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Home My WebLink About2012-83 ORRSTOWN BANK, : IN THE COURT OF COMMON PLEAS Plaintiff, : OF CUMBERLAND COUNTY, : PENNSYLVANIA : v. : : CIVIL ACTION - LAW ROBERT C. SAIDIS, ESQUIRE : GEOFFREY S. SHUFF, ESQUIRE : SAIDIS, SULLIVAN & ROGERS, P.C. : No. 2012-83 a/k/a SAIDIS SULLIVAN LAW, P.C., : a/k/a SAIDIS, FLOWER and LINDSAY, : P.C., a/k/a SAIDIS, SHUFF, FLOWER & : LINDSAY, P.C. : Defendants. : : JURY TRIAL DEMANDED IN RE: DEFENDANTS’ PRELIMINARY OBJECTIONS TO PLAINTIFF’S AMENDED COMPLAINT 1 BEFORE HESS, P.J. and PECK, J. OPINION and ORDER Before the Court are the preliminary objections of the Defendants Robert C. Saidis, Esquire; Gregory S. Shuff, Esquire; Saidis, Flower & Lindsay, P.C., a/k/a Saidis, Shuff, Flower & Lindsay, P.C.; and Saidis Sullivan & Rogers, P.C., a/k/a Saidis Sullivan Law, P.C. (hereinafter “Defendants”) to an Amended Complaint filed by the Plaintiff, Orrstown Bank. (Prelim. Objs. to Pl’s. Am. Compl., filed Jan. 7, 2013). Plaintiff’s Amended Complaint contains four counts: at Count I, a negligence-based legal malpractice claim against all Defendants; at Count II, a contract-based legal malpractice claim against all Defendants; at Count III, an intentional / negligent misrepresentation claim against all Defendants; and at Count IV, a successor liability claim against Defendant Saidis Sullivan & Rogers, P.C., a/k/a, Saidis Sullivan Law, P.C. (Am. Compl., filed Dec. 17, 2012). The Amended Complaint was preliminarily objected to on four bases. (Prelim. Objs to Pl’s Am. Compl., filed Jan. 7, 2013). The Defendant is no longer 1 Judge Masland has recused himself from this case. pursuing two of those bases but is continuing to demur for failure to allege any facts demonstrating actual damages and still seeks to strike Plaintiff’s request for punitive damages. (Defs’. Br. In Supp. of Their Prelim. Objs. to Pl’s Am. Compl., filed Mar. 25, 2013). Plaintiff’s Amended Complaint may be summarized as follows: Plaintiff is a Pennsylvania banking corporation operating at 22 South Hanover Street, Carlisle, Cumberland County, Pennsylvania 17013, among other locations. (Am. Compl, ¶ 1). Defendant Saidis, Flower and Lindsay, P.C., a/k/a Saidis, Shuff, Flower & Lindsay, P.C. (hereinafter “Old Saidis Firm”) is a law firm organized as a professional corporation located at 26 West High Street, Carlisle, Cumberland County, Pennsylvania 17013. (Am. Compl., ¶ 2). Defendant Saidis Sullivan & Rogers, P.C., a/k/a Saidis Sullivan Law, P.C. (hereinafter “New Saidis Firm”) is a law firm organized as a professional corporation located at 26 West High Street, Carlisle, Cumberland County, Pennsylvania 17013. (Am. Compl., ¶ 4). Defendant Geoffrey S. Shuff, Esquire, is an attorney who practiced at the Old Saidis Firm from at least 2001 to 2005. (Am. Compl., ¶ 12). Defendant Robert C. Saidis, Esquire, was the co-incorporator of the Old Saidis Firm, the sole incorporator of the New Saidis Firm, and worked at both firms at all relevant times. (Am. Compl., ¶¶ 2,5,13). Plaintiff agreed to issue a line of credit to Yorktown Funding, Inc. (hereinafter “Yorktown”). (Am. Compl., ¶ 14). Yorktown used the line of credit to lend money to its customers for interim construction financing of residential properties. (Am. Compl., ¶ 15). Plaintiff retained the Old Saidis Firm for the transaction, and the Old Saidis Firm drafted a security agreement that assigned and granted the Plaintiff a security interest in the construction notes, mortgages, and guarantees underlying the loans of Yorktown’s customers (hereinafter “Collateral”). (Am. Compl., ¶¶ 