Philadelphia Legal Malpractice Lawyer

Philadelphia Legal Malpractice Lawyer

Harper J. Dimmerman, Attorney, is a seasoned litigator and has recently added legal malpractice law as a new area of practice.

Statutes of limitation in any litigation matter in Pennsylvania oftentimes present serious roadblocks for otherwise viable claims. In the realm of legal malpractice, generally two years is the operative time frame which an aggrieved party has to bring a claim. Potential plaintiffs frequently ask when this clock begins to run, if you will. The simple answer is that this period commences as soon as the conduct which forms the basis of the action occurs: the happening of the alleged breach of duty. For practical purposes then, this clock may start even during the representation period, with the lawyer or law firm that could possibly be the subject of that very legal malpractice suit.

 

Partition and Philadelphia Real Estate Law

Partition and Philadelphia Real Estate Law by Harper J. Dimmerman, Attorney at Law. Mr. Dimmerman handles real estate litigation and partition matters. Contact him now for a consultation – (215) 545-0600. His office is located in center city Philadelphia, Pennsylvania.

Co-owners of real estate have a right to partition. This is supported by the Pennsylvania Rules of Civil Procedure.

In a Philadelphia Common Pleas Court decision handed down in November, 2012, the trial court was asked to consider a partition claim by an ex-husband. More specifically, ex-husband argued that he still have a right to real estate, despite not having perfecting his economic claims during the divorce proceeding. Post-divorce, ex-husband filed a suit in partition (approximately one year later) and contended that an oral agreement existed which required the preparation and recording of a deed during the marriage; this never happened. The ex-wife denied the existence of such an agreement. The Philadelphia trial court analyzed the statute of frauds, in light of the claim that there was an oral contract. That statute prohibits the creation of interests in any land by parol evidence. This is particularly true where a spouse seeks to compel the specific performance of such a contract by the other spouse. Also, the payments of repairs and mortgage installments does not take the case away from the statute of frauds. Here the ex-husband could not meet the particularly high burden of proof required to prove the existence of an oral contract. These parties were not even tenants by the entireties while they married, stated the trial court.

Bottom line: always get every deal in writing.  

Philadelphia Defamation Law

Philadelphia Defamation Law

The following Philadelphia County court opinion demonstrates the complexities in mounting a defamation case. This opinion is very useful for its analysis of the admissibility of expert reports and should certainly be considered in assembling a case on behalf of a plaintiff. Harper J. Dimmerman, Attorney at Law, handles defamation litigation and provides free, initial consultations: (215) 545-0600

1
IN THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY
FIRST JUDICIAL DISTRICT OF PENNSYLVANIA
CIVIL TRIAL DIVISION
:
CARL R. GREENE, :
: SEPTEMBER TERM, 2011
Plaintiff, :
: No. 01223
v. :
:
PHILADELPHIA MEDIA NETWORK, INC. :
AND :
PHILADELPHIA MEDIA NETWORK :
NEWSPAPERS, LLC, :
:
Defendants. :
RAU, J.
MEMORANDUM OPINION1
Plaintiff Carl Greene sued Defendants, Philadelphia Media Network, Inc., and
Philadelphia Media Network (Newspapers), LLC, for monetary damages for defamation,
false-light invasion of privacy, and commercial disparagement based on seventeen
articles and editorials concerning Mr. Greene’s tenure as Executive Director at the
Philadelphia Housing Authority, which were published in the Philadelphia Inquirer and
Daily News between November 1, 2010 and August 9, 2011. Defendants filed a motion
for summary judgment asserting that Plaintiff Greene, who is a public figure, did not
show by clear and convincing evidence that the articles were materially false or that
Defendants published them with actual malice, that is “with knowledge that [they were]
false or with reckless disregard of whether [they were] false or not.” N.Y. Times Co. v.
Sullivan, 376 U.S. 254, 279–80 (1964). Defendants argued that the First Amendment

1
This brief memorandum opinion is drafted without the benefit of the written transcript. If there is an
appeal, this Court may amplify this opinion with citations to the evidentiary hearing and further analysis. 2
protects publishers from liability for defamation for unreasonable interpretations of
articles’ meanings, claimed unfairness in presentation, opinions, immaterial
inaccuracies or truthful articles.2
Movants also argued3
that Plaintiff Greene could not
overcome the fair report privilege, which provides that when “it is in the public interest
that information be made available as to what takes place in public affairs, a newspaper
has the privilege to report the acts of the executive or administrative officials of
government.” Sciandra v. Lynett, 187 A.2d 586, 588 (Pa. 1963). Once Defendants filed
their summary judgment motion, the law required Plaintiff Greene to refute with actual
evidence any facts essential to the cause of action that Defendants asserted were not
disputed. Pa.R.C.P. 1035.3(a)(2). At this stage, the Plaintiff “may not rest upon the
mere allegations or denials of the pleadings” but must respond with more. Pa.R.C.P.
1035.3(a). Plaintiff Greene offered Dr. Timothy Habick as an expert in linguistics to
provide his primary evidence that Defendants published the articles with actual malice.
Defendants challenged Dr. Habick’s proffered expertise and report and requested a
Frye hearing. (Defs.’ Reply in Supp. of Mot. Summ. J. at 11, n.5.)
This Memorandum addresses this Court’s findings and conclusions on the legal
admissibility of Dr. Habick’s testimony under Pennsylvania Rule of Evidence 702 and
accompanying case law following a Frye hearing on July 28, 2014. Plaintiff Carl

2
See, e.g., Tucker v. Phila. Daily News, 848 A.2d 113, 133 (Pa. 2004) (“[A]n article is not made
defamatory by being unfair . . . .”); Baker v. Lafayette Coll., 532 A.2d 399, 402 (Pa. 1987) (“[O]pinion
without more does not create a cause of action in libel.”); Thomas Merton Ctr. v. Rockwell Int’l Corp., 442
A.2d 213, 216 (Pa. 1981) (“[W]e must consider the full context of the article to determine the effect the
article is fairly calculated to produce, the impression it would naturally engender, in the minds of the
average persons among whom it is intended to circulate.”) (internal quotations omitted); Kilian v.
Doubleday & Co., 79 A.2d 657, 660 (Pa. 1951) (a statement that is “substantially true” cannot be
defamatory); ToDay’s Hous. v. Times Shamrock Commc’ns, Inc., 21 A.3d 1209, 1215 (Pa. Super. Ct.
2011) (finding an absence of material falsity and explaining, “The law does not require perfect truth, so
long as any inaccuracies do not render the substance and ‘gist’ of the statements untrue.”).
3Defendants also argued that Greene did not show evidence that any of the statements caused him injury
to his reputation, emotional distress or economic loss. 3
Greene’s proffered expert, Dr. Timothy Habick, submitted a report stating that, upon
review and analysis of all of the allegedly defamatory articles written by numerous
authors, he concluded that the writing showed that the Defendants “willfully,
maliciously, without substantiation, and with reckless disregard for the truth, defamed”
Plaintiff Carl Greene. (Pl.’s Answer in Opp’n to Defs.’ Mot. Summ. J. Ex. L, at 3.)
Plaintiff’s counsel offered Dr. Habick’s testimony as a linguist for two reasons: (1) to
explain what the articles mean to the average reader, and (2) to show that Defendants
published the articles with actual malice, that is, “with knowledge that [they were] false
or with reckless disregard of whether [they were] false or not.” Sullivan, 376 U.S. at
279–80. In short, Plaintiff has offered a linguist to testify as an expert to what an
average reader thinks, and to what the mental state of the Defendants’ seven authors
and editorial board was when they published allegedly false statements. Defendants
challenged Dr. Habick’s qualifications, the relevance of his testimony, and the reliability
of his methods, claiming that they were not “generally accepted in the relevant field” of
linguistics. Pa.R.Evid. 702; Grady v. Frito-Lay, 839 A.2d 1038, 1047 (Pa. 2003).
Given the considerable clout that the term “expert” imbues to a jury,
Pennsylvania law requires that the judge serve as a gatekeeper before proffered expert
testimony is provided at trial. The judge must screen to ensure that the witness has
demonstrated qualifications in the field offered, the testimony provides information that
an average juror would not already possess, the testimony is relevant and the methods
used are reliable. Pennsylvania Rule of Evidence 702 provides:
“A witness who is qualified as an expert by knowledge, skill, experience,
training, or education may testify in the form of an opinion or otherwise if:
(a) the expert’s scientific, technical, or other specialized knowledge is
beyond that possessed by the average layperson;4
(b) the expert’s scientific, technical, or other specialized knowledge will
help the trier of fact to understand the evidence or to determine a
fact in issue; and
(c) the expert’s methodology is generally accepted in the relevant
field.”
Pa.R.Evid. 702. In examining the admissibility of expert witness testimony, the
Pennsylvania Supreme Court has recently held:
“[T]his Court has recognized the influential nature of expert testimony on
complex subjects, and the potential that distortions have to mislead
laypersons. . . . [W]e conclude that a Frye hearing is warranted when a
trial judge has articulable grounds to believe that an expert witness has
not applied accepted scientific methodology in a conventional fashion in
reaching his or her conclusions.”
Betz v. Pneumo Abex LLC, 44 A.3d 27, 53 (Pa. 2012). Plaintiff’s counsel conceded that
the type of “unique” testimony offered here rendered a Frye hearing appropriate. Trach
v. Fellin, 817 A.2d 1102, 1109 (Pa. Super. Ct. 2003) (“Frye only applies when a party
seeks to introduce novel scientific evidence.”). Plaintiff Greene, as the proponent of the
evidence, bears the burden of establishing “all of the elements for its admission under
Pa.R.E. 702, which includes showing that the Frye rule is satisfied.” Grady v. Frito-Lay,
839 A.2d 1038, 1045 (Pa. 2003).
In explaining the idea of “methodology,” the Pennsylvania Superior Court has
explained that replicability, or reproducibility, lies at the heart of the scientific method:
“[T]he scientific method is a method of research in which a problem is
identified, relevant data are gathered, a hypothesis is formulated from
these data, and the hypothesis is empirically tested. Within the meaning
of the definition of the scientific method, ‘empirical’ means ‘provable or
verifiable by experience or experiment.’ Key aspects of the scientific
method include the ability to test or verify a scientific experiment by a
parallel experiment or other standard of comparison (control) and to
replicate the experiment to expose or reduce error.”5
Trach, 817 A.2d at 1113 (internal citations omitted). “Frye only applies to
determine if the relevant scientific community has generally accepted the
principles and methodology the scientist employs, not the conclusions the
scientist reaches. . . .” Id. at 1112.
An expert must be qualified in the field in which they testify.
This Court found that Dr. Habick was not qualified in the areas for which his
testimony was offered. Dr. Habick was offered as an expert in linguistics and logic to
offer an opinion about (1) how average readers would read the articles and (2) how
linguistic and logical analysis shows that Defendants and their reporters “willfully,
maliciously, without substantiation, and with reckless disregard for the truth, defamed”
Plaintiff Carl Greene. (Pl.’s Answer in Opp’n to Defs.’ Mot. Summ. J. Ex. L, at 3.)
Dr. Habick testified that he has spent the bulk of his career developing test
questions for graduate school admissions tests, initially at the Educational Testing
Service (ETS) and then at his business, Reasoning, Inc., which he founded after his
departure from ETS in 2001. He used his linguistic expertise to develop questions that
achieved the “highest level of fairness” for test-takers. Dr. Habick’s venture into the field
of forensic linguistics is a fascinating tale of serendipity.
4
Dr. Habick testified that he
met Dr. Marilyn Lashner’s daughter in 2009 and later met Dr. Lashner. When Dr.
Lashner died the next year, her children gave Dr. Habick her business, Media Analysis
and Communications Research. Prior to being bequeathed this forensics linguistics
business, Dr. Habick had never worked in the area of forensics linguistics, nor had he
done any linguistic analysis in the area of defamation. Dr. Habick was assisted in this

4 Dr. Habick testified that he met Dr. Lashner when her daughter came by his home in 2009, notified him
that Dr. Lashner had previously lived in his home and asked whether Dr. Lashner could visit her former
home. Thereafter, he developed a relationship with the family. 6
new venture by reviewing Dr. Lashner’s prior reports and analyses after her death.
Though Dr. Habick’s resume lists among his accomplishments that he “[p]rovided
forensic linguistic services in support of Dr. Marilyn Lashner’s case evaluations,
analyses and reports, discovery assistance, and testimony,” he admitted in his
testimony that he had never actually worked with Dr. Lashner but instead had been only
an acquaintance. (See Frye Hr’g Defs.’ Ex. 7, Aff. of Timothy Habick, Schnitt v. Cox
Radio, Inc., et al., Case No. 08-05738 (Fla. Cir. Ct.).)
Dr. Habick testified that he analyzed the logical structures and identified
fallacious arguments in the articles in question. However, he is not a logician. Dr.
Habick claims expertise in this area due to having worked alongside and collaborating
with logicians during his 27 years of writing exam questions. This assertion has faulty
logic: a nurse is not qualified to do surgery just because the nurse has worked
alongside a surgeon for many years and may be familiar with much of what occurs in
the operating room. Dr. Habick has insufficient expertise under the law to give
testimony in the area of logic.
Dr. Habick uses the term defamatory and defamation throughout his report but
his testimony showed that he did not know the correct legal definition of defamation5
for
public figures. A public figure is not defamed under the law just because embarrassing
facts are publicized and opined about by writers. True statements, even if unflattering,

5
In Pennsylvania, any person bringing a defamation claim bears the burden of proving:
“(1) The defamatory character of the communication.
(2) Its publication by the defendant.
(3) Its application to the plaintiff.
(4) The understanding by the recipient of its defamatory meaning.
(5) The understanding by the recipient of it as intended to be applied to the plaintiff.
(6) Special harm resulting to the plaintiff from its publication.
(7) Abuse of a conditionally privileged occasion.”
Weaver v. Lancaster Newspapers, Inc., 926 A.2d 899, 903 (Pa. 2007) (citing 42 PA. CONS. STAT. ANN. §
8343(a)). 7
do not constitute defamation. Phila. Newspapers, Inc. v. Hepps, 475 U.S. 767, 775
(1985); Spain v. Vicente, 461 A.2d 833, 836 (Pa. Super. Ct. 1983). A public-figure
plaintiff such as Carl Greene must show by clear and convincing evidence that the
allegedly defamatory statements were materially false and made with actual malice.
Gertz v. Robert Welch, Inc., 418 U.S. 323, 342 (1974). Dr. Habick is not qualified to
render an opinion concluding that Defendants “defamed” Plaintiff when he does not
know how defamation is defined under the law.
Dr. Habick also misunderstands the application of the actual malice standard in
defamation cases: falsity is a precondition to actual malice. N.Y. Times Co. v. Sullivan,
376 U.S. 254, 279–80 (defining actual malice as publishing statements “with knowledge
that [they were] false or with reckless disregard of whether [they were] false or not”).
“Actual malice under the New York Times standard should not be confused with
common-law malice or the concept of malice as an evil intent or a motive arising from
spite or ill will.” See also Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 510
(1991). The actual malice requirement is a subjective, not an objective, standard:
showing that a defendant should have seriously doubted the accuracy of her or his story
is insufficient. Harte-Hanks Commc’ns, Inc. v. Connaughton, 491 U.S. 657, 688 (1989);
see also Garrison v. Louisiana, 379 U.S. 64, 74 (1964) (a plaintiff cannot prevail without
clear and convincing evidence of a “calculated falsehood”); Am. Future Sys. Inc., v.
Better Bus. Bureau, 923 A.2d 389, 395 n.6 (Pa. 2007) (proving actual malice is difficult
because actual malice “implies at a minimum that the speaker entertained serious
doubts about the truth of his publication, . . . or acted with a high degree of awareness
of . . . probable falsity”); Bartlett v. Bradford Publ’g, Inc., 885 A.2d 562, 564 (Pa. 2005)
(mere departure from journalistic ideals not actual malice).8
Dr. Habick analyzed the Defendants’ articles to assess whether Defendants
published statements intentionally knowing they were false or with recklessness as to
their falsity, even though he had no information as to whether the statements were
actually false. He testified that he talked to Plaintiff’s counsel, read the Complaint, and
relied upon his “common sense”, “common knowledge,” and “verifiable truths.” He
admitted he did no factual research save for some minor internet searches. This
process shows again that he misapprehends the legal definition of actual malice for
public figures. The statements must be proven as false before a publisher can be found
to have actual malice in publishing them. See St. Amant v. Thompson, 390 U.S. 727,
730 (1968) (defamation plaintiff has “the burden of proving that the false statements . . .
were made with actual malice as defined in New York Times Co. v. Sullivan and later
cases” (emphasis added)). Dr. Habick began his analysis with faulty assumptions that
statements were false. Dr. Habick dismissed this concern by testifying that if any of the
allegedly defamatory statements turned out to be true, his opinion should just be
ignored as to those statements and kept intact for the others. Not only is this approach
contrary to sound scientific method but it illustrates a fundamental lack of understanding
of what “actual malice” means in the context of defamation.
Actual malice in the context of public figure defamation is not the same as malice
in common usage. Actual malice does not mean “evil” or “critical.” Masson, 501 U.S. at
510. There is nothing inappropriate about reporters’ publishing unflattering information
that is materially true or they even justifiably think is true. The press must be permitted
to write about public officials like Plaintiff Greene in order to keep the citizenry informed
about the conduct of those serving in their government. Public officials in a democracy
must be open to being evaluated by the press and the public they serve. Muzzling the 9
press from criticizing public officials would threaten good government and ultimately
threaten democracy’s survival.
Dr. Habick also has no training or experience in journalism. He has no
background or experience in empirically testing or scientifically determining the intent of
journalists or any other group of writers to determine whether they have written articles
with malice as defined by defamation law. Though Dr. Habick was being offered for the
purpose of testifying about how an article is read by an average reader, he conceded
that he is unable to read as an average reader himself based on his extensive
experience in linguistics. He also conceded that he has never tested how average
readers interpret journalistic pieces outside the context of high-stakes graduate testing.
Though Dr. Habick has been offered as an expert in prior cases, he has never been
qualified by a court to give his expert opinion in a defamation case.
Thus, Dr. Habick does not have the requisite qualifications to testify as an expert
to what an average reader might think or the subjective intent of Defendants and their
reporters when they published the articles.
An expert’s methodology must be reliable as evidenced by being generally
accepted in the field.
Plaintiff failed to meet his burden of showing that Dr. Habick used methodology
that was generally accepted in the field of linguistics. Plaintiff’s claims of what his
linguistic expert could provide were bold: he claimed that a linguistic expert could use a
scientific method to determine the subjective intent of publishers and reporters when
they wrote and published articles. In short, a linguistic expert could divine by a mere
reading and analysis of articles, and nothing more, whether a publisher and its many
reporters wrote the articles “with knowledge that [they were] false or with reckless 10
disregard of whether [they were] false or not.” N.Y. Times Co. v. Sullivan, 376 U.S. 254,
279–80 (1964). Such a promise, if true, would prove exciting indeed: courts could
reduce the number of trials, police investigations could be shortened, and crimes could
be solved if a linguist could be employed to merely analyze another speaker’s language,
without reference to any facts, and determine the speaker’s mental intent. However, Dr.
Habick’s analysis was not shown to be accepted science to permit its admission in
court. His analysis was not based on factual research, was not replicable, lacked the
requisite degree of certainty, and used methods that were not shown as generally
accepted within the field of linguistics.
Dr. Habick testified that he reached his opinions “solely on the basis of the
examination of the articles” and not on “deposition testimony or other facts contained in
documents that were exchanged by the parties after this case was initiated.” (Pl.’s
Answer in Opp’n to Defs.’ Mot. Summ. J. Ex. L, at 4.) Dr. Habick testified as to what he
did to reach his opinion. He first met with Plaintiff’s counsel, who explained the issues.
Next he read the Complaint but not the Answer. Dr. Habick then applied his linguistic
analysis to the seventeen articles. His linguistic analysis involved looking at the
linguistic structures, including argumentation, logical fallacies, and assumptions. Dr.
Habick testified that he used his “common sense,” “common knowledge,” and “verifiable
reality” to reach his conclusions as to the truth of statements made. Dr. Habick
admitted he did no fact checking, other than some unspecified internet research, to
determine whether statements were true or not. He provided the ultimate disclaimer: if
any statements made by Defendants were found to be false, his conclusions that they
were defamatory and made with malice should be ignored. 11
Dr. Habick also contributed another proviso that compromised the admissibility of
his testimony: he testified he was making the claim only that there was a “likelihood”
that the published statements were defamatory and made with malice, but that he could
not speak with certainty. The law generally requires that experts testify to more than a
mere “likelihood” of the substance of expert testimony to make it admissible as having
any value to a jury. Dr. Habick’s opinion lacked the requisite certainty for expert
testimony. See Hoffman v. Brandywine Hosp., 661 A.2d 397, 402 (Pa. Super. Ct. 1995)
(an expert’s opinion lacks a reasonable degree of certainty if it is based merely upon a
“likelihood” that something “may” have occurred). See also Com. v. Spotz, 756 A.2d
1139, 1160 (Pa. 2000) (experts are not required to use “magic words,” but rather the
Court “must look to the substance of [the expert’s] testimony to determine whether his
opinions were based on a reasonable degree of medical certainty rather than upon
mere speculation”). In addition, Dr. Habick’s conditioning his opinion as finding there
was a mere “likelihood” of actual malice itself compromised Plaintiff’s success in this
case. The law requires that Plaintiff must show by clear and convincing evidence, not
mere likelihood, that Defendants knew the statements were false or published with
reckless disregard of whether they were false to defeat summary judgment. Sullivan,
376 U.S. at 279–80.
Dr. Habick testified that he had no hypothesis for his analysis. He did not retain
or provide any of the underlying notes or data he used for his analysis. He conducted
no surveys or questionnaires of readers as to their interpretations of the articles to
support his opinion as to what “average readers” might conclude upon reading the
articles. With respect to his opinion about the intent of the authors, Dr. Habick testified
that what the authors said about their intent in writing the article was not relevant to his 12
analysis of their subjective intent in terms of actual malice. No validity or replicability
studies were performed or attempted.
When Dr. Habick was pressed to describe how his process of analysis fit within
the methodology used in the field of linguistics, he evaded responding with precision.
He simply insisted that this is what linguists do: they analyze structures. This
vagueness makes it impossible to validate or test his analysis and has been frowned
upon by the Supreme Court when assessing the admissibility of scientific methodology:
“[T]he breadth and character of an expert’s extrapolations are relevant to
the scientific acceptance of his methodology. The alternative is to permit
experts to evade a reasoned Frye inquiry merely by making references to
accepted methods in the abstract.”
Betz v. Pneumo Abex LLC, 44 A.3d 27, 58 (Pa. 2012).
Strikingly, Dr. Habick failed to employ the methods used in linguistics within the
context of test examination questions, for which he has experience to verify or replicate
his results. He conducted no interannotater studies or any other validity studies to verify
his conclusions, as is done in the test-taking field. Not only did he fail to articulate a
clear replicable methodology he employed that could be replicated by others in his field,
he made no attempt to have other linguists verify or evaluate his methods. Plaintiff
failed to provide any evidence that Dr. Habick’s linguistic analysis of a reporter’s articles
to determine if they had satisfactory argumentation, logic, or assumptions could even
reveal an author’s intent or recklessness in writing an article. Even if he could show that
articles have fallacies, he showed no link between poor logic and a writer’s subjective
intent about whether the statements are true or not. Moreover, Dr. Habick’s conclusion
about whether a statement in the article was false seemed to rest not on any proven 13
facts but rather on his personal “common sense,” “common knowledge,” and “verifiable
reality.”
Dr. Habick conceded that he knew of no peer-reviewed articles endorsing his
method. No defamation cases were presented where a linguist had been qualified as
an expert under Frye standards for using the Dr. Habick’s process of analysis to
establish whether a publisher had actual malice or to educate the jury as to how an
average reader would interpret articles. Indeed, no evidence was provided that linguists
generally accept Dr. Habick’s assertion that a linguist need simply read articles and
apply common sense and knowledge without any factual research or verification to
assess whether an author knowingly wrote a false article or wrote one with reckless
disregard for its truthfulness. Thus, the magical promise of crystal-ball-like insight into
another’s mental state through analysis of a person’s writing failed to be backed by any
generally accepted science.
An expert’s knowledge must be beyond that possessed by the average
layperson and be relevant to a question the jury must answer.
Experts must contribute knowledge that the jurors don’t already have. Pa. R.
Evid. 702(a) (expert’s testimony is admissible only if it provides “scientific, technical, or
other specialized knowledge” that “is beyond that possessed by the average
layperson”). The law does not permit a party to package a witness as an expert to talk
in confusing, technical, or Latin language to tell a juror something that is already within
the realm of common sense and general knowledge. “Expert testimony is permitted
only as an aid to the jury when the subject matter is distinctly related to a science, skill,
or occupation beyond the knowledge or experience of the average layman. Where the
issue involves a matter of common knowledge, expert testimony is inadmissible.” Com. 14
v. O’Searo, 352 A.2d 30, 32 (Pa. 1976) (internal citations omitted). Dr. Habick’s
proffered testimony does not meet these requirements because average jurors are
inherently qualified to read the articles as average readers without the aid of an expert,
and because logical and linguistic structures are irrelevant to the question of whether
false statements are knowingly or recklessly published as truth.
The Superior Court has recently held:
“Admissible expert testimony that reflects the application of expertise
requires more than simply having an expert offer a lay opinion.
‘Testimony does not become scientific knowledge merely because it was
proffered by a scientist.’ Likewise, expert testimony must be ‘based on
more than mere personal belief,’ and ‘must be supported by reference to
facts, testimony or empirical data.’
. . .
The exercise of scientific expertise requires inclusion of scientific authority
and application of the authority to the specific facts at hand. Thus, the
minimal threshold that expert testimony must meet to qualify as an expert
opinion rather than merely an opinion expressed by an expert, is this: the
proffered expert testimony must point to, rely on or cite some scientific
authority—whether facts, empirical studies, or the expert’s own research—
that the expert has applied to the facts at hand and which supports the
expert’s ultimate conclusion. When an expert opinion fails to include such
authority, the trial court has no choice but to conclude that the expert
opinion reflects nothing more than mere personal belief.”
Snizavich v. Rohm & Haas Co., 83 A.3d 191, 195 (Pa. Super. Ct. 2013) (internal
citations omitted), allocatur denied July 29, 2014 (88 EAL 2014). Dr. Habick’s testimony
reflects his personal beliefs and, by his own admission, his common sense and
knowledge. It does not provide specialized knowledge beyond what the average jury
already possesses.
First, Dr. Habick’s testimony was offered to provide insight as to what an average
reader would conclude. A jury provides a perfect sampling of average readers. Dr.
Habick’s allegedly expert testimony provides nothing that the average jury does not 15
have. Indeed, Dr. Habick testified that based on his extensive experience in linguistics,
he lacks the ability to even read an article as an average reader would. Jurors are
already endowed with the ability to read newspaper articles and need no expert
assistance, especially from an expert like Dr. Habick who confesses that he can no
longer read articles through the lens of an as average reader and that he rarely even
reads the newspaper.
Second, Dr. Habick claims to use his linguistic analysis coupled with his
“common sense,” “common knowledge,” and “verifiable reality” to tell the jury what the
many reporters and the collective editorial board must have thought when they wrote
and published the articles he assumes to be false. Dr. Habick claims that he can
determine in a scientific way that the Defendants subjectively must have known or been
reckless in not knowing that the articles they wrote were false. He claims to know this
based on analyzing Defendants’ reporters’ articles and their allegedly faulty
argumentation, logic, and assumptions, coupled with his “common sense,” “common
knowledge” and “verifiable reality” that the articles are false. Jurors are known and
valued for their “common sense” and “common knowledge”; having a so-called expert
tell them what is common sense and common knowledge would be invading their
province by purporting to provide them information that the average layperson already
possesses. Average jurors also can assess the validity of arguments, logic, and
assumptions without an expert, even though they may not be able to assign the proper
Latin terminology to each type with quite the same practiced ease of a linguist like Dr.
Habick.
Dr. Habick offers extensive critical commentary about the logical and linguistic
structure of the articles in this case. However, there is no element of a defamation case 16
that calls for a linguist’s or logician’s stamp of approval of the writing style. Dr. Habick’s
career has focused on trying to make test questions clear and unambiguous to
prospective graduate student test takers, which is a noble and important task.
However, defamation law is not about whether articles fall into this balanced style where
rigorous rules are applied to ensure clear and uniform understanding. People may
prefer that reporters write with clear logic and structure. However, reporters who may
be perceived by some as not having that gift are not subject to legal liability for
defamation. Moreover, opinions on what constitutes good, clear writing vary as much
as tastes in cuisine. Defamation law requires only that publishers and authors, whether
logical or not, do not knowingly or recklessly publish false statements about public
figures. Latin nomenclature, logical structure and linguistic style are irrelevant to a jury’s
ability to reach a conclusion on that straightforward issue.
Dr. Habick’s testimony would be unfairly prejudicial, confusing and
misleading to the jury.
Dr. Habick’s proffered testimony does not meet minimal legal requirements for its
admissibility. However, even if Dr. Habick’s testimony did meet those standards, this
Court finds that his testimony would be excluded under Pa. R. Evid. 403 as “its
probative value is outweighed by a danger of . . . unfair prejudice, confusing the issues,
[or] misleading the jury.” See, e.g., Betz v. Pneumo Abex LLC, 44 A.3d 27, 52 (Pa.
2012) (affirming that R. 403 gives the trial court a role in screening proffered experts to
exclude unfair prejudice, confusion, and misleading evidence). Dr. Habick’s testimony
reaches into areas that the jury need not decide—(1) that of a so-called sophisticated
linguistic analysis rather than an average juror’s reading, and (2) that of a linguist
speculating about his view as to the likelihood, based on no actual proven facts outside 17
of the articles’ written words, that the articles were written with knowledge of their
alleged falsity or with reckless disregard of their alleged falsity. However, he confuses
the definitions of defamation and actual malice. He uses overly technical vocabulary to
discuss basic concepts. He makes assumptions that statements are false, which is a
jury’s task, and jumps to assessing whether the statements were published intentionally
or recklessly as to whether they are false. Dr. Habick’s testimony, if permitted and
given the imprimatur of being “expert” by the court, would unfairly prejudice, confuse
and mislead the jury. By contrast, the jury will have far more information when they
make their decision than Dr. Habick did in rendering his opinion that statements were
defamatory. In addition to reading the articles, the jury will hear evidence including
testimony from Plaintiff, Defendants, reporters and others who can provide evidence as
to the true facts and the Defendants’ subjective intent. The jury will not be determining
the publishers’ subjective intent based on whether the articles are logical or include
false assumptions. Jurors will be guided by whether there is evidence of actual malice.
Conclusion
This Court finds that Dr. Habick’s testimony and report do not meet legal
requirements under Pa. R. Evid. 702 and caselaw. Dr. Habick is not qualified in the
areas he was offered for—namely, (1) to explain what the articles mean to the average
reader, and (2) to show that Defendants knowingly published false statements or did so
with reckless disregard of their falsity. Sullivan, 376 U.S. 254, 279–80 (1964). Plaintiff
failed to show that Dr. Habick was qualified to testify in these areas, that his
methodology was reliable or scientific and generally accepted within the field of
linguistics, and that his testimony was relevant to the issues the jury would need to 18
decide. Pa.R.Evid. 702.
6
Further, this Court finds that Dr. Habick’s testimony is not
admissible because it would be unfairly prejudicial, confusing and misleading.
Pa.R.Evid. 403. For the foregoing reasons, Dr. Habick’s testimony and report are not
admissible and may not be used as evidence in support of Plaintiff’s response to the
summary judgment motion nor at trial.
BY THE COURT:
_________________
Lisa M. Rau, J.
Date: August 1, 2014

