The Estate of Lay, J. v. McDonald, J.

J-S48033-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

THE ESTATE OF JAMES P. LAY, III AND : IN THE SUPERIOR COURT OF
MRS. DARLENE M. LAY,
: PENNSYLVANIA
Appellants :
:
v. :
:
JAMES D. McDONALD, JR. AND THE :
McDONALD GROUP, LLP : No. 1969 WDA 2015

Appeal from the Order November 17, 2015
in the Court of Common Pleas of Erie County,
Civil Division, No(s): 12889-2012

BEFORE: BOWES, DUBOW and MUSMANNO, JJ.

MEMORANDUM BY MUSMANNO, J.: FILED OCTOBER 13, 2016

The Estate of James P. Lay, III (“the Lay Estate”), and Mrs. Darlene M.

Lay (“Mrs. Lay”) (collectively, “the Lays”) appeal from the Order granting

summary judgment against them and in favor of James D. McDonald, Jr.,

Esquire (“Attorney McDonald”), and the McDonald Group, LLP (“the

McDonald Group”) (collectively, “Defendants”). We affirm.

In its November 17, 2015 Opinion, the trial court set forth the history

underlying the instant appeal, which we adopt as though fully restated

herein. See Trial Court Opinion, 11/17/15, at 1-2. The trial court granted

summary judgment in favor of Defendants and against the Lays. Thereafter,

the Lays filed the instant timely appeal.

The Lays present the following claims for our review:
J-S48033-16

I. Did the [trial court] err in failing to recuse itself from this case
given that the litigants are/were both members of the Erie
County Bar Association?

II. Did the trial court err in granting Defendants’ Motion for
Summary Judgment?

III. Did the trial court err in refusing to grant a stay in this
matter pending resolution of the “[Derek] Allen” case [“the Allen
case”] so damages could be proven of record?

Brief for Appellants at 4.

Initially, we are cognizant of our scope and standard of review:

Our scope of review of an order granting summary judgment is
plenary. [W]e apply the same standard as the trial court,
reviewing all the evidence of record to determine whether there
exists a genuine issue of material fact. We view the record in
the light most favorable to the non-moving party, and all doubts
as to the existence of a genuine issue of material fact must be
resolved against the moving party. Only where there is no
genuine issue as to any material fact and it is clear that the
moving party is entitled to a judgment as a matter of law will
summary judgment be entered.

Motions for summary judgment necessarily and directly implicate
the plaintiff’s proof of the elements of his cause of action. ...
Thus, a record that supports summary judgment will either (1)
show the material facts are undisputed or (2) contain insufficient
evidence of facts to make out a prima facie cause of action or
defense and, therefore, there is no issue to be submitted to the
[fact-finder]. Upon appellate review, we are not bound by the
trial court’s conclusions of law, but may reach our own
conclusions. The appellate Court may disturb the trial court’s
order only upon an error of law or an abuse of discretion.

DeArmitt v. New York Life Ins. Co., 73 A.3d 578, 585-86 (Pa. Super.

2013) (citations and quotation marks omitted).

The Lays first claim that certain trial court judges improperly failed to

recuse themselves from the case. Brief for Appellants at 11. The Lays

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J-S48033-16

assert that “a sitting judge in his home county should not preside over a

case involving two prominent members of the local bar.” Id. Further, the

Lays argue that “Judge [Fred] Anthony improperly permitted Attorney [Gary

D.] Bax[,] of [the McDonald Group,] to provide his legal input into the case

(as a represented party) over the Lays’ counsel’s objections, a clear

indication of his willingness to fawn to the McDonald Group.” Id. According

to the Lays, Attorney McDonald and members of the McDonald Group “still

practice and presumably socialize among the Erie [j]udges.” Id. The Lays

assert that the views of two judges involved in the case, i.e., that they could

decide the case impartially, are trumped by the perceived opinions of the

public and the litigants. Id. at 12.

Before addressing this claim, we must determine whether the Lays

preserved this issue for our review. “When circumstances arise during the

course of a trial raising questions of a trial judge’s bias or impartiality, it is

still the duty of the party, who asserts that a judge should be disqualified, to

allege by petition the bias, prejudice or unfairness necessitating recusal.”

Reilly v. Southeastern Pennsylvania Transp. Auth., 489 A.2d 1291,

1299 (Pa. 1985). “A party seeking recusal or disqualification [is required] to

raise the objection at the earliest possible moment, or that party will suffer

the consequence of being time barred.” In re Lokuta, 11 A.3d 427, 437

(Pa. 2011) (quoting Goodheart v. Casey, 565 A.2d 757, 763 (Pa. 1989)).

Once a party has waived the issue, that party “cannot be heard to complain

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J-S48033-16

following an unfavorable result.” Commonwealth v. Stanton, 440 A.2d

585, 588 n.6 (Pa. Super. 1982) (citations omitted).

Our review of the record discloses that the Lays failed to raise this

claim before the trial court. Accordingly, it is waived. See Pa.R.A.P. 302(a)

(stating that an issue cannot be raised for the first time on appeal); Lokuta,

11 A.3d at 437 (recognizing that a party seeking recusal must raise the

objection at the earliest possible moment).

The Lays next claim that the trial court improperly granted Defendants’

Motion for summary judgment as to the Lays’ claim that Attorney McDonald

negligently failed to monitor the Allen case. Brief for Appellants at 13.

According to the Lays, the trial court erred when it (a) ignored the report of

Thomas T. Frampton, Esquire (“Attorney Frampton”); (b) applied the wrong

standard on the issue of damages; and (c) ignored the testimony of Mrs. Lay

and Craig Hartle (“Hartle”), a paralegal of James P. Lay, III’s (“decedent”)

law firm (“the Lay Law Firm”). Id. at 13.

The Lays specifically direct our attention to the Pa.R.C.P. 1042.3(1)

Certificate of Merit filed by Attorney Frampton. Id. at 14. In the Certificate

of Merit, Attorney Frampton opined that,

as to the professional negligence claims[,] there exists a
reasonable probability that the care, skill or knowledge exercised
or exhibited in the treatment, practice or work of [Attorney]
McDonald, that is the subject of the Complaint, fell outside the
acceptable professional standards and that such conduct was the
cause in bringing about the stated harm. Relative to the [] Allen
case, such conduct likely will be the cause in bringing about the
stated harm.

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J-S48033-16

Certificate of Merit, 8/16/13. In addition, The Lays rely on the testimony of

Hartle that (a) the Allen case was one of the biggest in the Lay Law Firm;

(b) Attorney McDonald allowed Thomas S. Talarico, Esquire (“Attorney

Talarico”), to take the file; (c) Attorney McDonald never looked at the file;

and (d) Attorney McDonald failed to play any role in how the file was

handled. Brief for Appellants at 15. According to the Lays, the fact that

Attorney Talarico later offered the case to Patrick Loughren, Esquire

(“Attorney Loughren”), “is evidence that [Attorney Talarico] acknowledged

[Attorney] Loughren’s superior legal ability and perhaps his right to assume

representation of [Michelle] Allen [“Mrs. Allen”].” Id. at 16.

In addressing Defendants’ preliminary objections to the Lays’ Second

Amended Complaint, the trial court concluded that the Lays had failed to

state a cause of action for professional negligence related to the Allen case.

See Trial Court Opinion, 4/16/14, at 18-24. Upon review, we agree with the

trial court’s legal analysis and conclusion, as stated in its April 16, 2014

Opinion, and affirm the trial court’s dismissal of this cause of action on this

basis.1 See id.

In challenging the grant of summary judgment, the Lays next argue

that the trial court improperly dismissed their claim that Attorney McDonald

1
To the extent that the Lays challenge the grant of summary judgment,
related to the Allen case, based upon a theory of implied contract, we
conclude that such claim lacks merit for the reasons stated in the trial
court’s November 17, 2015 Opinion. See Trial Court Opinion, 11/17/15, at
7-12.

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J-S48033-16

negligently advised Mrs. Lay to pay obligations owed by the Lay Law Firm to

PNC Bank (“PNC”). Brief for Appellants at 17. The Lays contend that PNC

had no claim on the life insurance proceeds paid to Mrs. Lay for the death of

decedent. Id. Therefore, the Lays argue, “[t]he life insurance proceeds

were personal funds of [Mrs.] Lay that did not secure the PNC lines of

credit[,] and [] Attorney McDonald’s advice to her to pay off these

obligations with the unsecured funds with no negotiations whatsoever was

unreasonable.” Id. The Lays contend Mrs. Lay was advised to take her

insurance money and pay off PNC, to her financial detriment. Id. at 18.

In its Opinion, the trial court addressed this claim and correctly

concluded that it lacks merit. See Trial Court Opinion, 11/17/15, at 4-6.

We affirm on the basis of the trial court’s Opinion with regard to this claim.

See id.

The Lays next assert that the trial court improperly entered summary

judgment as to their claim that Attorney McDonald negligently failed to

monitor the cases handled by Attorney [Joe] Steele [“Attorney Steele”], of

the Lay Law Firm. Brief for Appellants at 18. The Lays argue that the trial

court erred in relying upon a release between Mrs. Lay, the Lay Estate and

Attorney Steele, to which Attorney McDonald was not a party. Id. The Lays

further assert that their claim is supported by Attorney Frampton’s

Certificate of Merit, “testimony,” the Affidavit of Robert Garver, Esquire, and

the unverified statement of Karen Benson. Id. at 19.

