Riverside Management Group v. Finkelman, H. ( 2018 )

J-S41032-18
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RIVERSIDE MANAGEMENT GROUP, : IN THE SUPERIOR COURT OF
LLC AND FRED ONORATO AND : PENNSYLVANIA
EDWINA ONORATO, H/W :
:
Appellants :
:
v. :
:
HOWARD A. FINKELMAN, ESQUIRE :
AND BOCK AND FINKELMAN, P.C. :
:
Appellees : No. 3407 EDA 2017
Appeal from the Judgment Entered October 13, 2017
In the Court of Common Pleas of Delaware County
Civil Division at No(s): 2012-08630
BEFORE: GANTMAN, P.J., OLSON, J., and STEVENS*, P.J.E.
MEMORANDUM BY GANTMAN, P.J.: FILED DECEMBER 17, 2018
Appellants, Riverside Management Group, LLC (“RMG”), Fred Onorato,
and Edwina Onorato, appeal from the judgment entered in the Delaware
County Court of Common Pleas in favor of Appellees, Howard A. Finkelman
and Bock and Finkelman, P.C., in this legal malpractice action. We affirm.
In its opinion, the trial court fully and correctly sets forth the relevant
facts of this case. Therefore, we will only summarize them here. In 2009,
Thomas C. Phelan, a client of Appellees, solicited the Onorato Appellants to
become members of Collina Investment Group, LLC (“Collina”). Collina was
also a client of Appellees, and was a real estate management group that
included Mr. Phelan, Dr. Lawrence P. Wean, and Dr. Andrew Rosen. On June
2, 2009, the Onorato Appellants signed promissory notes, secured by
____________________________________
* Former Justice specially assigned to the Superior Court.
J-S41032-18
mortgages, on several of their properties in favor of Dr. Wean. The Onorato
Appellants believed the promissory notes and mortgages were merely a good
faith assurance by the Onorato Appellants that they intended to invest with
Collina, and that the notes and mortgages would not actually be used. On
December 7, 2009, however, Dr. Wean sought to disassociate himself from
Collina, and filed a complaint in confession of judgment against the Onorato
Appellants in the amount of $770,000.00 on the notes. After the Onorato
Appellants expended large sums of money in attorney’s fees in an attempt to
have the judgment opened, Mr. Phelan introduced the Onorato Appellants to
Appellees, and recommended the Onorato Appellants retain Appellees as new
counsel to enter into a settlement agreement with Dr. Wean. Despite
Appellees’ purported conflict of interest in the representation of Mr. Phelan in
cases which created an irreconcilable conflict of interest between Mr. Phelan
and the Onorato Appellants, as well as between Appellees and the Onorato
Appellants, Appellees represented Mr. Phelan, Collina, Dr. Rosen, and the
Onorato Appellants in a settlement with Dr. Wean on July 20, 2010. As part
of the settlement agreement, the Onorato Appellants executed a deed in favor
of Dr. Wean for a property located at 450 Cherry Tree Road in Upper
Chichester Township to be held in escrow until a future time. Dr. Wean,
however, recorded the deed that transferred the Cherry Tree property to his
name on October 6, 2011.
Additionally, the Onorato Appellants, Mr. Phelan, and Drs. Wean and
-2-
J-S41032-18
Rosen, formed Appellant RMG on August 31, 2010. Mr. Phelan and Drs. Wean
and Rosen pressured the Onorato Appellants to contribute properties to RMG
and the Onorato Appellants complied. On October 15, 2010, Appellees
represented Mr. Phelan and the Onorato Appellants in a transaction in which
RMG borrowed $1,750,000.00 from Penn Business Credit (now Fulton Bank)
against the properties provided by the Onorato Appellants. On May 17, 2012,
Penn/Fulton filed a complaint for judgment by confession against RMG in the
Delaware County Court of Common Pleas, and on the same date, the court
entered a judgment by confession against RMG in the amount of
$2,076,393.60. As a result, Penn/Fulton began foreclosure proceedings
against the properties contributed by the Onorato Appellants to RMG as
collateral for the loan. On June 13, 2012, Penn/Fulton also commenced an
action directly against Appellant Fred Onorato which sought judgment on his
personal guaranty of the Penn/Fulton loan.
Procedurally, we add that the Onorato Appellants filed a writ of
summons against Appellees on October 10, 2012. On July 18, 2013, the
Onorato Appellants filed a complaint against Appellees for legal malpractice.
Appellees filed preliminary objections to the complaint on September 16,
2013. On October 7, 2013, Appellants (now including RMG) filed an amended
complaint against Appellees for breach of contract, legal malpractice, breach
of fiduciary duty, and respondeat superior liability. Appellees filed preliminary
objections to the amended complaint on October 28, 2013, and Appellants
-3-
J-S41032-18
filed an answer to Appellees’ preliminary objections on November 13, 2013.
The court overruled Appellees’ preliminary objections to the amended
complaint on February 10, 2014.
On August 25, 2014, Appellees filed an answer and new matter to the
amended complaint. Appellants filed a reply to Appellees’ new matter on
October 23, 2014, and Appellees filed preliminary objections to Appellants’
reply to the new matter on October 14, 2015. On November 6, 2015,
Appellants answered Appellees’ preliminary objections. The court sustained
Appellees’ preliminary objections to Appellants’ reply to the new matter on
January 13, 2016. On March 8, 2016, Appellants filed an amended reply to
Appellees’ new matter, and Appellees filed preliminary objections to the
amended reply on March 28, 2016. Appellants filed a 2 nd amended reply to
Appellees’ new matter on June 17, 2016.
On June 7, 2017, Appellees filed a motion for judgment on the pleadings,
and Appellants filed a response in opposition on June 27, 2017. On September
18, 2017, the court granted Appellees’ motion for judgment on the pleadings.
Appellees filed a praecipe for entry of judgment against Appellants, and
judgment in favor of Appellees and against Appellants was entered on October
13, 2017. On the same day, Appellants filed a timely notice of appeal. On
October 18, 2017, the court ordered Appellants to file a concise statement of
errors complained of on appeal per Pa.R.A.P. 1925(b); Appellants timely
complied on November 8, 2017.
-4-
J-S41032-18
Appellants raise the following issue for our review:
DID THE [TRIAL COURT] COMMIT LEGAL ERROR AND/OR
ABUSE ITS DISCRETION, BY ENTERING JUDGMENT ON THE
PLEADINGS IN FAVOR OF [APPELLEES] AND AGAINST
[APPELLANTS], BASED ON THE PURPORTED APPLICATION
OF THE RELEVANT STATUTE OF LIMITATIONS
AND/OR…[APPELLANTS]’ PURPORTED FAILURE TO
ESTABLISH VIABLE CLAIMS IN THIS ACTION ASSERTING
PROFESSIONAL NEGLIGENCE, BREACH OF CONTRACT, AND
BREACH OF FIDUCIARY DUTY?
(Appellants’ Brief at 3).
Appellants argue their claims concerning the losses of the Cherry Tree
property and the properties they contributed to RMG should not have been
time-barred. Regarding the loss of the Cherry Tree property, Appellants
contend the earliest date they could have known from public records that they
had suffered an actual loss was October 6, 2011, when Dr. Wean recorded the
deed for the property. Appellants maintain the trial court should have used
the October 6, 2011 date, instead of the July 20, 2010 date of the execution
of the Wean settlement agreement, to calculate the 2-year statute of
limitations for their negligence action against Appellees. Similarly, Appellants
assert the earliest date they could have known from public records that they
suffered a loss of the properties Appellants contributed to RMG, occurred
during 2012, when Penn Business Credit began to foreclose on the properties.
Appellants claim the trial court should have used August 2012, rather than the
October 15, 2010 date of execution of the Penn Business Credit loan
settlement, to determine the 2-year statute of limitations period for their
-5-
J-S41032-18
negligence claim against Appellees. Appellants reason that if the correct dates
had been used, their claims would not have been time-barred.
Appellants also allege the trial court applied the wrong legal standard
for judgment on the pleadings and improperly ruled that Appellants’ complaint
failed to make out a cause of action on their claims of professional negligence.
Appellants contend that their amended complaint provided sufficient facts to
support the basic elements of each of their asserted causes of action.
Appellants complain the trial court should not have granted Appellees’ motion
for judgment on the pleadings; instead, Appellants’ submit their case should
have proceeded to trial. Appellants conclude this Court should reverse and
remand for a trial on the merits of the case.
The applicable scope and standard of review are as follows:
Our scope of review on an appeal from the grant of
judgment on the pleadings is plenary. Entry of judgment on
the pleadings is permitted under Pennsylvania Rule of Civil
Procedure 1034, which provides that after the pleadings are
closed, but within such time as not to unreasonably delay
trial, any party may move for judgment on the pleadings. A
motion for judgment on the pleadings is similar to a
demurrer. It may be entered when there are no disputed
issues of fact and the moving party is entitled to judgment
as a matter of law. In determining if there is a dispute as
to facts, the [trial] court must confine its consideration to
the pleadings and relevant documents. On appeal, we
accept as true all well-pleaded allegations in the complaint.
