author: STEWART,

text:
    In re Anonymous No. 59 D.B. 99

      Disciplinary Board Docket no. 59 D.B. 99.
    October 11, 2000
   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

By Supreme Court order of May 4, 1999, [ ], the respondent in these proceedings, was placed on temporary suspension as a result of his conviction for violating 18 U.S.C. §1027 on the basis that he made or caused to be made documents that contained false statements and misrepresentations, documents which were required to be kept as part of records of an employee pension benefit plan by the Employee Retirement Income Security Act of 1974. Petitioner, Office of Disciplinary Counsel, filed a petition for discipline on June 21, 1999, and charged respondent with violation of Pa.R.D.E. 203(b)(1). Respondent filed an answer to petition for discipline on July 19, 1999.

A disciplinary hearing was held on October 7, 1999, before Hearing Committee [ ] comprised of Chair [ ], Esquire, and Members [ ], Esquire, and [ ], Esquire. Respondent was represented by [ ], Esquire. Petitioner was represented by [ ], Esquire.

The Hearing Committee filed a report on February 28, 2000 and recommended a suspension for 24 months retroactive to May 4,1999, the date of respondent’s temporary suspension.

No briefs on exceptions were filed by the parties.

This matter was adjudicated by the Disciplinary Board at the meeting of May 11, 2000.

n. FINDINGS OF FACT

The board makes the following findings of fact:

(1) Petitioner, whose principal office is located at Suite 3710, One Oxford Centre, Pittsburgh, Pennsylvania, is invested, pursuant to Rule 207 of the Pennsylvania Rules of Disciplinary Enforcement, with the power and the 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 was bom on September 23, 1949 and was admitted to practice law in the Commonwealth of Pennsylvania on November 17,1975. Respondent’s last registered address was [ ]. Respondent is subject to the disciplinary jurisdiction of the Disciplinary Board of the Supreme Court.

(3) Respondent became involved in a pension fund fraud and embezzlement scheme initiated by [A], the president, chief executive officer and sole shareholder of [B], doing business as [C], after [A] had taken the funds. [A] was the beneficiary of the scheme, in which he stole pension funds exceeding $550,000 from an employee retirement plan maintained by [C] for the benefit of seven participants. [A] used these funds for his personal benefit and the benefit of his companies. From September 1991 through October 1991, respondent prepared or caused to be prepared documents falsely purporting to convert the retirement plan into an employee stock ownership plan (ESOP) as of the date [A] stole the pension funds, funded by stock of several bankrupt companies owned solely by [A]. These documents concealed the illegal diversion of the assets of the retirement plan. At the time respondent created the documents to assist [A] in carrying out his scheme, he knew that the companies funding the ESOP were in Chapter 11 bankruptcy proceedings.

(4) On March 31, 1997, respondent entered a plea of guilty to one count of an information charging him with violating 18 U.S.C. §1027 on the basis that he made or caused to be made documents that contained false statements and misrepresentation, documents which were required to be kept as part of records of an employee pension benefit plan by the Employee Retirement Income Security Act of 1974 (ERISA), as amended, Title 29, United States Code, §1001 et seq.

(5) On March 1, 1999, respondent was sentenced by the Honorable [D] to:

(a) probation for a term of five years;

(b) six months home confinement under electronic monitoring;

(c) 100 hours of community service to be performed over a period of two years;

(d) payment of restitution in the amount of $42,500.

(6) Respondent is currently suspended from the practice of law in Pennsylvania by order of the Supreme Court of Pennsylvania dated May 4, 1999, following the submission of a joint petition for immediate suspension by petitioner and respondent.

(7) A violation of 18 U.S.C. §1027 is punishable by imprisonment of up to five years and is a “serious crime,” as defined by Pa.R.D.E. 214(i), and respondent’s conviction constitutes a per se ground for discipline under Pa.R.D.E. 203(b)(1).

(8) Between March 1991 and July 1991, [A] engaged in a series of transactions that allowed him to withdraw $475,000 of the retirement plan’s assets, which he then used for his own personal benefit or to pay his bankrupt companies’ operating expenses.

(9) At the time [A] initiated his scheme, the retirement plan had assets totaling approximately $625,000 and covered seven participants, five of whom were between the ages of 60 and 72.

(10) In August 1991, [A] involved the respondent and another attorney, [E], in his scheme, since he needed their aid in concealing his actions from the retirement plan participants.

(11) Respondent was told that [A] had used the monies he withdrew from the retirement plan to keep the bankrupt companies operating.

(12) [A] told respondent and [E] that two days earlier, he had withdrawn an additional $58,035 from the retirement plan.

(13) Respondent told [A] not to withdraw any more monies from the retirement plan and explained to him that the $58,035 would be treated as a loan that the bankrupt companies had to repay the retirement plan.

(14) Respondent and [E] explained to [A] that by removing the monies from the retirement plan, he had engaged in a prohibited transaction under ERISA; nonetheless, respondent expressed his belief that it might be possible to correct the transaction and convert the retirement plan to an ESOR

(15) ERISA permits an employer to convert a profit sharing plan to an ESOP so long as there is an independent appraisal prior to the stock sale, there is a stock purchase agreement and there is adequate consideration paid for the stock.

(16) [A] agreed to retain respondent and [E] for the purpose of converting the retirement plan to an ESOP for a fee of $25,000, of which respondent was to receive 40 percent, and [E], 60 percent.

(17) Sometime after the September 11,1991 meeting, respondent received a facsimile transmission of a document entitled “consent of directors,” which purportedly documented [A’s] intent to convert the retirement plan to an ESOP prior or contemporaneous to his withdrawal of monies from the retirement plan.

(18) Unbeknownst to respondent, document was backdated to March 8, 1991 and did not pre-date [A’s] withdrawal of monies from the retirement plan in March and July of 1991.

(19) Respondent prepared the following documents prior to an October 14, 1991 meeting:

(a) Employee and stock ownership plan (ESOP plan), which purportedly created the ESOP and which was dated as having been executed on July 25, 1991. This document was backdated and was, in fact, signed on October 14, 1991;

(b) ESOP trust agreement, which purportedly created the trust in which the ESOP’s assets were to be held and which was dated as having been executed on July 25, 1991. This document was backdated and was, in fact, signed on October 14, 1991;

(c) Stock purchase agreement, which purportedly transferred, in exchange for $500,000 in retirement plan funds, approximately 12.5 percent of the bankrupt companies’ stock to the retirement plan and which was dated as having been executed on March 1,1991. This document was backdated by respondent and was, in fact, signed on October 14, 1991; and

(d) Promissory note, which was purportedly created to reflect the bankrupt companies’ debt to the retirement plan in the amount of $58,035 — which accounted for the withdrawals from the retirement plan in excess of the $500,000 purportedly used to purchase the bankrupt companies’ stock, plus interest — and dated as having been executed as of September 8, 1991. This document was backdated and was signed on or about November 1991.

(20) At the October 14, 1991 meeting, prior to [A] signing the promissory note, he informed respondent that he was mistaken in the amount he had withdrawn from the retirement plan just prior to the September 11, 1991 meeting.

(21) Respondent informed [A] that he would revise the promissory note to reflect the correct amount, which, according to [A], was $85,334, and would have him execute it at a later date.

(22) When it came time to sign the ESOP plan and the ESOP trust agreement, respondent told [A] to date the documents October 14, 1991.

(23) [A] insisted that the ESOP plan and the ESOP trust agreement be backdated to March 1991, when he purportedly formed the intent to convert the retirement plan to an ESOP.

(24) Respondent told [A] that the ESOP plan and the ESOP trust agreement should not be backdated.

(25) After some discussion, respondent suggested as a compromise, and [A] agreed, to backdate the ESOP plan and the ESOP trust agreement to July 25, 1991.

(26) Respondent knew, prior to the October 14, 1991 meeting, that ERISA required that the stock purchase agreement, the ESOP plan and the ESOP trust agreement not contain any false or misleading information.

(27) Respondent knew that backdating the ESOP plan and the ESOP trust agreement violated ERISA at the time the documents were executed by [A] and the secretary of the companies, [F].

(28) The backdating of the stock purchase agreement violated ERISA.

(29) The backdating of the promissory note and the stock certificates violated ERISA.

(30) In December 1991, [A] asked respondent and [E] to prepare an opinion letter to the bankruptcy attorney for the bankrupt companies stating that the conversion of the retirement plan into an ESOP was legal and proper.

(31) Respondent agreed to draft such a letter and prepared a draft, which was reviewed, revised and finalized by [E],

(32) On January 2,1992, [E] sent the opinion letter to the bankruptcy attorney for the bankrupt companies.

(33) That letter, which was submitted to the bankruptcy court, contained misleading statements and omission of material fact in that it stated that the conversion of the retirement plan into an ESOP was legal and proper when the conversion was contingent on securing an independent appraisal which was never obtained.

(34) Respondent, through his actions on behalf of [A] assisted him in concealing his scheme to defraud the plan participants of their assets in the retirement plan by making it appear that the retirement plan had been legally and properly converted to an ESOP.

(35) Sometime in mid-1996, the United States Government notified respondent that he was the target of a criminal investigation.

(36) After retaining counsel, respondent offered to cooperate with the United States Government’s criminal investigation.

(37) Respondent’s guilty plea and sentence generated negative publicity by the print media.

(38) Respondent’s guilty plea and sentence had a negative impact on the public’s view of the legal profession.

(39) Respondent has no prior record of discipline.

III. CONCLUSIONS OF LAW

By his conduct as set forth above, respondent violated the following Pennsylvania Rule of Disciplinary Enforcement:

(1) Respondent’s conviction is punishable by up to five years imprisonment and is a serious crime pursuant to Pa.R.D.E. 214(i).

(2) Pursuant to Pa.R.D.E. 203(b)(1), respondent’s conviction of a serious crime is an independent ground for discipline.

IV. DISCUSSION

This matter is before the Disciplinary Board upon a petition for discipline filed as a result of respondent’s guilty plea on March 31,1997, in the United States District Court for the District of [ ] to one count of an information charging him with violating 18 U.S.C. §1027. On March 31,1999, the district court sentenced respondent to five years probation, six months of home confinement under electronic monitoring, 100 hours of community service, to be performed over two years, and restitution in the amount of $42,500.

