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HomeMy WebLinkAbout97-3505 CivilDAVID W. KNAUER, ESQUIRE, and DAVID W. KNAUER, P.C., Plaintiffs IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Vo CIVIL ACTION - LAW RISK ENTERPRISE MANAGEMENT LIMITED a/k/a: REM, JAMES R. SCHADEL, ESQUIRE, WEINHEIMER SCHADEL & HABER, MICHAEL P. O'DAY, ESQUIRE, and O'DAY & SMITH, a parmership, Defendants NO. 97-3505 CIVIL TERM IN RE: DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND OBJECTION TO VENUE BEFORE HOFFER~ P.J. OLER and GUIDO~ JJ. OPINION and ORDER OF COURT OLER, J., July 10, 2001. This case has its genesis in an earlier legal malpractice claim brought on behalf of Fred F. Schleicher by his attorney, David W. Knauer, Esquire, a Plaintiff herein. The malpractice action was based upon the allegedly negligent prosecution of a workers' compensation claim by Schleicher's prior counsel, a law firm known as O'Day and Smith. ~ James R. Schadel, Esquire, a Defendant herein, was attorney for O'Day and Smith in the malpractice action. On behalf of his client, he joined Knauer as an additional defendant in the action.2 Knauer requested dismissal of the joinder, and Schadel eventually, but not immediately, complied with the request.3 Knauer then commenced the ~ Defs.' Mot. Summ. J. para. 5; Pis.' Resp. Defs.' Mot. Summ. J. para. 5. 2 Defs.' Mot. Summ. J. Ex. H; Defs.' Mot. Summ. J. Ex. G. 3 Defs.' Mot. Summ. J. para. 41; Pls.' Resp. Defs.' Mot. Summ. J. para. 41. current action against the above-named Defendants, asserting various claims arising from the allegedly improper joinder.4 All Defendants have been dismissed from the present action except Schadel and his law firm, Weinheimer, Schadel & Haber.5 All counts have been dismissed except Count III (abuse of process for wrongful initiation ofjoinder by Knauer against Schadel), Count IV (abuse of process for wrongful continuation of joinder by Knauer against Schadel), Count XII (wrongful use of civil proceedings for initiation ofjoinder by Knauer against Schadel), Count XV (wrongful use of civil proceedings for continuation of joinder by Knauer against Schadel), Count XVIII (abuse of process, wrongful use of civil proceedings for initiation and continuation ofjoinder by Knauer, P.C., against Schadel), and Count XXII (civil conspiracy to commit perjury by Knauer against Schadel and Weinheimer, Schadel & Haber).6 Defendants have moved for summary judgment on the pending counts. Defendants also, as part of the motion for summary judgment, have moved for transfer of the case to Indiana County or Allegheny County, on the ground of improper venue. Based upon the evidence in the record, and for the reasons stated in the accompanying opinion, Defendants' motion for summary judgment will be granted and Defendants' objection to venue, included as part of the motion for summary judgment, will be denied. STATEMENT OF FACTS The Pennsylvania Rules of Civil Procedure establish the standard of review for a motion for summary judgment: After the relevant pleadings are closed, but within such time as not to unreasonably delay trial, any party may move for summary judgment in whole or in part as a matter of law See Third Am. Compl. (hereinafter "Complaint"). See Stipulation of Dismissal, June 20, 2000; Stipulations of Dismissal, July 14, 2000. See Op. and Order of Ct., February 22, 1999. 