6
See also Frye v. United States, 293 F. 1013 (D.C. Cir. 1923); Betz v. Pneumo Abex LLC, 44 A.3d 27,
53, 58 (Pa. 2012) (clarifying Court’s gatekeeping role and explaining relevance of the breadth and
character of an expert’s extrapolations); Summers v. Certainteed Corp., 997 A.2d 1152, 1161 (Pa. 2010)
(summary judgment is improper where an expert’s conclusions are sufficiently supported); Grady v. FritoLay,
839 A.2d 1038 (Pa. 2003) (affirming that party proffering expert evidence must show that scientists
in the field generally accept the expert’s methodology for arriving at the expert’s conclusion); Trach v.
Fellin, 817 A.2d 1102, 1113 (Pa. Super. Ct. 2003) (explaining meaning of “methodology”).

Philadelphia Real Estate Law and Litigation Case

A compelling Philadelphia Real Estate Law and Litigation Case

The following opinion, although not precedential, is noteworthy when considering real estate law in the Commonwealth of Pennsylvania. The matter was remanded to the Philadelphia Common Pleas Court, with an opinion issued by the trial court in October 2014 and the case addressed quiet title, ejectment and constructive trust issues.

Harper J. Dimmerman, Attorney at Law, is also an adjunct professor at Temple University, lecturer to other lawyers on legal topics and handles Philadelphia real estate law matters. He offers free, initial consultations – (215) 545-0600.

