An attorney has failed to show a link between his inability to collect from ex-clients $768,000 in unpaid legal fees and a separate suit filed by three law firms on behalf of those clients. As a result, he cannot claim the amount of the judgment as damages in a Dragonetti Act suit against those firms, a Philadelphia judge has found.
In Harris v. Stark & Stark, according to court documents, plaintiff Douglas T. Harris, a Philadelphia attorney, filed and won a breach of contract suit against the owners of Philadelphia Waterfront Partners and Philadelphia Waterfront Development—Charles Kamps, Patrick Hanley and Scott Blow—seeking payment for work he performed related to the sale of substantial interests in PWP and PWD to developer Joseph Logue.
The deal, which was contingent on Logue purchasing a property on State Road in Philadelphia through PWP, eventually went south, leading Kamps, Hanley and Blow to sue Logue, his companies and Harris, claiming Logue failed to meet certain obligations under the sale agreement causing the bulk of the ownership in PWP and PWD to revert back to them, according to court documents.
By that time, Logue had already purchased the State Road property, according to court documents.
The claims against Harris were eventually dropped and Logue eventually won the case, court documents said.
But Harris, who has been unable to collect the judgment for unpaid fees from his former clients, according to court documents, filed a Dragonetti Act and abuse of process action against the law firms that represented Kamps, Hanley and Blow in the suit against Logue, alleging that they filed the suit in an attempt to prevent Logue from developing the property.
That suit, Harris alleged, effectively rendered collection of his judgment impossible because his payment was contingent on the success of the sale of PWP and PWD to Logue, which in turn was contingent on Logue’s ability to purchase and develop the State Road property.
However, in two separate but nearly identical opinions issued in Harris, Philadelphia Court of Common Pleas Judge Albert J. Snite Jr. granted the partial summary judgment motions filed by defendant firms Mattioni Ltd., Stark & Stark and the Erlanger Law Firm, as well as several of their attorneys and the now-defunct firm of Liederbach, Hahn, Foy & Van Blunk, precluding Harris from seeking to collect the amount of the judgment he obtained in the case against his former clients as damages in his Dragonetti suit against the firms.
According to Snite, Harris was entitled to payment for the work he performed on the deal between PWP and PWD and Logue regardless of whether that deal was ultimately successful.
Therefore, Snite said, Kamps, Hanley and Blow—referred to in the opinion as “individual defendants”—are still obligated to pay the judgment awarded to Harris.
But Snite said Harris could not establish a causal relationship between his former clients’ failure to pay the judgment and their suit against Logue, referred to in the opinion as the “PWP action.”
“The undisputed material facts establish that Harris’ right to payment was not contingent on the successful sale or development of the property, the subject matter of the PWP action,” Snite said. “Therefore, Harris cannot sustain the burden of showing that the damages he seeks from [the defendant law firms], payment of the judgment rendered against individual defendants in the Harris action, are causally related to the claims brought in the PWP action.”
In Harris, according to court documents, Logue’s companies—Churchill Development Group, Churchill Residential Development and Churchill Commercial Development, collectively “Churchill”—purchased 100 percent of the membership interests in PWD and 75 percent of the membership interests in PWP from Kamps, Hanley and Blow in August 2006.
Under the purchase agreement, Kamps, Hanley and Blow were required to provide Churchill with PWP’s 2005 tax returns by Oct. 15, 2006. The agreement also required Churchill, acting through PWP, to obtain a loan commitment to purchase the State Road property by Nov. 15, 2006, and to close on the property by Dec. 15, 2006, court documents said.
However, Churchill had an additional 30 days under the agreement to complete its tasks if the individual defendants failed to timely provide the tax returns, according to court documents.
On Oct. 12, 2006, the individual defendants provided Churchill with improperly executed copies of the tax returns, thus extending Churchill’s timeline for obtaining a loan commitment on the State Road property until Dec. 14, 2006, and for closing on the property until Jan. 13, 2007, according to court documents.
Kamps, Hanley and Blow began to argue that Churchill had failed to complete its tasks as required under the agreement, resulting in a reversion of 75 percent of the PWD interest and 75 percent of the PWP interest to them, according to court documents.
Churchill obtained a loan commitment for the State Road property Dec. 6, 2006, and closed on the property Jan. 17, 2007, court documents said. But Kamps, Hanley and Blow filed suit, alleging breach of contract, unjust enrichment, fraudulent conveyance, constructive trust, fraud, breach of fiduciary duty and conspiracy against Logue and Churchill, and fraudulent conveyance, fraud, breach of fiduciary duty and civil conspiracy against Harris for his role in negotiating the deal.
The claims against Harris were voluntarily dismissed before trial, however, court documents said.
Following a bench trial in April 2010, the court entered a judgment in favor of Logue and Churchill and against Kamps, Hanley and Blow.
Harris, meanwhile, had filed suit in June 2007 against Kamps, Hanley and Blow, alleging they had failed to pay him for the work he did during the negotiations of their deal with Logue, according to court documents.
Following a trial in July 2010, a jury awarded Harris $525,000 plus interest and more than $243,000 in attorney fees and costs, court documents said.
But when the individual defendants failed to pay the judgment, according to court documents, Harris filed suit against Philadelphia-based Mattioni Ltd. and its shareholders, John Mattioni and Joseph F. Bouvier; Lawrenceville, N.J.-based Stark & Stark, along with its shareholder, Henry Van Blunk, and his previous firm, Liederbach Hahn; and New York-based Erlanger Law Firm, along with its principal, Robert Erlanger.
The law firm defendants filed motions for partial summary judgment to preclude Harris from seeking the amount of his judgment against Kamps, Hanley and Blow as damages in his case against the firms.
Snite sided with the firms, saying the damages Harris sought from the firms “are too attenuated to be considered ‘any specific pecuniary loss that has resulted from the proceedings’” under the Dragonetti Act.
Counsel for the Mattioni defendants, Jeffrey B. McCarron of Swartz Campbell in Philadelphia, said Snite found that there was an “absence of any genuine connection” between Harris’ inability to collect his judgment and PWP’s suit against Logue.
Counsel for the Erlanger defendants, Eugene J. Maginnis Jr. of Dugan Brinkmann Maginnis and Pace in Philadelphia, said he and his clients felt the court made the correct decision.
Counsel for the Stark & Stark defendants, Josh M. Greenbaum of Cozen O’Connor in Philadelphia, and for Harris, Andrew A. Chirls of Fineman Krekstein & Harris in Philadelphia, also could not be reached.
(Copies of the 15-page opinion in Harris v. Stark & Stark, PICS No. 13-3315, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •