Opinion
892 EDA 2023 893 EDA 2023 J-A14040-24
08-22-2024
COURTNEY SPINELLI, AN INCAPACITATED PERSON, BY C. BARBARA MORRIS, THE GUARDIAN OF HER ESTATE Appellant v. JOSEPH DYSON FALLON, EXECUTOR OF THE ESTATE OF CHRISTOPHER C. FALLON, ESQ. DECEASED, JACQUELINE PROMISLO, COZEN O'CONNOR, P.C., AND ROCCO SPINELLI COURTNEY SPINELLI, AN INCAPACITATED PERSON, BY C. BARBARA MORRIS, THE GUARDIAN OF HER ESTATE Appellant v. JOSEPH DYSON FALLON, EXECUTOR OF THE ESTATE OF CHRISTOPHER C. FALLON, ESQ. DECEASED, JACQUELINE PROMISLO, COZEN O'CONNOR, P.C., AND ROCCO SPINELLI
Appeal from the Order Entered March 10, 2023 In the Court of Common Pleas of Philadelphia County Civil Division at No(s): 220101322
BEFORE: LAZARUS, P.J., STABILE, J., and LANE, J.
OPINION
LANE, J.
Courtney Spinelli ("Appellant"), an incapacitated person, by C. Barbara Morris, the guardian of her estate, appeals from the orders which: (1) granted the preliminary objections filed, respectively, by Joseph Dyson Fallon, Executor of the Estate of Christopher C. Fallon, Esquire, Deceased ("Fallon"),Jacqueline Promislo, Esquire ("Promislo"), and Cozen O'Connor, P.C. ("Cozen O'Connor") (collectively, the "Cozen Defendants"), and by Rocco Spinelli ("Spinelli"); and (2) dismissed Appellant's complaint with prejudice under the doctrine of lis pendens. We hold the elements of the doctrine of lis pendens were not established here, as the parties, causes of actions, and requested relief in the instant matter are not identical to those in a previously filed matter. Accordingly, we reverse.
For ease of discussion, we refer to Courtney Spinelli and her estate collectively as "Appellant."
Fallon passed away in 2021, see Appellant's Brief at 8, and the underlying complaint named his estate as a party. For ease of discussion, we refer to Fallon and his estate collectively as "Fallon."
The Cozen Defendants are represented by attorneys from the Cozen O'Connor law firm and have filed a joint brief. Spinelli has filed a separate brief, which does not include any discussion but instead adopts all portions of the Cozen Defendants' brief.
We glean the following procedural history from Appellant's complaint. In 2018, the orphans' court division of the Delaware County Court of Common Pleas ("orphans' court") decreed Appellant, then thirty-six years old, to be an incapacitated person, after she sustained severe brain injuries in an automobile accident. The orphans' court appointed co-guardians of Appellant's person and estate: her "estranged husband," Spinelli - from whom Appellant had been separated for two years - and Kathleen Devine Fox ("Fox"). Complaint, 1/18/22, at 3-4, 16.
See In re Spinelli, an Incapacitated Person, No. 142-2018, Delaware County Court of Common Pleas, Orphans' Court Division.
The Cozen Defendants state that Fox is Appellant's mother. See Cozen Defendants' Brief at 6.
Fallon and Promislo, both attorneys employed by Cozen O'Connor, pursued personal injury claims on Appellant's behalf related to the automobile accident. Id. at 10. These claims resulted in settlement agreements in the amounts of $40,000 and $990,000. See id. at 5-6, 8-10.
The Cozen Defendants aver they were retained by both original guardians, Spinelli and Fox, merely to pursue the personal injury claims. See Cozen Defendants' Brief at 6 n.4. Appellant, however, as we discuss infra, avers their legal representation extended to additional matters affecting her estate.
In September 2020, the orphans' court entered a decree, which: (1) granted Spinelli's request to resign as co-guardian of Appellant's estate and person; and (2) directed him to file an accounting of his term as co-guardian. The orphans' court also granted Fox's request to resign as co-guardian of Appellant's estate, and appointed a new guardian of the estate: "Elder Care Advocacy Services, Inc., C. Barbara LeMunyon, President." Orphans' Court Decree, 9/23/20, at 1, Exhibit 1 to Complaint, 1/18/22. Fox remained the guardian of Appellant's person.