14,16). The Old Saidis Firm also drafted a UCC-1 Financing 2 Statement to be filed with the Pennsylvania Department of State in order to perfect the Plaintiff’s security interest in the Collateral. (Am. Compl., ¶ 16). Originally, the Plaintiffs worked with Defendant Shuff regarding the Yorktown line of credit. (Amended Complaint, ¶ 17). In December of 2001, the Plaintiff received an invoice for the preparation of a UCC-1 Financing Statement. (Am. Compl., ¶ 21). In 2004, Plaintiff increased the line of credit to Yorktown from $4 million to $5 million, and Defendant Shuff again represented the Plaintiffs by drafting a Modification and Amendment of Revolving Line of Credit. (Am. Compl., ¶ 22). In 2005, the line of credit was increased to $7.5 million, and Defendant Shuff drafted a Second Modification of Revolving Line of Credit. (Am. Compl., ¶ 23). At this time, Defendant Shuff expressed to the Plaintiff that he did not know if a UCC-1 Financing Statement had previously been prepared or filed but that he intended to file one then. (Am. Compl., ¶ 24). On September 9, 2005, Plaintiff instructed Defendant Shuff to file a UCC-1 Financing Statement; shortly thereafter, Plaintiff received an invoice from the Old Saidis Firm for the cost of preparing a UCC-1 Financing Statement and filing it with the Pennsylvania Department of State. (Am. Compl., ¶ ¶ 25, 27). The UCC-1 Financing Statement was prepared, but it was never filed. (Am. Compl., ¶ 26). In July 2006, the line of credit to Yorktown was increased to $9.5 million, and Defendant Saidis drafted a Third Modification and Amendment of Revolving Line of Credit. (Am. Compl., ¶ 28). At that time, Defendant Saidis informed the Plaintiff that there was no record of a UCC-1 Financing Statement regarding the Yorktown line of credit being previously filed, but that the expense for filing had then been incurred. (Am. Compl., ¶ 29). Plaintiff advised the Old Saidis Firm that Defendant Shuff was to have filed a UCC-1 Financing Statement in 2005. (Am. 3 Compl., ¶ 30). Subsequently, on July 17, 2006, the Old Saidis Firm invoiced the Plaintiff for recording the new UCC-1. (Am. Compl., ¶ 31). Yorktown filed a petition for relief under Chapter 11 of the Bankruptcy Code on February 29, 2010. (Am. Compl., ¶ 36). As a result, the Plaintiff performed a search and was not able to find a UCC-1 Financing Statement naming Yorktown as debtor and the Plaintiff as a secured party. (Am. Compl., ¶ 37). Since the Plaintiff was twice billed for the filing of a UCC- 1, Plaintiff asked the New Saidis Firm for copies of the filed UCC-1 Financing Statements. (Am. Compl., ¶ 38). The New Saidis Firm informed the Plaintiff that the Old Saidis Firm did not file UCC-1 Financing Statements because they had never been directed to do so. (Am. Compl., ¶ 39). Since a UCC-1 Financing Statement was never filed, Plaintiff’s security interest was not timely perfected. (Am. Compl., ¶ 40). The standard of review for preliminary objections in this Commonwealth is well settled. Preliminary objections are properly granted only when, “based on the facts pleaded, it is clear and free from doubt that the complainant will be unable to prove facts legally sufficient to establish a right to relief.” Mazur v. Trinity Area School Dist., 599 Pa. 232, 240-41, 961 A.2d 96, 101 (2008) (internal citations omitted). In considering preliminary objections, “all well-pleaded allegations and material facts averred in the complaint, as well as all reasonable inferences deducible therefrom, must be accepted as true.” Wurth by Wurth v. City of Philadelphia, 136 Pa. Cmwlth. 629, 638, 584 A.2d 403, 407 (1990). However, the trial court “need not accept as true conclusions of law, unwarranted inferences from fact, argumentative allegations, or expressions of opinion.” Penn Title Insurance Co. v. Deshler, 661 A.2d 481, 483 (Pa. Cmwlth. 1995). Initially, in the nature of a demurrer, Defendants seek dismissal based on the Plaintiff’s failure to allege actual damages. A demurrer is “an assertion that a complaint does not set forth a 4 cause of action or a claim on which relief can be granted.” Lerner v. Lerner, 2008 Pa. Super. 183, ¶ 11, 954 A.2d 1229, 1234 (internal citations omitted). “The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Where a doubt exists as to whether a demurrer should be sustained, this doubt should be resolved in favor of overruling it.” Wawa, Inc. v. Alexander J. Litwornia & Associates, 2003 Pa. Super 55, ¶ 2, 817 A.2d 543, 544 (quoting Price v. Brown, 545 Pa. 216, 221, 680 A.2d 1149, 1151 (1966)). If any theory of law will support the claim raised by the complaint, dismissal is improper. Slaybaugh v. Newman, 330 Pa. Super. 216, 220, 479 A.2d 517, 519 (1984). Furthermore, “when it is alleged that an attorney has breached his professional obligations to his client, an essential element of the cause of action is proof of actual loss.” Duke & Co. v. Anderson, 275 Pa. Super. 65, 72-74, 418 A.2d 613, 617 (1980). The test of whether damages are remote or speculative has nothing to do with the difficulty in calculating the amount, but deals with the more basic question of whether there are identifiable damages. . . .Thus, damages are speculative only if the uncertainty concerns the fact of damages rather than the amount. Pashak v. Barish, 303 Pa. Super. 559, 561-62, 450 A.2d 67, 69 (1982). “Evidence which demonstrates that a plaintiff has suffered the loss of property rights under a contract will suffice to establish ‘actual injury’ or ‘harm’…” Fiorentino v. Rapoport, 693 A.2d 208, 216 (Pa. Super. 1997) (citing Curran v. Stradley, Ronon, Stevens &Young, 361 Pa. Super. 17, 25-26, 521 A.2d 451, 455 (1987)). Applying the foregoing, we find that the Plaintiff has sufficiently alleged damages due to the Defendants not filling a UCC-1 Financing Statement. It is essential that the Plaintiff claim actual damages that were proximately caused by the Defendants. In doing so, the Plaintiff states, “[a]s a result of Defendants’ failure to file any UCC-1 Financing Statements, Orrstown’s security interest in the Yorktown Collateral, was not timely perfected, resulting in substantial damage to 5 Orrstown;” “[p]laintiff has been harmed by Defendants’ breach of duty, in that Yorktown’s debt to Plaintiff is not secured by a perfected security interest in the Yorktown Collateral;” “[a]s a result of Defendants’ breach of their contractual obligations to Plaintiff, Plaintiff has been harmed, in that Yorktown’s debt to Plaintiff is unsecured;” and “[a]s a result of the Defendants’ representation that the UCC-1 Financing Statements had been filed, Plaintiff has been harmed, in that Plaintiff’s security interest in the Yorktown Collateral is not perfected.” (Am. Compl., ¶¶ 40, 51, 63, 74). Plaintiff clearly alleges that, but for Defendants’ failure to file a UCC-1 Financing Statement, they would have a perfected security interest. There is no question that the Plaintiff has less than they sought and were charged for, an unperfected security interest instead of a perfected one. Like in Fiorentino, here, the Plaintiff has a lesser, or inferior, property interest than they would have but for the Defendants’ actions or