2 (1) whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or (2) if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury. Pa. R.C.P. 1035.2. Under subparagraph (1) of Rule 1035.2, summary judgment may be granted if the material facts are not in dispute and "the moving party is entitled to judgment as a matter of law." Dean v. Commonwealth, 561 Pa. 503, 507, 751 A.2d 1130, 1132 (2000). In this context, "the record must be viewed in the light most favorable to the [non-moving] party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party." Id. at 507, 751 A.2d at 1132. Under subparagraph (2), summary judgment also may be granted if the non-moving party has not offered evidence sufficient to support its burden of proof on a key element of the claim or defense. Young v. Commonwealth Dept. ofTransp., 560 Pa. 373, 375-76, 744 A.2d 1276, 1277 (2000). This case was preceded by a workers' compensation claim instituted on behalf of one Fred Schleicher by a law firm known as O'Day and Smith.7 The claim was successful, but Schleicher was unable to collect on the award because the entity identified as his employer in the claim as filed was not in fact responsible for providing workers' compensation coverage for him and could not satisfy the award.8 After discovery of the mistake, Schleicher notified O'Day and Smith and requested that it take action against his "true" employer.9 7 Defs.' Mot. Summ. J. para. 5; Pis.' Resp. Defs.' Mot. Summ. J. para. 5. 8 Compl. para. 12; Answer para. 12. 9 Defs.' Mot. Summ. J. paras. 11, 12; Pls.' Resp. Defs.' Mot. Summ. J. paras. 11, 12. When O'Day and Smith did not respond to this letter of notification, Schleicher scheduled an appointment with Knauer, of the law firm known as David W. Knauer, P.C., for 3:00 p.m. on September 9, 1986; as it happened, September 9, 1986 was the last day on which a workers' compensation claim could be filed under the applicable statute of limitations,l° Schleicher arrived at Knauer's office with his employment log book, but without the file on his claim, which was still at O'Day and Smith.il The log book contained information identifying Schleicher's true employer and the statute of limitations period.12 After a brief meeting with Knauer, Schleicher left to retrieve the file.13 Schleicher returned later that day, but the evidence tends to show that Knauer did not review the file until that evening, after government offices had closed.TM Schleicher did not sign his contingent fee agreement until September 10, 1986, and Knauer filed Schleicher's claim that day, after the expiration of the statute of limitations period. 15 Knauer, on behalf of Schleicher, commenced litigation in Indiana County for legal malpractice against O'Day and Smith on September 12, 1986, based upon negligent representation with respect to Schleicher's workers' compensation claim.16 The malpractice complaint stated in paragraph 20 that, "[s]ubsequent to SCHLEICHER'S retention of[Knauer] as his counsel, SCHLEICHER instituted a claim petition" against Schleicher's true employer.17 Since the claim petition had been filed only one day after l0 Defs.' Mot. Summ. J. paras. 13, 14; Pis.' Resp. Defs.' Mot. Summ. J. paras. 13, 14. ll Defs.' Mot. Summ. J. paras. 16, 17; Pls.' Resp. Defs.' Mot. Summ. J. paras. 16, 18. 12 Defs.' Mot. Summ. J. Ex. E. 13 Defs.' Mot. Summ. J. paras. 16, 20; Pls.' Resp. Defs.' Mot. Summ. J. paras. 16, 20. 14 Defs.' Mot. Summ. J. paras. 16, 20; Pls.' Resp. Defs.' Mot. Summ. J. paras. 16, 20. 15 Defs.' Mot. Summ. J. Ex. C; Defs.' Mot. Summ. J. Ex. H; Defs.' Mot. Summ. J. para. 31; Pls.' Resp. Defs.' Mot. Summ. J. para. 31. 16 Defs.' Mot. Summ. J. Ex. H; Defs.' Mot. Summ. J. para. 5; Pls.' Resp. Defs.' Mot. Suture. J. para. 5. 17 Compl. para. 20 (emphasis added). 4 the expiration of the statute of limitations,la this allegation lent itself to an interpretation that Knauer was Schieicher's attorney before the expiration of the statute of limitations and could himself have submitted a claim in time on behalf of Schieicher. Based upon this interpretation, Schadei joined Knauer as an additional defendant in the malpractice action on October 20, 1993.