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J-S48033-16

A claim of legal malpractice requires that the plaintiff plead the

following three elements: employment of the attorney or other basis for a

duty; the failure of the attorney to exercise ordinary skill and knowledge;

and that the attorney’s negligence was the proximate cause of damage to

the plaintiff. Kituskie v. Corbman, 714 A.2d 1027, 1029 (Pa. 1998);

accord Steiner v. Markel, 968 A.2d 1253, 1255 (Pa. 2009).

In the Second Amended Complaint, The Lays averred a negligence

claim against Attorney McDonald based upon his alleged failure to monitor

the cases he permitted Attorney Steele to handle, resulting in subsequent

ligation against Attorney Steele. Second Amended Complaint, ¶¶ 43, 44(g).

However, as the trial court stated in its Opinion,

the record before this [c]ourt now contains almost no
information concerning the nature and extent of [Attorney]
Steele’s representation of various clients of the Lay [L]aw [F]irm
following [decedent’s] death[,] and there is nothing to indicate
that [Attorney] McDonald, acting in his capacity [as] attorney,
was required to oversee [Attorney] Steele’s performance[,] nor
is there any indication that, if he had the duty to do so, he did so
negligently….

Trial Court Opinion, 11/17/15, at 3. Our review confirms that there is no

evidence that Attorney McDonald undertook a duty to monitor or oversee

Attorney Steele’s performance prior to Attorney’s Steele’s termination from

the Lay Law Firm. Accordingly, we affirm the trial court’s resolution of this

claim on the basis of the trial court’s reasoning, as set forth above, with the

following addendum.

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J-S48033-16

Our review of the record discloses that in October 2012, the Lay Law

Firm and Mrs. Lay, as executrix of the Lay Estate, filed a lawsuit against

Attorney Steele. The Complaint against Attorney Steele (the “Steele

Complaint”) alleged that, “[a]t the time of [Attorney Steele’s] termination,[2]

the parties had not reached an agreement to transfer ownership of any files

to Attorney Steele ….” Steele Complaint, ¶ 6 (footnote added). The Steele

Complaint further alleged that Attorney Steele “unilaterally and wrongly took

possession and asserted ownership of the [Lay] Law Firm’s files, and began

collecting attorney fees and costs in connection with those files, which fees

and costs he has refused and continues to refuse to pay over to the [Lay]

Law Firm.” Id. at ¶ 7. Thus, the Steele Complaint was based upon conduct

occurring after Attorney Steele’s termination, on May 26, 2011. The record,

however, discloses that Attorney McDonald was no longer counsel for Mrs.

Lay, or counsel to or executor of the Lay Estate at the time of Attorney

Steele’s termination.

The undisputed evidence establishes that on May 25, 2011, before

Attorney Steele’s termination, the trial court approved Attorney McDonald’s

resignation as co-executor of the Lay Estate, and as counsel for the Lay

Estate and Mrs. Lay. Trial Court Order, 5/25/11. Thus, there is no

evidence, disputed or otherwise, that Attorney McDonald owed a duty to the

2
Attorney Steele testified that on May 25, 2011, he found a letter on his
desk terminating his employment with the Lay Law Firm, effective May 26,
2011. Affidavit of Attorney Steele, 8/25/15, at ¶ 30.

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J-S48033-16

Lays after Attorney Steele’s termination (the time of the misconduct alleged

in the Steele Complaint). Accordingly, the Lays are not entitled to relief on

their claim related to Attorney Steele’s actions following his termination.

Finally, the Lays claim that the trial court improperly refused to grant

a stay pending the resolution of the Allen case, “so that damages could be

proven of record[.]” Brief for Appellants at 20. The Lays claim that prior to

his death, decedent had identified Attorney Loughren as his choice of

competent counsel for the Allen case. Id. at 21. Following decedent’s

death, the Lays argue, Attorney McDonald improperly failed to introduce

Attorney Loughren to Mrs. Allen, in order “to protect the legal rights of Mrs.

Lay[.]” Id. The Lays assert that “the negligence of Attorney McDonald in

allowing this case file to leave the Lay [Law Firm] prior to introducing Mrs. []

Allen to Attorney Loughren was conduct below the standard of a personal

representative and attorney.” Id. at 21-22. According to the Lays, a stay

was necessary, pending the outcome of the Allen case, to itemize the

damages resulting from Attorney McDonald’s negligence. Id. at 22.

Our review of the record discloses that the trial court granted

summary judgment against the Lays, as to their claim of negligence related

to the Allen case, based, in part, upon the speculative nature of the

damages. Trial Court Opinion, 11/17/15, at 11. In this regard, the trial

court stated the following:

It is the essence of [the Lays’] factual recitation that because
[Attorney] Loughren is a better trial lawyer than [Attorney]

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J-S48033-16

Talarico, and that [Attorney] Talarico is returning a lesser
percentage of any award or settlement to the Lay [E]state, they
will suffer a loss. Nothing could be more speculative. Indeed,
the notion that there will be any damage[s] at all hinges not only
on the generalized belief that the Allen case has legal merit, but
also that [Attorney] Talarico’s efforts will result in an outcome
less favorable to the [E]state. Whether there is any loss to the
Estate at all depends entirely on guess-work by assuming that
one attorney will do a better job than another.

… [I]n this case, it would be necessary to predict the outcome of
two actions[:] one prosecuted by [Attorney] Talarico and one
pursued by [Attorney] Loughren, and to do so with the relative
precision necessary to compare the results. Viewing the [Lays’]
Second Amended Complaint as a whole, it is apparent that even
if the averments of fact were proven at trial, [the Lays] would
still be unable to recover damages because [the Lays] cannot
establish actual harm.

Trial Court Opinion, 4/16/14, at 22. The trial court’s reasoning is supported

by the evidence of record, and we discern no error in this regard. See id.

Consequently, a stay would not have resolved the speculative nature of

predicting Attorney Talarico’s performance and results in the Allen case, as

compared to those of Attorney Loughren, and assessing damages on this

basis. As a result, the Lays have established no right to relief on this claim.

For the foregoing reasons, we affirm the Order of the trial court.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

- 10 -
J-S48033-16

Date: 10/13/2016

- 11 -
 Circulated 09/12/2016 02:42 PM

THE ESTATE OF JAMESP. LAY,ill IN THE COURT OF COMMON PLEAS
and MRS. DARLENE M. LAY, OF ERIE COUNTY, PENNSYL VAN~ g
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MEMORANDUM

A. PROCEDURAL IIlSTORY

James P. Lay, ill, Esquire ("Mr. Lay") died testate on August 27, 2010. In his will he

named James D. McDonald, Jr., Esquire ("Mr. Mcfronald" and/or "Defendant") and his wife, ·

Darlene M Lay ("Mrs. Lay" and/or "Plaintiff'), as co-executors of the Estate of James P. Lay,

pl ("Estate» and/or "Plaintiff'). Mr. McDonald and his firm, the McDonald Group, LLP

("McDonald Group» and/or "Defendant"), also acted as counsel for the Estate. In May 2011,

Mr. McDonald resigned as co-executor and Mrs. Lay continued on as executrix of the Estate. In

August 2012, the Estate filed a Petition for Surcharge seeking to have the court order Mr.

McDonald to reimburse it for, among other things, failing to properly manage the assets of the

Estate and overcharging the Estate for legal fees. A motion to withdraw. the petition for

surcharge with prejudice was granted by the court and an order was entered accordingly.

In 2012, the Estate and Mrs. Lay, apparently in a personal capacity', filed a civil action

against Mr. McDonald and the McDonald Group setting forth four (4) causes of action.

Thereafter, following an involved procedural history, the court granted certain preliminary

I
It is not clear from the Complaint that Mrs. Lay is suing in her individual capacity, however, she claims- that she
was personally damaged by the actions of Mr. McDonald with regard to advice be allegedly gave lier concerning the
use ofpersonal funds.

APPENDIX "B"
 objections which had the effect of limiting the causes of action upon which the case could

proceed.'

Now before this Court is the Defendants' Motion for Summary Judgment seeking to have

judgment entered in their favor on the remainder of the case. It is noteworthy that the

Defendants' initial motion for summary judgment was dismissed without prejudice to allow the

Plaintiffs to complete their discovery and to otherwise come forward with the appropriate

evidence in support of their civil action. While it is not clear as to whether the Plaintiffs actually

conducted any discovery. of any consequence, discovery is now closed and the record on

summary judgment is complete.

B. SUMMARY JUDGMENT STANDARD

On summary judgment the threshold determination is whether there are any genuine

issues of material fact in dispute. The facts and inferences derived therefrom must be viewed in

a light most favorable to the non-moving party. Lance v. Wyeth, 624 Pa. 231 (2014). In

ascertaining whether one is entitled to an entry of summary judgment, the court may rely on facts

which are uncontested or proceed as though the facts suggested by the non-moving party are

true. Id. In either instance, the court must then determine whether the factual record properly

discerned in a summary judgment context entitles the moving party to judgment as a matter of

law. Id. Here, the moving parties argue that the Plaintiffs, having the obligation to do so, have

not come forward with evidence to support the allegations set forth in the Second Amended

Complaint. Discovery having been closed, it was the Plaintiffs' burden to produce evidence of

20n July 11, 2013, the Honorable Fred Anthony entered a Memorandum and Order sustaining in part preliminary
objections to the Complaint. On April 16, 2014, the Honorable John A. Bozza entered an Opinion and Order
sustaining certain preliminary objections to the Second Amended Complaint further limiting the grounds upon
which the case could proceed.

2
 the facts essential to the survival of their cause of action in the context of a jury trial. Bailets v.

Pa. Tpk: Comm., 250 Pa. Lexus 1995.

C. DISCUSSION

1. . Claim of professional negligence as an attorney concerning the failure to
monitor cases handled by Attorney Joseph Steele.

A separate action was filed by Mrs. Lay and the Estate which has been resolved'

and the Plaintiffs signed a general release, the provisions of which preclude them from further

recovery with regard to the matters addressed in the lawsuit. On that basis it would appear that

recovery for the same damages contemplated in that case are not available to Plaintiffs in this

matter.

In addition, the record before this Court now contains almost no information

concerning the nature and extent of Mr. Steele's representation of various clients of the Lay law

film following Mr. Lay's death and there is nothing to indicate that Mr. McDonald, acting in his

capacity of attorney, was required to oversee Mr. Steele's performance nor is there any

indication that, if he had the duty to do so, he did so negligently. Summary judgment will be

granted accordingly.

2. Professional negligence c1aim for improperly operating the Lay professional
corporation and overcharging the Estate.

Aside from the other claims set forth below, the record contains no facts to

support these allegations. In neither instance is there any information to indicate that the

Defendants overcharged the Estate nor is there any factual support indicating that, in his role as

3
Docket No. J 1507 - 2012.

3
 an attorney, Mr. McDonald negligently performed his duties with regard to the Lay professional

corporation.

There are three (3) elements that must be established in a case alleging attorney

malpractice: the retaining of the attorney, the failure of the lawyer to exercise ordinary skill and

care and that the negligence was the proximate cause of damages. Storm v. Golden, 371 Pa.

Super. 368, 538 A.2d 61 (1988). In order to sustain a claim of professional negligence in this

case, it would be necessary for the Plaintiffs to produce expert testimony that opined that the

conduct of Mr. McDonald in the exercise of his professional responsibilities fell below the

standard of care for an attorney acting in such circumstances. Id. There is no such evidence in

the record.

While there is in the record a certificate of merit, that document, while sufficient

for its intended purpose, does not set forth an opinion stating to a reasonable degree of

professional certainty that Mr. McDonald did anything wrong with regard to the way in which he

operated the professional corporation or with regard to the fees he charged.

3. The professional negligence claim for improperly advising Mrs. Lay to "pay
an unsecured line of credit with PNC Bank, in which Mrs. Darlene M.. Lay
was not personally liable, in the amount of $4254000 from her own personal
funds when she had no legal obligation to do so".

A review of the facts in the record indicates the following with regard to this

issue:

a. Mr. Lay had arranged for two lines of credit which as of the date of his

death had combined outstanding balances of approximately $400,000.

~ Certain other claims set forth in paragraphs 41 and 42 appear to be matters that the Plaintiffs are not pursuing and
for which there has beeu no discussion in the context of this Motion.

4
 b. These loans were secured by a mortgage applicable to the Lay law

building, an asset of the Estate.

c. The loans were personally guaranteed by Mrs. Lay as evidenced by signed

guarantee agreements.

d. The guarantee agreements provided that in the event of default Mrs. Lay

was obligated to pay any outstanding balances.

... e. Mr. Lay's death constituted default pursuant to the Loan agreements and

Mrs. Lay was personally obligated to pay the loan balances.

f. PNC Bank called in the loans following Mr. Lay's death and froze the

firm's accounts.

g. Mrs. Lay had access to cash in an undetermined amount but had at her

disposal at least $720,000 from the proceeds of life insurance policies on

her deceased husband's life.

h, Mr. McDonald arranged to have Mrs. Lay meet with PNC Bank

representatives to discuss the Lines of credit.

1. Mrs. Lay met with various representatives of PNC Bank to discuss the

loans. PNC Bank refused to unfreeze the accounts or allow the lines of

credit to continue and insisted on repayment.

J. Mrs. Lay used part of the proceeds from the life insurance policies to pay

off the lines of credit.

k. During the period of time prior to paying off the PNC Bank loans, Mrs.

Lay was represented by Attorney Ronald Susmarski, who made

5
 arrangements to make the money from the insurance policies available to

pay off the loans.

While Mrs. Lay maintains in the Complaint and other litigation papers that Mr.

McDonald advised her to pay off the loans with personal funds, nowhere in the record, including

her deposition, does she provide testimonial. support for the details of that claim. Nonetheless,

assuming that Mr. McDonald did provide such advice, the balance of her statement as set forth

above, is materially false as follows:

a. The loans were unsecured. To the contrary, the loans were secured by a

mortgage of the Lay law building.

b. She was not personally liable. Indeed, Mrs. Lay was completely liable for

the balance of the loans as she had agreed to be a guarantor of the payment

of the loans.

c. She had no obligation to use personal funds. As guarantor she was

obligated to pay off the loans ostensibly with whatever funds were legally

available to her.

In the end, this claim comes down to an assertion that Mr. McDonald advised

Mrs. Lay to pay off loans for which she was personally responsible and which were secured by a

mortgage on one of the key assets of the Estate. Mrs. Lay was the sole heir of the Estate. There

is no evidence in the record to support the notion that such advice was inconsistent with the

applicable standard of care for a lawyer in such circumstances. As above, the Plaintiffs have not

come forward with a report from a legal' expert which would indicate the nature of the alleged

professional malpractice. Storm v. Golden, 371 Pa. Super. 368, 538 A.2d 61 (1988).

Summary judgment will be granted with regard to this claim.

6
 4. Breach of contract action regarding fee differential theory for the "Allen"
case.

The facts with regard to this claim as contained in the summary judgment record

are as follows:

a. Mr. Lay represented Michelle Allen with regard to a potential legal action

involving the death of her husband.

b. Upon Mr. Lay's death, no complaint had been drafted or filed, although

the case had been favorably reviewed by a physician with whom Mr. Lay

was acquainted.

c. Mr. Lay had discussions with his wife, Darlene, and others indicating that,

in the event of his death, the case should· be referred to Attorney Patrick

Loughren.

d. Attorney Thomas Talarico, who was associated with Mr. Lay but not

employed by him, worked on the case and had an agreement with Mr. Lay

in which they would equally share any fee that was earned in the case's

ultimate resolution.

e. Attorney Talarico rented the second floor of the Lay law building and

utilized the law library on the second floor for which he shared the

expense and which was accessible to all the attorneys in the building.

f. Mr. Lay passed away on August 27, 2010, and as of that time Attorney

Talarico was actively working on the case and had complete access to the

file, a part of which was retained in his own office and a part of which was

spread out in the law library.

7
 g. Shortly after Mr. Lay's death, Attorney Talarico was working on a draft of

the complaint which had to be filed pursuant to a certain action that had

been taken by a defendant.

b. At a meeting with Mrs. Lay, Mr. McDonald and others, including

Attorney Loughren, there was discussion of who would take responsibility

for continuing to represent Mrs. Allen.

i. At that meeting both Attorney Talarico and Attorney Lough.ren indicated

that they wished to take on the case and represent Mrs. Allen.

J. Mr. McDonald requested that those two attorneys try to work out an

agreement on the manner in which the case would be handled. Thereafter,

however, Attorney Talarico reported that they failed to reach an

agreement.

k. Mrs. Lay attended the meeting with the two attorneys and Mr. McDonald

and she voiced no objection to Mr. McDonald's suggestion that the two

attorneys work out an agreement as to the representation issue.

I. Mr. McDonald did not refer the case to either attorney.

m. On September 24, 2010, Mrs. Allen signed a contingency agreement with

Attorney Talarico.

n. Mr. McDonald did nothing to facilitate Attorney Talarico's representation

of Mrs. Allen.

o. Attorney Talarico agreed to pay the Estate a one-third (1/3) referral fee,

however, Attorney Loughren bad initially offered to take over

8
 representation of the plaintiff and in return would provide a fifty (50)

percent referral fee.

p. The file in the Allen case was not given to Attorney Talarico by Mr.

McDonald as he already had it and was working on it and preparing a

complaint.

q. Later, at Attorney Robert Garber's request, Attorney Talarico offered to

have Attorney Loughren take over representation of Mrs. Allen, if in

return Attorney Loughren provided him with an acceptable referral fee.

Attorney Loughren declined the offer.

r. Although the Allen case was believed by the Estate and apparently the

attorneys that reviewed it to be of considerable value, neither the merits

nor value of the case are addressed in the record.

s. Mrs. Lay, on behalf of the Estate, agreed to accept' Attorney Talarico's

referral fee arrangement,

The theory of this cause of action, while originally including professional

negligence, now centers entirely on what was described by the court early in the proceedings as a

"contract implied in law".5 In responding to preliminary objections filed by the Defendants, the

court indicated that the Plaintiffs bad pled sufficient facts in their Complaint to support an action f
for breach of a contract implied in law. A contract implied in law has generally been defined as

a contract that sounds in "unjust enrichment" and arises in circumstances where there is actually
I
no meeting of the minds but where justice dictates finding that there was a relationship between

parties such that equity required a finding that an enforceable agreement existed. A close

5
The Honorable Fred Anthony addressed preliminary objections filed with regard to the original Complaint. See,
Memorandum, July 11, 2013.