On appeal, our task is to determine whether the trial court’s
ruling was based on a clear error of law or whether there
were facts disclosed by the pleadings, which should properly
be tried before a jury, or by a judge sitting without a jury.
-6-
J-S41032-18
Neither party can be deemed to have admitted either
conclusions of law or unjustified inferences. Moreover, in
conducting its inquiry, the [trial] court should confine itself
to the pleadings themselves and any documents or exhibits
properly attached to them. It may not consider inadmissible
evidence in determining a motion for judgment on the
pleadings. Only when the moving party’s case is clear and
free from doubt such that a trial would prove fruitless will
an appellate court affirm a motion for judgment on the
pleadings.
Consolidation Coal Co. v. White, 875 A.2d 318, 325-26 (Pa.Super. 2005)
(internal citations and quotation marks omitted).
For a professional (legal) negligence claim, the plaintiff must establish
three elements: (1) the employment of the attorney or other basis for duty;
(2) the failure of the attorney to exercise ordinary skill and knowledge; and
(3) the attorney’s failure to exercise the requisite skill and knowledge was the
proximate cause of damage to the plaintiff. Bailey v. Tucker, 533 Pa. 237,
246, 621 A.2d 108, 112 (1993). “An attorney will be deemed ‘negligent’ if
he…fails to possess and exercise that degree of knowledge, skill and care
which would normally be exercised by members of the profession under the
same or similar circumstances.” Fiorentino v. Rapoport, 693 A.2d 208, 212
(Pa.Super. 1997), appeal denied, 549 Pa. 716, 701 A.2d 577 (1997).
By way of comparison, an assumpsit claim based on breach
of an attorney-client agreement is a contract claim, and the
attorney’s liability must be assessed under the terms of the
contract. [Bailey, supra] at 251, 621 A.2d at 115. Thus,
if the attorney agrees to provide his…best efforts and fails
to do so, an action in assumpsit will accrue. Id. “[A]n
attorney who agrees for a fee to represent a client is by
implication agreeing to provide that client with professional
services consistent with those expected of the profession at
-7-
J-S41032-18
large.” Id. at 251-52, 621 A.2d at 115.
Id. at 213. As a general rule, to succeed in a cause of action for breach of
contract the plaintiff must establish: “(1) the existence of a contract, including
its essential terms, (2) a breach of a duty imposed by the contract and (3)
resultant damages.” Gorski v. Smith, 812 A.2d 683, 692 (Pa.Super. 2002),
appeal denied, 579 Pa. 692, 856 A.2d 834 (2004).
With respect to a breach of fiduciary duty claim, “a confidential
relationship and the resulting fiduciary duty may attach wherever one
occupies toward another such a position of advisor or counsellor as reasonably
to inspire confidence that he will act in good faith for the other’s interest.”
Basile v. H & R Block, Inc., 777 A.2d 95, 101-02 (Pa.Super. 2001), appeal
denied, 569 Pa. 714, 806 A.2d 857 (2002). The fiduciary duty owed by an
attorney arises from either an express or implied attorney-client relationship.
See Estate of Pew, 655 A.2d 521, 545 (Pa.Super. 1994).
The [Pennsylvania] Supreme Court [has] held that part of
the fiduciary duty which arises out of the attorney client
relationship is that of undivided loyalty. This duty, the Court
emphasized, prohibits an attorney from engaging in activity
which constitutes a conflict of interest, and the Court held
that a breach of that duty by the attorney is actionable.
Gorski, supra at 711.
[T]he substance of the allegations comprising a claim in a
plaintiff’s complaint are of paramount importance, and,
thus, the mere labeling by the plaintiff of a claim as being
in tort, e.g., for negligence, is not controlling. If the facts
of a particular claim establish that the duty breached is one
created by the parties by the terms of their contract—i.e., a
specific promise to do something that a party would not
-8-
J-S41032-18
ordinarily have been obligated to do but for the existence of
the contract—then the claim is to be viewed as one for
breach of contract. If, however, the facts establish that the
claim involves the defendant’s violation of a broader social
duty owed to all individuals, which is imposed by the law of
torts and, hence, exists regardless of the contract, then it
must be regarded as a tort.
Bruno v. Erie Ins. Co., 630 Pa. 79, 112, 106 A.3d 48, 68 (2014) (internal
citations omitted).
After a thorough review of the record, the briefs of the parties, the
applicable law, and the well-reasoned opinion of the Honorable Charles B.
Burr, II, we conclude Appellants’ issue merits no relief. The trial court opinion
comprehensively discusses and properly disposes of the question presented.
(See Trial Court Opinion, filed January 16, 2018, at 23-31) (finding:
Appellants assert professional malpractice claims for breach of contract in
Count I and in tort in Court II; Appellants attached to pleadings no written
retainer agreement but contended parties had oral representation agreement;
Appellants claimed Appellees breached representation agreement by failing to
conform with general standard of care for attorneys in representing clients,
which constitutes professional negligence; Appellants alleged in Count I that
Appellees failed to impart critical information when Appellants entered into
their arrangement with Appellees, but did not identify what information was
asked for but not disclosed; Count I for breach of contract amounts to tort
claim, absent averment of breach of specific contracted-for instructions;
therefore, Appellants’ Counts I and II were both professional negligence claims
-9-
J-S41032-18
sounding in broader social duty and subject to two-year statute of limitations;
further, Appellants have not disputed that statute of limitations for their claims
for breach of fiduciary duty against Appellees and respondeat superior against
Appellee law firm is also two years; as to when statute of limitations period
began to run, lost properties Appellants claimed as damages were lost because
Appellant RMG defaulted on its loan payment obligation, which Appellant Mr.
Onorato guaranteed, in order to accomplish settlement of confession of
judgment action; additionally, Appellants have stipulated out of this case their
claims against Appellees arising from escrow (e.g., the Cherry Tree property)
and disbursement of loan proceeds; further, insofar as judgment confessed
against Appellant Mr. Onorato concluded with settlement, it cannot form basis
of viable claim against Appellees that Appellees caused involuntary loss of
properties; with no other damages established, Appellants’ claims against
Appellees for professional malpractice (conflict, nondisclosure, and breach of
fiduciary duty) and respondeat superior date back to when Appellants hired
Appellees in July 2010, which is triggering date for statute of limitations).
Accordingly, we affirm on the basis of that opinion.
Judgment affirmed.
Judge Olson files a concurring memorandum in which President Judge
Emeritus Stevens concurs in the result.
President Judge Emeritus Stevens concurs in the result.
- 10 -
J-S41032-18
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/17/18
- 11 -
Circulated 10/15/2018 04:34 PM
IN THE COURT OF COMMON PLEAS OF DELAWARE COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
RIVERSIDE MANAGEMENT GROUP, LLC, NO. 12-008630
and FRED ONORATO and PA Superier Court Docketing No. 3407 EDA 2017
EDWINA ONORATO, h/w
v.
HOWARD A. FINKELMAN, ESQUIRE and
BOCK AND FINKELMAN, P.C.
DONALD J. WEISS, ESQUIRE and MARC A. ZAID, ESQUIRE, Attorneys for the Plaintiffs.
JEFFREY B. McCARRON, ESQUIRE and CANDID US K. DOUGHERTY, ESQUIRE,
Attorneys for the Defendants.
OPINION
BURR, S.J. FILED: January 16, 2018
The Plaintiffs, Riverside Management Group, LLC ("Riverside") and Fred and
Edwina Onorato, h/w, have appealed from this Court's Order of September 14, 2017 granting the
Motion of the Defendants, Howard A. Finkelman, Esquire and Bock and Finkelman, P.C., for
Judgment on the Pleadings and dismissing, with prejudice, the Plaintiffs' Amended Complaint in
this professional negligence action for raising non-viable claims against the Defendants that were
not otherwise time barred.
This action was initiated by the Onorato Plaintiffs via a Writ of Summons filed on
October 10, 2012 followed by the filing of a Complaint on July 18 2013, and then an Amended
Complaint adding Riverside Management Group as a Plaintiff being filed on October 7, 2013
subsequent, respectively, to the Defendants' initial Preliminary Objections, after which
Preliminary Objections to the Plaintiffs' Amended Complaint were overruled by the Honorable
James F. Proud of' this court. The Plaintiffs alleged in their Amended Complaint' that, in the
Spring of 2009, they were the owners of the following Delaware County commercial properties:
Comer, Delaware Avenue and Engle Street, Chester, Pennsylvania; 17 and 19 Bryam Street,
Chester, Pennsylvania; 15 Engle Street, Chester, Pennsylvania; 7 Front Street, Chester,
Pennsylvania; and 612 MacDade Boulevard, Collingdale, Pennsylvania ("the Properties").
(Amended Complaint, Paragraph 6). Plaintiffs alleged that, during this same time, they were
contacted by a client of the Defendant attorney and law firm, Thomas C. Phelan, who
represented to Plaintiffs that he was part of Collina Investment Group, LLC ("Collina''), that
included Dr. Lawrence P. Wean and Dr. Andrew Rosen, and was also a client of the Defendants.