Pa.R.D.E. 203(b)(1) provides that conviction of a serious crime shall be grounds for discipline. A serious crime is defined by the rules as a crime punishable by imprisonment of one year or more in this or any other jurisdiction. Rule 214(e), Pa.R.D.E., specifies that a certificate of conviction of an attorney for a serious crime shall be conclusive evidence of that crime. When a disciplinary action is commenced against an attorney based on a criminal conviction, the board does not engage in a retrial of the underlying facts of the crime. The board’s responsibility is to determine one appropriate measure of discipline relative to the seriousness of the crime. The focal issue is whether the attorney’s character is so damaged by the misconduct as to render him or her unfit to practice law. Office of Disciplinary Counsel v. Casety, 511 Pa. 177, 512 A.2d 607 (1986). The issue balances a concern for the public with a respect for the substantial interest of an attorney in maintaining his or her privilege to practice law. Office of Disciplinary Counsel v. Lewis, 493 Pa. 519, 426 A.2d 1138 (1981). It is appropriate for the board to examine any aggravating or mitigating circumstances present in this matter.

The record reveals that respondent and others became involved in a pension fund fraud and embezzlement scheme initiated by one [A], after [A] had taken the funds. [A] was the beneficiary of the scheme, in which he took pension funds exceeding $550,000 from an employee retirement plan. From August 1991 through January 1992, respondent and others prepared or caused to be prepared documents falsely purporting to convert the retirement plan into an employee stock ownership plan funded by stock of several companies owned solely by [A] as of the date [A] took the pension funds. These documents concealed the illegal diversion of the assets of the retirement plan.

An examination of reported conviction cases in which the gravamen of the offense involved making false statements reveals that attorneys received discipline ranging from a two-year period of suspension to the most severe sanction of disbarment. In re Anonymous No. 103 D.B. 89, 13 D.&C.4th 238 (1991) (two-year suspension); In re Anonymous No. 16 D.B. 87, 8 D.&C.4th 493 (1990) (three-year suspension); Office of Disciplinary Counsel v. Chung, 548 Pa. 108, 695 A.2d 405 (1997) (five-year suspension); In re Anonymous No. 18 D.B. 78, 14 D.&C.3d 759 (1980) (disbarment).

Of the aforementioned cases, the most similar to the instant matter is No. 16 D.B. 87. The attorney therein was convicted on two counts of violating 18 U.S .C. § 1027 based on his failure to disclose in two annual reports of a pension fund, of which he was the administrator, his private interest in properties for which the pension fund provided mortgages. The mortgages profited the attorney, who was involved in a failing property development venture. The mortgages eventually went into default and the pension fund incurred a loss. At the disciplinary hearing, the attorney presented evidence that he had no prior record of discipline, had regret and remorse over his misconduct, had a good reputation in the community, and engaged in numerous civic and charitable activities. The Supreme Court suspended the attorney for three years. This case is analogous to the instant matter as the attorney engaged in one instance of misconduct as opposed to a pattern of misconduct, which is the hallmark of cases wherein the attorney received a very lengthy suspension or disbarment.

Respondent committed serious misconduct. He had an obligation to uphold the law and instead he acceded to the wishes of a client and backdated documents in violation of the law. From the character testimony presented at the hearing, it is apparent that respondent is a talented attorney. He pushed the limits of creativity into the danger zone in his attempts to help his client.

For the reasons as set forth above, the board recommends a suspension of three years retroactive to May 4, 1999, the date of respondent’s temporary suspension.

V. RECOMMENDATION

The Disciplinary Board of the Supreme Court of Pennsylvania recommends that the respondent [ ], be suspended from the practice of law in the Commonwealth of Pennsylvania for a period of three years retroactive to May 4, 1999.

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

Board Member Elliott dissents and would recommend disbarment.

ORDER

And now, December 14, 2000, upon consideration of the report and recommendation of the Disciplinary Board dated October 11, 2000, it is hereby ordered that [respondent] be and he is suspended from the bar of this Commonwealth for a period of three years retroactive to May 4, 1999, 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.

Messrs. Justice Zappala and Castille dissent.


source: Caselaw Access Project

author: HOOVER, J.,

license: Public Domain

text:
    Potami v. Frankel

      Robin J. Marzella and Thomas W. Hall, for plaintiffs.

      S. Walter Foulkrod III, for defendant Frankel M.D.

      Evan Black, for defendants Harrisburg Hospital and Pinnacle Health Hospitals.

      Steven D. Snyder, for defendant Keystone Health Plan Central Inc.
    June 19, 2000
   HOOVER, J.,

Plaintiffs Katherine R. Potami and Samuel J. Potami, her husband, brought suit against Sharon Frankel M.D., Harrisburg Hospital, Pinnacle Health Hospitals and Keystone Health Plan Central and asserted, inter alia, that Harrisburg Hospital and Pinnacle Health Hospitals (hereinafter the hospital) violated the Emergency Medical Treatment and Active Labor Act, 42 U.S.C. §1395(dd)(a), based upon the hospital’s alleged failure to perform appropriate medical screening at the time of Mrs. Potami’s arrival at the emergency room. The plaintiffs moved for summary judgment and argued that Harrisburg Hospital’s intake procedure, which included a “pre-authorization” call to Mrs. Potami’s primary care physician, constituted a per se violation of EMTALA, entitling plaintiff to judgment as a matter of law as to that aspect of her claim.

For the reasons set forth below, plaintiffs’ motion for partial summary judgment is denied.

FACTUAL BACKGROUND

Plaintiff Katherine Potami alleges that on October 25, 1994 she presented to Harrisburg Hospital’s emergency room with complaints of severe mediastinal chest pain radiating into her back. Plaintiff asserts that immediately upon her arrival, the hospital staff inquired into Mrs. Potami’s health insurance coverage, which she maintained with defendant Keystone Health Plan Central. The thrust of plaintiff’s EMTALA claim against the hospital is that the emergency room staff improperly denied her a medical screening examination by an emergency room physician because she was an HMO subscriber, by placing a call for pre-authorization for the visit to her primary care physician. The record reflects that the hospital emergency room staff placed a pre-authorization call to plaintiff’s primary care physician Sharon Frankel M.D., and that Dr. Frankel did not authorize the visit. Mrs. Potami left the emergency room without receiving an examination or treatment by an emergency room physician.

The record as to what transpired upon plaintiff’s arrival at the emergency room includes the deposition testimony of the hospital’s registration clerk, Mr. Paul Corbett, and the triage nurse, Ms. Dawn Sladky. Mr. Corbett testified that upon Mrs. Potami’s arrival, he notified Nurse Sladky that there was a female in the waiting area with chest pain. The record reflects that Ms. Sladky performed a triage assessment of Mrs. Potami, which included taking her vital signs. The nurse entered the triage assessment into the emergency room record. She then returned Mrs. Potami to the registration desk, where the clerk obtained Mrs. Potami’s HMO insurance card.

Mr. Corbett then called Dr. Frankel, the plaintiff’s primary care physician, to obtain pre-authorization for the emergency room visit. Mr. Corbett read to Dr. Frankel the triage nurse’s notes. Dr. Frankel then spoke with the triage muse and the patient by phone and diagnosed Mrs. Potami’s condition as anxiety. Dr. Frankel recommended that Mrs. Potami return home. Dr. Frankel denied authorization for the emergency room visit. Mr. Corbett testified that he advised Mrs. Potami that she could still be seen in the emergency department, but would be responsible for payment. He testified that he advised Mrs. Potami that she could call the HMO at the number on the back of the insurance card to request an appeal of the doctor’s denial.

The record also reflects that plaintiff’s husband, Mr. Potami, discussed with the emergency room personnel a willingness to personally pay for the visit by check or credit card, but that after speaking with Dr. Frankel, his wife had decided to leave. Nurse Sladky testified that she felt that an emergency room physician should see Mrs. Potami, encouraged Mrs. Potami to stay for further evaluation and indicated that she would find an emergency room doctor to come speak with her. Nurse Sladky testified that she felt that Mrs. Potami should be seen emergently, and that she considered myocardial infarction or unstable angina in the range of possible diagnoses. However, Mrs. Potami testified that based upon her phone conversation with Dr. Frankel, she felt sufficiently reassured, so that she did not insist upon being seen by a doctor in the emergency room. Mrs. Potami left the emergency room. The following morning, October 26, 1994, she returned to the emergency room for evaluation and treatment of an acute myocardial infarction.

According to the testimony of James Taylor M.D., Harrisburg Hospital’s policy in effect in 1994, “Guidelines for emergency care under managed health care plans,” set forth the intake procedure applicable to HMO patients. The guidelines required the outpatient clerk to contact the patient’s insurance company or primary care physician before evaluation by the emergency room physician, unless, because of the nature of the emergency, registration would not be appropriate. Under the guidelines, where pre-authorization is denied, the patient may still see an emergency room physician, although the staff is required to disclose to the patient their financial responsibility for the visit.

Defendants Harrisburg Hospital and Pinnacle Health deny that the pre-authorization call denied plaintiff a medical screening exam in violation of EMTALA, and assert that plaintiff withdrew her request for examination by an emergency room physician.

DISCUSSION

Plaintiffs have not demonstrated that the record is so free of genuine issues of material fact to entitle them to judgment as a matter of law on their claim that defendant Harrisburg Hospital violated the Emergency Medical Treatment and Active Labor Act, 42 U.S.C. §1395(dd). Summary judgment is proper only when the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits demonstrate that there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Banks v. Jerome Taylor & Associates, 700 A.2d 1329 (Pa. Super. 1997); Pa.R.C.P. 1035.2. On a motion for summary judgment, 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 in favor of the non-moving party. Kapres v. Heller, 536 Pa. 551, 640 A.2d 888 (1994). We do not find that as a matter of law, the placement of the pre-authorization call, irrespective of its purpose or effect, amounted to disparate availability of the medical screening in violation of EMTALA. Further, issues of fact exist as to the reason the medical screening of the plaintiff, Mrs. Potami, did not take place. Accordingly, plaintiffs’ motion for partial summary judgment must be denied.

