Opinion
Civil Action No. 03-6437.
September 21, 2004
MEMORANDUM ORDER
Plaintiff Allen Green filed this lawsuit on November 25, 2003. At the heart of the action is a series of loans from Plaintiff to Defendants Allan J. Nowicki and Dianne M. Nowicki ("Nowickis"). Defendant Jonathan F. Altman, Esquire, of the law firm of Marshall, Dennehy, Warner, Coleman and Goggin, P.C. ("Marshall Dennehey") and Steven P. Moyer, Esquire of the Defendant law firm of Grim, Biehn Thatcher, P.C. ("Grim Biehn"), represented Plaintiff in the dispute with the Nowickis. Defendant State Farm Fire and Casualty, Co. ("State Farm") was Plaintiff's insurance carrier. Presently before us are Motions to Dismiss filed by each of the Defendants. (Doc. Nos. 18, 20, 21, 22, 26, 35, 43.) For the reasons that follow, Defendants Altman, Moyer, Marshall Dennehy, and Grim Biehn's ("Attorney Defendants") Motions will be granted, Defendant State Farm's Motion will be granted, and Defendant Nowickis' Motion will be denied.
I. BACKGROUND
Plaintiff is a citizen of Florida. Beginning in 1992, Plaintiff made a series of loans to the Nowickis totaling $990,000. (Am. Compl. ¶ 15.) At that time Plaintiff retained Moyer and Grim Biehn to assist him with the loans. ( Id. ¶ 24.) As security for these loans, Plaintiff received mortgages on several properties owned by the Nowickis in Bucks County and Wayne County. This included properties located on Route 611 in Bucks County ("611 Properties") that consisted of a gas station and convenience store, a vacant lot, and four residential lots. It also included a 92 acre parcel of land ("small Wayne property") and 1,937 acre parcel of land ("large Wayne property") located in Wayne County. ( Id. ¶¶ 27, 29.) In March, 1994, Plaintiff made another loan to the Nowickis that was secured by a second mortgage on the property in Wayne County, Diane M. Nowicki's surety, and a mortgage on the Nowickis' residence. ( Id. ¶ 31.)
On June 13, 1994, the Nowickis filed a voluntary Chapter 11 bankruptcy petition. ( Id. ¶ 37.) On March 25, 1998, after four years of bankruptcy proceedings, the bankruptcy proceedings closed and the stay on creditor actions was lifted. In an effort to recover on the defaulted loans, Moyer (and Grim Biehn) filed several mortgage foreclosure actions in state court pertaining to both the Nowickis' residence and the 611 Properties. ( Id. ¶ 53.) On September 25, 1998, the Nowickis filed a nine-count complaint in federal court against Plaintiff. At that time, Moyer retained the law firm of Conrad, O'Brien, Gellman Rohn to represent Plaintiff. That firm immediately filed a motion to dismiss the Nowickis' Complaint. ( Id. ¶ 62.)
This suit, Civil Action No. 99-0031, was assigned to the Honorable William H. Yohn, Jr.
State Farm had issued a personal liability insurance policy to Plaintiff. Pursuant to this policy, State Farm undertook Plaintiff's defense in the Nowicki suit, and retained Altman (and Marshall Dennehy) to represent Plaintiff. ( Id. ¶ 64.) On May 11, 1999, Judge Yohn issued an order denying Plaintiff's motion to dismiss and allowing seven of the Nowickis' claims to proceed. Plaintiff contends that because of the expense of litigating this action in federal court, "[D]efendant State Farm, acting in bad faith and working in concert with [D]efendants [Marshall Dennehy and Altman], began an effort to cram-down a global settlement on [Plaintiff]. . . ." ( Id. ¶ 72.) Plaintiff alleges that in June, 1999, Altman "advised . . . Moyer [that] if [Plaintiff] did not agree to settle the Nowickis's lawsuit," Moyer and Grim Biehn would become defendants in a suit for indemnification brought by State Farm. ( Id. ¶ 74.) Plaintiff alleges that to avoid this threatened suit, "defendants [Grim Biehn] and Moyer conspired with defendants State Farm, [Marshall Dennehy] and Altman, and aided and abetted in the cram-down [sic] on Green of an unconscionable global settlement." ( Id. ¶ 75.)
On June 22, 1999, Plaintiff attended a settlement conference before Magistrate Judge Charles B. Smith. Prior to this conference, Altman and Moyer had been negotiating a global settlement between Plaintiff and the Nowickis. At the settlement conference, Altman advised Plaintiff to accept the proposed settlement. Plaintiff alleges that Altman threatened that if Plaintiff did not accept the agreement, Altman would cease to represent him stating, "Take it or leave it, but if you don't take it, I'm gone." ( Id. ¶ 77.) Plaintiff alleges that under this duress, he entered into a settlement agreement with the Nowickis that settled four actions between the parties pending in state and federal court.
