author: WORTHINGTON, J,

text:
    Cullen v. Cullen

      C.P. of Monroe County,
    no. 1511 CV 2004.

      Robert M. Maskrey Jr., for plaintiff.

      Ellen C. Schurdak, for defendant.
    December 7, 2004
   WORTHINGTON, J,

Plaintiff, James P. Cullen (husband), and defendant, Traci L. Cullen (wife), were married on March 25, 2000. No children were bom of the union. The parties’ relationship deteriorated and husband left the marital residence on January 16, 2003. The parties have been separated since that time. Husband and wife executed a property settlement agreement on November 6, 2003. The issue before us is whether the property settlement agreement executed by husband and wife is a valid and enforceable contract.

In the spring of 2003, wife retained counsel to draft a property settlement agreement. She then approached husband and requested that he sign the agreement. Wife, admittedly, never provided a copy of the agreement to husband, however, a copy was available at the marital residence at all times for him to review. Although husband declined to execute the agreement initially, he eventually agreed to sign it pending a renegotiation of its terms. As part of the renegotiation, husband requested an additional cash payment and the deferred transfer of a Nissan pickup truck, which was titled in wife’s name, pending the restoration of his driver’s license. Wife acquiesced in his requests and husband’s revisions were incorporated into the agreement. On November 6,2003, both parties signed and executed the property settlement agreement which did not include a schedule of the parties’ assets.

On or about March 2, 2004, husband filed a complaint in equity in which he averred that the agreement was unenforceable and should be rescinded. He alleged that wife failed to provide him with full disclosure of the parties’ financial resources prior to their entry into the agreement, and that wife secured his joinder into the agreement by means of fraudulent misrepresentation. Wife filed an answer and counterclaim on March 29,2004, in which she alleged that husband has refused to comply with the terms of the negotiated property settlement agreement and requested that we enter an order directing husband to execute any and all documents required by the agreement. A bench trial was held on October 13,2004. We find in favor of the defendant on plaintiff’s complaint and on defendant’s counterclaim.

Before undertaking our analysis, we would like to note the following facts. There is a disparity with regard to the respective educational backgrounds of the parties. Husband is a high school graduate. Wife graduated from high school, obtained a bachelor of arts degree in finance, and is currently pursuing a master’s degree. Additionally, we note that this was husband’s second marriage. This is only significant insofar as husband has admitted that upon the dissolution of his first marriage, he and his former wife executed a property settlement agreement to distribute the marital property.

Upon hearing the testimony of husband and wife, we have determined that several facts are undisputed. It is understood that no appraisals of the marital home were ever completed and neither party ever consulted an appraiser or discussed a likely appraised value for the marital home. The parties agree that negotiations of the agreement continued from March of 2003 until November of 2003, at which time the agreement was finally executed. Neither party disputes that husband was able to successfully negotiate a higher cash payment from wife prior to signing the agreement, increasing the amount he was to receive from $2,500 to $3,500. Additionally, it is undisputed that wife did, in fact, tender the Nissan pickup truck and $3,500 in cash payments to husband in accordance with the terms of the agreement. Finally, both parties agree that husband never asked for a list of financial accounts held by wife at any time prior to the execution of the agreement.

Husband now contests the validity of the property settlement agreement. He contends that subsequent to his entry into the agreement, he came to realize that the value of the marital residence was worth much more than the parties had believed. Additionally, after signing the agreement, husband conducted a search of some of wife’s financial records, which were located in an unlocked filing cabinet in the marital home, and discovered the existence of certain assets of which he had previously been unaware. Husband therefore asserts that he was uninformed, at the time he executed the agreement, that wife held the following accounts in her own name: a Roadway Express Inc. 401(k) stock savings pension plan, a Mellon Bank certificate of deposit (CD), and a Dreyfus Investment individual retirement account (IRA).

Conversely, wife claims that she did not hide personal assets from husband. Both parties agree that during the course of their marriage, wife kept all of her financial records in an unlocked filing cabinet in the marital home, which was easily accessible to husband. Wife therefore claims that even if husband never chose to look through those files during the course of the parties’ marriage, after their separation, once husband was faced with the prospect of signing the agreement, he could have entered the marital residence to investigate those reports and determine the nature and extent of her personal assets.

Wife further claims that husband was aware of her assets due to his participation in the preparation of the parties’ joint income tax returns. Husband and wife privately completed a joint income tax return for the 2001 tax year. The parties had a joint income tax return professionally completed by husband’s accountant for the 2002 tax year. Both the 2001 and 2002 tax returns reflect the existence of the Mellon Bank CD and the Dreyfus IRA.

Additionally, wife claims that during the course of their marriage, she and husband would sit down together on a bi-weekly basis and review all of the mail that was received by the household. After sorting the mail, the parties would then pay the bills together. Wife contends that because of the parties’ bi-weekly mail-opening sessions, and because of the joint filing of their tax returns, husband was put on notice and should have been aware of wife’s assets. Moreover, wife testified that husband was physically present at Mellon Bank when she opened her certificate of deposit. For the foregoing reasons, it is wife’s contention that husband was free to inquire about her Mellon Bank CD, her Dreyfus Investment IRA, and her 401(k) pension plan at Roadway before executing the agreement.

Husband admits that wife fully controlled the parties’ finances throughout the marriage. However, with regard to the parties’ income tax preparation, husband claims that his involvement was limited to providing his W-2 forms. With regard to the bi-weekly bill paying sessions, husband claims that writing checks in the nature of child support and day care payments was the extent of his participation.

In the action before us, husband contends that there was fraudulent misrepresentation on the part of wife in compelling husband to enter into the property settlement agreement. Husband further asserts that wife failed to make a full disclosure of all of her financial resources prior to his entry into the agreement. Husband ultimately claims that wife’s fraudulent misrepresentation and her failure to make a full and fair disclosure of her financial resources render the parties’ property settlement agreement voidable.

We now undertake to determine whether the agreement is valid. It is well-settled law in Pennsylvania that a husband and wife are free to determine their property rights and support obligations by contract. See 23 Pa.C.S. §3105. Moreover, one of the well-established precepts regarding property settlement agreements and their modification is that a property settlement agreement between a husband and wife will be enforced by the courts in accordance with the same rules of law applicable to contract interpretation. Gocek v. Gocek, 417 Pa. Super. 406, 409, 612 A.2d 1004, 1006 (1992), citing Kleintop v. Kleintop, 291 Pa. Super. 491, 495, 436 A.2d 223, 225 (1981). “[T]he paramount goal of contract interpretation is to ascertain and give effect to the parties’ intent.” Bianchi v. Bianchi, 859 A.2d 511, 515 (Pa. Super. 2004), citing Lang v. Meske, 850 A.2d 737, 739 (Pa. Super. 2004). “[W]here, as here, the words of a contract are clear and unambiguous, the intent of the parties is to be ascertained from the express language of the agreement itself.” Id., citing Brosovic v. Nationwide Mutual Insurance Co., 841 A.2d 1071 (Pa. Super. 2004).

Furthermore, the long-standing law of this Commonwealth is that property settlement agreements are presumed to be valid and binding on the parties. McGannon v. McGannon, 241 Pa. Super. 45, 359 A.2d 431 (1976). Generally, parties will be bound by their agreements, absent proof of fraud, misrepresentation or duress. Sabad v. Fessenden, 825 A.2d 682, 688 (Pa. Super. 2003). Moreover, they are bound “without regard to whether the terms were read and fully understood and irrespective of whether the agreements embodied reasonable or good bargains.” Id. at 688. Thus a court may construe or interpret a property settlement agreement as it would a contract, but it has neither the power nor the authority to modify or vary the decree unless there is conclusive proof of fraud or mistake. See Bianchi v. Bianchi, 859 A.2d 511, 515 (Pa. Super. 2004).

Pennsylvania jurisprudence has long mandated that when a husband and wife draft a property settlement agreement, “full disclosure of the parties’ financial resources is a mandatory requirement.” Stoner v. Stoner, 572 Pa. 665, 673, 819 A.2d 529, 533 (2003). Thus, in order for a property settlement agreement to be enforceable, the parties must make a full and fair disclosure of their respective financial positions. Colonna v. Colonna, 791 A.2d 353, 355 (Pa. Super. 2001), citing Simeone v. Simeone, 525 Pa. 392, 402, 581 A.2d 162, 167 (1990). The axiomatic question then becomes: what constitutes full and fair disclosure?

Husband contends that merely providing the identity of an asset is not fair for the intended purpose of executing a property settlement agreement. Rather, husband contends that full and fair disclosure should include not only the revelation of the specific nature of the financial resources, but also their respective valuations. Furthermore, husband proffers that the person who should be held accountable for making the full and fair disclosure of a particular asset should be the person most likely to have such information. Husband claims that because wife’s personal financial assets are at issue here, wife should have been responsible for making a full and fair disclosure. Husband therefore argues that the mere allegation that he had general knowledge of the existence of wife’s financial assets is immaterial unless and until it is clearly established that wife failed to provide husband with a full and fair accounting of her financial resources. Because wife failed to specifically provide a valuation of her financial holdings, particularly her Roadway Express Inc. 401(k) pension plan, her Mellon Bank CD, and her Dreyfus Investment IRA, husband claims that the parties’ property settlement agreement should be rescinded as voidable.

