Shenango Systems v. Micros-Systems

Citation887 A.2d 772
CourtUnited States State Supreme Court of Pennsylvania
Decision Date03 January 2006
PartiesSHENANGO SYSTEMS SOLUTIONS, INC., Appellee v. MICROS-SYSTEMS, INC., a Maryland Corporation, Appellant v. Jones, Gregg, Creehan & Gerace, LLP, Richard G. Lewis, Esquire, Richard B. Sandow, Esquire, John P. Davis, III, Esquire, Gregory L. Klink, Esquire, Ronald E. Reitz, Esquire, Daniel M. Taylor, Jr., Esquire, and David M. Huntley, Esquire.

Thomas J. Farnan, Pittsburgh, for appellant.

John P. Corcoran, Jr., Pittsburgh, for appellees.



¶ 1 This is an appeal from a trial court order issued following a remand from this Court in a matter which concerns the enforcement of a charging lien and a party's right to set-off. We reverse.

¶ 2 A prior panel of this Court reviewed the factual history of this case:

In terms of background information, Micros [Appellant-Micros-Systems, Inc.] obtained a judgment against Shenango [Shenango Systems Solutions, Inc.] in the amount of $331,006.77 plus interest in the U.S. District Court for the District of Maryland. Micros Systems, Inc. v. Shenango Systems Solutions Inc., Civil No. CCB-01-228. That judgment was filed in Allegheny County on April 15, 2002 and indexed in the form of a Praecipe to Index Foreign Judgment (G.D. 02-007451). On April 26, 2002, Shenango obtained an award against Micros in a Maryland arbitration proceeding in the total amount of $198,677.31, plus interest. Shenango Systems Solutions v. Micros Systems, Inc., No. 16-117-00193-00. Shenango was awarded damages in the amount of $105,609.13 and attorney's fees and costs in the amount of $82,456.30. Attorney's fees and costs were awarded pursuant to paragraph 20 of the parties' Dealership Agreement Jones, Gregg, Creehan & Gerace (Jones Gregg) represented Shenango in the arbitration proceeding.

On June 7, 2002, Shenango and Jones Gregg filed a complaint in the Court of Common Pleas of Allegheny County against Micros. At Count I of the complaint Shenango alleged a breach of contract claim. At Count II, Jones Gregg made a claim for attorney's fees under the Dealership Agreement and arbitration award. On July 19, 2002, Micros filed preliminary objections claiming that any action for breach of the Dealership Agreement was required to be prosecuted in Maryland. In response to the preliminary objections, the trial court entered an Order on September 4, 2002 striking the complaint and directing Shenango and Jones Gregg to file a petition to enforce arbitration. The Order further directed Micros to file an answer to the petition within ten days of receipt of the petition. The trial court further scheduled a rule returnable on the petition on October 2, 2002 and dismissed all preliminary objections.

On September 6, 2002, Shenango filed a petition to enforce arbitration award. Thereafter, on September 13, 2002, Jones Gregg filed a petition to intervene and obtain enforcement of charging lien. In support of its claim, it attached a copy of Shenango's consent to place a charging lien on the judgment for attorney's fees. Additionally, Jones Gregg served a notice of claim of charging lien on Shenango and Micros. On September 16, 2002, Micros filed an answer to the petition to enforce arbitration award, new matter and counterclaim. Micros denied that Shenango was entitled to any damages and instead contended that it satisfied all obligations owed to Shenango under the arbitration award by way of set-off.

. . .

On October 2, 2002, the trial court entered two orders. The first order confirmed the arbitration award pursuant to 42 Pa.C.S.A. § 7342(b). Judgment was entered against Micros in the amount of $82,456.30, subject to an attorney's charging lien. The second order granted the petition to intervene and obtain enforcement of charging lien. The trial court valued the services rendered by Jones Gregg at $82,456.30 and determined that an attorney's charging lien had priority over the Maryland judgment between Micros and Shenango and was not subject to set-off.

Micros Systems, Inc. v. Shenango Systems Solutions Inc., No.1964 WDA 2002 (Pa.Super. filed March 9, 2004) (unpublished memorandum at 2-5) (footnotes omitted).

¶ 3 On appeal, a panel of this Court sought to review the trial court's ruling. It noted that the trial court's determination was based on a finding that Micros lacked standing to object to the imposition of a charging lien, despite the fact that issue of standing was not raised by the parties and not litigated. The panel ultimately ruled:

[W]e find a remand is necessary to fully litigate the issue of whether Micros has standing in this matter. If the trial court determines upon remand that Micros has standing, the trial court must then consider whether the five requirements set forth under Recht [Recht v. Urban Redevelopment Authority, 402 Pa. 599, 168 A.2d 134 (1961)] have been met including whether there are equitable considerations which necessitate the application of the charging lien.

Id. at 8.

¶ 4 On remand after the receipt of testimony and argument during a hearing on the matter, the trial court issued an order, reaffirming its earlier order. Although the trial court concluded upon review that Micros had standing, it found that the five requirements for the imposition of a charging lien set forth in Recht had been met, and that Jones Gregg had a valid charging lien, in the amount of $82,456.30, which was superior to Micros' right of set-off.

¶ 5 In this appeal from the trial court's ruling Micros challenges the trial court's ultimate decision and the trial court's rulings regarding the receipt of evidence and the conduct of the hearing in the matter. Because we determine that Micros has a right to set-off and is not responsible for paying Jones Gregg the amount of attorney fees awarded to its client Shenango, we reverse the trial court's ruling without discussion of the remaining issues.

¶ 6 In Recht our Supreme Court set forth the five conditions which must be met before a charging lien will be recognized and applied:

[I]t must appear (1) that there is a fund in court or otherwise applicable for distribution on equitable principles, (2) that the services of the attorney operated substantially or primarily to secure the fund out of which he seeks to be paid, (3) that it was agreed that counsel look to the fund rather than the client for his compensation, (4) that the lien claimed is limited to costs, fees or other disbursements...

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  • Royce v. Michael R. Needle, P.C.
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    • May 20, 2019 608, 168 A.2d at 138-39 (all factors must be present); Shenango Sys. Solutions, Inc. v. Micros-Sys., Inc. , 2005 PA Super 370 ¶¶ 10-11, 887 A.2d 772, 775 (Pa. Super. Ct. 2005) (where attorney could not establish first Recht factor, declining to adjudicate the others).2. Common Fund Doctr......
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