(Id., Paragraphs 7-11). Plaintiffs contended that, when Dr. Wean sought to dissociate himself
and receive compensation for his contributions to Collina from Mr. Phelan and Dr. Rosen, also in
the Spring of 2009, Mr. Phelan solicited the Plaintiffs to become members of Collina. (Id.,
Paragraphs 12-13).
The Plaintiffs further averred that, on or about June 2, 2009, Mr. Phelan and Dr.
Wean induced them to execute promissory notes, secured by mortgages, in favor of Dr. Wean on
the Properties as follows [sic]: (a) Plaintiffs
-,
never received any money in exchange for the
promissory notes or mortgages; (b) Plaintiffs were informed by Mr. Phelan, Dr. Wean, and his
counsel that the promissory notes and mortgages were merely a good faith assurance by
Plaintiffs that they intended to invest with Mr. Phelan, Dr. Wean and Dr. Rosen in their real
estate management business; (c) Plaintiffs were informed by Dr. Wean and his counsel that the
notes arid mortgages would be destroyed once Dr. Wean was given assurances that Plaintiffs
The following recapitulation of the Plaintiffs' Amended Complaint reflects redactions therefrom pursuant to an agreed
upon stipulation by counsel for the parties.
2
would invest with Mr. Phelan and Drs. Wean and Rosen; (d) Dr. Wean's counsel personally
appeared at Plaintiffs' residence on June 2, 2009 and presented Plaintiffs with a demand
mortgage note in the principal amount of $550,000.00 and presented an additional demand
• ·-·�---·--···�·-·--··h,,,...-..,,._._ ,..,,..._._...,.____. __.. H•WWOe>-W,o • -----�-- • • O
mortgage note in the sum of $220,000.00; (e) On June 2, 2009, Dr. Wean and his counsel
requested that Plaintiffs sign the notes immediately as a gesture of good faith; (f) Plaintiffs did
not understand the terms of the notes; (g) Dr. Wean and his counsel refused Plaintiffs the
opportunity to review the notes or consult with counsel regarding the Notes and insisted that
Defendants [sic] immediately sign the Notes based on Plaintiff [sic] and his attorney's
assurances and representations; (h) Plaintiffs never received any consideration whatsoever from
Dr. Wean for signing the notes. (Id., Paragraph 14,passim).
Plaintiffs went on to allege in their Amended Complaint that, on or about December
7, 2009, after promising not to do so, Dr. Wean filed a Complaint in Confession of Judgment and
entered judgment against them in the amount of $770,000.00 on the [N]otes. (Id., Paragraph 15).
The Plaintiffs averred that: "[a]s a result of Plaintiff [sic] wrongfully confessing judgment
against them on the Notes, Defendants [sic] were forced to expend large sums of money in
attorney's fees in an attempt to have the judgment opened." (Id., Paragraph 16). Plaintiffs
contended that Mr. Phelan introduced them to the Defendant attorney and recommended that
they retain the Defendant to enter into a settlement agreement with Dr. Wean. (Id., Paragraph
1 7). Plaintiffs alleged that the Defendant attorney did not advise them that he and the Defendant
law firm represented Mr. Phelan in cases which created an irreconcilable conflict of interest
between Mr. Phelan and the Plaintiffs and the Defendant attorney and the Plaintiffs. (Id.,
Paragraph 18). Plaintiffs contended that, despite his conflict of interest, the Defendant attorney
represented Mr. Phelan, Collina, Dr. Rosen and Plaintiffs in a settlement with Dr. Wean on July
3
20, 2010 titled "Cooperation, Settlement and Mutual Release Agreement" ("R�lease"), Section
1 l(g) of which provides that the Defendant attorney was representing Mr. Phelan, Collina, Dr.
······--···---·--····-- Rosen and Plaintiff�:_(Jd., Paragr_�phs 19-20): .. plaj�tiffs addeg__that,_ as there was no _
consideration for Plaintiffs to sign the original notes, likewise there was no consideration to sign
the Release. (Id., Paragraph 21).
Plaintiffs additionally complained that they executed a Deed in favor of Dr. Wean
for real property at 450 Cherry Tree Road, Upper Chichester Township, Delaware County,
Pennsylvania, being folio number 09 00 0025501 ("Cherry Tree Property") to be held in escrow
until a future time period, and a deed was recorded by Dr. Wean transferring the Cherry Tree
Property into his name on or about October 6, 2011. (Id., Paragraphs 22-23). Plaintiffs averred
that the Plaintiff, Riverside, whose members were Plaintiff, Fred Onorato, Mr. Phelan and Drs.
Wean and Rosen, was formed on or around August 31, 2010, and that Mr. Phelan and Drs. Wean
and Rosen pressured the Plaintiffs to contribute properties to Riverside and that the Plaintiffs
complied therewith. (Id., Paragraphs 25-26). The Plaintiffs alleged that the Defendant attorney
represented Mr. Phelan and Plaintiffs in a transaction in which the Plaintiff, Riverside, borrowed
One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00) from Penn Business Credit,
now Fulton Bank, against the Properties provided by the Plaintiffs. (Id., Paragraph 27).
The Plaintiffs contended in their Amended Complaint that, on May 17, 2012,
Penn/Fulton filed a Complaint for Judgment by Confession against the Plaintiff, Riverside, in the
Court of Common Pleas of Delaware County, Pennsylvania, Docket No. 12-4155, and on the
same date, the Court entered a Judgment by Confession against the Plaintiff, Riverside, in the
amount of $2,076,393.60 and Penn/Fulton began foreclosure proceedings against the Properties
contributed by Plaintiffs to Riverside as collateral for the loan. (Id., Paragraph 34). Plaintiffs
4
averred that, on June 13, 2012, Penn/Fulton also commenced an action directly against the
Plaintiff, Fred Onorato, in the Court of Common Pleas of Delaware County, Pennsylvania, under
Docket No. 12-5010, which action se���ju_dgrr.i��� c;n1J!�S p�r�onal Guaranty of the Penn/Eulton__
loan. (Id., Paragraph 35). The Plaintiffs alleged that, as a direct result of the Defendant
attorney's negligence, Plaintiffs lost not only the properties they contributed to the Plaintiff,
Riverside, but have also been subjected to the loss of additional property on the personal
Guaranty given in connection with the Penn/Fulton loan to the Plaintiff, Riverside. (Id.,
Paragraph 36). Plaintiffs contended that, as a direct result of the Defendant attorney's
negligence, they signed the Release with Dr. Wean in July 2010 whereby Plaintiffs executed a
Deed to Dr. Wean for the real property at 450 Cherry Tree Road, Upper Chichester Township,
Delaware County, Pennsylvania resulting in Dr. Wean becoming the equitable owner of that
property. (Id., Paragraphs 37-38). Plaintiffs claimed that they first became aware of damages
they suffered from the Defendant attorney's negligence in or around August of 2012, and filed a·
writ of summons against the Defendant attorney and law firm in this court on October 10, 2012,
which writ was served on the Defendants on October 16, 2012 by the Sheriff of Delaware
County, Pennsylvania. (Id., Paragraphs 39-40).
The Plaintiffs charged both of the Defendants in Count I of their Amended
Complaint with Breach of Contract, contending that they were asserting a professional
negligence action in breach of contract arising from Defendants' failure to provide competent
counsel under their contract for legal services with the Plaintiffs. (Id., Paragraph 42). Plaintiffs
alleged that an oral contract for legal services was formed between Defendants and Plaintiffs by
which law and custom required that the Defendants direct their representation of Plaintiffs with
zeal, competence and sound legal ethics. (Id., Paragraph 43). Plaintiffs averred that Defendants
5
had a contractual duty to ensure that Plaintiffs' interests were represented in the execution of the
Release and the Riverside/Penn Business Credit loan, and this contractual duty required that
Defendants direct their representation Qf the. Plaiptiffs ponsisteL\\ith�applicahle_s.tanda.rd_of_�·"·
care required of a Pennsylvania lawyer engaged in similar activity. (Id., Paragraph 44).
Plaintiffs alleged that, consistent with the foregoing contractual duty, if Defendants were unable
to fulfill their contractual duties to Plaintiffs in the representation of their interests in the
execution of the Release and the Riverside/Penn Business Credit Loan, then by law Defendants
were obliged to withdraw as counsel for Plaintiffs and direct Plaintiffs to obtain different
counsel. (Id., Paragraph 45).
According to Count I of the Plaintiffs' Amended Complaint, the Defendants
breached their contract for legal services with Plaintiffs by their deviation from the applicable
standard of care of a Pennsylvania attorney as follows: (1) advising Plaintiffs to execute the
Release which was contrary to their interests; (2) failing to disclose their conflict of interest in
representing Mr. Phelan, whose interests were adverse to Plaintiffs', in the above transactions;
and (3) failing to direct Plaintiffs to obtain different counsel to represent their interests in the
Release and the Riverside/Penn Business Credit Loan. (Id., Paragraph 46,passim).
