Elliott Reihner Siedzikowski & Egan, P.C. v. Pennsylvania Employees Benefit Trust Fund

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
3-4-2002
Elliott Reihner v. PA Empl Benefit
Precedential or Non-Precedential:
Docket 1-2042
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 01-2042
__________
ELLIOTT REIHNER SIEDZIKOWSKI & EGAN, P.C.,
Appellant
v.
THE PENNSYLVANIA EMPLOYEES BENEFIT TRUST FUND;
THOMAS G. PAESE
__________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
D.C. Civil No. 00-cv-04036
District Judge: The Honorable James T. Giles
__________
Argued February 5, 2002
__________
Before: BECKER, Chief Judge, McKEE, and BARRY, Circuit Judges
(Opinion Filed: February 27, 2002)
____________
Mark J. Schwemler, Esq. (Argued)
Elliott Reihner Siedzikowski & Egan, P.C.
925 Harvest Drive, Suite 300
Blue Bell, PA 19422-3010
Attorneys for Appellant
Edwin L. Klett, Esq. (Argued)
Klett Rooney Lieber & Schorling
One Oxford Centre, 40th Floor
Pittsburgh, PA 15219-6498
AND
R. Nicholas Gimbel, Esq.
Klett Rooney Lieber & Schorling
Two Logan Square, 12th Floor
Philadelphia, PA 19103-2756
Attorneys for Appellee Pennsylvania Employees Benefit Trust Fund
John G. Harkins, Jr., Esq. (Argued)
David J. Creagan, Esq.
Harkins Cunningham
2800 One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
Attorneys for Appellee Thomas G. Paese
Eric Kraeutler, Esq.
Christin L. Bassett, Esq.
Morgan, Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103
Attorneys for Appellee Independence Blue Cross
Steven J. Fram, Esq.
Archer & Greiner
One Centennial Square
East Euclid Avenue
P.O. Box 3000
Haddonfield, NJ 08033-0968
Attorneys for Capital Blue Cross
Patrick J. O'Connor, Esq.
Aaron Krauss, Esq.
Cozen O'Connor
The Atrium
1900 Market Street
Philadelphia, PA 19103
Attorneys for Appellee Blue Cross of Northeastern Pennsylvania
____________
MEMORANDUM OPINION
____________
BARRY, Circuit Judge
Appellant Elliott Reihner Siedzikowski & Egan, P.C. ("ERSE") appeals
the
District Court's orders granting the motions to dismiss and to stay
discovery of
defendants the Pennsylvania Employees Benefit Trust Fund ("PEBTF") and
Thomas G.
Paese and the motion to intervene and for a protective order of
Independence Blue Cross,
Capital Blue Cross, and Blue Cross of Northeastern Pennsylvania
(collectively "Blue
Cross"). We have jurisdiction pursuant to 28 U.S.C. 1291 and will
affirm.
Because we write only for the parties who well understand the
procedural history
and facts of the case, we will not repeat them except as necessary to
provide context.
Instead, we will move directly to ERSE's primary contention that the
statute of
limitations does not bar the three causes of action contained in its
complaint (1) First
Amendment violation; (2) breach of contract; and (3) intentional
interference with
contractual relations.
I.
The first count of the complaint seeks relief under 42 U.S.C. 1983
for a violation
of ERSE's First Amendment right to free speech. ERSE asserts that this
claim is not
time-barred. It is mistaken. Section 1983 claims are governed by the
relevant state's
statute of limitations for personal injury actions. Wilson v. Garcia, 471
U.S. 261, 276
(1985); McDowell v. Delaware State Police, 88 F.3d 188, 190 (3d Cir.
1996). In
Pennsylvania, the statute of limitations for personal injury actions is
two years and begins
running when the cause of action accrues. 42 Pa. Cons. Stat. Ann.
5524(2) (West
1981 & Supp. 2001); S.T. Hudson Engineers, Inc. v. Camden Hotel Dev.
Assocs., 747
A.2d 931, 934 (Pa. Super. Ct. 2000). The question as to when a section
1983 action
accrues is, however, one of federal law. Genty v. Resolution Trust Corp.,
937 F.2d 899,
919 (3d Cir. 1991). Under federal law, the statute of limitations begins
to run "when the
plaintiff knew or should have known of the injury upon which its action is
based."
Sameric Corp. of Delaware, Inc. v. City of Philadelphia, 142 F.3d 582, 599
(3d Cir.
1998).
Here, ERSE's section 1983 action accrued over five years before the
complaint
was filed in the District Court and, thus, is barred by the two-year
statute of limitations.
Defendants allegedly violated ERSE's First Amendment right to free speech
when they
"retaliated" against ERSE for a letter it sent to PEBTF on April 21, 1995,
which warned
that political interests were compromising the Blue Cross matter. A month
after the
letter was sent, PEBTF terminated ERSE. It was at this moment, May 24,
1995, that any
First Amendment right to free speech was violated and that ERSE suffered
injury.
ERSE counters that the unconstitutional retaliation occurred when
PEBTF
withheld an earned contingent fee and that this fact was not discoverable
before
September 1998 because defendants actively concealed information about the
settlement
with Blue Cross. This argument does not rescue ERSE from the statute of
limitations.
ERSE possessed in 1995 facts essential to a First Amendment retaliation
claim. See
United States v. Kubrick, 444 U.S. 111, 122 (1979) (statute of limitations
runs once a
plaintiff possesses "the critical facts that he has been hurt and who has
inflicted the
injury"). ERSE knew it had exercised its First Amendment right to free
speech by
sending the letter. ERSE also knew that PEBTF had terminated it because
of the letter.
On May 24, 1995, therefore, ERSE possessed the information necessary to
file an action
under 42 U.S.C. 1983 for violation of its First Amendment right to free
speech, and a
jury could have calculated appropriate damages. Accordingly, ERSE's
section 1983
action accrued more than two years before the complaint was filed and is
barred by the
statute of limitations.
II.
Similarly, ERSE's second claim, against PEBTF only, for breach of
contract is
barred by the statute of limitations. ERSE contends that PEBTF breached
the fee
agreement when it refused to pay an earned contingent fee. Although ERSE
attempts to
characterize its claim as one for breach of contract, it is in fact a
claim for quantum
meruit. In Pennsylvania, it is well-established that a client has an
absolute right to
terminate an attorney at any time for any reason, regardless of any
contract. Kenis v.
Perini Corp., 682 A.2d 845, 849 (Pa. Super. Ct. 1996); Hiscott & Robinson
v. King, 626
A.2d 1235, 1237 (Pa. Super. Ct. 1993). The dismissed attorney's remedy is
a quantum
meruit action to recover the value of services rendered. Novinger v. E.I.
DuPont de
Nemours & Co., Inc., 809 F.2d 212, 218 (3d Cir. 1987); Kenis, 682 A.2d at
849; Hiscott
& Robinson, 626 A.2d at 1237; Sundheim v. Beaver County Bldg. & Loan
Assoc., 14
A.2d 349, 351 (Pa. Super. Ct. 1940). The statute of limitations for a
quantum meruit
action is four years. 42 Pa. Cons. Stat. Ann. 5525(4) (West 1981 &
Supp. 2001);
Kenis, 682 A.2d at 849; Fowkes v. Shoemaker, 661 A.2d 877, 880 (Pa. Super.
Ct. 1995).
A quantum meruit action accrues on the date of the attorney's termination.
Kenis, 682
A.2d at 849; Fowkes, 661 A.2d at 880. Under these well-recognized
principles, ERSE's
action against PEBTF for legal fees arose on May 24, 1995, the date of its
termination,
and is time-barred.
ERSE attempts to avoid this result by arguing that PEBTF and Blue
Cross
intentionally conspired to cheat it out of its contingent fee and that
under these conditions
a discharged attorney may recover the full fee on a breach of contract
theory. We
recognize that under Pennsylvania law a breach of contract action for
contingent fees may
lie when "a collusive and fraudulent settlement is made for the purposes
of defrauding an
attorney out of his fees." Paul v. Horton, No. CIV.A. 95-5791, 1996 WL
297572, at *8
(E.D. Pa. May 22, 1996); see also Bennett v. Sinclair Nav. Co., 33 F.