Wife, on the other hand, argues that, based on the evidence produced at trial, it is clear that she made no misrepresentations with respect to the parties’ assets. Neither party discussed appraised values for the marital home and neither party asked for a listing of financial accounts. Moreover, wife contends that husband knew of her Dreyfus, Mellon, and Roadway Express accounts. After all, husband was physically present when wife opened her Mellon Bank certificate of deposit account. The couple prepared their tax returns jointly. Husband had full access to all of wife’s financial documents. The property settlement agreement specifically references wife’s Roadway Express pension. Finally, the couple reviewed wife’s Dreyfus and Roadway Express financial statements together during their mail-opening sessions.

The Supreme Court has held that because the parties to a property settlement agreement stand in a relation of mutual confidence and trust, the disclosure of their financial positions in preparation of such an agreement must be full and fair, but need not be exact. Id. at 402, 581 A.2d at 167. As such, full and fair disclosure does not require disclosure of the exact amount of a party’s assets; rather, it merely requires sufficient disclosure to allow the intended party to make an informed decision. Busch v. Busch, 732 A.2d 1274, 1278 n.5 (Pa. Super. 1999), citing Gula v. Gula, 380 Pa. Super. 249, 254, 551 A.2d 324, 327 (1988). Absent a full and fair disclosure, a party may assert that there has been a material misrepresentation in the inducement for entering into a property settlement agreement. Sabad v. Fessenden, 825 A.2d 682, 688 (Pa. Super. 2003). Moreover, Pennsylvania courts find that a presumption of full disclosure arises when a property settlement agreement specifically provides that full disclosure of the parties’ financial assets has been made. Porreco v. Porreco, 571 Pa. 61, 69, 811 A.2d 566, 570 (2002). “If a spouse attempts to rebut this presumption through an assertion of fraud or misrepresentation then this presumption can be rebutted [only] if it is proven by clear and convincing evidence.” Simeone v. Simeone, 525 Pa. 392, 403, 581 A.2d 162, 167 (1990), citing Hillegass Estate, 431 Pa. 144, 152-53, 244 A.2d 672, 676-77 (1968).

Our first consideration in this case is whether wife made a full and fair disclosure of her financial position to husband prior to his signing of the agreement. Here, the property settlement agreement unequivocally states that full financial disclosure was made. The agreement provides:

“The parties hereto agree to the following distribution of their marital property in lieu of any equitable distribution by a court of appropriate jurisdiction, both parties acknowledging the said distribution is fair and equitable and that they are satisfied with same, being fully and completely informed of their rights and being familiar with and cognizant of their wealth, real and/or personal property, estates and assets, earnings and income of the other, and that each has made a full and complete disclosure to the other of his or her entire asses [sic], liabilities and worth.” Property settlement agreement at page 3, paragraph 2.

Husband and wife, in signing the agreement, both admitted that they were fully informed of their rights, familiar with the assets of the other, and had fully disclosed the nature and extent of their own assets. Moreover, the language of the agreement further provides:

“Each party ... acknowledges and declares that he or she respectively is fully and completely informed as to the facts relating to the subject matter of this agreement, and as to the rights and liabilities of the parties, enters into this agreement voluntarily after receiving the advice of independent counsel or having had the opportunity to receive the advice of independent counsel and waiving said right... Each party further represents that he or she has given careful, mature thought to the making of this agreement, has carefully read each of the provisions hereof, fully and completely understands each provision, both as to subject matter and legal effect, and based thereon, has executed this agreement.” Property settlement agreement, page 12, paragraph 17.

The foregoing language expressly imparts that full disclosure of each party’s financial assets had been made. Because a presumption of full disclosure arises when a property settlement agreement specifically provides that full disclosure has been made, the evidentiary burden falls on husband to show that a fraudulent misrepresentation occurred. Porreco v. Porreco, 571 Pa. 61, 69, 811 A.2d 566, 570 (2002).

The Supreme Court outlined the requisite elements of a cause of action for fraudulent misrepresentation and delineated a high standard for rescinding property settlement agreements in the case of Porreco v. Porreco, 571 Pa. 61, 811 A.2d 566 (2002). In Porreco, the court held:

“In order to void a contract due to fraudulent misrepresentation, the party alleging fraud must prove, by clear and convincing evidence: (1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) resulting injury proximately caused by the reliance.” Porreco v. Porreco, 571 Pa. 61, 69, 811 A.2d 566, 570(2002).

The standard for clear and convincing evidence has been defined as “testimony that is so clear, direct, weighty, and convincing as to enable the trier of fact to come to a clear conviction, without hesitance, of truth of the precise facts in issue.” In re Adoption of Dale A. II, 453 Pa. Super. 106, 110, 683 A.2d 297, 299 (1996).

Husband seeks to rescind the property settlement agreement for the following reasons. He claims there was: (1) Fraudulent misrepresentation of the value of the marital home; (2) fraudulent misrepresentation of wife’s Roadway Express 401(k) pension plan; (3) fraudulent misrepresentation of wife’s Mellon Bank certificate of deposit; (4) and fraudulent misrepresentation of wife’s Dreyfus individual retirement account.

Husband initially alleges that wife fraudulently misrepresented the value of the marital home. The portion of the agreement pertaining to the real property at issue states:

“Husband after full and fair disclosure of the nature and value of the aforesaid property, and cognizant of his right to obtain an independent appraisal regarding the value of the same relinquishes his interest in and to the marital residence in consideration of wife’s agreement to be solely responsible for the payment of the parties’ debt to East Stroudsburg Savings Association in the form of a first lien mortgage.” Property settlement agreement, page 3, paragraph 2(A)(i).

The terms of the agreement are clear. Husband contracted to relinquish his rights to the marital residence located at RR6, Box 6223-A, Stroudsburg, Monroe County, Pennsylvania, which was encumbered by a mortgage to East Stroudsburg Savings Association, provided that wife agreed to be solely responsible for the payment of the parties’ debt to the bank in the form of a first lien mortgage. Husband alleges that it was only subsequent to the execution of the property settlement agreement that he discovered that the marital estate actually had an approximate value of $150,000 at the time of the execution of the agreement.

We find that the provision in the agreement clearly satisfied the full and fair disclosure requirement of Simeone. Husband’s signature on the agreement implies that he read it and agreed to be bound by it. The language specifically stated that the parties were unaware of the actual value of the home and that husband was free to have it appraised. We find that husband did not meet his burden of proving fraudulent misrepresentation by clear and convincing evidence. In fact, we are hard-pressed to find any misrepresentation at all on the part of wife. The agreement contains no representations regarding the value of the marital home. The agreement provides only that wife will take the marital home and assume its accompanying mortgage. We find that husband simply failed to realize that the marital residence was worth more than he originally thought. Because husband could have procured an appraiser to confirm the value of the marital home and could have further investigated any doubts he may have had as to the value of the residence, we will not allow him, now that he has the benefit of hindsight, to avoid compliance with the agreement. See Colonna at 356.

Our concern with this allegation is that husband appears to be taking issue with the underlying inequity of the agreement, but is expressing that concern by way of a fraudulent misrepresentation claim. Per the terms of the agreement, wife received the marital residence valued at $150,000. Meanwhile, husband, by virtue of the agreement, received a distribution of assets valued at a mere $10,000, which is comprised of the transfer of the 1995 Nissan pickup truck, valued at $6,500, plus the $3,500 in cash he received. Wife retained all of the remaining marital assets. Unfortunately for husband, the apparent inequality of the bargain is not a consideration that we may evaluate. After all, parties to a property settlement agreement are bound “without regard to whether the terms were read and fully understood and irrespective of whether the agreements embodied reasonable or good bargains.” Sabad v. Fessenden, 825 A.2d 682, 688 (Pa. Super. 2003). As such, we find that husband has failed to adequately prove fraudulent misrepresentation on the part of wife with regard to the portion of the agreement pertaining to the marital residence. Husband is therefore bound by the agreement.

Husband’s next allegation of error is that there was fraudulent misrepresentation of wife’s Roadway Express 401(lc) pension plan account. We find this allegation to be unconvincing. Paragraph 2(E) of the agreement provides:

“The parties acknowledge that wife has a pension plan through her employment at Roadway Express. By this agreement, husband agrees to waive any rights, claims or interest, which he might otherwise have in and to the aforesaid plan in consideration for the promises contained in this agreement.” Property settlement agreement, page 5, paragraph 2(E).

Despite husband’s claim that he was unaware of wife’s Roadway Express pension plan, he was unable to explain that lack of knowledge, given that the preceding provision specifically detailed the parties’ respective retirement plans. We are not troubled by the fact that nothing was stated particularizing the nature or form of those plans. We find it sufficient that the agreement specifically acknowledged that each of the parties was aware that the other had a pension plan. As such, it is our determination that had husband been concerned with the amount of wife’s pension, he should have sought more information prior to signing the agreement.

Husband finally alleges fraudulent misrepresentation on the part of wife regarding her Mellon Bank certificate of deposit as well as her Dreyfus individual retirement account. The agreement contains a provision regarding bank accounts generally, which states, in pertinent part:

“Husband and wife acknowledge that any and all joint checking and/or savings accounts have been divided between the parties prior to the execution of this agreement and both parties hereby waive any right or claim which either may have in and to any monies received by the other party from the division of those accounts as well as any right or claim which either may have in and to any monies presently held in the individual name of the other party.” Property settlement agreement, page 5, paragraph 2(G)(i).