It appears that Barbara LeMunyon is the same person as C. Barbara Morris, who has designated herself as the guardian of Appellant's estate. The Cozen Defendants have argued, before the trial court and on appeal, that she is not in fact the guardian, and instead her employer, Elder Care Services, Inc., is the proper guardian. See Cozen Defendants' Brief at 4 n.1, 8.
According to Appellant's complaint, Spinelli filed an "Accounting" in December 2020, which: (1) "was late, riddled with inaccuracies, and failed to conform to court rules and procedures;" (2) failed to report the receipt of the personal injury settlements; and (3) failed to report the payment of $363,333.33 in legal fees to Fallon and Cozen O'Connor. Complaint, 1/18/22, at 12. Upon Appellant's filing of a petition to compel an accounting, Spinelli filed a second accounting in July of 2021. However, this accounting likewise failed to report the legal fees paid to Fallon and Cozen O'Connor.
According to Appellant, Spinelli subsequently filed a third accounting in February 2023. See Appellant's Brief at 8.
In September 2021, Appellant filed objections to Spinelli's accounting, seeking a surcharge. We review the averments in detail. Appellant's objections asserted Spinelli failed to, inter alia: (1) account for the entire time Spinelli was guardian of her estate; (2) list all receipts, disbursements, and distributions, including those related to her personal injury settlements, "'long term disability' receipts," and individual retirement account ("IRA") distributions; (3) explain why Spinelli failed to timely obtain court approval of the personal injury settlements; (4) report the payment of attorney fees and medical bills; (5) list all relevant bank accounts; and (6) require Cozen O'Connor to place the settlement proceeds "into an interest-bearing account until a proper Medicaid-qualified special needs trust could be prepared." Objections to First and Final Account of Former Guardian of the Estate Spinelli, 9/1/21, at 1-4, 7 (emphasis omitted). The objections to the accounting further alleged Spinelli improperly comingled assets with the estate's assets, and used estate funds to pay utility bills, car and home equity loans, real estate taxes, income taxes, tuition, and credit cards, none of which were for Appellant's benefit, but instead for Spinelli's or another's benefit.
Although Appellant averred Spinelli filed two accountings, she styled her objections as responding to the "First and Final Account."
Furthermore, Appellant's objections asserted Spinelli failed to apply on her behalf for: (1) lifetime disability benefits from the Pennsylvania School Employees' Retirement System ("PSERS"), resulting in the loss of $1,736 monthly for the balance of Appellant's life; (2) social security disability benefits; (3) medical assistance benefits; and (4) a proper Medicaid-qualified special needs trust, which would have protected estate assets. Id. at 6-8. Finally, the objections claimed that Spinelli failed to disclose that he had an adverse interest in acting as guardian of Appellant's estate and person, because they were negotiating a divorce and marital settlement agreement at the time of Appellant's injury. We note the objections made only one reference to Promislo - in requesting discovery concerning or a deposition of Spinelli's "former counsel," Promislo, in order to obtain "a full understanding of [Spinelli's] activities." Id. at 11. The objections further requested relief of, inter alia: a surcharge against Spinelli, Fallon, and Cozen O'Connor "jointly and severally," as well as return of the legal fees paid to Fallon and Cozen O'Connor. Id. at 11. The parties agree that the Delaware County orphans' court has not adjudicated Appellant's objections or her request for a surcharge. See Appellant's Brief at 8; see also Cozen Defendants' Brief at 4. Meanwhile, in January 2022, Appellant filed the underlying complaint in the Philadelphia Court of Common Pleas ("trial court"). We similarly review these claims in detail. First, Appellant raised a count of breach of fiduciary duty and a count of conversion against Spinelli, for alleged: (1) "self-dealing" in, and wasting, Appellant's estate and assets; (2) converting or stealing the estate's funds for his own or other's use; (3) failing to account for assets in the estate; and (4) failing to apply for retirement, disability, insurance, and other benefits. Complaint, 1/18/22, at 19-21.
In her complaint, Appellant stated she was an employee of a Pennsylvania school district and thus eligible for lifetime disability payments through PSERS.