9
.

reading of the court's opinion leads to the conclusion that, rather than a contract implied in law,

the court actually found that the Plaintiffs had sufficiently pled a contract implied in fact.

The elements of a contract implied in fact are the same as the elements of any

other contractual relationship and it requires that a plaintiff demonstrates the "outward and

objective manifestation of assent''. Rambo v. Green, 906 A2d 1232 (Pa. Super. 2006). It is

necessary for a claimant to prove the intention of the parties even though those intentions were

not directly expressed, Bricklayers of W. Pa. Combined Funds v. Scott's Dev. Co., 625 Pa. 26

(2014).

Here, there was no written contract between the Estate and Mr. McDonald, as its

attorney, contained in the record of this summary judgment proceeding. The Complaint alleges

that Mrs. Lay, who was the co-executor, wanted the case referred to Attorney Loughren and

directed Mr. McDonald to do so and indicated that he should introduce Mrs. Allen to Attorney

Loughren and that he should not refer the case to Attorney Talarico. Because of Mr.

McDonald's dual responsibilities as both co-executor and attorney for the Estate, it is not evident

in which capacity Mrs. Lay was expecting him to act. Generally co-executors each have the

power to bind an estate to an agreement and may act unilaterally. In Re: Estate of Maskowitz,

115 A.2d 372 (2015). Outside of what bas been pied in the Complaint, the Plaintiffs have not

included in the factual record by way of testimony or affidavits or any other format any factual

recitations indicating the facts that would lead to the implication that Mr. McDonald assented to

a request to refer the Allen case to Attorney Loughren or that there were terms of his engagement

as an attorney that required him to do so. Moreover, assuming there was a contractual

arrangement with Mr. McDonald to generally provide legal services, and in particular, to make

10
 the referral arrangements regarding the Allen case, the question remains as to whether the Estate

suffered any damages as a result of a breach.

Apart from the comments and opinion of Mrs. Lay, there is nothing in the record

to indicate that the Allen case involved a claim that was likely to succeed. There is no expert

report describing what occurred to Mr. Allen or describing the negligence that led to his death.

There is also no information in the record about the value of the case other than it was thought by

some to be a.high damage case. The claim of the Plaintiffs in this case is that Attorney Loughren

would provide a fifty (50) percent referral fee and Attorney Talarico a one-third (1/3) referral

fee. Whether this is a meaningful distinction in the circumstances in this case would hinge on

the value of damages in the case and of course the probability of successful prosecution. Since

there is no evidence in the record either calculating damages or concerning the likelihood of

success, a determination, even an estimate of damages in this case, is not possible. Without any

facts about the case's potential merit, there is no way to predict the nature of an ultimate result

and therefore no way of calculating the amount of damages based on the fee differential theory.

In addition, there is little information in the record about the comparative skill and

experience of the respective attorneys. Obviously, attorney competence is a significant factor in

ascertaining the likelihood of a favorable result. There is information in the record indicating

that Attorney Talarico was associated with Mr. Lay, generally had thirty (30) years' experience

handling personal injury cases, including medical malpractice cases, and assisted him on this and

other cases. The Plaintiffs have not presented any evidence to the contrary. Moreover, there is

no information in the record with regard to Attorney Loughren's actual experience and skill that

would provide for a means of determining the likelihood that he would obtain a result that would

have made the fifty (50) percent referral fee a meaningful advantage to the Estate. On the record

11
before this Court, a jury could not, without speculation, ascertain damages to the Estate as a

result oftbe differential referral arrangements.

Finally, the record also reveals that after Mrs. Allen retained new counsel,

Attorney Talarico and Mrs. Lay, along with the Estate's attorney, Robert Garber, accepted his

offer of providing a one-third (1/3) referral fee to the Estate. It is obvious in those circumstances

that there was no desire to refer the case to anyone else and no damages to the Estate.

. "*' Summary judgment with regard to the differential fee agreement will be granted.

An appropriate order follows.

BY TI-IE COURT:

/}. 8 '
Jo
SENIORJUDG!; oY-
Dated: November 4 2015

cc: Joseph S.D. Christof, II, Esquire
Michael P. Flynn, Esquire
c/o Two PPG Place, Suite 400
Pittsburgh, PA 15222-5402
(Counsel for Defendants, James D. McDonald, Jr. and The McDonald Group, LLP)

Jack W. Cline, Esquire
James A. Stranahan, Esquire
c/o 101 South Pitt Street
P. O.Box206
Mercer, PA 16137
(Counsel for Plaintiffs, Estate of James P. Lay, III and Mrs. Darlene M Lay)

12
 Circulated 09/12/2016 02:42 PM

THE ESTATE OF JAMES P. LAY, III IN THE COURT OF COMMON PLEAS
AND MRS. DARLENE M. LAY, OF ERIE COUNTY, PENNSYLVANIA
Plaintiff,
CIVIL ACTION - LAW
V.

JAMES D. MCDONALD, JR., AND
THE MCDONALD GROUP, LLP,
No. 12889-2012
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This matter comes before the Court on Defendant's Preliminary Objections to thtSe~nd

Amended Complaint. Following a review of the record and oraJ argument, Defendant's

Preliminary Objections are OVERRULED IN PART AND SUSTAINED IN PART.

I. Factual and Procedural History

This matter arises out of the death of James P. Lay, IIT ("Mr. Lay") on August 27, 2010.

Plaintiffs allege that Defendant, James D. McDonald, Jr., C'Mr. McDonald") developed an

attorney-client relationship with Plaintiff Darlene M. Lay ("Mrs. Lay") and acted as co-executor

and attorney for Mr. Lay's estate until his removal in October 20 I 0. Plaintiffs initial complaint

was fiJed on January 23, 2013 and following the disposition of various procedural matters,

Preliminary Objections were filed on May 3, 2013. These Preliminary Objections involved both

\ requests for the dismissal of certain counts set forth in the Complaint and requests for the filing
. I
of a more specific pleading. The case was assigned to the Honorable Fred P. Anthony, Senior

Judge, for disposition.

Plaintiffs' claims included allegations of fraud, breach of contract, professional

negligence and breach of fiduciary duty. Specifically, Plaintiff's alleged that Mr. McDonald

failed to maximize the value of the assets of Mr. Lay and otherwise wasted estate and personal

APPENDIX "D"
 .,

funds. In particular, Plaintiffs have alleged that Mr. McDonald failed to exercise his

responsibilities with regard to his oversight of the case of Michelle D. Allen v. Hamot Medical

Center, Erie County Docket No. 12904-20 I 0, by failing to refer the case to Patrick J. Loughren,

Esq., the attorney that Mr. Lay had designated. Instead, Plaintiffs' claim that Mr. McDonald

allowed the file to end up in the hands of an allegedly less competent attorney, Thomas S.

Talarico, Esq., who agreed to pay a lesser referral fee to the estate.

On July 11, 2013, the Court entered an Order with an accompanying Memorandum

Opinion, providing that the Preliminary Objection to Plaintiffs professional negligence claim for

failure to file a proper Certificate of Merit ("COM") was sustained "without prejudice." The

Court explained in its Memorandum that Plaintiff's expert, whose letter to counsel actually

served as the COM, failed to comment with regard to the allegations of negligence concerning

l Mr. McDonald's advice to Mrs. Lay regarding estate debts and other matters. In addition, with
1
\
the exception of the claim punitive damages, the Court overruled all of the Defendant's motions

-, to dismiss but granted motions for a more specific pleading with regard to the counts of fraud,

professional negligence, and breach of contract for reasons set forth in the Memorandum. The

Court further directed that Plaintiffs had thirty (30) days to file an amended complaint.

On August 14, 2013, Plaintiffs filed their first Amended Complaint, and on September 3,

2013, Defendants filed Preliminary Objections thereto. On September 20, 2014, Plaintiffs filed

Preliminary Objections to Defendants' Preliminary Objections. Oral argument was held thereon,

and on November 1, 2013, Judge Anthony overruled Plaintiffs Preliminary Objections and gave

the Plaintiffs twenty (20) days to file a "responsive pleading" to Defendant's Preliminary

Objections. On November 21, 2013, Plaintiffs filed a Second Amended Complaint. On

December 9, 2013, Defendants filed Preliminary Objections thereto. This matter was

2
 subsequently reassigned and oral argument was again held on March 6, 2014 before the

Honorable John A. Bozza, Senior Judge.

II. Law and Analysis

Pa. R. Civ. P. I 028 provides that "[pjreliminary objections may be filed by any party to any

pleading" and only on limited grounds. Defendants have now raised preliminary objections for

failure of a pleading to conform to law or rule of court under Rule l 028(a)(2), for inclusion of a

scandalous or impertinent matter under Rule 1028(a)(2), for insufficient specificity under Rule

I028(a)(3), and for legaJ insufficiency of a pleading, or a demurrer, under Rule 1028(a)(4),

similar to, but not the same as, those filed to the initial complaint.

Of considerable significance in this matter is the application of the coordinate jurisdiction

rule. Upon transfer of a case to a different judge a court is bound to follow the resolution of a

legal question previously decided by another judge with the same jurisdictional authority.

