Beyers v. Richmond

• Decision Date: 28 December 2007
• Docket Number: No. 38 EAP 2006.,38 EAP 2006.
• Citation: 937 A.2d 1082
• Parties: Janic Iannece BEYERS v. Donald RICHMOND, Forceno & Arangio, P.C., Robert Arangio and Raymond P. Forceno. Appeal of: Forceno & Arangio, P.C., Robert Arangio and Raymond P. Forceno.
• Court: Pennsylvania Supreme Court

937 A.2d 1082

Janic Iannece BEYERS v. Donald RICHMOND, Forceno & Arangio, P.C., Robert Arangio and Raymond P. Forceno Appeal of: Forceno & Arangio, P.C., Robert Arangio and Raymond P. Forceno.

No. 38 EAP 2006.

Supreme Court of Pennsylvania.

Argued April 16, 2007.

Decided December 28, 2007.

Jeffrey B. Albert, Told Rehder, J.W. Christie, McKissock & Hoffman, P.C., Philadelphia, for Forceno & Arangio, P.C., Robert Arangio and Raymond P. Forceno, appellants.

Amy Joann Coco, Weinheimer Schadel & Haber, P.C., Pittsburgh, Kathryn Lease Simpson, Mette, Evans & Woodside, Harrisburg, for Pa. Bar Ass'n, amicus appellant.

Edwin P. Smith, Smith, Edwin P. & Associates, P.C., for Janic Iannece Beyers, appellee.

BEFORE: CAPPY, C.J., CASTILLE, SAYLOR, EAKIN, BAER, BALDWIN and FITZGERALD, JJ.

OPINION

Justice FITZGERALD.

We determine whether the Unfair Trade Practices and Consumer Protection Law (UTPCPL), 73 P.S. §§ 201-1-209-6, applies to an attorney's conduct in collecting and distributing settlement proceeds. The Superior Court held that the UTPCPL provides a cause of action against attorneys arising out of the disbursement of settlement funds. We hold the UTPCPL does not apply to attorney misconduct, and reverse the decision of the Superior Court.

FACTS

This case arises from the admitted conversion of funds by Donald Richmond, an associate of appellants' Pennsylvania law firm, Forceno & Arangio, P.C. (the Firm), for which the Firm was held vicariously liable, and for the preparation of a settlement distribution sheet by the Firm which included deductions for unsubstantiated costs.

Appellee Janice Iannece Beyers and her companion, James Piccirilli, were injured in an automobile accident. They retained the services of Donald Richmond and the Firm to represent them in their personal injury claim. Appellee agreed to settle the case for $468,401.67. According to a fee agreement, appellee was to receive 42.5% of the settlement, or $205,495.72. The Firm received the settlement funds and Richmond converted $185,000 of the settlement. Richmond deposited $95,000 of the funds into court in Delaware County in connection with his personal divorce action. The remaining funds, held in escrow by appellants, were also deposited into court. Appellants prepared a distribution schedule, which provided: $68,481.91 for recovery of attorneys' fees, $1,576.65 for unidentified costs, $6,480.59 for a "loan repayment" to an accountant, and $18,001.61 for medical bills. These amounts were deducted from appellee's settlement. The court ordered appellants to pay appellee $110,904.96, based upon the distribution schedule.¹

Appellee contended that the deductions reflected on the distribution schedule were improper. On January 29, 2002, appellee filed a complaint against appellants alleging negligent supervision, negligence, conflict of interest and breach of fiduciary duty, violation of consumer protection laws (UTPCPL), assumpsit in the form of forfeiture of attorneys' fees, and fraudulent misrepresentation.²

A bench trial was held on the sole issue of damages. On August 25, 2003, the court found in favor of appellee as to all claims, except violation of the UTPCPL. The claims pursuant to the UTPCPL were held under advisement. The court rendered a preliminary verdict, in the amount of $110,198.24, which represented the recovery of attorneys' fees in the amount of $68,481.91 and non-existent costs totaling $26,058.85, plus simple interest at the statutory rate of 6% per annum during the 2¾ years of non-payment in the amount of $15,607.48.³

On December 9, 2003, the Honorable Mark Bernstein found in favor of appellee on the UTPCPL claim, awarding her treble damages in the amount of $78,171.00.⁴ Appellee filed a motion for clarification of the December 9, 2003 order, contending that the entire verdict entered on August 25, 2003, $110,198.24, should be trebled. Appellee also requested 40% for attorneys' fees on the trebled amount. On February 6, 2004, the court assessed damages in the amount of $467,637.20 on the UTPCPL claim.⁵ Post trial motions were filed, denied, and judgment was entered.

The Superior Court affirmed the judgment of the trial court, and adopted its reasoning, holding that appellants' actions did not arise from the practice of law, and therefore appellants could not use their profession as a shield from the application of the UTPCPL. Further, the Superior Court held appellee established the essential elements of fraud, and that appellants' malfeasance pertaining to the collection and management of the settlement funds, as well as the breach of their fiduciary responsibility to appellee, placed their actions within the scope of the UTPCPL.

DISCUSSION

This case presents a question of law, thus this Court's standard of review is plenary. Norton v. Glenn, 580 Pa. 212, 860 A.2d 48, 52 (2004). Although we find the egregious conduct of appellants in this case to be reprehensible, we decline to hold that Pennsylvania's UTPCPL applies to an attorney's conduct in collecting and distributing settlement proceeds. Application of the UTPCPL under these circumstances would encroach upon this Court's exclusive power to regulate the practice of law in this Commonwealth. In re Larsen, 571 Pa. 457, 812 A.2d 640, 653 (Sp. Trib.2002).

a. Applicability of Consumer Protection Laws

Most states have enacted a consumer protection statute.⁶ The majority of jurisdictions that have addressed this issue have held that the regulation of attorneys does not fall within the ambit of consumer protection laws.⁷ A minority of jurisdictions has carved out an exception for entrepreneurial aspects of the practice of law, such as advertising and debt collection, while recognizing that claims which allege negligence or legal malpractice are exempt from the consumer protection laws.⁸ Courts which strictly adhere to the separation of powers doctrine hold that consumer protection laws do not apply to attorneys.⁹ Other jurisdictions hold that the consumer protection statutes do not apply to the practice of law based upon the existence of regulatory boards,¹⁰ or explicit exemptions for attorneys within statutes.¹¹ However, some jurisdictions have indicated implicitly that in certain circumstances a claim could be brought against an attorney under the consumer protection act,¹² and still other jurisdictions have not decided the issue.¹³

b. Pennsylvania's UTPCPL

The pertinent section of the Pennsylvania statute provides:

(a) Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by any person of a method, act or practice declared unlawful by section 3 of this act, may bring a private action to recover actual damages or one hundred dollars ($ 100), whichever is greater. The court may, in its discretion, award up to three times the actual damages sustained, but not less than one hundred dollars ($ 100), and may provide such additional relief as it deems necessary or proper. The court may award to the plaintiff, in addition to other relief provided in this section, costs and reasonable attorney fees.

73 P.S. § 201-9.2(a).

The applicability of this statute to the attorneys' conduct in this case presents an issue of first impression in Pennsylvania. Although this Court has not addressed the issue of the applicability of the UTPCPL to attorney conduct, the Superior Court of Pennsylvania has held that the UTPCPL does not apply to treatment provided by another category of professionals: physicians. Foflygen v. R. Zemel, M.D., 420 Pa.Super. 18, 615 A.2d 1345 (1992), appeal denied, 535 Pa. 619, 629 A.2d 1380 (1993); Gatten v. Merzi, 397 Pa.Super. 148, 579 A.2d 974 (1990), appeal denied, 528 Pa. 611, 596 A.2d 157 (1991). In Gatten, the court held "[t]here is no indication that the [UTPCPL] was intended to create a cause of action for every statement made by a physician regarding a patient's condition, the likelihood for success of a given procedure, or the recommended course of treatment." Gatten, 579 A.2d at 976. The holding in Gatten was embraced by the court in Foflygen. Foflygen, 615 A.2d at 1354.

In Walter v. Magee-Womens Hosp., 876 A.2d 400, 407 (Pa.Super.2005), aff'd per curiam, 588 Pa. 739, 906 A.2d 1194 (2006), the Superior Court held that the UTPCPL was not intended to apply to providers of medical services. Walter involved a proposed class action lawsuit filed for a group of women whose pap smear reports were processed bearing physicians' names, although the reports were not reviewed by physicians. The proposed class was not certified and the appellate court determined, inter alia, that the processing of pap smear results did not trigger a claim under the UTPCPL. The Superior Court in Walter opined that "Pennsylvania courts have determined that the UTPCPL does not apply to providers of medical services." Walter, 876 A.2d at 407.

According to the Act, unfair methods of competition and deceptive practices in the conduct of any trade or commerce are unlawful. 73 P.S. § 201-3. The phrase "trade or commerce" includes the sale of services. 73 P.S. § 201-2(3). Among the practices condemned by the Act are various misrepresentations as well as other fraudulent conduct that creates a likelihood of confusion or misunderstanding. 73 P.S. § 201-2(4). However, even though the Act does not exclude services performed by physicians, it is clear that the Act is intended to prohibit unlawful practices relating to trade or commerce and of the type associated with business enterprises. It equally is clear that the legislature did not intend the Act to apply to physicians rendering medical services.

Walter, 876 A.2d at 407-8, (quoting Gatten, supra at 976).

We are also persuaded by the reasoning in an unpublished, non-precedential decision from the federal District Court for the Eastern District of Pennsylvania ...