing by public officials or private employees is not included in the definition of honest services fraud). The legal effect of the United States Supreme Court ruling is that conflict of interest honest services fraud is void as a valid basis for a conviction. Simply stated, “an undisclosed conflict of interest is not a crime.” United States v. Lynch, 807 F. Supp. 2d 224, 234-35 (E.D. Pa. 2011).

Considering that appellee pled guilty to and was convicted under a now unconstitutional theory of honest services mail fraud, appellant erred in determining that Appellee was disqualified from her pension under the Retirement Code. Appellant initially terminated appellee’s pension benefits on March 18, 2010; appellee appealed this decision on March 30, 2010, and a hearing was subsequently held on December 8, 2010. Certified Record (09/06/20 ll)(“Findings of the Board of Pensions and Retirement”). Conflict of interest honest services fraud was held unconstitutional by the United States Supreme Court on June 24, 2010. Skilling, 130 S. Ct. at 2927-29, 2931-33.

Appellant denied appellee’s appeal of her benefits termination on April 28, 2011. Appellee was not charged with any violations of the Pennsylvania Penal Code. Therefore, there was no basis for appellant’s decision to disqualify appellee from receiving pension benefits under the Philadelphia Retirement Code at the time that appellant decided to deny appellee’s appeal. The court did not err in ruling that appellee was not disqualified from her pension benefits under the Retirement Code.

3. The court properly determined that appellant erred when it interpreted the Philadelphia Retirement Code in a manner inconsistent with the Pennsylvania Forfeiture Act

As discussed above, the Forfeiture Act requires a conviction to trigger forfeiture. 43 P.S. § 1313; Mazzo, 611 A.2d at 195-197. At the time that appellant decided to deny appellee’s appeal, thereby disqualifying appellee from receiving her pension benefits, there was no basis for either disqualification under the Retirement Code, nor forfeiture under the Forfeiture Act. To be clear, appellant could not consider conflict of interest honest services mail fraud in its analysis of whether or not appellee’s actions fell under either the Retirement Code or the Forfeiture Act. This is where appellant erred. In making this determination, the court did not, as appellant alleges in its 1925(b) statement, allow appellee to collaterally attack her criminal conviction. 1925(b) statement. Instead, the court found as error appellant’s attempt to adjudicate in a manner suggested by the dissent in Mazzo, which was to consider evidence of a non-existent criminal conviction in a collateral civil proceeding. Mazzo, 611 A.2d at 197. To allow the appellant to adjudicate in this manner is to allow an interpretation of the retirement code that is inconsistent with the State Forfeiture Act and, as discussed next, to allow the appellant to require a provision that is not explicitly required in the State Forfeiture Act. Again, appellant has conceded as much during oral arguments in this matter. Appellant, with the requisite level of candor, admitted that appellant knew that it needed a conviction to proceed with terminating appellee’s benefits. N.T. (02/07/2012) at 26.

4. Appellant erred in concluding that Appellee’s actions, which are no longer criminal, required that she be disqualified from receipt ofpension benefits under the Pennsylvania Forfeiture Act.

The Forfeiture Act governs pension forfeiture by public employees in Pennsylvania, which of course includes public employees in Philadelphia County. 43 P.S. § 1313. Under the Forfeiture Act, a public employee forfeits their entitlement to retirement benefits if the employee is convicted of or pleads guilty to any crime related to public office or public employment. 43 P.S. § 1313(a). Forfeiture of retirement benefits is triggered by a guilty plea or initial conviction; however, “if a verdict of not guilty is rendered or the indictment or criminal information [is] finally dismissed,” the official or employee “shall be reinstated as a member of the pension fund or system and shall be entitled to all benefits....” 43 P.S. § 1313(b). The Pennsylvania Legislature enumerated a number of criminal offenses applicable to the Forfeiture Act, including theft by deception, theft of services, theft by failure to make required disposition of funds received, and misapplication of entrusted property and bribery. 43 P.S. § 1312.