J-A09009-14
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
GERALDINE RENZULLI, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
FREDERICK RENZULLI AND KRISTIN M.
RENZULLI,
Appellees No. 3148 EDA 2012
Appeal from the Judgment Entered December 18, 2012
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): March Term, 2011, No. 003016
BEFORE: BOWES, OTT, and JENKINS, JJ.
MEMORANDUM BY BOWES, J.: FILED JUNE 17, 2014
Geraldine Renzulli (“Geraldine”) appeals from the judgment entered in
this quiet title action. The trial court denied Geraldine’s request to order
that certain real estate be transferred into her name, and it also granted a
counterclaim in ejectment that was filed by Appellees herein, who are
Geradine’s son, Frederick Renzulli (“Fred”), and Fred’s wife Kristin Renzulli
(“Kristin”). After careful review, we reverse and remand for further
proceedings.
Typically, this Court first recites the evidence presented by the verdict
winners, which, in this case, are Fred and Kristin. We have elected to
examine the evidence presented by both Appellant and Appellees. This
approach will lead to a better understanding of how the trial court herein
erred in its application of the law and the proper resolution of the appeal. J-A09009-14
– 2 –
Geraldine was married to John A. Renzulli (“John A.”),1
and three
children were born of the marriage: Fred, Fred’s older brother John J.
Renzulli (“John J.”), and Fred’s younger sister Danielle Renzulli. The
property that is the subject of this lawsuit is located at 1830 East Passyunk
Avenue, Philadelphia. Geraldine has resided at 1830 East Passyunk Avenue
since approximately 1986. Originally, Geraldine lived there with her three
children, but they have since become adults and moved elsewhere. It was
undisputed that Geraldine exercised control over the property from 1986
until 2012. She collected and retained the rental income from an apartment
on the first floor, occupied the upper two floors of the house without paying
rent, and maintained the property.
The real estate located at 1830 East Passyunk Avenue was never titled
in Geraldine’s name, nor was it ever titled in the name of her husband
John A. Instead, since 1986, title to the premises was held by various
members of the Renzulli family. When Geraldine instituted this quiet title
action, Fred had title to 1830 East Passyunk Avenue.2
Geraldine averred in
her complaint that she was the rightful owner of said property as Fred held it
in a constructive trust for her benefit. She asked that the court order that
Fred execute a deed to transfer it into her name. Fred and Kristin denied
____________________________________________
1
John A. and Geraldine separated but it is unclear whether they ever
divorced.
2
The house is now worth about $265,000. J-A09009-14
– 3 –
that the property was held in a constructive trust for the benefit of
Geraldine. They also counterclaimed for ejectment and for damages
occasioned by Geraldine’s rent-free occupation of the premises and her
collection of income from the apartment on the first floor.
We will now recite the title transfers that are relevant to this appeal.
On January 29, 1986, Michael Mattiocco deeded 1830 East Passyunk Avenue
to Josephine Rettig. Josephine Rettig is John A.’s mother and Geraldine’s
mother-in-law. On November 9, 1989, Josephine Rettig executed a deed to
the property to her grandsons, John J. and Fred. On October 3, 2007,
John J. transferred his one-half interest in 1830 East Passyunk Avenue to his
brother, Fred. On February 7, 2008, Fred deeded the property to his wife,
Kristin, and on February 22, 2011, Kristin re-transferred the real estate into
her husband Fred’s name.
To establish her entitlement to relief, Geraldine presented the
following evidence explaining each transfer of the property in question.
Josephine Rettig testified as follows. The property was originally transferred
into her name in 1986 as payment for a debt owed to her son, John A. She
said that an unidentified person handed her the deed and told her that it was
from her son. Ms. Rettig explained that John A. had previously told her that
she would be receiving the deed to the property because he was going to be
arrested for drug dealing and feared that the property would be forfeited to
the government if it was placed in his name. At that time, Ms. Rettig agreed
to hold the property for the benefit of John A. and Geraldine so that it would J-A09009-14
– 4 –
not be confiscated by the government and the family would have a place to
reside.
Martin Mattiocco is Michael Mattiocco’s father; Michael is the named
grantor in the 1986 deed to Ms. Rettig. Martin testified as follows. In 1986,
John A., Ms. Rettig’s son, owned a car dealership. Martin purchased a
number of cars from John A. and owed John A. money. At that time,
Martin’s son Michael owned 1830 East Passyunk Avenue and did not want to
maintain it. Michael agreed to give John A. the property in question to
satisfy Martin’s debt to John A. John A. told Martin and Michael that the
property was to be placed in the name of his mother, Ms. Rettig.
John A. confirmed Martin’s description of the events leading to the
transfer of the property to his mother. He stated that Martin owed him
money for cars that Martin purchased from him and that John A. agreed to
accept 1830 East Passyunk Avenue as payment for that debt. John A.
explained that his mother’s name was placed as grantee on the deed since
he “was having a lot of problems at the time with the government and I
figured my wife would have someplace to go and then when I [got] out of
jail I would straighten it all out.” N.T. Trial, 7/31/12, at 45. That witness
specified that all of his other property, including their home and other joint
assets that he owned with Geraldine, had been forfeited to the federal
government as a result of his drug dealing and failure to pay income taxes
on his illegal income. Id. at 70. John A. believed that, if 1830 East
Passyunk Avenue was placed in his and Geraldine’s names, it would also be J-A09009-14
– 5 –
taken by the government, and his family would have nowhere to live when
he went to jail. Id.
Ms. Rettig delineated the circumstances surrounding her execution of
the November 9, 1989 deed transferring the property from herself and into
the names of her two grandsons, John J. and Fred. She was called before a
federal grand jury about whether she or her son owned 1830 East Passyunk
Avenue. She invoked the Fifth Amendment and then called John A., who
was in prison, and told him that she no longer wanted the real estate in her
name. John A. responded to “give it to my two sons, put it for them for
them to hold for me.” Id. at 16. She hired her accountant to prepare the
deed and transferred the title to the premises into the names of John J. and
Fred, who were nineteen and eighteen years old, respectively, at that time.
Ms. Rettig’s testimony was that her reason for transferring 1830
Passyunk Avenue to John J. and Fred was for “them to hold [the property]
for their father and mother.” Id. at 17. Ms. Rettig continued that John J.
and Fred “didn’t even know it. They did not know I had transferred the
property.” Id. They were never shown the deed. Id.
John A. also confirmed this aspect of Ms. Rettig’s testimony. He
related that while he was in jail, his mother called and told him that she
“didn’t want it in her name no more” so he “told her to put it in my kids’
name.” Id. at 48. Danielle was not placed on the deed since she was too
young. John A. testified that John J. and Fred were not told about the 1989
deed. J-A09009-14
– 6 –
In 1986, Geraldine and John A. and the three children moved into
1830 East Passyunk Avenue. John A. subsequently went to prison for tax
fraud and drug dealing. When he was released from jail in 1996, he went to
reside at 1830 East Passyunk Avenue. John A. paid for renovations to the
house both in 1986 and upon his release from prison. John A. was
imprisoned again shortly after 1996 and remained in jail until 2008. After he
was released in 2008, John A. and Geraldine were separated. John A.
testified that he allowed Geraldine to purchase his interest in the real estate
for $10,000. John A. stated at trial that Geraldine did transfer that amount
of money to him in exchange for his agreement to relinquish any ownership
rights to the property that he may have owned.
John J. likewise testified that he, his parents, and his two siblings
moved to 1830 East Passyunk Avenue after the government took their home
in 1986. Id. at 76. John J. thought that the real estate was owned by his
parents. He testified that he did not have any knowledge that, in 1989, the
property was placed in his and Fred’s names and stated that he never saw
the deed. Id. at 77. John J. reported that Fred was arrested in 1999, and,
at that time, John J. first learned that he and Fred had title to the premises
since he executed a paper allowing the house to be used as collateral for
Fred’s bail. Id. at 82. John J. said that he always considered the real estate
to be owned by his mother and father.
John J. described the circumstances surrounding his transfer of his
one-half interest in the real estate into his brother’s sole name. In 2007, J-A09009-14
– 7 –
John J. owned a business that was failing, and he had a significant amount
of debt. Geraldine “told me I want you to take your name off the property
before I get judgments against me on my property.” Id. at 86. Since John
J. was weighing whether to file for bankruptcy and since he considered his
mother to own the property, he followed her instructions and transferred his
one-half interest in 1830 East Passyunk Avenue into the sole name of Fred.
Geraldine’s testimony was consistent with that of her mother-in-law,
John A., and John J. In 1986, John A. told her that he “had acquired the
property from a debt that was owed to him” and that it would be titled in his
mother’s name. Id. at 100. The property was titled in this manner because
John J. “was the target of an investigation” and eventually, they would lose
1830 East Passyunk Avenue if it was titled in their names. Id. Geraldine
continued that, as result of John A.’s criminal activity, they lost their home,
and the Internal Revenue Service placed a tax lien against both Geraldine
and John A. The tax lien was filed in 1993 and amounted to $785,000. Id.
at 102.
Geraldine continued that, after her mother-in-law no longer wanted to
be involved in the property ownership issue, John A. instructed his mother
that the real estate was to be placed in the names of John J. and Fred.
Geraldine related that she never told either of her sons that 1830 East
Passyunk Avenue was in their name. Id. at 103. Geraldine confirmed that
in 2007, when John J. started to experience financial difficulties, she J-A09009-14
– 8 –
instructed him to transfer the real estate into Fred’s name so that it would
not be seized by his creditors. Id. at 117.
Geraldine testified that from 1986 onward, she lived on the premises
rent-free, maintained the property, paid the real estate taxes on it, and
collected the rental from the first-floor apartment. Geraldine related that,
after she and John A. separated, she purchased his interest in 1830 East
Passyunk Avenue for $10,000. She borrowed $5,000 of that amount from
Fred and repaid him. She had $1,000 of her own and borrowed the
remaining amount from other people.
Geraldine explained why the real estate was placed in Kristin’s name in
2008. Fred and Kristin wanted to purchase a bar in Wildwood, New Jersey,
known as the Anglesea Pub. Fred did not have satisfactory credit, so Kristin
planned to secure a loan for the property. Geraldine stated that she agreed
to allow Fred to place the real property into Kristin’s name so that it could be
listed as her asset on her loan application. Id. at 119.
Geraldine insisted that all the record owners from 1986 onward held
the property in a constructive trust for her benefit. She continued that there
was an agreement that the property would be transferred into her name
when the tax lien was removed, in 2009. Id. at 116. She spoke with Fred
in 2009 about getting the property placed in her name. He responded that
John A. owed him $47,000 for an emissions machine that was purchased for
a business that John A. owned. Fred said that Geraldine “had to pay his
father’s bill” before he would give Geraldine the house. Id. at 121. J-A09009-14
– 9 –
Geraldine did not believe that she was liable for this debt since she had
already purchased John A.’s interest in the property. She therefore
instituted this lawsuit to have the property transferred into her name.
In response to this evidence, Fred testified that in 1989, his
grandmother told him that she had made a gift to him and John J. of the
property on 1830 East Passyunk Avenue. N.T. Trial, 8/1/12, at 40. He
insisted that in 2007, John J. transferred his one-half interest in the real
estate to Fred in payment for various loans that Fred had given John J. over
the years. Id. Fred stated that he and his mother Geraldine had an
arrangement whereby she managed the property and that he allowed her to
keep the rent in exchange for maintaining it, and this agreement was
reached when he was eighteen years old. Id. at 41. Fred alleged that he,
not his mother, had given $10,000 to his father, but maintained that it was
to induce his father to cease harassing Geraldine rather than in payment for
any interest that John A. had in the property. Kristin acknowledged that the
property was transferred into her name to enable her to obtain a loan, but
denied that Geraldine was involved in the transaction and gave her
permission for its occurrence.
The trial court entered its verdict on August 13, 2012. Significantly,
the trial court rendered only one credibility determination, which was that
“Geraldine Renzulli was not credible.” N.T. Trial, 8/13/12, at 2. It found
Geraldine unworthy of belief on the basis that she admitted that the
transfers of the property were designed to “frustrate and avoid government J-A09009-14
– 10 –
forfeiture and tax lien procedure as if it were an appropriate legal solution to
her difficulties.” Id. The court also concluded that Geraldine could not
prevail since she “did not have the clean hands required to recover in
equity.” Id. On these two bases alone, the trial court found in favor of
Appellees as to Appellant’s quiet title action, and granted Appellees
ejectment of Appellant from 1830 East Passyunk Avenue. It declined to
award attorney’s fees or damages to Appellees.
In its Pa.R.A.P. 1925(a) opinion, the trial court again indicated its
verdict was premised solely upon its conclusions that Geraldine was not
credible and did not have the clean hands necessary to recover in equity. It
made no credibility rulings as to any other witness. It supported its decision
in this matter based on the fact that Geraldine’s “testimony regarding
ownership of the property was not credible because she admitted to
attempting to defraud the government through forfeiture and tax lien
procedures.” Trial Court Opinion, 1/15/13, at 4. Based upon her admitted
fraud as to the government, the trial court opined that “it was reasonable to
ultimately find that title was never placed, nor intended to be placed in
Appellant’s name.” Id. at 4-5.
This appeal followed denial of Appellant’s post-trial motion and entry of
judgment on the verdict. Appellant raises these contentions on appeal:
1. In an Action to Quiet Title, where the Appellant sought
the Court award her the property in which she had resided for
over 22 years as the real and rightful owner of the property, title
to which was in the name of Appellee, Frederick Renzulli, and
previously in the name Appellee, Kristin Renzulli, was it an abuse J-A09009-14
– 11 –
of discretion and an error law for the Court not to decide the
case on its merits, but instead, find in favor of the Appellees on
their Counterclaim, to be awarded the property as the true and
rightful owners of the property because the Court found
Appellant not credible and lacking in clean hands?
2. Were the reasons why the Court found that Appellant
was not credible and lacked clean hands because she never had
her name on the title to the property because of a forfeiture tax
lien scheme and because she signed the names of others to legal
documents supported in the record, or was it an abuse of
discretion?
3. Did the trial court abuse its discretion, fail to apply the
principles of equity and commit error of law by not examining
the testimony of the Appellees, by not judging their credibility
and their bad conduct under the maxim of the clean hands
doctrine on their Counterclaim, equally and in the same way and
under the same scrutiny as the Court examined Appellant’s
testimony for credibility, and applying the clean hands doctrine
and, in fact, not examining the testimony of the Appellees at all
and awarding Appellees the property?
4. Was it an abuse of discretion, a misapplication of the
rules of equity and error of law to grant Appellee, Frederick
Renzulli, the relief he requested in his Counterclaim of Ejectment
by default, without making any findings on the matter of
Appellee’s claim to real ownership of the property and weighing
the relative equities of the matter, resulting in Appellees’ unjust
enrichment, an inequitable result?
5. Did the trial court misapply the maxim of unclean hands
as to Appellant’s conduct which prevented the Appellant from
having the Court decide the case on the merits and effectively
deciding the merits of the case against her?
6. Did the trial court abuse its discretion and/or commit
error of law in not considering the evidence presented by
Appellant that title to the property was held by Appellees as
constructive trustees for the benefit of Appellant?
7. Did the trial court deny Appellant a fair trial, show bias
and ill will toward Appellant and prejudge this case and prevent
Appellant from completing the presentation of her testimony? J-A09009-14
– 12 –
8. Were the trial court’s findings and Order granting
Appellees’ request for ejectment of Appellant fair and equitable
and according to the principles of equity?
Appellant’s brief at 1-3.
Initially, we ascertain the proper standard of review. An action to
quiet title is a civil action at law. Pa.R.C.P. 1061(a) (“Except as otherwise
provided in this chapter, the procedure in the action to quiet title from the
commencement to the entry of judgment shall be in accordance with the
rules relating to a civil action.”). However, imposition of a constructive trust
is considered an equitable remedy. Robbins v. Kristofic, 643 A.2d 1079,
1083 (Pa.Super. 1994) (“a constructive trust is not a trust in the ordinary
sense of the term but simply an equitable remedy designed to prevent
unjust enrichment”); Hercules v. Jones, 609 A.2d 837, 839 (Pa.Super.
1992) (“request for the establishment and enforcement of a constructive
trust is a matter within the jurisdiction of a court of equity”).
Where a complaint contains a cause of action to quiet title but also
seeks an equitable remedy, the court has jurisdiction to decide both the
legal and equitable causes. Sutton v. Miller, 592 A.2d 83, 85 (Pa.Super.
1991). Since the trial court herein resolved this litigation based upon the
assertion of the equitable remedy of imposition of a constructive trust, we
will employ the equity standard of review, as have all decisions involving
constructive trusts.
When reviewing a decision of the equity court, our standard of review
is very limited, and we cannot disturb the decision of an equity court “unless J-A09009-14
– 13 –
it is unsupported by the evidence or demonstrably capricious.” Mid Penn
Bank v. Farhat, 74 A.3d 149, 153 (Pa.Super. 2013) (citation omitted).
Thus, the equity court’s determination will be affirmed unless it abused its
“discretion or committed an error of law. The test is not whether we would
have reached the same result on the evidence presented, but whether the
chancellor’s conclusion can reasonably be drawn from the evidence.” Id.
We first observe the following. As analyzed supra, the trial court’s
ruling herein was purportedly premised upon its determination that
Geraldine was not credible. It rendered no other credibility rulings.
Meanwhile, the court’s legal resolution of the merits of this matter indicates
that it was based upon the truth of Geraldine’s testimony. Specifically,
Geraldine stated that title was never transferred into either her or her
husband’s name to avoid the federal tax lien, but that it was everyone’s
intent that she be the equitable owner of the property. Although indicating
that she was not a credible witness, the trial court based its merits decision
on the truth of what she reported. It stated that a constructive trust could
not be imposed because Geraldine admitted that title was never intended to
be transferred to her so that it would not be seized by the federal
government. It also decided that, since Geraldine conceded that the titling
of the property was planned so as to avoid the tax lien, she operated with
unclean hands. These legal conclusions cannot be supported unless one
accepts that Geraldine was truthful about how the title scheme operated. J-A09009-14
– 14 –
More importantly, in the context of imposition of a constructive trust
for Appellant’s benefit, it is not relevant if the property was ever intended to
be placed in Appellant’s name. We have specifically observed, “when relief
through imposition of a constructive trust is prayed for, it is not the specific
intent between the parties to create a constructive trust but rather whether
or not imposition of a constructive trust is necessary to prevent unjust
enrichment.” DePaul v. DePaul, 429 A.2d 1192, 1194 (Pa.Super. 1981).
This principle is echoed in the pertinent provisions of the Restatement of
Trusts, which discusses constructive trusts only in comment e to § 1, as
follows:

A constructive trust is a relationship with respect to
property usually subjecting the person by whom its title is held
to an equitable duty to convey the property to another on the
ground that the title holder’s acquisition or retention of the
property is wrongful and that unjust enrichment would occur if
the title holder were permitted to retain the property. See
Restatement of Restitution § 160 [“Where a person holding title
to property is subject to an equitable duty to convey it to
another on the ground that he would be unjustly enriched if he
were permitted to retain it, a constructive trust arises.”] . . .
Both express trusts and resulting trusts are based upon an
intention of the person who creates them. . . . On the other
hand, a constructive trust is imposed, not necessarily to
effectuate an expressed or implied intention, but to redress a
wrong or to prevent unjust enrichment. A constructive trust is
thus the result of judicial intervention and is remedial in
character. J-A09009-14
– 15 –
Restatement (Third) of Trusts § 1 comment e. That comment continues that
the provisions of the Restatement of Trusts are not applicable to constructive
trusts.3
Pennsylvania principles applicable to constructive trusts are consistent:
A constructive trust arises when a person holding title to
property is subject to an equitable duty to convey it to another
on the ground he would be unjustly enriched if he were
permitted to retain it. The necessity for such a trust may arise
from circumstances evidencing fraud, duress, undue influence or
mistake. Id. The controlling factor in determining
whether a constructive trust should be imposed is
____________________________________________
3
Hence, we reject Appellees’ invocation of Restatement (Second) of Trusts
§ 63, and the Pennsylvania cases applying that section. That Restatement
provision states:
(1) Except as stated in Subsection (2), a trust is invalid if the
purpose of the settlor in creating the trust is to defraud his
creditors or other persons.
(2) If the beneficiary of the trust is a third person who at the
time of the creation of the trust had no notice of the fraudulent
purpose of the settlor, he can enforce the trust, except so far as
he is precluded from so doing because of the claims of the
defrauded persons.
The cases Appellees cite involve resulting trusts, which are subject to the
Restatement of Trust and applied § 63. See Policarpo v. Policarpo, 189
A.2d 171 (Pa. 1963); In re Summers’ Estate, 226 A.2d 197 (Pa. 1967);
Galford v. Burkhouse, 478 A.2d 1328 (Pa.Super. 1984). In this case, we
are examining whether a constructive trust was created, and the
Restatement is not applicable. We undoubtedly would be inclined to
invalidate a finding that Geraldine had title to the property if the federal
government, as creditor, sought that remedy. However, that holding would
result from the fact that the transfer was fraudulent as to it. Herein,
Appellees have been unjustly enriched by this scheme and cannot be heard
to complain about fraud that was not perpetrated on them. J-A09009-14
– 16 –
whether it is necessary to prevent unjust enrichment.
One who seeks the imposition of a constructive trust must do so
by clear, direct, precise and convincing evidence. Id.
Hercules, supra at 841 (citations omitted; emphasis added). Nowhere in
its opinion or on the record did the trial court even examine whether
Appellees would be unjustly enriched by their retention of 1830 East
Passyunk Avenue. It thus committed an error of law in resolving this matter
based upon the intent of the parties, which is not pertinent, and in failing to
consider the relevant legal principles. We thus agree with Appellant’s sixth
assertion, which is that the trial court did not apply the proper legal
principles to the evidence presented.
In examining whether a constructive trust was created by the
circumstances, there is no requirement that the transferee of title to the
property that is subject to the trust agree to transfer it to the person with
equitable title. Indeed, we have ruled that the intent of the transferee is
irrelevant. The sole consideration is whether imposition of a constructive
trust is necessary to prevent unjust enrichment. Thus, the question is
whether it would be inequitable for Appellees to retain the property since
they would be unjustly enriched by the present state of the title to 1830 East
Passyunk Avenue.
Appellant presented uncontested evidence that the real estate in
question was purchased with consideration provided by John A., Fred’s
father, and placed in Ms. Rettig’s name. Ms. Rettig’s unrebutted testimony J-A09009-14
– 17 –
was that she did not consider herself the owner of the property. She
understood that she was deeded the property so that there would be a place
for her son and his family to reside since all of their property had been taken
by the federal government. Appellees likewise failed to present any
evidence to contradict the fact that, all the while that the property was
deeded to the various family members, Geraldine resided there and
exercised all rights attendant with ownership of the property for twenty-five
years prior to institution of this action. The trial court did not find
Ms. Rettig, John A., or John J. incredible witnesses.
Also of significance is the fact that the trial court at no point indicated
that it credited any of Fred’s testimony, and, most importantly, his
representation that Ms. Rettig intended to gift him and his brother the
property. Since Ms. Rettig’s unrebutted testimony was that she did not even
consider herself the owner of the property, any finding that she gifted
property that she did not own would be completely illogical and contrary to
common sense. Likewise, Fred’s representation that, at the age of eighteen,
he entered an agreement with his mother and allowed her to manage the
property on his behalf strains credulity.
Appellees did not pay any consideration for the property in question.
From 1986 to 2012, it was the home of Fred’s mother, who exercised all
ownership rights attendant to it. The facts at issue herein unquestionably
establish Appellees hold title to property subject to an equitable duty to J-A09009-14
– 18 –
convey it to Geraldine since they would be unjustly enriched if they were
permitted to retain it and since she has always been treated as its equitable
owner. Since the controlling factor in determining whether a constructive
trust should be imposed is whether it is necessary to prevent unjust
enrichment, and the question of whether there was an intent to create such
a trust is irrelevant, the trial court herein committed an error of law in
connection with its ruling as to whether a constructive trust was created.
We also examine the trial court’s application of the doctrine of unclean
hands. It applied this precept based upon the fact that the property was
placed in various family members names so that Geraldine had a home that
could not be seized pursuant to the federal tax lien. However, as Appellant
correctly asserts in her fifth issue, the doctrine of unclean hands was
improperly invoked by the trial court.
The doctrine of unclean hands has no application in this case. As we
observed in Walacavage v. Walacavage, 77 A.2d 723, 725 (Pa.Super.
1951):
The doctrine of unclean hands affects misconduct in the
matter in suit only, . . . and is available only when the plaintiff in
an equity suit has been guilty of unconscionable or unlawful
conduct respecting the transaction before the court. Comstock
v. Thompson, 286 Pa. 457, 461, 133 A. 638. A strikingly
analogous case is Vercesi v. Petri, 334 Pa. 385, 5 A.2d 563,
565. In that equity proceeding for an accounting, it appeared
that plaintiff and defendant had entered into an oral agreement
of partnership to conduct a restaurant, and all partnership assets
were taken in defendant’s name with the intent on the part of
plaintiff to evade his past creditors. The Court concluded that
the doctrine of unclean hands had no application, and speaking J-A09009-14
– 19 –
through Stern, J., said: ‘One of the limitations of the doctrine of
coming into equity with unclean hands is that the wrong-doing of
the plaintiff must have been in reference to the very matter in
controversy and not merely remotely or indirectly connected
therewith. . . .”
Hence, “the doctrine of unclean hands applies only where the plaintiff’s
wrongdoing directly affects the equitable relations existing between the
parties,” McLaughlin v. McLaughlin, 187 A.2d 905, 907 (Pa. 1963)
(emphasis in original). The doctrine of unclean hands, as noted in
Walacavage, is not applied as between the person with legal title and the
person with equitable title when the property was placed in someone’s name
to avoid creditors.
In this case, Appellant did not operate with unclean hands as to
Appellees. While the people involved in these series of transactions may
have operated with unclean hands with respect to the federal government,
Appellant did not have unclean hands with respect to her dealings with
Appellees. Hence, the trial court committed an error of law in applying the
doctrine of unclean hands herein.
In light of our findings that the trial court failed to apply the proper
principles in determining whether a constructive trust was created, did not
render any credibility determinations other than the one that Geraldine was
not credible when she stated that it was the intent of everyone that the
property would eventually be placed in her name, and that the doctrine of
unclean hands is inapplicable, we must reverse the trial court’s verdict. We J-A09009-14
– 20 –
remand for the trial court to apply the proper principles of law and render
appropriate credibility determinations as to the witnesses who testified at
trial. In light of disposition herein, we need not address Appellant’s
remaining allegations.
Judgment reversed. Case remanded for proceedings consistent with
this adjudication. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/17/2014