The Act upon which plaintiffs base their claim, EMTALA, the “Patient Anti-Dumping Statute” requires that a hospital provide an “appropriate medical screening examination,” within the capability of the hospital’s emergency department to any individual who comes into the emergency department and requests examination and treatment. 42 U.S.C.§1395(dd)(a). The legislative history of the Act indicates that Congress intended to prevent hospitals from refusing to treat, or from “dumping” patients who lack insurance coverage. Brooker v. Desert Hospital, 947 F.2d 412 (9th Cir. 1991). However, “the Act itself draws no distinction between persons with and without insurance.” Id. at 414. Accordingly, hospitals must provide uniform screening procedures to all individuals who come into the emergency room and request examination or treatment, regardless of financial status. In addition to the requirement to provide appropriate medical screening, the Act further provides that if any individual has an “emergency medical condition,” the hospital must either provide further medical treatment to stabilize the medical condition or transfer the patient to another medical facility, if indicated, if the transfer can be accomplished with relative safety. Id. at section (dd)(l)(c). The Act also prohibits a hospital from delaying an appropriate medical screening examination to inquire about the individual’s method of payment or insurance status. Id. at section (dd)(h). Plaintiffs have briefed and argued the allegation of failure to provide the medical screening exam, and therefore, we will restrict our analysis to the issue of whether the pre-authorization call, as a matter of law, deprived Mrs. Potami of the right to an appropriate medical screening exam. We cannot conclude, based upon the law, and the disputed facts of record, that she was so denied.

The language of the Act itself, and case law interpreting its requirements, make its purpose clear: a hospital may not consider a patient’s insurance status in deciding whether to perform a medical screening exam. “A hospital fulfills its statutory duty to screen patients in its emergency room if it provides for a screening exam reasonably calculated to identify critical medical conditions that may be afflicting symptomatic patients and provides that level of screening uniformly to all those who present with substantially similar complaints.” Correa v. Hospital San Francisco, 69 F.3d 1184 (1st Cir. 1995), citing Barber v. Hospital Corp. of America, 977 F.2d 872, 879 (4th Cir. 1992). “The essence of this requirement is that there be some screening procedure, and that it be administered evenhandedly.” Correa, 69 F.3d at 1192.

However, neither the Act itself, nor case law interpreting the Act, completely prohibit inquiry into insurance information during the registration process, where the inquiry does not deprive the patient of, or delay, the appropriate medical screening examination. The Department of Health and Human Services Health Care Financing Administration’s 1994 commentary regarding implementation of EMTALA’s regulations provided:

“Hospitals may continue to follow reasonable registration processes for emergency room individuals, including requesting information about insurance as long as these procedures do not impede provision of necessary treatment and as long as all individuals to whom the procedures apply are treated similarly ... the hospital shall not delay treatment to any individual while it verifies the information provided.” 58 Fed.Reg. 32099.

Accordingly, we cannot state as a matter of law that placement of the pre-authorization call in the hospital’s intake process de facto caused disparity in Mrs. Potami’s access to an appropriate medical screening exam.

Further, the record contains issues of fact material to plaintiffs’ claim that the hospital, by virtue of the preauthorization call, denied Mrs. Potami the same medical screening examination as would have been available to a person with different insurance, or no insurance. An issue of fact exists as to whether, as asserted by plaintiff, the registration clerk inquired into insurance immediately upon Mrs. Potami’s arrival in the emergency room, to screen her out as a “self-pay” patient, or whether the insurance information was requested as part of the usual registration process after triage. The record contains facts upon which a jury could conclude that the hospital, in following its triage, intake, and registration procedure, and encouraging a medical examination by the emergency room physician, provided Mrs. Potami the same access to the medical screening examination as it would to a patient with any other payment status.

Finally, factual issues exist as to whether or not the pre-authorization call in some way caused Mrs. Potami to leave the emergency room. Plaintiff argues that the intake process ceased, and she was, in essence, coerced to leave the emergency room following denial of preauthorization of the visit. However, the hospital presents evidence upon which a jury could conclude that Mrs. Potami made the decision to leave after consultation with Dr. Frankel over the phone, without regard to any payment issues. The hospital also presents evidence that, rather than depriving Mrs. Potami of a medical screening exam because of a payment issue, Nurse Sladky attempted to persuade Mrs. Potami to remain and be seen, but that Mrs. Potami withdrew her request for further evaluation and treatment. The existence of these material issues of fact relating to the hospital’s responsibilities under EMTALA preclude summary judgment in favor of the plaintiffs.

Accordingly, plaintiffs’ motion for partial summary judgment against defendants Harrisburg Hospital and Pinnacle Health Hospitals is hereby denied.

ORDER

And now, June 19, 2000, plaintiffs’ motion for partial summary judgment against defendants Harrisburg Hospital and Pinnacle Health Hospitals is hereby denied.


author: SAYLOR, J.,

text:
    Nationwide Mutual Insurance Co. v. Klinger

      Jarad W. Handelman, for plaintiff.

      Marc Lieberman, for defendant Klinger.

      James A. Zurich, for defendant Apollo.

      Christopher Coyle, for defendant Bennetch.

      Edward L. Brady, for defendant Farrow.
    July 10, 2003
   SAYLOR, J.,

This case arises as a result of a motor vehicle accident that occurred on November 7, 1999, in which defendants Klinger, Farrow and Bogetti were injured. Klinger was driving a 1984 Chevrolet Caprice Classic he had recently purchased on October 1,1999, when he lost control of the vehicle striking a pole. At issue is whether the insurance covering another vehicle of Klinger, a 1988 Ford Ranger insured by plaintiff Nationwide through its agent Susan Hartsock, extended also to the Caprice. Nationwide filed a complaint seeking declaratory judgment against all named defendants for a determination as to whether it is obligated to provide coverage and benefits for any claims stemming from the accident involving the Caprice. Following a bench trial in this matter, the court now enters the following findings of fact and conclusions of law.

I. FINDINGS OF FACT

(1) On June 23, 1999, plaintiff Nationwide issued an insurance policy to defendant Klinger covering a 1988 Ford Ranger.

(2) This policy covered “physical damage” to a four-wheel motor vehicle newly acquired by Klinger provided, inter alia, such acquisition was reported to the insurer during the first 30 days.

(3) In a separate provision, this policy covered “auto liability” for a four-wheel motor vehicle newly acquired for the first 30 days Klinger owned such vehicle.

(4) On October 1, 1999, Klinger purchased and took possession of the 1984 Caprice from defendants David and Greta Bennetch by giving $300 in cash to Greta who, in return, gave Klinger a signed, handwritten paper they entitled a “bill of sale.”

(5) No party has contended that the Caprice was a replacement for the Ford Ranger, and Klinger had both vehicles available to him for his use.

(6) Susan Hartsock was an insurance agent for Nationwide at all relevant times, and previously acted as an agent in the issuance of the policy covering the Ford Ranger.

(7) On October 1,1999, immediately after purchasing the Caprice, Klinger and his father went to Hartsock’s office to insure it.

(8) Klinger told Hartsock he bought the Caprice.

(9) Hartsock told the Klingers to return when they received the “pink slip” (Pennsylvania Department of Transportation MV-4, vehicle purchase form) as it would have the vehicle identification number.

(10) Hartsock neither made any notation memorializing this meeting nor took any steps to insure the Caprice (she denied that she was ever notified about the Caprice or that the Klingers came to her office that day; however, the court has accepted the Klingers’ testimony in this regard).

(11) Klinger never obtained the “pink slip” or returned to Hartsock’s office.

(12) Neither Hartsock nor Nationwide contacted Klinger concerning any additional premium to be paid.

(13) Thirty-eight days after acquiring the vehicle, on November 7,1999, Klinger was driving the Caprice when he lost control of the vehicle and collided with a pole (the subject accident) injuring himself and his passengers, defendants Farrow and Bogetti.

II. CONCLUSIONS OF LAW

Having found that Klinger acquired the Caprice and notified Hartsock thereof on October 1, 1999, the court must now determine whether that finding compels the conclusion that Klinger was covered for liability regarding this vehicle and the accident that occurred 38 days later. Although all parties agreed, prior to trial, that notification by Klinger to Hartsock of his purchase of the Caprice was enough to ensure coverage, a close reading of the policy fails to clearly support this contention. The court must therefore, taking the policy as a whole, determine whether a finding of notification necessarily requires liability coverage.

Initially, the court must consider the apparent lack of effort put forth to properly insure the Caprice. Klinger did nothing more than tell Hartsock he bought an additional vehicle. He failed to follow through, as requested, by returning to Hartsock’s office with the “pink slip” for the Caprice. Nor did he further inquire as to any added premium or whether any evidence of such insurance was forthcoming. For her part, Hartsock failed to even memorialize the meeting with Klinger, perhaps under the assumption that Klinger would promptly return with the requested information. Klinger’s efforts to produce the “pink slip,” however, were frustrated by his inability to coordinate the execution of the same with David Bennetch due to a conflict of work schedules between them. This seems to be a reasonable explanation for such failure and, in light of the fact that neither Hartsock nor Nationwide contacted Klinger after October 1, 1999 regarding any additional premium or the need for the “pink slip,” such failure is not fatal to any claim Klinger has for coverage.

The Nationwide policy covering Klinger’s Ford Ranger provides coverage for “physical damage” to a newly acquired four-wheel motor vehicle. The acquisition of such vehicle must be reported to the insurer during the first 30 days of ownership. No limit as to the length of this coverage extension is stated, so long as the notice is given. Under this policy provision, Klinger was also responsible for paying any premiums resulting from this extension of coverage.

Of course, this policy also covers “auto liability” for newly acquired vehicles. Paradoxically, this provision differs from the “physical damage” coverage as it applies only during the first 30 days of ownership. This provision, unlike the previous one, does not require any notice to the insurer. As with the “physical damage” provision, this coverage requires the payment of any added premium.

“Physical damage coverages . . . Coverage extensions . . . Use of other motor vehicles
“The insurance on your auto also covers other motor vehicles as follows: ... 2. A four-wheel motor vehicle newly acquired by you. You must report the acquisition of the vehicle to us during the first 30 days you own the vehicle. Also, if the newly acquired vehicle does not replace your auto, all household vehicles owned by you must be insured by us or an affiliate for this extension to apply. We provide this coverage only if you do not have other collectible insurance. You must pay any added premium resulting from this coverage extension.” Nationwide Century II Auto Policy at p. 4 as amended by Amendatory Endorsement at p. 1.

Thus, Klinger, by contacting his agent, was covered under the existing policy for the newly acquired Caprice for “physical damage.” This coverage continued indefinitely until such time as Klinger failed to pay a premium or Nationwide cancelled it. By the terms of the insurance policy, however, it would appear that “auto liability” coverage ceased after 30 days. There is no indication in the policy as to how one would extend liability coverage beyond the 30 days. It is quite surprising that one would have an automobile policy that provides, after notice, indefinite coverage for the damage to a newly acquired vehicle, but limits the liability protection that an owner is required to carry under the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) to only 30 days.