Hunter v. City of Philadelphia, 80 A.3d 533, 536 (Pa. Commw. 2013) (citation omitted). The

-J notion is that absent some unusual circumstance judges of the same jurisdiction should not be

overruling each other. Id. There are exceptions to the rule, however, that include instances

where the nature of the matter before the court arises in a different procedural context, such as

summary judgment versus preliminary objections, or where adhering to prior a ruling that was

clearly in error would lead to a manifest injustice. Zanes v. Friends Hospital, 836 A.2d 25, 29

(Pa. 2003) (citation omitted). Neither of those circumstances applies here.

There is of course often a need to assure that the legal questions involved are indeed the

same and that the factual posture of the case bas remained the same. Hunter, 80 A.3d at 536.

The rationale underlying the rule to promote finality assumes that the issues and relevant facts

are the same. Here, the record demonstrates a c-omplex procedural history with a number of legal

3
 issues raised by Defendants presented in three sets of preliminary objections. Plaintiffs suggest

that the resolution of the first set of preliminary objections may, in part, prevent further Court

action on the current set of preliminary objections to the Plaintiff's Second Amended Complaint.

This Court first notes that although Judge Anthony overruled a number of preliminary

objections involving claims of fraud, professional negligence and breach of contract, in each

instance, be granted a Motion for a More Specific Pleading. In its Memorandum, the Court

made it clear that it viewed the Plaintiffs' Complaint to be wanting with regard to the specificity

of the facts alleged in support of those claims, providing examples of where the Complaint was

deficient. In the context of the Preliminary Objections currently before the Court, Defendants

have laid out continuing concerns with regard to the sufficiency of factual averments in the latest

amended complaint in light of Judge Anthony's conclusion that more specificity was required.

Therefore, at a minimum, this Court is obligated to ascertain whether the Plaintiffs have

sufficiently complied with Judge Anthony's directive. Such an inquiry does not run afoul of the

l
-J
coordinate jurisdiction rule. In other instances, as more fully addressed below, the issue

presented is different in character and the rule is not applicable.

a. Defendants' Motion to Strike Second Amended Complaint in its Entirety for Failure to
Conform to Law or Rule of Court pursuant to Rule 1028(a)(2)

Defendants argue Plaintiffs filed the Second Amended Complaint in direct violation of this

Court's October 31, 2013 Order to file a responsive pleading within twenty (20) days.

Defendants explain that the October 31, 2013 Order unambiguously directed Plaintiffs to file a

responsive pleading to Defendants' Preliminary Objections to Plaintiffs Amended Complaint.

Defendants note that Plaintiffs were also well outside of the twenty (20) day period from

Defendants' filing of Preliminary Objections as a matter of right under Pa. R. Civ. P. 1028(c)(l)

and that Plaintiffs did not seek leave of Court or consent of Defendants before filing the Second

4
...
Amended Complaint in contravention of Pa. R. Civ. P. 1033. In response, Plaintiffs argue that

the Second Amended Complaint is a responsive pleading in compliance witb this Court's

October 31, 2013 Order.

Pennsylvania Rule of Civil Procedure 1028(a) provides that any party may file a

preliminary objection to any "any pleading." Pa. R. Civ. P. IO 17 designates a preliminary

objection as a pleading. This Court is unconvinced by Plaintiffs position that its Second

Amended Complaint is a responsive pleading to Defendants' Preliminary Objections in

compliance with this Court's October 31, 20 L3 Order. However, the Rules of Civil Procedure

explicitly provide that if a preliminary objection is overruled, the objecting party has twenty days

to plead over. Pa. R. Civ. P. l 028( d). Therefore, Plaintiffs were authorized by rule to file an

Amended Complaint in response to the Court's Order overruling their Preliminary Objections. In

any case, it should be noted that Defendants' Preliminary Objections to the Amended Complaint

are very similar in nature to Defendants' Preliminary Objections to the Second Amended

Complaint. The issues, both substantively and procedurally, remain essentially the same and it

would serve no legal or practical purpose to strike the Second Amended Complaint.

Accordingly, Defendants' Preliminary Objections to Amended Complaint are OVERRULED AS

MOOT and Defendants' Motion to Strike Second Amended Complaint in its Entirety is

DENIED.

b. Defendants' Motion to Strike Averments of Second Amended Complaint Based ou
Scandalous and Impertinent Material pursuant to Rule 1028(a)(2)

Defendants argue that the averments in paragraphs 24-30 of the Second Amended

Complaint should be stricken as they involve scandalous and impertinent matters relating to Mr.

Lay's final days, funeral and wake. It does not appear that this issue was previously raised as the

factual averments at issue were added to the Second Amended Complaint. Our Commonwealth

5
 Court has held that allegations are scandalous and impertinent when they are immaterial and

inappropriate to the proof of the cause of action. Common Cause/Pennsylvania v.

Commonwealth, 710 A.2d 108, I 15 (Pa. Commw. 1998), affd, 757 A.2d 367 (Pa. 2000)

(citation omitted). Defendants claim that paragraphs 24-30 contain allegations wholly

immaterial and inappropriate to any of the issues in this action and should be stricken as having

no bearing on the case. Defendants further argue these allegations serve only to cast a negative

and prejudicial light on Defendants. Plaintiffs argue that the allegations are proper in that they

represent an attempt to plead allegations of fraud with specificity.

It is important to recognize that Pennsylvania does not favor and certainly does not require

the pleading of evidence in a civil complaint. Pa. R. Civ. P. 10 I 9(a). While fact pleading does

necessarily require a more detailed recitation of the factual underpinnings of a cause of action,

albeit in an concise and summary fashion, it does not require that one plead circumstances

relating to an event or in support of a necessary element that would otherwise be admissible in a

hearing or trial as mere proof of a relevant fact. For example, motive is seldom an element of

either a civil or criminal cause of action, but, nonetheless, is widely admissible in a proceeding

before a fact finder. In a similar manner, evidence of character, particularly as bearing on

credulity, seldom has a place in a civil pleading but may, in limited circumstances, be admissible

at the time of trial. It is conceivable that some of what the Court finds objectionable in

Plaintiff's complaint may, under the proper circumstances, be admissible as evidence at the time

of trial.

After a review of these paragraphs, this Court finds that paragraphs 24, 25, 27, 28, and 30

contain, in large part, scandalous and impertinent matters. None of the allegations in paragraphs

24, 25, 27, 28, and 30 are material to of the elements of the fraud claim and have no impact on

6
 the resolution of this case. Rather, these paragraphs seek to cast a derogatory light on

Defendants and have no place in a pleading. Paragraphs 26, 29 and 30 are proper in that they are

allegations that reasonably related to Plaintiffs' claims. Accordingly, Defendants' Motion to

Strike Paragraphs 24, 25, 27, and 28 is GRANTED. The Motion to Strike Paragraphs 26, 29 and

30 is DENIED.

c. Defendants' Demurrer/Motion to Strike and Lack of Specificity Regarding Count [V,
Sounding in Fraud pursuant to Rule 1028(a)(3) - (a)(4)

Defendants note that this Court previously sustained Defendants' Preliminary Objections to

Plaintiffs original Complaint on failure to plead fraud with the requisite specificity. (Order, July

11, 2013, at 9-LO.) More accurately, the Court overruled the preliminary objection seeking

dismissal of the fraud count, but sustained the preliminary objection seeking a more specific

pleading. lo its prior ruling, the Court observed:

Here the Plaintiffs' complaint reveals that the Plaintiffs have pied
the "key" words with respect each element of fraud. However,
closer review of the complaint indicates they have pied little, if
any, facts pertaining to each element of fraud. The Estate's count
for fraud is littered with vague assertions concerning Mr.
McDonald's allegedly improper instructions to Mrs. Lay regarding
her personal obligations pertaining to the maintenance and/or
continued operation of the law firm. Mr. McDonald is entitled to
know specifically the details of the advice and counsel he allegedly
rendered to Mrs. Lay constituting fraud so Defendants may
appropriately respond and prepare their defense.

(Memorandum, July 11, 2013 at I 0.) The issue now before the Court is whether the Plaintiffs

have included in their Second Amended Complaint additional facts sufficient lo meet the Court's

concern and otherwise meet the pleading requirements for a claim of fraud.

Pennsylvania is a fact pleading jurisdiction that requires more than simply general

avennents of wrongdoing in order to plead a cause of action. Individual facts must be alleged

that are sufficient to support an established cause of action. Ow- courts have long recognized the

7
 importance of a heightened pleading standard in cases where a plaintiff asserts that one acted in a

fraudulent manner. In re Estate of Schofield, 477 A.2d 473, 477 (Pa 1984). Pursuant to Pa. R.

Civ. P. 1019(b), "[a)verments of fraud or mistake shall be averred with particularity."

Specifically the Supreme Court has noted that:

In satisfaction of the particularity requirement we have required
that two conditions must always be met: the pleadings must
adequately explain the nature of the claim to the opposing party so
as to permit him to prepare a defense, and they must be sufficient
to convince the court that the avermenls are not merely subterfuge.

Id. (citing Bata v. Central-Penn National Bank of Philadelphia, 224 A.2d 174 (Pa. 1966))

(citations omitted). This rationale has been reinforced by more recent cases before the Superior

Court. See Presbyterian Med. Ctr. v. Budd, 832 A.2d 1066, 1072-73 (Pa. Super. 2003). As is

apparent from a long line of Pennsylvania cases, an assertion that one acted dishonestly, as is the

case here, is not a matter to be taken lightly and it is imperative that the court view such

allegations closely to assure compliance with the letter and spirit of these heightened pleading

requirements.

