Korn v. Epstein

• Decision Date: 16 March 1999
• Citation: 727 A.2d 1130
• Parties: Robert A. KORN, Jerome N. Kline, and Alan R. Kutner, Appellees, v. Ellyn M. EPSTEIN and DeSimone Reporting Group, Inc., Appellees. Appeal of Ellyn M. Epstein, Appellant.
• Court: Pennsylvania Superior Court

727 A.2d 1130

Robert A. KORN, Jerome N. Kline, and Alan R. Kutner, Appellees, v. Ellyn M. EPSTEIN and DeSimone Reporting Group, Inc., Appellees.

Appeal of Ellyn M. Epstein, Appellant.

Superior Court of Pennsylvania.

Submitted October 26, 1998.

Filed March 16, 1999.

Reargument Denied May 12, 1999.

Stephen R. Bolden, Philadelphia, for appellant.

Mark D. Abramson, Plymouth Meeting, for appellees.

Before CAVANAUGH, LALLY-GREEN and HESTER, JJ.

HESTER, Judge:

¶ 1 Ellyn M. Epstein appeals from the judgment entered in the Court of Common Pleas of Philadelphia County on April 3, 1998. For the reasons set forth below, we affirm.

¶ 2 The facts and procedural history of this case may be summarized as follows. DeSimone Reporting Group, Inc. ("DeSimone"), provided court-reporting services to the Philadelphia law firm of Korn, Kline & Kutner, a professional corporation, from 1981 until the latter's dissolution in mid-1991. The shareholders of Korn, Kline & Kutner subsequently contacted its vendors, advised them of the dissolution, and indicated that the corporation would try to satisfy all outstanding obligations. Despite that notice, the corporation failed to pay for more than $10,000 worth of services provided by DeSimone.

¶ 3 On March 19, 1993, while acting as DeSimone's counsel in its efforts to recover the unpaid fees, Appellant instituted suit against the corporation and three of the attorneys employed by it, Robert A. Korn, Jerome N. Kline, and Alan R. Kutner, Appellees. Appellees subsequently contacted Appellant, advised her that they were not responsible for corporate debts, demanded their dismissal from the action, and threatened further litigation. Appellant responded with a letter seeking permission to amend her complaint to clarify the grounds for asserting individual liability. In a post-script to that letter, Appellant indicated that DeSimone authorized her both to proceed with the suit and to discuss settlement.

¶ 4 Appellant, who ultimately made several other references to settlement, later amended her complaint. In the amended complaint, Appellant relied upon a November 7, 1990 letter by Geraldine Zaretsky, a member of the accounting department at Korn, Kline & Kutner, to support the claim of individual liability. That letter, which was written on corporate letterhead in response to a number of invoices, advised a representative of DeSimone that those bills related to a bankrupt client, that the corporation expected to receive payment from Bankruptcy Court, within sixty days, and that payment would be forwarded at that time. Ms. Zaretsky also stated, "Please be assured that should the Courts not issue the funds by the 60 days time limit Korn, Kline & Kutner will pay you direct." Plaintiff's Trial Exhibit 4. Although Ms. Zaretsky previously advised Appellant that all corporate expenses were paid by the corporation and that nothing was undertaken by the shareholders individually, see N.T. Deposition, 11/30/93, at 63, 70-71, she treated the phrase "Korn, Kline & Kutner" as a reference to Appellees in their individual capacity. As a result, she construed the letter as a promise by Appellees to answer for the corporate debt. She alleged that the promise induced DeSimone to continue to provide services to the corporation.

¶ 5 On November 30, 1993, Appellant, who had conducted no discovery to that point, deposed Ms. Zaretsky. The next day, the parties adjudicated the matter before a board of arbitrators. The board, which found in favor of Appellees with respect to the claims of individual liability, awarded De-Simone $10,000 on its cause of action against the corporation. Appellant did not file an appeal on behalf of DeSimone from that decision.

¶ 6 On April 11, 1994, contending that Appellant and DeSimone lacked probable cause to sue them individually and that their purpose in doing so was improper, Appellees filed a complaint against them for wrongful use of civil proceedings. Consequently, Appellees requested an award encompassing expenses incurred in defending the prior suit, the specific pecuniary losses stemming from that suit, the resulting emotional distress, and punitive damages. Following the effectuation of service, Appellant filed an answer in which she asserted that she acted with probable cause, in good faith, in the best interest of her client, and while discharging the duties imposed upon her as an attorney. In its answer and new matter, DeSimone similarly alleged that it acted in good faith and raised numerous defenses.

