Gorski v. Smith

• Citation: 812 A.2d 683,2002 Pa. Super. 334
• Parties: Caesar GORSKI and Saranne Gorski, Appellees v. Lawrence SMITH, Executor of the Estate of Raymond Jenkins, Deceased and Jenkins, Jenkins, Siergiej & Smith, Appellants.
• Decision Date: 30 October 2002
• Court: Superior Court of Pennsylvania

812 A.2d 683

2002 Pa. Super. 334

Caesar GORSKI and Saranne Gorski, Appellees v. Lawrence SMITH, Executor of the Estate of Raymond Jenkins, Deceased and Jenkins, Jenkins, Siergiej & Smith, Appellants.

Superior Court of Pennsylvania.

Argued October 30, 2001.

Filed October 30, 2002.

Reargument Denied January 7, 2003.

Jeffrey B. McCarron, Philadelphia, for appellants.

Francis X. Clark, Wayne, for appellees.

Before: McEWEN, P.J.E., CERCONE, P.J.E., and BECK, J.

CERCONE, P.J.E.

¶ 1 Appellants, Lawrence Smith and Jenkins, Jenkins, Siergiej and Smith, the "Jenkins Firm," appeal from the judgment of $461,000 entered on a jury verdict in favor of Appellees, Caesar and Saranne Gorski, hereinafter the "Gorskis." After review, we affirm in part and vacate in part.

¶ 2 This is a case involving attorneys, real estate developers, land, and malfunctioning sewers, the volatile mixture of which spawned considerable litigation. The Gorskis were real estate developers with fourteen (14) acres of land to sell in Skippack Township, Montgomery County, hereinafter referred to as the "property." A gentleman named Iacobucci wished to buy the property and build townhouses, so he entered into negotiations with the Gorskis. The Gorskis retained the services of Attorney Raymond Jenkins, now deceased, who was a principal in the Jenkins Firm, to negotiate a land sales agreement with Iacobucci. ¶ 3 Attorney Jenkins and Iacobucci's representatives entered into talks, which produced a land sales agreement. In this agreement, the Gorskis, as sellers, warranted that they had obtained subdivision approval and final approval from the relevant governmental authorities so that the buyer, Iacobucci, could obtain building permits to construct seventy-nine (79) residential units on the property without any further approvals. See Land Sales Agreement, Plaintiff's Exhibit 4, ¶ 8.13, 1.03, 1.06 and 1.07. The agreement also specifically required the Gorskis, as sellers, to warrant that they had satisfied certain requirements which were set forth in a letter of July 2, 1993 from the Skippack Township Solicitor, Thomas M. Keenan, Esquire, to Attorney Jenkins. In this letter the solicitor requested, inter alia, that the Skippack Township Sewer Authority forward a letter to him indicating that they would be servicing the subdivision which Iacobucci planned to build. Id.; Plaintiff's Exhibit 3. The parties signed the agreement on November 5, 1993, even though the Skippack Township Sewer Authority had not provided written verification that they would be providing sewer service to the property.

¶ 4 As foul fate would have it, problems developed with a sewer pumping facility adjacent to the property, due to excess storm water infiltration. The Skippack Township Sewer Authority would not grant final approval for the subdivision of the property unless the capacity of the pumping station was upgraded by the developer, or the station was replaced with an additional larger sewer line. N.T. Trial, 10/23/2000, at 186-187, 191. Iacobucci refused to pay for such upgrades and took the position that since the Gorskis, as sellers, warranted that they would deliver a fully approved subdivision, it was their responsibility to pay for the necessary upgrades. N.T. Trial, 10/24/2000, at 82.

¶ 5 On June 9, 1994 the Gorskis, through Attorney Jenkins, notified Iacobucci that their land sales agreement was terminated. N.T. Trial, 10/19/2000, at 117. The Gorskis opened discussions with another buyer but apparently did not finalize a sales agreement with that buyer. Id. at 122. The Gorskis subsequently asked Attorney Jenkins to commence legal proceedings to release them from their land sales agreement with Iacobucci. Attorney Jenkins filed a complaint on behalf of the Gorskis seeking termination of the land sales agreement on the basis that Iacobucci refused to go forward with the sale of the property until the sewer issue was resolved and that he also refused to agree to terminate the agreement.

¶ 6 Iacobucci, stung by the twin indignities of overflowing sewers, and what he apparently perceived as equally odious business maneuvering, countersued the Gorskis for breach of contract. Both actions were consolidated for a non-jury trial before a judge in Montgomery County, the Honorable Bernard Moore. Judge Moore ruled in favor of Iacobucci in both actions and awarded him a total judgment of $645,000, which represented the amount Iacobucci had paid as a deposit on the property, out of pocket expenses, lost profits on the transaction and prejudgment interest. Trial Court Opinion, filed 1/3/2001, at 2. The final judgment against the Gorskis, including all accrued post-judgment interest, totaled $713,445. N.T. Trial, 10/17/2000, at 118.