Here, appellee pled guilty to and was convicted under a now unconstitutional theory of honest services mail fraud. Appellee was never charged under any of the potentially applicable criminal offenses enumerated in the Forfeiture Act. At the time that appellant decided to permanently terminate appellee’s benefits in April of 2011, which is when appellant denied appellee’s appeal, conflict of interest honest services mail fraud was not a viable theory upon which to base a forfeiture decision. Since appellee’s conviction was based on one, and only one count of the very criminal offense deemed unconstitutional, appellant had no basis to terminate appellee’s pension benefits. Again, appellant concedes that this is the proper analysis. When asked in oral arguments in this matter whether or not, today, appellee’s pensions benefits could be terminated based on all relevant known facts, appellant, with all appropriate candor, responded that appellant could not properly terminate the benefits because of the necessity of a conviction. N.T. (02/07/2012) at 25.

5. The Court properly ruled that appellant’s decision to disqualify and terminate appellee’s pension benefits was both unconstitutional and an error of law.

The court’s standard of review on appeal of an agency determination is limited to three questions: 1) whether the agency’s decision violated constitutional rights; 2) whether the agency’s necessary findings of fact are supported by substantial evidence in the record; and 3) whether the agency committed an error of law. 2 Pa.C.S. § 754(b). The court is precluded from making findings of fact and credibility determinations within the posture of the instant case on appeal. Davis, 820 A.2d at 878. The court properly determined that appellant’s decision to terminate appellee’s pension benefit based on an unconstitutional basis of criminal culpability violated appellee’s constitutional rights. Furthermore, the court properly determined that appellee committed an error of law by interpreting the retirement code and the State Forfeiture Act in a manner inconsistent with Pennslyvania law, namely that appellee’s benefits could be terminated based on an unconstitutional conviction.

IV. Conclusion

The court did not err in determining that appellant’s decision to terminate appellee’s pension benefits based on an unconstitutional theory of criminal liability was a violation of appellee’s constitutional rights and an error of law. The court notes the procedural posture of this case and the intervening change in the law governing honest services mail fraud. Flowever, the court did not err in preventing the appellant from adjudicating in a manner that is contrary to Pennsylvania law. The court’s ruling must stand.


author: ASHWORTH, J,

text:
    Everbank v. Fischer

      C.P. of Lancaster County,
    No. CI-11-14283.

      Heidi R. Spivak, for plaintiff.

      Gary G. Kraffi, for defendant.
    April 16, 2012
   ASHWORTH, J,

Before the court for consideration are the preliminary objections of plaintiff Everbank s/i/i/t Everhome Mortgage Company to the new matter and counterclaim of defendant Melinda L. Fischer n/b/m Melinda L. Scott (“Scott”), filed in response to the complaint in mortgage foreclosure. For the reasons set forth below, these objections will be overruled in part and sustained in part.

I. Background

On February 23, 1994, defendants Brad Fischer and his then wife, Melinda Scott, executed and delivered to GMAC Mortgage Corporation of PA a mortgage upon the property at 237 South West End Avenue, Lancaster, Pennsylvania (the property). (See complaint at ¶ 4.) This mortgage was duly recorded in the office of the recorder of Deeds in and for Lancaster County on February 23, 1994. (Id.) The mortgage was payable in monthly installments and granted plaintiff the right to accelerate the entire balance due during any default by defendants. (Id. at ¶ 14.) On December 14,2007, the mortgage was assigned to Everhome Mortgage Company, by assignment recorded in the office of the recorder of Deeds of Lancaster County. (Id. a^ 5.)

Plaintiff avers that in 2009 three federal tax liens totaling $28,426.83 were filed against the property. (See complaint at ¶¶ 6-11.) Beginning in June 2011, defendants allegedly failed to make the monthly payments required by the mortgage, (id. at ¶ 14.) In accordance with act 91 of 1983 (the “Homeowners Emergency Assistance Act”), a combined notice providing the information required by § 403 of act no. 6 of 1974, and act 91, was sent to defendants’ last known address by certified mail, return receipt requested. (Id. at ¶ 16). As of December 6, 2011, the principal balance due plaintiff was $151,860.01. (Id. 15).