~9 The depositions of Knauer and others in connection with the joinder initially were scheduled for November 18, 1993, but due to scheduling conflicts of Knauer and other persons, the depositions were not conducted until December 16, 1994.20 During his deposition, Knauer produced his appointment schedule for September 9, 1986 and the contingent fee agreement dated September 10, 1986,2~ both of which tended to support Knauer's position that he did not have sufficient time to file a complaint before 5:00 p.m. on September 9, 1986.22 The deposition of Michael P. O'Day, Esquire, also conducted on December 16, 1994, precipitated the charge of civil conspiracy to commit perjury against Schadei and Weinheimer, Schadei & Haber. Knauer conducted the deposition of O'Day, during which Knauer asked if O'Day knew the whereabouts of Edward H. Smith, Esquire.23 O'Day testified that he did not know Smith's whereabouts,24 and Knauer alleges that O'Day intentionally perjured himself to conceal information possessed by Smith that showed the la Defs.' Mot. Summ. J. Ex. S; Pis.' Resp. Defs.' Mot. Summ. J. para. 21. 19 Defs.' Mot. Summ. J. Ex. H; Defs.' Mot. Summ. J. Ex. G; Pis.' Resp. Defs.' Mot. Summ. J. para. 29. 20 Defs.' Mot. Summ. J. Ex. R; Defs.' Mot. Summ. J. Ex. C; Pis.' Resp. Defs.' Mot. Summ. J. para. 49-50. 2~ Defs.' Mot. Summ. J. para. 31; Pis.' Resp. Defs.' Mot. Summ. J. para. 31. 22 Defs.' Mot. Summ. J. Ex. S; Defs.' Mot. Summ. J. Ex. T; Pis.' Br. Opp'n Defs.' Mot. Summ. J. at 2-4. 23 Defs.' Mot. Summ. J. Ex. O; Pis.' Resp. Defs.' Mot. Summ. J. para. 53-54. 24 Defs.' Mot. Summ. J. Ex. O; Pis.' Resp. Defs.' Mot. Summ. J. para. 53-54. joinder was improper.25 Knauer alleges that Schadel and Weinheimer, Schadel & Haber conspired with O'Day with respect to the commission of this perjury.26 Following the depositions, Knauer requested that Schadel discontinue the joinder, and Schadel subsequently did so.27 In a letter to the insurer of his client dated December 30, 1994, Schadel stated that the initial joinder had been based solely on the pleadings, and that the continuation of the joinder might be feasible with further discovery.28 In this regard, Schadel questioned details of Knauer's deposition, specifically claims that Knauer did not have sufficient time to review Schleicher's file before the expiration of the statute of limitations.29 On February 2, 1995, Knauer secured issuance of a rule upon Schadel's client to file a complaint against Knauer.3° Schadel followed with another letter to the insurer in March, 1995 advising that the joinder was unlikely to succeed and that it presented an "acute conflict" for Knauer in continuing to act as Schleicher's attorney while being joined as a defendant.3~ Schadel then submitted a praecipe to discontinue the joinder, to which Knauer consented, and the joinder was filed as discontinued on July 5, 1995.32 Knauer commenced the current action against the above-named Defendants in 1997.33 25 Compl. paras. 45-46, 48. 26 Id. 27 Defs.' Mot. Summ. J. para. 32; Pls.' Resp. Defs.' Mot. Summ. J. para. 32. 2a Defs.' Mot. Summ. J. Ex. S. Home Insurance Company insured O'Day & Smith during the litigation concerning Schleicher's claim for malpractice. Id 29 Id. 30 Defs.' Mot. Summ. J. Ex. H. 3~ Defs.' Mot. Summ. J. Ex. T. 32 Defs.' Mot. Summ. J. Ex. J. 33 See Compl. DISCUSSION Statement of Law Wrongful Use of Civil Proceedings. The tort of wrongful use of civil proceedings is codified at 42 Pa. C.S.A. § 8351, which provides, in pertinent part, as follows: (a) Elements of action.--A person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings: (1) He acts in a grossly negligent manner or without probable cause and primarily for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based; and (2) The proceedings have terminated in favor of the person against whom they are brought. Act of Dec. 19, 1980, P.L. 1296, No. 232, § 1, 42 Pa. C.S.A. § 8351(a) (West 1998 & Supp. 2001). Three elements must be proven to succeed in this type of claim: (1) that the defendant acted in a grossly negligent manner or without probable cause in instituting or continuing the underlying civil proceedings, (2) that the defendant acted with malicious or improper purpose, and (3) that the underlying civil proceedings were terminated in favor of the plaintiff. Rosen v. Tesoro Petroleum Corp., 399 Pa. Super. 