¶ 7 The Gorskis, stung by the magnitude of their sudden misfortune, filed for bankruptcy to prevent Iacobucci from executing on the judgment by forcing a sheriff's sale of the property. During the bankruptcy proceedings, the Jenkins Firm filed a claim for its unpaid legal bills. The Gorskis later presented a reorganization plan to the Bankruptcy Court which did not provide for payment of the unpaid legal bills. Iacobucci subsequently proposed a competing reorganization plan to the Bankruptcy Court that provided not only for full payment of his judgment, but also the legal bills of the Jenkins Firm. The Jenkins Firm subsequently voted for the Iacobucci plan and not the Gorskis' plan. However, before that plan was approved by the Bankruptcy Court, the matter went to mediation, after which the Gorskis settled the Iacobucci claim for $425,000 and discontinued the bankruptcy action.

¶ 8 The Gorskis then commenced the instant action against Raymond Jenkins, individually, and the Jenkins Firm on the basis of breach of contract and negligence for the firm's representation of them in connection with the land sales agreement, and on the basis of breach of contract and negligence for the firm's representation of them at the subsequent trial involving Iacobucci. The Gorskis also proceeded on a claim of bad faith based on the Jenkins Firm's decision to endorse the Iacobucci plan over their plan in the bankruptcy proceedings. Prior to trial, Attorney Jenkins regrettably passed away and Lawrence Smith, Mr. Jenkins executor, was substituted for him as a defendant. Ultimately the case proceeded to a jury trial, before the Honorable Calvin E. Smith, during which there were two (2) weeks of testimony from a number of witnesses.

¶ 9 In its verdict, the jury found Attorney Jenkins and the Jenkins Firm, (referred to infra, collectively, as Appellants) to have been negligent in representing the Gorskis in their negotiation of the land sales agreement with Iacobucci and negligent in representing the Gorskis in their lawsuit against Iacobucci. The jury also found that Appellants breached their contractual obligation to provide effective legal representation to the Gorskis in connection with the negotiation of the land sales agreement with Iacobucci. Further, the jury found that Appellants acted in bad faith by voting for the debt discharge plan proposed by Iacobucci in Bankruptcy Court. The only bright spot for Appellants in the jury verdict was that the jury found them not to have breached their contractual duty of providing effective representation to the Gorskis when it represented them in the lawsuit against Iacobucci. Finally, the jury found the Gorskis contributorily negligent in their actions pertaining to the creation of the land sales agreement with Iacobucci.

¶ 10 The jury awarded the Gorskis $435,000 as damages for their successful breach of contract claim involving the drafting of the land sales agreement and $26,000 for their bad faith claims, but they awarded nothing to the Gorskis on their negligence claims, even though they had found the Appellants negligent in both their actions of drafting the land sales agreement and representing the Gorskis in the lawsuit against Iacobucci.

¶ 11 Both the Gorskis and Appellants filed cross motions for post-trial relief. The Trial Court denied Appellants' motion for judgment notwithstanding the verdict but granted the Gorskis' motion to mold the jury's verdict to award damages on the jury's finding that the Appellants had committed legal malpractice by negligently representing the Gorskis in the negotiation of the land sales agreement and negligently representing the Gorskis at the subsequent trial involving Iacobucci. The Trial Court entered an order providing in relevant part:

[T]he jury's verdict is molded to include an award of damages of $435,000.00 for negligence as set forth in Counts I and/or Count III of [the Gorskis'] Second Amended Complaint and that judgment is hereby entered on the jury's verdict in favor of [the Gorskis] and against [Appellants] in the sum of $461,000.

Trial Court Order, docketed 12/27/2000.¹ This appeal followed.

¶ 12 Appellants present the following six (6) issues for our consideration:

1. Whether the Evidence Was Insufficient to Establish a Breach of Contract.

2. Whether the Court Improperly Charged the Jury Concerning the Elements for Breach of Contract.

3. Whether the Court Improperly Entered Judgment on the Negligence Claims Notwithstanding the Verdict since the Jury Found Plaintiffs Contributory (sic) Negligent and Did Not Award Damages.

4. Whether the Evidence Established Plaintiff Sustained Recoverable damages Due to the Alleged Actionable Conduct by Defendants Even Though Plaintiffs Profited from the Alleged Malpractice and Plaintiffs' Evidence Established No Damages Due to the Alleged Bad Faith.

5. Whether the Evidence Established a Cause of Action for Bad Faith.

6. Whether the Court Improperly Overruled the Motion to Voir Dire the Jurors and for Mistrial in Connection with the Circumstances Which Led to the Dismissal of a Juror.

Appellant's Brief at 4. We will consider these claims seriatim.

¶ 13 With respect to Appellants' first issue, they contend that the...