S. Mack v. PSP, & Inservco Ins. Svcs., Inc. ( 2022 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Stephanie Mack, as :
Administratrix of the Estate :
of Decedent, Martin Mack, Individually:
and on behalf of a Class of Similarly :
Situated Individuals, :
Petitioner :
:
v. :
:
Pennsylvania State Police, and :
Inservco Insurance Services, Inc., :
Respondents :
:
v. :
:
Charles Kannebecker, Esquire and :
Law Offices of Charles Kannebecker, : No. 9 M.D. 2021
Additional Respondents : Submitted: June 23, 2022
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE LORI A. DUMAS, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
JUDGE COVEY FILED: July 28, 2022
Before the Court are: (1) Martin Mack’s (Mack)1, individually and on
behalf of a class of similarly situated individuals (Petitioner), Preliminary Objections
to Inservco Insurance Services, Inc.’s (Inservco) Preliminary Objections to
Petitioner’s First Amended Class Action Complaint (Amended Complaint); (2)
1
On May 18, 2022, a Praecipe for Substitution Pursuant to Pennsylvania Rule of Civil
Procedure 2352 was filed by Stephanie Mack, as the surviving spouse of Decedent, Martin Mack,
and as Administratrix of the Estate of Decedent, Martin Mack. The caption in this matter has been
changed to reflect this substitution.
Petitioner’s Preliminary Objections to the Pennsylvania State Police’s (PSP)
Preliminary Objections to Petitioner’s Amended Complaint; (3) Charles
Kannebecker, Esquire’s (Kannebecker), and Law Offices of Charles Kannebecker’s
(Law Offices) (collectively, Additional Respondents) Preliminary Objections to
Inservco’s Joinder Complaint; and (4) Inservco’s Motion to Disqualify Additional
Respondents as Counsel for Petitioner (Motion to Disqualify).
On November 30, 2018, Petitioner was acting in the course and scope
of his employment as a PSP trooper when he was involved in a motor vehicle
accident. Specifically, a vehicle struck Petitioner’s police vehicle. Petitioner
sustained serious bodily injury caused solely by the underlying tortfeasor’s alleged
negligence and carelessness. Thereafter, Petitioner filed a civil action against the
tortfeasor in Common Pleas Court,2 seeking recovery of damages in connection with
the serious bodily injuries he sustained in the November 30, 2018 motor vehicle
accident. Petitioner settled the tort action against the underlying tortfeasor.
Following the November 30, 2018 motor vehicle accident, Petitioner
also filed a claim against PSP seeking benefits pursuant to what is commonly
referred to as the Heart and Lung (H&L) Act (H&L Act)3 for the injuries he sustained
in the accident. Inservco and PSP (collectively, Respondents) issued a Notice of
Compensation Payable acknowledging their obligation to pay H&L benefits to
Petitioner and thereafter paid Petitioner H&L benefits.
By March 19, 2020 letter (Letter), Respondents’ counsel, Diane Lee
Newman, Esquire (Attorney Newman), asserted a lien for the H&L benefits paid to
Petitioner. The Letter provided:
As you are aware, I represent [PSP], and its third-party
administrator, [Inservco], in connection with the above-
2
The county in which the action was filed does not appear in the pleadings.
3
Act of June 28, 1935, P.L. 477, as amended, 53 P.S. §§ 637-638.
2
captioned matter. Please mark your file accordingly and
direct all future correspondence to my attention.
You previously advised me that you are handling
[Petitioner’s] third-party action in connection with his
November 30, 2018[] work injury. As you know, pursuant
to Section 319 of the Pennsylvania Workers’
Compensation Act[4] [(WC Act)], . . . [PSP] maintains a
subrogation lien against any settlements and/or verdicts
obtained by [Petitioner] in his third-party action. Please
be advised that, as of today, March 19, 2020, [PSP’s] total
subrogation lien is $12,633.48 in connection with
[Petitioner’s] work[-]injury claim.
Amended Complaint Ex. A. “[Petitioner], based on [Respondents’] demands,
thereafter made payment of $20,826.58 to [Inservco], for the benefit of [PSP], on
the basis of the assertion of the lien [for] [H&L] benefits paid.” Amended Complaint
¶ 28.
On January 15, 2021, Petitioner filed a Petition for Review in the nature
of a Class Action Complaint against PSP in this Court’s original jurisdiction. On
March 2, 2021, Petitioner and PSP filed a stipulation, wherein PSP consented to
Petitioner filing the Amended Complaint to include Inservco as a respondent. On
March 8, 2021, Petitioner filed the Amended Complaint, seeking inter alia,
that the Court enter an Order:
(a) [d]etermining that this action is a proper class action,
certifying the named [Petitioner] as class representative[]
for the classes alleged herein and [Petitioner’s] counsel as
Class Counsel;
(b) declaring that [Respondents] may not assert a lien[,]
subrogation right and/or reimbursement demand against
the proceeds of any personal injury recovery for any [H&L
benefits] paid . . . for injuries sustained in motor vehicle
accidents and other injury-causing incidents in the course
and scope of employment[;]
4
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 671.
3
(c) declaring that [Petitioner] and members of the putative
class are entitled to reimbursement for all monies paid to
[Respondents] following the assertion of the lien,
subrogation right and/or reimbursement demand against
the proceeds of any personal injury recovery for any
[H&L] benefits paid . . . for injuries sustained in motor
vehicle accidents and other injury-causing incidents in the
course and scope of employment.
Amended Complaint at 20.5 In addition, Petitioner seeks a Court order “requiring
[Respondents] (and/or prior third[-]party administrators) to reimburse [Petitioner]
and members of the putative class, of all monies obtained through the illegally [sic]
and unlawful assertion of the lien, subrogation right and/or reimbursement demand
for [H&L b]enefits paid[,]” Amended Complaint at 24; attorney’s fees and costs;
restitution; actual, punitive, and treble damages; and pre- and post-judgment interest.
On April 7, 2021, PSP filed Preliminary Objections to the Amended
Complaint. On April 8, 2021, Inservco filed Preliminary Objections to the Amended
Complaint. Also on April 8, 2021, Inservco filed the Joinder Complaint against the
Additional Respondents. On April 18, 2021, Inservco filed its Motion to Disqualify.
On April 28, 2021, Petitioner filed Preliminary Objections to Inservco’s Preliminary
Objections to the Amended Complaint. On May 7, 2021, Petitioner filed
Preliminary Objections to PSP’s Preliminary Objections to the Amended Complaint.
Also on May 7, 2021, Additional Respondents filed Preliminary Objections to the
Joinder Complaint. By June 25, 2021 Order, this Court issued a briefing schedule.
On November 9, 2021, this Court listed for oral argument: Petitioner’s Preliminary
Objections to Inservco’s Preliminary Objections to the Amended Complaint;
Petitioner’s Preliminary Objections to PSP’s Preliminary Objections to the
Amended Complaint; Additional Respondents’ Preliminary Objections to Inservco’s
5
Because the Amended Complaint’s pages are not numbered, the page numbers referenced
in the Opinion reflect electronic pagination.
4
Joinder Complaint; and Inservco’s Motion to Disqualify.6 The above-stated
Preliminary Objections and Motion to Disqualify are now ripe for disposition.
In ruling on preliminary objections, we must accept as true
all well-pleaded material allegations in the [complaint], as
well as all inferences reasonably deduced therefrom. The
Court need not accept as true conclusions of law,
unwarranted inferences from facts, argumentative
allegations, or expressions of opinion. In order to sustain
preliminary objections, it must appear with certainty that
the law will not permit recovery, and any doubt should be
resolved by a refusal to sustain them.
A preliminary objection in the nature of a demurrer admits
every well-pleaded fact in the complaint and all inferences
reasonably deducible therefrom. It tests the legal
sufficiency of the challenged pleadings and will be
sustained only in cases where the pleader has clearly failed
to state a claim for which relief can be granted. When
ruling on a demurrer, a court must confine its analysis to
the complaint.
Torres v. Beard, 997 A.2d 1242, 1245 (Pa. Cmwlth. 2010) (emphasis added;
citations omitted). “‘[C]ourts reviewing preliminary objections may not only
consider the facts pled in the complaint, but also any documents or exhibits attached
to it.’ Allen v. Dep’t of Corr., 103 A.3d 365, 369 (Pa. Cmwlth. 2014).” Foxe v. Pa.
Dep’t of Corr., 214 A.3d 308, 311 n.1 (Pa. Cmwlth. 2019).
I. Petitioner’s Preliminary Objections to Inservco’s Preliminary
Objections to the Amended Complaint7
Petitioner objects to Inservco’s Preliminary Objections, asserting: (1)
Inservco failed to conform to law, or rule of court, by asserting facts not of record
6
By June 2, 2022 Order, this Court denied Petitioner’s Application for Continuance of
Oral Argument, and directed that this matter be decided on the briefs previously filed.