The Settlement Agreement provided that the Nowickis' indebtedness to Plaintiff would be reduced from "an amount that was in excess of $2,000,000 to $1,050,000." ( Id. ¶ 81a.) In exchange for this reduction, the Nowickis were to sell the 611 properties and the small Wayne property, with the net proceeds being applied to satisfying the Nowickis' debt. (Am. Compl. ¶ 87.) The Settlement Agreement provided in pertinent part:
2. Sale of Properties: Within thirty (30) days of June 22, 1999, the date of the Agreement, Allan (Nowicki) shall list the 611 and Small Wayne Properties (the 100 acre Wayne County property) for sale with a commercial real estate broker with the broker's commission not to exceed six percent (6%) of the gross selling price. During the first nine (9) months that the 611 and Small Wayne Properties are listed, Allan (Nowicki) shall have, in his sole discretion, the authority on whether to accept any cash offers from any unrelated third parties for each parcel. Green shall cooperate and execute such documents which are necessary to transfer clear title to the purchaser. Green and his agents shall not interfere with Allan's (Nowicki) efforts to market the 611 and Small Wayne Properties during this time period. Any advertising costs which are required to be paid in advance shall be paid by Allan (Nowicki).
If the 611 and Small Wayne Properties are not sold and settled within the above nine (9) month period or under an agreement for sale with closing to be held within two (2) months of the end of the above nine (9) month period, an absolute auction of the 611 and Small Wayne Properties shall be conducted within ninety (90) days of the end of the nine (9) month period or the expiration of the agreement of sale, whichever is later . . .
( Id. ¶ 81b.) Under the Agreement, Plaintiff also agreed to release his mortgage on the large Wayne property, and to file no foreclosure action on the Nowickis' residence until the sale of the 611 properties and the sale of the small Wayne property had been completed. ( Id. ¶ 81d, e.)
Plaintiff now contends that the Settlement Agreement was unconscionable because it provided Plaintiff no enforcement mechanism to compel the Nowickis to comply with the Agreement and either sell, or hold an auction for the properties, and because the Agreement had no provision for interest. ( Id. ¶¶ 81a, c, e.) Plaintiff contends that this lack of an enforcement mechanism has allowed the Nowickis to breach the Settlement Agreement. During the nine-month period, the Nowickis failed to sell the two properties. Subsequently, the Nowickis failed to arrange for an auction of the properties within the ninety-day period that followed. ( Id. ¶ 89.) In September, 2001, more than a year after the nine-month period had ended, the Nowickis arranged for an auction to be conducted. Plaintiff alleges that at this auction, the Nowickis received a bid of $1,050,00 for all of the 611 Properties in Bucks County, but failed to accept the bid. ( Id. ¶ 91.) The Nowickis did sell three of the smaller parcels of the 611 Properties for a total purchase price of $285,000. ( Id.) Plaintiff alleges that of this $285,000, he was only given $119,377.82. ( Id.) There have been no further auctions, and Plaintiff has received no other payments.
The Settlement Agreement provided, however, that: "The enforcement of any and all issues and/or future Actions stemming from this agreement and the satisfaction of the Agreed Debt shall be placed under the Jurisdiction of the United States District Court for the Eastern District of Pennsylvania." (Doc. No. 18 Ex. B "Settlement Agreement" ¶ 16.)
In fact, the Settlement Agreement contained provisions such that "all future rents shall be paid to Green but not applied towards the balance of the 'Agreed Debt'" and when the gas station portion of the 611 Properties was sold, Plaintiff would "accrue 6% interest per annum to be added to the then remaining balance of the Agreed Debt." (Doc. No. 18 Ex. B "Settlement Agreement" ¶ 4.)
Plaintiff asserts claims in assumpsit, malpractice, and breach of fiduciary duty against Altman, Moyer, Marshall Dennehy, and Grim Biehn. Plaintiff also asserts claims for bad faith and inducement of breach of fiduciary duty against State Farm, and claims for breach of contract, rescission, misappropriation of funds and a request for declaratory relief against the Nowickis. Each Defendant has filed a Motion to Dismiss Plaintiff's claims.
Plaintiff amended his Complaint to include the assumpsit claims. (Am. Compl. ¶¶ 170-83.)