¶ 7 On January 31, 1995, Appellees amended their complaint to include a demand for damages for defamation. Three weeks later, a board of arbitrators found in favor of DeSimone. However, the board found Appellant liable and awarded Appellees $27,500 each in damages. Appellant then filed a notice of appeal from that decision, and DeSimone moved for summary judgment. On September 5, 1995, the trial court concluded that Appellees could not prove their claim against DeSimone since DeSimone relied upon Appellant's advice. Thus, the court granted DeSimone's summary judgment motion. We later quashed Appellees' interlocutory appeal from that decision due to the failure of the trial court to amend the summary judgment order within thirty days of its entrance to include a determination that an appeal would facilitate the resolution of the entire case. See Korn v. Desimone Reporting Group, 454 Pa.Super. 273, 685 A.2d 183 (1996).

¶ 8 On November 26, 1997, trial on the matter commenced. Several days later, the trial court rendered a decision in favor of Appellees and ordered Appellant to pay $9,000 in damages to Mr. Korn, $4,600 in damages to Mr. Kline, and $6,900 in damages to Mr. Kutner. Appellant subsequently filed post-trial motions seeking judgment notwithstanding the verdict or, in the alternative, a new trial. The trial court denied Appellant's requests for relief, finding with respect to the former that Appellant had no probable cause for continuing the suit against Appellees to arbitration and that her motive in doing so was to induce them to settle the action relating to the corporate debt. Trial Court Opinion, 6/25/98, at 6-10. This timely appeal followed the entrance of judgment on the trial court's decision.

¶ 9 Appellant initially challenges the trial court's determination that she lacked probable cause to proceed against Appellees individually. Appellant also questions the propriety of the court's related conclusion that she possessed an improper motive in continuing the suit against Appellees to arbitration. See Appellant's brief at n. 4. Although Appellant's argument contains no explicit reference to her post-trial motions, it implicitly asserts that the trial court's denial of the motion for judgment notwithstanding the verdict was erroneous. Our standard for reviewing such an assertion is well established.

We must determine whether there was sufficient competent evidence to sustain the verdict. Wenrick v. Schloemann-Siemag Aktiengesellschaft, et al., 523 Pa. 1, 4, 564 A.2d 1244, 1246 (1989). Ingrassia Construction Co. v. Walsh, 337 Pa.Super. 58, 61, 486 A.2d 478, 480 (1984). In so doing, we must grant the verdict winner the benefit of every inference which reasonably may be drawn from the evidence. We also must reject all unfavorable testimony and inferences. Ingrassia, supra. See also Lira v. Albert Einstein Medical Center, 384 Pa.Super. 503, 508, 559 A.2d 550, 552 (1989); Jewell v. Beckstine, 255 Pa.Super. 238, 386 A.2d 597 (1978). Judgment n.o.v. may be granted only in clear cases, where the facts are such that no two reasonable minds could fail to agree that the verdict was improper. Gray v. H.C. Duke & Sons, Inc., 387 Pa.Super. 95, 563 A.2d 1201 (1989); Frank v. Peckich, 257 Pa.Super. 561, 391 A.2d 624 (1978).

Schneider v. Lindenmuth-Cline Agency, 423 Pa.Super. 73, 620 A.2d 505, 507 (1993); see also Somerset Community Hospital v. Allan B. Mitchell & Associates, 454 Pa.Super. 188, 685 A.2d 141, 146 (1996). Keeping these principles in mind, we consider the propriety of the trial court's decision.

Wrongful use of civil proceedings "is a tort which arises when a party institutes a lawsuit with a malicious motive and lacking probable cause." Rosen v. Bank of Rolla, 426 Pa.Super. 376, 380, 627 A.2d 190, 191 (1993), citing Shaffer v. Stewart, 326 Pa.Super. 135, 138, 473 A.2d 1017, 1019 (1984). This tort is now a statutory action and has been codified at 42 Pa.C.S. § 8351, as follows:

§ 8351. Wrongful use of civil proceedings

(a) Elements of action.— A person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings [if]:

(1) He acts in a grossly negligent manner or without probable cause and primarily for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based; and

(2) The proceedings have terminated in favor of the person against whom they are brought.

42 Pa.C.S. § 8351(a)(1)-(2).

Ludmer v. Nernberg, 433 Pa.Super. 316, 640 A.2d 939, 942 (1994); see also Broadwater v. Sentner, 725 A.2d 779 (Pa.Super.1999).

¶ 10 In order to prevail in such an action, a plaintiff must establish the following:

(1) The defendant has procured, initiated or continued the civil proceedings against him.

(2) The proceedings were terminated in his favor.

(3) The defendant did not have probable cause for his action.

(4) The primary purpose for which the proceedings were brought was not securing the proper discovery, joinder of parties or adjudication of the claim on which the proceedings were based.

(5) The plaintiff has suffered damages....

42 Pa.C.S.A. § 8354. This formulation of the tort's elements conforms to that set forth in Restatement (Second) of Torts § 674. Ludmer, supra: see also Shaffer v. Stewart, 326 Pa.Super. 135, 473 A.2d 1017 (1984). Comment d to that section...