author: LEVIN, S.J.,

text:
    Basile v. H&R Block Inc.

      Steven Angstreich, for plaintiffs.

      Mary Kohart, for defendants.
    March 1, 2004
   LEVIN, S.J.,

— Before this court are defendants’ motion for class decertification, plaintiffs’ memorandum of law in opposition to defendants’ motion for decertification and all responses thereto. For the reasons stated below, we grant defendants’ motion.

I. INTRODUCTION

This opinion is not an acceptance or endorsement of the actions of H&R Block in this matter. The question in this case is not one of morality or business ethics, but rather one of law. This court has no right or responsibility to impose its view of how business should be conducted on the defendants, only to apply the law of Pennsylvania to the facts in this case.

Procedural history. The defendants in exhibit A of their motion for class decertification set forth an accurate account of the procedural history of Basile v. H&R Block Inc. This history is repeated here:

“Procedural history of Basile v. H&R Block Inc.

On April 23, 1993, Sandra Basile and Laura Clavin filed this case against H&R Block Inc., H&R Block Eastern Tax Service Inc. and Mellon Bank in the Court of Common Pleas of Philadelphia County. The case was removed to the United States District for the Eastern District of Pennsylvania on May 14, 1993. Basile and Clavin filed their first amended complaint on April 6, 1994, asserting claims for: (I) violation of the Truth in Lending Act (TILA); (II) fraud; (III) negligent misrepresentation; (IV) breach of fiduciary duty; (V) violation of the UTPCPL; and (VI) violation of the Delaware Legal Rate of Interest Law.

Federal District Court summary judgment order, August 1, 1995. Block and Mellon Bank filed motions for summary judgment, which were granted in part on July 24,1995, as evidenced by a written memorandum dated August 1, 1995. Basile v. H&R Block Inc., 897 F. Supp. 194, 195 (E.D. Pa. 1995). The federal court granted summary judgment in favor of Block on all of the federal claims, finding no violation of TILA and no violation of any state or federal law related to the Delaware Legal Rate of Interest claim. Regarding plaintiffs’ UTPCPL claim, the court reasoned, “Inasmuch as plaintiffs’ unfair trade practices claim arises from the bank’s interest rate charges, it is preempted by the National Bank Act.” Id. at 198-99. Thereafter, the court returned the remaining state law claims to this court. Id. at 199. Basile and Clavin did not appeal the decision of the federal court.

Court of Common Pleas class certification order, May 30, 1997. In this court, Basile and Clavin filed a class certification motion and all parties filed cross-motions for summary judgment. Judge Avellino denied the motions for summary judgment without prejudice pending the class certification ruling. He also ruled that the court would assume the existence of an agency relationship for purposes of the class certification ruling. Order of January 17, 1996, Basile v. H&R Block Inc., Phila. C.C.P. no. 9304-3246.

The matter was then assigned to the Honorable John W. Herron, who ruled on the class certification on May 30, 1997. The court ruled that the UTPCPL claim did not survive the federal court’s summary judgment order and reasoned that even if the claim had survived, it would not be appropriate for class certification because of the reliance issues. Basile v. H&R Block Inc., 34 Phila. 1, 14-16 (1997). The court denied certification of a class action premised on the fraud and misrepresentation claims and disqualified Clavin as a class representative because she was a paralegal for class counsel, creating a conflict of interest. Id. at 77.

For the only remaining claim for breach of fiduciary duty, Judge Herron certified a class of Pennsylvania residents who applied for and received a “Rapid Refund” through Block during the years 1990 through 1993. Id. at 78; see also, memorandum, p. 1 n.l for class definí - tion. As directed by Judge Avellino’s prior order, the court assumed the existence of an agency relationship between Block and members of the class for the limited purpose of ruling on class certification. Id. at 64-65.

Court of Common Pleas summary judgment order, December 31, 1997. On December 31,1997, the Honorable Stephen E. Levin granted Block’s motion for summary judgment, finding that Block did not owe the plaintiff class a fiduciary duty because (1) there was no agency relationship because of the absence of substantial control over Block; and (2) there was no confidential relationship between the parties. Memorandum and order of December 31, 1997, Basile v. H&R Block Inc., Phila. C.C.P. no. 9304-3246.

Superior Court 1999 decision. Basile and Clavin appealed both the class certification order and the summary judgment order. The Superior Court reversed the summary judgment order, finding that there was a principal-agent relationship giving rise to a fiduciary duty. Basile v. H & R Block Inc., 729 A.2d 574, 582 (Pa. Super. 1999). Having determined that there was an agency relationship, the court did not consider the alternate theory that the alleged fiduciary duty arose from a confidential relationship. Id.

The Superior Court also addressed Judge Herron’s UTPCPL ruling and determined that the trial court had incorrectly found that the federal court had disposed of the claim. The Superior Court reasoned that the federal court only found that UTPCPL claims premised on rate of interest pre-empted, but not other claims that were not based on rate of interest. Id. at 583. The Superior Court also disagreed that the UTPCPL claim could not be certified for class treatment. The court ruled that individualized proof of reliance was not necessary in this case, reasoning that the reliance element could be satisfied without testimonial evidence because rebanee is “implicit and is established by operation of law” because of the agency relationship between the plaintiff class and Block. Id. at 584. Accordingly, the Superior Court vacated the trial court’s order denying certification of the UTPCPL claims and remanded for certification. Id.

Supreme Court 2000 decision. The Supreme Court granted allocatur to address the issue of whether there was evidence of an agency relationship between Block and members of the class such that the claim for breach of fiduciary duty should have survived summary judgment. Basile v. H & R Block Inc., 563 Pa. 359, 362, 761 A.2d 1115, 1117 (2000). The Supreme Court concluded, “[A]s a matter of law, Block was not acting as appellees’ agent in the [Refund Anticipation Loan] transactions, such that they were subject to a heightened, fiduciary duty.” Id. at 1121, 761 A.2d at 1121. The court recognized Basile had made an alternative argument that fiduciary duty was based upon a confidential relationship and remanded to the Superior Court “for consideration of the confidential relationship issue in the first instance.” Id. at 1121, 761 A.2d at 1122-23.

Superior Court 2001 decision. In 2001, on remand from the Supreme Court, the Superior Court reviewed the narrow issue of the propriety of summary judgment in light of the “confidential relationship” allegations of the plaintiffs. Basile v. H & R Block Inc., 777 A.2d 95 (Pa. Super. 2001). The court acknowledged, “[W]e have limited our review to determine whether the trial court erred in granting summary judgment on the question of confidential relations.” Id. at 100. The Superior Court reviewed the confidential relationship case law and evidence considered by the trial court in ruling on summary judgment and determined that there was sufficient evidence to make out a prima facie case of a confidential relationship. Accordingly, it reversed summary judgment by this court in 1999. Id. at 107. The Superior Court also addressed its prior ruling regarding the UTPCPL claim. The court recalled that it had previously held that proof of a fiduciary relationship would relieve plaintiffs of the burden of proving reliance for purposes of UTPCPL claims. Id. at 107. The court concluded that if upon remand the plaintiffs demonstrate a confidential relationship, reliance will be presumed for purposes of the UTPCPL claim. Id. at 107-108.

Defendants’motion for class decertification. After the remand from the Superior Court, the defendants, H&R Block Inc. et al., moved the court to decertify the class, for which plaintiff, Sandra Basile, is a representative, basically arguing that courts around the country have determined that the subjective issue of a “confidential relationship” cannot be addressed on a class-wide basis.

Plaintiff responded by raising two arguments, both of which stem from the same analysis. First, the plaintiff contends that the Superior Court, in its 2001 decision decided the confidential relationship issue on a class-wide basis; and, second, that this court is bound by that holding and cannot decertify the class. Although admitting that a trial court has discretion to decertify a class, “this case is not one where this court has the power or discretion to do so.” (Basile brief, at 5.)

The heart of both arguments is the plaintiffs’ analysis that the Superior Court’s holding decided the issue on a class-wide basis. Since both arguments stand on the same foundation, this court must analyze the holding of the Superior Court’s 2001 decision to decide both.

The Superior Court held as follows “Nonetheless, our holding is narrow. We do not conclude that the relationship of a tax consultant to his client is confidential, per se, nor do we conclude that the parties here were engaged in such a relationship as a matter of law. We conclude only that the evidence before the trial court on summary judgment was sufficient to establish, prima facie, the elements of a confidential relationship between the parties in this case. If, upon remand, the fact-finder accepts, as truthful, evidence adduced tending to demonstrate a confidential relationship, Block will be bound by a corresponding fiduciary duty as a matter of law.” Basile v. H & R Block Inc., 777 A.2d 95 at 107 (Pa. Super. 2001). (emphasis in original)

Clearly this holding cannot support the plaintiffs’ position. But, in reviewing the evidence, the Superior Court also said, “The evidence suggests further that Block recognized its customers’ confusion and exploited ‘a corresponding opportunity to abuse [their] trust for personal gain.’ In re Estate of Scott, 316 A.2d at 885. As documented ... by Block, the company was aware of the limited economic and educational standing of its customers, their confusion about the ‘Rapid Refund’ service, and the fact that they trusted the company to ‘take the worry out.’ Notwithstanding this knowledge, the company, ostensibly, made no effort to provide a clear explanation of its services, but in Sandra Basile’s case, merely told her where to sign. Thus, we conclude that the jury could reasonably find that Block occupied a position of substantial strength which, relative to the pronounced intellectual and economic weakness of the plaintiffs, presented Block with the opportunity to abuse the plaintiffs’ trust for its own gain. Such a scenario is consistent with confidential relations as defined by our Supreme Court.” Id. at 106.

The plaintiff then argued that the Superior Court’s acceptance of the evidence ample to demonstrate that Sandra Basile and members of the certified class did not deal on equal terms, requires this court to permit a fact-finder to make this determination on a class-wide basis. This court cannot accept that position.

The question that must be answered on a class-wide basis is, did Block give advice that the class members “by virtue of their own weakness or inability, the ad-visor’s pretense of expertise, or a combination of both, invest such a level of trust that they seek no other counsel.” Id. at 102.

