eNotes: Liability – March 2023 – Pennsylvania
March 01, 2023
SIGNIFICANT CASE SUMMARIES
Pennsylvania Case Summaries
Marion v. Bryn Mawr Trust Co.
Pennsylvania Supreme Court
No. 72 MAP 2021
Decided: January 19, 2023
Pennsylvania Supreme Court recognizes tort claim for aiding and abetting fraud and requires actual knowledge of the underlying fraud.
Robert Bentley was a broker of certificates of deposits. He operated his business through two entities: Bentley Financial Services (“BFS”) and Entrust Group (“Entrust.”) Bentley engaged in a Ponzi scheme in which he would sell fraudulent or fictitious CDs to new investors in order to pay off previous investors. In 1997, as he continued to defraud investors, Bentley opened deposit and wire transfer accounts with Bryn Mawr Trust Company (“BMT”) and continued to engage in his fraudulent scheme.
David Marion, a federal court-appointed receiver, to recover and repay the losses sustained by the victims of Bentley’s scheme, sued BMT looking to recoup a significant part of the victims’ losses. A Montgomery County Trial Court ruled that Pennsylvania did not recognize a tort for aiding and abetting fraud, and at trial the jury returned a verdict in favor of Defendant BMT. Marion appealed to the Superior Court, which reversed the judgment in favor of BMT and remanded for a new trial, ruling that Pennsylvania has long recognized the tort of aiding and abetting fraud. The Pennsylvania Supreme Court agreed to consider only whether Pennsylvania recognized a tort claim for aiding and abetting fraud and whether the Superior Court had required the appropriate level of knowledge to support such a claim.
The Pennsylvania Supreme Court reasoned that mere negligence is not sufficient to support aiding and abetting liability. Rather, the requirement is actual knowledge, which may be proven by circumstantial evidence. In reliance on the Restatement (Third) of Torts, the Court noted that “it is not enough to prove that the defendant should have known of the primary actor’s wrongful conduct, but did not.” A negligence standard would be highly susceptible to hindsight bias as to whether the defendant “should have known” of the fraud. Additionally, a negligence scienter would effectively oblige banks like BMT, and other entities who engage in a high volume of commercial transactions with numerous customers, to engage in costly and intrusive monitoring and investigations of their customers’ activities.
Overall, the Court explicitly held that “Pennsylvania law recognizes the tort of aiding and abetting fraud, and the scienter requirement for this cause of action is actual knowledge of the underlying fraud,” noting that “actual knowledge” can be proven by circumstantial evidence including evidence of willful blindness and intentional ignorance.
Questions about this case can be directed to Cameron Kockler at (412) 926-1428 or firstname.lastname@example.org.
Cowher v. Kodali
Pennsylvania Superior Court
2023 Pa. Super. Unpub. LEXIS 244
Decided: January 31, 2023
On remand from the Supreme Court, the Superior Court holds that the two remaining issues – previously not addressed on appeal – were also waived because Defendant failed to request a special verdict slip that would have isolated and quantified any damages awarded for pain and suffering under the survival act claim.
Plaintiff’s decedent suffered a cardiac event while running in his neighborhood. Plaintiff brought wrongful death and survival actions against his health care providers alleging medical negligence. The wrongful death award, while substantial in and of itself, was not challenged on appeal. Instead, the case turned on whether the survival act award was improper. In the first round of appeal, The Supreme Court held, in Cowher v. Kodali, 283 A.3d 794 (Pa. 2022) (Cowher I), that Defendant’s failure to request a special verdict slip that would have specified the amount, if any, awarded for pain and suffering under the survival act waived various issues for appeal relative to the verdict on the survival act claim. The Supreme Court remanded the case to the Superior Court for a determination of two remaining survival act issues, with specific direction that the Superior Court should decide whether those remaining issues were likewise waived by the failure to have a more specific verdict slip. After additional briefing, the Superior Court held that the additional issues were also waived.