As a result of defendants’ alleged default, plaintiff filed a complaint in mortgage foreclosure pursuant to Pa. R.C.P. 1141, et seq., against defendants on December 6, 2011, seeking judgment in rem against defendants for foreclosure and sale of the mortgaged premises. In the complaint, plaintiff avers that the amount due is $157,124.55, which includes interest on the principal amount since the date of default, fees billed, and attorney’s fees associated with the default. (See complaint at ¶ 15.) Plaintiff’s demand is for this amount due plus interest and costs and “foreclosure and sale of the mortgaged property.”

Defendant Scott filed a timely answer denying (1) that she is a mortgagor and/or real owner of the South West End Avenue property (see defendant’s answer at ¶ 3), (2) that any principal exceeding the original mortgage amount of $90,250 is due and owing (Id. at ¶ 4), (3) that any federal tax liens were filed against her (Id. at ¶¶ 6-11), and (4) receipt of any foreclosure notices. (Id. at ¶ 16.) Defendant Scott’s new matter asserts that in 1998 defendants Fischer and Scott separated, and Scott permanently vacated the property at 237 South West End Avenue. (See defendant’s new matter at ¶ 19.) Defendant Scott further avers that on March 11, 1999, September 11, 2000, and December 10, 2010, defendant Fischer unilaterally entered into loan modification agreements to modify the mortgage and the underlying note, in each case increasing the principal amount and monthly payment, and extending the mortgage’s maturity date. (Id. at ¶¶ 20-24, 26-29, 47-48, 51-52.) Defendant Scott states that she was unaware of these loan modifications and was not a party to them. Consequently, she contends she was released from the promises, debts and duties of the mortgage and note. (Id. at ¶¶25, 31-35.)

Defendant Scott further asserts in her new matter that on October 3,2007, plaintiff filed a complaint in mortgage foreclosure against defendants in the court of common pleas of Lancaster County, docketed at No. CI-07-10081. (See defendant’s new matter at ¶ 40.) In response to that first foreclosure action, defendant Scott filed an answer denying knowledge of the 1999 and 2000 loan modification agreements entered into by her then husband, defendant Fischer. (Id. at ¶ 42.) She also included counterclaims against plaintiff for common law fraud (concealment) and unfair business practices. (Id. at ¶ 43.)

On December 15, 2009, plaintiff filed a consent judgment executed by plaintiff and defendant Scott. (See defendant’s new matter at ¶ 44.) Through the consent judgment, plaintiff obtained an in rem judgment against defendant Scott and agreed not to pursue defendant Scott for any deficiency after the property, which is subject to the mortgage, is sold at Sheriff’s sale. (Id. at ¶ 45.) On April 14, 2010, an in rem judgment against defendant Fischer was entered following plaintiff’s motion for summary judgment. (Id. at ¶ 46.)

Thereafter, plaintiff again modified the loan through an agreement with defendant Fischer on December 10, 2010. (See defendant’s new matter at ¶ 47.) Defendant Scott did not participate in, nor was she aware of, the 2010 agreement. (Id. at ¶ 48.) On May 17,2011, following plaintiff’s motion, the consent judgment against defendant Scott and the judgment against defendant Fischer were vacated and the initial foreclosure was discontinued without prejudice. (Id. at ¶ 54.)

Based upon these averred facts, defendant Scott contends in her new matter that plaintiff’s claims are barred by the doctrines of unclean hands, release, consent, accord and satisfaction, waiver, laches, estoppel, immunity, justification, privilege, failure of consideration, and illegality, as well as the fraud and misrepresentation of plaintiff.

In her counterclaim, defendant Scott seeks relief on three grounds. She avers that plaintiff: (1) engaged in common law fraud (concealment) when it negotiated and executed the 1999, 2000, and 2010 loan modification agreements without her consent or participation; (2) violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. C.S.A. ¶¶ 201-1 — 201.9.3, based upon the unfair and deceptive acts that created a likelihood of confusion regarding material changes to the mortgage; and (3) engaged in defamatory action by reporting to various credit reporting and monitoring agencies from December 15, 2009, through May 17, 2011, while the consent judgment was effective, that the principal balance on the mortgage was overdue and owed by defendant Scott personally. (See defendant’s counterclaim, counts I-III.) Defendant Scott’s counterclaim seeks rescission of the mortgage, the underlying note, and the 1999, 2000, and 2010 loan modification agreements to defendant Scott, and monetary damages, including treble, compensatoiy and punitive damages, and attorney’s fees.