Next, Appellant presented a claim of aiding and abetting breach of fiduciary duty and conversion - against Fallon, Promislo, and Cozen O'Connor. See id. at 22 (citing Restatement 2d of Torts, § 876) (discussed infra). In support, Appellant alleged the Cozen Defendants knew of Spinelli's wrongdoing and "in concert with" him: converted the estate's assets; paid themselves with money from the estate without the orphans' court's approval; made "deliberate and material omissions in court filings;" and made "misleading, false, and fraudulent statements to the [c]ourt to further and conceal their tortious conduct." Complaint, 1/18/22, at 22.
The complaint's fourth count was legal malpractice against Fallon, Promislo, and Cozen O'Connor. Appellant claimed these defendants breached their duty to use the skills and knowledge typically possessed by attorneys to ensure her rights were protected. In support, Appellant alleged the Cozen Defendants failed to: investigate the statutes and laws "appliable to [her] legal matters;" establish a Medicaid-qualified special needs trust; timely apply for PSERS, social security, long term disability, and Medicaid benefits; structure "proposed settlement approval orders in a manner" beneficial to her; and timely provide information to the successor guardian. Id. at 24-26.
The complaint's fifth count was a claim of conversion against Fallon, Promislo, and Cozen O'Connor, for improperly converting estate assets to pay themselves attorneys' fees of $363,333.33, without the orphans' court approval. Finally, the complaint alleged civil conspiracy against all the defendants, for conspiring to convert, divert, and steal money from Appellant's estate. Appellant sought compensatory and punitive damages.
The Cozen Defendants and Spinelli filed preliminary objections, alleging the complaint should be dismissed under the doctrine of lis pendens, because Appellant's objections to Spinelli's accounting, in the Delaware County orphans' court, involved the same parties, claims, and requests for relief. The trial court agreed, and ultimately, in March 2023, issued the underlying orders sustaining the preliminary objections and dismissing Appellant's complaint with prejudice. Appellant filed timely notices of appeal and both she and the trial court have complied with Pa.R.A.P. 1925.
The trial court initially granted the preliminary objections and dismissed Appellant's complaint in May 2022. Appellant filed a motion for reconsideration, and then, on June 10, 2022, a notice of appeal. This Court docketed that appeal at 1593 EDA 2022. However, the trial court advised this Court that on June 13, 2022, it had granted reconsideration. See Pa.R.A.P. 1701(b)(3)(i)-(ii) (providing that after an appeal is taken, a trial court may grant reconsideration if, within the 30 day prescribed time period, both an application for reconsideration was filed and the trial court issued an order expressly granting reconsideration). This Court issued a rule on Appellant to show cause why the notice of appeal should not be stricken. Appellant did not respond, and on September 2, 2022, this Court sua sponte quashed the appeal. The parties continued to file competing motions and briefs in litigation of the preliminary objections. On March 10, 2023, the trial court issued the two underlying orders, which again granted Spinelli's and the Cozen Defendants' preliminary objections and dismissed Appellant's complaint with prejudice.
Appellant presents the following issue for our review:
Did the Trial Court err by granting [Spinelli's and the Cozen] Defendants' preliminary objection on the basis of a "prior pending
action" (or "lis pendens") of an equitable accounting action in Delaware County and then by dismissing Appellant's civil malpractice complaint in Philadelphia County with prejudice where the strict three prong test required to apply the doctrine of its pendens - the same parties, the same causes of action and the same relief asserted - had not been met and the Delaware County Orphans' Court and Philadelphia Common Pleas Court actions were materially different?Appellant's Brief at 4.
Appellant avers the trial court erred in granting Spinelli's and the Cozen Defendants' preliminary objections and dismissing her complaint under the doctrine of lis pendens. We first consider the relevant standard of review: "Assessment of the applicability of a lis pendens defense 'is purely a question of law determinable from an inspection of the records in the two causes.'" Rostock v. Anzalone, 904 A.2d 943, 945 (Pa. Super. 2006) (citation omitted). "[O]ur scope of review is plenary." Barren v. Commonwealth, 74 A.3d 250, 253 (Pa. Super. 2013) (citation omitted). "Preliminary objections should be sustained only in cases that are clear and free from doubt." Rostock, 904 A.2d at 945.
