Opinion
J-S41032-18 No. 3407 EDA 2017
12-17-2018
RIVERSIDE MANAGEMENT GROUP, LLC AND FRED ONORATO AND EDWINA ONORATO, H/W Appellants v. HOWARD A. FINKELMAN, ESQUIRE AND BOCK AND FINKELMAN, P.C. Appellees
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Judgment Entered October 13, 2017
In the Court of Common Pleas of Delaware County
Civil Division at No(s): 2012-08630 BEFORE: GANTMAN, P.J., OLSON, J., and STEVENS, P.J.E. MEMORANDUM BY GANTMAN, P.J.:
Former Justice specially assigned to the Superior Court. --------
Appellants, Riverside Management Group, LLC ("RMG"), Fred Onorato, and Edwina Onorato, appeal from the judgment entered in the Delaware County Court of Common Pleas in favor of Appellees, Howard A. Finkelman and Bock and Finkelman, P.C., in this legal malpractice action. We affirm.
In its opinion, the trial court fully and correctly sets forth the relevant facts of this case. Therefore, we will only summarize them here. In 2009, Thomas C. Phelan, a client of Appellees, solicited the Onorato Appellants to become members of Collina Investment Group, LLC ("Collina"). Collina was also a client of Appellees, and was a real estate management group that included Mr. Phelan, Dr. Lawrence P. Wean, and Dr. Andrew Rosen. On June 2, 2009, the Onorato Appellants signed promissory notes, secured by mortgages, on several of their properties in favor of Dr. Wean. The Onorato Appellants believed the promissory notes and mortgages were merely a good faith assurance by the Onorato Appellants that they intended to invest with Collina, and that the notes and mortgages would not actually be used. On December 7, 2009, however, Dr. Wean sought to disassociate himself from Collina, and filed a complaint in confession of judgment against the Onorato Appellants in the amount of $770,000.00 on the notes. After the Onorato Appellants expended large sums of money in attorney's fees in an attempt to have the judgment opened, Mr. Phelan introduced the Onorato Appellants to Appellees, and recommended the Onorato Appellants retain Appellees as new counsel to enter into a settlement agreement with Dr. Wean. Despite Appellees' purported conflict of interest in the representation of Mr. Phelan in cases which created an irreconcilable conflict of interest between Mr. Phelan and the Onorato Appellants, as well as between Appellees and the Onorato Appellants, Appellees represented Mr. Phelan, Collina, Dr. Rosen, and the Onorato Appellants in a settlement with Dr. Wean on July 20, 2010. As part of the settlement agreement, the Onorato Appellants executed a deed in favor of Dr. Wean for a property located at 450 Cherry Tree Road in Upper Chichester Township to be held in escrow until a future time. Dr. Wean, however, recorded the deed that transferred the Cherry Tree property to his name on October 6, 2011.
Additionally, the Onorato Appellants, Mr. Phelan, and Drs. Wean and Rosen, formed Appellant RMG on August 31, 2010. Mr. Phelan and Drs. Wean and Rosen pressured the Onorato Appellants to contribute properties to RMG and the Onorato Appellants complied. On October 15, 2010, Appellees represented Mr. Phelan and the Onorato Appellants in a transaction in which RMG borrowed $1,750,000.00 from Penn Business Credit (now Fulton Bank) against the properties provided by the Onorato Appellants. On May 17, 2012, Penn/Fulton filed a complaint for judgment by confession against RMG in the Delaware County Court of Common Pleas, and on the same date, the court entered a judgment by confession against RMG in the amount of $2,076,393.60. As a result, Penn/Fulton began foreclosure proceedings against the properties contributed by the Onorato Appellants to RMG as collateral for the loan. On June 13, 2012, Penn/Fulton also commenced an action directly against Appellant Fred Onorato which sought judgment on his personal guaranty of the Penn/Fulton loan.
Procedurally, we add that the Onorato Appellants filed a writ of summons against Appellees on October 10, 2012. On July 18, 2013, the Onorato Appellants filed a complaint against Appellees for legal malpractice. Appellees filed preliminary objections to the complaint on September 16, 2013. On October 7, 2013, Appellants (now including RMG) filed an amended complaint against Appellees for breach of contract, legal malpractice, breach of fiduciary duty, and respondeat superior liability. Appellees filed preliminary objections to the amended complaint on October 28, 2013, and Appellants filed an answer to Appellees' preliminary objections on November 13, 2013. The court overruled Appellees' preliminary objections to the amended complaint on February 10, 2014.
On August 25, 2014, Appellees filed an answer and new matter to the amended complaint. Appellants filed a reply to Appellees' new matter on October 23, 2014, and Appellees filed preliminary objections to Appellants' reply to the new matter on October 14, 2015. On November 6, 2015, Appellants answered Appellees' preliminary objections. The court sustained Appellees' preliminary objections to Appellants' reply to the new matter on January 13, 2016. On March 8, 2016, Appellants filed an amended reply to Appellees' new matter, and Appellees filed preliminary objections to the amended reply on March 28, 2016. Appellants filed a 2nd amended reply to Appellees' new matter on June 17, 2016.