In citing Frowen v. Blank, 493 Pa. 137, 425 A.2d 412 (1981), accordingly “[a confidential relationship] appears when the circumstances make it certain the parties do not deal on equal terms, but, on the one side there is an overmastering influence, or, on the other, weakness, dependence or trust, justifiably reposed[.]” While this court accepts that both elements need not appear together as “in both an unfair advantage is possible,” Basile v. H & R Block Inc., 777 A.2d at 101 (emphasis in original), citing Frowen, 493 Pa. at 145, 425 A.2d at 417. Nevertheless, to find an overmastering influence, the fact-finder must consider the relative positions of both parties and determine if the plaintiffs place complete trust in the advisor’s expertise.

This court finds that it will be necessary to consider the evidence of the unique qualities of each class member since the fact-finder must determine whether each placed his or her complete trust in the defendant’s expertise. This court finds that the repose of complete trust in the defendant’s expertise is required to form a confidential relationship.

The plaintiff continued to argue that the Superior Court made a clear finding here of a superior position held by Block and therefore, the court does not have to address an inferior position. While that may be true as to Ms. Basile, who did not graduate from high school and worked as a waitress, it cannot be true as to the entire class without making the relationship of an H&R Block Inc., to the class confidential per se. If members of the class did not place their trust in Block’s expertise, they cannot claim a confidential relationship. This court finds that proof of a confidential relationship requires consideration of the disparity between the respective parties, and whether the inferior party places primary trust in the other’s counsel.

n. DISCUSSION OF THE PENNSYLVANIA RULES OF CIVIL PROCEDURE GOVERNING CLASS ACTIONS

My decision, at this stage, is limited to whether plaintiffs have satisfied the requirements described in Pennsylvania Rule of Civil Procedure 1702.

“Rule 1702: Prerequisites to a class action

“One or more members of a class may sue or be sued as representative parties on behalf of all members in a class action only if

“(1) the class is so numerous that joinder of all members is impracticable;

“(2) there are questions of law or fact common to the class;

“(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class;

“(4) the representative parties will fairly and adequately assert and protect the interests of the class under the criteria set forth in Rule 1709; and

“(5) a class action provides a fair and efficient method for adjudication of the controversy under the criteria set forth in Rule 1708.”

In determining if these criteria are satisfied, the court is clearly vested with broad discretion. Cambanis v. Nationwide Ins. Co., 348 Pa. Super. 41, 51, 501 A.2d 635, 640 (1985) (court has authority to certify certain claims, issues or forms of relief and not others); Janicik v. Prudential Insurance Co. of America, 305 Pa. Super. 120, 135, 451 A.2d 451, 457 (1982) (same). See Pa.R.C.P. 1710(c)(1); Klemow v. Time Incorporated, 466 Pa. 189, 197, 352 A.2d 12, 16 (1976); Prime Meats Inc. v. Yochim, 422 Pa. Super. 460, 468, 619 A.2d 769, 773 (1993).

However, the court recognizes that decisions in favor of maintaining a class action should be liberally made. D’Amelio v. Blue Cross of Lehigh Valley, 347 Pa. Super. 441, 449, 500 A.2d 1137, 1141 (1985); Bell v. Beneficial Consumer Discount Co., 241 Pa. Super. 192, 205, 360 A.2d 681, 688 (1976) (class suits enable the assertion of many meritorious claims that might not otherwise be litigated). Accord, Janicik, 305 Pa. Super, at 128, 451 A.2d at 454.

Given this rule, the court will enumerate the factors it considered in ruling on class certification.

1. Numerosity

To satisfy this criterion, the class must be both numerous and identifiable. A class is sufficiently numerous when “the number of potential individual plaintiffs would pose a grave imposition on the resources of the court and an unnecessary drain on the energies and resources of the litigants should . . . plaintiffs sue individually.” Temple University v. Pennsylvania Department of Pubic Welfare, 30 Pa. Commw. 595, 603, 374 A.2d 991, 996 (1977). Plaintiffs assert that numerosity is satisfied because they allege the class exceeds 600,000 persons; no issue has been raised in the decertification motion concerning numerosity.

2. Commonality

For class certification, plaintiffs must also establish that their claim presents “questions of law or fact common to the class.” Pa.R.C.P. 1702(2). “The common questions of fact means precisely that the facts must be substantially the same so that proof as to one claimant would be proof as to all.” Allegheny County Housing Authority v. Berry, 338 Pa. Super. 338, 342, 487 A.2d 995, 997 (1985); Cook v. Highland Water and Sewer Auth., 108 Pa. Commw. 222, 231-32, 530 A.2d 499, 504 (1987). While the existence of individual questions essential to a class member’s recovery is not necessarily fatal to the class, there must be a “predominance of common issues, shared by all the class members, which can be justly resolved in a single proceeding.” Weismer by Weismer v. Beech-Nut Nutrition Corp., 419 Pa. Super. 403, 408-409, 615 A.2d 428, 431 (1992) (emphasis in original); D'Amelio, 347 Pa. Super, at 452, 500 A.2d at 1142; and Janicik, 305 Pa. Super, at 132-33, 451 A.2d at 457. See Pa.R.C.P. § 1708(a)(1).

The Superior Court in its 2001 decision determined that the fiduciary duty, in this case, must be shown through evidence of a confidential relationship. It is, therefore, necessary to consider whether a common proof of this relationship is possible.

Since this court finds that it will be necessary to consider the evidence of the unique qualities of each class member, so that a fact-finder can determine whether he or she placed his or her trust in Block, these questions cannot be answered on a class-wide basis. The existence of individualized issues and the need for individualized inquiries prevents common issues from predominating. Therefore, this court concludes that plaintiffs have not satisfied the commonality criterion and the common issues do not predominate over individual issues.

3. Typicality

Plaintiffs must also demonstrate that their “claims or defenses ... are typical of the claims or defenses of the class.” Pa.R.C.P. §1702(3). This factor requires that “the class representative’s overall position on the common issues is sufficiently aligned with that of the absent class members to ensure that her pursuit of her own interests will advance those of the proposed class members.” D’Amelio, 347 Pa. Super, at 458, 500 A.2d at 1146; Janicik, 305 Pa. Super, at 134, 451 A.2d at 457; Ablin Inc. v. Bell Telephone Co. of Pennsylvania, 291 Pa. Super. 40, 48, 435 A.2d 208, 212 (1981). See also, 1 Newberg on Class Actions § 1115a. This court determined earlier that plaintiffs have not satisfied the commonality criterion because a variety of facts and circumstances, unique to each plaintiff, must be considered to resolve the issue of confidential relationship.

As it is usually true when the court finds no commonality, typicality is also absent. Since it is apparent from the court’s finding that other members of the class will have unique facts, they will not be sufficiently aligned with that of the present class representative.

m. ADEQUACY OF REPRESENTATION

For the class to be certified, this court must also conclude that the plaintiffs “will fairly and adequately assert and protect the interest of the class.” Pa.R.C.P. §1702(4). Adequate representation is evaluated under consideration set forth in Pennsylvania Rule of Civil Procedure 1709. However, having determined that plaintiff failed to satisfy the typicality and commonality requirements, it is “unnecessary for the trial court to consider the remaining ... elements.” Weismer, 419 Pa. Super, at 410, 615 A.2d at 431.

IV. FAIR AND EFFICIENT METHOD OF ADJUDICATION

Finally, this court would generally address whether allowing plaintiffs to proceed with adjudication of this suit as a class action would be both fair and efficient. The factors to be evaluated are set forth in Pennsylvania Rule of Civil Procedure 1708. As above, having determined that plaintiff has failed to satisfy the requirements for certification of this case as a class action, we need not reach the merits of this inquiry. Weismer, 419 Pa. Super, at 410, 615 A.2d at 431.

POWER TO DECERTIFY

As stated initially, the plaintiffs also alleged that the trial court lacked the power or discretion to decertify this class. This argument must fail. This assertion is made without citation to precedent. Pa.R.C.P. 1710 does give this court power to revoke, alter or amend an order certifying a class. This is always appropriate, when later developments in the litigation reveal that a prerequisite of a certification is not satisfied. It should be clear that the later development in this case is that a confidential relationship, not an agency relationship, must now be proven to establish a fiduciary duty. I assume that the plaintiff raised this because of her belief that the Superior Court had ruled that a confidential relationship could proceed on a class-wide basis. Quite to the contrary, this court finds that Block’s decertification motion does not ask this court to overrule an appellate decision, as no appellate court had the opportunity to consider the class’ ability to prove confidential relationships on a class-wide basis.

CONCLUSIONS OF LAW

(1) This court has the power to decertify;

(2) The grounds for decertification are satisfied since the fiduciary duty must be shown through evidence of a confidential relationship and that evidence by its very nature will be unique to each class member; the requirements of commonality and typicality cannot be met.

(3) This case cannot continue as a class action but may proceed with individual parties only.

For the foregoing reasons, this court has determined that the instant case is not appropriate for disposition as a class action and entered the appropriate order.


source: Caselaw Access Project

author: GEORGELIS, P.J.,

license: Public Domain

text:
    Red Rose Motors Inc. v. Boyer & Ritter

      C.P. of Lancaster County,
    no. CI-1996-1108.

      Robert M. Frankhouser Jr, for plaintiffs.

      Douglas E. Herman, for defendant.
    February 23, 2004
   GEORGELIS, P.J.,

Before me is the motion for summary judgment of the defendant, Boyer & Ritter. This action is based on negligence and breach of contract. The plaintiffs, Red Rose Motors Inc. and Robert Wesoloskie, seek damages from Boyer & Ritter for its alleged failure, through its accounting work, to identify a third party’s embezzlement of funds from Red Rose Motors Inc. Boyer & Ritter seeks summary judgment on four grounds. It contends that the plaintiffs are barred from recovery on their negligence and breach of contract counts. The motion will be granted.

Wesoloskie was president and sole shareholder of Red Rose, a car dealership located in Lancaster County, Pennsylvania. Boyer & Ritter, a certified public accounting firm, provided tax services and annual calculations for new vehicle and parts LIFO (last in first out) reserve to Red Rose for the years ending 1993 and 1994. Boyer & Ritter also provided audit services to the Central Pennsylvania Buick Dealer’s Marketing Group for the years ending 1993 and 1994. The Group jointly marketed the sale of the Buick vehicles to potential consumers in central Pennsylvania. Red Rose was a member of the Group. Wesoloskie served as the Group’s secretary and treasurer. Roy Latshaw, the office manager of Red Rose, served as the Group’s bookkeeper. As the Group’s auditors, Boyer & Ritter reported to Wesoloskie. It also reported to Wesoloskie when providing accounting services to Red Rose.