Plaintiff’s preliminary objections are in the nature of a demurrer to defendant Scott’s counterclaim, seeking to strike the counterclaim as being violative of rules 1141, 1148 and 1028(a)(2) & (4). Further, plaintiff objects to the legal insufficiency of defendant’s new matter and seeks to strike it.

II. Discussion

A. Defendant’s Counterclaim

Counterclaims in mortgage foreclosure actions are governed by Pennsylvania rule of civil procedure 1148 which provides: “A defendant may plead a counterclaim which arises from the same transaction or occurrence or series of transactions or occurrences from which the plaintiff’s cause of action arose.” Pa. R.C.P. 1148; see also Green Tree Consumer Discount Co. v. Newton, 909 A.2d 811, 814 (Pa. Super. 2006) (citing Pa. R.C.P. 1148). Under this rule,

[t]he claim must now arise, in some manner, from the mortgage relationship. A counterclaim could be filed, for example, for damages and for breach of warranty of title to the mortgaged premises.... Also, it has been held that defendant may counterclaim for the balance due from plaintiff on a construction contract in connection with which the mortgage was given.... On the other hand, a counterclaim could not be filed for professional services rendered by the mortgagor to the mortgagee, at least if unrelated to the mortgagee....

Mellon Bank, N.A. v. Joseph, 267 Pa. Super. 307, 317, 406 A.2d 1055, 1060 (1979) (quoting 3 Goodrich-Amram 2d § 1148:1 at 488 (emphasis supplied) (internal citations omitted)). The courts in Pennsylvania have repeatedly refused to entertain counterclaims that do not specifically pertain to facts that were part of, or incident to, the creation of the mortgage. See Cunningham v. McWilliams, 714 A.2d 1054 (Pa. Super. 1998); Chrysler First Business Credit Corp. v. Gourniak, 411 Pa. Super. 259, 601 A.2d 338 (1992); Overly v. Kass, 382 Pa. Super. 108, 554 A.2d 970 (1989); Mellon Bank N.A. v. Joseph, 267 Pa. Super. 307, 406 A.2d 1055 (1979).

In Pennsylvania, the viability of a mortgage foreclosure action depends upon the existence of a valid mortgage. In re Madera, 586 F.3d 228, 232 (3rd Cir. 2009)). See also In re Calabria, 418 B.R. 862, 866-867 (W.D. Pa. 2009) (“In Pennsylvania, actions in mortgage foreclosure are dependent on the existence of a valid mortgage. Without a valid mortgage, there is simply nothing to foreclose upon.”); In re Randall, 358 B.R. 145, 158 (E.D. Pa. 2006) (same). Not unlike other written instruments, mortgages are governed by the law of contracts and interpreted accordingly. See Second Federal Savings and Loan Association v. Brennan, 409 Pa. Super. 581, 586, 598 A.2d 997, 999 (1991). It is a fundamental precept of contract law that if a party is fraudulently induced to enter into an agreement (i.e., “but for” fraudulent misrepresentation(s) the contract would not have been executed by the innocent party), the agreement is void or voidable at the option of the injured party. Youndt v. First National Bank of Port Allegheny, 868 A.2d 539, 546 (Pa. Super. 2005); Blumenstock v. Gibson, 811 A.2d 1029, 1036 (Pa. Super. 2002), appeal denied, 573 Pa. 714, 828 A.2d 349 (2003); 1726 Cherry Street Partnership v. Bell Atlantic Properties Inc., 439 Pa. Super. 141, 148-150, 653 A.2d 663, 667-668 (1995), appeal denied, 544 Pa. 647, 664 A.2d 976 (1995). Therefore, if borrowers raise factual issues regarding fraud in the inducement in conjunction with the formation of the mortgage, they have asserted a valid defense to the foreclosure. See Green Tree, 909 A.2d at 814 (fraud in the inducement of a mortgage is a permissible counterclaim under rule 1148 in a mortgage foreclosure action); Cunningham, 714 A.2d at 1056 (“Thus, a counterclaim in a foreclosure action is cognizable if it alleges fraud in the inducement to the mortgage....”); In re Randall, 358 B.R. at 157 (mortgagors can properly defend in rem foreclosure proceedings by demonstrating that the mortgage is void due to fraud). Here, plaintiff is suing under the mortgage as it has been amended pursuant to the 1999, 2000 and 2010 loan modification agreements. Two of defendant Scott’s three counterclaims allege that the mortgage was amended in a fraudulent manner. As a result, these counterclaims are directly related to the existence and validity of the mortgage and are permissible and proper under rule 1148.

