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The city of Philadelphia on Tuesday dropped all but three partners as defendants in a lawsuit filed against Mylotte, David & Fitzpatrick for allegedly failing to pay more than $2.3 million in taxes, interest and penalties, according to the firm’s lawyer. Paul Winterhalter of DiDonato & Winterhalter said that at a status conference Tuesday in front of Philadelphia Common Pleas Judge Matthew Carrafiello, lawyers for the city dismissed all of the 60 defendants except for equity partners Edward David and John and Charles Fitzpatrick. City Solicitor Romulo Diaz could not be reached for comment Tuesday afternoon. Winterhalter said the only other name in question was that of Dorothy Donahue, widow of the late name partner Joseph Mylotte, who died in 1992. He said Donahue must only show that she is not an attorney and had only received money from her husband’s estate. According to the lawsuit, filed by Deputy City Solicitor Frank Paiva, Mylotte David and its general partners failed to pay $899,805 in taxes between Dec. 31, 1994, and June 30, 2004. Most of that sum emanates from the business privilege tax ($826,315), while the firm also owes $57,755 in net profits taxes and $15,734 in wage withholding taxes, according to city officials. The suit said the firm also owes $578,855 in interest and $910,665 in penalties. But some lawyers named as defendants were upset because they claim they were never partners at the firm, while one said he never even worked at the firm. At a firm that is structured as a partnership and not a corporation, partners must pay the business privilege and net profits taxes while associates and other employees pay the wage tax. Winterhalter said it is still early on in the case and he had not had a chance to review the firm’s tax returns back to 1994. His client has indicated that it does not believe it owes nearly the amount the city claims that it does. But in an interview last week, Diaz said he is confident that the firm owes the $2.3 million stated in the complaint. Mylotte David is an insurance defense firm that once boasted more than 30 attorneys but now only has 13. David said the firm has parted ways with lawyers situated in satellite offices. Last month, the firm moved out of its Center City offices to new space in Broomall. David said the lawsuit had nothing to do with the move but that rent and tax issues did play a role. Winterhalter said the next status hearing has been scheduled for May 7, at which time a trial date might be set if the two sides have not settled the dispute.

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