In March of 1994, while auditing the Group’s 1993 accounts, Boyer & Ritter discovered that a check in the amount of $73,357.55, issued by General Motors Corporation to the Group in November of 1993, had not been deposited into the Group’s account. Boyer & Ritter contacted Latshaw and inquired into the whereabouts of the check. Latshaw informed Boyer & Ritter that he mistakenly deposited the Group’s funds into Red Rose’s account and that he removed the funds from Red Rose’s account and deposited them into the Group’s account. On March 18, 1994, he provided Boyer & Ritter a copy of the deposit ticket evidencing the deposit of the General Motors check into the Group’s account. When Boyer & Ritter completed its audit of the Group, it listed the payment as “deposit-in-transit,” and it did not disclose that the funds had been deposited into Red Rose’s account to either the Group or Wesoloskie.

In March of 1995, Boyer & Ritter conducted an audit of the Group’s 1994 accounts and discovered that the payment issued by General Motors to the Group had not been deposited in the Group’s account as Latshaw claimed. In April of 1995, Boyer & Ritter issued a new audit report, which informed Group members that the 1993 cash balance had to be restated to exclude the receipt that had been reflected as a “deposit-in-transit” the previous year. Boyer & Ritter noted in a footnote that the receipt had been erroneously deposited into Red Rose’s checking account and had been subsequently repaid.

While preparing the 1994 audit for the Group, Boyer & Ritter was also preparing a schedule of proposed accounting adjustments for Red Rose. Upon reviewing the schedules, it discovered that Group funds had been placed by Latshaw into Red Rose’s account as opposed to the Group’s accounts. An investigation by Wesoloskie and Red Rose was performed, and they discovered that Latshaw had been embezzling Red Rose’s corporate funds for approximately 10 years. The “mis-deposit” of the General Motors check had been part of a scheme to cover up his embezzlement of Red Rose funds. Latshaw was charged with embezzlement of more than $900,000 and pled guilty to the charges in November 1996.

The plaintiffs filed their complaint on January 27, 1997. In it, they aver two counts of negligence and one count of breach of contract. The plaintiffs aver in their two negligence counts that Boyer & Ritter violated its legal duty and professional obligation to disclose acts constituting fraud that it uncovered. They contend in their breach of contract count that Boyer & Ritter failed to use reasonable care and skill to conduct its review of Red Rose’s accounts.

Pennsylvania Rules of Civil Procedure 1035.1 through 1035.5 govern summary judgment motions. Pa.R.C.P. 1035.2 provides:

“After the relevant pleadings are closed, but within such time as not to unreasonably delay trial, a party may move for summary judgment in whole or in part as a matter of law

“(1) whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or

“(2) if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in jury trial would require the issues to be submitted to a jury.”

The burden of responding to a motion for summary judgment is set forth in Pa.R.C.P. 1035.3:

“(a) ... the adverse party may not rest upon the mere allegations or denials of the pleadings but must file a response within 30 days after service of the motion identifying

“(1) one or more issues of fact arising from evidence in the record controverting the evidence cited in support of the motion or from a challenge to the credibility of one or more witnesses testifying in support of the motion, or

“(2) evidence in the record establishing the facts essential to the cause of action or defense which the motion cites as not having been produced.”

In reviewing summary judgment cases, the record must be viewed in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Ertel v. Patriot-News Co., 544 Pa. 93, 98, 674 A.2d 1038, 1041 (1996), cert. denied, 519 U.S. 1008, 117 S.Ct. 512, 136 L.Ed.2d. 401 (1996).

Boyer & Ritter contends that the plaintiffs are barred from recovery on their negligence counts due to their contributory negligence, their failure to identify any duty it owed to the plaintiffs and their failure to control the negligence of a third person, who was the legally contributing cause of the plaintiffs’ harm. It also contends that the plaintiffs are barred from recovery on their claim for breach of contract because they failed to plead a breach of any specific duty it owed.

Our Superior Court has held that contributory negligence is applicable in a professional negligence claim. Gorski v. Smith, 812 A.2d 683 (Pa. Super. 2002). The Gorski court concluded that, since legal malpractice actions do not involve bodily injury or damage to property, such actions are outside the scope of the Pennsylvania Comparative Negligence Act, 42 Pa.C.S. §7102, and that the doctrine of contributory negligence applies. Id. at 702.

More recently, in July of 2003, our Superior Court held that a defense of contributory negligence is also available to a defendant-accounting firm in a malpractice action commenced by its client. See Columbia Medical Group Inc. v. Herring & Roll P.C., 829 A.2d 1184 (Pa. Super. 2003). Accordingly, the defense of contributory negligence has been appropriately pled in this case. However, because Boyer & Ritter’s motion as to the negligence counts can be adjudicated by addressing the duty issue, the issue of contributory negligence need not be reached.

Boyer & Ritter contends that the plaintiffs’ negligence counts fail to identify any duty it owed to the plaintiffs and that the plaintiffs are barred from recovery on their claim for breach of contract because they failed to plead a breach of any specific duty owed by Boyer & Ritter to the plaintiffs. Absent contractual relations between a plaintiff and defendant-accountant, an action founded on a claim for professional negligence will not lie. Landell v. Lybrand, 264 Pa. 406, 107 A. 783 (1919). The Lybrand court held that professional negligence claims must arise out of the breach of an identified duty and that, because the plaintiff in that case was a stranger to the defendant-accountant, no duty was owed to the plaintiff. Id. at 408, 107 A. at 783. “The Pennsylvania Supreme Court requires privity between a plaintiff and a defendant-accountant to maintain a professional negligence action.” Williams Controls Inc. v. Parente, Randolph, Orlando, Carey & Associates, 39 F. Supp.2d 517, 523 (M.D. Pa. 1999), citing Landell v. Lybrand, 264 Pa. 406, 107 A. 783 (1919). Our Pennsylvania Supreme Court upheld the “strict privity” rule for professional negligence actions in Guy v. Liederbach, which held that “important policies require privity [, as in] an attorney-client or analogous professional relationship, or a specific undertaking... to maintain an action in negligence for professional malpractice ....” Guy v. Liederbach, 501 Pa. 47, 51, 459 A.2d 744, 746 (1983).

The agreement between Boyer & Ritter and Red Rose, which agreement formalized the services to be performed, is evidenced in engagement letters for the years ending 1993 and 1994. The engagement letter for the year ending 1993 outlines the services to be performed by Boyer & Ritter for Red Rose as: to compile the balance sheet of Red Rose and the related statements of income, retained earnings, cash flows and other data given to Boyer & Ritter. Boyer & Ritter contracted to prepare Red Rose’s federal and Pennsylvania taxes and to provide the annual calculations for new vehicle and parts LIFO reserve. The engagement letter for the year ending 1994 includes the same services to be performed as the engagement letter for the year ending 1993. It also indicates that the services to be performed are “not designed and cannot be relied upon to disclose errors, irregularities or illegal acts, should any exist.” However, Boyer & Ritter was required to inform Red Rose if any such matters came to its attention. Both engagement letters are signed by Robert Wesoloskie, as president of Red Rose, to confirm that the services outlined in the letters are correct as understood by him.

Both engagement letters indicate only that Boyer & Ritter owed the duties of preparing federal and Pennsylvania taxes and LIFO reserve calculations to Red Rose. Neither states, expressly or impliedly, that Boyer & Ritter would audit Red Rose to uncover fraud or deception. In fact, the 1994 letter explicitly states that Boyer & Ritter would not perform services designed to uncover fraud or deception.

The plaintiffs’ complaint pleads that Boyer & Ritter was negligent in failing to discover that the information Latshaw provided Boyer & Ritter was fraudulent. However, as noted above, Boyer & Ritter was not hired to discover fraudulent information. The plaintiffs’ complaint does not aver a breach of any of the identified duties of preparation of tax returns or preparation of annual calculations for LIFO reserve. After viewing all the evidence in the light most favorable to the plaintiffs and applying the analysis set forth in Landell v. Lybrand, supra, to the facts in this case, I find that the plaintiffs have failed to identify any duty owed them by the defendant and that their two negligence counts must fail. Boyer & Ritter is entitled to summary judgment on those counts.

Boyer & Ritter also contends that the breach of contract count in the complaint should be dismissed because it fails to set forth a claim for a breach of contract. Failure to perform a service with the requisite level of professional skill “typically constitutes a claim of negligence, not breach of contract.” The Official Committee of Unsecured Creditors of Correl Steel v. Fishbein and Company P.C., 1992 U.S. Dist. Lexis 11618, at *17 (E.D. Pa. 1992), citing Yosuf v. U.S., 642 F. Supp. 415, 426-27 (M.D. Pa. 1986); Hoyer v. Frazee, 323 Pa. Super. 421, 425, 470 A.2d 990, 992-93 (1984). An accountant’s failure to perform an audit in accordance with the professional standard of care gives rise to a claim for negligence, not breach of contract. Robert Wooler Co. v. Fidelity Bank, 330 Pa. Super. 523, 479 A.2d 1027 (1984).

The Fishbein court held: “an action in contract is for the breach of a duty arising out of a contract either express or implied, while an action in tort is for breach of a duty imposed by law, which arises from an obligation created by a relation, ordinarily unconnected with a contract, but may arise independently of any contract or by virtue of contract relations.” Fishbein, 1992 U.S. Dist. Lexis 11618 at *18. (citation omitted)

The Fishbein court held further that the contract was not the source of the accountant’s duty to act with professional care, but that, to the contrary, the duty to act with professional care arose from a duty imposed by law. Id. In order to state a claim for breach of contract, a plaintiff must plead and prove the breach of a specific provision of the contract, rather than a general duty to act with due care. Hoyer v. Frazee, 323 Pa. Super. 421, 425-26, 470 A.2d 990, 992-93 (1984).

The plaintiffs’ complaint contains only two substantive paragraphs pertaining to the alleged breach of contract, and both are couched in the clear verbiage of a negligence claim. Paragraph 40 asserts that Boyer & Ritter “breached its engagement contract with Red Rose which required B&R to use reasonable care and skill to conduct the review of Red Rose’s accounts and to inform Red Rose” about its financial condition. The plaintiffs do not plead that a specific provision of the contract has been breached. Their contention that Boyer & Ritter did not use reasonable care and skill constitutes a breach of a general duty to act with due care, which is imposed by law. Ultimately, their assertion constitutes a claim for professional negligence and does not constitute a claim for breach of contract. After viewing all the evidence in the light most favorable to the plaintiffs and applying the analysis set forth in Hoyer and Fishbein, supra, to the facts in this case, I find that the plaintiffs have failed to plead a breach of contract and that this count must fail. Boyer & Ritter is entitled to summary judgment on this count.

Accordingly, I enter the following:

ORDER

For the reasons stated in the foregoing opinion, the motion for summary judgment filed by the defendant, Boyer & Ritter, is granted. Judgment is entered in favor of the defendant and against the plaintiffs, and the complaint is stricken.

      . Exhibit “D” to defendant’s motion.

      . See footnote 1.

      . See footnote 1.

      . See footnote 1.

      . Complaint at ¶35.

      . Complaint ¶40.


author: GRIM,

text:
    Brugger v. Brugger

      C.P. of Berks County,
    no. 02-6838.

      David S. Sobotka, for plaintiff.

      Bernard Mendelsohn, for defendant.
    February 3, 2004
   GRIM,

— The matter before the court is a custody dispute involving Father’s request to modify his periods of partial physical custody. The following are the pertinent facts and procedural history.

The parties share legal custody of their four children: Will (date of birth July 28, 1992), Ross (September 29, 1993), Graham (December 29,1994), and Brett (December 29, 1994). Plaintiff, Deborah A. Brugger (Mother) has primary physical custody of the children. Defendant, Robert Brugger (Father), has partial physical custody of the children.

The parties have been abiding by a June 2003, custody order which provides Father, inter alia, with partial physical custody of the children every Saturday from 6 p.m. until Sunday at 6:30 p.m. On alternate Sundays, Father takes the children to 9 a.m. mass. Father also has custody of all the children on Tuesday from 6 p.m. to 8 p.m. and has custody on a rotating basis of one child on Wednesdays from 6 p.m. to 8 p.m. In summer, Father’s Tuesday evening custodial periods extend until Wednesday evenings at 8 p.m.

This order further provided that a party could request a relisting before the custody master without the filing of a petition if the request was made within six months from the date of the order. Father requested and received a relisting and subsequently filed exceptions to the recommended order.

Mother and the children reside in the former marital residence in Topton, Pennsylvania. Following the separation, Father initially lived with his grown daughter and her children in their residence in Bethlehem, Pennsylvania. To be closer to his minor children, Father shared a residence with another man in Topton. This arrangement failed because the man did not like children so Father returned to his daughter’s residence. This past summer, Father moved into an apartment in Topton that is less than two blocks from Mother’s residence.

For nine years prior to the parties’ separation, Father did not work outside the home in order to care for the children. He worked as a realtor during this period. Father now works as a salesperson in Emmaus, Pennsylvania. He works Monday through Saturday beginning at 9 a.m. On Thursdays he works until 8:30 p.m. and on Saturdays he works until 5:30 p.m. The other days he usually works until 6:30 p.m.

For approximately 25 or 26 years, Mother has been the nursing and personnel supervisor at a doctors’ office. She works from 8 a.m. to 3 p.m. Monday through Friday. On some Fridays she works until 5 p.m.

All children are involved in scouting activities. Will’s troop meets on Tuesdays. Father wants to become actively involved with scouting but he cannot attend the meetings because he has custody of the other children on Tuesdays. Therefore, he wants his weekly custodial period to be changed to Monday or Wednesday and he wants to have all the children overnight on that day.

Father also wants to have overnight visitation with the individual child. He strongly believes that individual time is important for each child.

The children attend school in Emmaus. Father works approximately one mile from the school. If he were to have the children overnight, he could take them either to Mother’s residence in time to board the school bus or directly to school. He is willing to take the children to their activities that occur during his custodial periods.

The third change which Father requests is that he have all the children for one week of vacation during the summer so that they can do something together, such as camping. He also wants to have each child for one week during the summer so that he can spend quality time with each child. He would have the children’s usual babysitter watch the child while he was at work during the day.

Father complains that Mother is inflexible and will not deviate from the custody order. He asked 34 times for different children and received them only twice. Mother contends that Father shows favoritism by asking for custody of Will more than the other boys. Father testified that he may have asked for custody of Will more because he had wanted to do scouting activities with him and Will is the only child who is a scout. The others are cub scouts. Father accommodated Mother’s requests to care for the children three out of four times.

Mother does not want the custody schedule to change. She believes that the present schedule works fine. Mother complains, however, that she does not always have a telephone number to contact the children when they are in Father’s custody. Father takes the children places without notifying her.

Mother does not want the children to stay overnight at Father’s residence during the school year. At her residence, the children’s bedtime is 9 p.m. She believes Father is more lenient and allows them to stay up later. She also thinks that it would be too hectic for Father to get the children ready on time for school because he would have to oversee the children’s homework, have clean uniforms ready for them, and prepare breakfast for them.

All four children want to spend more time with Father. They enjoy their time alone with him. All the children, except Ross, play chess with Father who taught them how to play. The children wish to be able to see Father beyond the times allotted on the custody order.

The children have been in therapy since October 2002, for issues surrounding their parents’ divorce. All of the children told the therapist that they desire to spend more time with Father. The children want more freedom to see Father during the week since he lives so close to them. The therapist believes that flexibility in the custody schedule would be good for them, especially since the two residences are so close in proximity.

The therapist believed that Father wanted to spend more time with Will than he did with the other boys. She wrote that this favoritism elicits resentment from the other children and appears to increase Will’s already present symptomology. Will’s maladaptive behavior includes aggression towards siblings and Mother and overt defiance. Will also exhibits depression with anxiety features. (Plaintiff’s exhibit no. 1.)

The paramount concern in a child custody case is the child’s best interests, based on a consideration of all factors that legitimately affect the child’s physical, intellectual, moral and spiritual well-being. Bovard v. Baker, 115 A.2d 835 (Pa. Super. 2001).

In the case sub judice, it is apparent that both parties love their children and want to be an important influence in their lives. A strong public policy exists against limiting the relationship between a parent and a child. Visitation should be limited or denied only if the parent has been found to possess such severe mental or moral deficiencies as to constitute a grave threat to the child’s welfare. Nancy E.M. v. Kenneth DM., 316 Pa. Super. 351, 462 A.2d 1386 (1983).

Nothing was presented to suggest that Father’s time with the children should be limited. He should be able to spend more time with them. If his work schedule would be a typical one, he would have, at the bare minimum, alternate weekends.

It is well established that the strength of a child’s relationship with each parent is a critical factor in custody determinations. Mahoney v. Mahoney, 354 Pa. Super. 585, 512 A.2d 694 (1986). These children love Father and want to spend more time with him.

Mother has done a great job in raising these children since the parties’ separation. However, these children need their father in their lives. He, too, has strengths to offer them. For these reasons, the court will award Father additional time with the children.

The parties must also learn to communicate with each other. Therefore, the court will order them to participate in mediation. The court, too, wants the parties to learn to be flexible and accommodate these children’s needs. The parties live within walking distance of each other. If one child wants to go to the noncustodial parent’s home, it should not be hard to grant his request. Children will flourish better in an environment that, if not friendly, is at least civil.

All of the children are aware of the parties’ hostility towards each other. The children, especially Will and Ross, are affected by it and are especially needful of therapy. If the antagonism continues, the younger children, too, will become victims of the fallout of their parents’ divorce.

In accordance with the foregoing opinion, the court enters the following order.

ORDER

And now, February 3, 2004, it is hereby ordered and decreed as follows:

(1) The parties shall share legal custody of the minor children, Will Brugger, date of birth July 28,1992; Ross Brugger, date of birth September 29, 1993; Graham Brugger, date of birth December 29, 1994; and Brett Brugger, date of birth December 29, 1994.

(2) Mother shall have primary physical custody of the minor children.

(3) Father shall have partial physical custody of the minor children on a four-week cycle for the first three Saturday evenings of the cycle from 6 p.m. until Sunday evenings at 6:30 p.m. Mother shall have custody on the fourth week of the cycle. This cycle shall follow Father’s pay periods.

(4) On alternating Sundays, Father shall deliver the children to St. Ann’s Roman Catholic Church in Emmaus, Pennsylvania, for 9 a.m. mass.

(5) Father shall have physical custody of all four children on Wednesday evenings from 6 p.m. until Thursday morning. Upon reasonable advance notice to Mother (at least 48 hours), Father shall be permitted to commence his periods of weeknight physical custody at an earlier time. Father shall notify Mother prior to the start of his custodial period if he plans to take the children directly to school or return them to her on Thursday in time for the children to board the school bus. This visitation shall continue in the summer. Father shall return the children on Thursday morning to the children’s babysitter or Mother’s residence.

(6) Each week during the school year, Father shall have physical custody of one of the children on a rotating basis from oldest child to youngest child. This custodial period shall occur on either Monday or Tuesday to accommodate the particular child’s schedule. The custodial period shall begin at 6 p.m. on Monday or Tuesday and shall extend to the following morning at which time Father shall transport the child directly to school or to Mother’s residence in time to board the school bus. Father shall notify Mother prior to the start of his custodial period of his intention.

(7) Unless otherwise agreed upon by the parties, Father shall have the right to one uninterrupted week of vacation during the children’s summer vacation from school with the four minor children. Father shall provide Mother with his choice of vacation week by May 1st of each year. In the event of a conflict with Mother’s vacation plans, Mother’s choice shall take priority in even-numbered years, and Father’s choice shall take priority in the odd-numbered years.

(8) Unless otherwise agreed upon by the parties, Father shall have the right of physical custody of one of the children on a rotating basis from oldest child to youngest child during one week in summer.

(9) Father’s overnights with the children shall be spent at Father’s home unless Father provides Mother with an address/phone number where he and the children can be reached on overnights away from his residence in advance of the overnight at another location.

(10) Notwithstanding the foregoing, Mother shall have physical custody of the minor children on Mother’s Day and Father shall have physical custody on Father’s Day each year. Custody shall be from 9 a.m. until 7 p.m.

(11) The parties shall alternate physical custody of the four minor children on Easter, Memorial Day, July Fourth, Labor Day, and Thanksgiving holidays. Custody for the holidays shall be from 10 a.m. until 7 p.m. Father shall have physical custody of the four minor children for the Easter holiday in 2004 and the parties shall alternate the holidays thereafter.

(12) In odd-numbered years, Father shall have physical custody of the minor four children from 12 noon on December 24th until 12 noon on December 25th and from 3 p.m. on December 31st until 7 p.m. on New Year’s Day. Mother shall have physical custody of the four minor children from 12 noon on December 25th until 8 p.m. on December 26th. In the even-numbered years, Mother shall have physical custody of the four minor children from 12 noon on December 24th until 12 noon on December 25th and from 3 p.m. on December 31st until 7 p.m. on New Year’s Day. Father shall have physical custody of the four minor children from 12 noon on December 25th until 8 p.m. on December 26th.

(13) Unless otherwise agreed upon, Dr. Edward Hanna is appointed mediator/arbitrator to resolve any conflicts which arise between the parties regarding the minor children. If, after mediation, a resolution cannot be reached, the decision of the mediator/arbitrator is final except that each party shall always have recourse to petition the court to determine the child’s best interests in the event he or she believes that the arbitrator’s decision is clearly not in the child’s best interest. If the court finds that recourse to the court was unreasonable, then counsel fees shall be awarded against that party. Father shall pay 50 percent and Mother shall pay 50 percent of the cost of mediation/arbitration unless the mediator/arbitrator believes that a party was unreasonable, in which case the court may assess the costs against one or the other party in a different proportion.

(14) If any party is unavailable during his or her custodial period, then the other party shall have the right to have custody of the children during that party’s absence.

(15) Neither party shall disparage or denigrate the other parent in the presence of the children nor permit others to do so. Each parent will try to encourage the development of the parent-child relationship between each child and each parent.

(16) The attached appendix [not published herein] is hereby made a part of the within order.


author: BROWN JR., RJ.,

text:
    In re Estate of Renaud

      C.P. of Centre County,
    no. 14-02-0288.

      Dennis Reiter, for M. Renaud.

      Jeffrey W. Stover, for objector.

      Gary A. Delafield, for estate.
    February 2, 2004
   BROWN JR., RJ.,

— Presently before the court is the objection of co-executor Curtis Alan Renaud to the first and final account filed by Michael Jon Renaud, the other co-executor. The court determines the first and final account should not be amended to include the certificate of deposit at issue, therefore, the objection is overruled.

PROCEDURAL BACKGROUND

Vivian Pauline Marshall Renaud (decedent) died July 3, 2002, survived by two sons: Curtis Alan Renaud (objector) and Michael Jon Renaud (son) (collectively co-executors). Decedent was preceded in death by her husband, Michael J. Renaud (father), who died sometime in 1993. Decedent’s will names objector and son as co-executors of her estate. On July 15, 2002, decedent’s will was admitted for probate and co-executors were granted letters testamentary.

An inventory of estate assets was filed on September 3, 2003. A first and final account and schedule of proposed distribution of Michael Jon Renaud, one of the co-executors (first and final account), was filed on September 3,2003, by Attorney Gary A. Delafield. Objector did not join in the filing of the first and final account.

On October 3, 2003, objector filed the instant objection to the first and final account. Objector’s sole objection concerns an M&T Bank certificate of deposit, deposit no. [***], in the joint names of decedent and “Michael Renaud” (joint C.D.). Objector maintains the joint C.D. was originally a certificate of deposit held by decedent and father as tenants by the entirety. Thus, when father died, decedent became the sole owner of the joint C.D. Therefore, according to objector, the joint C.D. is an estate asset which should be divided equally between co-executors according to decedent’s will.

A hearing and oral argument was held on the objection to the first and final account on January 23, 2004.

FINDINGS OF FACT

The original certificate of deposit for the joint C.D. has not been found. The joint C.D. was opened at Keystone Financial, which is now M&T Bank (bank). Bank’s records show title to the joint C.D. is held in the name of decedent and “Michael Renaud.” Son and father share the same name (Michael J. Renaud). Bank’s records show the address listed on the joint C.D. is 212 E. Sycamore Street, Snow Shoe, Centre County, Pennsylvania. Decedent and father lived at 212 E. Sycamore Street during their entire marriage. Decedent and father were married in either 1943 or 1944. Son’s address is 106 Meadow Street, Snow Shoe, Centre County, Pennsylvania.

Bank’s records show the joint C.D. was opened on October 30,1988, with a beginning balance of $13,290.38. The date of death value of the joint C.D. is $27,781.20. Father died sometime in 1993, after the joint C.D. account was opened.

Objector is the father of three daughters: Danielle Renaud (biological daughter), Crystal Renaud (biological daughter) and Sheila Perks Renaud (step-daughter). Son has no children. Decedent assisted all three of objector’s daughters with their post-high school education expenses. On November 1, 1988, decedent opened the following accounts at bank: (1) a certificate of deposit account in the name of decedent “in trust for” Danielle Renaud, in the amount of $1,502.08; (2) a certificate of deposit account in the name of decedent “in trust for” Sheila Perks Renaud, in the amount of $1,199.47; and (3) a certificate of deposit account in the name of decedent “in trust for” Crystal Renaud, in the amount of $1,502.08. In 1995 and 1997, decedent opened two more certificate of deposit accounts in her name alone.

Bank’s records show decedent held at least one joint account with son at some time, but bank employees could not identify which account. Bank’s records show decedent held at least one joint account with father at some time, but bank employees could not identify that account either. Bank employees could not find a record of any joint account between decedent and father being closed.

Decedent’s will provides for a specific devise to the Presbyterian Church in Snow Shoe and a specific devise to Hazel R. Renaud, her daughter-in-law. Decedent’s will then divides the residue of her estate equally between co-executors. Decedent’s will specifically states Sheila Perks is not provided for in the will because of the assistance decedent has already provided to Perks in obtaining her post-high school education.

Attorney Delafield, attorney for co-executors, filed the inventory of estate assets and the first and final account. Attorney Delafield did not list the joint C.D. as an estate asset. Attorney Delafield did not list the joint C.D. as an estate asset because of his belief decedent wished to treat her two sons equally. Attorney Delafield also believed, due to the time period decedent was bom and the generation in which she was married, if the joint C.D. was meant to be held jointly between decedent and her husband, decedent would have listed her husband’s name first.

DISCUSSION

The sole issue for the court to decide is whether the joint C.D. was held jointly by decedent and father, thereby making it an estate asset, or whether the joint C.D. was held jointly by decedent and son, thereby making it an asset belonging to son.

Objector maintains the joint C.D. is owned by decedent and father. Objector argues there is a rebuttable presumption that where a father and son bear the same name, the father is intended. See Laskowski Estate, 17 Fiduc. Rep.2d 99, 105 (O.C. Div. Luzerne 1996); In re Weidaw Estate, 73 D.&C.2d 249, 250 (1973). Objector submits this presumption prevails in the instant case because there is no evidence to rebut the presumption. Objector notes the address on the joint C.D. is the address decedent and father shared during their entire marriage, including the time period when the joint C.D. was opened. Therefore, objector submits, the joint C.D. is an asset originally held jointly by father and decedent, and, at decedent’s death, the joint C.D. became an asset of her estate. Thus, the joint C.D. should be divided equally between him and son, as provided for in decedent’s will.

Son maintains the joint C.D. is titled in his name and decedent’s name. Son maintains the evidence rebuts the presumption argued by objector. Son argues the evidence shows decedent wished to treat her sons equally. Decedent provided financial assistance to objector during her lifetime by assisting his daughters with post-high school education expenses and by opening certificate of deposit accounts in trust for her granddaughters. Since son has no children, decedent provided financial assistance to son by opening the joint C.D. titled in both her name and son’s name. Son argues bank’s records support this argument because the records prove he and decedent held at least one joint account together at some time.

The court determines the joint C.D. is not an asset of decedent’s estate. The court determines the joint C.D. is an account held jointly by decedent and son and is now the sole property of son.

The court determines the evidence presented rebuts the presumption that father’s name was intended. Through her will, decedent expressed a desire to treat her sons equally by dividing the residue of her estate equally among them. During her lifetime, decedent assisted objector by paying for post-high school expenses for his three daughters. Decedent also opened certain certificate of deposit accounts “in trust” for objector’s three daughters. The disparity between the total amounts decedent provided to objector’s children and the amount used to open the joint C.D. is not great. The court determines it is reasonable to presume decedent opened the joint C.D. in her and son’s name in order to “balance” the financial assistance she provided to each son during her lifetime.

Bank’s records show that decedent and son held at least one account jointly, although the records cannot conclusively show which account that is. The fact that the joint C.D. contains the address of decedent and father is not persuasive considering that decedent listed her home address on each certificate of deposit account she opened with bank. The court determines the joint C.D. is titled in decedent’s and son’s names. Consequently, the first and final account should not be amended to include the joint C.D. as an estate asset.

Accordingly, the following is entered:

ORDER

And now, February 2,2004, upon consideration of the objection of co-executor Curtis Alan Renaud to the first and final account filed by Michael Jon Renaud, the other co-executor, said objection is overruled.


author: SCHMEHL, P.W., J.,

text:
    In re Estate of Simmons

      C.P. of Berks County,
    no. 6-85-935.

      Victoria Gallen Schutt and Mark R. Sprow, for petitioners.

      Eugene C. LaManna, for respondent.

      January 8, 2004
   SCHMEHL, P.W., J.,

This matter is before the court on the petition of two of the decedent’s three sons for the enforcement of a family settlement agreement. The scrivener of the decedent’s will drafted the agreement shortly after the decedent’s death because of his concern about ambiguities in the will he had earlier drafted. As the result of the scrivener’s taking this initiative, the decedent’s wife and three sons executed the agreement to clarify the decedent’s intent regarding the distribution of his assets. The agreement is clear.

The decedent, Joseph L. Simmons, died on July 3, 1985, leaving a will dated March 24,1982. Letters testamentary were granted on July 17,1985, to the decedent’s wife, Mildred M. Simmons, and his son, J. David Simmons, the respondent herein. They retained C. Wilson Austin, Esquire, the decedent’s attorney for many years and the scrivener of the decedent’s will, as counsel for the estate. According to the terms of the decedent’s will, the respondent was also to serve as the trustee of a testamentary marital deduction trust for the benefit of the decedent’s wife.

Apparently, on the belief that there was an ambiguity in the decedent’s will regarding the identity and disposition of certain assets, Attorney Austin prepared a family settlement agreement, which was signed by all interested parties, the decedent’s wife, and the decedent’s three sons. The agreement provided for the disposition of certain assets pertaining to the decedent’s business, Joseph L. Simmons Inc., of which the decedent owned 4,499 out of 5,000 shares of stock.

The corporation owned and managed a building situated at 136 South 5th Street, Reading, Pennsylvania and operated a business known as the Beltone Hearing Aid Service from the first floor of that building. The remainder of the building contained residential apartments. In accordance with the decedent’s will, the decedent’s shares of stock in the corporation were distributed to the respondent as trustee of the marital deduction trust.

The family settlement agreement provides in pertinent part as follows:

“Whereas, it was the intent of the testator that the Beltone Hearing Aid Service business was to become the absolute property of J. David Simmons upon the termination of the marital deduction trust set forth in his last will and testament and that the apartment house building was to be part of his residuary estate; and,

“Whereas, such wording was not clear under his last will and testament, now, therefore,

“It Is Agreed between the surviving spouse and the three surviving sons, as follows:

“(1) Upon the death of Mildred M. Simmons, and the termination of the unlimited marital deduction trust set forth in the said last will and testament of the said Joseph L. Simmons, deceased, the ownership of Joseph L. Simmons Inc., in and to the Beltone Hearing Aid Service shall pass in fee to J. David Simmons.

“(2) The building situated at 136 South 5th Street, Reading, Pennsylvania, shall become part of said decedent’s residuary estate, and upon the death of Mildred M. Simmons, each of decedent’s three sons shall become one-third owner of the said building only, as title and ownership of the hearing aid business, without any reference to any stock ownership, shall pass by this family settlement agreement as aforesaid to J. David Simmons.”

The agreement clearly states that the building situated at 136 South 5th Street shall pass to the decedent’s three sons, in equal shares, upon the death of the decedent’s wife. Decedent’s wife died on May 10, 2002.

The petitioners have made demand upon the respondent to terminate the trust and distribute their shares of the building to them in accordance with the family settlement agreement. The respondent has failed to distribute the trust assets in accordance with the family settlement agreement. The respondent has also failed to act upon any of the petitioners’ settlement offers. Consequently, the petitioners filed their petition to enforce the agreement. The respondent did not bother to appear for the hearing, though his counsel did.

Prior to the hearing on this matter, the building’s value was appraised at $63,000. As part of his appraisal, the appraiser reported that the building has a gross potential income of $25,260 per year, an effective gross income of $22,987 peryear, total operating expenses of $12,819, and a net operating income of $10,168. Despite the terms of the family settlement agreement providing for the building’s becoming a part of the decedent’s residuary estate and for the building’s ownership passing to the brothers in equal shares upon their mother’s death, the building continues to be titled in the name of the corporation.

“Family agreements or settlements are always favored in the law and when fair are valid and will be upheld whenever possible. . . . Speaking with more particularity, family agreements construing wills are, in the absence of fraud, binding . . . , even though based on an error of law.” Fry v. Stetson, 370 Pa. 132, 135, 87 A.2d 305, 307 (1952). (citations omitted)

As the majority shareholder of the corporation, the estate had, by several different means, the ability to effect the transfer of the building from the corporation to the estate for distribution in accordance with paragraph number two of the family settlement agreement. The fiduciaries of the estate, both of whom were signatories to the family settlement agreement, had an obligation to accomplish this result. Furthermore, the respondent (again noted to be a signatory to the family settlement agreement), as trustee of the marital deduction trust, accepted the distribution of the estate’s shares in the corporation with the full understanding that the building was not to remain an asset of the corporation.

It was undisputed that the respondent runs the corporation as a “one-man operation.” Whether in his role as trustee or in his individual capacity, he is the controlling (and apparently the only) shareholder of the corporation and clearly has the means and obligation to cause the family settlement agreement to be honored. He cannot hide behind the corporate veil or under his trustee’s cloak in order to avoid compliance with a clear and fair agreement, which he entered into knowingly and voluntarily. It is time that the respondent terminate the trust and make the distribution as mandated by the family settlement agreement.

For the foregoing reasons, the court entered its order of October 31,2003, directing the respondent to transfer ownership of the building or buy out the petitioners’ interests therein.


author: RUDNITSKY, Member,

text:
    In the Matter of Sokolic

      Disciplinary Board Docket no. 59 D.B. 1999.
    May 23, 2003
   RUDNITSKY, Member,

— Pursuant to Rule 218(c)(5) of the Pennsylvania Rules of Disciplinary Enforcement, the Disciplinary Board of the Supreme Court of Pennsylvania submits its findings and recommendations to your honorable court with respect to the above-captioned petition for reinstatement.

I. HISTORY OF PROCEEDINGS

Petitioner, Stephen E. Sokolic, filed a petition for reinstatement to the bar of Pennsylvania on January 30, 2002. By order of the Supreme Court of Pennsylvania dated December 18, 2000, petitioner was suspended for three years, retroactive to May 4, 1999.

A reinstatement hearing was held on September 26, 2002, before Hearing Committee 1.16 consisting of Chair Laurence H. Brown, Esquire, and Member Theresa M. Italiano, Esquire. Member James D. Golkow, Esquire, was absent from the hearing but participated in the decision of the committee. Petitioner was represented by William J. Honig, Esquire.

The committee filed a report on February 10, 2003 and recommended that the petition for reinstatement be granted.

This matter was adjudicated by the Disciplinary Board at the meeting of March 26, 2003.

II. FINDINGS OF FACT

The board makes the following findings of fact:

(1) Petitioner is Stephen E. Sokolic. He was bom in 1949 and was admitted to the practice of law in Pennsylvania in 1975. His current business address is 3275 Stokley Street, Philadelphia, Pennsylvania 19129.

(2) Petitioner was suspended from the practice of law by order of the Supreme Court of Pennsylvania dated December 18, 2000, for a period of three years, retroactive to May 4, 1999.

(3) In March of 1997, petitioner entered a plea of guilty to one count of violating 18 U.S.C. §1027 on the basis that he made or caused to be made documents that contained false statements and misrepresentations, which documents were required to be kept as part of records of an employee pension benefit plan by the Employee Retirement Income Security Act of 1974.

(4) On March 1, 1999, petitioner was sentenced to probation for a term of five years, six months home confinement under electronic monitoring, 100 hours of community service, and restitution of $42,500.

(5) Petitioner was placed on temporary suspension by order of the Supreme Court dated May 4, 1999.

(6) Petitioner has paid the court-ordered restitution of $42,500 in full.

(7) Petitioner’s probationary sentence of five years was served without incident and was terminated early by Judge William G. Bassler.

(8) Petitioner completed the community service required by his sentence. He continues to volunteer his services at Galilee Pavilion, a low-income facility for the elderly.

(9) During the period of his suspension, petitioner was employed at Benefits Consultants Group as executive vice-president. Petitioner performs consulting work on retirement plans and tax issues, as well as handling management duties for the company.

(10) Petitioner plans to continue his employment with Benefits Consultants Group after reinstatement.

(11) Petitioner is ashamed of his misconduct and expressed sincere remorse for it.

(12) Petitioner has shown the appropriate insight into the causes of his misconduct to assure that it will not be repeated.

(13) Petitioner has maintained the requisite legal knowledge for reinstatement through his employment at Benefits Consultants Group, reading tax periodicals, attending the required number of continuing legal education courses mandated for reinstatement, and teaching courses in his field to others, including the Bucks County Bar Association.

(14) Thirteen character witnesses testified on petitioner’s behalf. These witnesses included fellow attorneys in the community, his employer, and long-standing personal friends.

(15) Each witness was aware of petitioner’s criminal conviction and sentencing.

(16) Each witness testified that petitioner’s reputation for honesty and integrity was very high and his misconduct was an aberration.

(17) These character witnesses are credible and worthy of belief.

III. CONCLUSIONS OF LAW

(1) Petitioner has the moral qualifications, competency and learning in the law required to practice law in Pennsylvania.

(2) Petitioner’s resumption of the practice of law will be neither detrimental to the integrity and standing of the bar or the administration of justice nor subversive of the public interest.

IV. DISCUSSION

This matter is before the Disciplinary Board on a petition for reinstatement filed by Stephen E. Sokolic. By order of the Supreme Court of Pennsylvania dated December 18,2000, petitioner was suspended for three years retroactive to May 4, 1999.

Pursuant to Rule 218(a), Pa.R.D.E., an attorney who is suspended for a period exceeding one year may not resume the practice of law until reinstated by the Supreme Court of Pennsylvania. In order for petitioner to gain reinstatement, he has the burden of proving by clear and convincing evidence that he possesses the moral qualifications, competency and learning in the law required for admission to practice law in this Commonwealth. In addition, petitioner has the burden of demonstrating that his resumption of the practice of law will not be detrimental to the integrity and standing of the bar or administration of justice, nor subversive of the public interest. Rule 218(c)(3)(i), Pa.R.D.E.

A reinstatement proceeding is a searching inquiry into a lawyer’s present professional and moral fitness to resume the practice of law. The object of concern is not solely the transgressions which gave rise to the lawyer’s suspension, but rather the nature and extent of the rehabilitation efforts the lawyer has made since the time the sanction was imposed, and the degree of success achieved in the rehabilitative process. Philadelphia Newspapers Inc. v. Disciplinary Board of the Supreme Court, 468 Pa. 382, 363 A.2d 779 (1976).

