Justia Contracts Opinion SummariesArticles Posted in Supreme Court of Pennsylvania
Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C.
This matter arose from a wrongful death lawsuit filed by the Estate of Richard Eazor deriving from a motor vehicle accident. The Eazor Estate was represented by Attorney William Weiler, Jr., who entered his appearance in the matter in March 2005. By December 1, 2005, Weiler became associated with Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. Weiler brought the Eazor Litigation with him and Meyer Darragh attorneys worked on the Eazor Litigation for over seventy hours over a nineteen-month period. In May 2007, Weiler resigned from Meyer Darragh. At that time, Meyer Darragh understood it would continue as lead counsel in the Eazor Litigation along with Weiler at his new firm. Written correspondence at the time of Weiler’s separation from Meyer Darragh indicated that Meyer Darragh would receive two-thirds of the attorneys’ fees arising out of the Eazor Litigation, and Weiler would retain one- third of the fees. In an earlier decision in this case, the Pennsylvania Supreme Court held Meyer Darragh, as predecessor counsel, was not entitled to breach of contract damages against successor counsel, the Law Firm of Malone Middleman, P.C., where a contract regarding counsel fees did not exist between the two firms. The Supreme Court granted discretionary review nunc pro tunc to determine whether Meyer Darragh was entitled to damages in quantum meruit against Malone Middleman, where the trial court initially held such damages were recoverable, but the Superior Court reversed. After review, the Supreme Court reversed the Superior Court and remanded to the trial court for reinstatement of its award of damages in quantum meruit to Meyer Darragh against Malone Middleman. View "Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C." on Justia Law
Danganan v. Guardian Protection Svc.
The Third Circuit Court of Appeals certified a question of Pennsylvania law to the Pennsylvania Supreme Court. Appellant Jobe Danganan’s contracted with Appellee Guardian Protection Services (“Guardian”), a Pennsylvania-headquartered business, for home security equipment and services at his then-home in Washington, D.C. The contract signed by Appellant, a standardized form agreement employed by Guardian, contained, inter alia, a choice-of-law provision, stating that the “Agreement shall be governed by the laws of Pennsylvania.” Another clause required that any suit or legal proceeding pertaining to the Agreement be brought in the other party’s district or county of residence and mandated that the parties consent to jurisdiction in such venue. Prior to the expiration of the Agreement’s purported three-year initial term, Appellant moved to California and sold his Washington, D.C. house, notifying Guardian of his intent to cancel the contract and related home protection services. However, Guardian continued to bill Appellant, citing provisions of the Agreement that it claimed authorized ongoing charges through the contract’s term, regardless of cancellation attempts. Appellant filed a complaint in the Court of Common Pleas of Philadelphia County on behalf of himself and a putative class of nationwide plaintiffs who were subject to the same form contract. His claims for relief were predicated exclusively on Pennsylvania statutory grounds, namely, the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL") and Pennsylvania’s Fair Credit Extension Uniformity Act. The matter was removed to federal district court, and Guardian moved to dismiss, arguing that Appellant had not, pursuant to the UTPCPL, demonstrated a "sufficient nexus" between the Commonwealth and the improper conduct alleged in the complaint. In response to the first certified question, the Pennsylvania Supreme Court held that a non- Pennsylvania resident may bring suit under the UTPCPL against a Commonwealth-headquartered business based on transactions that occurred out-of-state. Furthermore, the Court concluded that its answer to the first issue eliminated the predicate to the second question certified for review. The matter was thus returned to the Third Circuit Court of Appeals. View "Danganan v. Guardian Protection Svc." on Justia Law
SCF Consulting, LLC. v. Barrack Rodos & Bacine
Appellant SCF Consulting, LLC lodged a civil complaint against Appellee, the law firm of Barrack, Rodos & Bacine, in the common pleas court. Appellant averred that it had maintained a longstanding oral consulting agreement with the law firm, which the firm purportedly breached in 2014. According to Appellant, the arrangement was for the solicitation of institutional investors to participate in securities class actions, and remuneration was to be in the form of a two-and-one-half to five-percent share of the firm’s annual profits on matters “originated” by Appellant’s principal or on which he provided substantial work. Appellant claimed the consulting agreement qualified as an express exception to the anti-fee-splitting rule for an employee “compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.” Alternatively, Appellant argued Appellee’s attempt to invoke public policy as a shield was an “audacious defense” which, if credited, would perversely reward the law firm by allowing it to profit from its own unethical conduct. The county court agreed with Appellee’s position concerning both the nonapplicability of the exception to Rule 5.4(a)’s prohibition and the unenforceability of the alleged agreement. The Pennsylvania Supreme Court concluded the ultimate outcome of this case might turn on factual findings concerning Appellant’s culpability, or the degree thereof, relative to the alleged ethical violation. The Court held only that the contract cause of action was not per se barred by the purported infraction on Appellee’s part and, accordingly, the county court’s bright-line approach to the unenforceability of the alleged consulting agreement should not have been sustained. View "SCF Consulting, LLC. v. Barrack Rodos & Bacine" on Justia Law