Defendant Scott’s first counterclaim alleges common law fraud (concealment) by plaintiff and plaintiff’s assignor when it negotiated and executed the 1999, 2000 and 2010 loan modification agreements without defendant Scott’s consent or knowledge. Specifically, on March 11,1999, defendant Fischer is alleged to have unilaterally entered into a loan modification agreement with the then current lender, Dovenmuehle Mortgage Company, LP, to modify the mortgage and the mortgage’s underlying note. (See defendant’s new matter at ¶ 20.) The 1999 agreement resulted in an increase in the principal amount and monthly payment of the mortgage and extended the mortgage’s maturity date by five years. (Id. at ¶ 21.) In its opening paragraph, the 1999 agreement redefines “Borrower,” for purposes of the mortgage, as only defendant Fischer and does not include defendant Scott. (Id. at ¶ 22.) The signature area of the 1999 agreement shows that the name “Melinda L. Fischer” was originally placed below one of the signature lines for the “Borrower” but was subsequently deleted by the preparer of the 1999 agreement by typing numerous uppercase Xs over “Melinda L. Fischer.” (Id. at ¶ 23.) Defendant Scott claims to have been unaware of the 1999 agreement at the time it was negotiated and executed. She claims she was not a party to it. (Id. at ¶ 25.)

Similarly, on September 11, 2000, defendant Fischer unilaterally entered into another loan modification agreement with Dovenmuehle mortgage to modify the mortgage and the underlying note. (See defendant’s new matter at ¶ 26.) The 2000 agreement modified the mortgage by substantially increasing the principal, interest rate, and monthly payments, and extending the maturity date. (Id. at ¶ 27.) The signature area of the 2000 agreement for the “Borrower” provided only for the signature of defendant Fischer. Defendant Scott was not intended to be and was not a party to the 2000 agreement. (Id. at ¶¶ 28-29.) Defendant Scott claims to have been unaware of the 2000 agreement at the time it was negotiated and executed and she claims she was not a party to it. (Id. at ¶ 31.)

The 1999 and 2000 loan modification agreements ultimately raised the original principal by $9,076.34, the yearly interest rate by almost a full percentage point, and monthly payments by $124.97. (See defendant’s new matter at ¶ 38; see also defendant’s counterclaim, count I at ¶ 73.) These agreements also extended the original maturity date of the mortgage by six years. (See defendant’s counterclaim, count I at ¶ 74.)

On December 10, 2010, plaintiff again modified the mortgage through an agreement with defendant Fischer. (See defendant’s new matter at ¶ 47.) As before, defendant Scott did not participate in, nor was she aware of, the 2010 agreement; the phrase “divorce decree on record” having been handwritten on the signature line for defendant Scott’s signature. (Id. at ¶48.) The 2010 agreement substantially raised the principal amount by an additional $53,744.95 over the principal amount set by the 1999 and 2000 loan modification agreements. (Id. at ¶ 51.) The 2010 agreement also substantially extended the maturity date until the year 2047. (Id. at ¶ 52.)

These allegations in defendant Scott’s new matter and count I of her counterclaim clearly relate to the existence and validity of the mortgage and will be permitted.