Supp. 14, 17 (E.D.
Pa. 1940). However, we do not read the complaint as alleging that PEBTF
and Blue
Cross conspired to defraud ERSE out of its fees. Although the complaint
clearly alleges
that PEBTF terminated ERSE for political reasons, it does not allege a
factual scenario in
which, as in Bennett, PEBTF was on the verge of settling with Blue Cross
through ERSE,
but settled on its own in order to avoid paying ERSE its contingent fee.
See also Paul,
1996 WL 297572, at *8 (denying contingent fees to terminated lawyer where
settlement
was not near conclusion at time of termination).
Moreover, ERSE alleges no facts indicating that it had taken
substantial steps
towards settling the Blue Cross matter before it was terminated. See id.
at *8 (denying
contingent fees to terminated lawyer where the attorney's services had not
contributed to
the settlement). Indeed, ERSE did not even allege that it ever contacted
counsel for Blue
Cross, much less held negotiations with them. ERSE's work consisted
solely of
preparing a draft of a complaint. In light of these factors, ERSE's claim
cannot be
considered a claim for breach of contract, but rather as one for quantum
meruit, and is
therefore barred by the statute of limitations.
III.
ERSE's last claim, against Paese only, for intentional interference
with contractual
relations is also barred by the statute of limitations. The statute of
limitations in
Pennsylvania for the tort of interference with contractual relations is
two years. 42 Pa.
Cons. Stat. Ann. 5524(3) (West 1981 & Supp. 2001); Bednar v. Marino, 646
A.2d
573, 577 (Pa. Super. Ct. 1994); Torchia v. Keystone Foods Corp., 635 A.2d
1082, 1086
(Pa. Super. Ct. 1993). The cause of action accrues "as soon as the right
to institute and
maintain a suit arises; lack of knowledge, mistake or misunderstanding do
not toll the
running of the statute of limitations." Pocono Int'l Raceway, Inc. v.
Pocono Produce,
Inc., 468 A.2d 468, 471 (Pa. 1983). In other words, the statute of
limitations commences
upon the defendant's first act interfering with the contract. Dellape v.
Murray, 651 A.2d
638, 640 (Pa. Commw. Ct. 1994); Eagan v. U.S. Expansion Bolt Co., 469 A.2d
680, 681
(Pa. Super. Ct. 1983).
On the facts alleged in the complaint, ERSE should have first become
aware of
Paese's interference with the PEBTF contract when it received a draft of
Paese's tolling
agreement on January 25, 1995. This agreement was negotiated by Paese
without
ERSE's knowledge or assistance. If this act was not enough to notify ERSE
of Paese's
interference, certainly Paese's transmittal of a final copy of the tolling
agreement was
more than enough; indeed, ERSE itself contends that the tolling agreement
severely
undermined PEBTF's ability to obtain maximum recovery from Blue Cross.
Paese's
interference was even more evident at the March 10, 1995 meeting where he
allegedly
explicitly acknowledged that he would not allow PEBTF to maximize recovery
due to
outside political interests. And, at the very latest, ERSE should have
realized on May 24,
1995 that Paese was frustrating its contract with PEBTF when it received a
letter stating
that the "litigation committee" was terminating ERSE's representation. At
that point,
ERSE suffered concrete and substantial harm, i.e., it lost the contract
and any contingent
fees therefrom. Clearly, a cause of action for intentional interference
with contractual
relations, if one indeed existed, accrued no later than May 24, 1995, and
is time-barred.
IV.
In sum, ERSE's claims are barred by the relevant statutes of
limitations.
Accordingly, we will affirm the District Court's order dismissing the
complaint.
TO THE CLERK OF THE COURT:
Kindly file the foregoing Memorandum Opinion.
/s/ Maryanne Trump Barry
Circuit Judge