Real estate law fraud article co-authored by a Philadelphia attorney

Unauthorized reproduction is expressly prohibited. Copyright ALM 2015

“Proving Fraud in a Residential Real Estate Transaction” by Harper J.  Dimmerman  and  James  M.  Lammendola, ” The  Legal  Intelligencer”, Publication date: January  6,  2015 (Real estate law fraud article co-authored by a Philadelphia attorney. The article discusses Pennsylvania’s disclosure laws in a residential real estate deal).

Litigators  know  that  proving  fraud  against  a  seller  in  the  residential  real  estate  context  can  be  challenging and  being  awarded  damages  for  fraud  even  more  so.  The  recent  decision  in  Floyd  v.  Wigfield,  (Oct.  2014, Lehigh  Co.,  No.  2012-­C-­4131),  handed  down  this  past  October,  provides  a  useful  analysis  of  the  facts and  types  of  claims  that  should  be  considered.  The  case  also  serves  as  a  reminder  that  failure-­to-­disclose cases  continue  to  be  litigated  in  our  state.  This  is  so  despite  the  requirement  in  the  1996  Real  Estate Seller  Disclosure  Law  (68  Pa.C.S.A.  Section  7301)  requiring  material  defects  to  be  disclosed  in  writing before  an  agreement  of  sale  for  residential  real  estate  is  signed  as  well  as  the  1968  Unfair  Trade Practices  and  Consumer  Protection  Law  (73  P .S.  Section  201-­1  et  seq.),  made  applicable  to  residential real  estate  transactions  by  the  Superior  Court  in  1987.

The  facts  are  straightforward  enough:  Shannon  Floyd,  Norman  D’Avanzo  and  Ruth  D’Avanzo  (the buyers),  purchased  property  in  Emmaus,  Pa.,  from  Edward  and  Carol  Wigfield  (the  sellers)  on  Oct.  9, 2010.  During  their  ownership,  the  sellers  made  various  improvements  to  the  property,  including  the conversion  of  a  barn  on  the  site  into  multiple  apartment  units  and  alterations  to  the  wastewater  system. The  sellers  were  the  only  owners  in  the  chain  of  title  prior  to  the  sale  to  the  buyers.  They  listed  the property  and  prepared  various  documents,  including  a  required  seller’s  property  disclosure  statement  that did  not  disclose  any  information  on  any  code  violations.  The  property  was  marketed  as  having  two income-­producing  rental  units,  in  addition  to  the  main  residence  being  ready  for  use.

Post-­settlement,  an  issue  arose  with  the  tenants  (the  rental  units  were  occupied  at  the  time  of  the transfer)  and  an  inspection  by  Upper  Milford  Township  exposed  several  violations.  These  violations included  the  fact  that  the  property  had  never  been  approved  for  multiple  rental  units.  The  buyers  sought zoning  relief,  in  the  form  of  a  variance;;  the  request  was  eventually  granted.  But  the  variance  was conditioned  upon  an  inspection  of  each  of  the  rental  units.  In  the  course  of  this  process,  it  was  discovered that  the  septic  system  servicing  the  dwelling  units  was  non-­compliant,  necessitating  a  new,  compliant system  with  an  approximate  cost  of  $40,000.

As  a  result  of  their  reliance  upon  the  disclosures  either  made  or  omitted  by  the  sellers,  the  buyers commenced  litigation  in  the  Lehigh  County  Court  of  Common  Pleas.  The  multicount  complaint  averred common-­law  misrepresentation  as  well  as  violations  of  both  the  Real  Estate  Seller  Disclosure  Law (RESDL)  and  the  Unfair  Trade  Practices  and  Consumer  Protection  Law  (UTPCPL),  inter  alia.  The  thrust of  the  buyers’  suit  was  that  the  sellers  misrepresented  the  condition  of  the  property,  thereby  entitling  them to  actual  damages  amounting  to  the  cost  of  the  septic  system,  treble  damages  and  attorney  fees.

Notably,  at  the  bench  trial,  the  sellers  stipulated  to  the  fact  that  they  knew  permits  were  required  and intentionally  did  not  obtain  them.  The  court  made  an  additional  finding  of  fact  that  the  sellers  represented on  the  disclosure  statement  that  they  were  unaware  of  any  material  defects  on  the  property.  A  material defect  is  defined  by  case  law,  the  RESDL  and  the  disclosure  statement  as  “a  problem  with  residential  real property  or  any  portion  of  it  that  would  have  a  significant  impact  on  the  value  of  the  property  or  that involves  an  unreasonable  risk  to  people  on  the  property.”  Section  7304-­16  of  the  RESDL  includes  “legal issues  affecting  title  that  would  interfere  with  use  and  enjoyment”  in  its  list  of  what  may  qualify  as  a material  defect.  Section  19-­D  of  the  disclosure  statement  requires  disclosure  of  any  zoning,  housing, building,  safety,  or  fire  code  violations.

In  its  conclusions  of  law,  the  court  relied  heavily  on  the  oft-­cited  Pennsylvania  Supreme  Court  case  Bortz v.  Noon,  729  A.  2d,  555  (Pa.  1999),  in  analyzing  the  sellers’  conduct.  There  is  nothing  in  the  opinion  that mentions  a  defense  for  failing  to  disclose  that  the  apartments  were  in  violation  of  zoning  law  but  the sellers  apparently  tried  to  posit  the  defense  that  the  septic  system  functioned  properly.  The  court  noted that  this  defense  was  only  relevant  to  the  “idea  that  [sellers]  never  thought  their  deceit  would  be uncovered.”

Once  reliance  on  a  misstatement  of  fact,  or  concealment  of  a  material  defect  is  established  as  fact,  then the  intent  to  fraudulently  inflate  the  value  of  the  property  is  established  for  the  purpose  of  finding  a material  defect.  As  a  consequence  of  holding  that  both  the  intentional  misrepresentation  and  a  violation  of the  RESDL  occurred,  the  court  granted  the  plaintiffs  compensatory  damages  in  an  amount  sufficient  to bring  the  septic  system  into  compliance.  The  RESDL  allows  actual  damages  under  Section  7311  but  does not  preclude  punitive  damages  or  “any  other  remedies  applicable  under  other  provisions  of  law.”

The  UTPCPL’s  catch-­all  21st  unfair  trade  practice  definition  is  “any  other  fraudulent  or  deceptive  conduct which  creates  a  likelihood  of  confusion  or  of  misunderstanding,”  which  has  been  interpreted  as  requiring proof  of  common-­law  fraud  by  the  Superior  Court  in  2000  in  Booze  v.  Allstate  Insurance,  750  A.2d  877. Section  201-­9.2  also  provides  that  “the  court  may  in  its  discretion,  award  up  to  three  times  the  actual damages  sustained,”  plus  reasonable  attorney  fees.

As  in  many  cases,  the  court  declined  to  award  treble  damages,  which  is  discretionary  under  UTPCPL Section  201-­9.2(a),  despite  an  explicit  finding  of  intentional  conduct,  coupled  with  the  finding  of  fact  that one  of  the  sellers  was  a  former  township  zoning  officer  who  “was  familiar  with  zoning  hearing  procedures, zoning  laws,  building  laws,  and  septic  system  laws.”  The  court  found  treble  damages  inappropriate  but did  not  explicitly  state  its  reasoning.  Nonetheless,  the  court  did  award  about  $20,126  in  attorney  fees, which  was  the  exact  amount  prayed  for  since  said  sum  met  the  four  factors  under  McCauslin  v.  Reliance Finance,  751  A.2d  683  (Pa.  Super  2000).

Floyd  serves  as  yet  another  reminder  of  the  multiple  causes  of  action  available  in  a  residential  failure-­to-­ disclose  case,  the  specific  remedies  attached  to  the  various  claims,  and  that  treble  damages  are  not awarded  as  a  matter  of  course.  Although  the  threat  of  treble  damages  did  not  serve  as  a  deterrent  to  this litigation,  the  threat  of  treble  damages  and  counsel  fees  makes  the  UTPCPL  a  necessary  supplement  to RESDL  and  common-­law  failure-­to-­disclose  claims.

Harper  J.  Dimmerman  is  an  adjunct  professor  at  Temple  University’s  Fox  School  of  Business.  His  office represents  clients  in  various  litigation  and  real  estate  law  matters  and  he  can  be  reached  at harper@hjdlaw.net  or  215-­545-­0600.

James  M.  Lammendola  is  an  assistant  professor  at  Temple  University’s  Fox  School  of  Business  who was  in  private  practice  for  20  years.  He  can  be  reached  at  james.lammendola@temple.edu  or  215-­204-­ 4124.

Real Estate Law Article co-authored by a Philadelphia Attorney

Major Developer Litigates with Contractor, Real Estate Law Article co-authored by a Philadelphia Attorney. Mr. Dimmerman offers free, initial consultations.

Toll Brothers Battles Contractor

In 2012, our Superior Court handed down an extremely well-reasoned opinion in J.J. DeLuca Company, Inc. v. Toll Brothers, Inc.The matter explored the contours of the gist of the action doctrine and punitive damages law within the framework of an extremely ambitious development project. Toll Brothers (TB), a local behemoth clearly in need of no introduction, has been aggressively developing communities, even during these economically precarious times, stimulating the local economy and responding to the needs of sophisticated homebuyers throughout the region. One of these efforts has unquestionably altered the complexion of the area just south of Fitler Square.