The two issues that remained in the case after the Supreme Court decision in Cowher I were: (1) whether the Trial Court erred and abused its discretion in failing to set aside the survival act claim as against the weight of the evidence when the record was devoid of evidence that the decedent was conscious and able to feel pain, or indeed that he felt pain immediately prior to his death; and (2) whether the damages awarded for (at best) two or three minutes of pain and suffering was grossly excessive, unmoored from the record, and against the weight of the evidence.
The Superior Court likewise applied the general verdict rule to insulate the remaining challenges to the survival act award from appellate scrutiny. The Superior Court explained that the two outstanding issues expressly challenged the survival act damages on the ground that the jury included pain and suffering damages and that the amount awarded was excessive. According to the Superior Court, Defendants knew that any verdict for pain and suffering and the amount of any such award would be potential subjects for appeal, yet the defense chose not to seek a special verdict to delineate whether the verdict included any such pain and suffering damages and the amount thereof. As such, the absence of the special verdict precluded review of any issue relating to the alleged pain and suffering. Moreover, the Superior Court determined that the Supreme Court in Cowher I concluded that the verdict as a whole was supported by the evidence and not excessive, even if it contained no pain and suffering damages, because there was sufficient evidence to support the amount of survival damages awarded based on evidence of the other components of survival damages.
Questions about this case can be directed to Louis Long at (412) 926-1424 or email@example.com.
Mertira v. Camelback Lodge & Indoor Water Park
Pennsylvania Superior Court
No. 1193 EDA 2022
Decided: January 24, 2023
Summary judgment for landowner where Plaintiff fell while traversing grassy area during an active snowfall.
Plaintiff slipped and fell on Defendants’ property while leaving a restaurant owned by Defendants. It was undisputed that at the time of the accident, there was precipitation falling in the form of freezing rain and/or snow before and after Plaintiff was in the restaurant and did not stop until three hours after the fall. Plaintiff and family members chose to walk on a grassy strip and not on a walkway/sidewalk or parking lot. None of the witnesses identified any hills or ridges formed by the ice or snow. The fall occurred on a grassy snow and ice covered area. Plaintiff claimed that she was forced to walk on the grassy area because the walkways appeared to be covered with ice and snow.
On appeal, Plaintiff argued that summary judgment was premature due to incomplete discovery, that the doctrine of hills and ridges did not apply and that there were multiple genuine issues of material fact remaining. The Court noted that the deposition Plaintiff sought of Defendant’s maintenance personnel would not have aided in the establishment of any material fact because there was an ongoing storm, and Plaintiff chose to traverse an area not expected to be clear of snow and ice. The Court found that Plaintiff’s hills and ridges argument failed because although it applies to walkways and parking lots, Plaintiff’s choice of walking across a grassy area was simply to avoid generally slippery conditions on an untreated walkway during an ongoing storm. Plaintiff’s choice of travel does not impose liability on a landowner simply by claiming that the path taken looked less dangerous. Finally, although Plaintiff argued the existence of multiple issues of material fact, she failed to support her arguments with citations to the record, so the Court deemed the argument waived.
The Court affirmed the judgment in favor of the landowner because no additional discovery would have disclosed a genuine issue of material fact, and Plaintiff fell on an area not intended for pedestrian travel during an ongoing winter event.
Questions about this case can be directed to James F. Swartz, III at (610) 332-7028 or firstname.lastname@example.org.
Huertas v. El Bochinche Rest.
Pennsylvania Superior Court
No. 248 EDA 2022
Decided: January 23, 2023
The Court addressed various evidentiary rulings, including hearsay exceptions and the impact of evidence contained within opening statements that was later excluded.
Plaintiff appealed the Trial Court’s admission of a statement contained within her medical record, which was admitted under the business record exception to hearsay. The subject statement was contrary to her testimony that she was punched in the restaurant around her eye three times. The statement contained in her medical record stated that Plaintiff was punched in one “eye last night while walking down the street.” On appeal, the Court affirmed the Trial Court’s admission of the statement, holding that the statement was admissible under two hearsay exceptions – first, as a statement made in the course of medical treatment under Pa.R.E. 803(4), and second, as a party admission under Pa.R.E. 803(25). The Court did not address its admission under the business records exception.
