Rizzo v. Haines

Decision Date06 March 1989
Citation520 Pa. 484,555 A.2d 58
Parties, 90 A.L.R.4th 1007, 57 USLW 2578 Frank L. RIZZO and Lena Rizzo, Appellees, v. Barton A. HAINES, Esq., Appellant.
CourtPennsylvania Supreme Court

James D. Crawford, Philadelphia, for appellant.

Herbert Braker, Louis Kattelman, Philadelphia, for appellees.



STOUT, Justice.

Barton A. Haines, Esquire, appeals from the order of the Superior Court, 357 Pa.Super. 57, 515 A.2d 321 affirming in part, and reversing and remanding in part, the judgment order of the Court of Common Pleas of Philadelphia County that held that he negligently, and in bad faith, conducted settlement negotiations for his client Frank L. Rizzo,1 that he had fraudulently induced his client to transfer $50,000 to him, and that he improperly accounted for costs and expenses. The trial court entered a judgment against him in the amount of $530,000 in compensatory damages and $150,000 in punitive damages. In addition, the trial court denied Haines' recusal motion. In affirming the judgment, the Superior Court held that Haines must pay interest at the market rather than the statutory rate on the fraudulently-transferred monies. We affirm.

On September 20, 1968, Rizzo, while stopped in a vehicle at an intersection, was rear-ended by a City of Philadelphia police vehicle. At the time, Rizzo was an off-duty police officer for the City of Philadelphia. Rizzo's soft-tissue neck, back, and arm injuries, sustained in the accident, eventually worsened, and he came under the supervision of Henry T. Wycis, M.D. After three surgical procedures between September 29 and October 16, 1971, he became permanently partially paralyzed. Once a handsome and vital police officer, he became a comparatively helpless and pitiful invalid.

Rizzo originally retained Anthony J. Caiazzo, Esquire, to institute a suit against the City of Philadelphia [hereinafter "City " case]. Later he retained the law firm of Richter, Syken, Ross & Levant, which assigned the case to Haines, an associate with the firm. The relationship between Haines and the Richter firm deteriorated, and Haines left the firm. He copied the Rizzo file and took it and the client, who by this time had become a personal friend, with him.2 Frank and Lena Rizzo, under Haines' counsel, instituted a medical malpractice action against Dr. Wycis and the hospital where the surgeries were performed [hereinafter "Wycis " case].3 The instant action arises from Haines' representation of Rizzo in these two lawsuits.

Haines did not pursue consolidation of the two cases. Rather, after a failed attempt on the part of the City to join Dr. Wycis' estate,4 the City case was listed for a jury trial before the Honorable Merna B. Marshall. The jury returned a verdict in favor of Mr. Rizzo for $450,000. Reassuring the Rizzos that the Wycis case was still viable, Haines recommended that Rizzo take the money. Neither party filed post-trial motions.

After the verdict in the City case, Judge Marshall, by agreement of those involved, conducted a fee dispute hearing, wherein Caiazzo and Haines argued for a portion of the one-third of the verdict that had been placed in escrow for the payment of legal fees. Citing dissatisfaction with the conduct of the attorneys, and with Haines' conduct during settlement negotiations, Judge Marshall ordered a return from the escrow fund, to Rizzo, of $50,000, and divided the remainder between the attorneys. Subsequently, Haines procured for himself from Rizzo, supposedly as a gift, a return of the $50,000.

Throughout the course of the City case, Haines repeatedly led the Rizzos to believe that the Wycis case had a recovery value of between $800,000 and $1 million. The record reveals, however, that there was insufficient evidence of Dr. Wycis' malpractice to justify this figure. Furthermore, the doctor's professional liability insurance coverage was only $100,000. In addition, there was insufficient evidence that the hospital was negligent either in extending staff privileges to Dr. Wycis or in caring for Rizzo. On January 23, 1978, the Wycis case was dismissed on a summary judgment motion. The Honorable Harry A. Takiff dismissed the suit on the basis that, inter alia, the recovery in the City suit had fully compensated Rizzo for his injuries. Rizzo v. Rohrback, 8 Pa.D. & C.3d 122, aff'd, 261 Pa.Super. 455, 395 A.2d 995 (1978).