7
Petitioner has requested that this Court dispose of Petitioner’s Preliminary Objections to
Inservco’s and PSP’s Preliminary Objections before requiring Petitioner to respond to Inservco’s
and PSP’s Preliminary Objections to the Amended Complaint. This Court hereby grants
Petitioner’s request.
5
and not providing a verification thereto, as required by Pennsylvania Rule of Civil
Procedure (Rule) 1024; and (2) Inservco’s second and seventh Preliminary
Objections constitute speaking demurrers. Inservco rejoins: (1) Inservco did not
make allegations of fact not of record in the pleading, and no verification was
required under Rule 1024; and (2) Inservco’s second and seventh Preliminary
Objections do not constitute speaking demurrers.
Verification
Rule 1024 provides, in relevant part:
(a) Every pleading containing an averment of fact not
appearing of record in the action . . . shall state that the
averment . . . is true upon the signer’s personal knowledge
or information and belief and shall be verified. The signer
need not aver the source of the information or expectation
of ability to prove the averment . . . at the trial. A pleading
may be verified upon personal knowledge as to a part and
upon information and belief as to the remainder.
....
(c) The verification shall be made by one or more of the
parties filing the pleading unless all the parties (1) lack
sufficient knowledge or information, or (2) are outside the
jurisdiction of the court and the verification of none of
them can be obtained within the time allowed for filing the
pleading. In such cases, the verification may be made by
any person having sufficient knowledge or information
and belief and shall set forth the source of the person’s
information as to matters not stated upon his or her own
knowledge and the reason why the verification is not made
by a party.
Pa.R.Civ.P. 1024.
Petitioner first argues that in a footnote to paragraph two of Inservco’s
Preliminary Objections, Inservco averred: “[Petitioner] paid $8,191.84 in
reimbursement of the $20,826.58 lien asserted by counsel for PSP in the [w]orker[s’]
6
[c]ompensation matter. [Petitioner] waived any and all objections to payments his
same attorney voluntarily made as subrogation for monies paid to him pursuant to
the [WC] Act[.]” Inservco Prelim. Objs. ¶ 2 n.1. Petitioner maintains that Inservco’s
non-record allegation required it to provide a verification and, because Inservco did
not provide one, the averment should be stricken.
Inservco rejoins that this averment is consistent with paragraph 28 of
the Amended Complaint, which provides: “[Petitioner], based on [Respondents’]
demands, thereafter made payment of $20,826.58 to [Inservco], for the benefit of
[PSP], on the basis of the assertion of the lien of [H&L] benefits paid.” Amended
Complaint ¶ 28. Inservco further contends that its waiver averment is “the
substantive issue in question and [thus, it] do[es] not view [] preliminary objections
that dispute [Petitioner’s] position as relying upon information not contained in the
[Amended Complaint].” Chambers Dev. Co., Inc. v. Dep’t of Env’t Res., 532 A.2d
928, 929 (Pa. Cmwlth. 1987). This Court disagrees with both assertions.
Inservco’s averment that Petitioner paid Inservco $8,191.84 is
completely contrary to Petitioner’s averment that he paid Inservco $20,826.28.
Further, the substantive issue is not whether Petitioner voluntarily paid monies to
Inservco but, rather, whether Respondents improperly, illegally, and unlawfully
demanded said payment. Under the circumstances, a verification was required to
support Inservco’s averment and, because it was not provided,8 Petitioner’s
Preliminary Objection thereto is sustained and the footnote to paragraph two of
Inservco’s Preliminary Objections is stricken.
8
Although Inservco could have asked this Court for leave to file amended preliminary
objections containing a verification, see, e.g., Allentown Sch. Dist. v. Dep’t of Educ., 782 A.2d 635(Pa. Cmwlth. 2001), it did not do so.
7
Petitioner further contends that a verification was required because
averments 20, 27, and 64 of Inservco’s Preliminary Objections also contain facts
outside the record. The specific averments provide:
20. Inservco did not issue or direct the March 19, 2020
[L]etter purporting to assert a subrogation lien.
Rather, [Petitioner’s] own [] Amended Complaint
identifies the author as [Attorney Newman], an attorney
with offices separate and apart from PSP and Inservco.
See [Amended Complaint, Ex. A] ¶¶ 26 and 27.
....
27. Here, [Petitioner] again failed to demonstrate any
direct, substantial[,] and present interest or controversy on
its part against Inservco, wh[ich] had nothing to do with
making the decision on coverage or subrogation.
Inservco was not the insurer, issuer[,] or the
underwriter of the policy. Thus, there is no actual
controversy with respect to Inservco. “The events which
might bring these parties into actual conflict are thus too
remote to justify our resolution of this dispute by
declaratory judgment.” S[.] Whitehall T[wp. v. Dep’t of
Transp.], . . . 475 A.2d [166,] 169 [(Pa. Cmwlth. 1984)].
....
64. [Petitioner] again cites to only a March 19, 2020
[L]etter from an attorney, not Inservco and not at the
direction of Inservco, as the basis for his claims. [See
Amended Complaint] ¶ 26.
Inservco Prelim. Objs. ¶¶ 20, 27, 64 (emphasis added).
Inservco rejoins that its allegations in paragraphs 20 and 64 of its
Preliminary Objections do not rely upon facts outside of the record. Specifically,
Inservco asserts that paragraphs 20 and 64 are based upon the of-record March 19,
2020 Letter attached as Exhibit A to Petitioner’s Amended Complaint, upon which
Petitioner relies. Inservco proclaims that the Amended Complaint acknowledges
that the Letter was sent by third-party Attorney Newman, not Inservco. See
8
Amended Complaint ¶ 118. Inservco maintains that the Amended Complaint thus
attributes the statements made in the Letter to third-party Attorney Newman, not
Inservco, which made no statements and certainly none of a fraudulent nature.
Inservco further retorts that paragraph 27 of its Preliminary Objections
also did not allege facts not previously of record. See Amended Complaint ¶ 13.
Inservco claims that Petitioner acknowledged in the Amended Complaint that
Inservco was only the third-party claims administrator for PSP; thus based on the
facts pled, Inservco was not an insurer, not PSP, and not the third-party lawyer who
issued the Letter, and Inservco does not make coverage or subrogation decisions.
See Amended Complaint ¶ 11. This Court disagrees.
Paragraphs 11, 13, and 118 of the Amended Complaint provide:
11. At all times material hereto . . . Inservco . . . acted
as the authorized agent, servant, workman or
employee of [PSP] handling and adjusting claims of,
inter alia, [PSP] employees injured in motor vehicle
accidents and other injury-causing incidents while in the
course and scope of their employment.
....
13. Further . . . Inservco . . . is a business entity authorized
to[,] and conducting business in the Commonwealth of
Pennsylvania [(Pennsylvania)], and regularly conducts
business in Pennsylvania generally and in Pike County
specifically. In that regard. . . . Inservco . . . undertakes
subrogation actions against the following who are
injured in the performance of their duties:
• Pennsylvania State Troopers;
• Any policeman of any county;
• Any policeman of any city;
• Any policeman of any borough;
• Any policeman of any town or township;
9
• Any sheriff or deputy sheriff; and
• Officers of the Pennsylvania Liquor Control Board.
. . . Inservco . . . has already regularly done so, and
continues to regularly do so, to assert subrogation liens
against these injured law enforcement officers who
received [w]orkers[’] [c]ompensation or [H&L] benefits,
which regularly included officers in Pike County.
....
118. By way of example of [Respondents’] actions and not
in limitation, by [L]etter dated March 19, 2020, . . .
[Attorney] Newman, counsel for [Respondents] wrote
to counsel for [Petitioner] asserting a lien for the monies
paid to [Petitioner] pursuant to the [H&L] Act. A true and
correct copy of the March 19, 2020[] [L]etter[,] is attached
hereto and marked Exhibit “A”.
Amended Complaint ¶¶ 11, 13, 118 (emphasis added).
Inservco’s averments in its Preliminary Objection paragraphs 20, 27,
and 64 are contrary to the allegations in Amended Complaint paragraphs 11, 13, and
118, as such they are “fact[s] not appearing of record.” Pa.R.Civ.P. 1024.
Accordingly, verification of those facts was required. Because no verification was
included, Petitioner’s Preliminary Objection on that basis is sustained, and
paragraphs 20, 27, and 64 of Inservco’s Preliminary Objections are stricken.