Defendant Scott’s second counterclaim alleges violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1, et seq. Specifically, defendant Scott restates much of the content of the previous counterclaim, that is, that plaintiff fraudulently modified the original mortgage and note without her knowledge and consent. (See defendant’s counterclaim, count II at ¶¶ 84-87.) By increasing the principal and extending the maturity date of the original mortgage, plaintiff’s three loan modification agreements allegedly damaged defendant Scott’s creditworthiness and purportedly increased her personal liability in an amount in excess of $62,821.29, without her knowledge and consent. (Id. at ¶¶ 88-89.) Again, the allegations in this counterclaim relate to the modification of the mortgage at issue and the terms contracted for at the original signing of the mortgage. Accordingly, this counterclaim must be permitted.

Defendant Scott avers in her third counterclaim that “[fjrom December 15, 2009, through May 17, 2011, while the consent judgment was effective, Scott was not personally liable for the principal amount of the loan secured by the mortgage,” and that “[nevertheless... Plaintiff continued to report the principal balance as being overdue and owed by Scott, personally, to various credit reporting and monitoring agencies” thus, defaming her good name. (See defendant Scott’s counterclaim, count III at ¶¶ 91, 93.) The cause of action raised in this counterclaim concerns actions taken by the lender after an alleged default by defendants and resulting litigation. This is the type of counterclaim that is not cognizable under Rule 1148 because it clearly is not “part of or incident to the creation of the mortgage itself.” See Gourniak, 411 Pa. Super, at 266, 601 A.2d at 342. Accordingly, this counterclaim must be dismissed.

The Rule governing counterclaims in actions of mortgage foreclosure is designed to further the policy of resolving the entire controversy in one action rather than compelling the defendant to pursue his or her remedy by a separate action. Provident Nat. Bank v. Eckhardt, 12 D.&C.3d 243, 245 (Bucks Co. 1979) (citing Roth v. Golden Slipper Restaurant & Catering, Inc., 167 Pa. Super. 558, 559, 76 A. 2d 475, 477 (1950)). A counterclaim in a mortgage foreclosure action that is factually tied up with the mortgage and the default thereon is a practical application of Rule 1148 governing counterclaims, and an example of judicial economy. Peoples Savings Ass’n v. Whallin, 14 D.&C.3d 136, 138-39 (Butler Co. 1980) (disapproved of on other grounds by, Newtown Village Partnership v. Kimmel, 424 Pa. Super. 53, 621 A.2d 1036 (1993)). In the instant case, a determination of whether the plaintiff lender acted fraudulently in modifying the mortgage contract upon which these foreclosure proceedings are based is consistent with the policy of the courts to resolve an entire controversy in one action, and serves the interests of judicial economy. Separate proceedings would clearly involve a substantial duplication of effort.

Accordingly, plaintiff’s preliminary objections in the nature of a demurrer to counts I and II of defendant Scott’s counterclaim are overruled. The objection to count III of the counterclaim is sustained.

B. Defendant’s New Matter

Plaintiff has also objected to the legal sufficiency of defendant Scott’s new matter. For the reasons set forth above, the objection to defendant’s new matter is overruled.

III. Conclusion

For the reasons set forth above, plaintiff’s preliminary objections in the nature of a demurrer to defendant’s counterclaims will be overruled in part and sustained in part.

Plaintiff’s preliminary objection to defendant’s new matter will be overruled. Accordingly, I enter the following:

ORDER

And now, April 16, 2012, upon consideration of the preliminary objections of plaintiff Everbank s/i/i/t Everhome Mortgage Company to the new matter and counterclaims of defendant Melinda L. Fischer n/b/m Melinda L. Scott, it is hereby ordered that said preliminary objections are sustained in part and overruled in part as follows:

1. Plaintiff’s preliminary objection in the nature of a demurrer to count I of defendant’s counterclaim is overruled;

2. Plaintiff’s preliminary objection in the nature of a demurrer to count II of defendant’s counterclaim is overruled;

3. Plaintiff’s preliminary objection in the nature of a demurrer to count III of defendant’s counterclaim is sustained; and

4. Plaintiff’s preliminary objection in the nature of a demurrer to defendant’s new matter is overruled.

It is further ordered that plaintiff shall have twenty days from the date of this order to file an answer to defendant’s answer, new matter and counterclaims.


author: WETTICK, J,

text:
    Wimberly v. Katruska

      C.P. of Allegheny County,
    No. AR-11-004777.