Petitioner was convicted of one count of preparing documents that contained false statements and misrepresentations, which documents were required to be kept as part of records of an employee pension benefit plan. The documents concealed the illegal diversion of the assets of the retirement plan. Following his guilty plea, petitioner was sentenced to probation for five years, six months of home confinement under electronic monitoring, 100 hours of community service, and restitution of $42,500. Petitioner satisfied all of the provisions of his sentence and his probation was terminated early.

During his suspension, petitioner worked as a tax consultant for Benefits Consultants Group. He plans to continue this employment as tax counsel if reinstated. Petitioner kept himself apprised of the law by reading tax periodicals, attending CLE courses and teaching courses in his field to others. But for this incident, petitioner had an unblemished career in tax law, working for three Philadelphia law firms and the U.S. Department of Justice Tax Division.

Petitioner has worked to improve himself in his personal life as well. He has chosen to continue his volunteer work at Galilee Pavilion, a low-income facility for the elderly. He and his family have strengthened their relationship and this commitment is strong evidence of the support considerations necessary for him to avoid misconduct in the future. Petitioner has come to grips with the shame he feels due to his actions and has shown insight into the causes of his misconduct so that he will not repeat it.

Thirteen character witnesses testified as to petitioner’s very good reputation for honesty and integrity. These witnesses believed petitioner’s misconduct to be an aberration such that his re-admission to the bar would not be detrimental.

Petitioner has presented conclusive evidence that he has rehabilitated himself. Petitioner has met with clear and convincing evidence his burden of proving that he is morally qualified, competent and learned in the law. Furthermore, petitioner has demonstrated that his readmission will not be detrimental to the bar or the public. For these reasons the board recommends that the petition for reinstatement be granted.

V. RECOMMENDATION

The Disciplinary Board of the Supreme Court of Pennsylvania unanimously recommends that petitioner, Stephen E. Sokolic, be reinstated to the practice of law.

The board further recommends that, pursuant to Rule 218(e), Pa.R.D.E., petitioner be directed to pay the necessary expenses incurred in the investigation and processing of the petition for reinstatement.

Board Member Brown recused in this matter and Board Member Newman did not participate in the March 26, 2003 adjudication.

ORDER

And now, July 30, 2003, upon consideration of the report and recommendations of the Disciplinary Board of the Supreme Court of Pennsylvania dated May 23, 2003, the petition for reinstatement is granted.

Pursuant to Rule 218(e), Pa.R.D.E., petitioner is directed to pay the expenses incurred by the board in the investigation and processing of the petition for reinstatement.


author: STEWART, Vice-Chair,

text:
    In the Matter of Wheeler

      Disciplinary Board Docket no. 59 D.B. 1995.
    May 2, 2003
   STEWART, Vice-Chair,

— Pursuant to Rule 218(c)(5) of the Pennsylvania Rules of Disciplinary Enforcement, the Disciplinary Board of the Supreme Court of Pennsylvania submits its findings and recommendations to your honorable court with respect to the above-captioned petition for reinstatement.

I. HISTORY OF PROCEEDINGS

Petitioner, Lacy R. Wheeler III, filed a petition for reinstatement to the bar of Pennsylvania on July 1, 2002. Petitioner was suspended for one year and one day by order of the Supreme Court of Pennsylvania dated May 6,1997. This is petitioner’s second request for reinstatement. His first petition for reinstatement was denied by order of the Supreme Court dated June 28, 2001.

A reinstatement hearing was held on October 25,2002, before Hearing Committee 4.06 comprised of Chair Blair V. Pawlowski, Esquire, and Members Craig E. Coleman, Esquire, and Timothy J. Geary, Esquire. Petitioner appeared pro se. He called four witnesses, offered four exhibits, and testified on his own behalf. Office of Disciplinary Counsel was represented by Cory John Cirelli, Esquire.

The committee filed a report on January 17,2003, recommending that the petition for reinstatement be granted.

This matter was adjudicated by the Disciplinary Board at the meeting of March 26, 2003.

II. FINDINGS OF FACT

The board makes the following findings of fact:

(1) Petitioner is Lacy R. Wheeler III. He was born in 1953 and was admitted to practice law in Pennsylvania in 1984. His current address is 625 N. 18th Street, Apt. 105, Philadelphia, PA 19130.

(2) In 1992, petitioner was retained to do collection work on behalf of the East Hills Association, which was a residential housing cooperative. In the course of collecting a certain account, petitioner failed to timely notify the client or promptly turn over collected funds. Specifically, on one occasion, a payment of $292 was not effectuated because petitioner’s check was returned for insufficient funds. A second collection in a similar amount was retained by petitioner. Petitioner then ignored repeated requests for the funds by the client until complaint was made to the Office of Disciplinary Counsel at which point petitioner turned over $584.

(3) By order of the Supreme Court of Pennsylvania dated May 6, 1997, petitioner was suspended from the practice of law for a period of one year and one day.

(4) On December 27, 1999, petitioner filed his first petition for reinstatement.

(5) By report and recommendation of April 26, 2001, the Disciplinary Board recommended that the petition be denied, as petitioner had not shown that he possessed the moral qualifications required for admission to practice in Pennsylvania.

(6) The board found that during petitioner’s period of suspension, he avoided court-ordered support obligations, failed to appear in court, and was arrested and incarcerated for criminal contempt.

(7) By order of June 28, 2001, the Supreme Court of Pennsylvania denied the first petition for reinstatement.

(8) During the time period between the denial of petitioner’s first petition for reinstatement and the current time, he and his wife moved to Philadelphia where they have family and friends. Petitioner was employed in the field of human resources, most recently for C & D Technology.

(9) The support complaint against petitioner was withdrawn and he has reconciled with his children.

(10) In February 2001, petitioner voluntarily underwent counseling with Dr. Elliott Rotman. He continued this counseling up to the time of the hearing and testified that he planned to continue doing so.

(11) Petitioner took the required CLE courses necessary for readmission.

(12) Petitioner presented the testimony of four witnesses, all of whom have known petitioner for many years, and two of whom are Pennsylvania-licensed attorneys. These witnesses testified that petitioner is a moral person, competent in the law, who would not be a detriment to the profession if reinstated.

(13) Petitioner demonstrated sincere remorse for his misconduct and an appreciation of both the inappropriateness of the underlying misconduct and the reasons why he was denied reinstatement in 2001.

(14) Petitioner intends that any practice of law he does in the future will be limited and will not be his primary source of income. He does not plan to maintain a private practice of law.

III. CONCLUSIONS OF LAW

(1) Petitioner has the moral qualifications, competency and learning in the law required to practice law in Pennsylvania.

(2) Petitioner’s resumption of the practice of law will be neither detrimental to the integrity and standing of the bar or the administration of justice nor be subversive of the public interest.

IV. DISCUSSION

This matter is before the Disciplinary Board on a petition for reinstatement filed by Lacy R. Wheeler m. By order of the Supreme Court of Pennsylvania dated May 6, 1997, petitioner was suspended for a period of one year and one day.

Pursuant to Rule 218(a), Pa.R.D.E., an attorney who is suspended for a period exceeding one year may not resume the practice of law until reinstated by the Supreme Court of Pennsylvania. In order for petitioner to gain reinstatement, he has the burden of proving by clear and convincing evidence that he possesses the moral qualifications, competency and learning in the law required for admission to practice law in this Commonwealth. In addition, petitioner has the burden of demonstrating that his resumption of the practice of law will not be detrimental to the integrity and standing of the bar or administration of justice, nor be subversive of the public interest. Rule 218(c)(3)(i), Pa.R.D.E.

A reinstatement hearing is a searching inquiry into a lawyer’s present professional and moral fitness to resume the practice of law. The object of concern is not solely the transgressions which gave rise to the lawyer’s suspension, but rather the nature and extent of the rehabilitative efforts the lawyer has made since the time the sanction was imposed, and the degree of success achieved in the rehabilitative process. Philadelphia Newspapers Inc. v. Disciplinary Board of Supreme Court, 468 Pa. 382, 363 A.2d 779 (1976).

Petitioner was suspended as a result of mishandling client funds in 1992 and 1993. Petitioner’s first request for reinstatement was denied due to his conduct during the period of his suspension. This conduct consisted of a series of attempts to dodge bench warrants issued in a child support matter, culminating in his arrest in 1998. Petitioner served 30 days in jail after a finding of direct criminal contempt.

Petitioner has presented evidence that he is rehabilitated and ready to resume the practice of law. He gave a detailed statement of his current life to the Hearing Committee. He has made a concerted effort to turn his life around by attending counseling, repairing relationships with his children, and moving to Philadelphia where he has the support of family and friends. He has gained insight into his past actions and is sincerely remorseful for the professional misconduct and the personal behavior which have proved to be stumbling blocks in his life. Although he has no plans to practice law as his sole means of support, petitioner has been suspended in excess of five years and he desires reinstatement to the bar as a means of moving forward in his life. Character witnesses support petitioner’s reinstatement and find him to be a moral, competent and qualified person.

For these reasons, the board recommends that the petition for reinstatement be granted.

V. RECOMMENDATION

The Disciplinary Board of the Supreme Court of Pennsylvania unanimously recommends that petitioner, Lacy R. Wheeler III, be reinstated to the practice of law.

The board further recommends that, pursuant to Rule 218(e), Pa.R.D.E., petitioner be directed to pay the necessary expenses incurred in the investigation and processing of the petition for reinstatement.

Board Member Newman did not participate in the March 26, 2003 adjudication.

ORDER

And now, July 29, 2003, upon consideration of the report and recommendations of the Disciplinary Board of the Supreme Court of Pennsylvania dated May 2,2003, the petition for reinstatement is granted.

Pursuant to Rule 218(e), Pa.R.D.E., petitioner is directed to pay the expenses incurred by the board in the investigation and processing of the petition for reinstatement.


author: STEWART, Member,

text:
    Office of Disciplinary Counsel v. Perrella

      Disciplinary Board Docket no. 19 D.B. 2001.
    January 29, 2003
   STEWART, 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 February 6, 2001, petitioner, Office of Disciplinary Counsel, filed a petition for discipline against Nicholas R. Perrella, respondent in these proceedings. The petition charged respondent with violations of the Rules of Professional Conduct arising out of allegations that respondent engaged in the unauthorized practice of law. Respondent filed an answer to petition for discipline on May 4, 2001.