Speaking Demurrers
Inservco’s second and seventh “[P]reliminary [O]bjections are in the
nature of demurrers, and the attempt to introduce evidence in support of either such
objection would render it an impermissible ‘speaking demurrer.’” Pa. Indep. Oil &
Gas Ass’n v. Pa. One Call Sys., Inc., 245 A.3d 362, 366 (Pa. Cmwlth. 2021) (quoting
Minor v. Kraynak, 155 A.3d 114, 124 (Pa. Cmwlth. 2017)).
10
This Court has explained:
[A] court cannot consider matters collateral to the
complaint, but must limit itself to such matters as appear
therein, and an effort to supply facts missing from the
objectionable pleading makes the preliminary objection in
the nature of a demurrer an impermissible “speaking
demurrer.” Stilp v. Commonwealth, 910 A.2d 775[, 791]
(Pa. Cmwlth. 2006); see also Regal Indus[.] Corp[.] v.
Crum & Forster, Inc., 890 A.2d 395, 398 (Pa. Super.
2005) (defining a speaking demurrer as one which requires
the aid of a fact not appearing on the face of the pleading
being objected to and noting that a speaking demurrer
cannot be considered in sustaining preliminary
objections).
Mobley v. Coleman, 65 A.3d 1048, 1053 (Pa. Cmwlth. 2013).
Petitioner argues that Inservco’s Preliminary Objection to Amended
Complaint Count I, i.e., Objection to Declaratory Judgment and Motion to Strike
Count I, must be stricken as an improper speaking demurrer. Petitioner contends
that the essence of Inservco’s demurrer to Count I is that a declaratory judgment
cannot be entered because there is no case or controversy between Petitioner and
Inservco. In support of that demurrer, Inservco pleads: Inservco did not issue or
direct the March 19, 2020 Letter asserting a subrogation lien; Attorney Newman was
not acting at Inservco’s direction; and Inservco had nothing to do with the decision
to pursue subrogation. See Inservco Prelim. Objs. ¶¶ 20, 23, 24, 27. Petitioner
asserts that, to grant Inservco’s Preliminary Objection to Count I, this Court would
have to assume and rely upon the existence of the aforementioned facts which are
not pled in the Amended Complaint.
Moreover, Petitioner claims that the aforementioned facts expressly
contradict the following facts pled in the Amended Complaint: Inservco was the
agent and acted on behalf of PSP; Attorney Newman was counsel for both PSP and
Inservco; Attorney Newman acted on behalf of PSP and Inservco; Attorney Newman
11
asserted a subrogation lien on behalf of PSP and Inservco; and Inservco retained a
portion of the money Inservco collected from Petitioner. See Amended Complaint
¶¶ 11, 13, 29, and 118. Petitioner declares that, because sustaining Inservco’s second
Preliminary Objection requires this Court to assume the existence of a fact not
already pleaded, Inservco’s second Preliminary Objection constitutes a speaking
demurrer and must be stricken.
Inservco rejoins that Petitioner’s Preliminary Objections to Inservco’s
second Preliminary Objection to Declaratory Judgment and Motion to Strike Count
I should be overruled. Inservco asserts that its Preliminary Objection alleges that
Inservco did not issue nor direct the March 19, 2020 Letter purporting to assert a
subrogation lien, Inservco is not the insurer or underwriter, and does not make
coverage or subrogation decisions, and there is no actual controversy involving
Inservco as is required to state a valid declaratory judgment claim. Inservco declares
that its allegations do not require the aid of a fact not appearing on the face of the
pleading, but rather rely upon the Amended Complaint’s factual allegations. This
Court disagrees.
Inservco specifically contends that Petitioner’s allegations regarding
any relationship between Inservco and Attorney Newman were made without
knowledge and without pleading sufficient supporting facts, and are merely
speculation, conclusions, argument, and unwarranted inferences from the facts that
this Court need not accept as true and, thus, do not conflict with Inservco’s
allegations. However, the Letter clearly supports Petitioner’s allegations regarding
a relationship between Inservco and Attorney Newman. See Amended Complaint
Ex. 2. Attorney Newman began the Letter stating that she represents PSP and
Inservco, and thereafter notified Petitioner of the subrogation lien on behalf of PSP.
As Inservco is PSP’s third-party administrator, and Attorney Newman
represented PSP and Inservco, it is reasonable to infer that Inservco makes coverage
12
and/or subrogation decisions, it directed the issuance of the March 19, 2020 Letter
purporting to assert a subrogation lien, and there is an actual controversy involving
Inservco as is necessary to state a valid declaratory judgment claim. See Pa. State
Police v. Workers’ Comp. Appeal Bd. (Bushta), 184 A.3d 958 (Pa. 2018) (because
PSP is self-insured, Inservco, its third-party administrator, paid its workers’
compensation benefits); see also Risius v. Workers’ Comp. Appeal Bd. (Penn State
Univ.), 922 A.2d 72, 75 (Pa. Cmwlth. 2007) (“[A]s stated in Brown v. Travelers
Ins[.] Co[.], . . . 254 A.2d 27 ([Pa.] 1969), although Section 319 of the [WC] Act
does not include the term insurance carrier, if an employer has an insurance carrier,
such carrier would have subrogation rights.”); Dep’t of Transp., Bureau of Driver
Licensing v. Yandrich, 529 A.2d 1210, 1211-12 (Pa. Cmwlth. 1987) (“As the agent
of his client, of course, acts or statements made by an attorney, in the course of
employment and within the scope of the attorney’s authority, are binding on the
client.”).
Because in its second Preliminary Objection, Inservco alleges that it did
not issue nor direct the March 19, 2020 Letter purporting to assert a subrogation lien;
is not the insurer, or underwriter, and does not make coverage or subrogation
decisions; there is no actual controversy with respect to Inservco as is necessary to
state a valid declaratory judgment claim; and these allegations contradict factual
allegations in the Amended Complaint, thereby requiring the aid of a fact not
appearing on the face of the pleading, “[Inservco’s second Preliminary Objection is]
an impermissible ‘speaking demurrer.’” Pa. Indep. Oil & Gas Ass’n, 245 A.3d at
399 (quoting Minor, 155 A.3d at 124). Accordingly, Petitioner’s Preliminary
Objection to Inservco’s second Preliminary Objection is sustained, and Inservco’s
second Preliminary Objection is stricken.
Petitioner further argues that Inservco’s seventh Preliminary Objection,
i.e., Objection and Motion to Strike Count VI and Bar Claims of Fraudulent
13
Misrepresentation and/or Fraudulent Concealment, must be stricken as an improper
speaking demurrer. Petitioner contends that the essence of Inservco’s demurrer to
Amended Complaint Count VI is that Inservco did not make any representation to
Petitioner, let alone “any misrepresentations.” Inservco Prelim. Objs. ¶ 63; see also
Inservco Prelim. Objs. ¶ 64 (Petitioner “cites to only [the] March 19, 2020 [L]etter
from [] [A]ttorney [Newman], not Inservco.”). Petitioner asserts that, to sustain
Inservco’s seventh Preliminary Objection, this Court would have to assume the truth
of that fact, which does not appear anywhere in the Amended Complaint and is
expressly contradicted by the Amended Complaint’s other averments.
Inservco rejoins that because its averments do not require the aid of a
fact not appearing on the face of the Amended Complaint, and to the extent
Inservco’s seventh Preliminary Objection also contains “legal conclusions and
opinions” which do not “attempt to interpolate facts not of record into the record[,]”
they are not speaking demurrers. Buehl v. Horn, 728 A.2d 973, 976 (Pa. Cmwlth.
1999). This Court agrees.
In its seventh Preliminary Objection, Inservco expressly averred:
63. [Petitioner], however, fails to state with specificity the
particularities regarding any misrepresentations allegedly
made by Inservco and fails to state with specificity as to
how, or in what manner, the alleged misrepresentations of
Inservco were fraudulent.
64. [Petitioner] again cites to only a March 19, 2020
[L]etter from an attorney, not Inservco and not at the
direction of Inservco, as the basis for his claims.
[Amended Complaint] ¶ 26.
Inservco Prelim. Objs. ¶¶ 63-64 (footnote omitted). If Inservco can show with
certainty that Petitioner cannot establish the elements of misrepresentation, this
Court can grant Inservco’s Preliminary Objection to Count VI, whether or not this
Court assumes and/or relies upon the existence of the aforementioned facts which
14
do not appear in the Amended Complaint. Because these averments do not require
the aid of a fact not appearing on the face of the Amended Complaint, and are merely
legal conclusions and opinions, they are not speaking demurrers. See Mobley; Buehl.
Accordingly, Petitioner’s Preliminary Objection to Inservco’s seventh Preliminary
Objection is overruled.