226, 230, 582 A.2d 27, 29-30 (1990) (citing Shaf]kr v. Stewart, 326 Pa. Super. 135, 140, 473 A.2d 1017, 1020 (1984)). Only a party in the underlying action may maintain a subsequent claim for wrongful use of civil proceedings. Hart v. 0 'Malley, 436 Pa. Super. 151, 165, 647 A.2d 542, 549 (1994), aff'd, 544 Pa. 315, 676 A.2d 222 (1996). The first element of the claim may be satisfied by showing the defendant acted either in a grossly negligent manner or without probable cause in instituting the underlying litigation. Under the statute, probable cause exists when [a] person who takes part in the procurement, initiation or continuation of civil proceedings.., reasonably believes in the existence of the facts upon which the claim is based, and .... Believes as an attorney of record, in good faith that his procurement, initiation or continuation of a civil cause is not intended to merely harass or maliciously injure the opposite party. 42 Pa. C.S.A. § 8352. Evidence of an improper motive may support an allegation of a lack of probable cause. Korn v. Epstein, 727 A.2d 1130, 1134 (Pa. Super. Ct. 1999), appeal denied, 743 A.2d 921 (Pa. 1999). The second element of the claim is satisfied by showing that the defendant instituted or continued underlying litigation for a malicious or improper purpose. As to this element, it is unnecessary to prove actual malice; improper purpose may be inferred from attendant circumstances, including lack of probable cause. Gentzler v. Atlee, 443 Pa. Super. 128, 142, 660 A.2d 1378, 1385 (1995) (citing ShafJbr, 326 Pa. Super. 135, 473 A.2d 1017)). One common example of litigation brought for an improper purpose is the "nuisance suit," in which the claim is meant only to harass the other party and to force him or her into a favorable settlement. ShafJbr, 326 Pa. Super. at 142-43, 473 A.2d at 1021 (quoting Restatement (Second) of Torts § 676 cmt. c (1979)). Improper purpose is normally a question for the trier of fact. See Bannar, 701 A.2d at 239. The third element is satisfied by showing a favorable termination of the underlying litigation for the plaintiff. "Whether withdrawal or an abandonment constitutes a final termination in favor of the person against whom the proceedings are brought.., depends on the circumstances under which the proceedings are withdrawn." Rosenfield v. Pa. Auto. Ins. Plan, 431 Pa. Super. 383, 389, 636 A.2d 1138, 1142 (1994) (quoting Restatement (Second) of Torts § 674 cmt. j). Withdrawals occasioned by compromise or mootness do not constitute favorable termination. Id at 389, 636 A.2d at 1142. Settlement agreements and other forms of compromise do not generally establish favorable termination for either party since neither party admits fault. Elec. Lab. Supply Co. v. Cullen, 712 A.2d 304, 311 (Pa. Super. Ct. 1998). Facts showing a "last-second dismissal in the face of imminent defeat" may establish that the termination favored the opposing party. Bannar, 701 A.2d at 239. Whether the underlying proceedings terminated in favor of the plaintiff sub judice is a matter for the court to decide. Rosenfield, 431 Pa. Super. at 389, 636 A.2d at 1141. Abuse of Process. The tort of abuse of process requires proof of the defendant's use of a legal process against another "primarily to accomplish a purpose for which it was not designed." Rosen v. Am. Bank of Rolla, 426 Pa. Super. 