Both parties did, in fact, sign the agreement containing the foregoing terms. The fact that wife had two individual accounts that husband claims he was not expressly aware of is not a sufficient reason for us to rescind the agreement. Wife did not hide those accounts from husband. In fact, husband had ready access to all of her files. There is a very real distinction between wife knowingly failing to disclose the exact valuation of her personal accounts and wife fraudulently misrepresenting her financial assets to induce husband to sign a property settlement agreement. Because husband has failed to prove evidence of the latter, the agreement must be enforced.

In Porreco, the Supreme Court held that it could not find reliance on a misrepresentation “where the party claiming reliance had an adequate opportunity to verify the allegedly fraudulent statements.” 571 Pa. 61, 70, 811 A.2d 566, 571 (2002). In other words, “[t]o be justifiable, reliance upon the representation of another must be reasonable.” Porreco at 69, 811 A.2d at 571, citing In re Allegheny International Inc., 954 F.2d 167, 178 (3d Cir. 1992). Here, although husband did not have wife’s financial records in his physical possession, they were readily available to him and easily accessible by him. However, husband failed to specifically request them. We therefore find that husband’s reliance was not justifiable because he had an adequate opportunity to verify wife’s financial records and failed to do so.

Although husband avers that the agreement should be rescinded because it was procured by wife through fraudulent misrepresentation and without full disclosure of the parties’ assets, the crux of husband’s complaint is an unconscionability argument. Husband maintains that the division of the net equity in the parties’ marital estate as established by the property settlement agreement is one-sided and does not represent a reasonable or equitable division of the parties’ marital estate. Husband further argues that the agreement is unconscionable because it is unreasonably favorable to wife, who was the drafter.

Whether the agreement was favorable to one party or another at the time of execution in 2003 is not the issue. See Colonna v. Colonna, 791 A.2d 353, 357 (Pa. Super. 2001), citing Todd Heller Inc. v. United Parcel Service Inc., 754 A.2d 689, 701 (Pa. Super. 2000). “In order ‘for a court to deem a contractual provision unconscionable it must determine both “that the contractual terms are unreasonably favorable to the drafter” and that there [was] no meaningful choice on the part of the other party regarding acceptance of the provisions.’ ” Colonna v. Colonna, 791 A.2d 353, 357 (Pa. Super. 2001), citing Todd Heller Inc. v. United Parcel Service Inc., 754 A.2d 689, 701 (Pa. Super. 2000). This agreement is not unconscionable because husband has failed to show that both parties were not of equal bargaining power. Furthermore, we find that wife made a full and fair disclosure of her financial position at the time the agreement was executed. We further find that husband has failed to present any evidence of fraudulent misrepresentation on the part of wife. As such, we are compelled to uphold the agreement under Pennsylvania law.

The Porreco court delineated a high standard to rescind property settlement agreements. In said case, the court upheld and enforced a prenuptial agreement despite the fact that the agreement fraudulently listed the value of a diamond engagement ring as $21,000 instead of disclosing that the ring was, in fact, a cubic zirconium, and therefore worth markedly less. Porreco v. Porreco at 70, 811 A.2d at 570, citing Bortz v. Noon, 556 Pa. 489, 499, 729 A.2d 555, 560 (1999). The Porreco court emphasized that the wife had the opportunity to obtain her own appraisal of the ring prior to her execution of the agreement. Id. at 71, 811 A.2d at 572. Similarly, here, husband clearly had the opportunity to obtain financial statements and a home appraisal. The fact that he chose not to do so until after executing the agreement is not a sufficient reason for us to rescind the agreement.

We note that our decision today does not take into account the reasonableness of the agreement. After all, a property settlement agreement is to be reviewed as any other contract. See Simeone, supra. When construing agreements involving clear and unambiguous terms, this court need only examine the writing itself to give effect to the parties’ understanding. Vaccarello v. Vaccarello, 563 Pa. 93, 757 A.2d 909 (2000). A court may not modify the plain meaning of the words under the guise of interpretation. Id.

Here, the parties negotiated the agreement at issue from March of 2003 through November of 2003. Husband determined that wife had particular assets of value sometime after having signed the agreement. We will not rescind the agreement simply because husband, upon determining that he did not get the benefit of the bargain, now wishes not to abide by the terms of the agreement. In light of the clear and unambiguous language of the agreement, coupled with husband’s failure to prove fraudulent misrepresentation or a lack of full and fair disclosure by clear and convincing evidence, we will uphold the parties’ agreement.

Finally, we note that the agreement contains a provision providing that this agreement “shall be incorporated for purpose of enforcement only, but not merged into any divorce decree or judgment in divorce.” Property settlement agreement, page 11, paragraph 16(A). As such, the agreement will remain a valid and binding contract.

Accordingly, we enter the following:

ORDER

And now, December 7,2004, after a trial on plaintiff’s complaint to rescind the property settlement agreement and defendant’s counterclaim to enforce the property settlement agreement, it is hereby ordered as follows:

(1) Verdict for defendant against plaintiff on plaintiff’s complaint to rescind the parties’ property settlement agreement.

(2) Verdict for defendant against plaintiff on defendant’s counterclaim for enforcement of the parties’ property settlement agreement.

(3) Husband is ordered to execute a deed to the marital residence and produce all other documents required by the agreement within 10 days of the date of this order.


source: Caselaw Access Project

author: MINORA, J,

license: Public Domain

text:
    Chrzan v. Lewis
    C.P. of Lackawanna County,
    no. 99-CIV-3714.

      Gene E. Goldenziel, for plaintiff.

      Alicia M. Caridi, for defendant.
    December 2, 2004
   MINORA, J,

This action is before the court by way of defendant’s motion for summary judgment. The plaintiff instituted this cause of action by filing a writ of summons on July 26, 1999, and subsequently a complaint on March 22,2000, asserting an action in negligence. The defendant filed his response and discovery was subsequently completed. The defendant has since filed a motion for summary judgment to which the plaintiff filed her response and brief. This matter is hereby submitted on briefs and the necessity of oral argument has been waived upon agreement of the parties. The underlying circumstances of this matter are as follows.

STATEMENT OF THE CASE

On or about July 27, 1997, at approximately 1 a.m., the plaintiff, Eugenia Mary Chrzan was driving her vehicle upon the roads of Dupont, Pennsylvania and was stopped at a red light when the defendant, Dale Lewis, failed to apply his brakes causing his vehicle to collide with the plaintiff’s vehicle. As a result of the defendant’s conduct, the plaintiff has suffered injuries, reportedly permanent in nature, including aggravation of pre-exist-ing conditions, specifically injuries to the head; bilateral disc displacement; injuries to the temporomandibular joint (TMJ); injuries to the mandibular area; bilateral anterior meniscal displacement without reduction on mouth opening and with limitation of the degree of anterior excursion. (See medical reports attached to defendant’s motion for summary judgment.) Additionally, as a result of the defendant’s conduct, the plaintiff asserts that she experienced great physical pain and difficulty upon opening the jaw.

Prior to the auto accident, the plaintiff, Ms. Chrzan, was involved in a separate accident in Fort Lauderdale, Florida. On March 6, 1994, the plaintiff was in a bar where she fell and struck her head, causing injuries, including an injury to her temporomandibular joint, also known as the TMJ. (See medical reports attached to defendant’s motion for summary judgment.) Five months after this occurrence, Ms. Chrzan sought medical assistance whereby she learned of her injury to the TMJ and other facial trauma. (See report by Dr. Gary J. Weitz dated 8/5/1994; 7/20/1995.) Upon examination, it was revealed that there was mandibular deviation upon opening of the mouth causing her pain and discomfort and the plaintiff was diagnosed with temporomandibular joint dysfunction. (Id., ¶¶3-6.) Ms. Chrzan received proper treatment on account of the incident and, in her April 18, 1996 visit, she received a prescription for TMJ physical therapy and was instructed to utilize her TMJ appliances as directed. It was not until March 17, 1997, that she started physical therapy for stiffness in her TM joints and pain and pressure while eating. After the 1997 auto accident Ms. Chrzan’s existing injuries from the above described events supposedly inflamed and worsened. It is alleged that the car accident caused an exacerbation of the plaintiff’s present injury to the TMJ. In addition, the plaintiff claims that she received a new injury, the non-reducing disc/dislocation. (See Dr. Stephen Smith report dated 7/12/04.)

The substance of the defendant’s request for summary judgment is that the plaintiff is bound by her choice of insurance coverage, specifically the “limited tort” option in her automobile insurance policy, which precludes her from recovering noneconomic damages. (See generally, 75 Pa.C.S. §101 et seq. and 75 Pa.C.S. §1705(d).) The defendant asserts that the insured must be barred from bringing an action for any noneconomic loss unless she can prove that her injuries cross the “serious injury” threshold. Here the defendant declares that any injuries sustained by the plaintiff on account of the car accident are not serious and therefore she may not recover for noneconomic losses.

The issue that this court is confronted with is twofold. We must determine whether the defendant is entitled to summary judgment as a matter of law where the plaintiff sustained injuries in an automobile collision with the defendant, and where she selected “limited tort” coverage by her automobile insurance carrier? Yet, before that determination may be made, we must clarify whether the aggravation of the plaintiff’s pre-existing injuries by the defendant’s conduct satisfies the “serious injury” threshold under the “limited tort” option in an insurance policy pursuant to 75 Pa.C.S. §1702?