"When two lawsuits are pending, the common law doctrine of lis pendens permits the dismissal of the newer suit if both suits involve the same parties, the same relief requested, the same causes of action, and the same rights asserted." Barren, 74 A.3d at 253; see also Pa.R.C.P. 1028(a)(6) (providing that preliminary objections may be filed on the grounds of the pendency of a prior action). "[T]he burden is on the moving party to show that in each case the same parties are involved, the same rights asserted, and the same relief sought." Rostock, 904 A.2d at 945. "When comparing the two causes of action, we examine the substantive elements that must be proved in both actions." Barren, 74 A.3d at 254. "Cases do not involve the same causes of action where the theories of recovery are distinct." Id. The purposes of lis pendens include: "protect[ing] a party from being forced to litigate the same issues in several suits at the same time;" "saving judicial resources;" and "prevent[ing] the appearance of the inequitable administration of law [should] two cases litigating the same issues in different counties reached different results." Id. at 253.
Appellant asserts the trial court erred in dismissing her complaint pursuant to the doctrine of lis pendens, as none of the required elements were present. In support, Appellant alleges the trial court erred in finding, without any analysis, that the claims in this matter are the same as those in her objections to the accounting in orphans' court. Appellant maintains that despite the similarities between the two cases, "the legal standards . . . and requisite proof[ ] for legal malpractice, conversion and civil conspiracy in a civil action . . . are materially different" from those in a surcharge action, which is properly brought in orphans' court. Appellant's Brief at 18, 21. Appellant further asserts the trial court overlooked "the fact that orphans' court can only exercise . . . its limited equitable jurisdiction as conferred by statute," and furthermore that orphans' court cannot assess compensatory or punitive damages. Id. at 20 (unnecessary capitalization omitted). Finally, Appellant maintains that she is requesting different forms of relief: in this case, she is seeking compensatory and punitive damages for legal malpractice, which are "simply not available in orphans' court." Id. at 22 (unnecessary capitalization omitted).
Here, the trial court determined that all three elements of lis pendens were established. First, the trial court found the same parties were in both the pending orphans' court matter and the present case: Appellant's estate, Spinelli, Cozen O'Connor, Promislo, and Fallon. See Trial Court Opinion, 10/23/23, at 3. Second, the trial court found the claims in both matters were the same. It set forth Appellant's "causes of action asserted in the prior pending surcharge action" as follows:
(1) Acting in . . . Spinnelli's own best interest instead of the estate's
(2) Co-mingling . . . Spinelli's assets and liabilities with estate assets and liabilities
(3) Mismanagement of estate assets
(4) Failure to properly account for estate assets
(5) Failure to properly manage the estate's tax responsibilities
(6) Failure to apply for benefits available to the estate
(7) Failure to create specific trusts for the estate
(8) Failure to make proper filings for the estate
(9) Failure to receive proper court approvals
(10) Failure to make proper disclosures to the court including . . . Spinnelli's conflict of interest with the estate
(11) Objection to the hiring, retention, and payment of Cozen O'Connor and . . . FallonTrial Court Opinion, 10/23/23, at 4 (unnecessary capitalization omitted). The trial court then reiterated the causes of action in this case: breach of fiduciary duty, aiding and abetting breach of fiduciary duty and conversion, conversion, legal malpractice, and civil conspiracy. Finally, the trial court found Appellant sought monetary relief in both the orphans' court matter and the present case, while noting the requested relief in this case was compensatory and punitive damages.
First, we review whether the two matters involve the same parties. The instant complaint named four defendants: Spinelli, Fallon, Promislo, and Cozen O'Connor. In the orphans' court objections, while Appellant sought a surcharge against Spinelli, Fallon, and Cozen O'Connor "jointly and severally," she did not seek any relief against Promislo. Although Appellant requested discovery concerning or a deposition of Promislo, Appellant's purpose was to obtain "a full understanding of [Spinelli's] activities as former guardian," and not to make Promislo be responsible or compensate her for any alleged misconduct. Indeed, Appellant's objections in the orphans' court matter did not make any allegations of wrongdoing against Promislo, and Appellant does not now claim that Promislo was a party in the orphans' court action. Accordingly, we determine the first element of the lis pendens test was not established. See Barren, 74 A.3d at 253. Although this conclusion is dispositive of the lis pendens issue, we nevertheless address the remaining two elements.