376, 381, 627 A.2d 190, 192 (1993) (quoting Restatement (Second) of Torts § 682). Unlike the elements of wrongful use of civil proceedings, the elements of this tort do not include a requirement that the defendant instituted the underlying litigation with an improper purpose. Id. at 381, 627 A.2d at 192 (quoting Restatement (Second) of Torts § 682 cmt. a). Rather, abuse of process is concerned only with "subsequent misuse of the process." Id at 381, 627 A.2d at 192 (quoting Restatement (Second) of Torts § 682 cmt. a). The party must "actively seek and employ" the process to harm the adverse party in the underlying litigation to support a claim for abuse of process. Hart, 436 Pa. Super. at 169, 647 A.2d at 551-52. "[T]here is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions." ShafJkr, 326 Pa. Super. at 139, 473 A.2d at 1019 (quoting Di Sante v. Russ Fin. Co., 251 Pa. Super. 184, 189, 380 A.2d 439, 441 (1977)). Civil Conspiracy. The tort of civil conspiracy requires "that two or more persons combined or agreed with intent to do an unlawful act or to do an otherwise lawful act by unlawful means." Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 211,412 A.2d 466, 472 (1979). if a civil cause of action does not attach to the particular act underlying the alleged conspiracy, the civil conspiracy claim cannot stand. Pelagatti v. Cohen, 370 Pa. Super. 422, 432, 536 A.2d 1337, 1342 (1987). Venue. "improper venue shall be raised by preliminary objection and if not so raised shall be waived." Pa. R.C.P. i006(e). The "proper manner" for raising improper venue is by preliminary objection. Hohlstein v. Hohlstein, 223 Pa. Super. 348, 352, 296 A.2d 886, 888 (1972). Unlike improper venue, petitions for change of venue by reason of forum non conveniens may be brought after an answer has been filed. Pa. R.C.P. i006(d); see Scola v. AC & S, Inc., 540 Pa. 353,366-67, 657 A.2d 1234, 1240 (1995). Application of Law to Facts Wrongful Use of Civil Proceedings. In the present case, the record does not support the proposition that Schadel acted with gross negligence or without probable cause in initiating the joinder. Schadel instituted the joinder based on a paragraph in the malpractice action complaint stating that "[s]ubsequent to SCHLEICHER'S retention of [Knauer] as his counsel, SCHLEICHER instituted a claim petition" against Schleicher's true employer.34 Given the fact that the statute of limitations had been missed by less than one day, Schadel's premise in joining Knauer was not without a reasonable basis. Nor does the record support the proposition that Schadel acted with gross negligence or without probable cause in continuing the joinder. Soon after initiating the joinder in October 1993, Schadel requested information pertaining to the timing of Knauer's meeting with Schleicher on September 9, 1986, but Knauer did not produce information at a deposition until December 1994. The evidence showed that the delay of over a year in taking the deposition was not caused by Schadel, but by scheduling conflicts among all parties involved in the depositions, including Knauer, and that within a relatively short time of the Knauer deposition, Schadel discontinued the joinder. Since, as discussed previously, Schadel did not act with gross negligence or without probable cause in initiating the joinder, he did not act without probable cause in pursuing it until the discontinuance. For these reasons, the wrongful use of civil proceedings claim by Knauer must be dismissed. In addition, Knauer, P.C., cannot maintain a claim for wrongful use of civil proceedings. As all parties acknowledge in their briefs, an entity that is not a party in the underlying action cannot stand as a party in a subsequent wrongful use of civil proceedings claim.35 Since Knauer, P.C., was not a party in the underlying joinder, the claims by Knauer, P.C., against Schadel must be dismissed. 34 Compl. para. 20; see Defs.' Mot. Summ. J. Ex. S. 35 Defs.' Br. Supp. Mot. Summ J. at 36; Pls.' Br. Opp'n Defs.' Mot. Summ. J. at 15. 