In Count II of their Amended Complaint, the Plaintiffs charged the Defendant
attorney with professional negligence arising from his negligent deviation from the standard of
care expected of Pennsylvania lawyers after being engaged by the Plaintiffs to provide legal
services, alleging that he owed a duty of care to provide them with competent legal services and
consistent with the applicable standard of care required of a Pennsylvania lawyer engaged in the
provision of similar services. (Id., Paragraphs 49-51). The Plaintiffs averred that the Defendant
attorney deviated from the applicable standard of care required of Pennsylvania lawyers through
6
his negligence as follows: advising Plaintiffs to execute the Release which was contrary to their
interests, and failing to disclose his conflict of interest in representing Mr. Phelan, whose
interests were adverse to the Plaintiffs'__in theabove transactions. (� Paragraph_.5Lpassim).
The Plaintiffs' pleaded a claim of Breach of Fiduciary Duty against the Defendant
attorney in Count III of their Amended Complaint, alleging that, under common law, the
Defendant attorney owed Plaintiffs the fiduciary duty of honesty, fidelity and loyalty that
Plaintiffs would always be in a position to make informed decisions regarding the Defendant
attorney's representation, and that the Defendant attorney had a further fiduciary duty to provide
Plaintiffs with skillful, diligent, competent and professional legal advice and to take appropriate
and professional legal actions. (Id., Paragraph 55). Plaintiffs contended that the Defendant
attorney breached the fiduciary duty of loyalty owed to Plaintiffs by placing his own professional
and pecuniary interests above the duty of honesty and fidelity that he owed to the Plaintiffs in
failing to disclose his conflict of interest through his representation of Mr. Phelan. (Id.,
Paragraph 56). The Plaintiffs raised a claim of Respondeat Superior against the Defendant law
firm in Count IV of their Amended Complaint with the contention that, at all relevant times,
since the Defendant attorney was acting within the scope of his employment with the Defendant
law firm, under the doctrine of Respondeat Superior, the firm is fully liable for all of the acts and
omissions of the Defendant attorney identified in the Amended Complaint. (Id., Paragraph 59).
(Plaintiffs' Amended Complaint, pp. 1-12).
The Defendants' Motion for Judgment on the Pleadings set forth the following
grounds for their requested relief:
"This is a legal malpractice action [brought] by the [Pjlaintiffs, Fred and Edwina Onorato
(collectively the 'Onoratos'), and Riverside Management Group, LLC ('Riverside') against
[D]efendants, Howard A. Finkelman and Bock and Finkelman, P.C. (collectively
'[Djefendants'), arising from the [Djefendants' representation of the Onoratos in connection with
7
a settlement agreement and a loan obtained by Riverside. Amended [Cjomplaint, attached hereto
as Exhibit 'A'. (Id., Paragraph 1). While Riverside was identified as a [P]laintiff, Riverside did
not actually allege any claims against [D]efendants and was not included in the definition of
'[P]laintiffs' in the [A]mended [C]omplaint. See Exhibit 'A' at 1 1. (Id., Paragraph 2). The
Onoratos asserted claims against [D]efendants characterized as a breach of contract ([C]ount I),
negligence ([C]ount II), breach of fiduciary -duty-([C]ount III) and respondeat superior ([C]ount
IV). (Id., Paragraph 3).
The Defendants contended in this Motion that they had filed Preliminary Objections both
to the Plaintiffs' Complaint and Amended Complaint alleging lack of specificity of the pleadings
and failure to include a copy of the contract on which the Plaintiffs' claims were based and that
their Preliminary Objections were overruled. (Id., Paragraphs 38-43). Defendants asserted that
they raised the statute of limitations as a defense in New Matter to their Answer to the Amended
Complaint and that the Plaintiffs had denied the action was untimely, but did not raise the
discovery rule or fraudulent concealment in any of their responsive pleadings to the Defendants'
claims. (Id., Paragraphs 48-53; Exhibits B - Defendants' New Matter; F - Plaintiffs' Reply to
New Matter; G-Plaintiffs' Amended Reply to New Matter).
The Defendants maintained in their Motion for Judgment on the Pleadings that, during the
taking of the Plaintiffs, Fred Onorato, deposition, the parties had entered into stipulations to
remove the following claims and paragraphs from the Amended Complaint:
• Any claim derivative of, based on, or involved in the escrow agreement signed by the
Plaintiffs in 2010 (Id., citing to Exhibit H appended thereto - Fred Onorato Deposition at
2/27/17 N.T 1063; Defendants' Exhibit 20);
• A claim or criticism of Defendants based on a derivative use of the proceeds from the
Penn Business Credit loan made to the Plaintiff, Riverside Management Group (Id.,
2/28/17 N.T. 1164);
• Plaintiffs acknowledge the disbursements from the Penn Business Credit Loan proceeds
were appropriate and authorized, and Defendants did not mismanage the escrow account
(Id., 2/27/17 N.T. 1063; 2/28/17 N.T. 1164; 3/23/17 N.T. 1197);
• As it relates to the Amended Complaint, all references to the escrow agreement are
stricken-Paragraphs 28-33, 46(b)-(c) and 52(b)-(c) are stricken in their entirety from the
Amended Complaint. (Id., 2/27/17 N.T 1063; 3/23/17 N.T. 1197 and 1313). (Id.,
Paragraphs 54-57).
Based upon the foregoing stipulations, Defendants described the Plaintiffs' claims
remaining against them as follows:
• Defendants breached their contract for legal services with Plaintiffs by their deviation
from the applicable standard of care of a Pennsylvania attorney, as follows: (a) advising
Plaintiffs to execute the Release which was contrary to their interests; (b) failing to
8
disclose their conflict of interest in representing Mr. Phelan, whose interests were adverse
to Plaintiffs, in the above transaction; and ( c) failing to direct Plaintiffs to obtain different
counsel to represent their interests in the Release and the Riverside/Penn Business Credit
loan.
=================== -· --·- ·-------·
• The Defendant attorney, Mr. Finkelman, deviated from the applicable standard of care
required of Pennsylvania lawyers through negligence as follows: (a) advising Plaintiffs
to execute the Release which was contrary to their interests; and (d) failing to disclose
[his] conflict of interest in representing Mr. Phelan, whose interests were adverse to
Plaintiffs in the above transactions.
• The Defendant attorney, Mr. Finkelman breached the fiduciary duty of loyalty he owed
Plaintiffs by placing his own professional and pecuniary interests above the duty of
loyalty, honesty and fidelity that he owed Plaintiffs in failing to disclose his conflict of
interest through his representation of Mr. Phelan. (Defendants' Motion for Judgment on
the Pleadings, Paragraph 58, passim, citing to Plaintiffs' Amended Complaint, appended
thereto as Exhibit A, Paragraphs 46, 52 and 56, as amended by the stipulations
hereinabove cited as reflected in Exhibit H appended to Defendants' Motion for
Judgment on the Pleadings).
The Defendants further �verred in this Motion that the Onorato Plaintiffs' claims
alleging negligence (Count II), breach of fiduciary duty (Count III) and respondeat superior
(Count IV) are time barred for being tort claims subject to a two year limitations period pursuant
to 42 Pa.C.S.A. § 5524(7),2 and that the Count I claim of "a professional negligence action in
breach of contract'' alleging a breach of the requisite standard of care sounds in tort, rather than
in contract, and should also be subject to a two year limitations period. (Defendants' Motion for
Judgment on the Pleadings, Paragraphs 66-69, 84-86, 91-92). The Defendants contended that,
although the alleged breaches arising from the Release and conflict of interest had to occur prior
to the Onorato Plaintiffs' execution of the Release concluding the settlement with Dr. Wean on
July 20, 2010, the Onorato Plaintiffs did not plead the date on which they retained the
2
42 Pa.C.S.A. § 5524. Two year limitation
*****
9
Defendants nor when they believed the Defendants were required to inform them of the putative
conflict of interest. (Id., Paragraphs 118-120). Instead, the Onorato Plaintiffs did not contend
that they were unaware of the terms of the Release oILhtly 20.,JJUQ. but brought suit..on..ground
that the Defendants should have, but did not tell them not to enter into it on July 20, 2010. (Id.,
Paragraphs 121-122). Therefore, Defendants maintained that, because this action was not
initiated until October 10, 2012, it is more than two years past the limitations period that began
on the Release execution date of July 20, 2010. (Id., Paragraph 123). Similarly, according to
the Defendants, Plaintiffs' suggestion of a cause of action arising from the Plaintiff's, Fred
Onorato, personal guaranty of the Penn Business Credit loan, the proceeds of which were
intended to pay Dr. Wean pursuant to the Release, related back to that transaction that took place
on July 20, 2010. (Id., Paragraphs 124-127). The Defendants contended that, to the extent that
the execution of the personal guaranty represents a separate transaction, the trigger date for the
applicable limitations period was not pleaded in the Amended Complaint, nor did the Plaintiffs
ever provide it during successful litigation of the Defendants' Preliminary Objections that were
overruled by the court. (Id., Paragraphs 128-130). Finally, Defendants maintained that the
Plaintiff, Riverside Management Group, did not assert any claims against the Defendants until
the filing of the Amended Complaint on October 7, 2013, or more than two years after the Penn
Business Proceeds loan settled on October 15, 2010, and that these also, were untimely. (Id.,
Paragraph 131).