On June 7, 2017, Appellees filed a motion for judgment on the pleadings, and Appellants filed a response in opposition on June 27, 2017. On September 18, 2017, the court granted Appellees' motion for judgment on the pleadings. Appellees filed a praecipe for entry of judgment against Appellants, and judgment in favor of Appellees and against Appellants was entered on October 13, 2017. On the same day, Appellants filed a timely notice of appeal. On October 18, 2017, the court ordered Appellants to file a concise statement of errors complained of on appeal per Pa.R.A.P. 1925(b); Appellants timely complied on November 8, 2017.
Appellants raise the following issue for our review:
DID THE [TRIAL COURT] COMMIT LEGAL ERROR AND/OR ABUSE ITS DISCRETION, BY ENTERING JUDGMENT ON THE PLEADINGS IN FAVOR OF [APPELLEES] AND AGAINST [APPELLANTS], BASED ON THE PURPORTED APPLICATION OF THE RELEVANT STATUTE OF LIMITATIONS AND/OR...[APPELLANTS]' PURPORTED FAILURE TO ESTABLISH VIABLE CLAIMS IN THIS ACTION ASSERTING PROFESSIONAL NEGLIGENCE, BREACH OF CONTRACT, AND BREACH OF FIDUCIARY DUTY?(Appellants' Brief at 3).
Appellants argue their claims concerning the losses of the Cherry Tree property and the properties they contributed to RMG should not have been time-barred. Regarding the loss of the Cherry Tree property, Appellants contend the earliest date they could have known from public records that they had suffered an actual loss was October 6, 2011, when Dr. Wean recorded the deed for the property. Appellants maintain the trial court should have used the October 6, 2011 date, instead of the July 20, 2010 date of the execution of the Wean settlement agreement, to calculate the 2-year statute of limitations for their negligence action against Appellees. Similarly, Appellants assert the earliest date they could have known from public records that they suffered a loss of the properties Appellants contributed to RMG, occurred during 2012, when Penn Business Credit began to foreclose on the properties. Appellants claim the trial court should have used August 2012, rather than the October 15, 2010 date of execution of the Penn Business Credit loan settlement, to determine the 2-year statute of limitations period for their negligence claim against Appellees. Appellants reason that if the correct dates had been used, their claims would not have been time-barred.
Appellants also allege the trial court applied the wrong legal standard for judgment on the pleadings and improperly ruled that Appellants' complaint failed to make out a cause of action on their claims of professional negligence. Appellants contend that their amended complaint provided sufficient facts to support the basic elements of each of their asserted causes of action. Appellants complain the trial court should not have granted Appellees' motion for judgment on the pleadings; instead, Appellants' submit their case should have proceeded to trial. Appellants conclude this Court should reverse and remand for a trial on the merits of the case.
The applicable scope and standard of review are as follows:
Our scope of review on an appeal from the grant of judgment on the pleadings is plenary. Entry of judgment on the pleadings is permitted under Pennsylvania Rule of Civil Procedure 1034, which provides that after the pleadings are closed, but within such time as not to unreasonably delay trial, any party may move for judgment on the pleadings. A motion for judgment on the pleadings is similar to a demurrer. It may be entered when there are no disputed issues of fact and the moving party is entitled to judgment as a matter of law. In determining if there is a dispute as to facts, the [trial] court must confine its consideration to the pleadings and relevant documents. On appeal, we accept as true all well-pleaded allegations in the complaint.
On appeal, our task is to determine whether the trial court's ruling was based on a clear error of law or whether there were facts disclosed by the pleadings, which should properly be tried before a jury, or by a judge sitting without a jury.
Neither party can be deemed to have admitted either conclusions of law or unjustified inferences. Moreover, in conducting its inquiry, the [trial] court should confine itself to the pleadings themselves and any documents or exhibits properly attached to them. It may not consider inadmissible evidence in determining a motion for judgment on the pleadings. Only when the moving party's case is clear and free from doubt such that a trial would prove fruitless will an appellate court affirm a motion for judgment on the pleadings.Consolidation Coal Co. v. White , 875 A.2d 318, 325-26 (Pa.Super. 2005) (internal citations and quotation marks omitted).
For a professional (legal) negligence claim, the plaintiff must establish three elements: (1) the employment of the attorney or other basis for duty; (2) the failure of the attorney to exercise ordinary skill and knowledge; and (3) the attorney's failure to exercise the requisite skill and knowledge was the proximate cause of damage to the plaintiff. Bailey v. Tucker , 533 Pa. 237, 246, 621 A.2d 108, 112 (1993). "An attorney will be deemed 'negligent' if he...fails to possess and exercise that degree of knowledge, skill and care which would normally be exercised by members of the profession under the same or similar circumstances." Fiorentino v. Rapoport , 693 A.2d 208, 212 (Pa.Super. 1997), appeal denied, 549 Pa. 716, 701 A.2d 577 (1997).
By way of comparison, an assumpsit claim based on breach of an attorney-client agreement is a contract claim, and the attorney's liability must be assessed under the terms of the contract. [ Bailey , supra ] at 251, 621 A.2d at 115. Thus, if the attorney agrees to provide his...best efforts and fails to do so, an action in assumpsit will accrue. Id. "[A]n attorney who agrees for a fee to represent a client is by implication agreeing to provide that client with professional services consistent with those expected of the profession at
large." Id. at 251-52, 621 A.2d at 115.Id. at 213. As a general rule, to succeed in a cause of action for breach of contract the plaintiff must establish: "(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages." Gorski v. Smith , 812 A.2d 683, 692 (Pa.Super. 2002), appeal denied, 579 Pa. 692, 856 A.2d 834 (2004).
With respect to a breach of fiduciary duty claim, "a confidential relationship and the resulting fiduciary duty may attach wherever one occupies toward another such a position of advisor or counsellor as reasonably to inspire confidence that he will act in good faith for the other's interest." Basile v. H & R Block , Inc., 777 A.2d 95, 101-02 (Pa.Super. 2001), appeal denied, 569 Pa. 714, 806 A.2d 857 (2002). The fiduciary duty owed by an attorney arises from either an express or implied attorney-client relationship. See Estate of Pew , 655 A.2d 521, 545 (Pa.Super. 1994).
The [Pennsylvania] Supreme Court [has] held that part of the fiduciary duty which arises out of the attorney client relationship is that of undivided loyalty. This duty, the Court emphasized, prohibits an attorney from engaging in activity which constitutes a conflict of interest, and the Court held that a breach of that duty by the attorney is actionable.Gorski , supra at 711.
[T]he substance of the allegations comprising a claim in a plaintiff's complaint are of paramount importance, and, thus, the mere labeling by the plaintiff of a claim as being in tort, e.g., for negligence, is not controlling. If the facts of a particular claim establish that the duty breached is one created by the parties by the terms of their contract—i.e., a specific promise to do something that a party would not
ordinarily have been obligated to do but for the existence of the contract—then the claim is to be viewed as one for breach of contract. If, however, the facts establish that the claim involves the defendant's violation of a broader social duty owed to all individuals, which is imposed by the law of torts and, hence, exists regardless of the contract, then it must be regarded as a tort.Bruno v. Erie Ins. Co., 630 Pa. 79, 112, 106 A.3d 48, 68 (2014) (internal citations omitted).
After a thorough review of the record, the briefs of the parties, the applicable law, and the well-reasoned opinion of the Honorable Charles B. Burr, II, we conclude Appellants' issue merits no relief. The trial court opinion comprehensively discusses and properly disposes of the question presented. ( See Trial Court Opinion, filed January 16, 2018, at 23-31) (finding: Appellants assert professional malpractice claims for breach of contract in Count I and in tort in Court II; Appellants attached to pleadings no written retainer agreement but contended parties had oral representation agreement; Appellants claimed Appellees breached representation agreement by failing to conform with general standard of care for attorneys in representing clients, which constitutes professional negligence; Appellants alleged in Count I that Appellees failed to impart critical information when Appellants entered into their arrangement with Appellees, but did not identify what information was asked for but not disclosed; Count I for breach of contract amounts to tort claim, absent averment of breach of specific contracted-for instructions; therefore, Appellants' Counts I and II were both professional negligence claims sounding in broader social duty and subject to two-year statute of limitations; further, Appellants have not disputed that statute of limitations for their claims for breach of fiduciary duty against Appellees and respondeat superior against Appellee law firm is also two years; as to when statute of limitations period began to run, lost properties Appellants claimed as damages were lost because Appellant RMG defaulted on its loan payment obligation, which Appellant Mr. Onorato guaranteed, in order to accomplish settlement of confession of judgment action; additionally, Appellants have stipulated out of this case their claims against Appellees arising from escrow (e.g., the Cherry Tree property) and disbursement of loan proceeds; further, insofar as judgment confessed against Appellant Mr. Onorato concluded with settlement, it cannot form basis of viable claim against Appellees that Appellees caused involuntary loss of properties; with no other damages established, Appellants' claims against Appellees for professional malpractice (conflict, nondisclosure, and breach of fiduciary duty) and respondeat superior date back to when Appellants hired Appellees in July 2010, which is triggering date for statute of limitations). Accordingly, we affirm on the basis of that opinion.
Judgment affirmed.
Judge Olson files a concurring memorandum in which President Judge Emeritus Stevens concurs in the result.
President Judge Emeritus Stevens concurs in the result. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary Date: 12/17/18
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