10 Abuse of Process. In the court's view, Plaintiffs have not presented evidence to support an abuse of process claim. Evidence of lack of probable cause or improper purpose in instituting or continuing a joinder is irrelevant to the abuse of process claim. This claim is concerned only with "subsequent misuse of the process." Rosen, 426 Pa. Super. at 381, 627 A.2d at 192 (quoting Restatement (Second) of Torts § 682 cmt. a). In this case, Plaintiffs has not adduced any evidence showing that Schadel used the joinder action in a manner other than for which it was intended. Plaintiffs presented no evidence of threats or other actions suggesting the use of the process to accomplish ends other than joining Knauer as an additional defendant. Regardless of the propriety of the purpose of instituting and continuing the process, the fact that Schadel did not employ the process in any manner inconsistent with its normal use compels dismissal of the claim of abuse of process. Civil Conspiracy. Plaintiffs have not presented evidence to establish a valid civil conspiracy claim. A civil cause of action must attach to the particular act underlying the alleged conspiracy, or the civil conspiracy claim cannot survive. In this case, Plaintiffs claim that Schadel conspired with others to have a witness perjure himself in a deposition, in order to conceal information from Plaintiffs that would have undermined the joinder.36 While perjury is a criminal violation, no civil claim attaches to this act. Ginsburg v. Halpern, 383 Pa. 178, 180, 118 A.2d 201, 202 (1955); Pelagatti, 370 Pa. Super. at 432-33, 536 A.2d at 1342. Since no civil cause of action applies to the alleged underlying act of perjury, a civil conspiracy claim cannot stand. See Homer v. Ciamacco, 2 Pa. D & C.3d 755, 757-58 (Allegheny County 1977). Venue. Finally, Defendants have not raised a procedurally proper venue objection. Improper venue is properly raised by preliminary objection (a preliminary objection which this court has already denied in this case37). Defendant may not renew an objection 36 Compl. paras. 45-46, 48. 37 See Op. and Order of Ct., February 22, 1999. 11 based on improper venue through a summary judgment motion. This objection will thus be dismissed. For the foregoing reasons, the following order will be entered: ORDER OF COURT AND NOW, this l0th day of July, 2001, after careful consideration of the Defendants' Motion for Summary Judgment, Plaintiffs' Response to Defendants' Motion for Summary Judgment, and the briefs and arguments in support thereof, and for the reasons stated in the accompanying opinion, Defendants' motion for summary judgment is granted. Defendants' objection to venue, included as part of the motion for summary judgment, is denied. BY THE COURT, Joseph M. Melillo, Esq. Angino & Rovner, P.C. 4503 North Front Street Harrisburg, PA 17110 Attorney for Plaintiffs Jeffrey T. McGuire, Esq. Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110-1533 Attorney for Defendants s/ J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. 12 13 DAVID W. KNAUER, ESQUIRE, and DAVID W. KNAUER, P.C., Plaintiffs IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Vo CIVIL ACTION - LAW RISK ENTERPRISE MANAGEMENT LIMITED a/k/a: REM, JAMES R. SCHADEL, ESQUIRE, WEINHEIMER SCHADEL & HABER, MICHAEL P. O'DAY, ESQUIRE, and O'DAY & SMITH, a parmership, Defendants NO. 97-3505 CIVIL TERM IN RE: DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND OBJECTION TO VENUE BEFORE HOFFER~ P.J. OLER and GUIDO~ JJ. ORDER OF COURT AND NOW, this l0th day of July, 2001, after careful consideration of the Defendants' Motion for Summary Judgment, Plaintiffs' Response to Defendants' Motion for Summary Judgment, and the briefs and arguments in support thereof, and for the reasons stated in the accompanying opinion, Defendants' motion for summary judgment is granted. Defendants' objection to venue, included as part of the motion for summary judgment, is denied. BY THE COURT, J. Wesley Oler, Jr., J. Joseph M. Melillo, Esq. Angino & Rovner, P.C. 4503 North Front Street Harrisburg, PA 17110 Attorney for Plaintiffs Jeffrey T. McGuire, Esq. Caldwell & Keams 3631 North Front Street Harrisburg, PA 17110-1533 Attorney for Defendants