Worldwide Marine Trading v. Marine Transport Serv., Civ. A. No. 80-1909

• Decision Date: 28 October 1981
• Docket Number: Civ. A. No. 80-1909,80-4341.
• Citation: 527 F. Supp. 581
• Parties: WORLDWIDE MARINE TRADING CORP., et al. v. MARINE TRANSPORT SERVICE, INC., et al. T & L LEASING, INC., et al. v. MARINE TRANSPORT SERVICE, INC. et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

527 F. Supp. 581

WORLDWIDE MARINE TRADING CORP., et al. v. MARINE TRANSPORT SERVICE, INC., et al.

T & L LEASING, INC., et al. v. MARINE TRANSPORT SERVICE, INC. et al.

Civ. A. Nos. 80-1909, 80-4341.

United States District Court, E. D. Pennsylvania.

October 28, 1981.

Arnold Levin, Philadelphia, Pa., for plaintiffs.

Barry E. Ungar, Philadelphia, Pa., for Semack and Kavula.

Ronald H. Surkin, Philadelphia, Pa., for Castelbuono.

Gilbert Newman, Philadelphia, Pa., for Austrian, Lance & Stewart.

Henry H. Janssen, Philadelphia, Pa., for Finnowners.

MEMORANDUM AND ORDER

NEWCOMER, District Judge.

Defendant Austrian, Lance and Stewart, P. C. ("Austrian") moves for summary judgment, and defendants "Finnowners" (comprising Amer-Sea O/Y Tuusula and Kommandiittiyhtio Jussi Ketola & Company) move to dismiss in this antitrust, tortious interference with contractual relations, and malicious prosecution case.

The facts of this case have been recited elsewhere, but a degree of elaboration is necessary. Plaintiffs allege that defendants conspired to injure them by withholding money due them, withdrawing two ships from their control, and advising creditors of MTS, Inc. to sue plaintiffs. See Worldwide Marine Trading Co., et. al. v. MTS, Inc. et al., Civil Action No. 80-1909 (January 28, 1981 E.D.Pa.) (Order granting in part and denying in part motion to dismiss), Realco Services Inc. v. Thomas J. Holt, et al., 513 F.Supp. 435 (E.D.Pa.1981).

1. Austrian's Motion to Dismiss

Anthony Castelbuono was at times relevant to this case counsel to defendant Paul Semack and MTS Agencies and a member of Austrian.¹ Plaintiffs allege that he was the "mastermind" of the scheme to injure plaintiffs, and that he "personally"² and through Austrian held checks payable to MTS, Inc. that by virtue of a security agreement should have been remitted to the First Pennsylvania Bank. See Realco, 513 F.Supp. at 437-38. Castelbuono testified in depositions that he held them until it could be determined to whom they belonged "and the responsibility for that question was satisfactorily removed from Mr. Semack and Mr. Kavula." (Deposition of Castelbuono at 209-210). Plaintiffs allege that this action caused them to default on their charters, and permitted Finnowners to revoke the charters on the ships Finn-Amer and Finn-Builder.

Castelbuono flew with Semack to Helsinki in April 1977 to meet with the Finnowners. Castelbuono's unrebutted testimony is that he made the trip as Semack's attorney and that Austrian was paid for his services. (Deposition of Castelbuono at 222-223).

On May 6, 1977 Semack, Kavula, and plaintiffs agreed to forward the freight monies to First Pennsylvania, and as a part of the arrangement plaintiffs agreed to pay Austrian for Castelbuono's services in drafting the agreement instrument. Plaintiffs also executed releases in favor of Semack, Kavula, Austrian and Castelbuono.

In carrying out the May 6 agreement Castelbuono deposited freight monies into an escrow account at Barclays Bank of New York, and acted as the escrow agent.

Also on May 6, 1977, plaintiffs allege, Castelbuono gave an attorney for Finnowners copies of the ships' manifests³ for the Finn-Amer and the Finn-Builder, knowing that the Finnowners would attempt to place liens on the freights held by Castelbuono that were to be sent by him to First Pennsylvania. Finnowners did send out lien notices to the freight holders whose names they learned and they sought to have payment stopped on checks for those freights. (Deposition of Honan at 21, 39).

Plaintiffs argue that the facts recited above show that Castelbuono was a member of the conspiracy to harm plaintiffs, and that the harms are actionable wrongs sounding in antitrust and tort and that Austrian is vicariously liable for Castelbuono's actions. Austrian argues that in order for it to be liable it must have explicitly taken part or authorized any activity beyond the scope of giving legal advice. Because plaintiffs were not clients of Austrian, Austrian argues, the firm could only be responsible by a theory of respondeat superior if it specifically permitted him to act in a way that was outside the scope of his professional duties as a lawyer.

Plaintiffs essentially agree, but argue that the facts demonstrate (1) that Castelbuono's actions exceeded the "lawyer's privilege to advise," and (2) that Austrian need not have specifically authorized those actions. The Court has already recognized the privilege lawyers have, see Worldwide Marine Trading, et al., supra, slip. op. at 5, in its ruling on the motions to dismiss. The burden is on plaintiffs to show "self-interested activity on the part of Castelbuono that went beyond the scope of his practice of law." This is the primary inquiry, and if plaintiffs can demonstrate such activity on Castelbuono's part, then the liability of Austrian can be considered.⁴

The undisputed facts establish that Castelbuono was the lawyer for some of the defendants, and that he carried out certain functions for them. Nowhere in the record is there any showing that Castelbuono collected anything other than a fee for his services. Plaintiffs' case appears to rest on the theory that Castelbuono facilitated the allegedly illegal schemes, or, indeed, that he was the "mastermind." Plaintiffs argue that even acting only as a lawyer Castelbuono can be liable and they cite several cases in which attorneys, using their skills as attorneys, were held in as defendants. The Court's analysis will focus initially on whether or not Castelbuono's actions are similar to the actions of the lawyers in those cases.

Plaintiffs seem to concede that there is no evidence that Castelbuono was ever rewarded in any way other than as a fee-earner and that there is no evidence that he had any "stake" in his clients' activities greater than a professional interest. Thus, as plaintiff concedes, the Court must consider "the more complex problems ... posed by the case of the attorney who acts not for his own account, but for the benefit of his client." Plaintiff's Memorandum of Law in Opposition to Summary Judgment Motion at 24.

In the cases cited by plaintiffs, attorneys were the knowing participants in frauds or tortious acts carried out by their clients. For example, in Newburger, Loeb & Co. Inc. v. Gross, 563 F.2d 1057 (2nd Cir. 1977) the defendant lawyer was found at trial to have been "at the heart of the entire matter, guiding the entire plan, carrying threats to the dissidents, and knowingly counseling, advising, and instituting baseless and fraudulent lawsuits." 563 F.2d at 1080. Indeed in Newburger the defendant lawyer issued a false opinion letter to carry out the illegal transactions. Id. In Steinberg v. Guild, 22 A.D.2d 776, 254 N.Y.S.2d 7 (Sup.Ct.1964) a lawyer was alleged to have conspired with his clients to defraud subscribers to a real estate syndicate by predating and otherwise changing a purchase contract to conceal a fraudulent arrangement from the subscribers. A motion to dismiss the complaint was denied, because such conduct, under New York law, constitutes activity beyond the "scope of honorable employment" of a lawyer. Steinberg, 254 N.Y.S.2d at 8-9; Newburger, 563 F.2d at 1080. In United States v. Benjamin, 328 F.2d 854 (2nd Cir. 1964), a criminal case brought under the Securities Act of 1933, the defendant lawyer issued a false opinion letter and other documents containing language that the Court of Appeals characterized as "completely false." 328 F.2d at 858. The lawyer's role was "far more than that of an attorney. He told a purchaser and distributor of shares he was acting as a `trustee' for some of the principals...." He offered financial aid if the purchaser and distributor would undertake some distribution of the stock, and he attempted falsely to minimize his client's role in fraudulent schemes during a Securities and Exchange Commission investigation. 328 F.2d at 863-64.

The cases cited by plaintiffs fall into two rough categories. The first, which is the category into which this case fits, is of instances where lawyers acted as advisors to clients who carried out tortious or criminal activities. The degree to which the lawyers participated, initiated, or furthered the schemes determined their culpability. Examples of such cases have been recited above. The second category, which might be considered an intersecting set of the first, is of those cases in which lawyer assisted his client in using the legal process tortiously or maliciously. See, e.g. Sachs v. Levy, 216 F.Supp. 44, 46 (E.D.Pa.1963), Adelman v. Rosenbaum, 133 Pa.Super. 386, 3 A.2d 15 (1938). In the second category the attorney has by necessity acted tortiously if the abuse of process can be proven. He has signed affidavits and pleadings, and represented to the courts of which he is an officer that his representations and arguments were made in good faith and upon reasonable belief of their truth. Except in the occasion where he has been misled by his client, or he could not upon exercise of due diligence discover the falsity of the representations made by his client, a lawyer may not "file a suit ... or take other action on behalf of his client when ... such action would serve merely to harass or maliciously injure another." Code of Professional Responsibility DR7-102(A)(1). There is no allegation that Castelbuono has personally effected any abuse of the legal process.

Putting aside, then, those cases in which the lawyer has acted by initiating malicious legal actions on behalf of his client, the Court must consider whether or not the facts of record disclose any action on the part of Castelbuono that might support a triable issue of fact as to his culpable participation in the alleged violations of federal antitrust laws or state laws of tortious interferences with contract and abuse of process.

As it appears from the cases cited by the Court, under Pennsylvania, New York, and federal law, an attorney who is...