inactions. Fiorentino, 693 A.2d at 216. The only aspect that is speculative at this time is how much the Plaintiff will recover in the Yorktown bankruptcy compared to what they would have recovered if the security interest would have been perfected. That is to say, the fact of damages is not speculative, just the amount. In addition, Plaintiff has averred that Yorktown is now in bankruptcy. From these facts, it is reasonable to infer damages resulting from Plaintiff’s weakened standing in the Yorktown bankruptcy proceedings. We are particularly considerate of this given that if the Plaintiff were to wait until the bankruptcy proceedings were finalized so that they could claim a specific dollar amount, they would do so at a risk. “[T]he trigger for the accrual of a legal malpractice action, for statute of limitations purposes, is not the realization of actual loss, but the occurrence of a breach of duty.” Wachovia Bank, N.A. v. Ferretti, 2007 Pa. Super. 320, ¶22, 935 A.2d 565, 572. Accordingly, claims for an uncertain dollar amount have been allowed to precede in professional 6 negligence cases despite the lack of resolution in underlying cases. See Liberty Bank v. Ruder, 402 Pa. Super. 561, 568, 587 A.2d 761, 765 (1991). As to Counts III and IV, Defendants filed preliminary objections in the nature of a motion to strike Plaintiff's request for punitive damages. “Assessment of punitive damages are proper when a person's actions are of such an outrageous nature as to demonstrate intentional, willful, wanton or reckless conduct, and are awarded to punish that person for such conduct.” SHV Coal, Inc. v. Continental Grain Co, 526 Pa. 489, 493, 587 A.2d 702, 704 (1991) (citations omitted). Accepting all averments in the complaint as true, it appears that Plaintiff directed the Defendants to file UCC-1 Financing Statements, that the Defendants had multiple opportunities to do so, that the Plaintiff was billed twice for recording a UCC-1 Financing Statement, and that a UCC-1 Financing Statement was never filed despite the Plaintiff’s inquiries. At this initial stage, we find that the Plaintiff has averred enough to survive the motion to strike. Accordingly, we overrule the Defendants’ preliminary objection on this issue. ORDER st AND NOW, this 31 day of May, 2013, upon consideration of Defendants’ Preliminary Objections to Plaintiff’s Amended Complaint, and after oral argument, heard April 5, 2013, the Preliminary Objections of the Defendants are OVERRULED. BY THE COURT, ___________________________ Kevin A. Hess, P.J. 7 ORRSTOWN BANK, : IN THE COURT OF COMMON PLEAS Plaintiff, : OF CUMBERLAND COUNTY, : PENNSYLVANIA : v. : : CIVIL ACTION - LAW ROBERT C. SAIDIS, ESQUIRE : GEOFFREY S. SHUFF, ESQUIRE : SAIDIS, SULLIVAN & ROGERS, P.C. : No. 2012-83 a/k/a SAIDIS SULLIVAN LAW, P.C., : a/k/a SAIDIS, FLOWER and LINDSAY, : P.C., a/k/a SAIDIS, SHUFF, FLOWER & : LINDSAY, P.C. : Defendants. : : JURY TRIAL DEMANDED IN RE: DEFENDANTS’ PRELIMINARY OBJECTIONS TO PLAINTIFF’S AMENDED COMPLAINT ORDER st AND NOW, this 31 day of May, 2013, upon consideration of Defendants’ Preliminary Objections to Plaintiff’s Amended Complaint, and after oral argument, heard April 5, 2013, the Preliminary Objections of the Defendants are OVERRULED. BY THE COURT, ___________________________ Kevin A. Hess, P.J. Eric L. Brossman, Esq; Mathew M. Haar; Emily Bensinger Saul Ewing LLP th 2 North Second Street, 7 Floor Harrisburg, PA 17101 Attorneys for Plaintiff Edwin A. Schwartz, Esquire Marshall, Dennehey, Warner, Coleman & Goggin 4200 Crums Mill Road, Suite B Harrisburg, PA 17112 Attorney for Defendants