II. Petitioner’s Preliminary Objections to PSP’s Preliminary Objections
to the Amended Complaint
Petitioner objects to PSP’s Preliminary Objections, asserting: (1) PSP
failed to conform to law, or rule of court, by raising issues of fact with respect to the
class action allegations in violation of Rule 1705; (2) PSP’s Preliminary Objections
include scandalous or impertinent matter; (3) PSP failed to conform to law, or rule
of court, by asserting facts not of record and by not providing a verification thereto
as required by Rule 1024; (4) legal insufficiency (demurrer) as to PSP’s ninth
Preliminary Objection based on the doctrine of laches; and (5) PSP’s second, eighth,
and tenth Preliminary Objections constitute speaking demurrers.
PSP rejoins that PSP did not need a signed verification to appropriately
submit its Preliminary Objections to the Amended Complaint, and its second and
eighth Preliminary Objections are not speaking demurrers.9
Rule 1705
Rule 1705 provides, in relevant part: “Issues of fact with respect to the
[c]lass [a]ction [a]llegations may not be raised by preliminary objections[,] but shall
be raised by the answer.” Pa.R.Civ.P. 1705. Here, Petitioner alleged in the
Amended Complaint: “[Petitioner] has the time and resources to prosecute this
9
Although PSP filed an Answer to Petitioner’s Preliminary Objections to PSP’s
Preliminary Objections, wherein it denied all of Petitioner’s Preliminary Objections to its
Preliminary Objections, PSP only addressed two of them in its brief.
15
action and has retained qualified counsel who have [sic] had experience in matters
involving the rights of insureds and both state and federal court litigation.
[Petitioner] intends to prosecute this action for the benefit of the [c]lass.” Amended
Complaint ¶ 53 (emphasis added). PSP avers in its Preliminary Objections: “Class
counsel in this case, [Kannebecker,] is not competent to represent [Petitioner] in this
matter because he committed legal malpractice against [Mack] in the events
preceding, and leading up to, this litigation.” PSP Prelim. Objs. ¶ 18. Because
“[i]ssues of fact with respect to class action allegations may not be raised by
preliminary objections[,] but instead should be set forth in an answer[,]” the
preliminary objection thereto is sustained and paragraph 18 of PSP’s Preliminary
Objections is stricken. Kempf v. Dep’t of Pub. Welfare, 471 A.2d 125, 128 (Pa.
Cmwlth. 1984).
Scandalous or Impertinent Matter
Rule 1028(a) provides: “Preliminary objections may be filed by any
party to any pleading and are limited to the following grounds: . . . . (2) failure of a
pleading to conform to law or rule of court or inclusion of scandalous or impertinent
matter[.]” Pa.R.Civ.P. 1028(a). Petitioner contends the above-quoted paragraph 18
of PSP’s Preliminary Objections includes scandalous or impertinent matter.
However, because this Court has already stricken paragraph 18 of PSP’s Preliminary
Objections, Petitioner’s Preliminary Objection on that basis is moot.
Verification
Petitioner first argues that the above-quoted paragraph 18 of PSP’s
Preliminary Objections contains facts outside of the record and, therefore, requires
a verification. Because this Court has already stricken paragraph 18 of PSP’s
Preliminary Objections, this Preliminary Objection thereto is moot.
16
Petitioner next declares that in paragraph 62 of PSP’s Preliminary
Objections, PSP averred: “[Petitioner] failed to pursue his appropriate available
remedy to challenge such subrogation of the [WC] Act through the appropriate
administrative process with the [w]orkers’ [c]ompensation appeals system.” PSP
Prelim. Objs. ¶ 62. Petitioner asserts that because this allegation contains a fact not
appearing of record, PSP was required to provide a verification as to this assertion.10
This Court agrees. Accordingly, because a verification was required for this
averment, and was not provided,11 Petitioner’s Preliminary Objection thereto is
sustained, and paragraph 62 of PSP’s Preliminary Objections is stricken.
Petitioner further contends that paragraphs 24, 67, and 68 of PSP’s
Preliminary Objections require a verification because each paragraph contains
allegations that PSP paid workers’ compensation benefits and/or denies that PSP
paid H&L benefits. Petitioner maintains that he expressly alleged in Amended
Complaint paragraph 24 that PSP paid Petitioner H&L benefits, notwithstanding
PSP’s Letter demanding reimbursement characterizing their payments as workers’
compensation benefits. PSP rejoins that Amended Complaint paragraphs 118, 120,
and Exhibit A (the Letter) contain facts upon which paragraphs 24, 67, and 68 of
PSP’s Preliminary Objections are based.
PSP’s Preliminary Objections provide, in relevant part:
24. In this case, PSP maintained and preserved its right to
subrogation of amounts paid to [Petitioner] under the [WC
Act], as pr[e]scribed by Section 1720 [of the Vehicle
Code, 75 Pa.C.S. § 1720].
....
10
PSP did not respond to this assertion.
11
Although PSP could have asked this Court for leave to file amended preliminary
objections containing said verification, see, e.g., Allentown Sch. Dist., it did not do so.
17
67. PSP, through contracted counsel, sent [Petitioner’s]
counsel a [L]etter correspondence on March 19, 2020, in
an effort to exercise its subrogation rights for monies paid
under the [WC Act] - not the [H&L] Act - as evidenced by
Exhibit A to the [Amended] Complaint.
68. In this case, PSP exercised its right of subrogation of
monies paid to [Petitioner] under the [WC Act] via [the
L]etter sent on March 19, 2020.
PSP Prelim. Objs. ¶¶ 24, 67, 68.
In the Amended Complaint, Petitioner alleged:
118. By way of example of [Respondents’] actions and not
in limitation, by [L]etter dated March 19, 2020, . . .
[Attorney] Newman, counsel for [Respondents] wrote to
counsel for [Petitioner] asserting a lien for the monies paid
to [Petitioner] pursuant to the [H&L] Act. A true and
correct copy of the March 19, 2020[] [L]etter[,] is attached
hereto and marked Exhibit “A”.
....
120. [Petitioner], based on [Respondents’] demands,
thereafter made payment of $20,826.58 to [Inservco], for
the benefit of [PSP], on the basis of the assertion of the
lien of [H&L] benefits paid.
Amended Complaint ¶¶ 118, 120. The Letter, which is an exhibit to the Amended
Complaint, expressly referenced “Section 319 of the [WC Act.]” Amended
Complaint Ex. A. Because the Letter specifically referred to a subrogation lien
pursuant to the WC Act, paragraphs 24, 67, and 68 of PSP’s Preliminary Objections
do not contain facts outside of the record. Accordingly, because a verification was
not required, this Preliminary Objection is overruled.
Finally, Petitioner argues that paragraphs 75 and 76 of PSP’s
Preliminary Objections require a verification because both assert that Petitioner
18
failed to object either at the time of receipt of the Letter or at the time of payment.12
Specifically, PSP alleges in its Preliminary Objections:
75. [Petitioner] acknowledged that he made a payment to
[Respondents], without objection, in response to the
March 19, 2020 subrogation [L]etter. [Amended
[13]
Complaint] ¶ 28.
76. [Petitioner] failed to object to this payment of
[Respondents’] subrogation claim at any time - either at
the time of receipt of the letter or at [the] time of payment.
PSP Prelim. Objs. ¶¶ 75, 76. Because it cannot reasonably be inferred from
Petitioner’s averment that he paid the lien without objection, a verification was
required for the above-quoted allegations. Accordingly, because a verification was
required, but was not provided, Petitioner’s Preliminary Objection is sustained, and
paragraphs 75 and 76 of PSP’s Preliminary Objections are stricken.
Laches
Petitioner argues that in PSP’s ninth Preliminary Objection, it alleges
Petitioner’s Amended Complaint must be dismissed under the doctrine of laches.
Petitioner contends that “laches is purely an equitable doctrine which cannot be
asserted in an action at law.”14 Graybill v. Juniata Cnty. Sch. Dist., 347 A.2d 524,
525 (Pa. Cmwlth. 1975); see also Christiansen v. Ely, 838 A.2d 630, 638 (Pa. 2003)
(“The doctrine of laches is an equitable doctrine[]” and not a defense available in
actions at law.) (quoting Roboski v. Fink, 669 A.2d 1017, 1017 (Pa. Super. 1996)).
Accordingly, because this is an action at law, the preliminary objection is sustained,
and PSP’s ninth Preliminary Objection is stricken.
12
PSP did not respond to this argument.
13
Paragraph 28 of the Amended Complaint provides: “[Petitioner], based on
[Respondents’] demands, thereafter made payment of $20,826.58 to [Inservco], for the benefit of
[PSP], on the basis of the assertion of the lien of [H&L] benefits paid.” Amended Complaint ¶ 28.