Under this policy, giving the words their ordinary meanings, if the insured buys an additional vehicle and notifies the insurer within 30 days, he is apparently covered indefinitely for “physical damage” but not for “auto liability.” As there is no indication as to how to extend “auto liability” past 30 days, one must ask how this is accomplished. In this court’s view, this creates an ambiguity as to the construction of these provisions. Reading the “auto liability” provision in light of the “physical damage” provision, however, one may reasonably conclude that notifying the insurer of the purchase would accomplish the task of extending the policy for all purposes, especially the coverage mandated by law under the MVFRL, that is, liability coverage.

When determining issues of insurance contract coverage, the proper focus is the “reasonable expectation of the insured.” Kvaerner U.S. Inc. v. Commercial Union Ins. Co., nos. 973 EDA 2001 and 1212 EDA 2001, 2003 WL 1878761 at *2 (Pa. Super. Apr. 16, 2003) (quoting Redevelopment Authority of Cambria County v. International Insurance Co., 454 Pa. Super. 374, 388, 685 A.2d 581, 588 (1996) (en banc)). The court must consider the totality of the insurance transaction. Id. “While a determination as to the reasonable expectations of the insured must be based upon the totality of the insurance transaction involved, an insured may not complain that his or her reasonable expectations were frustrated by policy limitations which are clear and unambiguous.” Id.

Contract terms are ambiguous if they are capable of “more than one reasonable interpretation when applied to a particular set of facts.” Wagner v. Erie Insurance Co., 801 A.2d 1226, 1231 (Pa. Super. 2002), appeal granted in part by 573 Pa. 30, 820 A.2d 160 (2003) (quoting Madison Construction Co. v. Harleysville Mutual Insurance Co., 557 Pa. 595, 735 A.2d 100, 106 (1999)). A provision is only ambiguous when, reading the contract in its entirety and giving words their ordinary meanings, reasonably intelligent minds could honestly differ as to its meaning. Jefferson v. State Farm Insurance Companies, 380 Pa. Super. 167, 170, 551 A.2d 283, 284 (1988) (citing Adelman v. State Farm Mutual Automobile Insurance Co., 255 Pa. Super. 116, 123, 386 A.2d 535, 538 (1978)). “Any truly ambiguous term must be given a construction favorable to the insured.” Id.

Here, Klinger notified Hartsock of the acquisition of the Caprice as required under the policy. One providing this notice can reasonably expect that such notice would ensure coverage for all purposes, not merely for “physical damage.” Yet, reading the “auto liability” provision by itself, it appears something more than notice may be required to extend such coverage beyond 30 days. This accident occurred after Klinger had the vehicle for 38 days, so on the policy’s face by a literal reading, he was no longer covered for liability purposes. As noted previously, however, this court must consider the meaning of a provision in the context of the entire policy. Reading the “auto liability” provision in conjunction with the “physical damage” section, one may reasonably conclude that notice is enough to trigger extended coverage. As there is no clear indication to the contrary, the court must construe these provisions against the insurer with the result that notification to the insurer of the purchase of a new vehicle is all that is required to extend liability coverage past the initial 30 days following acquisition, at least until termination occurs by virtue of some other reason, such as nonpayment of premium.

Klinger bought the Caprice on October 1,1999. Shortly after purchasing this car, Klinger notified Hartsock of its acquisition. Therefore, at the time of the November 7, 1999 accident, Klinger was covered by his existing Nationwide policy on his Ranger, and his reasonable expectation was that this coverage extended to both “physical damage” and “auto liability” related to the Caprice. Thus, Nationwide is responsible for any claims falling under this policy, including liability, stemming from the accident.

Accordingly, the court enters the following:

ORDER

And now, July 10, 2003, after a non-jury trial, the plaintiff’s request for a declaratory judgment in its favor is denied; therefore, Nationwide Mutual Insurance Company is obligated to provide liability coverage and benefits with respect to claims arising out of the motor vehicle accident of November 7, 1999, involving the operation of the 1984 Chevrolet Caprice Classic by defendant Klinger.

      . At trial, after the court raised the issue upon review of the policy language, plaintiff has taken the position that even if Klinger notified Hartsock of the acquisition of the Caprice Classic, Klinger was only covered for physical damage to the vehicle, not liability associated therewith.

      . This court was unable to locate any cases involving similar contract language and counsel for the parties did not reference any case that dealt with the issue in the context of the policy language present here. Plaintiff has directed the court’s attention to Shelby Mutual Insurance Co. v. Kistler, 347 Pa. Super. 222, 500 A.2d 487 (1985). However, Shelby is distinguishable in that it involved a policy liability section that required notice and an accident that occurred within that 30-day notice period.

      . The pertinent section of the policy states as follows:

      . The pertinent section of the policy states as follows:
      “Auto liability . . . Coverage extensions . . . Use of other motor vehicles
      “This insurance also applies to certain other motor vehicles as follows: ... 2. A four-wheel motor vehicle newly acquired by you. This coverage applies only during the first 30 days you own the vehicle unless it replaces your auto. If the newly acquired vehicle does not replace your auto, all household vehicles owned by you must be insured by us or an affiliate for this extension of coverage to apply. We provide this coverage only if you do not have other insurance. You must pay any added premium resulting from this coverage extension.” Nationwide Century II Auto Policy at p. 7 as amended by Amendatory Endorsement at p. 3.


author: WETTICK JR., J.

text:
    Rapidigm Inc. v. ATM Management Services LLC

      Robert M. Linn, Mark A. Grace and Alyze L. Pierce, for plaintiff.

      Kurt A. Miller, David G. Ries and Ashlie T. VanMeter, for defendant.
    July 10, 2003
   WETTICK JR., J.

This lawsuit arises out of a contract between plaintiff (Rapidigm) and defendant (ATM). The preliminary objections of Rapidigm seeking dismissal of tort claims that ATM has raised in an amended counterclaim are the subject of this opinion and order of court. These preliminary objections raise the issue of whether a professional negligence action may be maintained against a computer consultant.

On July 17, 2001, Rapidigm and ATM entered into a written project services agreement under which Rapidigm was to provide information technology consulting services. The agreement provided for ATM to pay a fixed amount for the services provided for under the agreement and for services beyond the scope of the agreement to be billed on a time and material basis. In this lawsuit, Rapidigm seeks to recover money due for services performed under the agreement and additional money for work performed beyond the scope of the agreement. In its answer, ATM alleges that Rapidigm is not entitled to any additional money because of its failure to perform the work in accordance with the requirements of the contract.

ATM’s answer includes an eight-count amended counterclaim in which it seeks to recover various damages including costs it incurred to locate and retain a replacement computer services provider and costs it will incur to complete the project in accordance with general industry standards. This amended counterclaim includes causes of action based on breaches of the project services agreement, including breach of an express written warranty that all services provided by Rapidigm will be performed in accordance with the general standards of the industry. The amended counterclaim also includes the following causes of action which Rapidigm’s preliminary objections seek to dismiss: fraud, misrepresentation, and professional negligence.

As I will discuss, the professional negligence and other causes of action that are the subject of Rapidigm’s preliminary objections are generally based on the same conduct that serves as the basis for ATM’s breach of contract/breach of warranty claims. ATM seeks to pursue these additional causes of action based on tort law (and Rapidigm seeks their dismissal) because these tort law causes of action may provide additional remedies.

The written warranty on which ATM’s breach of warranty claim is based includes a provision that this express warranty is in lieu of all other express or implied warranties and that in no event will Rapidigm be liable to the purchaser for any amount in excess of the fees paid hereunder. (Complaint, exhibit A ¶10) The parties’ agreement also includes a limitation of liability provision (complaint, exhibit A ¶12) which provides that neither party shall be liable for special, indirect, or consequential damages. Also, under Pennsylvania case law claims for punitive damages may not be based on the breach of a contract. Johnson v. Hyundai Motor America, 698 A.2d 631, 639 (Pa. Super. 1997).

In the tort causes of action, ATM seeks compensatory damages that substantially exceed the payments ATM made to Rapidigm, and punitive damages based on fraud.

I.

ATM’s fraud and misrepresentation claims are based on similar allegations. The July 17, 2001 project services agreement provided for ATM to pay Rapidigm a fixed amount of $706,200 for the services within the scope of the agreement. ATM alleges that Rapidigm drastically underbid the project. Rapidigm quoted ATM a cost of $706,200 with the knowledge that it would not perform the project for that amount. Its intention was to induce ATM to retain Rapidigm, thereby enabling Rapidigm to begin performance of the project and making ATM dependent upon Rapidigm personnel to complete the project. This would permit Rapidigm to demand substantially more money from ATM in order to complete the project. Furthermore, while ATM represented that the payment of $706,200 would purchase the type, amount, and content of work needed to provide ATM with a new software system, Rapidigm fraudulently omitted from its bid additional work not covered under the terms of the agreement that would be required in order to provide ATM with a new software system.

I am sustaining Rapidigm’s preliminary objections to ATM’s fraud and misrepresentation claims based on the above allegations.

Many of ATM’s claims are based on fraudulent representations made before the parties executed the project services agreement regarding the work that would be performed and the cost of the work. The project services agreement contains an integration clause (complaint, exhibit A j[17(f)) which provides that this agreement constitutes the entire agreement between the parties and supersedes any prior or contemporaneous communications, representations, or agreements between the parties, whether oral or written, regarding the subject matter of this agreement. Under Pennsylvania case law, in a commercial transaction the parol evidence rule bars reliance upon any representations made prior to the execution of an agreement containing a broad integration clause. HCB Contractors v. Liberty Place Hotel Associates, 539 Pa. 395, 652 A.2d 1278 (1995); 1726 Cherry Street Partnership v. Bell Atlantic Properties Inc., 439 Pa. Super. 141, 653 A.2d 663 (1995).

ATM also raises claims based on allegations that at the time the parties executed the project services agreement, Rapidigm had no intention of complying with the terms of the agreement. Pennsylvania case law holds that a fraud/misrepresentation claim may not be based on such an allegation. Shoemaker v. Commonwealth Bank, 700 A.2d 1003, 1006 (Pa. Super. 1997).

ATM’s fraud/misrepresentation claims may also be based on allegations concerning Rapidigm’s wilful noncompliance with its contractual obligations. These claims may be pursued only through a breach of contract action. The gist of the action doctrine bars claims for negligence or fraud in the performance of the contract. Etoll Inc. v. Elias/Savion Advertising Inc., 811 A.2d 10 (Pa. Super. 2002).