Defendants argue that both the First Amended Complaint and Second Amended

Complaint are identical in all material respects to Count rv of the original Complaint and

Plaintiffs have failed to cure any defects. Plaintiffs argue that the allegations of fraud contain all

of the necessary elements to support a cause of action for fraud. The elements of fraud, or

intentional misrepresentation, are (1) a representation; (2) which is material to the transaction at

hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or

false; (4) with intent of misleading another into relying on it; (5) justifiable reliance on the

misrepresentation; and (6) the resulting injury was proximately caused by the reliance. Id. at

1072.
 Assessing the sufficiency of Plaintiffs' Second Amended Complaint is a challenging task,

as the averments set forth in Count IV are many and varied, and contain a number of paragraphs

which contain anything but precise assertions and include conclusions of law extraneous to

pleading requirements. In general, however, the Court agrees with Defendant's position that

Plaintiffs have failed to meet the essential requirement of pleading fraud with specific

particularity. Contrary to the Court's conclusion as stated in its Memorandum and Order of July

11, 2013, Plaintiffs have failed to plead their fraud count more specifically. In that regard, the

Court addresses the sufficiency of the relevant paragraphs as follows:

/· This paragraph makes a broad assertion of fraud with regard to a billing issue.

While it asserts that bills were fraudulent, it fails to indicate which bills are at

issue and does not identify the services that were fraudulently provided.

/6. Here, Plaintiff claims that the bills were "bogus" without an indication of

which bills are involved. It also does not include any factual averments as to the

content of the misrepresentations or when and how they were made or

communicated.

/s;. Here, there is a general averment that statements of a fraudulent nature were

made but no details concerning where, when, and how they were corrununicated

are provided. It is one thing to not be able to pinpoint with absolute certainty the

specifics of each statement, and another to provide no information about the

statements at all. In the latter situation, as here, one is not pleading fraud with

sufficient specificity.
 /

/8. In this paragraph, Plaintiffs allege that information was concealed without an

indication of what was concealed or the circumstances of how and when it was

accomplished. Moreover, the notion that the actions of the defendants were

"duplicitous" is without any factual foundation.

/
/59. Here, Plaintiffs allege that Defendants established Plaintiffs as clients without

their knowledge, but fail to indicate how this was accomplished.

M.. There is no indication of which bills and taxes Plaintiffs are complaining

about. Although Plaintiffs plead "as more fully set forth herein,". it cannot b~

discerned with any certainty by reading the balance of the Complaint what bills

and taxes are specifically referred to, in part, because Plaintiffs assert that there

are "many" of them.

/~1. There is no delineation of the "services" and "routine and sundry" matters to

which Plaintiffs refer. There is also no indication of which bills constituted

"double billing."

( 62. This paragraph alleges a violation of a fiduciary duty without indicating how

this relates to the fraud allegation. Moreover, the claims against Mr. McDonald

relating to his position of executor are no longer apart of the lawsuit. (Oral

Argument Transcript, March 6, 2014 at 15:23-16:19; 23:25-24:25; 30:5-31:7.)

Also, there is no inclusion of facts indicating what "unnecessary" or "duplicitous"

work was performed.

~3. This paragraph includes only the broadest assertions of fraud without any

facts indicating the circumstances of the alleged misrepresentation. There is a
,

general assertion that Defendants benefitted from their fraudulent conduct without

any indication of what the misrepresentation may have been.

~This paragraph does not relate to fraud at all, but rather to some kind of other

/ kind of tortious behavior. Assuming that Plaintiffs are attempting to plead fraud,

the assertion that Defendants "literally forced" Plaintiffs to hire Joseph Steele is

without any factual support in the complaint. Nor do Plaintiffs provide any

factual allegations concerning Defendant's allegedly "devious" purposes.

~65. This paragraph is wholly unrelated to the claim of fraud. Moreover, it makes

broad assertions of "fraudulent actions and schemes" without identifying any

details concerning them. Plaintiffs make reference to "statements" without

describing them in any way or indicating when they occurred .

.. -67. In general, this a confusing averment with multiple assertions contained
//
within an eleven line sentence. There is reference to misrepresentations and other

occurrences without providing any details concerning their content or when and

where they may have occurred.

70. This paragraph has nothing lo do with the elements of fraud.

75. This paragraph has nothing to do with the fraud allegation.

76. This has nothing to do with the allegation of fraud.

Consistent with the analysis and conclusions described above, the Preliminary Objection

of the Defendants to Count IV in the nature of a Demurrer/Motion to Strike is SUSTAINED.
 d. Defendants' Motionto Strike for Insufficient Specificity of Pleading Pursuant to
Connor, Related Pennsylvania Precedent, and Rule 1028(a)(3)
This Preliminary Objection is directly related to the Court's previous admonition to the

Plaintiffs to plead their various claims more specifically. Pa. R. C. P. No. I 028(a)(3) allows a

party to file preliminary objections on the basis of insufficient specificity. The case of Connor v.

Allegheny General Hospital is often raised by defendants in preliminary objections. In this

medical malpractice action, our Supreme Court explained in a footnote that if the defendant did

not understand the indefinite allegation that it "otherwise fail [ed] to use due care and caution

under the circumstances," the defendant could have filed a preliminary objection in the nature of

a request for a more specific pleading or moved to strike that portion of the complaint. Connor

v. Allegheny Hospital, 46 l A.2d 600, 603 n.3 (Pa. 1983). However, the related holding dealt

with the fact that it was e1TOr to prevent Plaintiffs from amending the allegations in the

complaint. The Court held:

In this case, [plaintiffs'] proposed amendment does, in fact,
amplify one of the allegations of the original complaint. In their
original complaint, (plaintiffs] did not merely allege that the
barium enema had been negligently performed. Rather, (plaintiffs]
also alleged that appellee, acting individuals and through its
employees, was negligent "[i]n otherwise failing to use due care
and caution under the circumstances." [Plaintiffs'] proposed
amendment simply specifies the other was in which (defendant]
was negligent in this case. Since (plaintiffs'] proposed amendment
does not change the original cause of action, but rather merely
amplifies it, the amendment would not result in any prejudice to
(defendant). In view of the policy that the right to amend should
be liberally granted, and in view of the fact that the amendment in
this case would not have worked a prejudice against (defendant], it
was an abuse of discretion for the trial court to refuse the proposed
amendment, and it was error for the Superior Court to uphold the
trial court's action.

Id. at 602-03. Consequently, the well-known, often misconstrued, Connor footnote regarding the

option of a defendant to file preliminary objections seeking a more specific pleading is nothing
more than dicta that calls attention to the importance of the requirement of fact pleading, the

admonition against indefinite and open-ended allegations and the pitfalls of failing to object to

such averments in a timely manner. While the holding in Connor per se does not serve as a

basis for relief here, it firmly establishes that a party may amend a Complaint in order to amplify

an allegation previously set forth where that allegation is broadly stated and not objected to.

Here, Defendants are indeed objecting.

In this Preliminary Objection, Defendants argue that Plaintiffs have made a number of

vague, open-ended and conclusory allegations, and as a result, they have not been put on notice

of the specific claims against which they must defend. Specifically, Defendants argue

Paragraphs 44(d), (t), (g), and (h), 45(c), 53(d), 60, 67, 68 and 72 should be stricken and

Paragraphs 32, 35-37, 40, 42, 49(c), 53(c) and Count TI be dismissed with prejudice. Plaintiffs

argue in opposition that they have pied the above allegations with sufficient specificity.

With regard to the specific objections raised by the defendants the Court finds as follows:

1. Paragraph 44(d). The motion to strike is GRANTED.

2. Paragraph 44(f). The motion to strike is DENIED but proof at the time of trial limited the

factual allegations as stated in the paragraph.

3. Paragraph 44(g). The motion to strike is DENIED but proof at the time of trial limited

the factual allegations as stated in the paragraph.

4. Paragraph 44(h). The motion to strike is DENIED but proof at the time of trial limited

the factual allegations as stated in the paragraph.

5. Paragraph 45(c). The motion to strike is DENIED but proof at the time of trial limited

the factual allegations as stated in the paragraph.
 6. Paragraph 53(d). The motion to strike is DENIED but proof at the time of trial limited to

the facts set forth in the complaint.

7. Since Count IV is stricken for the reasons set forth above the motion to strike, Paragraph

60 is DENIED AS MOOT.

8. Since Count IV is stricken for the reasons set forth above the motion to strike, Paragraph

67 is DENIED AS MOOT ..

9. Since Count IV is stricken for the reasons set forth above the motion to strike, Paragraph

68 is DENIED AS MOOT

10. Since Count IV is stricken for the reasons set forth above the motion to strike, Paragraph

72 is DENIED AS MOOT.
I
I
l 11. Paragraphs 32, 35-37, 40, 42, 49(c) and 53(c) and Count II. The motion to dismiss with

prejudice is DENIED.

e. Defendants' Motion to Strike for Failure to Conform to Rule or Law for Lack of a
·I Sufficient or Proper Certificate of Merit pursuant to Rule 1028(a)(2)

Pursuant to Pa. R. Civ. P. 1042.J(a), "any action based upon an allegation that a licensed

professional deviated from an acceptable professional standard, the attorney for plaintiff ... shall

file with the complaint or within sixty days after the filing of the complaint, a certificate or merit

signed by the attorney."