DISCUSSION

The General Standard for Summary Judgment

This court was confronted with a similar issue as the one currently before the court in Krukowski v. Pep Boys, 64 D.&C.4th 225 (2003). There we laid out the following standard to be followed in determining whether summary judgment should properly be granted.

Summary judgment may be granted only in those cases where the record clearly demonstrates that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Cresswell v. Pennsylvania National Mutual Casualty Insurance Co., 820 A.2d 172, 111 (Pa. Super. 2003). In determining whether summary judgment is appropriate, the record must be viewed in the light most favorable to the non-moving party and all doubts regarding the existence of an issue of material fact must be resolved against the movant, who bears the burden of proving the absence of a factual dispute. Al's Café Inc. v. Sanders Insurance Agency, 820 A.2d 745, 748 (Pa. Super. 2003); Downey v. Crozer-Chester Medical Center, 817 A.2d 517, 524 (Pa. Super. 2003). “[Ojnly when the facts are so clear that reasonable minds cannot differ, may a trial court properly enter summary judgment.” Cresswell, supra. Thus, “[sjummary judgment may only be granted in cases where it is clear and free from doubt the moving party is entitled to judgment as a matter of law.” David Pflumm Paving & Excavating Inc. v. Foundation Services Co., 816 A.2d 1164, 1167 (Pa. Super. 2003). See also, Glazdick v. Whink Products Co., 104 Lacka. Jur. 262, 265 (2003).

The “Limited Tort” Paradigm

Auto insurance companies offer their customers what is recognized as the “limited tort” option for auto insurance coverage under 75 Pa.C.S. §1705. Furman v. Shapiro, 721 A.2d 1125 (Pa. Super. 1998); see generally, Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL), 75 Pa.C.S. §§1701-1799.7. Pursuant to 75 Pa.C.S. §7105(a)(1)(A), the limited tort option restricts the insured’s right to seek financial compensation for injuries caused by other drivers, specifically non-monetary damages for pain and suffering, unless the injuries sustained are categorized as a “serious injury” as set forth in the MVFRL. Recently, the Supreme Court of Pennsylvania held that the traditional summary judgment standard was to be followed in limited tort cases while the determination of whether a “serious injury” exists should be made by the jury rather than the trial judge in all but the clearest of cases. Washington v. Baxter, 553 Pa. 434, 446, 719 A.2d 733, 740 (1998); Furman, supra at 1126. Therefore, in limited tort cases, summaiy judgment should only be granted under circumstances in which reasonable minds could not differ as to whether a “serious injury” has been sustained. Furman, supra. Below we will summarize the criterion to qualify as a “serious injury” through a brief examination of the statutory language and case law.

Under the MFVRL, “serious injury” is defined as “a personal injury resulting in death, serious impairment of body function or permanent serious disfigurement.” 75 Pa.C.S. §1702. The Supreme Court in Washington v. Baxter adopted the definition of “serious impairment of body function” used by the court in DiFranco v. Pickard to define a “serious injury.” See DiFranco v. Pickard, 427 Mich. 32, 398 N.W.2d 896, 900 (1986). The definition for “serious impairment of body function” states that:

“The ‘serious impairment of body function’ threshold contains two inquiries:

“(a) What body function, if any, was impaired because of injuries sustained in a motor vehicle accident?

“(b) Was the impairment of the body function serious? The focus of these inquiries is not on the injuries themselves, but on how the injuries affected a particular body function. Generally, medical testimony will be needed to establish the existence, extent, and permanency of the impairment. ... In determining whether the impairment was serious, several factors should be considered: the extent of the impairment, the length of time the impairment lasted, the treatment required to correct the impairment, and any other relevant factors. An impairment need not be permanent to be serious.” DiFranco, 398 N.W.2d at 901.

We will next apply the present facts to the above DiFranco standard. At this point in our analysis, the focus has become whether the plaintiff has shown that she sustained a serious injury to the extent that a body function has been impaired?

As previously noted, all questions regarding whether a material fact does exist must be resolved in favor of the non-moving party. Al’s Café Inc., supra at 748. Here the non-moving party is the plaintiff. The first question that must be resolved is what body function was impaired due to the injuries from the auto accident. The answer to this first factor is an exacerbation of an old injury to the temporomandibular joint, limiting the ability to open and close the mouth, with the addition of non-reducing disc/dislocation. The second factor causes us to ask whether the impairment to the TMJ was serious. In determining whether the injury was serious, it is necessary to note how the injury affected the body function and, moreover, the plaintiff’s daily life. The body function is claimed to have been affected in such a way to cause the plaintiff pain, displacement, headaches, pain and pressure while eating, a decrease in range of motion and difficulty working out or performing at her job at the fitness center, in her school work and loss of the ability to bowl. (See Chrzan depo. pp. 31-34; medical reports attached to defendant’s motion for summary judgment.)

Since the body function that was impaired from the current incident is an exacerbation of an old injury, let us start with the plaintiff’s medical condition prior to the car accident. On August 5,1994, Ms. Chrzan visited Dr. Gary J. Weitz for treatment on account of her fall while on vacation in Florida, when Ms. Chrzan struck the back of her head. At that point she was assessed as having bilateral temporomandibular joint dysfunction and she experienced frequent headaches in the frontal region, tinnitus on both sides and jaw joint pain bilaterally with other subjective symptoms. (See Dr. Gary J. Weitz report dated 7/20/95; medical records attached to defendant’s motion for summary judgment.) Ms. Chrzan received a prescription for physical therapy but did not make use of it until March 17, 1997. Additionally, Ms. Chrzan failed to utilize her TMJ appliances and she declined the option of surgery. (See report dated 5/8/96 from Dr. Gary Weitz.) Yet, during this period Ms. Chrzan was able to continue to work. Following the car accident which occurred July 26, 1997, the plaintiff was examined by Stephen David Smith D.M.D. Her treatment with Dr. Smith began August 21,1997. At that time, her jaws were dislocated and she experienced pressure, earaches and eye twitching. (See report of Dr. Stephen Smith dated 7/12/04.) She was diagnosed as having non-reducing TMJ discs, and surgery was suggested, yet Ms. Chrzan followed through with therapy instead, which improved her position considerably. Therapy continued for five months and Ms. Chrzan’s condition was tolerable. {Id., ¶7.) It was not until an independent medical examination (IME) was conducted upon Ms. Chrzan by Dr. Michael Smirne DDS on August 12, 2003, when the plaintiff complained of additional pain to the head, joints, jaw, neck and shoulders. {Id., ¶¶7-8.) Her injury was reported as permanent and serious, and pain occurred when Ms. Chrzan opened her mouth, chewed or put any pressure on her jaw. (See supplemental report of Dr. Stephen Smith dated 7/30/04.) Additionally, after a comparison of the MRI studies, the first conducted in September of 1994 and the second conducted August of 1997, there appears to be a considerable change from one report to the other, mainly the anterior meniscal displacement without reduction and bilateral anterior meniscal displacement. (See MRI report conducted by Dr. Andrew Baron dated 9/2/94; MRI report conducted by Dr. Jonathan Sullum dated 8/9/97.)

Judge Terrence Nealon in Cordaro v. Hedderick, 45 D.&C.4th 353 (2000), stated that objective medical evidence need not be produced to establish that impairment satisfies the serious injury test. Cordaro v. Hedderick, 45 D.&C.4th 353, 361 (2000). The length of time that an impairment continues is relevant, but the impairment injury does not have to be permanent to be deemed serious. Id. at 362. The court determined that one may have a serious injury even though that injury resulted from a pre-existing condition; furthermore, the aggravation of a pre-existing condition or injury to the same body part can constitute a “serious injury” and impairment to body function. There the court was confronted with an issue where it was necessary to determine if a plaintiff with a previous heart condition can suffer injuries brought about by the defendant’s acts to the neck and back, so to constitute a serious injury and surpass the threshold under “limited tort?” There the court determined that the threshold had been met. Yet, this case is distinguishable from the present case at bar in that two separate injuries were at issue, a heart condition verses neck and back injury. Presently, the main determination is based upon the same injury to the same body part; TMJ, only here the defendant’s acts created a worsened infirmity to a preexisting condition. This court has found that “a plaintiff who is already suffering from an ailment or disability at the time of an accident may nevertheless sustain a serious injury under 75 Pa. C.S. §1705.” Sekol v. Albrecht, 51 D.&C.4th 235, 243 (2001); Sanderson-Cruz v. USA, 88 F. Supp.2d 388, 394 (E.D. Pa. 2000). (Doctor reported that the auto collision exacerbated the plaintiff’s chronic back injury.) This is precisely the case before the court. Additionally, here we have an abundance of medical data which all proves to be pertinent, including a report of permanent injuries. (See report of Dr. Stephen Smith dated 7/12/04.) After careful consideration of all the relevant factors, including the medical reports and deposition testimony, there appears to remain a genuine issue of material fact as to whether the auto accident of Mr. Lewis and Ms. Chrzan caused a re-injury to the TMJ, or if the accident did not bring about an additional impairment.