Naval Square, a grand-scale community, represents a highly complex undertaking. And for those history buffs amongst us, perhaps some very brief background is in order. According to TB’s website, the Philadelphia Naval Asylum first opened in 1834 and served as the first home of the U.S. Naval Academy and as the nation’s first retirement home for sailors and marines. One of the uses of the Naval Asylum was for the Philadelphia Naval School, an academy for midshipmen that was a precursor of the United States Naval Academy. The developer first acquired the subject property in 1988, many years before commencing formal development. Eventually, TB spearheaded major construction efforts at the approximately 20-acre site, expending tens of millions of dollars to create a picturesque gated community, with both single-family as well as condominium offerings. The stunning focal point, Biddle Hall, was formerly the Surgeon’s residence and designed by architect William Strickland. Well preserved, the structure represents a quintessential example of Greek Revival architecture in the United States.

Needless to say, in addition to the intensive planning and designing assuredly involved with such a massive project, numerous contractual relationships were either established or forged. One such alliance was created with the underlying plaintiff in the fairly protracted piece of litigation, J.J. Deluca Company, Inc. (DeLuca). Deluca was engaged to serve as the GC for the approximately 79M project. According to the decision, in addition to other compensation, TB had agreed to remit 3.5 percent of the total billings, representing a management/administrative fee for their anticipated efforts. Unfortunately however, disagreement ensued concerning the timeliness of permit acquisition, drawings and performance. In addition to scheduling gripes, TB also raised concerns with the quality of the workmanship. Deluca took the position that some of these claimed delays had actually been caused by TB.

At any rate, bad blood developed between the parties and TB elected to take back control of the entire project. After extensive negotiation, a Termination for Convenience Agreement (TCA) was executed, memorializing the parameters of the fissure, including limiting the types of claims that could be brought in the event of future litigation. In March of 2007, after mediation efforts broke down, DeLuca sued TB for amounts held back by Toll under a 10% retainage arrangement. The complaint alleged breach of contract, unjust enrichment, quantum meruit,and violation of the Contractor and Subcontractor Payment Act (CASPA), 73 P.S. §§ 501-516 theories. Originally, DeLuca pursued damages to the tune of about 4M, not an insignificant sum. TB counterclaimed for cost overruns, costs of completion, unanticipated personnel costs, and liquidated damages. Evidence developed by TB during discovery confirmed that subcontractors, including Brookside Construction, had been directed by DeLuca personnel to submit invoices to TB for work not actually performed at the site. Over DeLuca’s objection, the trial court permitted TB to amend and include a fraud count. As for plaintiff’s fraudulent billing claims, these were eventually withdrawn. After a bench trial, the trial court awarded about 1.2M to DeLuca. Post-trial motions were submitted and that court revised its original verdict, increasing the award amount to about 2.1M. Motions for attorneys’ fees were denied “because neither party is the ‘substantially prevailing party’ under CASPA as were claims for interest, not preserved under the TCA and therefore waived. Albeit that court acknowledged TB’s discovery of “pervasive significant fraud” committed by DeLuca, it declared that “all such sums have been voluntarily withdrawn or ruled not owed.” TB’s punitive damages claim had been deemed waived as well and subsequently both parties appealed.

On appeal, a Superior Court panel vacated the original judgment and remanded the case, deciding that the trial court erroneously concluded that TB’s claim for punitive damages had been waived. On remand, and after briefs and further argument, the lower court entered a 4.5M verdict in favor of TB on the punitive damages claim, resulting in a net award to TB of about 2.4M. Post-trial motions followed yet again, with the trial court essentially reaffirming itself, except with respect to the punitive damages. Timely cross appeals were eventually filed as well. Although DeLuca raised numerous issues on appeal, the thrust of its efforts concerned the evisceration of TB’s fraud and punitive damages claims. For instance, DeLuca contended that the lower court failed to find that fraud had even occurred. Additionally, at least in DeLuca’s estimation, TB waived any fraud claim by failing to preserve such a theory in the TCA.

The Superior Court easily rejected these attacks however, citing to “express and unequivocal” findings of fraud below and reminding the litigants of the duty of good faith and fair dealing implied in every contract. A statute of limitations defense had also been asserted yet was highly attenuated, at best, in the face of active concealment, a theory the lower court found to be an insurmountable impediment. Most notably, DeLuca contended that TB’s fraud claim should have properly been barred by the gist of the action doctrine. The Superior Court easily concluded however that TB’s fraud did not arise out of the performance of the contract. Rather, it was DeLuca’s fraudulent billing scheme that gave rise to such a claim. Furthermore, “DeLuca had an independent, societal duty not to defraud [TB], or any other comparably situated party.” Lastly, “[p]roof of the fraud is an independent and self-sufficient basis for recovery.” As for the punitive damages challenge, a multi-prong attack, the Superior Court could not concur that such an award had not been constitutionally warranted, especially in light of such egregious conduct committed by a business. The separate basis for fraud and the associated evidence proved too severe for DeLuca’s “mathematical gyrations.” Practitioners advising defense clients would be particularly wise to understand the bounds of their client’s conduct before rejecting tort claims willy-nilly.

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Harper J. Dimmerman is an adjunct professor at Temple University’s Fox School of Business. Bradley J. Osborne was an attorney in Mr. Dimmerman’s office. His firm represents clients in various litigation and real estate law matters. He may be reached at harper@hjdlaw.net or 215-545-0600.

James M. Lammendola is an Instructor at Temple University’s Fox School of Business who was in private practice for twenty years. He may be reached via e-mail at james.lammendola@temple.edu or telephone 267-254-3324.

Real Estate Law Article, co-authored by a Philadelphia Lawyer

Real Estate Law Article, co-authored by a Philadelphia Lawyer, Harper J. Dimmerman, Esquire

Real Estate Law, Philadelphia, PA, Article Published by “The Legal Intelligencer”, “A Mysterious Case: Pennsylvania’s Seller Disclosure Law”

COPYRIGHT. 2013. ALM. ALL RIGHTS RESERVED. UNAUTHORIZED REPRODUCTION IS PROHIBITED. 

“Truth will come to light: murder cannot be hid long.” Shakespeare, Merchant of Venice, Act I, Scene II. Disclosing or even defining defects at a property prior to transfer, as banal a task as this may seem, can raise a whole host of complex questions. Fortunately however, in the Commonwealth of Pennsylvania, at least for those queries less concerned with one’s moral or philosophical bent, the legislature has supplied all of the attentive homeowners amongst us, a pretty decent guidepost. Naturally we are referring to the Real Estate Seller Disclosure Law, codified at 68 Pa.C.S.A. section 7102. And customarily, the parties to a residential deal typically have the benefit of their respective agents, who through a series of key forms can vastly simplify the information exchange process. At least for the purpose of this article, the crucial document upon which the buyers rely in formulating an offer is the Seller’s Disclosure. And the Realtors Association has done a commendable job of encapsulating the spirit of the Disclosure Law in a relatively detailed form, to be completed by sellers in a majority of residential transactions.[1] Unquestionably, the prevalence of the PAR Disclosure Form streamlines the disclosure process significantly.

Nonetheless, without the benefit of competent counsel, opting to disclose or not disclose a particular issue with a property, especially in light of the subjective nature of what constitutes a material defect, can become risky business, even with the best of intentions and seeming adherence to the Law. A recent decision, handed down by our Superior Court just before the New Year, is illustrative of the complexities to which we refer and the oftentimes nebulous aspects of Pennsylvania’s Disclosure Law. The facts in the Milliken v. Jacono, et al. matter (2012 PA Super 284, No. 2731 EDA 2010) are straightforward enough. Here, the plaintiff purchased a home from a husband and wife. The property, located in Delaware County, possessed somewhat of a checkered past though. As fate would have it, the sellers’ had acquired the property from an estate, as noted in the title documents. Apparently, the estate came to own the property due to a murder-suicide that had occurred at the property, a tragic event that in fact was divulged to the listing agent by the sellers in anticipation of transferring the home. The sellers, even prior to listing the property, independently researched the issue of the need to disclose the murder to prospective purchaser. They went so far as to obtain and memorialize in writing conversations with representatives of the Real Estate Commission, amongst other things. The listing agents, rather wisely, engaged in their own due diligence, pursuing definitive guidance on the question of whether such a mark constituted a material defect. Understandably, they were eager to properly advise their sellers regarding whether they had a duty to disclose such an occurrence. Ultimately, the agents permitted their clients to employ a Disclosure that omitted what some might suggest is a vital piece of information related to the subject property.

Subsequent to settlement, the purchaser plaintiff discovered that her new home had indeed once been the site of a grisly scene. Litigation was commenced, sounding in negligence and fraud, the buyer going so far as to name the listing agents who had gone to fairly great lengths to avoid the very predicament in which they now found themselves. Eventually summary judgment was granted, with the instant appeal ensuing. The gravamen of plaintiff’s argument was that a psychological condition, such as the one plaguing the home, is one that rises to the level of a material defect and hence necessitates disclosure. Bear in mind that a “material defect” has been defined in the following manner: “A problem with a residential real property or any portion of it that would have a significant adverse impact on the value of the property or that involves an unreasonable risk to people on the property. The fact that a structural element, system or subsystem is near, at or beyond the end of the normal useful life of such a structural element, system or subsystem is not by itself a material defect.”

Plaintiff was constrained to look to other jurisdictions for precedent, particularly a California and Ohio decision, Reed v. King, 145 Cal. App. 3d 261, 193 Cal. Rptr. 130 (Cal. Ct. App. 1983), and Van Camp v. Bradford, 623 N.E.2d 731 (Ohio Ct. of Common Pleas 1993), respectively, which relies directly on ReedReed involved the sale of a house in which a woman and her four children had been murdered 10 years prior to the conveyance. Van Camp raised the question of a disclosure requirement of a rape at the property within one year of the transfer, where various other rapes had been committed in that neighborhood. Both the Reed and Van Camp courts concluded that actionable fraud did exist, which might have been sufficient for the Milliken court.After all, the plaintiff here also substantiated her claims with concrete economic harm, namely two experts who opined that there had been a reduction in value, nearly $100,000.00, not an insignificant sum by any stretch.

The majority of our Superior Court, honed in on the legislative intent behind the Disclosure Law and the slippery slope associated with permitting a psychological stigma to become actionable. For instance, “ . . . how recent must the murder be that the seller must inform the buyer?” Or “[w]hat if numerous owners have lived in the house in the interim?” “[I]s this disclosure limited to murder, or must other crimes be revealed also?” At the end of the day, the Milliken court hesitated to condone what would become “. . . a massive expansion in the character of disclosure,” mainly requiring sellers to consider not only physical defects but also psychological ones. Notably however, in a highly well-reasoned Dissent penned by Justice Bender, a more ambitious view of the breadth of disclosures was encouraged. Justice Bender, in addition to scrutinizing the Disclosure Law, also discusses the relevance of the Residential Real Estate Transfers Law, 68 Pa.C.S. sections 7101-7103, which in the Justice’s words “. . . provides meaning and context for the [Seller Disclosure Law].” He takes issue with the Majority’s position that defects are limited to structure, legal impairments or hazardous substances and concludes that the Transfer Law necessarily informs the Disclosure Law and provides the appropriate benchmark for defining a “material defect.” Even section 7313 of the Seller Disclosure Law concedes that the form promulgated by the Real Estate Commission does not abridge any disclosure obligation created by any other provision of law. In his estimation, these particular facts warrant a trial at the very minimum. Whether Pennsylvania courts eventually adopt a more expansive interpretation of what constitutes a “material defect,” one truth seems evident, merely by virtue of the existence of this litigation. The benefit of being legally correct does not always outweigh the benefit of staying outside the courtroom.

