Attorney Fee Recovery • Sanctions • Frivolity

Concrete Coating Sys. v. Pharma Mfg. Research Servs., PICS Case No. 14-0522 (C.P. Montgomery March 10, 2014) Smyth, J. (12 pages).

Sanctions in the form of legal fees were not warranted for time spent on appeal where issue was not raised before appellate court, but were appropriate for time spent defending action that was frivolous and without evidentiary basis. Fees granted in part and denied in part.

In 2004, plaintiff filed a mechanic’s lien against defendant but never filed a complaint to perfect the action. As a result, court granted defendant’s motion to strike the lien and denied plaintiff’s motion to file a complaint nunc pro tunc. The Superior Court affirmed.

In 2011, plaintiff filed an action alleging breach of contract based on the same occurrences that underlay the mechanic’s lien ac-tion. Defendant answered that the four-year period of limitation for commencing an action in breach of contract had long since expired on the 2004 transactions on which the claim was based. Defendant moved for judgment on the pleadings and for sanctions for violation of Pa.R.Civ.P. 1023.1(c). Plaintiff opposed the motion, claiming for the first time, that the doctrines of “equitable tolling” and “unclean hands” (on defendant’s part) extended the statutory period of limitation for commencing the 2011 action. Court granted judgment on the pleadings and defendant’s request for sanctions in the form of legal fees.

Specifically, counsel sought legal fees for: (1) defense of appeals in the 2004 mechanic’s lien action (Concrete I); (2) defense of the 2011 breach of contract action and appeal (Concrete II); and (3) preparation for sanction hearing. The court of common pleas awarded legal fees in part and denied them in part.

The court denied legal fees for defense of appeals in Concrete I because defendant did not seek such sanctions from appellate court. Pa.R.App.P. 2744 authorizes an appellate court to award as costs legal fees if an appeal is frivolous or taken solely for delay or if the opposing party’s conduct is dilatory, obdurate or vexatious. Superior Court affirmed by a divided three-judge panel with one judge dissenting, but did not determine that any aspect of the 2004 mechanic’s lien litigation or appeal was frivolous, dilatory, obdurate or vexatious.

The court allowed legal fees from commencement of the breach of contract case until request for sanctions because plaintiff’s claims of “equitable tolling” and “unclean hands” were frivolous and without evidentiary basis. See Pa.R.Civ.P. 1023.1(c).

However, it disallowed sanctions for the two-month period immediately after judgment because defendant’s legal fees were largely for defense of plaintiff’s new appeal in Concrete II and should have been raised before appellate court. It also denied fees incurred in pursuit of recovering the legal fees themselves.

Defendant retained right to pursue fees in a separate action under the Dragonetti Act, which he cited as an alternate basis for the relief sought.