The Rizzos instituted the instant malpractice action against Haines alleging, inter alia, professional negligence in settling the City case, breach of fiduciary duties with respect to the $50,000 transfer, and improper accounting of costs and expenses. The case was tried without a jury before the Honorable I. Raymond Kremer. On January 18, 1984, the judge found for the Rizzos. He awarded $300,000 compensatory damage for negligent settlement, plus $150,000 interest on that sum, calculated at the statutory rate of 6%. He also awarded a return of the $50,000 transfer, plus $25,000 in interest also calculated at the statutory rate. In addition, he awarded another $5,000, including interest, representing costs and expenses for which Haines had improperly accounted. Lastly, the court awarded $150,000 in punitive damages. Trial Ct. slip op. at 73. Both sides filed post-trial motions, Haines objecting to the judgment against him and the Rizzos objecting to the rate of interest applied to the judgment. On January 30, 1984, Haines filed a recusal motion, alleging that Judge Kremer had been involved in the City case in 1975. On June 20, 1985, Judge Kremer denied the post-trial motions and the motion to disqualify. The Superior Court affirmed, and held that, due to his breach of the fiduciary duty to Rizzo with regard to the $50,000 transfer, Haines must pay interest on that amount at the market rate rather than the statutory rate.

In reviewing the factual determinations of the trial court sitting as finder of fact, we must attribute to them the same force and effect as a jury's verdict. Cover v. Cushing Capital Corp., 344 Pa.Super. 593, 497 A.2d 249 (1985); Snellbaker v. Herrmann, 315 Pa.Super. 520, 462 A.2d 713 (1983). Accordingly, we view the evidence and all reasonable inferences therefrom in the light most favorable to the Rizzos, as verdict winners. Wilson v. Benjamin, 332 Pa.Super. 211, 481 A.2d 328 (1984); Courts v. Campbell, 245 Pa.Super. 326, 369 A.2d 425 (1976). We will only upset the findings if there is insufficient evidence, or if the trial court committed an error of law. Penn State Constr. Inc. v. Cambria Sav. & Loan Ass'n, 360 Pa.Super. 145, 519 A.2d 1034 (1987); Piccinini v. Teachers Protective Mut. Life Ins. Co., 316 Pa.Super. 519, 463 A.2d 1017 (1983). In reviewing the findings, the test is not whether we would have reached the conclusion of the trial court, but rather whether we reasonably could have reached the same result. Harrisburg School Dist. v. Pennsylvania Interscholastic Athletic Ass'n, 453 Pa. 495, 309 A.2d 353 (1973); Delahanty v. First Pa. Bank, 318 Pa.Super. 90, 464 A.2d 1243 (1983). We will not substitute our judgment for that of the trial court. Delahanty, supra.

Viewed in this light, the facts surrounding the settlement negotiations of the City case are as follows. On March 5, 1974, at Haines' request, an informal conference was held in the office of Sheldon Albert, the Chief Deputy City Solicitor. After a "mini-trial" of Rizzo's position, Haines with Rizzo's approval put forth $1.2 million as his client's initial settlement offer. N.T. 8/21/83 at 86-89; 4/29/83 & 5/2/83 at 24. The City did not accept this offer. Haines later provided the City with actuarial figures detailing his client's potential earnings as a police officer versus his earnings in other jobs that he conceivably could perform given his disability. N.T. 8/21/83 at 87-88; 4/29/83 at 69-70. The City never responded.

Again at Haines' request,5 a pre-trial settlement conference was held before the Honorable John J. McDevitt, III. At the April 2, 1975, meeting, the judge put an initial settlement range on the case of between $500,000 and $3,000,000. N.T. 7/21/83 at 107. Haines reiterated his client's demand of $1.2 million. Mr. Moran, a Deputy City Solicitor, responded by offering $300,000 plus a lifetime pension, which Haines did not accept. Id. Moran stated that although he needed approval from other departments within his office to effectuate the pension, he regarded the offer as "firm" because he believed he could accomplish it. Id. at 38. Sheldon Albert testified that Moran had the authority to settle in such a fashion. N.T. 4/29/88 at 11. Haines testified that, at the meeting, he neither inquired of the City what was involved in a lifetime pension, N.T. 4/27/83 at pm1-2, nor asked whether the pension was analogous to a structured settlement. Id. at pm6. He stated that he did not explore the pension because Rizzo previously applied to the City for a disability pension which the City denied after an administrative hearing because the accident did not occur while he was on duty. Rizzo therefore did not believe that the City could get him a pension. N.T. 4/29/83 & 5/2/83 at 27. Haines also did not explore the pension because he did not believe that Mr. Moran's remarks concerning the pension constituted a true offer. Rather, he thought that Moran made the remark in passing. N.T. 4/27/83 at pm4. He did, however, within one week of the conference, write two letters to Mr. Moran in which he specifically asked for an offer from the City, as well as for information concerning the pension. Mr. Moran did not respond to these letters. N.T. 7/21/83 at 104-08; N.T. 5/3/83 at 29.

Subsequently, Haines arranged for a second formal settlement conference. It transpired on Friday, April 18, 1975, three days before trial, in front of Judge Marshall. At the meeting, Haines raised his settlement demand to $2...

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