Approximately four months before the car accident, Ms. Chrzan was seen by a physical therapist who noted in her report that the patient demonstrated signs of chronic bilateral temporomandibular joint dysfunction. (See report by Lee Ann Jones P.T. dated 3/17/97.) Her range of motion was limited to 1.5 fingers in width and protrusion and retraction of the jaw was functional but painful. (Id., ¶3.) She was reported to have pain and difficulty eating and upon opening the jaw. (Id.) After Dr. Smith examined the plaintiff following the auto accident, her range of motion was only one finger in width while the normal range would be three fingers in width. (See report of Dr. Stephen Smith dated 7/12/04.) Subsequent to the accident, the plaintiff also complained of pressure, shooting pain, earaches and eye-twitching. (Id, ¶2.) According to the MRI conducted August 9,1997, both TMJs were dislocated and she had a limited degree of opening, without reduction. Conversely, the report provided by Dr. Michael J. Smirne, hired by the defense counsel, opines that Ms. Chrzan experienced no limitation caused by the injuries complained of. (See report of Dr. Michael J. Smirne dated 8/12/03.) Clearly there still remains a question as to the impairment. Moreover, there is sufficient evidence to indicate that the plaintiff’s condition worsened due to the car collision. Since only in the clearest of cases is the trial court judge to make the determination of the seriousness of injury, we cannot make this determination at this juncture. Therefore summary judgment is denied. An appropriate order follows.

ORDER

And now, to wit, December 2, 2004, upon consideration of the defendant’s motion for summary judgment, the verbal and written arguments of counsel and in accordance with the preceding memorandum, it is hereby ordered and decreed that the defendant’s motion will be denied.


author: NEWMAN, Member,

text:
    Office of Disciplinary Counsel v. Brown
    Disciplinary Board Docket no. 64 D.B. 2003.
    July 15, 2004
   NEWMAN, Member,

Pursuant to Rule 208(d)(2)(iii) of the Pennsylvania Rules of Disciplinary Enforcement, the Disciplinary Board of the Supreme Court of Pennsylvania herewith submits its findings and recommendations to your honorable court with respect to the above-captioned petition for discipline.

I. HISTORY OF PROCEEDINGS

On May 13,2003, Office of Disciplinary Counsel filed a petition for discipline against Gustee Brown, respondent in these proceedings. The petition charged respondent with practicing law while on inactive status in Pennsylvania. Respondent filed an answer on June 13,2003.

A disciplinary hearing was held on October 24,2003, before Hearing Committee 4.10 comprised of Chair Joseph M. Gaydos, Esquire, and Members Lawrence M. Kelly, Esquire, and David Kyle Harouse, Esquire. Respondent appeared pro se.

The Hearing Committee filed a report on April 19, 2004, finding that respondent engaged in misconduct and recommending that he be suspended for one year followed by one year of probation and a practice monitor.

The parties did not file briefs on exception to the report.

This matter was adjudicated by the Disciplinary Board at the meeting of May 18, 2004.

II. FINDINGS OF FACT

The board makes the following findings of fact:

(1) Petitioner, whose principal office is located at Suite 1400, 200 North Third Street, Harrisburg, PA 17101, is invested, pursuant to Rule 207 of the Pennsylvania Rules of Disciplinary Enforcement, with the power and duty to investigate all matters involving alleged misconduct of an attorney admitted to practice law in the Commonwealth of Pennsylvania and to prosecute all disciplinary proceedings brought in accordance with the various provisions of the aforesaid rules.

(2) Respondent, Gustee Brown, was bom in 1958 and was admitted to practice law in the Commonwealth in 1996. His office address is Masonic Square, 32 W. 8th Street, Erie, PA 16501. Respondent is subject to the disciplinary jurisdiction of the Disciplinary Board of the Supreme Court.

(3) Respondent was transferred to inactive status for failure to pay annual fees pursuant to Pa.R.D.E. Rule 219 by Supreme Court order dated November 30,2000, effective December 30,2000.

(4) Pursuant to the November 30,2000 order, respondent was ordered to comply with the provisions of Rule 217, Pa.R.D.E.

(5) Rule 217 provides, in pertinent part:

“(a) Orders transferring an attorney to inactive status shall be effective 30 days after entry;

“(b) The formerly admitted attorney shall promptly notify or cause to be notified by registered or certified mail, all litigation and non-litigation clients of the transfer to inactive status;

“(c) The formerly admitted attorney shall promptly notify, or cause to be notified, by registered or certified mail, the attorney or attorneys for each adverse party in a pending litigation matter of the transfer to inactive status;

“(d) The formerly admitted attorney shall also promptly notify or cause to be notified, by registered or certified mail, all persons, whether agents or guardians to whom a fiduciary duty is or may be owed at any time after the transfer to inactive status, or with whom the formerly admitted attorney may expect to have professional contacts under circumstances where there is a reasonable possibility that they may infer that the formerly admitted attorney continues as an attorney in good standing.” Rule 217(a), (b), (c), (d), Pa.R.D.E.

(6) Further, Rule 217 provides that, within 10 days after the effective date of the suspension, the formerly admitted attorney shall file with the board a certified statement showing full compliance with provisions of the order and these rules. Rule 217(e), Pa.R.D.E.

(7) By certified letter dated November 30,2000, Elaine M. Bixler, executive director and secretary of the Disciplinary Board, forwarded to respondent a copy of the court’s November 30, 2000 order directing that respondent be transferred to inactive status.

(8) The November 30,2000 letter was sent to respondent’s then attorney registration address, 5701 Yellow-leaf Drive, Richmond, VA23234-5954, by certified mail. The certified mail card reflects that the letter was received and signed for by Gilda B. Johnson on December 6,2000.

(9) The letter informed respondent that he was required to comply with the Pennsylvania Rules of Disciplinary Enforcement and the Disciplinary Board Rules enclosed with the letter.

(10) A statement of compliance with Rule 217 was never filed by respondent with the Disciplinary Board.

(11) Respondent did not provide any proof to the office of the secretary that he gave notice to his clients whose matters were pending on December 30, 2000, or to clients whom he represented after that date, of his transfer to inactive status.

(12) Respondent began part-time employment with the public defender’s office in Erie as an assistant public defender in October 2000.

(13) During the course of his employment in Erie, the public defender’s office received complaints about respondent from district justices that respondent was missing appointments and hearings.

(14) Chief Public Defender Christine Konzel met with respondent and informed him that if he continued to miss hearings he would lose his job.

(15) In February 2002, shortly after the meeting with Ms. Konzel, respondent resigned his position.

(16) Chief Public Defender Konzel did not learn of respondent’s transfer to inactive status until a telephone conversation with Erie County President Judge William Cunningham in late July 2002.

(17) After an article appeared in the Erie Times, the public defender’s office received numerous telephone calls from public defender clients or their family members regarding respondent’s transfer to inactive status.

(18) The notice of his transfer to inactive status was sent to respondent at his sister’s address in Virginia, which respondent described as being his “most secure address.” (N.T. 50.)

(19) Respondent was transient at that time and designated his sister’s address as the place to receive his most important papers.

(20) At the time respondent was on inactive status in December 2000, he was living with his in-laws in Akron, Ohio. Respondent commuted to the public defender’s office in Erie from Akron.

(21) Respondent’s sister forwarded mail to him in Akron, but he did not pay attention to it and he was not diligent in collecting his mail.

(22) Respondent believes that his sister did forward the notice of inactive status to him.

(23) Respondent believes he put the notice of inactive status on the top of the television in his living room.

(24) Respondent was aware that notices from attorney registration contained bills that had to be paid.

(25) Respondent’s understanding was that if a lawyer did not pay fees over a three-year period, that lawyer is transferred to inactive status. If that occurred, then the lawyer had to go before the board and petition to restore active status.

(26) Respondent never called the attorney registration office in Lemoyne to determine his status, nor to ask questions concerning the rules, paying dues on a yearly basis, and the consequence of not paying dues.

(27) Respondent first came to know of the problem with his inactive status when it appeared in a newspaper article in the Erie Times.

(28) On July 2, 2002, respondent paid the attorney registration fees for the 2000-2001,2001 -2002, and 2002-2003 years and was reinstated to active status.

(29) Data gathered by the court administrator of Erie County indicated that respondent was attorney of record in 120 cases during his period of inactive status, and 10 to 15 of those cases were in respondent’s capacity as private counsel.

(30) While on inactive status, respondent represented at least 97 defendants in criminal matters from January 2001 through February 2002 in his capacity as an assistant public defender.

(31) During respondent’s period of inactive status, he was involved in 13 juiy trials, eight of which ended in conviction of the defendant.

(32) When respondent’s clients learned of his inactive status, some instituted actions to withdraw guilty pleas and file PCRAs on the basis that respondent was not duly licensed.

(33) Two Pennsylvania Superior Court opinions resulted from these actions, which affirmed the convictions with the rationale that the mere fact that respondent was not licensed because he did not pay his fees did not make him per se ineffective.

(34) A series of articles appeared in the local Erie Times newspaper and the president judge of the common pleas court received numerous telephone calls from people across the state.

(35) Respondent did not apologize to President Judge Cunningham or Chief Defender Konzel.

(36) Respondent’s current practice is limited to about two or three cases every few months.

(37) During respondent’s inactive period, he was going through a divorce, his mother was ill and his former wife took his son to Tennessee.

(38) Respondent stayed in Erie because he is currently in a custody dispute and the court in Erie has jurisdiction.