As for the substantive merit of the Plaintiffs' pleadings in the Amended Complaint,
the Defendants averred that Plaintiffs did not plead all of the elements necessary to establish
causes of action for professional negligence, negligent breach of a legal representation contract
(7) Any other action or proceeding to recover damages for injury to person or property which is founded on negligent,
intentional, or otherwise tortious conduct or any other action or proceeding sounding in trespass, including deceit or fraud, except
10
and actual loss. (Id., Paragraphs 147-149). Defendants contended that Riverside did not exist
when the Release was signed on July 20, 2010, nor was it named a Plaintiff until the filing of the
Amended Complaint wherein the Defend�ts_' _ complained of conduct related solely to the
Onorato Plaintiffs. (Id., Paragraphs 151-153). Hence, according to the Defendants, Riverside,
which was not formed until August 31, 2010, cannot have a claim against the Defendants arising
from the Release nor a conflict of interest that arose not later than the time of the execution of
the Release. (Id., Paragraphs 154-158). Likewise, since the personal guaranty claim of the
Plaintiff, Fred Onorato, is based upon his liability for the default upon a loan made to Riverside
and a claim for damages arising from its enforcement by the lender, it cannot form the basis for a
claim by Riverside against the Defendants. (Id., Paragraphs 159-162). Moreover, having
stipulated to having no cause of action related to the treatment and distribution of the foregoing
Penn Business Credit loan proceeds and the handling of the escrow, Plaintiffs have removed all
such allegations from the Amended Complaint. (Id., Paragraphs 163-181).
The Defendants further contended in the within Motion that the Amended
Complaint sets forth no factual allegations establishing the formation of an attorney-client
relationship between Riverside and the Defendants, nor any causative nexus between
Defendants' conduct arid the foreclosure of the properties subsequent to the Plaintiff's, Fred
Onorato, default in repayment of the loan to Riverside. (Id., Paragraphs 182-198). In addition,
the Defendants averred that, because the Plaintiff, Fred Onorato, has not pleaded an actual loss
stemming from his personal guaranty on the Penn Business Credit loan, this cause of action is
non-cognizable. (Id., Paragraphs 199-219). As for the Plaintiffs' claim of the Defendants;
breach of fiduciary duty for failure to disclose their representation of Mr. Phelan, the Defendants
contended that the Plaintiffs' pleadings in the Amended Complaint admit that the Plaintiffs were
an action or proceeding subject to another limitation specified in this subchapter. Id.
11
referred to the Defendants by Mr. Phelan and dismissed their prior lawyers so as to employ the
Defendants in the matter of the execution of the Release disposing of the claims of Dr. Wean.
(Id., Paragraphs 220-239). In the Defendants' view, besides failipg__tQ__plead a cognizable claim
of breach of fiduciary duty against them, the Plaintiffs have not established in the Amended
Complaint that the Defendants failed to disclose a matter of which the Plaintiffs were themselves
unaware. (Id., Paragraphs 239-258).
The Plaintiffs, Riverside and the Onoratos, filed an Answer to the Defendants'
Motion for Judgment on the Pleadings in which they admitted that Collina Investment Group and
Mr. Phelan were represented by the Defendants in the matter of the Release with Dr. Wean, and
that they had not alleged that the Defendants were involved in any way with the preparation or
execution of the subject notes upon which Dr. Wean had filed a complaint in confession of
judgment against the Onoratos on December 7, 2009. (Id., Paragraphs 6, 10-11). The Plaintiffs
further admitted that Mr. Phelan had recommended that the Onorato Plaintiffs retain the
Defendant attorney for entering into a settlement agreement with Dr. Wean, and that Plaintiffs
had terminated their other attorneys' representation and hired the Defendant attorney for this
purpose. (Id, Paragraphs 14, 16).
The Plaintiffs also admitted in their Answer to this Motion that: (1) the subject
Release and settlement agreement set forth that they were represented by the Defendants; (2) the
Riverside Plaintiff was formed on or around August 31, 2010; (3) they had contributed properties
to Riverside as of October 15, 2010, the. date upon which Riverside borrowed $1,750,000 from
Penn Business Credit pursuant to a loan personally guaranteed by the Plaintiff, Fred Onorato,
and secured by mortgages against the Onorato Plaintiffs' properties that were contributed to
Riverside along with mortgages against other properties owned by Mr. Phelan and Dr. Rosen;
12
and (4) the Penn Business Credit loan had closed on October 15, 2010. (Id, Paragraphs 20-22,
24-25, 27-29). Plaintiffs additionally admitted in their Answer to the within Motion that
Riverside had defaulted upon the Penn Business Credit (now Fulton Bank} loan,· thai the lender
had initiated foreclosure proceedings against Riverside on May 17, 2012, as well as an action
against the Plaintiff, Fred Onorato, to enforce his personal guaranty, and that Plaintiffs did not
allege in their Amended Complaint whether Penn Business Credit was successful in obtaining a
judgment against Mr. Onorato, but only that he was' 'subjected to the loss of additional property
on the personal guaranty' as compared to sustaining an actual loss. (Id, Paragraphs 32, 34-37).
The Plaintiffs admitted also that this action was initiated by a Writ of Summons on
October 10, 2012 and that Riverside was not named as a party when the Complaint was filed on
July 18, 2013. (Id, Paragraphs 38-40). The Plaintiffs admitted that they had successfully
litigated the Defendants' Preliminary Objections to their Complaint and Amended Complaint
with arguments that their pleadings were adequately specific. (Id, Paragraphs 42, 44-45).
Further, the Plaintiffs admitted that the Defendants had pleaded the statute of limitations defense
in New Matter in their Answer to the Amended Complaint. (Id., Paragraph 47). The Plaintiffs
denied that the action was untimely filed, but did not assert the discovery rule or fraudulent
concealment in any of their responsive pleadings when alleging that they first became aware of
the damages arising from the Defendant attorney's negligence in or around August of 2012, or
shortly after the initiation oflegal actions commenced against them in May and June 2012. (Id,
Paragraph 53). The Plaintiffs admitted to all of the Defendants' representations in the instant
Motion for Judgment on the Pleadings regarding the stipulations of the parties to remove from
the Amended Complaint all claims regarding the escrow agreement signed by the Onorato
Plaintiffs in 2010. (Id, Paragraphs 54-57).
13
In response to the Defendants' contention in this Motion that they did not allege the
date the Defendants were retained or when they believed the Defendants failed to advise them of
a conflict of interest, the Plaintiffs averred �._._hrag:giph 19 of the Amended Complaint
alleges that the Finkelman representation of the Onoratos as to the Wean settlement agreement
was in place as of July 20, 2010 at the latest (and post-Amended Complaint discovery has
revealed that the loss of the Cherry Tree property took place when the escrowed deed was
recorded in favor of Wean on October 6, 2011), and the Finkelman representation of Riverside
and the Onoratos as to the Riverside loan with Penn Business Credit was in place as of October
15, 2010 at the latest (and the loss of the properties contributed to Riverside was discovered not
earlier than August 2012 (per Amended Complaint, Paragraph 34) when Penn Business Credit
began foreclosure proceedings against the properties contributed to Riverside)." (Id, Paragraph
119). Plaintiffs went on to contend that the commencement ofthis action on October 12, 2012
was neither two years nor four years longer than either (A) October 6, 2011 - the date when the
Cherry Tree property was recorded in favor of Dr. Wean, which was the earliest date when the
Onoratos could have known that they lost the Cherry Tree property which was put in escrow by
the July 20, 2010 Release), or (B) May 2012 (the date when Penn Business Credit began to
foreclose on properties contributed to Riverside, which was the earliest date when the Onoratos
and Riverside could have known that they would be losing the properties contributed by
Riverside. (Id, Paragraph 123).
Regarding the Defendants' averment in the within Motion that the trigger of the
limitations period for the Plaintiffs' causes of action occurred not later than the execution of the
Release on July 20, 2010, the Plaintiffs countered that: "the trigger for the loss of the Cherry
Tree property occurred not earlier than October 6, 2011 (when the Deed in favor of Dr. Wean
14
.was.reccrded), .and.tbe.tngger.forthe loss of the properties oontributed-te-Riverside-oeeurred not·
earlier than May 2012 (when the Penn Business Credit foreclosure actions began)", and the
October 7. 2013 date ofan action ccmmenced by Riverside was timely (Td Paragraphs 127 aod
135). Plaintiffs admitted the allegation of the Defendants that they elected to stand on their
pleadings and successfully opposed Defendants' preliminary objections on the basis of lack of
specificity and failure to annex the contracts to the Amended Complaint. (Id., Paragraph 129).