14
PSP did not respond to this argument.
19
Speaking Demurrers
Petitioner first proclaims that sustaining PSP’s second and eighth
Preliminary Objections requires the aid of facts not appearing on the face of the
Amended Complaint and alleges and/or assumes the existence of facts not already
pled. Specifically, Petitioner declares that PSP’s second and eighth Preliminary
Objections require that this Court assume, contrary to Petitioner’s pleadings, that
Petitioner received workers’ compensation benefits rather than H&L benefits. PSP
rejoins that Petitioner made several factual averments concerning the Letter, i.e.,
Amended Complaint Exhibit A, and attached it to his pleading. As such, any and all
facts raised therein, or which could be reasonably inferred therefrom, are proper for
PSP to rely upon in the filing of its preliminary objections. Thus, PSP maintains that
its second and eighth Preliminary Objections are proper and are not speaking
demurrers.
PSP’s second Preliminary Objection is a demurrer based on the fact that
PSP did in fact have a right to subrogation based on any workers’ compensation
benefits paid to Petitioner, and PSP’s eighth Preliminary Objection is a demurrer
based on Petitioner’s failure to exhaust administrative remedies under the WC Act.
As stated above, the Letter attached to the Amended Complaint
expressly referenced “Section 319 of the [WC Act.]” Amended Complaint Ex. A.
Because the Letter specifically referred to a subrogation lien pursuant to the WC
Act, the references to workers’ compensation benefits Petitioner received and/or
available remedies under the WC Act do not require the aid of any facts not
appearing on the face of the Amended Complaint or the attachment thereto. Thus,
PSP’s second and eighth Preliminary Objections are not speaking demurrers. See
Mobley. Accordingly, Petitioner’s Preliminary Objection to PSP’s second and
eighth Preliminary Objections is overruled.
20
Petitioner further claims that PSP’s tenth Preliminary Objection
requires this Court to assume the fact that Petitioner did not object to the payment of
PSP’s subrogation lien and should grant its tenth Preliminary Objection on the basis
of that assumption.15 As stated above, because it cannot be reasonably inferred from
Petitioner’s averment that Petitioner paid the lien without objection, PSP’s tenth
Preliminary Objection “suppl[ies] facts missing from the [Amended Complaint]
[and thus] makes the preliminary objection . . . an impermissible ‘speaking
demurrer.’” Mobley, 65 A.3d at 1053 (quoting Stilp, 910 A.2d at 791). Accordingly,
Petitioner’s Preliminary Objection is sustained, and PSP’s tenth Preliminary
Objection is stricken.
III. Additional Respondents’ Preliminary Objections to Inservco’s Joinder
Complaint
Additional Respondents object to the Joinder Complaint, alleging: (1)
Inservco does not have standing to sue the Additional Respondents (demurrer); (2)
a demurrer to Count I - Negligence of Inservco’s Joinder Complaint; (3) a demurrer
to Count II - Breach of Contract of Inservco’s Joinder Complaint; (4) a demurrer to
Count III - Breach of Fiduciary Duty of Inservco’s Joinder Complaint; and (5)
Inservco’s allegations of punitive damages, misrepresentation, and intentional,
voluntary, willful, wanton, dishonest, fraudulent, deceitful, and reckless conduct
must be stricken. Inservco rejoins that Pennsylvania courts permit a third-party
action against a plaintiff’s attorney if the attorney’s breach of duty or other
obligations, rather than the joining defendant’s conduct, caused the plaintiff’s
alleged harm. See Somers v. Gross, 574 A.2d 1056 (Pa. Super. 1990); see also
Pa.R.Civ.P. 2252(a) (allowing joinder of a third party as an additional defendant on
15
PSP did not reply to this claim.
21
the basis that the joined party may be solely liable to the plaintiff on the underlying
cause of action).
Inservco maintains that its Joinder Complaint satisfies the requisites of
Rule 2252(a), as it alleges that Kannebecker, not Inservco, was the perpetrator of
Petitioner’s alleged injuries and is liable for Petitioner’s financial harm. Inservco
declares that its allegations against Kannebecker, which are based upon his advice
to pay or reimburse the subrogation lien, are undeniably related to Petitioner’s
original claim against Inservco for allegedly asserting and seeking payment thereof,
and to the financial loss caused by such payment. Inservco asserts that Petitioner’s
alleged harm arises from the same occurrences, regardless of the specific theories of
liability against Inservco and Kannebecker.
Standing
Rule 2252(a) provides, in relevant part:
Except as provided by Rule 1706.1, any party may join
as an additional defendant any person not a party to
the action who may be
(1) solely liable on the underlying cause of action
against the joining party, or
....
(2) liable to or with the joining party on any cause of action
arising out of the transaction or occurrence or series of
transactions or occurrences upon which the underlying
cause of action against the joining party is based.
....
The joinder of an additional defendant in a class action is
limited by Rule 1706.1 to the grounds set forth in that
rule.[16]
16
Rule 1706.1 states:
22
Pa.R.Civ.P. 2252(a) (emphasis added). “So long as the additional defendant’s
alleged liability is related to the original claim which plaintiff asserts against the
original defendant, the third[-]party complaint is within bounds.” Incollingo v.
Ewing, 282 A.2d 206, 221 (Pa. 1971);17 see also Gen. State Auth. v. Sutter Corp.,
452 A.2d 75 (Pa. Cmwlth. 1982); Gen. State Auth. v. Coleman Cable & Wire Co.,
377 A.2d 1291, 1293 (Pa. Cmwlth. 1977) (“This liberalization of the rules governing
joinder of additional defendants has resulted in the practice of permitting joinder
whenever the alleged liability of the additional defendant is related to the claim of
the original plaintiff.”); Somers, 574 A.2d at 1061 (“[Rule 2252(a)] permits this
joinder and we are not free to disregard the express language of the [R]ule.”).
Additional Respondents argue that Inservco’s Joinder Complaint does
not assert a claim in which it has a substantial, direct, and immediate interest.
Specifically, Additional Respondents assert that since Inservco’s claim is based on
Petitioner’s attorney-client relationship with Kannebecker, to which Inservco was
not a party, Inservco does not have an interest in Petitioner’s rights or remedies
Any defendant or additional defendant may only join as an
additional defendant any person not a party to the action, or may
assert a cross-claim against another party to the action, who may be
(1) solely liable on the plaintiff’s cause of action, or
(2) liable over to the joining party on the plaintiff’s cause of action,
or
(3) jointly or severally liable with the joining party on the plaintiff’s
cause of action.
Note: The right of joinder under Rule 1706.1 of an additional
defendant based upon liability “on the plaintiff’s cause of action” is
not as broad as the right under Rule 2252(a) governing the joinder
of additional defendants generally.
Pa.R.Civ.P. 1706.1 (emphasis added).
17
Incollingo was abrogated on other grounds by Kaczkowski v. Bolubasz, 421 A.2d 1027(Pa. 1980).
23
against Kannebecker arising from the relationship. Further, Additional Respondents
declare that Inservco does not have a direct interest in the resolution of any claims
based on Petitioner’s attorney-client relationship with Kannebecker. Inservco
rejoins that, rather than alleging that Kannebecker caused Inservco harm, the Joinder
Complaint alleges that Kannebecker’s conduct, not Inservco’s, caused Petitioner’s
harm. This Court agrees with Inservco.
Here, as in Somers,
[Inservco] filed a [J]oinder [C]omplaint in which [it]
sought to join [Petitioner’s] attorney, [Kannebecker], as an
[A]dditional [Respondent]. The [J]oinder [C]omplaint
alleged that [Petitioner] had in fact relied on the advice of
[his] attorney, not o[n] the [Letter], in regard to [the
payment of the subrogation lien]. Therefore, any loss
[Petitioner] had incurred as a result of [his payment of the
lien] was the result of [Petitioner’s] attorney’s [simple
and] professional negligence. The [J]oinder [C]omplaint
allege[s] that [Petitioner’s] attorney[, Kannebecker,] was
solely liable to [Petitioner] on the cause of action [he] had
pled in the[] [Amended] [C]omplaint. It did not allege that
[Petitioner’s] attorney[, Kannebecker,] was liable over to
[Inservco], nor did it allege that [Petitioner’s] attorney[,
Kannebecker,] was jointly or severally liable with
[Inservco].
Somers, 574 A.2d at 1057. Inservco’s claims directly relate to the cause of
Petitioner’s harm. Because “[Kannebecker’s] alleged liability is related to the
original claim which [Petitioner] asserts against [Inservco], the third[-]party
complaint is within bounds.” Incollingo, 282 A.2d at 221. Accordingly, Inservco
has standing, and Additional Respondents’ Preliminary Objection on that basis is
overruled.