Plaintiff also appealed the Trial Court’s alleged failure to timely rule on her Motion in limine to preclude evidence of prior incidents, which included two motor vehicle accidents and two assaults. Although the Trial Court eventually ruled on her Motion in limine, Plaintiff argued that she was prejudiced because Defendant was permitted to refer to the prior incidents in its opening statements.
The Superior Court held that the Trial Court did not abuse its discretion in its “untimely” decision on Plaintiff’s Motion in limine. In reaching its decision, the Court took notice of the fact that Plaintiff filed Pre-trial Motions in limine one week before trial on June 17, 2021, and then filed the subject Motion in limine only two days later on Saturday, June 19, 2021. The Court addressed the prior incidents and held they were not admissible, but they were referenced by Plaintiff’s own attorney’s opening statement. Beyond this, the Court provided a preliminary instruction and a final instruction to the jury that the attorneys’ opening statements were not evidence, and that the jury was not to consider the opening statements “as established facts.”
Questions about this case can be directed to Danielle Vols at (570) 825-6890 or email@example.com.
Lomuscio v. Cole
Pennsylvania Superior Court
2023 Pa. Super. 9
Decided: January 19, 2023
An Order directing the disclosure of marital communications was not a collateral order for purposes of appeal as the marriage had ended.
A Trial Court ordered the wife of a decedent-defendant, individually and administratrix of the estate of her husband, to divulge communications she had with her husband before he died over the wife’s objection that the communication was protected by the spousal communication privilege. The wife appealed the Trial Court’s Order compelling her testimony as a collateral order.
While noting that the spousal-communication survives the marriage, the Superior Court quashed the appeal, finding that it did not meet the second prong, “where the right involved is too important to be denied review” and third prong “the question presented is such that if review is postponed until final judgment in the case, the claim will be irreparably lost” of the collateral order doctrine. Given that the statutory purpose of the spousal communication privilege is to protect and promote a marriage from the discord that might arise after disclosing private conversations, the purpose does not exist following the death of a spouse. Accordingly, the Superior Court held that the appeal was not collateral and quashed the appeal.
Questions about this case can be directed to Brook Dirlam at (412) 926-1438 or firstname.lastname@example.org.
1500 SPE, LP v. George D. Boyer & Sons, Inc.
Dauphin County Court of Common Pleas
No. 2018 CV 5731 CV
Decided: February 2, 2023
Complaint filed by partnership stricken as a nullity and dismissed with prejudice due to non-compliance with Pa.R.Civ.P. 2127.
Plaintiff, a partnership, instituted an action via Writ of Summons in the partnership name only. On the same docket, Plaintiff later tried to amend by filing a Complaint in the name of its partners, trading as the partnership. The purpose of the amended caption was to comply with Rule 2127 of the Pennsylvania Rules of Civil Procedure, which requires that a partnership prosecute an action “in the names of the then partners trading in the firm name.”
Following Preliminary Objections, Plaintiff argued that the Amended Partnership Act, 15 Pa.C.S. § 8620, permitted it to sue in its own name and that it could amend its pleading as a matter of right in response to Preliminary Objections. The court disagreed, holding that Section 8620 of the Amended Partnership Act is a procedural rule that conflicts with Rule 2127. The Court further found that the Rules of Civil Procedure must prevail based on Pa. Const. Art. V., §10(c), which grants the Pennsylvania Supreme Court the power to prescribe general rules governing procedure in all Pennsylvania courts.
The Court held that the Writ of Summons was a nullity, as the proper parties did not initiate suit. Moreover, Plaintiff’s later attempt to amend the pleadings was unavailing, as the initial Writ was a nullity and could not be amended. Furthermore, by the time the amendment occurred, the statute of limitations had expired.
TT&H Attorneys Scott McCarroll and Shannon Harkins represented the Defendant in this case. Questions about this case can be directed to Scott at (717) 237-7131 or email@example.com, or to Shannon at (717) 237-7147 or firstname.lastname@example.org.