      Wayne M. Chiurazzi, for plaintiffs.

      Miles Kirshner, for defendants.
    May 23, 2012
   WETTICK, J,

Plaintiffs’ petition to enforce settlement is the subject of this opinion and order of court.

Through a telephone conversation between counsel, the claims of Anna B. Wimberly (“plaintiff’) were settled for $9,000. The issue that is the subject of this opinion and order of court is whether defendant may condition payment upon plaintiff providing a no-lien letter from Medicare.

Pursuant to the Medicare secondary payer act (“MSPA”), Medicare is a secondary payer meaning that Medicare can only pay bills not paid by a “primary payer.” If Medicare makes a payment and a primary payer is identified, the primary payer must reimburse the United States. 42 U.S.C. §1395y(b)(2). The MSPA identifies an automobile or liability insurance policy as a primary payer. 42 U.S.C. §1395y(b)(2)(A)(ii). This means that if the insurance company has made a settlement payment and it is later discovered that Medicare had already made a payment for the same services or items, the insurance company which paid the settlement amount can be required to reimburse Medicare, pursuant to regulations promulgated by the U.S. Department of Health and Human Services to implement the MSPA. These regulations give Medicare and centers for Medicare services (“CMS”) a direct right of action to recover from any primary payer. 42 C.F.R. §411.24(e).

1.

Defendant’s first argument is that, as a matter of law, the insurance company is entitled to withhold payment until Medicare has issued a no-lien letter. This is the only manner by which an insurance company and its insured may avoid double payments. However, this argument is without merit as a result of the opinion of the Pennsylvania Superior Court in Zaleppa v. Seiwell, 9 A.3d 632 (Pa. Super. 2010).

Zaleppa was a personal injury action in which the jury returned a verdict in the amount of $15,000. The defendant alleged that the trial court erred in denying her post-trial motion which requested that the court enter an order directing her to pay the verdict either (1) by naming Medicare, along with Zaleppa and her attorneys, as payees on the draft satisfying the verdict or (2) paying the verdict into court pending notification from Medicare that all outstanding Medicare liens have been satisfied. The trial court denied the defendant’s motion. The Superior Court affirmed.

The Superior Court recognized that the MSPA assigns primary responsibility for medical bills of Medicare recipients to private health plans when a Medicare recipient is also covered by private insurance. This means that the private insurer may be required to pay for any treatment for which Medicare has already paid by reimbursing Medicare for the expense. Thus, if an outstanding Medicare lien existed, the MSPA gave CMS a direct action against the defendant’s insurer to reimburse Medicare.

In other words, the court recognized that if it denied the defendant’s request for post-trial relief, it would be subjecting the insurance company to the possibility of a double payment. Nevertheless, the court ruled that the defendant failed to offer any legal basis for the post-trial relief that would prevent a double recovery.

The court based its decision on settled Pennsylvania case law which obligates a party to satisfy a judgment once it has been entered. In order to satisfy a judgment for monetary damages, payment of the underlying debt must be tendered in full and must be payable to the parties specified in the judgment. This case law controls this litigation unless there are provisions within the MSPA or other federal legislation that alter Pennsylvania case law.

Through her motion for post-trial relief, the defendant argued that state law does not apply because the defendant was properly protecting the interests of the United States government. The court rejected this argument stating that the statutory scheme established by the MSPA was not designed to enable private parties to act on behalf of the United States government as a “private attorneys general.” Id. at 639 (citation omitted). Under the MSPA, only the United States government is authorized to pursue its own right to reimbursement.

2.

In his answer in opposition to the petition to enforce settlement (¶¶ 1 and 6 and exhibits A-E), defendant raises a second ground: Defendant’s counsel avers that prior to the parties reaching an agreement as to the settlement amount, plaintiff’s counsel, through letters and email, agreed that payment would be conditioned on plaintiff’s counsel obtaining documentation from Medicare, stating whether plaintiff is currently receiving Medicare benefits and what, if any, benefits were paid that were related to the accident. Counsel for plaintiff, on the other hand, avers that he never agreed to allow defendant to withhold the settlement funds because of a possible Medicare lien.