The [certificate of merit] is a summary written certification by the
plaintiff or counsel, which represents to the defendant profession
and the Court that a license professional in the same field as the
defendant has supplied a wri tten statement to the effect that there
exists a reasonable probabiJ ity that the defendant was
I I professionally negligent. The Rule directs that the [certificate of
I
merit) state either: ...

(]) that the professional negligence claim is based on a direct
theory or liability with reasonable factual and expert support,
i.e., that: an appropriate licensed professional has supplied a

14
 written statement that there exists a reasonable probability that
the care, skill or knowledge exercised or exhibited in the
treatment, practice or work that is the subject of the complaint,
fell outside acceptable professional standards and that such
conduct was a cause in bringing about the harm, or

(2) that the professional negligence claim is solely based on an
otherwise supported vicarious theory of liability, i.e. that the
claim that the defendant deviated from an acceptable
professional standard is based solely on allegations that other
licensed professionals for whom this defendant is responsible
deviated from an acceptable professional standard.

Stroudv. Abington Mem. Hosp., 546 F. Supp. 2d 238, 248 (E.D. Pa. 2008) (citations omitted).

The purpose of requiring a Certificate of Merit in such cases is to prevent "the filing of

malpractice claims of questionable merit, and ... to avoid the burdens that such claims impose

upon litigation and the courts." Pollock v. Feinstein, 917 A.2d 875, 877 (Pa. Super. 2007)

(citation omitted).

Here, P Jaintiffs filed their first Certificate of Merit on March 6, 2013. This Court ruled

that this original Certificate of Merit was defective in its July 11, 2013 Memorandum Opinion.

This Court explained:

(T]he Court does find that the Plaintiffs certificate of merit fails to
comply with Pa.R.C.P. 1042.3(a)(l). Here, Plaintiffs only
obtained an expert opinion with respect to Mr. McDonald's
conduct concerning the referral of the Allen case. Absent from
Plaintiffs certificate of merit is any opinion concerning Mr.
McDonald's conduct related to the advice he rendered to Mrs. Lay
pertaining to her personal obligations to continue operating the law
firm and satisfy its debts. Based upon the totality of Plaintiff's
allegations of professional negligence, the Court finds that
Plaintiff's certificate of merit fails to comply with the
Pennsylvania Rules of Civil Procedure because it fails to contain
any statement concerning Mr. McDonald's conduct with respect to
the advice he rendered to Mrs. Lay.

\ Following this Court's July 11, 2013 Order, Plaintiffs filed an Amended or Supplemental
I

Certificate of Merit on August 21, 2013.

15
 Defendants' argument is two-fold: (1) that the Pennsylvania Rules of Civil Procedure and

applicable case law do not authorize Plaintiffs to file an Amended or Supplemental Certificate of

Merit, and (2) that the Amended Certificate of Merit remains defective because Plaintiffs have

failed to identify an actual injury or any resultant damages required to sustain a legal malpractice

action. Plaintiffs argue that preliminary objections are not the proper vehicle to challenge a

certificate of merit, and that a Pa. R. Civ. P. l 042.8 "Motion to Strike" is the proper method.

Plaintiffs assert that because the time to file a Motion to Strike has expired, Defendants are

attempting to improperly use preliminary objections as a "backdoor" challenge to the certificate

of merit. As to the sufficiency of the content of the certificate of merit, Plaintiffs argue that

contingent fees are speculative by nature, and therefore, any expert would have to give a

speculative certification as to the merits of the case.

There is no authority that permits the automatic right to file an amended certificate of

merit. Indeed there is authority indicating that such a right does not exist. Stroud v, Abington

Memorial Hosp., 546 F. Supp. 2d 238, 249-50 (E.D. Pa 2008). On the other hand, the Superior

Court has noted that equitable considerations must be considered by the trial court when

determining the sufficiency of a certificate merit. Ditch v. Waynesboro Hosp., 917 A.2d 317 (Pa.

,· Super. 2007), aff'd 17 A.3d 3 l O (Pa. 2011 ). Here the Court, while finding that Plaintiffs'

f Certificate of Merit was deficient with regard to the professional negligence claims set forth in

the Complaint, sustained the Preliminary Objection, "without PREJUDICE," thus impliedly

allowing the Plaintiffs the opportunity to file an amended certificate. As a result, in these

circumstances, the filling of the amended Certificate of Merit was acceptable.1 Accordingly,

Defendants' Motion to Strike is DENIED.
:_,
I
lt is noteworthy that rather than supplying only the Attorney's certification per Pa. R. Civ. P. 1042.3, Plaintiff
provided the actual letter from the reviewing expert.
 )

f. Defendants' Demurrer/Motion to Strike Regarding Counsel Comparison Claims to the
Allen case pursuant to Rule 1028(a)(4) and Defendants' Demurrer/Motion to Strike
Regarding Referral Fee Differential Claims as to the Allen case pursuant to Rule
1028(a)(4)

In his Memorandum Opinion of July 11, 2013, Judge Anthony indicated that he found that

Plaintiffs had pied sufficient facts to minimally state a claim on the basis of a contract "implied

in law."2 (Memorandum, July 11, 2013 at 8.) The Court noted that the Complaint included facts

sufficient to establish that Defendants' actions in accepting a referral arrangement with Mr.

Talarico that included a lesser referral fee was adequate to establish the requisite "harm" in a

legal malpractice case. (Id.) In its Memorandum, the Court did not directly address the viability

of Plaintiffs' "counsel comparison" claim (i.e. that Mr. Loughren is a better lawyer than Mr.

Talarico) in the context of negligence or contract, although it noted that the Complaint was

devoid of facts supporting such an allegation. (Id. at I 0.) In general, the Court concluded that

the Complaint lacked sufficient specificity with regard to both Professional Negligence and

Breach of Contract claims and granted Defendants' Motion for a More Specific Pleading.
,.
(Memorandum p.10-11, Order July 11, 2013). Therefore, it is necessary for this Court to

determine whether the Plaintiffs' Second Amended Complaint now includes additional facts

sufficient to meet pleading requirements.

Wb!n faced with preliminary objections in the nature of a demurrer, a court must resolve

the issues on the facts averred in the pleadings, and determine, "whether the complaint

adequately states a claim for relief under any theory of law." Mistick; Inc. v. Northwestern Nat'l

Cas. Co., 806 A.2d 39, 42 (Pa. Super. 2002) (citations omitted). "To evaluate a demurrer under

this standard, the court must accept as true all material averments of the complaint and may

2
Considering that Plaintiffs have pied facts sufficient to allege an attorney-client relationship, it is not clear whether
the Court was referring to a contract implied in fact. Discover Bank v. Slue/ca, 33 A.3d 82 (Pa. Super. 2011 ).
 sustain the demurrer only if the law will not permit a recovery." Id. (citation omitted). "Where

any doubt exists as to whether a demurrer should be sustained, it must be resolved in favor of

overruling the demurrer." Id. (citation omitted).

Defendant argues that Pennsylvania Courts have ruled, in analogous cases, that contingent

fee cases are speculative, and as such, no value can be placed on them. See Lamparski v. Sikov,

Lamparski & Woncheck, 559 A.2d 544, 547 (Pa. Super. 1989)~ In re Tony, 724 F.2d 467, 468 (S1h

Cir. 1984). Defendants further argue that the Allen case "belongs" to Mrs. Allen, Plaintiffs have

no ownership interest in tbe case, and Mrs. Allen is free to discharge her attorney at any time.

·i See Mager v. Bultena, 797 A.2d 948, 958 (Pa. Super. 2002). Accordingly, Defendants' assert
I

that Plaintiffs' position that the return on the referral fee of the Allen case is substantially

compromised by the representation of Attorney Talarico, as opposed to Attorney Loughren is

entirely speculative. In response, Plaintiffs argue that Defendants' argument is in opposition to

their expert as provided in the Certificate of Merit. Plaintiffs state that they have alleged

cognizable causes of action and that Defendants are free to deny these claims and proceed with

discovery. The Court notes that both parties concede that the Allen case is ongoing, and as such,

has not yet resulted in any actual injury to Plaintiffs.

r To begin, it is essential that the focus of the Court's inquiry center on the facts as set forth

f in the Second Amended Complaint as they relate to the defendants' involvement in the Allen

case and accepting as true all well pied facts relevant to the claim presented. In summary, the

Court finds that pertinent factual averments are as follows:

l. Prior to the death of Mr. Lay, Mr. McDonald represented plaintiff Mrs. Darlene Lay

and billed her for his services.

18
 2. Following the death of James Lay until October 2010, James McDonald served as co-

executor and attorney for the estate of James Lay and attorney for Plaintiffs.

3. After October 2010 until the end of 2010, Mr. McDonald continued to serve as attorney

for the estate and for Mrs. Lay, the co-executrix of the estate.

4. Mr. McDonald was aware that Mr. Lay was an attorney whose practice was primarily

in the area of litigation.

5. Mr. McDonald was aware that at the time of his death Mr. Lay had several open cases

that needed to be referred to other competent counsel for resolution.