(39) Respondent is exploring alternative means of employment.

(40) Respondent has no prior history of discipline.

III. CONCLUSIONS OF LAW

By his conduct as set forth above, respondent violated the following Rules of Professional Conduct:

(1) R.P.C. 5.5(b) — A lawyer shall not practice law in a jurisdiction where to do so would be in violation of regulations of the profession in that jurisdiction.

(2) R.P.C. 8.4(d) — It is professional misconduct for a lawyer to engage in conduct that is prejudicial to the administration of justice.

(3) Pa.R.D.E. 217(b) — A formerly admitted attorney shall promptly notify or cause to be notified, by registered or certified mail, all clients who are involved in pending litigation or administrative proceedings, and the attorney or attorneys for each adverse party in such matter or proceeding, of the disbarment, suspension, or transfer to inactive status and consequent inability of the formerly admitted attorney to act as an attorney after the effective date of the disbarment, suspension or transfer to inactive status.

(4) Pa.R.D.E. 217(c)(1) and (2) — A formerly admitted attorney shall promptly notify or cause to be notified, of the disbarment, suspension or transfer to inactive status, by registered or certified mail, all persons or their agents or guardians to whom a fiduciary duty is or may be owed at any time after the disbarment, suspension or transfer to inactive status; and all other persons with whom the formerly admitted attorney may at any time expect to have professional contacts under circumstances where there is a reasonable probability that they may infer he or she continues as an attorney in good standing.

(5) Pa.R.D.E. 217(e) — Within 10 days after the effective date of the disbarment, suspension or transfer to inactive status order, the formerly admitted attorney shall file with the board a verified statement showing that the provisions of the order and the rules have been fully complied with, and all other state, federal and administrative jurisdictions to which such person is admitted to practice. The statement shall set forth the residence or other address of the formerly admitted attorney where communications to such person may thereafter be directed.

IV. DISCUSSION

Petitioner bears the burden of proving violations of the Rules of Professional Conduct by a preponderance of the evidence that is clear and satisfactory. Office of Disciplinary Counsel v. Keller, 509 Pa. 573, 506 A.2d 872 (1986). In this matter, by respondent’s stipulations to the factual averments contained in the petition for discipline and other evidence of record, petitioner has met its burden.

The record demonstrates that respondent engaged in the unauthorized practice of law while on inactive status and represented approximately 120 clients in criminal cases, 97 of those as an assistant public defender in Erie County. Respondent’s misconduct damaged the integrity of the judicial system in Erie County by creating the perception that the public defender’s office in Erie County was incompetent. Respondent’s misconduct triggered litigation from some of respondent’s clients to withdraw guilty pleas and file PCRA actions on the basis that respondent was ineffective because he was not licensed. Respondent’s practice of law without a license caused prejudice to the administration of justice in Erie County.

Respondent began working for the public defender’s office in October 2000. Respondent was transferred to inactive status effective December 30, 2000, for failure to pay his attorney registration fee. Respondent continued to work as apublic defender until February 2002, some 15 months later. Respondent does not contest the fact that a notice of inactive status was sent to him at his registered address and that he in fact received the notice. Respondent believes that he placed the notice on his television set. Clearly respondent was irresponsible in not reading his mail and contacting the office of the executive director and secretary. Respondent also does not dispute the fact that he received notices from attorney registration and that he knew they contained bills requiring payment. Respondent labored under the belief that if he did not pay his registration fees for three years he would have to petition the board to restore his active status. The conclusion can be drawn from respondent’s testimony that he engaged in a conscious decision not to pay his registration fees with the idea that he would simply ask the board to restore his active status at a later time. The thought does not appear to have crossed respondent’s mind that he was ineligible to actually practice law until he paid his fees. Respondent made no attempt to contact attorney registration to confirm his beliefs as to his status. Respondent is subject to discipline for his acts of misconduct.

It is well established that the appropriate disciplinary sanction is based on the nature and gravity of the misconduct and the aggravating and mitigating factors present. In re Anonymous No. 85 D.B. 97, 44 D.&C.4th 299 (1999). There are no significant aggravating or mitigating circumstances in this case. Respondent has not been the subject of prior discipline. Respondent did not mistreat clients and there is no evidence that he mishandled cases. Respondent did mishandle the subject of his own professional standing. An attorney is expected to be aware of the status of his privilege to practice law. Respondent received the notice of inactive status but by his own testimony admitted that he did not pay attention to it. Respondent was aware that attorney registration sent him notices and he knew that a fee was required to be paid. Again, respondent did not pay attention to these notices. Respondent wrongly believed that if he did not pay attorney fees for three years he would be placed on inactive status and then would need to restore his active status. Respondent never contacted attorney registration to verify whether this was true. He simply continued to practice law. Respondent’s failure to attend to his professional licensure, resulting in his unauthorized practice of law, demonstrates a general unfitness to practice law in Pennsylvania. Respondent testified to some problems in his personal life that have distracted him, but, while the board is sympathetic to these problems, their existence does not serve to excuse his misconduct, the consequences of which are serious.

The Supreme Court has stated that it will not tolerate a lax approach to the disciplinary process. Matter of Leopold, 469 Pa. 384, 366 A.2d 227 (1976). The court has considered the problem of attorneys who continue to practice law while on inactive status. In the matter of In re Anonymous No. 123 D.B. 96, 41 D.&C.4th 290 (1998), an attorney continued to practice law while on inactive status, even handling a case until the day before his disciplinary hearing. The board noted that the unauthorized practice was limited in scope and the attorney had no prior record. The attorney did not mishandle or mistreat the client, but rather mistreated the matter of his own professional standing. The board recommended and the court imposed a suspension for a period of six months. In the matter of In re Anonymous No. 53 D.B. 2000, 753 disciplinary docket no. 3 (Pa. July 10, 2002), the attorney engaged in the unauthorized practice of law and shared legal fees with a non-lawyer entity. The court imposed a suspension of one year and one day. In the matter of In re Anonymous No. 131 D.B. 1999, 660 disciplinary docket no. 3 (Pa. March 23, 2001), the attorney practiced law over a three-month period while on inactive status. He entered his appearance in five criminal court matters and appeared in court to represent his client. He had six instances of prior discipline. The court suspended the attorney for one year and one day.

The board is persuaded that a suspension of one year followed by probation for two years is warranted on the basis of the extent and scope of respondent’s unauthorized practice of law, balanced by his lack of prior discipline and his admitted personal problems.

V. RECOMMENDATION

The Disciplinary Board of the Supreme Court of Pennsylvania recommends that the respondent, Gustee Brown, be suspended from the practice of law for a period of one year followed by probation for a period of two years, subject to the following conditions:

(1) Respondent shall select a practice monitor subject to the approval of the Office of Disciplinary Counsel.

(2) The practice monitor shall do the following during the period of respondent’s probation:

(a) Meet with the respondent at least monthly to examine respondent’s progress towards satisfactory and timely completion of client legal matters, including regular communication with clients in returning telephone calls and responding to written correspondence;

(b) Periodically examine respondent’s law office organization and procedures to ensure that respondent is maintaining an acceptable tickler system, filing system, and other administrative aspects of respondent’s practice;

(c) File quarterly written reports on a board-approved form with the executive director and secretary of the board; and

(d) Shall immediately report to the executive director and secretary of the board any violations by the respondent of the terms and conditions of probation.

It is further recommended that the expenses incurred in the investigation and prosecution of this matter are to be paid by the respondent.

Board Members Saidis and O’Connor dissented and would recommend a one year and one day suspension.

Board Members Wright, Suh and Pietragallo dissented and would recommend a lesser suspension and a shorter period of probation.

Board Member Nordenberg dissented and would recommend a six-month suspension and no probation.

Board Vice-Chair Rudnitsky did not participate in the May 18, 2004 adjudication.

ORDER

And now, October 15, 2004, upon consideration of the report and recommendations of the Disciplinary Board dated July 15, 2004, the petition for review and response thereto, the request for oral argument is denied and it is hereby ordered that Gustee Brown be and he is suspended from the practice of law in the Commonwealth of Pennsylvania for a period of one year and one day and he shall comply with all the provisions of Rule 217, Pa.RD.E. It is further ordered that respondent shall pay costs to the Disciplinary Board pursuant to Rule 208(g), Pa.RD.E.


author: FORADORA, P.J.,

text:
    Hissong Kenworth Leasing Inc. v. D&FJ Co. Inc.

      C.P. of Jefferson County,
    no. 760-2003 Civil.

      Stephen A. Hall and Jacob S. Polochak, for plaintiffs.

      Walter Faderewski and Steven Poljak, for defendants.
    June 24, 2004
   FORADORA, P.J.,

And now, June 24,2004, after careful consideration of defendant’s preliminary objections, this court finds the following:

FACTS

This lawsuit involves an insurance policy covering a Kenworth tractor leased by D&FJ Co. Inc. d/b/a Eagle Freight from Flissong Kenworth Leasing Inc. Prior to December 16, 2000, Eagle Freight and Hissong entered into a full service agreement. Under the terms of the lease, Eagle Freight was to lease tractors from Hissong for use in its business. Per the agreement, Eagle Freight was to procure insurance for primary physical damage coverage for the tractors. Eagle Freight contacted Lyons Insurance Agency Inc. who was to procure the insurance through Occidental Fire and Casualty Company of North Carolina and Wilshire Insurance Company through United Brokers and name Hissong and PACCAR Leasing Company as additional insured.