II. LEGAL STANDARD
The purpose of a Rule 12(b)(6) motion to dismiss is to test the sufficiency of a complaint, not to resolve disputed facts or decide the merits of the case. Tracinda Corp. v. Daimlerchrysler AG, 197 F. Supp. 2d 42, 53 (D. Del. 2002). A court should not dismiss a case for failure to state a claim unless the plaintiff can prove no set of facts in support of the claim that would entitle it to relief. See United States v. Marisol, Inc., 725 F. Supp. 833, 836 (M.D. Pa. 1989); see also Trump Hotels Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998) ("A complaint should be dismissed only if, after accepting as true all of the facts alleged in the complaint, and drawing all reasonable inferences in the plaintiff's favor, no relief could be granted under any set of facts consistent with the allegations"); Diaz-Ferrante v. Rendell, No. Civ. A. 95-5430, 1998 WL 195683, at *3 (E.D. Pa. March 30, 1998) ("[A] Rule 12(b)(6) motion does not serve to question a plaintiff's well-pled facts, but rather tests the legal foundation of the plaintiff's claims"). Thus, the court's inquiry is directed towards whether the plaintiff's allegations constitute a claim under Fed.R.Civ.P. 8(a). Though the "plain statement" rule of 8(a) is construed quite liberally, the court need not credit a plaintiff's "bald assertions" or "legal conclusions" when deciding a motion to dismiss. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). Finally, the court should not look to whether plaintiff will "ultimately prevail," it should only consider whether plaintiff should be allowed to offer evidence in support of their claims. In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997).
III. DISCUSSION
A. CLAIMS AGAINST ALTMAN, MOYER, MARSHALL DENNEHY, AND GRIM BIEHN
Plaintiff has alleged claims of legal malpractice, breach of fiduciary duty, and assumpit against each of the Attorney Defendants. Despite their different roles in this dispute, Defendants Altman, Moyer, Marshall Dennehy, and Grim Biehn proffer the same arguments for dismissal. They argue that Plaintiff's claims against them should be dismissed because Plaintiff did not file a certificate of merit in accordance with Pa. R. Civ. P. 1042.1, that Plaintiff's claims are precluded by the Muhammad doctrine, that Plaintiff's claims are barred by the statute of limitations, that Plaintiff has failed to allege negligence on the part of the Attorney Defendants that caused his injury, and that Plaintiff has suffered no actual damages as a result of the Attorney Defendants' alleged actions. We will address the statute of limitations issue first.
1. STATUTE OF LIMITATIONS
Under Pennsylvania law, a plaintiff asserting a legal malpractice claim may plead either in contract or tort. Igbonwa v. Cameron, No. Civ. A. 03-5407, 2004 WL 257358, at *2 (E.D. Pa. Feb. 2, 2004) (citing Guy v. Liederbach, 459 A.2d 744, 748 (Pa. 1983)). "To sustain a claim of tortious malpractice, plaintiff must raise an issue whether the defendants failed to exercise the standard of care that a reasonable attorney would exercise under the circumstances." Id. (citing Sherman Indus. Inc. v. Goldhammer, 683 F. Supp. 502, 506 (E.D. Pa. 1988)). Alternatively, "an assumpsit claim based on breach of the attorney-client agreement . . . is a contract claim and the attorney's liability in this regard will be based on terms of that contract. Thus, if the attorney agrees to provide his or her best efforts and fails to do so an action will accrue." Bailey v. Tucker, 621 A.2d 108, 115 (Pa. 1993).
The statute of limitations that applies to malpractice claims based on negligence is different than the statute of limitations that applies to malpractice claims based on contract (i.e., assumpsit). Under Pennsylvania law, a cause of action that sounds in either legal malpractice or breach of fiduciary duty is subject to the a two-year statute of limitations. 42 PA. CONS. STAT. § 5524; see also Igbonwa, 2004 WL 257358, at *2 (discussing the difference in statute of limitations for legal malpractice claims that sound in contract vis-á-vis legal malpractice claims that sound in negligence); Bailey, 621 A.2d at 116 n. 17 (suggesting in dicta that § 5524 provides the statutes of limitations for legal malpractice). "An action in assumpsit for breach of an oral contract is subject to a four-year statute of limitations." Igbonwa, 2004 WL 257358, at *2 (citing 42 PA. CONS. STAT. § 5525).
The Attorney Defendants contend that all of Plaintiff's claims against them are barred by the applicable statutes of limitations. The disputed issue here is when the statutes of limitations was triggered. "A claim under Pennsylvania law accrues at 'the occurrence of the final significant event necessary to make the claim suable.'" Barnes v. Am. Tobacco Co., 161 F.3d 127, 152 (3d Cir. 1998) (quoting Mack Trucks, Inc. v. Bendix-Westinghouse Automotive Air Brake Co., 372 F.2d 18, 20 (3d Cir. 1966)). "Under the occurrence rule the statutory period commences upon the happening of the alleged breach of duty." Robbins Seventko Orthopedic Surgeons, Inc. v. Geisenberger, 674 A.2d 244, 246 (Pa.Super.Ct. 1996). In addition to the occurrence rule, "Pennsylvania law recognizes that 'in some circumstances, although the right to institute suit may arise, a party may not, despite the exercise of diligence, reasonably discover that he has been injured.' In such instances the discovery rule applies." Haugh v. Allstate Ins. Co., 322 F.3d 227, 231 (3d Cir. 2003) (citing Crouse v. Cyclops Indus., 745 A.2d 606, 611 (Pa. 2000)). "The discovery rule is a judicially created device which tolls the running of the applicable statute of limitations until the point where the complaining party knows or reasonably should know that he has been injured and that his injury has been caused by another party's conduct." Crouse, 745 A.2d at 611.