In answer to the Defendants' contention that, while Riverside is named as a Plaintiff,
Riverside did not actually assert any claims against the Defendants or allege an attorney-client
relationship with Defendants, the Plaintiffs replied that the caption of the Amended Complaint
identifies Riverside as a co-Plaintiff; Paragraph 27 thereof averred that the Defendant attorney
had represented Riverside at the Penn Business Credit loan transaction; and Paragraph 25 thereof
averred that the properties contributed by Riverside were lost as a result of the Defendant
attorney's negligence. (Id, Paragraph 131 ). In response to the Defendants' assertion that
Plaintiffs had not pleaded a reliance upon the discovery or fraudulent concealment rules in
responding to their New Matter, the Plaintiffs contended that the Amended Complaint averred
that Plaintiffs first became aware of damages they had suffered from the Defendant attorney's
negligence in or around August 2012, which was shortly after the initiation of the legal actions
commenced in May and June 2012 as described in Paragraphs 34 and 35 of the Amended
Complaint. (Id, Paragraph 139). The Plaintiffs admitted that this action was not commenced by
them until October 10, 2012 and Riverside did not join as a Plaintiff until October 7, 2013. (Id.,
Paragraph 142). The Plaintiffs further admitted the following allegations of the Defendants in
the within Motion: (1) Riverside did not exist when the Onoratos entered into the Release; (2)
Riverside was not formed until August 31, 20 I 0, which was more than a month after the
15
- --------- - - -Onor-atos-entered--into--th&-s@ttlement--with Dr. Wean on July 20, �Q-1-0;-{31-any-conduet-forming-
the basis for the claim arising from the Release occurred before Riverside was formed; (4)
Riverside cannot have a claim arising from the Release ar a conflict of interest that arme not
later than the execution of the Release because Riverside did not exist at the time the Release
was executed; (5) Plaintiffs stipulated they are not asserting a claim arising from the treatment
of the Penn Business Credit loan proceeds; and (6) an allegations in the Amended Complaint
relating to the distribution of the loan proceeds and the handling of the escrow have been
removed from the Amended Complaint and cannot be the basis of a claim. (Id., Paragraphs 155-
158, 164-165).
Despite their failure to plead a reliance upon the discovery rule, the Plaintiffs
averred the emergence of knowledge of the following instances of the negligence of the
Defendant attorney in post-Amended Complaint discovery - failure to disclose to Plaintiffs: (a)
an of the risks and consequences that could arise from agreements being signed regarding the
Penn Business Credit loan transaction; (b) all of the risks and consequences which could arise
from the documents of formation of Riverside; and (c) the conflicts of interest in Defendant
attorney's simultaneous representation of Dr. Rosen and Mr. Phelan regarding Collina and
Riverside matters. (Id, Paragraph 196).
The Plaintiffs opposed the Defendants' contentions vis a vis the lack of viability of
the personal guaranty claim of Fred Onorato due to having suffered no losses with statements
that the Plaintiff had directly contributed properties to Riverside that were lost as a result of the
Defendant attorney's negligence; that the claim for those losses can be maintained by either Fred
Onorato or Riverside; and that post-Amended Complaint discovery revealed that Fred Onorato
had to incur legal fees to successfully defend the Penn Business Credit unlimited legal action on
16
_ __ _ _ thcpersonalcguaranty__when.the.Defendant attorney was supros0d-te-have--negoti-ated-and----
documented a limited basis therefor. (Id., Paragraph 217). The Plaintiffs responded to the
·Defendants' - contentions tliartlieif claim of breach of fiduciary-@ rested on failure to reveal
Defendants' representation of Mr. Phelan and fails on the merits with contentions that: (1) post-
Arnended Complaint discovery had revealed that the Defendant attorney failed to disclose the
nature of his legal representation of Dr. Rosen, who was a member of Collina who formed, but
never joined, Riverside; (2) Dr. Rosen's limited involvement in the Penn Business loan
transaction was never explained to Plaintiffs as resulting from the Defendant's knowledge that
Dr. Rosen's business associate, Frank Boyle, had warned the Defendant attorney that the Penn
Business Credit loan transaction was ill-advised, and (3) Dr. Rosen owned properties in which
Collina and Riverside were supposed to have an interest, but those properties never became
owned by Collina or Riverside. (Id, Paragraph 222).
The Plaintiffs went on to admit that, while they may have been aware of the
Defendants' representation of Mr. Phelan, they learned for the first time in post-Amended
Complaint discovery that the Defendant attorney knew, but did not disclose to Plaintiffs,
[information] about Mr. Phelan's substantial money judgments and IRS obligations, and about
Mr. Phelan being a target of a U.S. Attorney investigation and telling the Defendant attorney that
'we are all screwed without the Penn Business Credit loan,' thus preventing Plaintiffs from
making informed decisions regarding (a) refraining from contesting the Wean confessed
judgments; (b) executing the Release; (c) escrowing the Cherry Tree property deed to Dr. Wean;
[(d)] contributing properties to Riverside; [(e)] becoming involved as a member of Riverside
with Mr. Phelan as the co-managing member; and [(f)] allowing Riverside's use of contributed
properties as collateral for the Penn Business Credit loan transaction. (Id., Paragraph 237).
17
The Plaintiffs additionally admitted in reference to the Defendants' averments as to
the lack of merit of their breach of fiduciary duty claim set forth in the within Motion that: (1)
tney had pleaded iii the Amended Complaint their awareness of tlie· rep.resentation of Mr. Phelan
by the Defendants; (2) Mr. Phelan had referred the Plaintiffs to his lawyers, the Defendants; (3)
they had fired the other separate lawyers who were representing them at the time in order to hire
the Defendants; and (4) the Release itself, which was signed by the Onoratos, indicated that the
Defendant attorney represented the Onoratos and Mr. Phelan. (Id, Paragraphs 237-240). And,
when replying to the Defendants' insistence that the Plaintiffs, therefore, could not base a
conflict of interest claim against them on a lack of knowledge as to dual representation and could
not fault the Defendants for failing to advise them to retain separate counsel when they already
had separate counsel who were fired to retain Defendants as part of the joint representation with
Mr. Phelan, the Plaintiffs alleged again that the Defendants failed to inform them of Mr. Phelan's
financial and legal difficulties, and cryptically contended that "[ t]here is a material difference
between Plaintiff[s] knowing they could use independent counsel and Plaintiffs being told why
they should use independent counsel." (Id, Paragraph 241-242).
The Plaintiffs argued in their Memorandum of Law in Support of Their Answer to
the Defendants' Motion for Judgment on the Pleadings that the Defendants' position that the
trigger date for the limitations period for their professional negligence and breach of contract
claim sounding in negligence is October 10, 2010, when the Release was executed, and that the
filing of the writ of summons on October 10, 2012 was beyond the applicable two year statute of
limitations period is incorrect. (Id., p. 8) The Plaintiffs asserted that such claims cannot be
initiated until the suffering of an actual loss and the fact of damages being established, even if
the amount were uncertain, citing to Adamski v .. Allstate Ins. Co., 718 A.2d 1033 (Pa. Super.
18
1999). (Id.). According to the Plaintiffs, the earliest date when they could have known from
public records that they had suffered an actual loss was October 6, 2011 when Dr. Wean
-- - --recoroea-tlie-Deea foYthe450-Chetry Tree property, and for Riverside, cm August of2012 after
Penn Business Credit obtained judgment against Riverside for defaulting upon the Penn Business
Credit loan. (Id., pp. 8-9, fn 3). Plaintiffs maintained that"[c]learly, the filing of the writ of
summons on October 10, 2012 was within the shortest applicable 2-year limitations period after
the October 6, 2011 date of forever loss of the equity value of the 450 Cherry Tree property."
(Id, p. 9). Plaintiffs alleged that Defendants' position that Riverside's claims are time-barred
because the filing of the Amended Complaint on October 7, 2013 was outside the two year
limitations period from the date of the Penn Business Credit loan settlement on October 15, 2010
is incorrect because "the earliest date when Riverside could have known from public records that
they suffered an actual loss occurred during August 2012, when the public records show that
Penn Business Credit had obtained judgment against Riverside in the Penn Business Credit loan
transaction." (Id., pp. 10-11). Plaintiffs claimed in a footnote to this statement that "[d]iscovery
also has revealed that Defendants had represented Riverside in its formation and at the Penn
Business Credit loan settlement." (Id., p. 11, fn 5). Plaintiffs further argued that:
"Riverside's claim for damages are mainly for the loss of properties contributed to
Riverside [adding, in an accompanying footnote placed here that: "[a]ny claim for
damages associated with the Fred Onorato personal guaranty is subsumed by the claim
for loss of the properties contributed to Riverside"], and the various stipulations to
narrow contentions, claims and damages do not operate to eviscerate that particular claim
for damages. While Defendants did not cause the default on the Penn Business Credit
loan, it was Defendants' failure to properly advise the Onoratos and Riverside at the time
of the Penn Business Credit loan that precluded the Onoratos and Riverside from making
informed decisions which would have prevented the losses. Accordingly, Riverside's
remaining claims against Defendants have been pleaded properly, and should continue at
trial." (Id.).
19
.The Plaintiffs addressed the Defendants' averments in this -Motion-thatthe-breae,h of
fiduciary duty claim is meritless with the contention that they had adequately pleaded the
· · ·etements · oflnis cause -ofactiofftlial: (I) the defendant acted negligentlf or- failea fo a.cfin-good
faith or solely for the benefit of the plaintiff for all matters for which the attorney was employed;
(2) the plaintiff suffered an injury; and (3) the defendant's failure to act solely for the plaintiffs
benefit was a real factor in bringing about the plaintiff's injuries," with citation to Dinger v.