The tractor was damaged on or about December 16, 2000, when Vero Radovanovic, an employee of Eagle Freight, was involved in an accident on State Route 80, in Washington Township, Jefferson County, Pennsylvania. The tractor, a 2000 Kenworth, was deemed a total loss and was alleged to have an approximate value of $75,606.28 excluding the salvage value. Hissong and PACCAR, as additional insured, attempted to collect from Occidental and Wilshire and were subsequently denied coverage.

In short, this case involves an Ohio-based insurance agency (Lyons) who placed a policy of insurance with a North Carolina insurance carrier (Occidental/Wilshire) through an intermediary located in the State of Indiana (United Brokers), with the insured being a trucking company based out of Ohio (Eagle Freight). A driver for Eagle Freight was involved in an accident in Jefferson County while traveling through Pennsylvania using tractors of additional insured’s (Hissong/PACCAR) who were domiciled in the State of Washington.

On or about December 6, 2002, plaintiff commenced this action in Philadelphia County, Pennsylvania. On or about April 10,2003, Occidental and Wilshire filed preliminary objections raising the issue of improper venue and defendant Lyons filed preliminary objections on May 30, 2003, raising the issue of lack of personal jurisdiction. The Court of Common Pleas of Philadelphia County dismissed the lawsuit on June 3, 2003, based upon the defendants’ preliminary objections. The defendant insurers argued that the action should have been brought in either Jefferson County, Pennsylvania, or the State of Ohio.

Plaintiffs refiled this lawsuit in Jefferson County. Defendant Lyons again filed preliminary objections on November 14, 2003, and alleged that this court lacks jurisdiction under Pa.R.C.P. 1028 and venue under Pa.R.C.P. 2179.

Plaintiff alleges that if Occidental and Wilshire can rightfully deny coverage, then Lyons neglected to procure proper insurance, and the policy obtained through Occidental and Wilshire was defective through the sole fault of Lyons. Plaintiff further alleges that Lyons is liable to the plaintiffs to the same extent as the insurer would have been liable had the insurance been properly effectuated.

The issue at the heart of the matter is whether an out-of-state specialty insurance agency can be haled into a Pennsylvania court when it places an insurance policy outside of Pennsylvania and subsequently denies coverage based on an accident occurring in Pennsylvania.

DEFENDANT’S OBJECTION TO JURISDICTION

Defendant Lyons claims that it is a corporation organized under the laws of the State of Ohio and is not qualified as a foreign corporation. Further, Lyons maintains that it does not conduct business within the Commonwealth of Pennsylvania; owns no real property and maintains no contacts within the Commonwealth; does not insure any individuals within the Commonwealth and has caused no harm or tortious activity within the Commonwealth.

Defendant also argues that at no time relevant hereto did it consent to, or submit itself to, the jurisdiction of the courts of the Commonwealth of Pennsylvania. In addition, defendant Lyons states that the contract was not entered into in the Commonwealth of Pennsylvania; none of the transactions or occurrences relevant to the making of the contract occurred in the Commonwealth of Pennsylvania; and for the reasons cited, the allegations set forth in the complaint are insufficient to establish that defendant Lyons is subject to the jurisdiction of Pennsylvania courts.

Plaintiff responds that defendant Lyons has an agency agreement with Erie Insurance Exchange that gives the defendant the ability to bind coverage for Erie Insurance. Plaintiff also points to the fact that the owner of defendant Lyons testified that, while none of the direct insured were Pennsylvania residents, it was likely that there were additional insured that were Pennsylvania residents. Plaintiff bases its minimum contacts analysis on the purposeful availment of the benefits and protections of Pennsylvania insurance laws.

PENNSYLVANIA PERSONAL JURISDICTION

The power of Pennsylvania courts to exercise jurisdiction over a non-resident defendant is dependent upon two requirements. First, jurisdiction must be authorized by the Commonwealth’s Long Arm Statute, 42 Pa.C.S. §5321; and, second, the exercise of jurisdiction must comport with constitutional principles of due process. Kenneth H. Oakes Ltd. v. Josephson, 390 Pa. Super. 103, 105, 568 A.2d 215, 216 (1989).

The Pennsylvania Long Arm Statute, 42 Pa.C.S. §5322(b), authorizes courts to exercise jurisdiction over non-resident defendants “to the fullest extent allowed under the constitution of the United States.” Id. at 105-106, 568 A.2d at 216. Therefore, any discussion relating to jurisdiction based on the constitution of the United States must focus on constitutional due process constraints. Temtex Products Inc. v. Kramer, 330 Pa. Super. 183, 194, 479 A.2d 500, 505-506 (1984).

A court may exercise two types of personal jurisdiction over a non-resident defendant. A court can base specific jurisdiction on the specific acts of the defendants that give rise to the cause of action, or general jurisdiction on the defendant’s general activity within the state. Derman v. Wilair Services Inc., 404 Pa. Super. 136, 590 A.2d 317 (1991).

For a court to exercise specific jurisdiction, due process requires that a defendant have “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102 (1945). These minimum contacts must have a basis in “some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283, 1298 (1958).

However, the clear focus in International Shoe was on fairness and reasonableness. Kulko v. California Superior Court, 436 U.S. 84, 92, 98 S.Ct. 1690, 1697, 56 L.Ed.2d 132 (1978). The court declined to establish a test based on the specific number of contacts between a state and the defendant and stated:

“Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure.” 326 U.S. at 319, 66 S.Ct. at 160.

After International Shoe and Hanson, courts now must consider (1) whether these contacts are sufficient to meet the “traditional notions of fairness” described in International Shoe and (2) whether the defendant “purposefully availed” itself of the benefits and protections of the forum state.

Such jurisdictional limits serve due process by assuring that a defendant whose property is at stake does not suffer meaningful inconvenience if compelled to litigate in the forum state. Thus, jurisdictional limits are designed to ensure that defendants are not so distant from, or unfamiliar with, the forum state that they are unable to maintain a defense in that forum. In Justice Brennan’s words, “the constitutionally significant ‘burden’ to be analyzed relates to the mobility of the defendant’s defense.”

However, due process limits on jurisdiction do not protect a defendant from all inconvenience of travel, McGee v. International Life Insurance Co., 355 U.S. 220, 224, 78 S.Ct. 199, 201 (1957), and it would not be sensible to make the constitutional rule turn solely on the number of miles the defendant must travel to the courtroom. Instead, and as noted by Justice Brennan, the constitutionally significant “burden” to be analyzed relates to the mobility of the defendant’s defense.

Absent specific jurisdiction, Pennsylvania courts may still exercise general personal jurisdiction over non-resident defendants if in personam jurisdiction does not exist. In contrast to traditional in personam jurisdiction analysis, general jurisdiction exists regardless of whether the cause of action is related to the defendant’s activities in this Commonwealth as long as the defendant’s activities are “continuous and substantial.” Skinner v. Flymo Inc., 351 Pa. Super. 234, 239, 505 A.2d 616, 619 (1986).

SPECIFIC JURISDICTION

Based on the deposition testimony of Gordon Lyons, the sole owner of Lyons Insurance Agency, it is clear that a significant portion of his business includes the procuring of surplus-lines insurance for transportation carriers who likely operate in the Commonwealth of Pennsylvania. Therefore, defendant Lyons knew or had reason to know that its insured would be traveling through or in the State of Pennsylvania. Further, Lyons knew or should have known that the risk of loss placed with each vehicle it insured could be traveling throughout the Commonwealth of Pennsylvania.

The plaintiff points to the case Adams v. Unione Mediterranea Di Sicurta, 234 F. Supp.2d 614 (E.D. La. 2002), for the proposition that jurisdiction is proper when an insurer has knowledge that its product will enter the stream of commerce of a particular forum. In Adams, an Italian cargo insurer was subject to personal jurisdiction in Louisiana in an action to have the insurer contribute to payment of cargo lost in Louisiana even when the defendant had never stipulated to an insurance contract in the United States; maintained no offices, P.O. boxes, addresses or telephone number listings in the United States; never qualified to do business in the United States; and did not own or lease any real or personal property in the United States, yet the court found jurisdiction on the basis of the fact that the defendant had knowledge that the product would be shipped through Louisiana. Id.

The defendant argues that Adams has no application to the instant case because the defendant in Adams had specific knowledge that the insured goods would be traveling through Louisiana. However, the defendant in Adams also had agents, servants and employees in the United States and employed law firms and adjusting companies within the boundaries of the United States.

Adams does apply to the instant case because the specialty-lines insurance market is that segment of the insurance industry where the more difficult or unusual risks are written. Because specialty-line’s insureds tend to be more unusual or higher risk, the specialty-lines market is characterized by a high degree of specialization.

For an account to be placed in the surplus-lines market it must be declined by the standard market. If a retail insurance agent or broker cannot find coverage, they may turn to the surplus-lines market to purchase appropriate coverage. The insured’s agent or broker contacts a surplus-lines broker for placement with specialty insurers operating in the surplus-lines market, and quite often, from out of state.

This demonstrates that defendant Lyons, operating a specialty insurance business by its own admission, should have had direct knowledge that by insuring multi-state trucking operations, the insurance carrier by its insured could reach and travel through the Commonwealth of Pennsylvania.