II.

I next consider Rapidigm’s preliminary objection seeking dismissal of ATM’s professional negligence claim.

Under settled Pennsylvania case law, a client may bring both a contract action and a tort action against a professional based on allegations that he or she failed to provide the client with professional services consistent with those expected of the profession. See Gorski v. Smith, 812 A.2d 683, 693-94 (Pa. Super. 2002) (both breach of contract and professional negligence actions may be raised against an attorney who failed to provide professional services consistent with those expected of the profession); Koken v. Steinberg, 2003 WL 21206122 (Pa. Commw. 2003) (accountants can be sued in contract and for malpractice for failure to properly provide professional services).

No Pennsylvania courts have applied any of the doctrines barring tort recovery in relationships arising out of a contract (including the gist of the action doctrine), to claims involving a professional’s failure to exercise the proper standard of care. Also, the economic loss doctrine does not apply to professional negligence actions where there is privity of contract. See e.g., Kituskie v. Corbman, 552 Pa. 275, 714 A.2d 1027 (1998); Rizzo v. Haines, 520 Pa. 484, 555 A.2d 58 (1989); Liberty Bank v. Ruder, 402 Pa. Super. 561, 587 A.2d 761 (1991); and Hoyer v. Frazee, 323 Pa. Super. 421, 470 A.2d 990 (1984). The application of the gist of the action or the economic loss doctrine to professional negligence causes of action would be inconsistent with recent case law (see e.g., Gorski v. Smith, supra) which gives a broad reading to prior case law allowing a client to bring both breach of contract and professional negligence actions based on the professional’s failure to exercise proper skill and care.

Professional negligence actions are recognized under section 299A of the Restatement (Second) of Torts which reads as follows:

“Section 299A. Undertaking in profession or trade
“Unless he represents that he has greater or less skill or knowledge, one who undertakes to render services in the practice of a profession or trade is required to exercise the skill and knowledge normally possessed by members of that profession or trade in good standing in similar communities.”

ATM contends that the tort of professional negligence applies to any person who undertakes to render services requiring special skill and knowledge. Rapidigm, on the other hand, contends that the tort of professional negligence applies only to services rendered in the practice of a profession governed by licensing requirements, a code of ethics, disciplinary standards, and the like.

To date, the Pennsylvania courts have allowed professional negligence actions to be maintained only against certain licensed professionals. However, the parties did not cite and the research of my staff did not produce any Pennsylvania appellate court case law that addresses the issue of whether a professional negligence action should be restricted in this fashion.

The decision of whether to restrict professional negligence actions to traditionally-recognized professions or to allow these actions to be brought against any providers of services requiring special skill and training depends on whether parties contracting with service providers should receive the protections of tort law or whether their rights should be governed solely by the terms of their agreement with the service provider.

Where the claims of a party to a contract involve only economic losses, the trend in the law has been to look solely to contract law to determine the scope of the parties’ duties and the remedies for a breach of these duties. Courts have been restricting tort law to the protection of persons or property and eliminating its use to extricate a party from a bargain which allocates risks in a manner different from tort law. In 1989, the Pennsylvania Superior Court in REM Coal Co. Inc. v. Clark Equipment Co., 386 Pa. Super. 401, 563 A.2d 128 (1989), adopted the standard adopted by the United States Supreme Court in East River Steamship Corp. v. Transamerica Delaval Inc., 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986), under which recovery in tort is barred in product liability actions between commercial enterprises where the only damage alleged is to the product itself. The Pennsylvania Superior Court said that Pennsylvania’s breach of warranty protections provide a suitable framework for regulating and enforcing the expectations and obligations of the parties as to product performance and that to impose tort liability in addition “would certainly erode the important distinctions between tort and contractual theories, including their differing objectives.” REM Coal, 386 Pa. Super. at 411, 563 A.2d at 133. In 2002 in Etoll Inc. v. Elias/Savion Advertising, supra, the Pennsylvania Superior Court, in a case of first impression, ruled that the gist of the action doctrine applies to claims for fraud in the performance of a contract. If the policy of protecting the allocation of risks is sufficiently important to defeat product liability and fraud claims, there is no apparent reason why contracts with providers of specialized services should not also be governed solely by contract law.

The apparent purpose of professional negligence actions is to provide protection to those service providers who are not likely to be guaranteeing the outcome of their services. Ordinarily, the lawyer, the physician, and the accountant are not guaranteeing a result that can be described in a contract. Instead, they are agreeing to exercise skill and knowledge normally possessed by members of the profession in an effort to achieve goals for the clients that cannot be guaranteed. The expert testimony at trial is not based on whether or not the goals were achieved but rather whether appropriate skill and knowledge was exercised.

In the present case, on the other hand, the focus will not be on the skill or knowledge that was exercised. An expert will be offering testimony as to whether the final product conforms to what was promised. Contract law provides sufficient protection to customers/clients of service providers whose services are capable of being evaluated through the guarantee of a defined outcome.

Most courts which have considered professional negligence claims raised against computer consultants have ruled that claims for economic loss should be governed only by contract law. The following cases decided since 1990, which I discuss in reverse chronological order, have reached this conclusion:

In Atkins Nutritionals Inc. v. Ernst & Young LLP, 754 N.Y.S.2d 320 (N.Y. App. Div. 2003), a claim to recover damages for malpractice in the selection and implementation of a computer system was dismissed because the courts of New York do not recognize a cause of action to recover damages for professional malpractice by computer consultants. Also see Nielsen Media Research Inc. v. Microsystems Software Inc., 2002 WL 31175223 (S.D.N.Y. 2002) (unpublished opinion), where the district court, citing Richard A. Rosenblatt & Co. v. Davidge Data Systems Corp., 743 N.Y.S.2d 471, 472 (N.Y. App. Div. 2002), and RKB Enters Inc. v. Ernst & Young, 582 N.Y.S.2d 814, 816 (N.Y. App. Div. 1992), ruled that the courts of New York do not recognize a cause of action for computer malpractice by computer consultants.

In Heidtman Steel Products Inc. v. Compuware Corp., 2000 WL 621144 (N.D. Ohio 2000) (unpublished opinion), a manufacturer that contracted with the defendant to develop a computer system could not maintain a professional malpractice action. The court, applying Michigan law, cited case law which had disallowed claims against defendants in other occupations, even though they involved great skill, because they were not professions as the term is used doctrinally. According to the court, under Michigan case law professional negligence is subject to a limited common-law definition.

In UOP v. Andersen Consulting, 1997 WL 219820 (Conn. Super. Ct. 1997) (unpublished opinion), the Connecticut court, applying Illinois law, did not permit a professional negligence action to be maintained against a computer consultant. The court compared services provided by lawyers and accountants with those provided by architects and computer consultants. A contract between a lawyer or an accountant and the client regards general matters; lawyers and accountants must make their own decisions regarding significant matters; and the decisions which they make are not necessarily dependent on the terms of the contract they executed with their client. The duties of a computer consultant, on the other hand, can be defined in a contract; the client can specify what the end product should be able to do, what information it should process, what it should produce, and how data should be manipulated. The job of computer consultant does not involve extracontractual duties which arise from the traditional responsibilities lawyers and accountants owe to their clients.

In Arthur D. Little International Inc. v. Dooyang Corp., 928 F. Supp. 1189 (D. Mass. 1996), the court, citing Massachusetts case law which applies the economic loss rule to permit parties to a contract to allocate their risks, ruled that it would not extend the case law recognizing professional malpractice claims to independent computer consultants.

In Columbus McKinnon Corp. v. China Semiconductor Co., 867 F. Supp. 1173 (W.D.N.Y. 1994), the court ruled that there was no basis in law for extending the doctrine of professional malpractice to independent computer consultants. “To lift the theory of malpractice from its narrow origin of personal, professional services to a lay patient or client and apply it to the law of commercial contracts would obfuscate the necessary boundaries of these two areas of law.” Id. at 1182-83. (citation omitted)

In that case, the court considered three phases of a relationship between the plaintiff and a third-party defendant (Newman). In phase one, Newman designed a computer control board and its various components. In phase two, Newman rendered advice on the selection of an alternate manufacturer. Phase three involved an after-the-fact trouble-shooting role that Newman undertook. All phases were performed pursuant to a contract. The court stated that as to all phases of the relationship, public policy does not warrant the imposition of a duty upon Newman to exercise reasonable care independent of the contractual duties:

“Primarily, this is so because of the nature of his services — an unincorporated consultant engaged in rather impersonal and relatively unregulated (compared to many other industries) field of computer design. Also, the nature of his relationship with CM was arms-length and, while he may have been vested with a certain degree of responsibility, his duties were not affected by any significant public interest. If liability exists, it is purely contractual. Actually, public policy weighs against allowing tort liability considerations to interfere with the ordering of private contractual relationships in many instances, this being one of them. Tort law is premised primarily upon the public policy of making the injured party whole, while contract law is meant to facilitate primarily economic exchange and is premised upon the ordering of private affairs by the parties involved. To infuse the current controversy with tort law, allowing it to further encroach upon private bargain-for relationships, would only upset the necessary order and predictability upon which the business world relies.” Id. at 1183-84. (citations omitted)

In Hospital Computer Systems Inc. v. Staten Island Hospital, 788 F. Supp. 1351 (D.N.J. 1992), the court rejected the argument that computer consultants are professionals in the same sense as doctors, lawyers, accountants and others who are held to a higher standard of care under the law. A professional is distinguished by the requirements of extensive formal training and learning, admission to practice by a qualifying licensure, a code of ethics, a system for discipline, and an obligation of its members to conduct themselves as members of a learned, disciplined, and honorable occupation. The court said:

“Professionals may be sued for malpractice because the higher standards of care imposed on them by their profession and by state licensing requirements engenders trust in them by clients that is not the norm of the marketplace. When no such higher code of ethics binds a person, such trust is unwarranted. Hence, no duties independent of those created by contract or under ordinary tort principles are imposed on them.” Id. at 1361.