Posted in: Business Law, Civil Procedure, Contracts, Professional Malpractice & Ethics, Supreme Court of Pennsylvania
Erie Insurance Exchange v. Bristol
The Pennsylvania Supreme Court granted allowance of appeal in this case to determine when the statute of limitations begins to run on an uninsured motorist (UM) claim under an insurance policy. Specifically, the issue reduced to whether the statute of limitations begins to run on an insured’s ability to initiate a court action to enforce a UM claim in a policy containing an arbitration agreement. The Superior Court held that, for the purpose of UM and underinsured motorist (UIM) claims, the statute of limitations begins to run when a claimant injured in an automobile accident first learns that the other driver is uninsured or underinsured. However, the Supreme Court determined this conclusion was not adequately grounded in the pertinent statutory text, prevailing statute of limitations doctrine, or significant public policy concerns. Accordingly, the Court held that statute of limitations principles attending contract claims apply, and that the running of the statute was commenced upon an alleged breach of a contractual duty, which in this case would be occasioned by the insurer’s denial of coverage or refusal to arbitrate. The Court therefore reversed the Superior Court’s order to the contrary. View "Erie Insurance Exchange v. Bristol" on Justia Law
Rancosky v. Washington National Ins. Co.
In this discretionary appeal, and in a matter of first impression, the Pennsylvania Supreme Court considered the elements of a bad faith insurance claim brought pursuant to Pennsylvania’s bad faith statute, 42 Pa.C.S. section 8371. In 1992, while working for the United States Postal Service (“USPS”) Appellee LeAnn Rancosky purchased a cancer insurance policy as a supplement to her primary employer-based health insurance. The cancer policy was issued by Appellant Conseco Health Insurance Company (“Conseco”). To pay for the policy, Rancosky’s employer automatically deducted bi-weekly payments of $22.00 from her paycheck. The policy contained a waiver-of premium provision, which excused premium payments in the event Rancosky became disabled due to cancer. In 2003, Rancosky was diagnosed with ovarian cancer and underwent surgery and chemotherapy. Though, Rancosky did not return to her job with USPS following her hospital admission, she remained on her employer’s payroll for several months because she had accrued unused vacation and sick days. Consequently, Conseco continued to receive payroll deducted premiums from Rancosky until June 24, 2003, when Rancosky went on disability retirement. Premium payments were made in arrears; the final premium payment extended coverage under her policy to May 24, 2003. Unbeknownst to Rancosky, her physician statement inaccurately specified her date of disability as beginning on April 21, 2003, rather than on February 4, 2003. 5 Believing that the premiums had been waived and that no further premiums were due on the policy because of her disability from cancer, Rancosky’s final premium payment came from her June 24, 2003, payroll-deducted premium. Over the next two years, as Rancosky experienced several recurrences of her cancer, she continued to submit claims to Conseco. Conseco eventually started denying Rancosky’s claims for further benefits based upon her failure to pay premiums. The Supreme Court adopted the two-part test articulated in Terletsky v. Prudential Property & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994) in order for a plaintiff to recover in a bad faith action; proof of an insurance company’s motive of self-interest or ill-will is not a prerequisite to prevailing in a bad faith claim under Section 8371, as was argued by Appellant. The Court affirmed the superior court, which partially vacated the trial court’s judgment and remanded for further proceedings on Appellee’s bad faith claim. View "Rancosky v. Washington National Ins. Co." on Justia Law
Yenchi v. Ameriprise Financial