The defendant also maintained business ties similar to the defendant in Adams. Lyons admits having an agency agreement at the time of the incident with Erie Insurance Exchange, a Pennsylvania-based insurance carrier, which gave Lyons the ability to bind coverage for Erie Insurance. Further, Lyons business with Erie Insurance totaled between 50 percent-60 percent of its income. In addition to Erie Insurance, defendant Lyons is currently placing policies with another Pennsylvania carrier, Donegal Insurance. Since defendant Lyons should have had knowledge that its insured could be traveling through the Commonwealth of Pennsylvania and it also maintains agency relationships similar to those found in Adams, it is this court’s opinion that defendant Lyons has maintained contacts sufficient to warrant jurisdiction under Adams. Further, the agency agreements with Pennsylvania businesses that constitute at least half of the defendant’s income allow the defendant to purposefully avail itself of the benefit and protection of Pennsylvania’s laws.

Defendant Lyons points to the case United Farm Bureau Mutual Insurance Company v. U.S. Fidelity and Guarantee Company, 501 Pa. 646, 462 A.2d 1300 (1983), for the proposition that a Pennsylvania court lacks jurisdiction over a foreign insurance company when the only alleged contact with Pennsylvania is an automobile accident occurring within the borders of the Commonwealth. In United Farm Bureau Mutual Insurance, an accident occurred in the Commonwealth of Pennsylvania; the four injured members of the family, including the driver, filed claims for no-fault benefits under the assigned claims plan of the Pennsylvania No-Fault Act. In accordance with the assigned claims plan, United States Fidelity and Guarantee Company, a carrier authorized to write automobile insurance policies in Pennsylvania, was assigned to administer the plaintiff’s claims. U.S.F. & G. refused to pay no-fault benefits and asserted that any benefits to which plaintiffs were entitled were owed by United Farm Bureau Mutual Insurance Company, an Indiana insurance company, which had issued a liability policy to Loran Palmer in Indiana. United Farm Bureau Mutual Insurance at 650, 462 A.2d at 1302.

The court in United Farm Bureau Mutual Insurance stated:

“This court does not believe a carrier who promises to indemnify and provide a defense against liability could reasonably foresee that those obligations would subject it to direct action for foreign no-fault benefits. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Here the foreign company’s only contact with Pennsylvania is an automobile accident involving its insureds under a liability insurance policy. That policy contains nothing more than a provision for compliance with state financial responsibility laws.” Id. at 649, 462 A.2d at 1301.

The instant case is distinguishable from United Farm Bureau Mutual Insurance in that the instant defendant could reasonably forsee being haled into court in Pennsylvania. Mr. Lyons testified that he provides trucking insurance that is a “specialty line” and constitutes what is known as excess or surplus-lines insurance.

The difference between United Farm Bureau Mutual Insurance and the instant action is that United Farm Bureau Mutual Insurance provided a policy that contained nothing more than a provision for compliance with state financial responsibility laws and the case at bar involves a policy that provides high-risk insurance to a multi-state trucking operation. Since the defendant was in the business of providing specialty excess high-risk insurance to a trucking operation that it knew was multi-state, it is reasonable to assume that the defendant could foresee being haled into this forum for a suit originating under a policy specifically written for such an incident.

Turning now to the “traditional notions of fairness” described in International Shoe, this court must examine the level of contacts in the forum balanced against fairness. The due process clause seeks to assure that a defendant whose property is at stake does not suffer meaningful inconvenience if compelled to litigate in the forum state. Thus, jurisdictional limits are designed to ensure that defendants are not so distant from, or unfamiliar with, the forum state that they are unable to maintain a defense in that forum.

In the instant action, there is no real argument that jurisdiction in Jefferson County, Pennsylvania, would be in contradiction to fair play and substantial justice. Specifically, Lyons Insurance is located near Cleveland, Ohio, in close proximity to the Pennsylvania border, roughly 150 miles from Jefferson County.

Balancing the defendant’s contacts and purposeful availment against traditional notions of fair play and substantial justice, it is this court’s opinion that the contacts are sufficiently significant to make it fair and reasonable for the defendant to submit to Pennsylvania’s jurisdiction.

GENERAL JURISDICTION

As stated above, in contrast to traditional in personam jurisdiction analysis, general jurisdiction exists regardless of whether the cause of action is related to the defendant’s activities in this Commonwealth. Specifically, such jurisdiction is valid “regardless of whether the cause of action is related to the defendant’s activities in Pennsylvania, as long as the [corporate] defendant’s activities in this Commonwealth are ‘continuous and substantial.’ ” Garzone v. Kelly, 406 Pa. Super. 176, 183, 593 A.2d 1292, 1296 (1991); see also, Skinner v. Flymo, 351 Pa. Super. 234, 239, 505 A.2d 616, 619 (1986).

Lyons admits that it maintained an agency agreement at the time of the incident with Erie Insurance Exchange, a Pennsylvania-based insurance carrier, which gave Lyons the ability to bind coverage for Erie Insurance. Further, Lyons business with Erie Insurance totaled between 50 percent-60 percent of its income. In addition to Erie Insurance, defendant Lyons is currently placing policies with another Pennsylvania carrier, Donegal Insurance.

Since such volume of defendant’s business is generated through agency agreements with Pennsylvania businesses, it is reasonable to conclude that the defendant’s acts within the Commonwealth are systematic and continuous and as such, can also provide the basis for general jurisdiction.

DEFENDANT’S OBJECTION TO VENUE

Defendant Lyons alleges that venue is improper under Pa.R.C.P. 2179, because, while the damage may have occurred to the tractor in Jefferson County, the damage was merely incidental and not germane to the case. Defendant alleges that the cause of action, the transactions and occurrences, all arose and took place outside of the Commonwealth.

Defendant points to Pennsylvania R.C.P. 2179 — venue

“(a) Except as otherwise provided by an Act of Assembly, by Rule 1006(a.l) or by subdivision (b) of this rule, a personal action against a corporation or similar entity may be brought in and only in

“(1) the county where its registered office or principal place of business is located;

“(2) a county where it regularly conducts business;

“(3) the county where the cause of action arose; or

“(4) a county where a transaction or occurrence took place out of which the cause of action arose.”

Plaintiff argues that it is not registered in Jefferson County, nor is its principal place of business located in Jefferson County; it does not conduct business in Jefferson County; the cause of action arose outside of the Commonwealth of Pennsylvania in that all transactions and occurrences material to the making of the contract and the denial of coverage occurred outside of the Commonwealth of Pennsylvania; and, there is no transaction or occurrence that took place in Jefferson County out of which this cause of action arose, since all of the transactions and occurrences material to the making of the contract and denial of insurance coverage took place outside of the Commonwealth of Pennsylvania.

PENNSYLVANIA VENUE

In Pennsylvania, the law is well established that a party has a constitutional right to seek a change of venue. See Felts v. Delaware Lackawanna and Western Railroad Co., 195 Pa. 21, 45 A.2d 493 (1900). The trial court is vested with broad discretion to determine whether the choice of forum was proper. Masel v. Glassman, 456 Pa. Super. 41, 689 A.2d 314 (1997). The decision of the trial court should be based upon the individual facts of each case and such a decision will not be disturbed where the trial court’s decision is reasonable based upon the record. Monaco v. Montgomery Cab Company, 417 Pa. 135, 208 A.2d 252 (1965).

Examining Pennsylvania R.C.P. 2179(a): “(3) the county where the cause of action arose; or (4) a county where a transaction or occurrence took place out of which the cause of action arose,” one can see that the legislature intended to distinguish between the county where the cause of action arose and the county where a transaction or occurrence took place out of which the cause of action arose. This distinction, though subtle, indicates that while the cause of action (namely the denial of coverage) may have occurred outside of the Commonwealth of Pennsylvania, the transaction or occurrence that gave rise to the cause of action (the accident), occurred in Jefferson County. Since the denial of coverage and the subsequent alleged breach of contract would not have occurred but for the accident in Jefferson County, venue in Jefferson County is deemed proper under Pa.R.C.P. 2179(a)(4).

Also, looking at the preliminary objection to venue filed by defendant Lyons, the defendant fails to address Pennsylvania R.C.P. 2179(b), a critical provision to this action, which states:

“(b) An action upon a policy of insurance against an insurance company, association or exchange, either incorporated in Pennsylvania or doing business in this Commonwealth, may be brought

“(1) In a county designated in subdivision (a) of this rule; or

“(2) In the county where the insured property is located; or

“(3) In the county where the plaintiff resides, in actions upon policies of life, accident, health, disability, and livestock insurance or fraternal benefit certificates.”

Clearly, under Pa.R.C.P. 2179(b)(2), venue is proper because the insured property was located at the time of the accident in Jefferson County, Commonwealth of Pennsylvania. Further, defendant was at the time and is currently conducting a large volume of business in the Commonwealth of Pennsylvania by way of the agency agreements that it maintains with Pennsylvania insurers, allowing it to bind coverage in their names.

ORDER

And now, June 24, 2004, after careful consideration of the defendant’s preliminary objections, this court now enters the following:

(1) Ordered that defendant Lyons’ preliminary objections to jurisdiction is hereby denied.

(2) Ordered that defendant Lyons’ preliminary objections to venue is hereby denied.

      . World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 301, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (Brennan, J., dissenting).