Rapidigm also relies on Raymond T. Nimmer, The Law of Computer Technology §9:30 (2002), which contends that malpractice claims against computer consultants should not be recognized because of the absence of a standard of the profession:

“Most practitioners in computer consulting, design, and programming do not fit a model that creates malpractice liability. These businesses and ‘professional’ parties clearly engage in complex and technically sophisticated activities. Computer programmers commonly define themselves as ‘professionals.’ Yet, despite the complexity of the work, computer programming and consultation lack the indicia associated with professional status for purposes of imposing higher standard of reasonable care. While programming requires significant skill and effective consultation requires substantial business and technical knowledge, the ability to practice either calling is not restricted or regulated at present by state licensing laws. If anything, programming skills have proliferated throughout the general public during the past decade and become less, rather than more, the exclusive domain of a profession specially trained and regulated to the task. Unlike traditional professions, while practitioner associations exist, there is no substantial self-regulation or standardization of training within the programming or consulting professions.” (Rapidigm’s appendix to brief, exhibit 11.)

Bridgestone/Firestone Inc. v. Cap Gemini America Inc., 2002 WL 1042089 (Del. Super. Ct. 2002) (unpublished opinion), is the only decision which the parties cite, rendered since 1990, that supports ATM’s position. In this case, the Delaware court, applying Tennessee law, ruled that a computer consultant is a professional under the Restatement (Second) of Torts §299A. The court did so because Tennessee has broadly construed section 299A to include all professions and trades, including precision machinists, carpenters, and blacksmiths. In footnote 13 at *4, the opinion refers to the case law of other jurisdictions that reaches the opposite result, as well as Diversified Graphics Ltd. v. Groves, 868 F.2d 293 (8th Cir. 1989), applying Missouri law and holding a computer consultant to the standards of a professional.

For the reasons that I have stated, an expanded reading of section 299A to cover any providers of specialized services, such as computer consultants, is inconsistent with the development of the case law allowing parties to commercial transactions to define by written agreement the obligations of the parties and the remedies for violations of these obligations. I am not aware of any justification for creating an exception to this approach for those service providers whose obligations to their customer s/clients have traditionally been governed by the language within a contract.

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

ORDER

On July 10, 2003, it is hereby ordered that plaintiff’s preliminary objections to the counts within defendant’s counterclaim of fraud, misrepresentation, and professional negligence are sustained and these claims are dismissed.

      .25 percent of the contract price was to be paid initially, and additional 25 percent payments were to be made when the project was 33 percent complete, 67 percent complete, and 100 percent complete. ATM made two of the four payments.

      . Before the project was completed, Rapidigm terminated the agreement pursuant to a provision in the agreement allowing either party to terminate upon 30 days notice. ATM alleges that Rapidigm terminated the agreement after ATM refused to pay an additional $1.2 million to complete the project.

      . Gorski involved legal malpractice. Most legal malpractice claims involve only economic losses. Consequently, the application of the economic loss doctrine to legal malpractice would limit clients’ causes of action to a breach of contract claim.

      . The Rules of Civil Procedure governing professional liability actions are restricted to attorneys and other persons who are licensed pursuant to an Act of Assembly. Pa.R.C.P. 1042.1.

      . “[T]he cases seem to turn on the question of whether the fraud concerned the performance of contractual duties. If so, then the alleged fraud is generally held to be merely collateral to a contract claim for breach of those duties. If not, then the gist of the action would be the fraud, rather than any contractual relationship between the parties.” 811 A.2d at 19.

      . Illinois case law restricts the scope of professional negligence actions by applying the economic loss doctrine to actions against service providers except where the adequacy of the professional services is not usually measured by what was achieved. Thus, while Illinois courts apply the economic loss doctrine to bar a client’s professional negligence claim against an architecture firm, they do not apply this doctrine to professional negligence claims against attorneys and accountants. Congregation of the Passion, Holy Cross Province v. Touche Ross & Co., 636 N.E.2d 503 (Ill. 1994).


author: FEUD ALE, S.J.,

text:
    Fulton v. Gavlick

      John J. Speicher, for plaintiff Fulton.

      Barbara H. Beringer, for plaintiffs Steffy and Moody.

      Jean Gilroy Gavlick, pro se.
    June 17, 2003
   FEUD ALE, S.J.,

In January of 1998, plaintiffs Candice Steffy and Geri Moody retained Jean Gilroy Gavlick, Esquire, and the firm of Gavlick & Rowe P.C. to assist them in the administration of the estate of their deceased mother, Doris M. Killian, who had died one month earlier. In January of 2000, plaintiff George Fulton retained Attorney Gavlick to assist him in the administration of the estate of his deceased mother, Jacqueline M. Fulton. Plaintiff Patricia Rittenhouse likewise retained Attorney Gavlick to assist her when her mother, Dorthea Brown, died in July of 2000. Alfred Laverick hired Attorney Gavlick to assist him with his personal affairs and his deceased wife Mary’s estate. After gathering the assets from the various estates, what transpired was not professional representation, but an elaborate shell game whereby Attorney Gavlick transferred monies out of these estates into her own pocket and then from one estate to another, “robbing Peter to pay Paul,” to keep her scheme from being discovered. Despite her best efforts, she has been discovered, disbarred and disgraced.

I. PROCEDURAL HISTORY

On July 30,2001, plaintiff George Fulton commenced this lawsuit against defendants Jean Gilroy Gavlick and Gavlick & Rowe PC., by writ of summons. On September 19, 2001, plaintiff Alfred Laverick likewise commenced suit. On November 2, 2001, this case was assigned to the Honorable Peter W. Schmehl, along with the Rittenhouse suit, docket no. 01-8544; the Laverick suit, no. 01-9427 and the Steffey and Moody suit, no. 01-10546. The complaint was filed by plaintiff Fulton on November 7, 2001. On December 6, 2002, plaintiff Fulton filed an amended complaint for breach of fiduciary duty — contract, fraud, breach of contract, conversion, negligence and respondeat superior, with requests for punitive damages. On December 12, 2001, plaintiffs Fulton, Rittenhouse, Laverick, Steffey and Moody moved the court for consolidation of these matters, which the court granted on January 17,2002. On January 31,2002, the defendant Gavlick filed an answer with new matter. On February 1, 2002, all of the judges on the Berks County bench recused themselves and all proceedings were stayed pending reassignment of the case; on February 28, 2002, the matter was reassigned to the undersigned. On May 6, 2002, plaintiffs Steffey and Moody filed their complaint for breach of fiduciary duty — contract, fraud, breach of contract, conversion, negligence and respondeat superior, with requests for punitive damages. On June 10,2002, a judgment was entered in favor of plaintiff Alfred A. Laverick by stipulation. A pretrial conference was scheduled for July 26, 2002. By pretrial order of August 12, 2002, the jury trial was scheduled for September 30, 2002, in order to give the defendant more time to make restitution to the plaintiffs. The trial date was continued to November 7, 2002. On October 18,2002, defendant Gavlick entered guilty pleas to eight counts of theft in the three related criminal cases. Plaintiffs Fulton, Moody and Steffey filed requests to amend their complaints to include counts under the Unfair Trade Practices and Consumer Protection Law, 73 PS. §§201-2 through 201-9.2, to which both defendants filed preliminary objections. Said objections were sustained on October 22,2002. On November 7,2002, the court approved settlement agreements entered into by the three remaining plaintiffs and Gavlick & Rowe PC. Gavlick & Rowe PC. was thereafter discontinued as a party defendant. Plaintiffs reserved the right to pursue their claims against the defendant. By agreement of the parties, a bench trial was scheduled at a later date to permit discovery re: Gavlick’s assets. On December 16, 2002, counsel for defendant, Jeffrey McCarron, Esquire, petitioned the court to withdraw as counsel for the defendant; said petition was granted and the trial was continued to permit the defendant time to obtain new counsel. Plaintiff Rittenhouse withdrew her action against the defendant by praecipe. The bench trial was ultimately held on March 28,2003; the defendant proceeded pro se. Defendant was given 30 days to file proposed findings of fact, conclusions of law and a brief in response to plaintiffs’ filing of the same. On April 24, 2003, defendant petitioned the court for additional hearing and opportunity to submit additional documents. On May 8,2003, the court denied defendant’s request for additional hearing, but granted the request to submit limited additional documentation and gave Gavlick 20 days in which to do so. As of this date, no additional documentation has been filed.

II. FINDINGS OF FACT

(1) Plaintiff, George Fulton, is the executor of the estate of Jacqueline M. Fulton, deceased, and resides at the premises known as 311 West Green Lane, Reading, Berks County, Pennsylvania.

(2) Plaintiffs, Candice E. Steffey, of R.D. 5, Box 5636, Mohnton, PA, and Geri D. Moody of P.O. Box 422, Robbinsville, North Carolina, are executrices of the estate of Doris M. Killian, deceased.

(3) Defendant, Jean Gilroy Gavlick, is an adult individual who is presently incarcerated in the Penn Pavilion, New Brighton, Pennsylvania, pursuant to a sentence imposed on her by this honorable court on October 18, 2002.

(4) In addition to the claims that plaintiffs are asserting against defendant Jean Gilroy Gavlick, plaintiffs had also filed claims against Gavlick & Rowe P.C., the law firm at which Jean Gilroy Gavlick was a partner during the time she represented them.

(5) Plaintiffs have resolved their claims against Gavlick & Rowe PC., pursuant to terms of settlement petitions that were approved by an order of this court on November 7, 2002.

(6) Plaintiff Fulton received total proceeds through his settlement with Gavlick & Rowe PC. and restitution of Jean Gilroy Gavlick in the amount of $211,906.51. Restitution by Ms. Gavlick equals $93,500, $85,000 of which was paid in September of 2001, and $8,500 of which was paid in November of 2002.

(7) Plaintiffs settled with Gavlick & Rowe PC., but specifically preserved all claims arising out of the intentional and criminal conduct of Jean Gilroy Gavlick.

(8) In January of 2000, plaintiff Fulton retained the law firm of Gavlick & Rowe PC. to assist him in the administration of the estate of his deceased mother, Jacqueline M. Fulton.

(9) Jean Gilroy Gavlick was the lead counsel in representing plaintiff Fultón and she entered into a fee agreement with plaintiff on January 7, 2000, and represented him through and including August 30, 2001. (Plaintiff Fulton’s exhibit 1, notes of testimony, 10/18/02, p. 9.)

(10) Assets of the estate included the residence of Jacqueline M. Fulton at 611 Lamberton Drive, Wheaton, Maryland, together with various stocks and bonds.

(11) On or about December 22, 2000, the home of Jacqueline M. Fulton was sold and the net proceeds from the sale were sent to plaintiff Fulton.

(12) At the instruction of defendant Gavlick, plaintiff Fulton endorsed the settlement check over to Attorney Gavlick and instructed a paralegal at Gavlick & Rowe PC. to deposit the settlement proceeds into the estate escrow account.