The Attorney Defendants contend that Plaintiff's claims of malpractice and breach of fiduciary duty are barred by the two year statute of limitations. The basis for Plaintiff's claims against the Attorney Defendants is the alleged recommendation by Moyer and Altman to accept the Settlement Agreement, which Plaintiff contends was unconscionable. In connection with his acceptance of the Settlement Agreement on June 22, 1999, Plaintiff alleges that Altman told him to "Take it or leave it, but if you don't take it, I'm gone." (Am. Compl. ¶ 77.) At the settlement conference, Moyer also advised Plaintiff to accept the Settlement Agreement negotiated by Altman. ( Id. ¶ 79.) On the basis of this advice, Plaintiff accepted the terms of the Settlement Agreement. The Attorney Defendants argue that the two-year statute of limitations for the tort claims, and the four-year statute of limitations for the assumpsit claims began to run on June 22, 1999.
Plaintiff contends that the statute of limitations did not begin to run on June 22, 1999. Rather, Plaintiff states that the statute of limitations began to run when the Plaintiff suffered an "appreciable harm" as a result of the Nowickis' failure "to sell the Route 611 properties after receiving a bid for $1,050,000 at auction in September 2001. In fact, Plaintiff did not suffer an injury as a result of defendants' malpractice and breach of fiduciary duty until January, 2002, after learning that A.J. Nowicki had not closed a sale for the entire 611 Properties, and plaintiff tried unsuccessfully to get A.J. Nowicki to arrange for another auction." Plaintiff cites the case of Fiorentino v. Rapoport, 693 A.2d 208 (Pa.Super.Ct. 1997), and argues that it is controlling. In Fiorentino, the plaintiff brought suit against his former attorney for malpractice in both tort and contract. The court was called upon to determine whether the statute of limitations for legal malpractice began to run when the initial contract was drafted and signed or when the plaintiff first suffered injury because of the alleged malfeasance of the attorney. Id. at 219. In analyzing the issue, the court noted that the "mere breach of a professional duty that causes only the threat of unrealized future harm does not suffice to create a cause of action for negligence." Id. at 220 (citing Rizzo v. Haines, 555 A.2d 58, 68 (Pa. 1989)). The court concluded that the cause of action could not have accrued until there was a tangible damage to the plaintiff. Id.; see also Glenbrook Leasing Co. v. Beausang, 839 A.2d 437, 441 (Pa.Super.Ct. 2003) (holding that statute of limitations began to run when knowledge of the harm became apparent). Plaintiff argues that he suffered no tangible damage until September, 2001 or January, 2002, and it was then that his cause of action accrued.
It appears that none of the parties are correct. Plaintiff's claims against the Attorney Defendants is based on their advice to accept a Settlement Agreement that Plaintiff characterizes as unconscionable. Plaintiff alleges that the Agreement was unconscionable because while it required that the Nowickis sell or auction the properties in dispute, it gave Plaintiff "no right to foreclose on the properties if A.J. Nowicki did not auction them," or "no power to compel [such] that [Plaintiff] could be forever barred from pursuing his remedy against the Nowickis' residence." ( Id. ¶¶ 81c, e.) As we discussed above, the Settlement Agreement mandated that the Nowickis sell certain pieces of property within nine months or be forced to sell the properties at auction. The Settlement Agreement was signed on June 22, 1999. Under the terms of that agreement, the Nowickis had until April 22, 2000 to sell the properties. Since the sale of the properties was not completed, the Nowickis then had until July 22, 2000, to conduct an "absolute auction" of the properties. Plaintiff claims that the Agreement was unconscionable because it provided no mechanism to force the Nowickis to comply with the Agreement. Although a reasonable argument can be made that Plaintiff could have discovered the alleged defect in the Agreement at an earlier time, Plaintiff certainly should have been fully aware of the defect on July 22, 2000, when the Nowickis allegedly violated the Agreement. When the properties were not sold pursuant to the terms of the Agreement, there was an occurrence which put Plaintiff on notice of the existence of these claims. Under the circumstances, we are compelled to conclude that Plaintiff's claims for legal malpractice, breach of fiduciary duty, and assumpsit accrued on July 22, 2000, when it was clear that the Nowickis had failed to comply with the Agreement. As the statute of limitations for legal malpractice and breach of fiduciary duty is two years, Plaintiff had until July 22, 2002, to file an action against the Attorney Defendants. This action was not filed until November 25, 2003. Accordingly, these claims are now barred by the statute of limitations. Since the statute of limitations for assumpsit claims is four years, Plaintiff had until July 22, 2004, to file these claims against Defendants. The complaint was filed on November 25, 2003. Thus, the claims in assumpsit are not barred by the statute of limitations.