Appellant also asserts Cozen O'Connor was not a party in the orphans' court surcharge matter, and that the trial court "ignored" the Cozen Defendants' admission, in its preliminary objections, that Cozen O'Connor was not a party to both actions. Appellant's Brief at 15 (citing Cozen Defendants' Preliminary Objections, 2/21/22, at 7). The relevant statement in the Cozen Defendants' preliminary objections, in full context, was: "Indeed, although Cozen O'Connor was not and is not a party to the guardianship proceeding in which those objections were filed, [Appellant] actually pleaded that she sought the imposition of surcharges on Cozen O'Connor and defendant . . . Fallon as well." Cozen Defendants' Preliminary Objections, 2/21/22, at 7 (emphasis added). In emphasizing the first portion of this statement, Appellant ignores, and does not refute, the second portion - that in the orphans' court matter, she sought a surcharge against Cozen O'Connor. The question of whether Cozen O'Connor can be subject to a surcharge, by nature of its legal representation of Appellant, is an issue for the orphans' court. We need not reach the related question - of whether Cozen O'Connor was a party in that matter - as we may resolve the present issue by determining Promislo was not a party in the prior action.
We next review whether Appellant's objections in the orphans' court matter presented the same causes of action as the underling complaint. We compare the causes of actions by examining their substantive elements. See Barren, 74 A.3d at 254.
With respect to a surcharge against the fiduciary of an estate, this Court has explained:
[A] fiduciary of the estate . . . "is required to use such common skill, prudence and caution as a prudent man, under similar
circumstances, would exercise in connection with the management of his own estate."
[A] surcharge may be imposed on the [fiduciary] to compensate the estate for any losses incurred by the [fiduciary's] lack of due care. . . . . .
In re Estate of Schultheis, 747 A.2d 918, 927 (Pa. Super. 2000) (citations omitted and paragraph break added). "[T]he party seeking to surcharge [a fiduciary] bears the burden of showing a failure to meet the required standard of care." In re Estate of Westin, 874 A.2d 139, 145 (Pa. Super. 2005). We apply a negligence standard when evaluating whether a fiduciary's management of an estate warrants a surcharge. See id. at 144. The orphans' court shall exercise jurisdiction over an incapacitated person's estate. See 20 Pa.C.S.A. § 711(10).
We note Estate of Schultheis addressed a petition for a surcharge against the executor of a decedent's estate. See Estate of Schultheis, 747 A.2d at 920-21. Nevertheless, we may find its discussion applicable to our discussion of a surcharge against a guardian of an incapacitated person's estate. See 20 Pa.C.S.A. § 5521(b) (stating that "[t]he provisions concerning the powers, duties and liabilities of guardians of incapacitated persons' estates shall be the same as those set forth in the following provisions of this title relating to personal representatives of decedents' estates . . .").
To establish a claim of breach of fiduciary duty,
a plaintiff must show: the existence of a fiduciary relationship between the plaintiff and the defendant, that the defendant negligently or intentionally failed to act in good faith and solely for the plaintiff's benefit, and that the plaintiff suffered an injury caused by the defendant's breach of its fiduciary duty.Marion v. Bryn Mawr Trust Co., 288 A.3d 76, 88 (Pa. 2023) (some punctuation omitted).
Aiding and abetting breach of a fiduciary duty, pursuant to section 876 of the Restatement (Second) of Torts, "is a viable cause of action in Pennsylvania." Id. at 85 (citation omitted). Section 876 provides:
§ 876 Persons Acting in Concert
For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he
(a) does a tortious act in concert with the other or pursuant to a common design with him, or
(b) knows that the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself, or
(c) gives substantial assistance to the other in accomplishing a tortious result and his own conduct, separately considered, constitutes a breach of duty to the third person.Restatement 2d of Torts, § 876(a)-(c).