(13) As part of being retained by plaintiff Fulton, defendant Gavlick came into possession of $197,789.28. (Plaintiff’s exhibit 1, p. 9.)

(14) Defendant Gavlick used the money to her benefit rather than to the benefit of the Fulton estate. (Id. )

(15) On August 22, 2001, defendant Gavlick entered into a stipulation with plaintiff Fulton, agreeing to repay the estate by September 13, 2001; said stipulation was approved by the Honorable Peter W. Schmehl by order of court on August 23, 2001.

(16) By October 18, 2002, defendant Gavlick only returned $85,079.61 to the Fulton estate. (Id.)

(17) Defendant Gavlick failed to return $112,436.61 to the estate as requested and as required by her legal obligation. (Id.)

(18) On or about January 1, 1998 through August 30, 2001, defendant Gavlick was retained by plaintiff Laverick to handle the Laverick estate. (Plaintiff’s exhibit 1, atp. 10.)

(19) Defendant Gavlick received $50,000 from the Laverick estate. (Id. at p. 10.)

(20) Defendant Gavlick used this money to her benefit rather than to the benefit of the Laverick estate; she also failed to turn this money over to the estate. (Id. at p. 11.)

(21) Between January 1, 1998 through and including August 30, 2001, defendant was retained by Patricia Rittenhouse to handle the Dorthea Brown estate.

(22) Defendant Gavlick received $70,000 from the Brown estate. (Plaintiff’s exhibit 1, p. 11.)

(23) Defendant Gavlick used this money to her benefit rather than to the benefit of the Brown estate; she also failed to turn this money over to the estate. (Id.)

(24) From January 1, 1998 through August 30, 2001, defendant Gavlick was retained by plaintiffs Steffey and Moody to handle the Killian estate. (Id. at p. 13.)

(25) As part of being retained by plaintiffs Steffey and Moody, defendant Gavlick came into possession of $410,125.43. (Plaintiffs’ exhibit 3, p. 2.)

(26) Defendant Gavlick paid plaintiffs Steffey and Moody $317,270 from the funds she received from the estate. {Id. atp. 3.)

(27) Defendant also entered into stipulations with plaintiffs Steffey and Moody for return of the remaining assets to the estate of Doris M. Killian by January 30, 2002. (Plaintiffs’ exhibit 3.)

(28) Defendant Gavlick received $77,740.03 from the Killian estate. (Plaintiffs’ exhibit 1, p. 13.)

(29) Defendant Gavlick used this money to her benefit rather than to the benefit of the Killian estate; she also failed to return this money to the estate. (Plaintiffs’ exhibit 1, p. 13.)

(30) Defendant Gavlick was criminally charged with, inter alia, theft by failure to make required disposition of funds relating to these four estates, Fulton, Brown, Laverick and Killian, as well as several others.

(31) Civil actions for money damages involving these four estates were filed, and consolidated for trial.

(32) Defendant Gavlick pled guilty to the theft charges revolving around her conduct in the administration of the Fulton, Brown, Laverick and Killian estates. (Plaintiffs’ exhibit 1.)

(33) Defendant Gavlick stole large sums of money from her clients and used this money for her own benefit, for the purchase of, inter alia, furs, jewelry, artwork and furniture.

(34) Defendant Gavlick then stole large sums of money from other clients, particularly plaintiff Fulton, to repay some of the assets she took to keep her criminal actions from being discovered. (Plaintiffs’ exhibit 2, pp. 56-57.)

(35) Defendant Gavlick’s conduct was a factual cause of the harm suffered by plaintiffs Fulton and Steffey and Moody.

(36) Defendant Gavlick claimed she used these assets to pay extraordinary medical expenses for her son’s medical prescriptions, between 1995 and 2001, in a total amount of $250,000 and that none of these were covered by any health insurance. (Plaintiffs’ exhibit 2, pp. 12-13, 15-16.)

(37) When asked to account for the $400,000 plus stolen from the estates, defendant Gavlick claimed it was used to pay her son’s prescription expenses. (Id. at p. 82.)

(38) Defendant, despite claiming she paid approximately $3,000 per month for prescriptions over several years, could not remember the name of the drug company nor could she substantiate her claims because she paid by money order or cashier’s check and the company has gone out of business. (Id. atpp. 101,103,105.)

(39) Defendant Gavlick claimed Capital Blue Cross, which provided medical insurance coverage through her husband’s job at Bank of Pennsylvania, denied the claims for her son’s prescriptions. (Id. at p. 105.)

(40) Defendant Gavlick did not take a deduction for these medical expenses on her tax returns. (Id. at p. 104.)

(41) Defendant Gavlick’s testimony is not credible; she did not use the stolen funds to pay for medical expenses for her son.

(42) Defendant Gavlick always made sure that her son’s medical treatments were being covered under her husband Blase’s insurance.

(43) Defendant Gavlick has provided no documentary evidence to support her claim that she stole the funds to pay for her son’s extraordinary medical expenses over several years.

(44) Defendant Gavlick’s conduct was willful and wanton.

(45) Through the settlement with Gavlick & Rowe PC., its insurance carrier, Westport Insurance Company, and with the proceeds received through the Pennsylvania Client Security Fund, all plaintiffs, except George Fulton, Candice E. Steffey and Geri D. Moody, have been made whole for the losses sustained by the criminal conduct of Jean Gilroy Gavlick and/or the negligent conduct of Gavlick & Rowe P.C.

(46) Defendant Gavlick continues to refuse to take full responsibility for her actions and instead has offered excuses and blames others; even to the point of stating Cheryl Rowe of Gavlick & Rowe P.C. “was quite an expert at handling a gun” and stating “[Ms. Rowe] made a point of telling me that she knew where my children were on most days.” (Plaintiffs’ exhibit 2 at pp. 58-62.)

(47) Defendant Gavlick’s conduct is outrageous.

(48) Defendant Gavlick claims to have a negative net worth. (Plaintiffs’ exhibit 2 at p. 81.)

(49) In late August, 2002, several Citizens Bank Certificates of Deposit, jointly owned by defendant Gavlick and her mother, Hazel Gilroy, in the aggregate amount of approximately $69,000, were redeemed early.

(50) Defendant was present with her mother when the CDs were cashed in.

(51) Defendant Gavlick has not complied with discovery requests and orders and has attempted to deceive the court concerning the use of the stolen proceeds, how the fruits of her crimes were dissipated and/or whether or not they have been retained by herself, her family or her friends.

(52) Defendant Gavlick has yet to disclose what she actually did with all of the plaintiffs’ monies.

III. DISCUSSION

The main issue before this court is what measure of punishment, by means of punitive damages, should it impose upon Jean Gilroy Gavlick for her willful, wanton and outrageous conduct. Liability for the harm caused by the defendant’s fraud upon her victims has clearly been established by her guilty pleas to eight counts of theft. The only issues remaining in that regard are the amounts of compensatory damages that should be awarded to plaintiffs Fulton, Steffey and Moody. Plaintiff Fulton requests that, due to the defendant’s discovery violations, we enter a default judgment against the defendant for the full amount of the monies initially taken. This we decline to do, as plaintiff Fulton concedes that $93,500 was returned to him. (Plaintiffs’ proposed finding of fact no. 39). We find the compensatory damages based upon the actual harm suffered to be a mathematical calculation, the amount of monies stolen, minus the amounts that were returned to the plaintiffs by defendant Gavlick. The amount taken from plaintiff Fulton was $197,789.28. (Plaintiffs’ exhibit 1, p. 9.) The amount returned to him was $93,500. Therefore, we find plaintiff Fulton is entitled to compensatory damages in the amount of $104,289.28. Likewise, the amount of monies taken from plaintiffs Steffey and Moody was $77,740.03. (Id. at p. 13.) We find no support in the record that any of this money was returned to them, thus, we find they are entitled to the full amount as compensatory damages. We also find that the plaintiffs are entitled to statutory interest on these amounts. Defendant argues that the plaintiffs have been made whole and they should not recover. We reject this argument because of the subrogation hens that Westport Insurance Company and the Pennsylvania Client Security Fund would have for amounts they paid out to the plaintiffs. Defendant also argues that plaintiffs gave up their right to pursue additional damages against her by signing the settlement of November 7,2002, with Gavlick & Rowe PC. The settlements that we approved specifically stated that they were not settlements of any possible claims of any nature that could be brought against Jean Gilroy Gavlick and such remained open and subject to further order of this court.

We turn our attention to the issue of punitive damages and the standards we must apply to be able to impose them in this case. The Supreme Court of Pennsylvania has adopted the guideline of section 908(2) of the Restatement (Second) of Torts regarding the imposition of punitive damages. Feld v. Merriam, 506 Pa. 383, 395, 485 A.2d 742, 747 (1984). Punitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others. See Chambers v. Montgomery, 411 Pa. 339, 192 A.2d 355 (1963). “Punitive damages must be based on conduct which is malicious, wanton, reckless, willful, or oppressive... Shiner v. Moriarty, 706 A.2d 1228, 1239 (Pa. Super. 1998). Further, one must look to “the act itself together with all the circumstances including the motive of the wrongdoers and the relations between the parties .. ..” Feld at 395, 485 A.2d at 748. (citation omitted) “The state of mind of the actor is vital. The act. . . must be intentional, reckless or malicious.” Id. at 396, 485 A.2d at 748.

“[Pjunitive damages are [not only] awarded to punish a defendant for certain outrageous acts, [but also] to deter him or others from engaging in similar conduct.” G.J.D. by G.J.D. v. Johnson, 552 Pa. 169, 176, 713 A.2d 1127, 1131 (1998). (citation omitted) (emphasis in original) The standard under which punitive damages are measured in Pennsylvania requires analysis of the following factors: (1) the character of the act, (2) the nature and extent of his victim’s harm, and (3) the wealth of the defendant. Kirkbride v. Lisbon Contractors Inc., 521 Pa. 97, 102, 555 A.2d 800, 803 (1989) (citing Restatement (Second) of Torts §908(2)); accord Tunis Brothers Co. Inc. v. Ford Motor Company, 952 F.2d 715, 740-41 (3d Cir. 1991), cert. denied, 505 U.S. 1221, 112 S.Ct. 3034, 120 L.Ed.2d 903 (1992) (applying Pennsylvania law). It is for the fact-finder to weigh these factors in arriving at an appropriate punitive damage award. Kirkbride at 102, 555 A.2d at 802.

The Pennsylvania Supreme Court has held that the award need not bear a proportional relationship to the amount of compensatory damages awarded. See Kirkbride at 103-104, 555 A.2d at 803. “Under Pennsylvania law, a reasonable relationship must still exist between the nature of the cause of action underlying the compensatory award and the decision to grant punitive damages.” Judge Technical Services Inc. v. Clancy, 813 A.2d 879, 888 (Pa. Super. 2002). (citation omitted) “The degree of reprehensibility is the primary indicator of the reasonableness of a punitive damages award. Id. The reprehensibility inquiry takes into consideration the fact that some wrongs are more blameworthy than others.” Id. at 888. (citation omitted)

However, we are mindful that recent cases from the United States Supreme Court have held that excessive punitive damages awards violate due process. Judicial review of the size of punitive damage awards provides a safeguard against excessive verdicts. Honda Motor Co. Ltd. v. Oberg, 512 U.S. 415, 114 S.Ct. 2331, 2335, 129 L.Ed.2d 336, 343 (1994). In Honda, the Supreme Court explicitly declined to adopt or identify any particular standard of review which provides the level of scmtiny demanded by the Fourteenth Amendment. Id., 512 U.S. 415, 114 S.Ct. at 2341 n.10, 129 L.Ed.2d at 350 n.10. But the Supreme Court indicated in that case that the award cannot be the result of “passion and prejudice,” the awards should not be “grossly excessive,” or “against the weight of the evidence.” In BMW of North America Inc. v. Gore, 517 U.S. 559, 134 L.Ed.2d 809, 116 S.Ct. 1589 (1996), the United States Supreme Court stated, “Elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a state may impose.” Id. at 826. Where the ratio of punitive damages to compensatory damages is not within a constitutionally acceptable range, it must surely “raise a suspicious judicial eyebrow.” Id. at 831. What a constitutionally acceptable range is has not yet been dictated to the lower courts by the high court. Very recently, in State Farm Mutual Automobile Insurance Company v. Campbell, 538 U.S., 155 L.Ed.2d 585, 123 S.Ct. 1513 (2003), the U.S. Supreme Court again declined to impose a bright-line ratio which a punitive damages award cannot exceed. Id. at 1524. Nevertheless, it stated, “Our jurisprudence and the principles it has now established demonstrate ... that in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.” Id.

With these principles in mind, we turn to the evidence before us:

“I have respect for my mother and I know that is her money.” So said the defendant during the non-jury trial on March 28, 2003, when asked why the certificates of deposit in her and her mother’s name were not used to pay restitution to the victims in this case. The court asked itself, “What about all the money that was heir money, that she treated as her money? Where was the respect?” What defendant Gavlick gave the heirs was reckless indifference at a time when they were suffering both human and financial losses. Shortly after the loss of their loved ones, plaintiffs came to Attorney Jean Gilroy Gavlick for help. They entrusted their affairs to her. She betrayed that trust, not just once, but over and over again. This conduct persisted for years. Gavlick even stole money from one estate to repay another in an attempt to keep from getting caught. She had clients send her money under false pretenses. She told her clients that she was filing tax returns for the estates when she did not. Even after her scheme began unraveling, she called trusting clients to attempt to get more money to cover her tracks.

Because Gavlick was an attorney that these clients hired when they were most vulnerable, we find that these wrongs are more blameworthy than others. As we commented during the guilty plea proceedings on October 18, 2002, the word “estate” is a term of art for actions occurring in an orphans’ court proceeding that involve probate of the estate either in accordance with the direction of the person who prepared the will or according to the laws of inheritance. A will is a simple document where we say to our loved ones, our friends, or charities, “while my body and soul are leaving you, I am remembering you by leaving you my money, my home, my car, my personal remembrances.” It is an emotional process undergone by decedents to decide who is to get what and what to pass on, to which loved ones. The decedent is saying, “I am giving you my right, my title, my interest in all that I have left to give.” But to facilitate this, most people need a lawyer. They come to an honorable and trusted profession. The defendant responded to the call with trickery and deceit. She was indifferent to her clients’ grief. She was not entitled to take from the lifelong efforts of persons who had nothing other than memories and their personal possessions to give to those who survived them. And the fact that Gavlick repeated this conduct over and over, with more than just one client, makes her conduct that much more reprehensible. Gavlick’s motive was to maintain her lifestyle when she (supposedly) faced economic shortfalls because of her husband’s and son’s medical problems. Her self-interest superseded her clients’ and instead of handling the financial problems as any responsible adult would do, whether it was to declare bankruptcy or to take out loans, the defendant, with reckless indifference to the rights of her clients, intentionally stole their money to keep herself from facing any losses. Whether it was for medical prescriptions, or for fur coats, jewelry, or expensive artwork is irrelevant. There is no justification for what she did.

We find that Gavlick’s actions were reprehensible. Plus, the nature and extent of the harm to the plaintiffs is obvious. After the death of their loved ones, they endured years of deceptions and lies, causing them additional emotional pain and financial losses, not to mention substantial legal fees incurred in trying to get the estates settled and their property, that their deceased loved ones intended for them to have, returned.

The court has not been able to determine the net worth of the defendant. However, in determining punitive damages, evidence of net worth is not mandatory. Shiner, supra, at 1240. We note that, during the course of the discovery and the non-jury trial, what became apparent is that the defendant, still fails to take full responsibility for her outrageous conduct. She is still refusing to acknowledge the gravity of her conduct and the enormity of her offenses. With every retelling of her tale of woe, defendant, again and again, tries to deceive. She has failed to persuade this court.

Therefore, we find an award of punitive damages is appropriate to punish the defendant and to deter others from abusing positions of trust by stealing from their clients. We are guided by the recent decisions of the U.S. Supreme Court and therefore, we find an award of $104,289.28 in punitive damages payable to plaintiff Fulton to be appropriate, and not excessive. We also find an award of $77,740.03 in punitive damages payable to plaintiffs Steffey and Moody to be appropriate.

We also find that prejudgment interest is appropriate in this case because the damages are liquidated amounts and the fault in nonpayment of the claims rests with the fiduciary defendant, who had the benefit of plaintiffs’ money and who failed to return the money, even after she had so agreed. See generally, Marrazzo v. Scranton Nehi Bottling Company Inc., 438 Pa. 72, 263 A.2d 336 (1970); Sack v. Feinman, 489 Pa. 152, 413 A.2d 1059, 1063-66 (1980).

As plaintiffs have proceeded on their tort claims, we will dismiss their remaining claims .as moot.

IV. CONCLUSIONS OF LAW

(1) Defendant, Jean Gilroy Gavlick, has admitted through her guilty plea entered in this case that she misappropriated $197,789.28 from plaintiff George Fulton.

(2) Defendant, Jean Gilroy Gavlick, has admitted through her guilty plea entered in this case that she misappropriated $77,740.03 from plaintiffs Steffey and Moody.

(3) The defendant’s conduct was the legal cause of the harm suffered by the plaintiffs, and they are entitled to their actual damages for the fraud.

(4) Plaintiff Fulton has received total restitution from defendant Gavlick in the amount of $93,500.

(5) Plaintiffs Steffey and Moody have received no restitution from defendant Gavlick.

(6) Prejudgment interest can be awarded to the plaintiffs because the damages are liquidated amounts and the fault in nonpayment of plaintiffs’ claims rests with the defendant.

(7) Plaintiff Fulton is entitled to statutory interest for the sum of $197,789.28 from February 1,2001 until September 13, 2001, when plaintiff received restitution in the amount of $85,000. Plaintiff Fulton is also entitled to interest on the unpaid balance at 6 percent annum, from September 13, 2001 until November 7, 2002.

(8) Plaintiffs Steffey and Moody are entitled to statutory interest for the sum of $77,740.03 from January 1, 2001 until November 7, 2002.

(9) Liens on behalf of Westport Insurance Company and the Pennsylvania Client Security Fund in the amounts paid to plaintiffs are recognized and preserved.

(10) The conduct of the defendant was outrageous and reprehensible.

(11) The nature and the extent of the harm suffered by the plaintiffs was substantial.

(12) The imposition of punitive damages against the defendant to punish her and to deter others is appropriate.

(13) Punitive damages in the amount of $104,289.28 are reasonable and are due to plaintiff Fulton.

(14) Punitive damages in the amount of $77,740.03 are reasonable and are due to plaintiffs Steffey and Moody.

(15) All other terms of the court’s order of January 16, 2002 (plaintiffs’ exhibit 3), shall remain in full force and effect.

Accordingly, we enter the following verdict:

VERDICT

And now, June 17, 2003, it is hereby ordered that a verdict is entered in favor of plaintiff George Fulton, individually and as executor of the estate of Jacqueline M. Fulton, deceased, and against defendant, Jean Gilroy Gavlick, for fraud, in the amount of $104,289.28, plus statutory interest on the sum of $197,789.28 from February 1, 2001 until September 13, 2001, when plaintiff received restitution in the amount of $85,000. It is further ordered that interest on the unpaid balance at 6 percent annum, from September 13, 2001 until November 7,2002, shall also be due and payable to plaintiff Fulton. It is further ordered that punitive damages in the amount of $104,289.28 are awarded in favor of the plaintiff, George Fulton, and against the defendant, Jean Gilroy Gavlick, to punish defendant Gavlick for her outrageous conduct in the handling of the estate of Jacqueline M. Fulton.

It is further ordered that the remaining counts in plaintiff Fultons’ amended complaint are dismissed as moot.

It is further ordered that a verdict is entered in favor of plaintiffs Candice E. Steffey and Geri D. Moody, individually and as executors of the estate of Doris M. Killian, deceased, and against defendant, Jean Gilroy Gavlick, for fraud, in the amount of $77,740.03. It is further ordered that statutory interest for the sum of $77,740.03, from January 1,2001 until November 7,2002, shall also be due and payable to plaintiffs Steffey and Moody. It is further ordered that punitive damages in the amount of $77,740.03 are awarded in favor of plaintiffs, Candice E. Steffey and Geri D. Moody, and against the defendant, Jean Gilroy Gavlick, to punish defendant Gavlick for her outrageous conduct in the handling of the estate of Doris M. Killian.

It is further ordered that the remaining counts in plaintiffs Steffey and Moody s’ complaint are dismissed as moot.

It is further ordered that all other terms of the court’s order of January 16, 2002 shall remain in full force and effect.-