Under the Agreement, the Nowickis were to list the properties for sale within thirty days, and then had nine months to complete the sale. (Am. Compl. ¶ 87.)
Plaintiff contends that when the statute of limitations began to run is ultimately a question for the jury. "Whether the statute has run on a claim is usually a question of law for the trial judge, but where the issue involves a factual determination, the determination is for the jury." Hayward v. Medical Ctr. of Beaver County, 608 A.2d 1040, 1043 (Pa. 1992) (citing Smith v. Bell Telephone Co. of Pa., 153 A.2d 477, 481 (Pa. 1959)). "[O]nly where the facts are so clear that reasonable minds cannot differ may the commencement of the limitations period be determined as a matter of law." Id. (citing Sadtler v. Jackson-Cross Co., 587 A.2d 727, 732 (Pa.Super.Ct. 1991)). The facts here are clear, and the commencement of the limitations period is therefor a matter for the Court rather than a jury.
Even if we were to find that Plaintiff's malpractice claims based in tort were not barred by the statute of limitations it could be argued that these claims are subject to dismissal under the "gist of the action" doctrine. The gist of the action doctrine bars tort claims arising solely from a contract between the parties. Galdieri v. Monsanto Co., 245 F. Supp. 2d 636, 650 (E.D. Pa. 2002). The doctrine is based on the notion that "the important difference between contract and tort actions is that the latter lie from the breach of duties imposed as a matter of social policy while the former lie for the breach of duties imposed by mutual consensus." Bohler-Uddeholm Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79, 103-04 (3d Cir. 2001) (quoting Redevelopment Auth. of Cambria County v. Int'l Ins. Co., 685 A.2d 581, 590 (Pa.Super.Ct. 1996) (en banc)). Under the "gist of the action" test, "to be construed as a tort action, the [tortious] wrong ascribed to the defendant must be the gist of the action with the contract being collateral." Id. If the claim alleges a breach of duty arising from the agreement between the parties it is contractual in nature. If, on the other hand, the claim alleges a breach of duty of the type imposed on individuals generally as a matter of social policy, the claim is essentially a tort claim.
2. EXISTENCE OF ACTUAL DAMAGES
Though the assumpsit claims cannot be dismissed based upon the statute of limitations, the Attorney Defendants contend that this claim should be dismissed because "Plaintiff cannot establish that he suffered any actual damages as a result of the alleged breach of contract. . . ." (Doc. No. 18 at 15.) In order to plead a claim in assumpsit, the plaintiff must prove that he suffered an actual loss. See Rizzo, 555 A.2d at 68; Duke Co. v. Anderson, 418 A.2d 613, 617 (Pa. 1980). The condition that damages be identifiable and actual is a pleading requirement:
when it is alleged that an attorney has breached his professional obligations to his client, an essential element of the cause of action, whether the action be denominated in assumpsit or trespass, is proof of actual loss. The mere breach of a professional duty, causing only nominal damages, speculative harm, or the threat of future harm — not yet realized — does not suffice to create a cause of action for negligence. . . . 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.Heimbecker v. 555 Assocs., No. Civ. A. 01-6140, 2003 WL 21652182, at *17 (E.D. Pa. March 26, 2003) (citing Rizzo, 555 A.2d at 68). In Heimbecker, the court dismissed the plaintiff's assumpsit action because plaintiff's damages, identified as "incurred expenses related to the costs of litigation, has been legally foreclosed from pursuing claims against [d]efendants . . . for wrongful use of civil proceedings and related harms," were remote, speculative, and unidentifiable. Id.
In this case, Plaintiff's alleged damages are also too remote, speculative or unidentifiable to sustain a claim of assumpsit. Plaintiff claims that as a result of breach by the Attorney Defendants, Plaintiff did not have the ability to foreclose on the Nowickis' property and to receive the proceeds that such foreclosure actions would have brought him. (Am. Compl. ¶¶ 178, 183.) Plaintiff contends that as a result of the Attorney Defendants' actions, he not only gave up the right to foreclose on the Nowickis' residence, he also released his mortgage on the large Wayne property. (Settlement Agreement ¶¶ 5, 7.) However, Plaintiff continued to hold mortgages on the 611 Properties and the small Wayne Property. ( Id. ¶¶ 3b, 5, 7.) The terms of the Settlement Agreement also provided for the outright auction of the 611 Properties and the small Wayne property, if the Nowickis did not sell the properties themselves. ( Id. ¶ 2.)