A disciplinary hearing was held before Hearing Committee 2.04 comprised of Chair Cheryl L. Young, Esquire, and Members Mark A. Kearney, Esquire and Lawrence R. Scheetz, Esquire. James M. McMaster, Esquire, represented respondent at the hearing.

After briefing by the parties, the committee filed a report and found that respondent violated Rules of Professional Conduct 1.16(a)(1) and 5.5(b), and Pennsylvania Rules of Disciplinary Enforcement 217(c), (d), and (e). The committee recommended that respondent be publicly censured.

The parties did not file briefs on exceptions and this matter was adjudicated by the Disciplinary Board at the meeting of August 7, 2002.

n. FINDINGS OF FACT

The board makes the following findings of fact:

(1) Petitioner, whose principal office is now 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 is a formerly admitted attorney in the Commonwealth of Pennsylvania, having been admitted to practice in 1984 and having been placed on inactive status effective May 24, 1996. Respondent is admitted to practice in the State of New York and maintains an office at Suite 2818, 320 E. 42nd Street, New York, NY 10017. Respondent is subject to the jurisdiction of the Disciplinary Board of the Supreme Court of Pennsylvania.

(3) Respondent was required by Pennsylvania Rules and Regulations of Continuing Legal Education to complete and satisfy certain course credit hours by August 31 of each compliance year.

(4) Respondent completed Ms requirements for the years 1993 and 1994.

(5) Respondent has taken no Pennsylvania CLE courses since 1994.

(6) On November 30,1995, a final notice of noncompliance was mailed by the CLE Board to respondent, informing him, inter alia:

(a) He was noncompliant with his CLE for 1995.

(b) After the expiration of 90 days, the CLE Board would prepare a list of noncompliant lawyers, which would be sent to the Supreme Court of Pennsylvania with the recommendation that those lawyers be involuntarily inactivated for noncompliance.

(7) An “Urgent notice” was mailed on March 4,1996, to respondent’s registered address and advised respondent that if he failed to comply with Pennsylvania CLE Rules that he would be placed on inactive status.

(8) By order of April 24, 1996, the Supreme Court of Pennsylvania ordered that respondent be transferred to inactive status pursuant to Rule 111(b), Pa.R.C.L.E., effective May 24, 1996.

(9) By letter dated April 25, 1996, Elaine M. Bixler, executive director and secretary of the Disciplinary Board, provided respondent with:

(a) A copy of the April 24, 1996 order.

(b) A letter prepared by the CLE Board providing information regarding compliance with the CLE Rules.

(c) Acopy of Rule 217, Pa.R.D.E., and sections 91.91 through 91.99 of the Disciplinary Rules.

(d) Forms DB-23(i) and DB-24(j), non-litigation and litigation notice of disbarment, suspension or transfer to inactive status, and formDB-25(i), statement of compliance.

(10) On or about June 11, 1999, respondent filed a complaint in the matter of Catherine F. Nugent v. Michale M. Imming and Therese Marren-Weeks, docket no. 1999-03927, in the Court of Common Pleas of Bucks County. (Nugent v. Imming) Respondent also entered his appearance and advised the court that he was designated as trial counsel for plaintiff. He utilized his Pennsylvania attorney identification number on the complaint.

(11) Prior to the filing of the complaint, respondent informed his client that he was on inactive status in Pennsylvania and would have to find local counsel to enter an appearance in the case and to make a motion for admission pro hac vice or for special admission.

(12) Paul C. Quinn, Esquire, was hired as co-counsel.

(13) By cover letter of November 8,1999, respondent provided Andrew F. Schneider, Esquire, opposing counsel, with a copy of plaintiff’s response for defendants’ request for interrogatories.

(14) This correspondence was on letterhead that represented respondent was a member of the Pennsylvania bar.

(15) By cover letter dated November 12,1999, respondent provided Attorney Schneider with a copy of plaintiff’s brief in opposition to defendants’ preliminary objections.

(16) This correspondence was on letterhead that represented respondent was a member of the Pennsylvania bar.

(17) On November 15, 1999, respondent and Attorney Quinn filed plaintiff’s brief in opposition to defendants’ preliminary objections, in which respondent identified himself as attorney for plaintiff and displayed his Pennsylvania attorney license number.

(18) On November 15,1999, respondent sent to Judge John Rufe a cover letter on letterhead that represented he was a member of the Pennsylvania bar.

(19) By letter of January 16, 2000, respondent submitted to Judge Rufe a response to a motion of the defense.

(20) On January 18, 2000, Attorney Schneider telephoned respondent to discuss an extension of time to file an answer to the complaint and a possible settlement of the case.

(21) On January 31, 2000, Attorney Schneider filed a petition to strike respondent’s appearance due to his inactive status in Pennsylvania.

(22) Subsequent to Attorney Schneider’s petition to strike respondent’s appearance, between January 31,2000 and March 5, 2001, respondent continued to reply to motions, send letters, and file legal pleadings on behalf of his client in the case of Nugent v. Imming.

(23) On February 24, 2000, June 26, 2000, and November 22, 2000, Attorney Quinn, co-counsel for plaintiff, attempted to file a motion for special admission of co-counsel on behalf of plaintiff (motion for admission pro hac vice).

(24) Mr. Quinn’s motion for admission pro hac vice initially was not acted upon by the court due to various deficiencies in the motion.

(25) By order of February 9, 2001, Judge John Rufe ordered and directed that a hearing be scheduled for March 5, 2001, regarding the motion.

(26) On March 5, 2001, Mr. Quinn argued his motion for admission pro hac vice, which Judge Rufe granted.

(27) To date, respondent has not been reinstated to active status in Pennsylvania.

(28) Respondent acknowledged that the use of the designation “member of the Pennsylvania bar” on his letterhead was inappropriate.

(29) Respondent has no history of discipline.

m. CONCLUSIONS OF LAW

By his actions as set forth above, respondent violated the following Rules of Professional Conduct and Rules of Disciplinary Enforcement:

(1) R.P.C. 1.16(a)(1) — A lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if the representation will result in a violation of the Rules of Professional Conduct or other law.

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

(3) Pa.R.D.E. 217(c) — A formerly admitted attorney shall promptly notify, or cause to be notified, of the ... transfer to inactive status,... all other persons with whom the formerly admitted attorney may at any time expect to have professional contacts under circumstances where ... they may infer that he or she continues as an attorney in good standing.

(4) Pa.R.D.E. 217(d) — The formerly admitted attorney, after entry of the... transfer to inactive status order, shall not... accept any new retainer or engage as attorney for another in any new case or legal matter of any nature.

(5) Pa.R.D.E. 217(e) — Within 10 days after the effective date of the . . . transfer to inactive status order, the formerly admitted attorney shall file with the board a verified statement showing that the provisions of the order have been fully complied with and showing all other state, federal and administrative jurisdictions to which such person is admitted to practice.

IV. DISCUSSION

This matter is before the Disciplinary Board on a petition for discipline charging respondent with the unauthorized practice of law. The uncontested facts of this matter demonstrate that respondent was placed on inactive status in 1996 for failure to complete continuing legal education requirements. In June 1999, respondent entered his appearance in Nugent v. Imming and acted as counsel for the plaintiff in this matter being litigated in the Bucks County Court of Common Pleas. Respondent obtained local co-counsel who first moved for respondent’s admission pro hac vice in February of 2000. This motion was not granted by the Court of Common Pleas until March 5,2001, nearly two years after respondent first entered his appearance in the case. During that time, respondent acted as counsel to his client by engaging in discovery, filing pleadings and appearing in court. Respondent utilized letterhead that indicated he was a member in good standing of the Pennsylvania bar. Respondent knew that he was on inactive status and further knew that he was not admitted pro hac vice.

Respondent did advise his client prior to entering his appearance in the case that he was not authorized to practice law in Pennsylvania. However, no such disclosure was made to opposing counsel or to the court itself. Opposing counsel discovered respondent’s status on his own and filed a motion to strike respondent’s appearance in January 2000. It was after this motion was filed that respondent’s co-counsel filed the motion for admission pro hac vice. Respondent made no efforts up until that time to seek admission for purposes of litigating Nugent v. Imming until confronted with the fact that a motion was filed to dismiss him from the case.

Respondent had an obligation to withdraw from the case, to notify the adverse party and to notify the court. Respondent failed to perform these requirements.

Petitioner has requested a public censure. Respondent seeks a dismissal of the petition for discipline. Clearly a dismissal of the charges is not warranted, as violations of the Rules of Professional Conduct and Rules of Disciplinary Enforcement have been found.

The main goal of the disciplinary system is the protection of the public from unfit attorneys. Office of Disciplinary Counsel v. Keller, 509 Pa. 573, 506 A.2d 872 (1986). Here, there is no allegation of general unfitness. Respondent has not been the subject of prior discipline. He did not mistreat his client or mishandle her case, and in fact did advise her of his inactive status. However, respondent was woefully neglectful of his professional standing. He knew that he was inactive and that he needed to file for admission pro hac vice. Yet with this knowledge, he continued to litigate his case for almost eight months before a motion for admission pro hac vice was filed. Respondent disregarded the rules and processes governing the legal profession. Additionally, respondent’s attitude of contempt towards the disciplinary process, as manifested in his testimony and correspondence, exacerbates his already tenuous position. The board is persuaded that a public censure is an appropriate sanction in this matter. Public discipline is not without precedent in cases of the unauthorized practice of law. In re Anonymous No. 123 D.B. 96, 41 D.&C.4th 290 (1998).

V. RECOMMENDATION

The Disciplinary Board of the Supreme Court of Pennsylvania recommends that the respondent, Nicholas R. Perrella, be subject to a public censure.

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 Schultz, Morris and Wright dissented and would impose a private reprimand. Board Member Sheerer dissented and would impose an informal admonition.

Board Members Donohue, Cunningham and McLaughlin recused.

ORDER

And now, June 11, 2003, upon consideration of the report and recommendations of the Disciplinary Board dated January 29, 2003, it is hereby ordered that Nicholas R. Perrella be and he is suspended from the bar of this Commonwealth for a period of three months, and he shall comply with all the provisions of Rule 217, Pa.R.D.E. It is further ordered that respondent shall pay costs to the Disciplinary Board pursuant to Rule 208(g), Pa.R.D.E.