6. One of the most valuable assets in Mr. Lay's law practice was the case of Michele D.

Allen et al. v. Hamot medical Center, a medical malpractice action that was initiated by

Mr. Lay on a contingent fee basis.

7. Prior to his death, Mr. Lay made it clear to a number of people, including Mrs. Lay and

Mr. McDonald, that the case should be referred to Patrick Loughren, Esq., and he

wished that upon his death Mrs. Allen should be introduced to him.

8. Mr. Lay had confidence in Mr. Loughren's legal ability and Plaintiffs believe he is a

highJy successful malpractice attorney.

r 9. Mr. Loughren had agreed to take the case on a contingent fee basis and to pay a referral

fee of 50% to Mr. Lay of his Estate.

10. During a meeting with Mr. Loughren with Mrs. Lay present, Mr. Lay went over his

cases and indicated that Mr. Loughren was to take over his open cases.

11. At Mr. Lay's funeral Mrs. Lay told Mr. McDonald that it was her husband's desire that

his cases be handled by Mr. Loughren.

19
 12. At a meeting, following Mr. Lay's death, at which Mr. McDonald was present, Mr.

Loughren noted that Mrs. Allen's case was potentially worth well into the seven

figures.

13. Attorney Tom Talarico was present at the meeting indicated his interest in taking over

the case.

14. It was made clear by someone to Mr. McDonald that the case should be referred to Mr.

Loughren.

15. Mr. McDonald agreed.

16. Thereafter, the file disappeared from the Lay Law Office, and Mr. Talarico entered his

appearance on behalf of Mrs. Allen on October 6, 2010.

17. Mr. McDonald permitted the Allen case file to leave the control of the Lay Law Offices

without Mrs. Lay's knowledge.

18. He permitted the file to end to up in the office of Tom Talarico.

19. He did not introduce Mrs. Allen to Mr. Loughren.

20. Mr. Talarico is an inexperienced medical malpractice trial lawyer.

21. Mr. Talarico has agreed to pay a referral fee of thirty three and one third percent (33

1/3%) of his contingency fee in the Allen case.

With regard to the issue of Mr. McDonald's handling of the Allen case, it appears that

Plaintirt:s have asserted causes sounding in breach of contract, professional negligence and

violation of a fiduciary duty. While an action in any of these categories does by implication call

into question attorney competence, each has its own threshold elements that must be met by

proper fact pleading. In that regard, it must be noted that all three claims seem to be based on

essentially the same factual foundation. With regard to the fiduciary duty claim, it is not clear

20
 whether the plaintiffs are pursuing the matter against Mr. McDonald in his capacity as co-

executor or attorney or both. At the time of oral argument, counsel for the Plaintiffs seemed to

be taking the position that at this juncture, his client would not be pursuing a claim against Mr.

McDonald in his capacity as executor. (Oral Argument Transcript, March 6, 2014 at 31.)

In order to state a claim for attorney malpractice, a plaintiff must set forth factual

allegations sufficient to make out a prima facie case with regard to each of the traditional

elements of a negligence claim: duty, breach, causation and damages. Atkinson v. Haug, 622

A.2d 983, 986 (Pa. Super. 1993). More precisely, it is necessary for a plaintiff to plead the

employment of an attorney, the failure of the attorney to exercise ordinary skill and knowledge,

and the failure to do so was the proximate cause of harm. Wachovia Bank v. Ferretti, 935A.2d

565, 570 (2007). In addition, however, it is also critical, whether a legal malpractice claim is

presented as a contract action or a negligence action that one pleads and proves an actual loss.

Pashak v Barish, 450 A.2d 67 (Pa. Super. 1982). An attorney is not liable for damages that are

remote or speculative. Id. This does not mean that the amount of loss has to be pied with

precision. The question is whether there will be any damage at all as a result of the claim being

asserted and the mere possibility that one will sustain a loss in the future is not sufficient. Id In

short, in considering preliminary objections the Court must determine whether if proved the

allegations in the complaint would allow the a plaintiff to recover damages. Discover Bank v.

Stucka, 33 A.3d 82 (Pa. Super. 2011). Here, this Court finds that Plaintiffs' Second Amended

Complaint does not meet the pleading requirements to state claims for professional negligence

and breach of fiduciary duty as they relate to the Allen case. With regard to the contract "implied

in law" claim, the Court having previously determined that Plaintiffs sufficiently pled harm on

21
 the basis of the referral fee differential, the preliminary objection in the nature of a demurrer will

be overruled.

While the Plaintiffs have delineated a factual scenario that asserts that Mr. McDonald did

not refer the Allen case to Mr. Loughren, did not introduce Mrs. Allen to Mr. Loughren, and

allowed the Allen file to be removed from the Lay law Offices, the claim of damage is entirely

speculative. It is the essence of Plaintiffs' factual recitation that because Mr. Loughren is a

better trial lawyer than Mr. Talarico, and that Mr. Talarico is returning a lesser percentage of any

award or settlement to the Lay estate, they will suffer a loss. Nothing could be more speculative.

Indeed, the notion that there will be any damage at all hinges not only on the generalized belief

that the Allen case has legal merit, but also that Mr. Talarico's efforts will result in an outcome

less favorable to the estate. Whether there is any loss to the estate at all depends entirely on

\ guess-work by assuming that one attorney will do a better job than another.

This is not to say that the quality of legal representation is not a critical factor in the

successful prosecution of a civil claim. But rather, it is to recognize that any attempt to predict

the precise outcome of an action for personal injury is fraught with the inherent difficulties of

predicting the behavior of a jury at some very uncertain date in the future. Moreover, in this case,

it would be necessary to predict the outcome of two actions one prosecuted by Mr. Talarico and

one pursued by Mr. Loughren, and to do so with the relative precision necessary to compare the

results. Viewing the Plaintiff's Second Amended Complaint as a whole, it is apparent that even

if the averments of fact were proven at trial, Plaintiffs would still be unable to recover damages

because Plaintiffs cannot establish actual harm. Id.

In cases involving contingency fees, there are almost a limitless number of variables that

will affect an ultimate outcome. It is the very risk of failure that justifies contingency fees in the

22
first place. Pennsylvania courts have noted the highly speculative nature of contingency fee

cases in other contexts. See Lamparski v, Sikov, Lamparski & Woncheck, 559 A.2d 544, 547 (Pa.

Super. 1989) (holding that contingency fee cases not reduced to settlement or judgment not to be

considered in evaluating the value of a shareholders' interest in a law firm). Perhaps that is one

of the reasons why Pennsylvania has never recognized a cause of action for negligent referral.

Bourke v. Kazaras, 746 A.2d 642, 643-44 (Pa. Super. 2000) (holding that Pennsylvania courts

have not adopted a cause of action for negligent referral). Here, based solely on the facts pied by

the Plaintiffs there is no reason to conclude that the outcome of the Allen case will be any less

uncertain.

Moreover, there is an additional concern with regard to the speculative nature of any

actual future loss. There is no way to foresee that Mrs. Allen, the plaintiff in the lawsuit at issue,

would have retained the services of Mr. Loughren as her attorney in any case. Indeed there is no

factual assertion in that regard. Accepting as true the allegation that Mr. McDonald failed to

introduce Mrs. Allen to Mr. Loughren, it is not possible to know or even guess whether her

reaction to him would have been favorable or more accurately, more favorable than Mr. Talarico.

Therefore, the plaintiffs position that a referral to Mr. Loughren would have ultimately

benefitted the estate more than a referral to Mr. Talarico. is nothing more than an averment of a

hoped for result. In a similar vein, there are no factual allegations regarding the fee agreement

that Mrs. Allen may have with Mr. Talarico. This of course would have significant

consequences for the ultimate amount the estate may receive as a result of any fee sharing

arrangement,

The Plaintiffs maintain that their expert report is sufficient to meet the pleading

requirements for a professional negligence claim. A Certificate of Merit with an attached expert

23
p

letter is not a pleading. The list of authorized pleadings is provided in the Rules of Civil

Procedure and an expert's report attached to a Certificate of Merit is not one of them. Nor for

that matter is the Certificate of Merit itself. Pa. R. Civ. P. 1017.

Accepting as true all of plaintiff's properly pled facts and viewing the plaintiff's

complaint in a light most favorable to them, it must be concluded that Plaintiffs have failed to

state claims against Defendants for professional negligence and breach of fiduciary duty related

to the handling of the Allen case and the demurrer is SUSTAINED. As to the cause of action

against Mr. McDonald for breach of contract "implied in law" with regard to the fee differential

theory, the demurrer is OVERRULED, and the case may proceed accordingly.

g. Defendants' Demurrer Regarding Claims for Punitive Damages, Interest, or Attorney's
Fees and Costs Pursuant to Rule 1028(a)(4)

At the March 6, 2014 oral argument, counsel for Plaintiffs, Jack W. Cline, Esq. conceded

that the claims for punitive damages, interest, attorney's fees, and costs is contingent upon

resolution of the fraud claim in Plaintiffs favor. Moreover, the Court has previously sustained a

similar preliminary objection. Because this Court has sustained Defendants' Motion to Strike

the fraud claim, this demurrer is also SUSTAINED.

II. Conclusion

For the foregoing reasons, Defendant's Preliminary Objections to the Second Amended

Complaint are OVERRULED fN PART AND SUSTAINED IN PART.

BY THE COURT:

24