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Harper J. Dimmerman is an attorney and adjunct professor at Temple University’s Fox School of Business. Bradley J. Osborne was formerly an attorney in Mr. Dimmerman’s office.

James M. Lammendola is an Instructor at Temple University’s Fox School of Business who was in private practice for twenty years.

[1] Certain transactions, such as estate sales and intrafamilial conveyances are exempt.

Philadelphia, Pennsylvania Real Estate Law/”The Legal Intelligencer” Article

“Timing is Everything with Act 91 Notice Challenges”

COPYRIGHT. 2013. ALM. ALL RIGHTS RESERVED. UNAUTHORIZED REPRODUCTION IS PROHIBITED.

This past summer, our Superior Court filed a noteworthy opinion highlighting just how strictly statutory timing requirements can be construed. The facts in the Nationstar Mortgage, LLC decision (2013 PA Super 233, No. 802 EDA 2012, 8/13/13) are straightforward enough. Back in February of 2007, a borrower executed and delivered a mortgage on the Philadelphia County property to AAKO, Inc; that mortgage was recorded the same month. The mortgage was eventually assigned to Mortgage Electronic Recording Systems and then again to GMAC Mortgage, Inc. (“GMAC”) about a year later.

The borrower defaulted on the subject loan, prompting GMAC to commence a foreclosure action on December 4, 2007. An Answer was never filed and accordingly default judgment was entered in favor of the lender. Subsequent to the entry of the judgment, the Mortgage was assigned yet again to National Mortgage LLC, the Appellee in the present matter. As the property was a primary residence, the matter made its way into Philadelphia County’s Foreclosure Diversion Program. At some point, a conciliation conference was held and the parties achieved an agreement to postpone the sheriff’s sale, affording them some additional time to strike a deal. Ultimately though, a settlement could not be reached, resulting the property being relisted for sheriff’s sale, compelling the borrower to file a petition to postpone the sale.

The trial court granted the requested relief with the caveat that there would be no further postponements without agreement of the parties. Eventually, on September 13, 2011 (nearly four years at the commencement of the underlying foreclosure action), the property was sold at sheriff’s sale; it went back to the lender. After the sale, the borrower filed what were entitled Motions to Dismiss and to which the Appellee responded. Both Motions were denied. On November 15, 2011, the Sheriff delivered and recorded the new deed, prompting the Appellant to file yet another motion, this time a Motion to Set Aside the Sheriff’s Sale, in which the theory that the Act 91 notice was somehow defective was raised for the very first time in the litigation. The Appellee tendered its Opposition and eventually a hearing was conducted on February 3, 2012, more than two months after recording of the new deed; the trial court denied said Motion.

In ruling, the lower court determined that the pre-complaint Act notice was not defective and thus could not constitute a basis for setting aside the sale. The Appellant contended that the notice was defective as it omitted the name of the original lender and listed GMAC as the “current lender/servicer” although the mortgage had not technically been assigned to GMAC until after the default judgment has been entered. Yet, at least in the trial court’s estimation, the borrower’s conduct seemed to belie the claim that the notice had been insufficient. For instance, subsequent to receiving the notice, the borrower entered into a negotiation with GMAC, even participating in the Mortgage Foreclosure Diversion Program. So in the lower court’s view, notice of the foreclosure action was both adequate and in conformity with the law.

The single issue on appeal was whether the trial court erred in denying the motion to set aside the sale for a defective notice. The Superior Court easily affirmed and utilized a slightly different approach. It concentrated on the question of whether the borrower’s defect theory had been timely raised. More specifically, section 1681.5(2) of the Homeowner Assistance Settlement Act, 35 P.S. §§ 1681.1-1681.7 provides in pertinent part that the “failure of a mortgagee to comply with the requirements of sections 402-C and 403-C of the Housing Finance Agency Law must be raised in a legal action before the earlier delivery of a sheriff’s or marshal’s deed in the foreclosure action or delivery of a deed by the mortgagor.” In the instant case, Appellant’s first mention of this defect theory came nearly two weeks after delivery of the sheriff’s deed. Essentially, for the Superior Court, it was just too little too late, with the Act’s unequivocal language easily empowering it to reach such a conclusion.

Despite the end result, the Appellant’s argument is still worth considering, especially as it relates to standing and where a litigant might have the ability to raise such an argument in the future. Under the Appellant’s logic, GMAC was not even the “true loan holder” at the time the default judgment had been entered and hence was not in a position to assign an interest to the Appellee. As such, the new lender would have been “without authority to proceed to a sheriff’s sale.” Going even one step further, the lower court would have been without jurisdiction even to order that a sale be permitted to occur in the first place. The problem with the borrower’s theory, in addition to being asserted too late statutorily speaking, was that there was still the matter of a default judgment having been taken. By permitting such a result, the Appellant essentially admitted to all of the bank’s allegations.

Critically, in paragraph 3 of the underlying foreclosure complaint, GMAC specifically alleged that it was “now the legal owner of the mortgage and is in the process of formalizing an assignment of same.” Thus, having admitted that GMAC was the “legal owner” of the mortgage in the foreclosure action, the Appellant should not now be permitted to allege the opposite merely for the sake of avoiding an unfavorable result. The Nationstar Mortgage, LLC decision is important for practitioners as is underscores the importance of raising critical defenses and issues as early on in the litigation process as possible. Once that gavel falls, new theories will be much harder to introduce.

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Harper J. Dimmerman is also an adjunct professor at Temple University’s Fox School of Business. His office represents clients in various litigation and real estate law matters and they may be reached at hdimmerman@llfnow.com or 215-545-0600.

James M. Lammendola is an Instructor at Temple University’s Fox School of Business who was in private practice for twenty years. He may be reached via e-mail at james.lammendola@temple.edu or telephone 267-254-3324.

Vital Decision on Eminent Domain/Condemnation in Pennsylvania

This is an interesting article I co-authored concerning constitutional issues and real estate.

-Harper J. Dimmerman, Esq., (215) 545-0600

COPYRIGHT. ALM. 2013. DO NOT REPRODUCE.

“Purchase Offers and Million Dollar Takings”

 The color green seems to be on everyone’s minds these days.  The whole green revolution (as in energy), the ubiquitous Starbucks logo, money (speaks for itself) and rolling fairways are just a few images that come to mind.  As this article relates to the practice of law (it really does), it is the final one that we find the most intriguing.  After what some might perceive as a deliberate round of litigation, a compelling condemnation issue eventually made its way up to our state Supreme Court.  And with the U.S. Open just wrapping up days ago, the decision in Lower Makefield Township v. The Lands of Chester Dalgewicz and Christine Dalgewicz, et al. (No. 33 MAP 2011, Decided 5/29/13), is quite timely.

The facts are straightforward enough.  Lower Makefield Township (Appellant), apparently under the spell of this country’s golf revolution, set it sights on a 166-acre farm owned by the Appellees.  It proceeded to use its eminent domain power for the purpose of building a golf course, an entirely legitimate public use according to our Commonwealth Court.  Preliminary objections were filed to the taking and a Board of View determined that the value of this very large parcel, also in close proximity to Interstate 95, was worth about $3.9 million.  This amount was challenged and eventually got to a jury, for a six-day trial.

A total of eleven witnesses were called, including Appellee Chester Dalgewicz.  He testified regarding the farm’s history and the interest shown by several developers in purchasing the property.  He also described some of the offers received both before and after the property was condemned, including a 1995 agreement of sale with Ryland Homes for $5.1 million, and a 1998 sales agreement with Toll Brothers for $7 million, contingent upon the condemnation being overturned.  During Mr. Dalgewicz’s testimony, he described a written offer from Pulte Homes, Inc., including the $8 million offer price; the letter was also introduced into evidence.

Notably, Appellant did object, just as it had earlier via its motion in limine, contending that the offer was inadmissible, having not resulted in an actual sales agreement.  Counsel for the Township argued that any testimony concerning the offer price would be both irrelevant and prejudicial.  The lower court overruled the objection (it previously denied the motion in limine) and explained that it would be appropriate to “let in what was going on with this piece of land in terms of developers from a reasonable time before to a reasonable time after the taking.”  The trial court also observed the Township could cross-examine Mr. Dalgewicz about the offer, and that its evidentiary value was “something that should be argued to the jury[ .]”  The jury ultimately settled upon a fair market value of the property of about $5.8 million, approximately $2 million more than the number the Board of View had put on it.

Appellant filed post-trial motions, arguing that the lower court erred in admitting the offer as evidence; these were denied.  In its opinion, the trial court set forth its rationale.  In sum, the court concluded that the Pulte offer was admissible to prove how highly sought after the property was by developers.  Also, testimony concerning the Pulte offer was admissible because concerns regarding hearsay and the abstract nature of the offers were not present.  On appeal to the Commonwealth Court, the Township lost again on the issue of the admissibility of the Pulte order.  While that intermediate court acknowledged the existence of decisional law that disfavors the introduction of such offers, it could not conclude that the need for such a blanket prohibition was present here.  For instance, both parties stipulated to the authenticity of the Pulte offer and the offer was introduced merely to highlight the reasonableness of the Toll Brothers deal.  Thus, hearsay concerns could not be said to have existed.  That court also fashioned a narrow exception for cases where “a sufficient foundation was laid to establish that the offer was made in good faith, by a party acquainted with the value of the [p]roperty, and of sufficient intention and ability to pay” so as to make it a bona fide offer and, therefore, admissible.  Lastly, prejudice by its admissibility could not be established.  The ultimate jury award was over $2 million less than the Pulte offer and the information contained in the subject offer was established by other competent evidence.

On appeal to the Commonwealth’s highest court, the Township framed two issues for appeal: (1) Whether a bona fide offer to purchase property subject to condemnation, made within a reasonable time of condemnation, may be admitted to prove the fair market value of the property; and (2) whether the Commonwealth Court departed from the harmless error standard by requiring the Township to show with certainty that the trial court’s evidentiary errors affected the verdict.  The standard of review was de novo.  The Supreme Court had no trouble concluding that “traditional concerns over relevancy and the speculative nature of offers” was not presence on the instant facts.  Furthermore, in the estimation of our highest court, 1964 amendments to the Eminent Domain Code itself, which broadened the scope of admissible evidence and liberalized the receipt of expert evidence to prove value, mitigated in favor of the admission of the Pulte offer.

Courts should also be guided by the principle that “[t]he admission or exclusion of evidence is within the sound discretion of the trial court[.]”  See Lehigh–Northampton Airport Authority v. Fuller, 862 A.2d 159, 168 (Pa.Cmwlth.2004) (citations omitted).  The extent to which an offer is indeed a bona fide one is a question properly reserved for the trier of fact.  Finally, the Pulte offer was enlightening; it showed concrete demand and the legitimacy of the Toll Brothers offer.  The Lower Makefield Township makes one thing crystal clear.  When it comes to green, the Eminent Domain Code and our courts will see to it that value will be adequately assessed.  Fore!

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Harper J. Dimmerman is an adjunct professor at Temple University’s Fox School of Business and published novelist. Bradley J. Osborne is an attorney in Mr. Dimmerman’s office. Their firm represents clients in various litigation and real estate law matters.  They may be reached at harper@hjdlaw.net or 215-545-0600. They also co-founded ZipWill.com

James M. Lammendola is an Instructor at Temple University’s Fox School of Business who was in private practice for twenty years. He may be reached via e-mail at james.lammendola@temple.edu or telephone 267-254-3324.