Plaintiff cannot say with any certainty that by following the Attorney Defendants' advice and exchanging his rights of foreclosure for the mandated sale or auction of the 611 Properties and the small Wayne property that he suffered any actual damages. First of all, it is seemingly impossible to place a determinate value on this exchange. It would be entirely speculative to guess what Plaintiff would have gained from foreclosure versus what he still may gain from acting upon the terms of the agreed upon Settlement. Second, the relationship between the Attorney Defendants' action and any loss Plaintiff suffered is extremely attenuated. In addition to the promise of an outright auction, to ensure that Plaintiff was not left without legal recourse should the Nowickis frustrate the enforcement of the Settlement Agreement, the Agreement provided that, "The enforcement of any and all issues and/or future Actions stemming from this Agreement and the satisfaction of the Agreed Debt shall be placed under the Jurisdiction of the United States District Court for the Eastern District of Pennsylvania." ( Id. ¶ 16.) Plaintiff never took advantage of this provision, even though the parties had specifically consented to permit Magistrate Judge Smith to retain jurisdiction over enforcement of the terms of the settlement agreement. Thus, even assuming arguendo that Attorney Defendants did breach some promised duty, Plaintiff's failure to immediately enforce his rights through the court was more likely than not the true source of his damages.
Based upon the foregoing, we are compelled to conclude that any damages suffered by Plaintiff, as a consequence of Attorney Defendants' actions, are too remote and speculative to support Plaintiff's claims in assumpsit. Finally, we note that for claims in assumpsit damages are "limited to the amount actually paid for the services provided plus statutory interest." Bailey, 621 A.2d at 252. Thus, the Attorney Defendants would not be liable for the claims pled in the assumpsit counts of over $2,000,000 in consequential damages, even if such actual damages were properly pled in the Amended Complaint.
3. SANCTIONS
As a final matter, Defendants Marshall Dennehy and Altman have filed Motions for Sanctions against Plaintiff. (Doc. Nos. 29, 31.) The basis of these requests for sanctions is the argument that Plaintiff's "failure to conduct a reasonable investigation" led him to file claims against these Defendants that "are not based on a plausible view of the law." (Doc. No. 29 at 3, 6.) We decline Defendants request to impose sanctions on Plaintiff.
In response to these Motions for Sanctions, Plaintiff requests that the Court order Defendants to pay Plaintiff reasonable attorneys' fees and costs incurred in opposing Defendants Motions for Sanctions. (Doc. No. 33 at 5.) We also decline Plaintiff's request.
B. CLAIMS AGAINST STATE FARM
Plaintiff alleges claims against State Farm for bad faith and inducement of breach of fiduciary duty. Plaintiff's claims against State Farm are based on allegations that State Farm instructed "defendant Altman to threaten to discontinue providing a legal defense to plaintiff if plaintiff rejected the Settlement Agreement." (Am. Compl. ¶¶ 132, 139.) State Farm contends that each of these claims is barred by the applicable statute of limitations.
The bad faith statute in Pennsylvania is found in 42 PA. CONS. STAT. § 8371, which provides:
In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:
(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%.
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees against the insurer.42 PA. CONS. STAT. § 8371. The Pennsylvania legislature did not include a statute of limitations in this statute. Haugh v. Allstate Ins. Co., 322 F.3d 227, 233 (3d Cir. 2003). While the Supreme Court of Pennsylvania has yet to determine which of several potential limitation periods applies to actions under this statute, the Third Circuit in Haugh "predicted that the Supreme Court of Pennsylvania would hold that an action under section 8371 sounds in tort and thus is subject to a two-year statute of limitations under 42 PA. CONS. STAT. § 5224(7)." Id. at 235-36.
Although the Pennsylvania Supreme Court has yet to determine whether it will recognize a claim of aiding and abetting a breach of fiduciary duty, courts in this district have entertained such claims, see, e.g. Adena, Inc. v. Cohn, 162 F. Supp. 2d 351, 357 (E.D. Pa. 2001); Schuylkill Skyport Inn, Inc. v. Rich, No. CIV.A. 95-3128, 1996 WL 502280, at *38 (E.D. Pa. Aug. 21, 1996); Pierce, 1992 WL 165817, at *8, and have determined that the tort of aiding and abetting a breach of fiduciary duty has a two-year statute of limitations. See Pierce, 1992 WL 165817, at 10 (holding that a two-year statute of limitations is appropriate since a breach of fiduciary duty claim typically has been subject to a two-year statute of limitations).
State Farm contends that the Amended Complaint demonstrates that Plaintiff was "aware of the facts supporting a potential bad faith action on or before June 22, 1999." (Mem. of Law in Support of Def. State Farm Fire Casualty Co.'s Mot. to Dismiss Pl.'s Compl. Pursuant to FRCP 12(b)(6) at unnumbered 3.) Plaintiff argues, as he did in response to the Attorney Defendants' Motions, that "plaintiff's bad faith coverage and tort claims against his insurer, State Farm, did not arise until plaintiff suffered an injury. Plaintiff did not suffer an injury as a result of the defendant State Farm's bad faith and tortious conduct until January 2002, after A.J. Nowicki advised plaintiff that he had not closed a sale for the Route 611 Properties. . . ." (Doc. No. 27 at 21.) The analysis with regard to the accrual of Plaintiff's claims against State Farm is the same as the analysis of this issue with respect to the claims against the Attorney Defendants. On July 22, 2000, the day the Nowickis' ninety-day period for conducting an auction ended and nothing was done, Plaintiff should have reasonably been aware of the alleged conduct which served as the basis for the claims against State Farm. As the statute of limitations for these claims is two years, Plaintiff had until July 22, 2002, to file an action against State Farm. Inexplicably, Plaintiff waited until November 25, 2003, to file. Thus, Plaintiff's claims against State Farm are barred by the statute of limitations.
C. CLAIMS AGAINST THE NOWICKIS
Plaintiff and the Nowickis agreed to a global settlement of all of the outstanding claims between them on June 22, 1999. Plaintiff alleges that the Nowickis have since violated the Settlement Agreement. The Nowickis, who are proceeding pro se in this case, have submitted papers entitled "Motion of Defendant Allan J. Nowicki to Dismiss Plaintiff's Complaint and Amended Complaint Pursuant to Rule 12(b)(6) FRCP," (Doc. No. 26), and "Joint Motion of Defendants Allan J. Nowicki and Dianne M. Nowicki to Dismiss Plaintiff's Complaint and Amended Complaint Pursuant to Rule 12(b)(6) FRCP" (Doc. No. 43)."
In the first Motion to Dismiss the only argument the Nowickis appear to make for dismissal is that Plaintiff's claims are inconsistent as Plaintiff simultaneously argues that the Settlement Agreement should be enforced against the Nowickis and that the Settlement Agreement is unenforceable. (Doc. No. 26 at unnumbered 5.) In support of this argument, the Nowickis cite the case of Wedgewood Diner, Inc. v. Ebersole, in which the court held that the "election of remedies rule" barred a claim by the plaintiff for rescission of a contract where that plaintiff had already received damages for breach of the same contract. 534 A.2d 537, 541 (Pa.Super.Ct. 1987). Wedgewood and the federal and state court decisions applying the election of remedies rule have concluded that "[t]he adoption, by an unequivocal act, of one of two or more inconsistent remedial rights has the effect of precluding a resort to others." Hartman Plastics, Inc. v. Star Int'l Ltd., Nos. Civ. A. 97-2679, 97-2734, 1998 WL 643864, at *4 (E.D. Pa. Sept. 18, 1998) (citing Wedgewood, 534 A.2d at 538); Roberts v. Estate of Barbagallo, 531 A.2d 1125, 1133 (Pa. 1987).
Plaintiff is correct in his contention that the election of remedies rule does not prevent him from pleading alternative theories at this stage of the proceedings. "The election of remedies doctrine has two aspects, one procedural and one substantive." Bell Howell Fin. Servs. Co. v. St. Louis Pre-Sort, Inc., No. Civ. A. 97-6063, 1999 WL 965961, at *4 (N.D. Ill. Sept. 29, 1999) (citing Olympia Hotels Corp. v. Johnson Wax Dev. Corp., 908 F.2d 1363, 1370-72 (7th Cir. 1990)). "As a substantive matter, the purpose of the doctrine is to prevent double recovery for a single wrong." Id. (citing Olympia, 908 F.2d at 1371). Once a party has elected to pursue one form of damage for a wrong, it cannot also pursue another as this could lead to a double recovery. "A party makes a conclusive election of remedies which will bar later resort to an inconsistent remedy when: (1) the party knows his rights, (2) has carried his case to a conclusion, and (3) has obtained a decision on the issues involved." Hartman, 1998 WL 643864, at *4 (citing Wedgewood, 534 A.2d at 539).