Allfirst Financial, Inc., 82 Fed. Appx. 261, 265 (3rd Cir. 2003)(citing McDermott v. Party City
Corp., 11 F. Supp. 2d 612, 626 n. 18 (E.D. Pa. 1998)). (Id, p. 12). Plaintiffs again insisted that
the Defendants' withholding of the foregoing information that they deemed vital to their ability
to make informed business decisions caused the losses complained of in the Amended
Complaint. (Id, pp. 12-13).
Although a hearing on the Defendants' Motion for Judgment on the Pleadings was
commenced by this Court on July 13, 2017 following an untranscribed robing room discussion
and negotiations between the parties, the Plaintiffs entered a stipulation into the record redacting
from the Amended Complaint Paragraph 35 alleging Penn Business Credit's initiation, on June
13, 2012, of an action arising from Fred Onorato's personal guaranty of the subject loan and the
statement in Paragraph 56 thereof alleging the Defendant attorney's liability for breaching his
fiduciary duty to Plaintiffs through his authorization of the misuse of the Penn Business Credit
loan proceeds. Plaintiffs additionally waived enforcement of Fred Onorato's guaranty regarding
Plaintiffs' MacDade Boulevard and Wilson Avenue properties, inasmuch as they had not lost
these properties under the guaranty. Thereafter, the Plaintiffs, took no further part in the
courtroom proceedings that were, as a result, brought to an end. The Court subsequently entered
20
the following appealed from Order disposing of the Defendants' Motion for Judgment on the
Pleadings:
''ORDER
AND NOW, this 14th day of September, 2017, upon consideration of
Defendants', Howard A. Finkelman, Esquire and Bock and Finkelman, P.C., Motion for
Judgment on the Pleadings, and Plaintiffs', Fred and Edwina Onorato, h/w, Answer
thereto, as well as the Memoranda of Law submitted in support thereof, and oral
argument having been heard thereon, it is hereby ORDERED and DECREED that said
Motion will be, and hereby is, GRANTED.
IT IS FURTHER ORDERED and DECREED that Plaintiffs' "revised"
Complaint filed October 7, 2013 (which referred to Riverside Management Group, LLC
as a Plaintiff in paragraph 2 thereof, but which neglects to set forth any viable claims
against these Defendants which are not otherwise time-barred) will be, and hereby is,
DISMISSED WITH PREJUDICE and that JUDGMENT will be, and hereby is, entered
against all alleged Plaintiffs and in favor of Defendants, Howard A. Finkelman, Esquire
and Bock and Finkelman, P.C.
BY THE COURT:
ls/CHARLES B. BURR, II S.J."
The Plaintiffs have submitted the following Concise Statement of Errors
Complained of on Appeal:
"1. This Honorable Court committed error of law or abused its discretion, by having
granted judgment on the pleadings in favor of Defendants ... and by having dismissed
all claims by 'alleged' Plaintiffs in this case, if such ruling was based upon the purported
application of one or more statutes of limitations, as to the discrete claims of the
[Plaintiffs, Fred and Edwina] Onorato[].
2. This Honorable Court committed error of law or abused its discretion, by having
granted judgment on the pleadings in favor of Defendants ... and by having dismissed
all claims by 'alleged' Plaintiffs in this case, if such ruling was based upon the purported
application of one or more statutes of limitations, as to the discrete claims of [the
Plaintiff,] Riverside.
3. This Honorable Court committed error of law or abused its discretion, by having
granted judgment on the pleadings in favor of Defendants ... and by having dismissed
all claims by 'alleged' Plaintiffs in this case, if such ruling was based upon the purported
failure to properly plead each of the requisite elements of the negligence, breach of
. contract and/or breach of fiduciary duty claims asserted in the original Complaint or in
the Amended Complaint, asto either or both of the discrete claims of the [Plaintiffs].
21
4. This Honorable Court committed error of law or abused its discretion, by having
granted judgment on the pleadings in favor of Defendants ... and by having dismissed
all claims by 'alleged' Plaintiffs in this case, if such ruling was based upon the Court's
purported failure to consider, and to rule upon, the merits of the matters presented in
for-Leave
- Plaintiffs' Petition to File a Second Amended I;oropfolni. wlj1c�_ff�ff_},e�n f1l�d
with the Court on September :S, 2017 and which was pending prior to the Court's
September 14, 2017 Order regarding Defendants' Motion for Judgment on the
Pleadings[], particularly when Defendants never responded to Plaintiffs' Petition for
Leave to File a Second Amended Complaint, because[,] although the decision to grant or
deny a petition to amend a pleading is a matter of judicial discretion, Pennsylvania
appellate courts have held that amendments should be allowed with great liberality at any
stage of the case unless they violate the law or prejudice the rights of the opposing party,
and Defendants never alleged violation of law nor prejudice by the Court's granting of
Plaintiffs' Petition for Leave to File a Second Amended Complaint.
5. This Honorable Court committed error of law or abused its discretion, by having
granted judgment on the pleadings in favor of Defendants ... and by having dismissed
all claims by 'alleged' Plaintiffs in this case, when, if such ruling was based upon the
purported failure of Riverside to plead any claims in the so called 'revised' Complaint
filed October 7, 2013, then there was no basis for the Court to have also dismissed the
separate claims asserted by the [Plaintiffs, Fred and Edwina] Onoratoj] in both the
original Complaint and the 'revised' Complaint filed October 7, 2013." (Plaintiffs'
Concise Statement of Errors Complained of on Appeal, pp. 2-3)(Emphases omitted).
Waiver of Issues
The Plaintiffs have raised contentions of error or abuse of discretion in the event that
the Court's ruling from the appealed from Order was based upon a finding that the Amended
Complaint was not well pleaded as to the causes of action waged therein. (Concise Statement,
Paragraph 3). However, this Court's Order is clear that Judgment was granted to the Defendants
solely on the findings that the Plaintiffs' causes of action are either not viable against the
Defendants or are time barred. Hence, this contention is of no moment or merit and need not be
discussed any further in this Opinion. The same must be said of Plaintiffs' contention of error or
abuse of discretion in the event that the appealed from Order improperly dismissed the separate
claims of the Onorato Plaintiffs along with those of the Plaintiff, Riverside, for reasons that
22
Riverside had not pleaded any causes of action against the Defendants in the Amended
Complaint. (Concise Statement, Paragraph 5).
· Plaintiffs additionally raised a claim of error or am!se afdfsc�etio11 fardfa�qsitiaoby
this Court of the Defendants' Motion for Judgment on the Pleadings before the issuance of a
ruling on the Plaintiffs' Petition for Leave to File a Second Amended Complaint that was
submitted a week before the appealed from Order was filed. (Concise Statement, Paragraph 4).
However, because this issue is being raised for the first time on appeal, it must be deemed
waived. Pennsylvania Rule of Appellate Procedure 1925(b); Orange Stones Co. v. City of
Reading Zoning Hearing Board. 32 A.3d 287, 291 (Pa. Cmwlth. 2011). "It is well settled that
issues not raised before the trial court cannot be raised for the first time on appeal or in a Rule
1925(b) Concise Statement of Claims Raised on Appeal." Irwin Union National Bank and Trust
Co. v. Famous, 4 A.3d 1099 (Pa. Super. 2010), appeal denied, 20 A.3d 1212 (Pa. 2011). Id
Discussion
The Plaintiffs' have contended in their remaining claims of error or abuse of
discretion that this Court wrongly granted judgment on the pleadings in favor of Defendants and
dismissed all claims by the Plaintiffs in this case if such ruling was based upon the purported
application of one or more statutes of limitations as to the discrete claims of the Plaintiffs, Fred
and Edwina Onorato, and those of the Plaintiff, Riverside. (Concise Statement, Paragraphs 1 and
2). Under Pennsylvania law and the facts of this case, the Plaintiffs' professional malpractice
claims against the Defendants sounded in negligent contractual breach in Count I, and
specifically in tort in Count II of the Amended Complaint. It goes without saying that, in order
to establish a claim of breach of contract, the terms thereof must be specifically pleaded as well
23
as the conduct that constituted the breach. It will be recalled that the Plaintiffs provided no copy
of their agreement with the Defendants, contending that it was made orally, and that the
surroundin}X allegations Ttf their Amended Com12laint alleged the Defendants' :failure �ojeff()rn1
in conformity with the requisite standard of care as the conduct which comprised the putative
breach. As the Defendants submitted in their Memorandum of Law in Support of the within
Motion:
"In the context of this action, [P]laintiffs must prove the [D]efendants failed
to achieve their objective of representation, failed to follow a specific instruction by
[P]laintiffs or breached a specific provision of the retention agreement to prove a breach
of contractual duty. Plaintiffs did not allege that [D]efendants failed to follow their
instructions or failed to achieve their objective. To the contrary, [P]laintiffs' claims are
based on the contentions that [D]efendants should have given them different advice and
achieved their objective in a different way. The essence of [P]laintiffs' claims are how
the legal services were performed and the nature of the advice provided, not that the
[D]efendants provided no legal service or no advice." (Id., p. 11 ).