No fiduciary duty arises in a consumer transaction for the purchase of a whole life insurance policy based upon the advice of a financial advisor where the consumer purchasing the policy does not cede decision -making control over the purchase to the financial advisor. In 1995, Bryan Holland, a financial advisor for IDS Life Insurance Corporation, made an unsolicited telephone contact, a "cold call," to Eugene and Ruth Yenchi. At a subsequent meeting and for a fee of $350, Holland presented the Yenchis with a financial management proposal containing a notice that it had been prepared by "your American Express financial advisor" (Holland) and that "[alt your request, your American Express financial advisor can recommend products distributed by American Express Financial Advisors and its affiliates as investment alternatives for existing securities." The Proposal offered the Yenchis a number of general recommendations, including that they monitor monthly expenses, consolidate their debt, consider various savings plans, consolidate current life insurance policies into one policy, review long-term care coverage, keep accurate records for tax purposes (medical expenses and charitable contributions), transfer 401(k) funds into mutual funds, and continue estate planning with an attorney and their financial advisor. The Yenchis implemented some of these recommendations. In 2000, the Yenchis had their portfolio independently reviewed. Through this process, they were advised that Holland’s recommendations would be financially devastating to the Yenchis. In April 2001, the Yenchis sued Holland and his company, American Express Financial Services Corporation, American Express Financial Advisors Corporation, and IDS Life Insurance Company. The Yenchis' asserted claims of negligence/willful disregard, fraudulent misrepresentation, violation of the Uniform Trade Practices and Consumer Protection Law ("UTPCPL"), bad faith, negligent supervision, and breach of fiduciary duty. Of relevance here, with respect to the breach of fiduciary duty claim, the trial court held that no fiduciary relationship was established between the Yenchis and Holland because the Yenchis continued to make their own investment decisions. The Pennsylvania Supreme Court concluded that, consistent with its jurisprudence, no fiduciary duty arose in such a situation. Consequently, the Court reversed the Superior Court's decision to the contrary. View "Yenchi v. Ameriprise Financial" on Justia Law
Scungio Borst & Assoc. v. 410 Shurs Lane Developers, LLC
In this appeal, the issue presented for the Supreme Court's review was whether a contractor could maintain an action under the Contractor and Subcontractor Payment Act (CASPA) against a property owner’s agents. Beginning in 2005, Appellant Scungio Borst & Associates (SBA) entered into a series of written and oral construction contracts with Appellee 410 Shurs Lane Developers, LLC (410 SLD), which 410 SLD’s part-owner and president, Appellee Robert DeBolt, executed on 410 SLD’s behalf. Therein, SBA agreed to improve real property owned by 410 SLD in connection with the development of a condominium complex, and did so until November 2006, when SBA’s contracts were terminated with approximately $1.5 million in outstanding payments due. SBA requested payment, but 410 SLD, again through DeBolt, refused. Accordingly, SBA sued 410 SLD; its alleged successor corporation, Appellee Kenworth II, LLC; and DeBolt in his personal capacity. SBA asserted, among other claims, violations of CASPA. After careful review, the Supreme Court held that a contractor could not maintain an action under CASPA, and, accordingly, affirmed the order of the Superior Court. View "Scungio Borst & Assoc. v. 410 Shurs Lane Developers, LLC" on Justia Law
A. Scott Enterprises v. City of Allentown
Appellant City of Allentown (City) contracted with appellee A. Scott Enterprises, Inc. (ASE), to construct a new public road. After arsenic-contaminated soil was discovered at the worksite, the City suspended work on the project. Following testing, it was determined construction could resume if precautions were taken. Accordingly, the City instructed ASE to obtain revised permits and proceed with the project. However, the existing contract did not include terms regarding the potential for contaminated soil, despite the fact the City was aware there might be contamination prior to entering into the contract, and ASE declined to proceed, explaining it would incur substantial additional costs due to the contaminated soil. The parties made several attempts to reach an agreement in which ASE would continue the construction, but to no avail. Consequently, ASE sued the City to recover its losses on the project, alleged breach of contract, and sought compensation under theories of quantum meruit and unjust enrichment, as well as interest and a statutory penalty and fee award for violations of the prompt pay provisions of the Procurement Code. After a trial, a jury found the City breached its contract with ASE and also withheld payments in bad faith. In this discretionary appeal, the issue this case presented for the Supreme Court's review was whether an award of a statutory penalty and attorney fees under the prompt payment provisions of the Commonwealth’s Procurement Code was mandatory upon a finding of bad faith, irrespective of the statute’s permissive phrasing. The Court held such an award was not mandatory, and therefore reversed the order of the Commonwealth Court and remanded the case to the trial court for further proceedings. View "A. Scott Enterprises v. City of Allentown" on Justia Law
Posted in: Construction Law, Contracts, Government & Administrative Law, Government Contracts, Supreme Court of Pennsylvania
Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Malone Middleman, P.C.