The procedural aspect of the doctrine has previously been used to prevent parties from pleading inconsistent theories of relief. However, "[t]his application has been eviscerated by the permissive rules of pleading under Fed.R.Civ.P. 8(a) and 8(e)(2), the former specifically permitting parties to demand relief in the alternative." Bell Howell, 1999 WL 965961, at *5 (citing Olympia, 908 F.2d at 1371 ("Those rules of course apply in all federal civil litigation, even if the issue being litigated is one of state law. . . ."); Kansas State Bank in Holton v. Citizens Bank of Windsor, 737 F.2d 1490, 1499 (8th Cir. 1984)). While no case in the Third Circuit has explicitly held that the Federal Rules of Civil Procedure eviscerate the procedural aspect of the election of remedies rule, we believe that an Erie analysis compels the conclusion that we follow Rule 8(e) and allow Plaintiff to plead inconsistent theories of relief at this time.
Pursuant to Erie R.R. Co. v. Tompkins, 304 U.S. 64, 92 (1938), a federal court sitting in diversity must apply the law of the forum state to questions that are "substantive" but must use federal rules to govern "procedural" matters.
Rule 8(e) provides in relevant part: "A party may also state as many separate claims or defenses as the party has regardless of consistency and whether based on legal, equitable or maritime grounds." FED. R. CIV. P. 8(e).
In the Nowickis' second Motion to Dismiss, the only argument made is that the Nowickis and Plaintiff agreed to "a standstill of all proceedings in the matter captioned Nowicki v. Green, United States District Court for the Eastern District of Pennsylvania, No. 02-CV-370, andGreen v. Nowicki, United States District Court for the Eastern District of Pennsylvania, No. 99-CV-31, until the conclusion of all litigation challenging the final resolution of the Mobil and IRS liens at issue in the case Green v. Nowicki." (Doc. No. 43, attached stipulation at 1.) In response to this argument, Plaintiff contends that the bare language of the stipulation "refers to a standstill of specific older actions different than the action herein." (Doc. No. 44 at 5.) Plaintiff suggests that because the Nowickis have introduced documents outside the pleadings, the Court should convert the Nowickis Motion to Dismiss to a motion for summary judgment pursuant to Fed.R.Civ.P. 56. While we think it inappropriate at this time to make such a conversion, we also believe that the Nowickis presentation of this stipulation alone, is insufficient for us to either dismiss the case, or grant the Nowickis a stay pursuant to the stipulation of the parties.
IV. CONCLUSION
Based upon the foregoing, Plaintiff's claims against State Farm will be dismissed, Plaintiff's claims against the Attorney Defendants based in tort and assumpsit will be dismissed, and the motions to dismiss the claim against the Nowickis will be denied.
An appropriate Order follows.
ORDER
AND NOW, this 21st day of September, 2004, upon the Motions to Dismiss of Defendants Jonathan F. Altman (Doc. Nos. 16, 20); Marshall, Dennehy, Warner, Coleman Goggin, P.C. (Doc. Nos. 14, 18); Steven P. Moyer, Grim, Biehn Thatcher, P.C. (Doc. Nos. 21, 35); State Farm Fire and Casualty Company (Doc. No. 22); and Allan J. and Diane M. Nowicki (Doc. Nos. 26, 43); and the Motions for Sanctions Pursuant to Fed.R.Civ.P. 11 of Altman and Marshall, Dennehy, Warner, Coleman Goggin, P.C. (Doc. Nos. 29, 31), and all papers submitted in support thereof, and opposition thereto, it is ORDERED that:
1. Defendant Altman's Motions to Dismiss (Doc. Nos. 16, 20) are GRANTED, and all of Plaintiff's claims against Defendant Altman are DISMISSED;
2. Defendant Marshall, Dennehy, Warner, Coleman Goggin, P.C.'s Motions to Dismiss (Doc. Nos. 14, 18) are GRANTED, and all of Plaintiff's claims against Defendant Marshall Dennehy are DISMISSED;
3. Defendants Steven P. Moyer, and Grim, Biehn Thatcher, P.C.'s Motions to Dismiss (Doc. Nos. 21, 35) are GRANTED, and all of Plaintiff's claims against Defendants Moyer and Grim Biehn are DISMISSED;
4. Defendant State Farm Fire and Casualty Company's Motion to Dismiss is GRANTED (Doc. No. 22), and all claims against Defendant State Farm are DISMISSED;
5. Defendants Allan J. and Diane M. Nowicki's Motions to Dismiss (Doc. Nos. 26, 43) are DENIED; and
6. Defendants Altman and Marshall, Dennehy, Warner, Coleman Goggin, P.C.'s Motions for Sanctions Pursuant to Fed.R.Civ.P. 11 (Doc. Nos. 29, 31.) are DENIED.
IT IS SO ORDERED.