Reviewing the Plaintiffs' contentions about the advice provided to them by the
Defendant attorney, there is the averment that the Defendant never apprised them of Mr.
Phelan's legal problems with the IRS and Attorney General, material that would surely be
protected by attorney client privilege. The Plaintiffs also were unhappy that the Defendant
attorney did not provide them with all of the information they felt should have been provided,
sans any representation that they had even described what that information might be and
requested that it must be given. An attorney cannot be faulted under any legal theory for not
being a mind reader.
The distinction between negligence and breach of contract claims in a professional
malpractice case was explained as follows in New York Central Mutual Ins. Co. v. Margolis
Edelstein, 2015 WL 412519 (M.D. Pa. Jan. 30, 2015)(quoting Frantz v Fasullo, 2014 WL
6066020, *4 (M.D. Pa. Nov. 13, 2014)(interpreting Pennsylvania law):
24
Because the Plaintiffs have not pleaded the Defendant's breach of specific
contracted for instructions, but alleged essentially a mere failure to read their minds vis a vis
information desirable for imparting to them at the time of their entry into the arrangements for
which the Defendants were hired, and pleaded a contractual breach consisting of a failure to
perform at the requisite standard of care of members of the legal profession, their Count I claim
against the Defendants alleging breach of contract sounds in tort and not in contract. New York
Central Mutual Ins. Co. v. Margolis Edelstein, supra. Hence, both of the Plaintiffs' causes of
action alleging professional malpractice by the Defendants were subject to a two year limitations
period. 42 Pa.C.S.A. § 5524, supra. Plaintiffs have not disputed that the statute of limitations
for their claims of breach of fiduciary duty against the Defendants and respondeat superior
against the Defendant law firm is two years as well.
As to their claim regarding the date when the two year statute of limitations was
triggered, the Plaintiffs asserted in response to this Motion that they first became aware of the
damages arising from the Defendant attorney's negligence in or around August of 2012, or
shortly after the initiation of the legal actions arising from Riverside' s default in repaying the
Penn Business Credit loan that were commenced in May and June of 2012, i.e., the confessed
25
judgment and foreclosure on escrowed deeds on Onorato properties contributed by Riverside and
the action by Penn Business Credit against the Plaintiff, Fred Onorato, as guarantor of the
·$t,7SO,OOO:OO loan-procee,i-s; respectively. Plaintiffs alleged in ·Paragfaplil9-oftlieit-A:mended
Complaint that the Finkelman representation of the Onoratos as to the Wean settlement
agreement was in place as of July 20, 2010 at the latest, and that post-Amended Complaint
discovery has revealed that the loss of the Cherry Tree property took place when the escrowed
deed was recorded in favor of Dr. Wean on October 6, 2011. Plaintiffs alleged in Paragraph 34
of their Amended Complaint that the Finkelman representation of Riverside and the Onoratos as
to the Riverside loan with Penn Business Credit was in place as of October 15, 2010 at the latest,
and that the loss of the properties contributed to Riverside was discovered not earlier than
August 2012 when Penn Business Credit began foreclosure proceedings against the properties
contributed to Riverside. Plaintiffs thus summarized that the Onoratos' commencement of this
action on October 12, 2012 was neither two years nor four years longer than either October 6,
2011 - the date when the Cherry Tree property was recorded in favor of Dr. Wean, which was
the earliest date when the Onoratos could have known that they lost the Cherry Tree property
that was put in escrow under the July 20, 2010 Release, or May 2012 - the date when Penn
Business Credit began to foreclose on properties contributed to Riverside and the earliest that the
Onorato Plaintiffs and the Plaintiff, Riverside, could have known that they would be losing the
other foreclosed upon properties contributed to Riverside that became collateral for the Penn
Business Credit loan. Therefore, in Plaintiffs' view, the addition of Riverside's claims to the
Amended Complaint on October 7, 2013 was not untimely either.
Nevertheless, the properties claimed by the Onorato and Riverside Plaintiffs as
damages in this action would not have been lost had Riverside not defaulted upon its
26
responsibility for repayment of the loan taken from Penn Business Credit and guaranteed by the
Plaintiff, Fred Onorato, in order to accomplish the Wean settlement of the confessed judgment
· .... · j�191:1 aiiijo�[liftl)�-� :Tu..�dcEl12!1, "The !!faintiffs .bav@ stinuJated rnff_�ft�Licas��-a�iaud _�1(�J�fo,�
against the Defendants arising from the escrow and disbursement of the loan proceeds.
Moreover, inasmuch as the judgment confessed against the Plaintiff, Fred Onorato, was not
adjudicated in court, but concluded with that settlement, it cannot form the basis of any viable
claim against the Defendants by the Onorato and Riverside Plaintiffs that it had caused an
involuntary loss. Therefore, with no damages being established, in order to plead the
Defendants' liability for professional malpractice and respondeat superior, the Plaintiffs must
rely upon the facts and circumstances of the initiation of the representation in July of 2010 as
triggering the limitations period for any claims thereof.
The Plaintiffs have alleged only that the Defendant attorney's breach of the requisite
standard of care consisted in the failure to apprise them of clearly privileged information as to
the legal problems of another client, Mr. Phelan, that they neither requested nor demanded at the
time. As to their claim of a breach of fiduciary duty, the Plaintiffs have not established grounds
in their pleadings that would support any breach of that duty nor any claim of loss.
Without belaboring the prior discussion of issues raised in this appeal, hereinabove set forth at
great length, the conclusion that the Plaintiffs had failed to timely plead viable causes of action
and damages against the Defendants is both reasonable and ineluctable.
Conclusion
A party is permitted to file a motion for judgment on the pleadings pursuant to
Pennsylvania Rule of Civil Procedure 1034 when the pleadings are closed and there would be no
delay of trial. In rendering a decision on a motion for judgment on the pleadings, a court may
27
consider only the pleadings and any documents properly attached thereto. Pa. R.C.P. 1034;
Vogel v Berkley, 511 A.2d 878, 880 (Pa. Super. 1986). Judgment on the pleadings may be
-entered when there are n9: di§Ruted issues_ ef__ma;:tallial fae� mid die 111ov1ng·party-1s entifloo to
judgment as a matter of law. Guerra v. Redevelopment Authority of City of Philadelphia, 27
A.3d 1284 (Pa. Super. 2011); Miami National Bank v. Willen§, 190 A.2d 438, 439 (Pa. 1963).
Judgment on the pleadings may be granted, however, only where "the moving party's right to
succeed is certain and the case is so free from doubt that trial would be a fruitless exercise."
Conrad v. Bundy, 777 A.2d 101 (Pa. Super. 2001).
The Plaintiffs' financial woes attendant to their involvement with the efforts to
compensate Dr. Wean for his contributions to Collina began before the Defendants were hired to
represent them. Dr. Wean had previously confessed judgment against the Plaintiff, Fred Onorato,
when the allegedly coerced arrangement to pay Dr. Wean in judgment notes collateralized with
Plaintiffs' properties fell through. On Mr. Phelan's advice, the Plaintiffs fired their previous
attorneys who, according to representations from the Defendants in their pre-trial Settlement
Memorandum, had advised against the execution of the Release and Settlement of that action and
\.
hired the Defendants with full knowledge that the Defendants were also Mr. Phelan's lawyers.
Thereafter, Riverside was formed and, using its collection of the Onorato Plaintiffs' and other
group members' properties as collateral, secured a $1,750,000.00 loan from Penn Business
Credit, the proceeds of which were used to compensate Dr. Wean pursuant to the Release. That
the Plaintiffs were instrumental in providing the deed for the Cherry Tree property for inclusion
in the escrow, which Dr. Wean later filed, renders the Plaintiffs' protestations that they had no
idea he would do so, disingenuous, especially since Dr. Wean had fully demonstrated that he
would attempt to regain the value of his contributions to Collina from its members by any means
28
suggested claim of damages arising from the Plaintiff's, Fred Onorato, guaranty of the Penn
Business Credit loan were stricken in part at the hearing on the Defendant's Motion prior to the
_d _ from Order. For that reason and because the Plaintiff has not pleaded
the potential for recovering a loss in that regard, this c · non-viable besides being
filed outside of the applicable two year statute of limitations. Kituskie v. Corbman, 5 52 Pa. 275, ··
282, 714 A.2d 1027, 1030 (1998); 42 Pa.C.S.A. § 5524, supra. Moreover, because the Plaintiffs'
have failed to timely plead viable causes of action against the Defendant attorney, Count IV of
the Amended Complaint alleging a claim of Respondeat Superior against the Defendant law firm
also fails.
For all of the foregoing reasons, this Court's Order granting the Defendants' Motion
for Judgment on the Pleadings and dismissing, with prejudice, the Plaintiffs' Amended
Complaint for raising non-viable claims against the Defendants that were not otherwise time
barred must not be reversed on appeal.
BY THE COURT:
�----�"-..../�
•
CHARLES B. BURR, II SJ.
31