787 F.Supp. 471 (E.D.Pa. 1992), Civ. A. 91-2600, Jordan v. Fox, Rothschild, O'Brien & Frankel

Docket Nº:Civ. A. 91-2600
Citation:787 F.Supp. 471
Party Name:Jordan v. Fox, Rothschild, O'Brien & Frankel
Case Date:March 27, 1992
Court:United States District Courts, 3th Circuit, Eastern District of Pennsylvania

Page 471

787 F.Supp. 471 (E.D.Pa. 1992)

Joe J. JORDAN, James E. Mitchell and Jordan, Mitchell, Inc.

v.

FOX, ROTHSCHILD, O'BRIEN & FRANKEL.

Civ. A. No. 91-2600.

United States District Court, E.D. Pennsylvania.

March 27, 1992

Page 472

[Copyrighted Material Omitted]

Page 473

Sharon K. Wallis, Philadelphia, Pa., for plaintiffs.

Steven R. Waxman, Leslie M. Gerstein, Lauren P. McKenna, Philadelphia, Pa., for defendants.

MEMORANDUM

WALDMAN, District Judge.

This case is related to Jordan v. Berman, 758 F.Supp. 269 (E.D.Pa.1991). The published opinion sets forth the facts which underlie this litigation and they will not be recounted at length herein. As in Berman, plaintiffs assert a claim under 42 U.S.C. § 1983, alleging that defendants deprived them of property without due process. Presently before the court is defendants' Motion to Dismiss plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(6).

I. STANDARD OF LAW

In deciding defendants' motion to dismiss for failure to state a cognizable claim, the court must accept as true all of the plaintiff's factual allegations and draw from them all reasonably favorable inferences. D.P. Enterprises, Inc. v. Bucks County Community College, 725 F.2d 943, 944 (3d Cir. 1984). A case should not be dismissed for failure to state a claim unless it clearly appears that no relief can be granted under any set of facts that could be proved consistent with the plaintiff's allegations. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984).

II. FACTS

Viewed in the light most favorable to plaintiffs, the pertinent facts are as follow. Defendants are lawyers who were retained by the defendants in Berman to obtain and execute a confessed judgment pursuant to a cognovit clause in a lease when plaintiffs refused to pay a retroactive rent increase which they disputed.1 In Berman, plaintiffs

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have alleged that this was part of an effort by the defendants in that case to extort and defraud them.

In the course of that representation, Fox, Rothschild attorney Martha Chovanes, Esq. filed with the Prothonotary of the Court of Common Pleas of Philadelphia a Confession of Judgment Complaint on May 16, 1989. Along with that complaint, attorney Chovanes filed a praecipe for the Prothonotary to enter judgment and to issue a writ of execution to the Sheriff.

Paul J. Brenman, Esq. then entered his appearance for Jordan, Mitchell Inc. and confessed judgment on its behalf. The Prothonotary's office entered judgment and simultaneously issued the writ. Later that afternoon, the Sheriff served the writ on Fidelity Bank, and thereby attached the checking account of Jordan, Mitchell Inc. at that institution.

In so doing, defendants and the officials whose aid they enlisted acted pursuant to applicable state procedures. See Pa.R.Civ.P. 3103, 3111 and 2959.2 Under these procedures, a judgment debtor is not notified or given an opportunity to be heard prior to the issuance of a writ or service on a garnishee. A debtor receives postseizure notice and has an opportunity to open the judgment upon presentation of a defense sufficient to withstand a directed verdict. See Berman, 758 F.Supp. at 278. These procedures do not require a prompt postseizure hearing on the validity of the creditor's claims, and execution may proceed even when a judgment has been opened. Id. at 280.

Plaintiffs did not receive notice of the attachment until May 19, 1989, and were deprived of the use of the Fidelity account until May 24, 1989. A number of checks written to satisfy their financial obligations bounced. On May 24, 1989, plaintiffs filed a petition to open the confessed judgment and obtained an order allowing them to substitute a $10,000 escrow account for the garnished account. On June 5, 1989, with the consent of defendants, the escrow was released. On July 21, 1989, a state court granted plaintiffs' petition and opened the confessed judgment.

III. DISCUSSION

A. Standing of the Individual Plaintiffs

Defendants argue that the individual plaintiffs have failed to state a cause of action as the garnished account in question admittedly was that of the corporate plaintiff.

An action for injury to a corporation must be pursued in the name of the corporation. Warren v. Manufacturers National Bank of Detroit, 759 F.2d 542, 544 (6th Cir. 1985). That an individual shareholder or employee may sustain harm incidental to the injury to the corporation does not confer standing upon him. Id. at 545 (loss of employment from fraud perpetrated against corporation insufficient); Motley Associates, Inc. v. Rumbaugh, 104 B.R. 683, 686 (E.D.Pa.1989). Initiating an action under 42 U.S.C. § 1983 does not alter the requirement that a plaintiff affiliated with a corporation sustain a direct individual injury to maintain standing. Flynn v. Merrick, 881 F.2d 446, 450 (7th Cir. 1989).

