by Mark Bauman | Mar 22, 2023 | Commercial Litigation & Corporate Law, Legal News
In a recent decision, the Court of Common Pleas determined that claims for corporate negligence were sufficiently plead against a professional corporation. In Astleford v. Delta Medix, P.C., et al.[1], the trial court held that plaintiff’s claims for corporate negligence against Delta Medix, P.C. and Delta Medix, P.C. t/a The Center for Comprehensive Cancer Care (“Delta Medix”) was sufficiently plead to survive the preliminary objection phase. In the underlying case, the plaintiff filed suitagainst her treating physician as well as Delta Medix for radiating the wrong side of her neck/throat for treatment of squamous cell carcinoma.
In 2015, the plaintiff was diagnosed with squamous cell carcinoma the length of her right tonsil and into the soft palate and uvula. The defendant doctor scheduled the plaintiff for thirty-five (35) radiation treatments on the right side of her neck. After twenty-six (26) treatments, the defendant doctor notified the plaintiff that he had been radiating the wrong side of her neck. He offered her an additional seventeen (17) treatments on the right side of her neck, which was beyond the safe recommended dosage of radiation. Plaintiff’s complaint asserted claims for vicarious liability and corporate negligence against Delta Medix; and negligence, informed consent and intentional infliction of emotional distress against the defendant doctor.
After the complaint was filed, all defendants filed preliminary objections. Notably, the defendants argued that plaintiff’s claim of corporate negligence against Delta Medix could not be maintained because it is not a hospital or a health maintenance organization (“HMO”). Further, the defendants asserted that claims for corporate negligence have never been extended to the office of a physician or a private medical group. The defendants relied on the Supreme Court’s decision in Thompson v. Nason Hospital,[2] where a hospital’s liability in corporate negligencewas established, as well as, the Superior Court’s decision in Shannon v. McNulty[3], where the court determined that “an HMO is similar to a hospital in that the central role played by an HMO in the total health care of its subscribers is similar to that of a hospital’s role in the total health care of its patients.” The defendants argued that Delta Medix is a professional corporation providing specific cancer-related treatment services to its patients with a specialized focus regarding its scope and treatment, and therefore, cannot be classified as a comprehensive health care facility as referred to in Thompson.
In reaching its decision, the Court of Common Pleas relied on the 2012 Supreme Court decision in Scampone v. Highland Care Center, et al.[4] Scampone involved an action by a decedent’s estate against a nursing home and a corporation providing management services to the nursing home. The Court of Common Pleas opined that a fair reading of Scampone undercut the defendants’ argument that a claim for corporate negligence against Delta Medix could not stand. The Supreme Court in Scampone determined that “. . . a defendant is not categorically exempt from liability simply because appellate decisional law has not specifically addressed a theory of liability in a particular context. Categorical exemptions from liability exist . . . only where the General Assembly has acted to create explicit policy-based immunities. . . ” Id. at 599. Based on the Court of Common Pleas reading of the Supreme Court’s Scampone opinion, and in light of the fact that the defendants failed to point to any action of the General Assembly conferring the benefit of immunity on them, the Court of Common Pleas declined to extend immunity from corporate negligence claims.
Ultimately, the Court of Common Pleas found that the plaintiff pled sufficient facts to state a claim for corporate negligence against Delta Medix. Significantly, however, the Court noted that whether or not the claim survives is a question for another day.
[1] Astleford v. Delta medix, P.C., et al, 2016 Pa. Ct. Comm. Pl. (unpublished opinion)(June 8, 2016).
[2] Thompson v. Nason Hospital,527 Pa. 330, 591 A.2d 703 (Pa. 1991).
[3] Shannon v. McNulty, 718 A.2d 828 (Pa. Super. 1998).
[4] Scampone v. Highland Park Care Center, et al., 57 A.3d 582 (Pa. 2012).
by Mark Bauman | Mar 21, 2023 | Commercial Litigation & Corporate Law, Legal News
The U.S. Court of Appeals for the Third Circuit affirmed a $5 million punitive damages award in a dispute involving safety testing and certification of commercial heaters. In Brand Marketing Group LLC v. Intertek Testing Services, No. 14-3010 (Sept. 10, 2015), the Court held that: (1) juries may award punitive damages in negligent misrepresentation claims; and (2) in awarding punitive damages, courts may consider harm to the general public rather than solely harm to the plaintiff.
Plaintiff manufacturer developed vent-free heaters which it provided to defendant testing company to perform safety testing and certification pursuant to American National Standards Institute (ANSI) standards. Defendant testing company performed the testing on the heaters in China using standards written in English and certified that the heaters met ANSI standards. Plaintiff manufacturer then delivered the heaters to its retail store customer. Plaintiff manufacturer’s retail store customer subsequently discovered that the heaters did not meet ANSI standards and stopped sales. The retailer then filed a claim against Plaintiff manufacturer and obtained a judgment in the amount of $611,060. Plaintiff manufacturer then brought suit against defendant testing company including a negligent misrepresentation claim.
The jury awarded a judgment in favor of plaintiff manufacturer in the amount of $1,045,000 in compensatory damages in addition to $5 million in punitive damages. The jury found that defendant testing company negligently misrepresented that it had the necessary expertise to determine whether the heaters met ANSI standards.
The Third Circuit affirmed the award including punitive damages holding that the jury may award punitive damages for negligent misrepresentation claims.
Aside from the application of punitive damages in negligent misrepresentation cases, the Third Circuit also addressed the broader issue of whether courts could consider harm to the general public rather than simply harm to plaintiffs. In the case at bar, plaintiff manufacturer sustained financial damages, but no consumers were harmed by an accident or injury caused by the heaters. However, the court held that the fact that no consumers were actually injured was irrelevant. The court further held that the potential public harm was “directly tied” to the harm to plaintiff manufacturer. Therefore, it was appropriate for the trial court to consider the harm to the general public in addition to the harm to plaintiff manufacturer.
by Mark Bauman | Mar 20, 2023 | Commercial Litigation & Corporate Law, Legal News
In Zimmerman v. Harrisburg Fudd I, L.P., 2009 Pa.Super. 202 (2009), the Pennsylvania Superior Court, in interpreting the Contractor and Subcontractor Payment Act (CASPA), permitted plaintiff (contractor) to recover post-judgment interest, penalties, attorney’s fees and expenses from collecting the money plaintiff was owed from defendant (owner).
Plaintiff and defendant entered into an agreement requiring plaintiff to install improvements to the wall and floor of a new restaurant being built by defendant. After not being paid for four months after submitting an invoice, plaintiff brought a breach of contract action against defendant. At arbitration, the parties stipulated to an award in favor of plaintiff and against defendant for the amount of the contract claim, plus statutory interest, penalty, and attorney fees as provided for by CASPA. Plaintiff subsequently entered the arbitration award and executed on the judgment. Defendant filed a claim for exemption from the execution which was denied by the trial court. An emergency motion to stay the execution was subsequently filed by defendant and was denied by the trial court. The denial of the emergency motion to stay the execution was denied and appealed to the Superior Court. While on appeal, plaintiff was paid by a garnishee of defendant.
The Superior Court affirmed the trial court’s denial of defendant’s motion for an emergency stay of execution and plaintiff subsequently filed a motion to recover statutory interest from the date of the arbitration award to the date they were paid by garnishee, the statutory penalty under CASPA, attorney fees and expenses incurred in the post-award proceedings. The trial court denied this motion and plaintiff appealed to the Superior Court.
The Superior Court held that the trial court abused its discretion because Section 505 of CASPA mandates that payment of statutory interest be paid and a penalty of 1% per month must be paid if payment is made after twenty days of delivery of the invoice. Additionally, CASPA provides for attorney fees to be paid to the prevailing party in any proceeding to recover any payment under CASPA. The Superior Court held that plaintiff was the prevailing party because the arbitrators awarded plaintiff the entire amount of their claim.
The Superior Court held that plaintiff is entitled to attorney fees and expenses for those attorney fees and expenses incurred during the post-award period during which plaintiff incurred expenses to defend against, inter alia, defendant’s claim for exemption, defendant’s motion for an emergency stay and related appeal, and the instant appeal. It remanded the case to the trial court with instructions to conduct a hearing to determine a reasonable amount of attorney fees and expenses incurred by plaintiff.
by Mark Bauman | Mar 19, 2023 | Commercial Litigation & Corporate Law, Legal News
In The Herrick Group & Associates, LLC v. K.J.T., L.P., Civil Action No. 07-CV-00628, U.S. Magistrate Judge Timothy R. Rice held that defendant (seller) did not prove the existence of an oral agreement to modify a written agreement of sale with plaintiff (purchaser).
In this action, during a four-day trial, evidence was presented regarding which party was responsible for a failed real estate transaction involving the sale of Washington Towers, a $6.5 million dollar commercial property in the business district of Reading, Pennsylvania.
Plaintiff alleged that defendant attempted to conceal the loss of the building’s commercial tenants and also failed to secure plaintiff’s oral agreement to address the loss of rental income plaintiff planned to receive as part of its purchase. Defendant countered that there was an oral modification to the agreement of sale which guaranteed lease payments from two commercial tenants who had prematurely terminated their leasehold prior to closing. Defendant sought the forfeit of plaintiff’s $325,000 deposit and liquidated damages.
In entering judgment for plaintiff, the Court set forth the law requiring that an oral contract modifying a prior written contract prohibiting non-written modifications must be proved by clear, precise, and convincing evidence. Brinich v. Jencka, 757 A.2d 388, 399 (Pa.Super. 2000). The Court reasoned that defendant failed to meet this burden and noted that all prior modifications to the agreement of sale were in writing, and it also indicated that correspondence between the parties revealed that the guaranteed lease payments were one of several options which were the subject of negotiations for which the parties never came to a final agreement. Thus plaintiff was entitled to a return of their $325,000 deposit.
by Mark Bauman | Mar 18, 2023 | Commercial Litigation & Corporate Law, Legal News
In TCPF Limited Partnership v. Skatell, 2009 Pa.Super. 112 (2009) the Pennsylvania Superior Court held that when a commercial landlord confesses judgment for the “entire unexpired balance of the Term of Lease”, but the landlord miscalculates the amount due and thus requests less than the full unexpired balance, the landlord may not attempt to amend his complaint to recover the full amount.
A confession of judgment is an arrangement in which a debtor agrees in advance to allow judgment to be entered against him in favor of his creditor without litigation for money which the debtor owes. A warrant of attorney is the writing in which a debtor allows his attorney to confess judgment on his behalf.
In Skatell, two officers of an incorporated entity which owned a Quiznos sandwich shop signed an individual guaranty in which they pledged the full and prompt payment of all rent. As the Court opinion states, “The guaranty contained a warrant of attorney and confession of judgment provision enabling” the landlord “to bring an action to confess judgment against Altmiller and Skatell for all or any sums due.” Furthermore, the guaranty “contained language allowing for the successive exercises of the warrant of attorney until all obligations of Altmiller and Skatell under the lease had been discharged.” In June 2006, the entity that owned the sandwich shop defaulted on its obligations under the lease.
The landlord invoked the right to accelerate the rent and other charges for the entire unexpired balance of the term of the lease and calculated that amount as $65,196.21. The landlord then sought confession of judgment of that amount and the trial court entered confession of judgment. Shortly after this entry of judgment, the landlord “discovered that it had calculated only a portion of the unexpired balance of the term of the lease, from June of 2006 through September of 2007, and not the entire lease term.” In August of 2007, the Landlord requested to amend his complaint in confession of judgment to increase the amount of judgment to $203,420.45, which represented the entire unexpired balance of the term of the lease from June of 2006 through September of 2010. On October 25, 2007, the trial court denied this request.