This Court has defined conversion as:
"the deprivation of another's right of property in, or use or possession of, a chattel, or other interference therewith, without the owner's consent and without lawful justification." Although the exercise of control over the chattel must be intentional, the tort of conversion does not rest on proof of specific intent to commit a wrong.McKeeman v. Corestates Bank, N.A., 751 A.2d 655, 659 n.3 (Pa. Super. 2000) (citations omitted).
"The elements of a legal malpractice action, sounding in negligence, include: (1) employment of the attorney or other basis for a duty; (2) failure of the attorney to exercise ordinary skill and knowledge; and (3) that such failure was the proximate cause of the harm to the plaintiff." Wachovia Bank, N.A. v. Ferretti, 935 A.2d 565, 570-71 (Pa. Super. 2007).
Finally, "[i]n order to state a cause of action for civil conspiracy, a plaintiff must show '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.'" Marion, 288 A.3d at 88.
After careful comparison of Appellant's objections in the orphans' court matter and her underlying complaint, we conclude that the causes of action are not the same. Preliminarily, we observe that the trial court's list of Appellant's purported "causes of action . . . in the prior pending surcharge action" is misidentified. Trial Court Opinion, 10/23/23, at 4 (emphasis added). Instead, the enumerated items - which included Spinelli's improper comingling of the estate's assets, mismanagement of assets, and failure to apply for benefits - were merely factual allegations supporting Appellant's causes of action, which we deem instead to be objections to Spinelli's accounting and a petition for a surcharge.
While there is substantial overlap in the factual allegations supporting the objections in the orphans' court and the instant complaint, the proper test for comparing two actions' causes of actions is to "examine the substantive elements that must be proved in both actions." Barren, 74 A.3d at 254. We conclude that the elements of and burdens of proof for the claims are distinct.
As discussed above, to establish grounds for a surcharge, which may only be brought in orphans' court, Appellant would have to show Spinelli's "failure to meet the required standard of care" as guardian of the estate. Estate of Westin, 874 A.2d at 145. Appellant's present counts of civil conspiracy, aiding and abetting breach of fiduciary duty or conversion, and legal malpractice, do not involve the same elements.
Conversion involves the deprivation of another's right of property - and does not include a standard of care, which is implicated in a petition for a surcharge. See McKeeman, 751 A.2d at 659 n.3.
Aiding and abetting requires the defendant's commission of a tortious act in concert with another, knowledge "that the other's conduct constitutes a breach of duty," or giving "substantial assistance to the other in accomplishing a tortious result." Restatement 2d of Torts, § 876.
A legal malpractice claim includes the elements of employment of an attorney for a duty and the attorney's failure to exercise ordinary skill and knowledge. See Wachovia Bank, 935 A.2d at 570-71.
A civil conspiracy claim requires two or more persons to have "agreed with intent to do an unlawful act or to do an otherwise lawful act by unlawful means." Marion, 288 A.3d at 88. None of these elements are required for a petition for surcharge in an estate matter.
We need not address, and offer no opinion on, whether the burden of proof for a petition for a surcharge in an estate matter is comparable to the elements of a breach of fiduciary claim.
For the foregoing reasons, we conclude Appellant's causes of action in the orphans' court matter - objections to Spinelli's accounting and a petition for a surcharge - are not the same as those in her present complaint.
Finally, we review whether the requested relief in the two actions is the same. In the orphans' court matter, Appellant sought a surcharge against Spinelli, Fallon, and Cozen O'Connor, for the losses incurred due to Spinelli's lack of due care and the legal fees paid to Fallon and O'Connor. In the present action, however, Appellant seeks punitive and compensatory damages. We conclude that the relief requested in each action is clearly not the same, notwithstanding the fact that the types of relief sought are all monetary in nature.
For the foregoing reasons, we conclude that none of the elements of the lis pendens doctrine have been established. The parties, causes of actions, and requested relief between the orphans' court matter and the present case are not the same. Accordingly, we reverse the trial court's orders granting the preliminary objections of Spinelli and the Cozen Defendants and dismissing with prejudice Appellant's complaint. We remand for further proceedings consistent with this opinion.
Orders reversed. Case remanded. Jurisdiction relinquished.