Count I – Negligence
Additional Respondents declare that Inservco asserts both simple
negligence and professional negligence/malpractice against Kannebecker, and
24
Inservco cannot sustain either theory even if the factual averments in its Joinder
Complaint are accepted as true. Specifically, Additional Respondents assert that
because they did not owe Inservco any duty and/or were not in an attorney-client
relationship with Inservco, Inservco cannot make out its claims. Inservco retorts that
Additional Respondents again overlook the fact that the Joinder Complaint is based
on Petitioner’s claims, not Inservco’s claims.
In the Joinder Complaint, Inservco alleges that “[a]t all times material,
Kannebecker and/or Law Offices breached its/their duty of care to [Petitioner],
acting negligently, carelessly and/or recklessly[,]” Joinder Complaint ¶ 23, then
specifies the purported negligent conduct, see id. at (a)-(mm), and adds that, “[a]s a
direct and proximate result of the negligence, carelessness and [r]ecklessness of
Kannebecker and/or Law Offices, [Petitioner] suffered the alleged actual loss.”
Joinder Complaint ¶ 25.
Given the clear language of [Rule 2252(a)], and the
principle of broad construction which we are required to
apply, we find that the joinder sought by [Inservco] in the
instant case is unmistakably permitted by [Rule 2252(a)].
[Rule 2252(a)] permits joinder of any person “who may be
alone liable . . . on the cause of action declared upon by
the plaintiff . . . [.]” [Former Pa.R.Civ.P. 2252(a).18] This
is precisely the type of joinder sought by [Inservco] when
[it] sought to join [] attorney [Kannebecker] on the single
theory that he alone was liable to [Petitioner] for [simple
and] professional negligence which resulted in the asserted
18
According to the 1990 Comment thereto, present Rule 2252(a)
clearly sets forth the four bases for joinder in a more readable
fashion. These bases of joinder are (1) sole liability to the plaintiff,
(2) liability over to the defendant on the plaintiff’s cause of action,
(3) joint or several liability with the joining party on the plaintiff’s
cause of action and (4) liability to defendant on a cause of action
arising out of the transaction or occurrence upon which plaintiff’s
action is based.
Id.
25
harm to [Petitioner] . . . . Since the allegations of the
[J]oinder [C]omplaint do not include any allegation that []
attorney [Kannebecker] is liable to [Inservco], but only
that he is liable to [Petitioner], whether Pennsylvania law
permits third[-]party professional negligence suits against
attorneys is irrelevant. [Inservco is] not alleging that
[Petitioner’s] attorney is liable to [Inservco].
Somers, 574 A.2d at 1058. Accordingly, because it does not “appear with certainty
that the law will not permit recovery, and any doubt should be resolved by a refusal
to sustain” the Preliminary Objection, this Preliminary Objection is overruled.
Torres, 997 A.2d at 1245.
Count II- Breach of Contract
Additional Respondents argue that, even if Inservco’s factual
allegations are accepted as true, Inservco does not allege facts sufficient to establish
the first element in its breach of contract claim against Additional Respondents - the
existence of a contract. Further, Additional Respondents contend that Inservco
cannot sustain its breach of contract claim because it did not incur damages as a
result of the alleged breach; to the contrary, Inservco was enriched by Additional
Respondents’ allegedly improper payment against the illegal subrogation lien.
Inservco retorts that it has adequately identified and pled Kannebecker’s fee
agreement with Petitioner, together with express and implied covenants of good faith
and fair dealing. Inservco further rejoins that it properly joined Kannebecker as
alone liable for Petitioner’s damages and pled that Kannebecker’s breach of contract
and the covenant of good faith and fair dealing resulted in Petitioner’s claimed harm.
Inservco avers in the Joinder Complaint:
27. The aforementioned conduct of Kannebecker and/or
Law Offices constitutes a breach of the fee and other
agreements, and the covenant of good faith and fair
dealing, express, implied, and as a matter of law.
26
28. As a direct and proximate result of the aforesaid breach
of the agreement, [Petitioner] allegedly has been damaged.
Joinder Complaint ¶¶ 27-28.
[I]n examining the duty of good faith, we begin by noting
that [Pennsylvania] has accepted the principle in
Restatement (Second) of Contracts § 205 [(Am. Law Inst.
1981)] that “[e]very contract imposes upon each party a
duty of good faith and fair dealing in its performance and
its enforcement.” Kaplan v. Cablevision of PA, Inc., . . .
671 A.2d 716, 721-22 ([Pa. Super.] 1996). Pennsylvania
courts impose a general duty of good faith performance on
each party in general commercial contracts.
John B. Conomos, Inc. v. Sun Co., Inc. (R&M), 831 A.2d 696, 705-06 (Pa. Super.
2003). Thus, Petitioner can bring a breach of contract claim against Additional
Respondents based on the parties’ fee agreement.
Clearly, the gravamen of Petitioner’s action against Inservco and
Inservco’s Joinder Complaint against Additional Respondents are the same. Despite
that Petitioner’s action against Inservco alleges intentional torts and Count II of
Inservco’s Joinder Complaint against Additional Respondents alleges breach of
contract, Petitioner alleges he “made payment” as a result of the subrogation lien,
Amended Complaint ¶ 28, and the Joinder Complaint alleges Petitioner “provided
payment” as a result of the subrogation lien, Joinder Complaint ¶ 15; and Petitioner’s
action alleges harm in the form of “the loss of [Petitioner’s] money which was paid,”
Amended Complaint ¶ 35, and the Joinder Complaint alleges harm in the form of
“actual loss” of money paid. Joinder Complaint ¶ 25. The transactions involved and
the evidence pertinent thereto are the same in time and nature. See Somers.
Accordingly, because it does not “appear with certainty that the law will not permit
recovery, and any doubt should be resolved by a refusal to sustain” the Preliminary
Objection, this Preliminary Objection is overruled. Torres, 997 A.2d at 1245.
27
Count III – Breach of Fiduciary Duty
Additional Respondents argue that Inservco’s Joinder Complaint does
not allege any facts that would enable it to establish that Inservco had a fiduciary
relationship or confidential relationship with Additional Respondents. Instead,
Inservco only alleges that Petitioner and Additional Respondents were in a fiduciary
relationship. Inservco rejoins that it is only required to, and did, allege that
Additional Respondents and Petitioner had a fiduciary relationship.
Inservco alleges in the Joinder Complaint:
30. [Petitioner] and Kannebecker / Law Offices were in a
fiduciary relationship.
31. The aforementioned conduct of Kannebecker and/or
Law Offices constitutes a breach of that fiduciary
relationship.
32. As a direct and proximate result of the aforesaid breach
of fiduciary duty, [Petitioner] allegedly has been damaged.
Joinder Complaint ¶¶ 30-32.
“It is axiomatic that an attorney who undertakes
representation of a client owes that client both a duty of
competent representation and the highest duty of honesty,
fidelity, and confidentiality.” Cap[.] Care Corp. v. Hunt,
847 A.2d 75, 84 (Pa. Super. 2004). Such duty demands
undivided loyalty and prohibits the attorney from
engaging in conflicts of interest, and [a] breach of such
duty is actionable. Maritrans GP, Inc. v. Pepper,
Hamilton & Scheetz, . . . 602 A.2d 1277, 1283 ([Pa.]
1992).
Kirschner v. K & L Gates LLP, 46 A.3d 737, 757 (Pa. Super. 2012). Thus, Petitioner
could bring a breach of fiduciary duty claim against Additional Respondents.
Clearly the gravamen of Petitioner’s action against Inservco and of the
Joinder Complaint against Additional Respondents are the same. Despite that
Petitioner’s action against Inservco alleges intentional torts and Count III of
28
Inservco’s Joinder Complaint alleges breach of fiduciary duty against Additional
Respondents, Petitioner’s action alleges Petitioner “made payment” as a result of the
subrogation lien, Amended Complaint ¶ 28, and the Joinder Complaint alleges
Petitioner “provided payment” as a result of the subrogation lien, Joinder Complaint
¶ 15; and Petitioner’s action alleges harm in the form of “the loss of [Petitioner’s]
money which was paid,” Amended Complaint ¶ 35, and the Joinder Complaint
alleges harm in the form of “actual loss” of money paid. Joinder Complaint ¶ 25.
The transactions involved and the evidence pertinent thereto are the same in time
and nature. See Somers. Accordingly, because it does not “appear with certainty
that the law will not permit recovery, and any doubt should be resolved by a refusal
to sustain” the Preliminary Objection, this Preliminary Objection is overruled.
Torres, 997 A.2d at 1245.