Plaintiffs allege that "as a result of" the garnishment of plaintiff corporation's account, the individual plaintiffs sustained harm. Moreover, much of the harm the individual plaintiffs allegedly sustained consisted of effort and resources they were required to expend on behalf of the corporation as officers thereof.3

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Individual plaintiffs have failed to set forth a distinct individual direct injury. Accordingly, defendants' motion to dismiss their claims on this ground is well founded.

B. Joint Action of Public and Private Parties Under § 1983

A private individual's conduct may be attributable to the state if the individual "acted together with or has obtained significant aid from state officials." Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 937, 102 S.Ct. 2744, 2754, 73 L.Ed.2d 482 (1982). "When private parties make use of state procedures with the overt, significant assistance of state officials, state action may be found." Tulsa Professional Collection Services v. Pope, 485 U.S. 478, 486, 108 S.Ct. 1340, 1345, 99 L.Ed.2d 565 (1988).

The Supreme Court has "consistently held that a private party's joint participation with state officials in the seizure of disputed property is sufficient to characterize that party as a 'state actor' for purposes of the Fourteenth Amendment." Lugar, 457 U.S. at 941, 102 S.Ct. at 2756. In Lugar, the Court found joint participation sufficient to establish state action where a private individual invoked the aid of state-created procedures in the context of a prejudgment attachment. Id. at 942, 102 S.Ct. at 2756 (plaintiff sufficiently demonstrated state involvement "when the State had created a system whereby state officials will attach property on the ex parte application of one party to a private dispute").

Defendants argue that a private attorney in the course of representing a client cannot be considered a state actor by virtue of the attorney's capacity as an officer of the court. This is correct. A private attorney cannot be considered a state actor by virtue of being an officer of the court. See Polk County v. Dodson, 454 U.S. 312, 102 S.Ct. 445, 70 L.Ed.2d 509 (1981); Drum v. Nasuti, 648 F.Supp. 888, 896 (E.D.Pa.1986), aff'd., 831 F.2d 286 (3d Cir. 1987) (Table); Arment v. Commonwealth National Bank, 505 F.Supp. 911, 913 (E.D.Pa.1981); Raitport v. Provident National Bank, 451 F.Supp. 522, 531 (E.D.Pa.1978). It has never been asserted, however, that the attorneys were named as defendants in this case because they acted as officers of the court. Rather, they are alleged to be state actors in this context because they invoked state attachment procedures.

Defendants' reliance on Shipley v. First Federal Sav'gs. and Loan Ass'n, 703 F.Supp. 1122 (D.Del.1988), aff'd without op., 877 F.2d 57 (3d Cir. 1989), cert. denied, 496 U.S. 938, 110 S.Ct. 3218, 110 L.Ed.2d 666 (1990), is misplaced. In Shipley, plaintiff sued a bank which held a mortgage on his property and the bank's attorney who had attempted several times to foreclose on the property pursuant to Delaware law.4

The attorney argued that he could not be considered a state actor by virtue of being an officer of the court. The court did not disagree but found the theory inapplicable to an attorney's invocation of foreclosure procedures. The Court stated:

While this [principle] may be true, it does not answer the question in this case, namely, whether [the attorney] assumed the role of a state actor by using the procedures in the Prothonotary and the Sheriff's offices. [The attorney] utilized these procedures while acting outside of his courtroom role as a trial attorney.

Id. at 1127.5

The principle that a private attorney does not become a state actor by virtue of being an officer of the court is not applicable

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to an attorney who invokes a state attachment procedure to seize property on behalf of a client. An attorney in these circumstances may be liable under § 1983. Buller, 706 F.2d at 852. In such situations, the attorney acts in a capacity wholly distinct from any duty owed to the court.

Relying on Shipley, defendants alternatively propose that the joint action theory requires the existence of a conspiracy or an agreement between defendants and state officials to violate plaintiff's constitutional rights. Since plaintiffs do not allege that the defendant attorneys entered into a conspiracy or an agreement with state officials, defendants contend that the court must dismiss this case.

In Shipley, plaintiff had in fact alleged a conspiracy between an attorney and state officials to violate his constitutional rights. When he failed to adduce any evidence of such a conspiracy, the Court granted summary judgment in favor of the defendant attorney. In so doing, the Court did state that:

The decisions in Drum, Hauptmann [ v. Wilentz, 570 F.Supp. 351 (D.N.J.1983) ], and Chicarelli [ v. Plymouth Garden Apartments, 551 F.Supp. 532 (E.D.Pa.1982) ], which built on Arment 's reasoning, are the most recent voices in our circuit on the joint action theory of...

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