At issue in this case were the attorney's fees earned in a wrongful death civil litigation settlement, and two law firms' dispute over who was entitled to how much. Richard Eazor was killed and Lynn Sharp was injured in a single automobile accident in Clearfield County. Eazor’s estate and Sharp sued each other, with Sharp contending that Eazor drove the vehicle when the accident occurred and Eazor’s estate alleging that Sharp was the driver. Progressive Insurance Company, the liability carrier for Sharp, retained counsel to represent both parties as defendants in the respective actions, while Sentry Insurance, the carrier for Eazor, remained potentially liable for underinsured motorists’ coverage payable to the person deemed to be the passenger in the vehicle. Attorney William Weiler, Jr., entered his appearance on behalf of the Eazor estate. Later that year, Weiler became associated with the law firm of Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C., (“Meyer Darragh”). Attorney Scott Millhouse of Meyer Darragh subsequently became primarily responsible for the case and drafted a proposed settlement agreement, which was sent to all counsel, but was never signed. Shortly thereafter, Weiler resigned from Meyer Darragh. Upon his departure, he agreed that Meyer Darragh would receive two-thirds of the attorney’s fees arising from the Eazor estate litigation, and that he would retain one-third of the fees. Weiler subsequently became affiliated with the law firm of Malone Middleman, P.C. (“Malone Middleman”). The Eazor estate decided to discharge Meyer Darragh and seek representation from Weiler and Malone Middleman. Malone Middleman took over the case and entered into a contingency fee agreement with the estate, providing that the firm would represent the estate in exchange for one-third of the proceeds of any settlement reached before suit was filed. The contingent fee agreement did not address the payment of attorney’s fees to Meyer Darragh. Further, Malone Middleman did not agree in writing or otherwise to protect the fee purportedly earned by Meyer Darragh. The Pennsylvania Supreme Court granted allocatur to examine the propriety of the Superior Court’s holding that a Meyer Darragh was entitled to breach of contract damages against Malone Middleman. The Supreme Court reversed, holding that under the specific facts presented here, any recovery that may have been due to Meyer Darragh would lie in quantum meruit, and not breach of contract. As such, the Court reversed and remanded. View "Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Malone Middleman, P.C." on Justia Law
Shedden v. Anadarko E&P Co.
In this appeal, the issue presented for the Pennsylvania Supreme Court's review was whether the Superior Court properly applied the doctrine of estoppel by deed to conclude that an oil and gas lease between Appellee, Anadarko E. & P. Co., L.P. and Appellants, Leo and Sandra Shedden, covered the oil and gas rights to 100% of the property identified in the lease, notwithstanding the fact that, unbeknownst to them, Appellants owned only a one-half interest in the oil and gas rights to the property at the time the lease was executed, and, consequently, received a bonus payment only for the oil and gas rights they actually owned. Upon review, the Supreme Court held that the Superior Court properly affirmed the trial court's grant of summary judgment in favor of Anadarko based on estoppel by deed. View "Shedden v. Anadarko E&P Co." on Justia Law
Posted in: Contracts, Energy, Oil & Gas Law, Real Estate & Property Law, Supreme Court of Pennsylvania