Punitive Damages
Additional Respondents argue that the Joinder Complaint makes only
non-specific blanket allegations without factual bases for Additional Respondents’
purported misrepresentation, and intentional, voluntary, willful, wanton, reckless,
fraudulent, dishonest, and deceitful actions. Additional Respondents contend that
when those unfounded allegations are appropriately disregarded, the Joinder
Complaint fails to describe outrageous conduct necessary to enable Inservco to
recover punitive damages. Additional Respondents declare that the language in
paragraphs 15, 17, 20, 23, and 25 do not support Inservco’s demand for punitive
damages and must be stricken, along with its prayers for punitive damages. Inservco
rejoins that it adequately pled the requisite facts supporting the type of deliberate
actions and conduct and conscious wrongdoing required for a punitive damages
claim against Additional Respondents under Pennsylvania law.
29
The Pennsylvania Supreme Court has explained:
This [Supreme] Court has adopted Section 908(2) of the
Restatement (Second) of Torts regarding the imposition of
punitive damages. That provision permits punitive
damages for conduct that is “outrageous because of the
defendant’s evil motives or his reckless indifference to the
rights of others.” Restatement (Second) of Torts § 908(2)
(“([Am. Law Inst.] 1977). See Feld v. Merriam, . . . 485
A.2d 742 ([Pa.] 1984); Chambers v. Montgomery, . . . 192
A.2d 355 ([Pa.] 1963). A court may award punitive
damages only if the conduct was malicious, wanton,
reckless, willful, or oppressive. Chambers, . . . 192 A.2d
at 358. The proper focus is on “the act itself together with
all the circumstances including the motive of the
wrongdoer and the relations between the parties. . . .” . . .
[Chambers,] 192 A.2d at 358. In addition, the actor’s state
of mind is relevant. The act or omission must be
intentional, reckless, or malicious.
Rizzo v. Haines, 555 A.2d 58, 69 (Pa. 1989) (italics added).
Inservco alleges in the Joinder Complaint:
15. During the course of legal representation of
[Petitioner], on or about May 5, 2020, Kannebecker and/or
Law Offices voluntarily and intentionally provided
payment or reimbursement in the amount of $8,191.84 to
[Attorney Newman], counsel for PSP. See Kannebecker
and Law Offices’ May 5, 2020 letter with enclosure,
attached as Exhibit “B”.
....
17. At no time during the ensuing seventeen months
between providing payment or reimbursement to
[Attorney] Newman on or about May 5, 2020[,] and
commencement of this civil action against PSP and
Inservco on or about October 14, 2021[,] did [Petitioner],
Kannebecker and/or Law Offices raise any concern or
objection to making the repayment or reimbursement or
demand repayment of the payment voluntarily and
intentionally made by [Petitioner], Kannebecker and/or
Law Offices.
30
....
20. Kannebecker and/or Law Offices acted intentionally,
willful [sic] and/or wantonly in [] providing repayment
or reimbursement and caused or contributed to
[Petitioner’s] alleged harm.
....
23. At all times material, Kannebecker and/or Law Offices
breached its/their duty of care to [Petitioner], acting
negligently, carelessly and/or recklessly and in the
following regards, respectively:
....
(o) Fraudulently and/or deceitfully and without basis in
law allowing, encouraging and/or making repayment or
reimbursement;
....
(ee) Engaging in conduct that involves dishonesty, fraud,
deceit and misrepresentation;
....
25. As a direct and proximate result of the negligence,
carelessness and [r]ecklessness of Kannebecker and/or
Law Offices, [Petitioner] suffered the alleged actual loss.
Joinder Complaint ¶¶ 15-25 (emphasis added).
In support of these allegations, Inservco avers:
12. [Petitioner] made and/or pursued a claim against PSP
for [b]enefits as a result of injuries sustained in the
[a]ccident.
13. [Petitioner] received [b]enefits from PSP.
14. Kannebecker and/or Law Offices settled [Petitioner’s]
claims against the underlying [a]ccident tortfeasor.
15. During the course of legal representation of
[Petitioner], on or about May 5, 2020, Kannebecker and/or
Law Offices voluntarily and intentionally provided
31
payment or reimbursement in the amount of $8,191.84 to
[Attorney Newman], counsel for PSP. See Kannebecker
and Law Offices’ May 5, 2020 letter with enclosure,
attached as Exhibit “B”.
16. At no time prior to May 5, 2020[,] did [Petitioner],
Kannebecker and/or Law Offices raise any concern or
objection to repayment or reimbursement to PSP or
Inservco.
....
18. During the course of Kannebecker and/or Law Offices’
legal representation [of Petitioner] in the personal injury
matter arising from the [a]ccident, Kannebecker and/or
Law Offices knew, or in the exercise of reasonable care
should have known, of the alleged impropriety, illegality
and/or unlawfulness of repayment or reimbursement to
PSP or Inservco, as alleged by [Petitioner] in this lawsuit
brought by Kannebecker and/or Law Offices against PSP
and Inservco.
Joinder Complaint ¶¶ 11-18. Inservco further pled supporting facts in paragraphs
23 through 25 and by attaching a Certificate of Merit.
Accepting Inservco’s allegations as true and all inferences reasonably
deduced therefrom, as we must, because it does not “appear with certainty that the
law will not permit recovery, and any doubt should be resolved by a refusal to
sustain” the Preliminary Objection, this Preliminary Objection is overruled. Torres,
997 A.2d at 1245.
IV. Inservco’s Motion to Disqualify Additional Respondents as Counsel for
Petitioner
Inservco argues that because it joined Additional Respondents,
Additional Respondents must withdraw as counsel for Petitioner. Additional
Respondents rejoin that a disciplinary violation under Pennsylvania Rules of
Professional Conduct (Rules of Professional Conduct) 3.7, 4.2, or 8.4 is not
sufficient to require Kannebecker’s disqualification as Petitioner’s counsel.
32
Additional Respondents further retort that Inservco’s Disqualification Motion
should be denied because it is a litigation tactic intended to create hardship for
Petitioner, and an abuse of the disqualification process.
Rule of Professional Conduct 3.7 provides:
(a) A lawyer shall not act as advocate at a trial in which
the lawyer is likely to be a necessary witness unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value
of legal services rendered in the case; or
(3) disqualification of the lawyer would work [a]
substantial hardship on the client.
(b) A lawyer may act as advocate in a trial in which
another lawyer in the lawyer’s firm is likely to be called as
a witness unless precluded from doing so by Rule [of
Professional Conduct] 1.7 [(relating to conflicts of
interest)] or Rule [of Professional Conduct] 1.9 [(relating
to duties to former clients)].
Pa.R.P.C. 3.7 (emphasis added). Explanatory Comment 1 to Rule of Professional
Conduct 3.7 warns: “Combining the roles of advocate and witness can prejudice the
tribunal and the opposing party and can also involve a conflict of interest between
the lawyer and client.” Id. Explanatory Comment 2 to Rule of Professional Conduct
3.7 dictates:
The tribunal has proper objection when the trier of fact
may be confused or misled by a lawyer serving as both
advocate and witness. The opposing party has proper
objection where the combination of roles may
prejudice that party’s rights in the litigation. A witness
is required to testify on the basis of personal knowledge,
while an advocate is expected to explain and comment on
evidence given by others. It may not be clear whether a
statement by an advocate-witness should be taken as proof
or as an analysis of the proof.
33
Id. (emphasis added). Finally, Explanatory Comment 4 to Rule of Professional
Conduct 3.7 expounds:
Apart from these two exceptions, paragraph (a)(3)
recognizes that a balancing is required between the
interests of the client and those of the tribunal and the
opposing party. Whether the tribunal is likely to be
misled or the opposing party is likely to suffer prejudice
depends on the nature of the case, the importance and
probable tenor of the lawyer’s testimony, and the
probability that the lawyer’s testimony will conflict with
that of other witnesses. Even if there is risk of such
prejudice, in determining whether the lawyer should be
disqualified, due regard must be given to the effect of
disqualification on the lawyer’s client. It is relevant that
one or both parties could reasonably foresee that the
lawyer would probably be a witness.
Id. (emphasis added).
Rule of Professional Conduct 4.2 states:
Communication with Person Represented by Counsel
In representing a client, a lawyer shall not communicate
about the subject of the representation with a person the
lawyer knows to be represented by another lawyer in the
matter, unless the lawyer has the consent of the other
lawyer or is authorized to do so by law or a court order.
Pa.R.P.C. 4.2. Explanatory Comment 1 to Rule of Professional Conduct 4.2
provides:
This Rule contributes to the proper functioning of the legal
system by protecting a person who has chosen to be
represented by a lawyer in a matter against possible
overreaching by other lawyers who are participating in the
matter, interference by those lawyers with the client-
lawyer relationship and the uncounselled disclosure of
information relating to the representation.