On appeal, the Landlord argued that Pennsylvania Rule of Civil Procedure 1033 allows for liberal amendments to pleadings. The Superior Court held, however, that under PA case law “an amendment will not be permitted where it is against a positive rule of law.” Capobianchi v. BIC Corp., 446 Pa.Super. 130, 666 A.2d 344, 346 (1995). The positive rule of law the court found here was in B. Lipsitz Co. v. Walker, 361 Pa.Super. 238, 522 A.2d 562, 566 (1987), appeal granted, 515 Pa. 617, 531 A.2d 426 (1987). The Court in that case held that “severable portions of a debt can be sought to be collected with the use of a single warrant of attorney as each become[s] due; provided, of course, the instrument is not used to collect the same portion of the debt already confessed.” The Court therefore did not interpret the portion of the individual guaranty mentioned above “allowing for the successive exercises of the warrant of attorney until all obligations of Altmiller and Skatell under the lease had been discharged” in favor of the landlord where the landlord sought to confess judgment a second time for the same debt. The Court also cited Pennsylvania Rule of Civil Procedure 2953 and 2953(a) in demonstrating that the successive exercises of the warrant of attorney must be for separate sums.
by Mark Bauman | Mar 17, 2023 | Commercial Litigation & Corporate Law, Legal News
The Supreme Court of Pennsylvania decided on May 31, 2007 that an arbitration agreement which reserved judicial remedies in favor of a sub-prime lender was not presumptively unconscionable. A residential mortgagor instituted a lawsuit against a sub-prime lender in the U.S. District Court for the Eastern District of Pennsylvania. The mortgagor was a low-income homeowner and applied for a residential mortgage loan with a sub-prime lender. The mortgage application required that the parties enter into a written agreement for arbitration of any disputes. However, the sub-prime lender excepted certain disputes from arbitration and reserved the right to pursue judicial remedies. These included foreclosure proceedings, self-help remedies (e.g. repossession), and several other legal remedies (e.g. attachment, garnishment, assignment of income). The mortgagor complained that this constituted a predatory lending practice and sought rescission of the contract. He argued that the arbitration agreement was unconscionable and therefore unenforceable.
The case was dismissed by the Federal District Court and the mortgagor appealed to the U.S. Court of Appeals for the Third Circuit. The Third Circuit certified a question to the Supreme Court of Pennsylvania. The mortgagor was relying on a Pennsylvania Superior Court case which held that when a financial institution reserved for itself access to the courts, at the exclusion of the consumer, a presumption of unconscionability was created. Lytle v. CitiFinancial Services, Inc., 810 A.2d 643 (Pa.Super. 2002). Lytle was in conflict with a prior decision by the Third Circuit, which to the contrary stated that such reservations did not make an arbitration agreement unenforceable. Harris v. Green Tree Financial Corporation, 183 F.3d 173 (3d Cir. 1999). Federal policy strongly favors arbitration agreements. It also permits consideration of state contract law defenses such as fraud, duress, or unconscionability. Generally, unconscionability exists when one party lacks meaningful choice in accepting a contract or term (procedural unconscionability) and the contract or term unreasonably favors another party who is asserting it (substantive unconscionabilty). The burden of proving unconscionability rests with the challenging party. Accordingly, the question before the Supreme Court of Pennsylvania was whether or not Lytle accurately reflected the law in Pennsylvania. If so, the mortgagor could prove his case merely by showing the existence of a reservations clause.
The question before the Supreme Court of Pennsylvania was relatively narrow. However, the question was considered in conjunction with several overarching policy issues such as predatory lending practices. Accordingly, numerous amicus curiae briefs were written in favor of both sides. The Supreme Court of Pennsylvania acknowledged that arbitration clauses could be employed by the sub-prime lending industry with predatory effect. However, an arbitrator must determine whether a predatory effect actually resulted. The Supreme Court of Pennsylvania conceded that arbitration clauses, as involved in this case, often resulted in a “split-forum effect” which placed additional burden on the borrower but federal and state consumer protection laws served as mitigating factors. The U.S. Supreme Court has clearly stated that parties may agree to arbitrate some claims while reserving the right to litigate others. Moreover, the Supreme Court of Pennsylvania reasoned that there were appropriate business justifications and sound practical and pragmatic reasons favoring pursuit of foreclosure proceedings in a court of law.
Thus, the Supreme Court of Pennsylvania overturned Lytle, indicating that it “swept too broadly” and there was no presumption of unconscionability. Rather, a party asserting unconscionability is required to prove it in cases involving arbitration agreements, such as the one at issue here, or otherwise. Specifically, under Pennsylvania law, the reservation of judicial remedies within the context of an arbitration agreement consummated in conjunction with a residential mortgage loan is not presumptively unconscionable.