A settlement is a contract. The parties may agree that the settlement amount will not be paid until information regarding Medicare is provided to the defendant. However, unless there is a specific agreement conditioning payment on a no-lien letter, it is a matter of contract law that a defendant cannot subsequently raise new conditions regarding the payment that the defendant agreed to make.

I considered a similar matter in Export Boxing & Crating, Inc. v. TechMet, 150 P.L.J. 35 (2001). In that case, on the eve of trial, the plaintiffs agreed to the settlement offer by one of two joint tort-feasors. Subsequently, the plaintiffs filed a motion to enforce the settlement.

Through their motion, the plaintiffs sought a court order compelling the release of the settlement funds because the plaintiffs had furnished executed pro tanto releases. The settling joint tort-feasor, on the other hand, sought a ruling that the plaintiffs were not entitled to the settlement funds until the plaintiffs executed pro rata releases.

At oral argument on the motion, counsel for the parties stipulated that there was a binding settlement. In other words, no attorney was taking the position that I should set aside the agreement based on a failure to agree upon a material term. Each of the witnesses who participated in the settlement discussions testified that no one used the term “pro rata release” or “pro tanto release” in any of the discussions. In other words, the type of release was not discussed.

I stated:

A settlement agreement is a contract governed by the general rules of contract interpretation. See Friia v. Friia, 780 A.2d 664, 668 (Pa. Super. 2001). Where the intentions of the parties cannot be gleaned from the language of the agreement, under general rules of contract interpretation a court should determine whether there are common expectations that would reveal the intentions of the parties.
In this case, this is a relatively easy task. When the parties arrived at a dollar amount that SPEDD [the settling defendant] would pay, it would have been apparent to counsel for plaintiffs that SPEDD expected a release that would eliminate SPEDD’s exposure to any further claims raised in this litigation. Obviously, plaintiffs’ counsel understood that plaintiffs would execute a release which would prevent plaintiffs from pursuing against SPEDD, in this or any other litigation, any claims that plaintiffs have raised against SPEDD in this litigation. Plaintiffs would also have understood that SPEDD expected that the payment it was making was the only money that SPEDD would be paying to plaintiffs, either directly or indirectly through payments made to a third party. Thus, plaintiffs would have understood that they could not pursue claims against any other parties to this litigation for which SPEDD would be ultimately liable.

Id. at 36 (footnote omitted).

Since the pro tanto release did not eliminate the possibility of a verdict that would result in the settling tort-feasor owing money to the non-settling tort-feasor, contraiy to the common expectation that payment of the settlement amount was to eliminate any risk of liability, I ruled that unless the plaintiffs could establish an agreement under which the plaintiffs would provide only pro tanto releases, any settlement agreement would be construed to require the plaintiffs to execute pro rata releases.

I use this approach in the present case. The common expectation is that a defendant will promptly pay the settlement amount. A settlement agreement (written or oral) will be construed in this fashion unless the defendant can establish that the parties reached a different agreement.

Because defendant contends that the parties’ agreement conditioned payment on receipt of a no-lien letter, a rule will issue to show cause why the settlement agreement should not be enforced. Since the only dispute is over whether payment was conditioned on a no-lien letter, it is defendant’s burden to establish an agreement that the payment was conditioned upon a no-lien letter.

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

ORDER OF COURT

On May 23, 2012, it is hereby ordered that a rule is issued to show cause why plaintiffs’ petition to enforce settlement should not be granted.

These proceedings will be governed by Pa.R.C.P. No. 206.7.

Depositions shall be completed within thirty (30) days, and an argument will be held on July 6, 2012 at 10:00 A.M. o’clock, 815 City-County Building.

Defendant has the burden of proving that payment of the agreed-upon settlement amount was conditioned upon defendant’s receipt of a non-lien letter.

      . This legislation also gives CMS a direct action against the plaintiff, the entity that received the payment and the defendant. However, CMS may elect to pursue only the defendant’s insurer.