34
Id. Rule of Professional Conduct 8.4(d) declares: “It is professional misconduct for
a lawyer to: . . . (d) engage in conduct that is prejudicial to the administration of
justice[.]” Pa.R.P.C. 8.4(d).
The Pennsylvania Superior Court has explained:
[D]isqualification of counsel is a serious remedy that
the court should use only when due process so requires.
In McCarthy v. Southeastern Pennsylvania
Transportation Authority, 772 A.2d 987 (Pa. Super. 2001),
we elaborated:
In Commonwealth v. Lambert, 765 A.2d 306 (Pa.
Super. 2000), this Court . . . stated that a trial court
may sanction, warn or recommend disciplinary
action against an attorney who has violated a Rule of
Professional Conduct. Lambert, 765 A.2d at 345-46.
Although disqualification and removal is an
appropriate sanction in some cases, it is a serious
remedy ‘which must be imposed with an
awareness of the important interests of a client in
representation by counsel of the client’s choice.’
Slater v. Rimar, Inc., . . . 338 A.2d 584, 590 ([Pa.]
1975) . . . .
A court’s authority to disqualify counsel based on
Rules of Professional Conduct is limited. In In re
Estate of Pedrick, . . . 482 A.2d 215 ([Pa.] 1984), our
Supreme Court stated that ‘this [C]ourt has held in
several cases that counsel can be disqualified for
violations of the [Rules of Professional Conduct]
where disqualification is needed to [e]nsure the
parties receive the fair trial which due process
requires.’ Pedrick, 482 A.2d at 221 (emphasis
added). Our Supreme Court continued:
Thus, while it may be appropriate under certain
circumstances for trial courts to enforce the
Code of Professional Responsibility by
disqualifying counsel[ ]or otherwise restraining
his participation or conduct in litigation before
them in order to protect the rights of litigants to
a fair trial, we are not inclined to extend that
enforcement power and allow our trial courts
35
themselves to use the Canons to alter
substantive law or to punish attorney
misconduct.
Id. In addition, our Supreme Court, in Reilly by
Reilly v. [Southeastern Pennsylvania Transportation
Authority], . . . 489 A.2d 1291 ([Pa.] 1985), limited
the authority of both trial and appellate courts to
sanction counsel for violations of the Rules of
Professional Conduct as follows:
Perceived violations of [the Rules of
Professional Conduct] do not permit the trial
courts or the intermediate appellate courts to
alter the rules of law, evidentiary rules,
presumptions or burdens of proof. More
importantly, violations of those [c]odes are not
a proper subject for consideration of the lower
courts to impose punishment for attorney or
judicial misconduct.
******
[W]e have not abdicated or delegated any of our
supervisory authority in enforcing these
standards of conduct to the Superior Court. To
presume that the [c]ode or its alleged violations
can be reviewed by any tribunal other than those
we authorize is a misapprehension of the
purpose of the [c]ode, and is seen as an
impermissible meddling into the administrative
and supervisory functions of this [Superior]
Court over the entire judiciary.
Id. at 991-92 . . . .
Sutch v. Roxborough Mem’l Hosp., 151 A.3d 241, 254-55 (Pa. Super. 2016)
(additional emphasis added).
Because “disqualification of counsel is a serious remedy that the
[C]ourt should use only when due process so requires,” and it cannot be determined
at this early stage in the proceedings whether “disqualification is needed to [e]nsure
the parties receive the fair trial which due process requires[,]” Sutch, 151 A.3d at
36
255, this Court denies Inservco’s Motion to Disqualify, without prejudice, for
Inservco to raise it again at the time of trial.
For all of the above reasons, Petitioner’s Preliminary Objections to
Inservco’s Preliminary Objections to the Amended Complaint are sustained in part
and overruled in part. Specifically, Petitioner’s First Preliminary Objection to
Inservco’s Preliminary Objections is sustained - footnote one (to paragraph two) of
Inservco’s Preliminary Objections is stricken, and paragraphs 20, 27, and 64 of
Inservco’s Preliminary Objections are stricken. Petitioner’s Second Preliminary
Objection to Inservco’s second and seventh Preliminary Objections is sustained in
part - Inservco’s second Preliminary Objection is stricken, and Petitioner’s
Preliminary Objection to Inservco’s seventh Preliminary Objection is overruled.
Petitioner’s Preliminary Objections to PSP’s Preliminary Objections to
the Amended Complaint are sustained in part and overruled in part. Specifically,
Petitioner’s first Preliminary Objection to PSP’s Preliminary Objections to the
Amended Complaint is sustained - paragraph 18 of PSP’s Preliminary Objections is
stricken. Petitioner’s second Preliminary Objection to PSP’s Preliminary Objections
to the Amended Complaint is moot. Petitioner’s third Preliminary Objection to
PSP’s Preliminary Objections to the Amended Complaint is sustained in part -
paragraphs 62, 75 and 76, of PSP’s Preliminary Objections are stricken. Petitioner’s
fourth Preliminary Objection to PSP’s Preliminary Objections is sustained - PSP’s
ninth Preliminary Objection is stricken. Petitioner’s fifth Preliminary Objection to
PSP’s Preliminary Objections is sustained in part - PSP’s tenth Preliminary
Objection is stricken.
37
Kannebecker’s Preliminary Objections to Inservco’s Joinder Complaint
are overruled, and Inservco’s Motion to Disqualify is denied without prejudice for
Inservco to refile at the time of trial.
_________________________________
ANNE E. COVEY, Judge
38
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Stephanie Mack, as :
Administratrix of the Estate :
of Decedent, Martin Mack, Individually:
and on behalf of a Class of Similarly :
Situated Individuals, :
:
Petitioner :
:
v. :
:
Pennsylvania State Police, and :
Inservco Insurance Services, Inc., :
Respondents :
:
v. :
:
Charles Kannebecker, Esquire and :
Law Offices of Charles Kannebecker, : No. 9 M.D. 2021
Additional Respondents :
ORDER
AND NOW, this 28th day of July, 2022, Martin Mack’s, individually
and on behalf of a class of similarly situated individuals (Petitioner), Preliminary
Objections to Inservco Insurance Services, Inc.’s (Inservco) Preliminary Objections
to Petitioner’s First Amended Class Action Complaint (Amended Complaint) are
sustained in part and overruled in part:
Petitioner’s First Preliminary Objection to Inservco’s Preliminary
Objections is SUSTAINED - footnote one (to paragraph two) of Inservco’s
Preliminary Objections is STRICKEN, and paragraphs 20, 27, and 64 of Inservco’s
Preliminary Objections are STRICKEN.
Petitioner’s Second Preliminary Objection to Inservco’s Second and
Seventh Preliminary Objections is SUSTAINED IN PART - Inservco’s Second
Preliminary Objection is STRICKEN, and Petitioner’s Preliminary Objection to
Inservco’s Seventh Preliminary Objection is OVERRULED.
Petitioner’s Preliminary Objections to the Pennsylvania State Police’s
(PSP) Preliminary Objections to the Amended Complaint are sustained in part and
overruled in part:
Petitioner’s First Preliminary Objection to PSP’s Preliminary
Objections to the Amended Complaint is SUSTAINED - paragraph 18 of PSP’s
Preliminary Objections is STRICKEN.
Petitioner’s Second Preliminary Objection to PSP’s Preliminary
Objections to the Amended Complaint is MOOT.
Petitioner’s Third Preliminary Objection to PSP’s Preliminary
Objections to the Amended Complaint is SUSTAINED IN PART - paragraphs 62,
75, and 76 of PSP’s Preliminary Objections are STRICKEN.
Petitioner’s Fourth Preliminary Objection to PSP’s Preliminary
Objections is SUSTAINED - PSP’s Ninth Preliminary Objection is STRICKEN.
Petitioner’s Fifth Preliminary Objection to PSP’s Preliminary
Objections is SUSTAINED IN PART - PSP’s Tenth Preliminary Objection is
STRICKEN.
Charles Kannebecker, Esquire’s (Kannebecker), and Law Offices of
Charles Kannebecker’s (Law Offices) (collectively, Additional Respondents)
Preliminary Objections to Inservco’s Joinder Complaint are OVERRULED.
Inservco’s Motion to Disqualify Additional Respondents as Counsel for
Petitioner is DENIED without prejudice.
Upon consideration of the Praecipe for Substitution Pursuant to
Pennsylvania Rule of Civil Procedure 2352 (Praecipe), filed with this Court on May
18, 2022, the Prothonotary is directed to change the caption in this matter to be
reflected as set forth in this Order.
_________________________________
ANNE E. COVEY, Judge