Articles Posted in Business Law

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In 1998, in order to pursue a real estate investment and development project, Lynn and Connie Hanaway, T.R. White, Inc. (“T.R. White”), and several others formed a limited partnership, Sadsbury Associates, L.P. (“Sadsbury”). The Hanaways were among several limited partners of Sadsbury, while T.R. White served as the general partner. In 2002, acting independently from Sadsbury, T.R. White contracted for options to purchase two separate tracts of land. In 2005, prompted by the success of Sadsbury, the partners of Sadsbury formed The Parkesburg Group, LP (“Parkesburg”) in order to implement a new residential development project involving two tracts of land. T.R. White served as Parkesburg’s general partner, and the Hanaways were among several limited partners. Parkesburg’s limited partnership agreement gave T.R. White broad discretion to carry out its duties. Pursuant to the express terms of the agreement, T.R. White, as the general partner, controlled “the business and affairs of the Partnership.” The crux of this dispute concerned Parkesburg’s sale of the land to a newly formed limited partnership, Parke Mansion Partners (“PMP”). The Hanaways filed a six-count complaint against T.R. White, PMP, Parkesburg, and Sadsbury, alleging T.R. White, as general partner, breached Parkesburg’s limited partnership agreement. They viewed the sale of the Parkesburg tracts to PMP as a sham, executed to freeze them out of Parkesburg. The issue presented for the Pennsylvania Supreme Court’s review centered on the applicability of the implied covenant of good faith and fair dealing to a limited partnership agreement formed pursuant to Pennsylvania’s Revised Uniform Limited Partnership Act (“PRULPA”). The Superior Court reversed the trial court’s order, which had granted partial summary judgment in favor of Parkesburg’s general partner and against two of its limited partners. The Supreme Court reversed the Superior Court’s order in relevant part, holding that the implied covenant of good faith and fair dealing was inapplicable to the Pennsylvania limited partnership agreement at issue, which was formed well before the enactment of amendments that codified such a covenant. View "Hanaway v. Parkesburg Group" on Justia Law

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No fiduciary duty arises in a consumer transaction for the purchase of a whole life insurance policy based upon the advice of a financial advisor where the consumer purchasing the policy does not cede decision -making control over the purchase to the financial advisor. In 1995, Bryan Holland, a financial advisor for IDS Life Insurance Corporation, made an unsolicited telephone contact, a "cold call," to Eugene and Ruth Yenchi. At a subsequent meeting and for a fee of $350, Holland presented the Yenchis with a financial management proposal containing a notice that it had been prepared by "your American Express financial advisor" (Holland) and that "[alt your request, your American Express financial advisor can recommend products distributed by American Express Financial Advisors and its affiliates as investment alternatives for existing securities." The Proposal offered the Yenchis a number of general recommendations, including that they monitor monthly expenses, consolidate their debt, consider various savings plans, consolidate current life insurance policies into one policy, review long-term care coverage, keep accurate records for tax purposes (medical expenses and charitable contributions), transfer 401(k) funds into mutual funds, and continue estate planning with an attorney and their financial advisor. The Yenchis implemented some of these recommendations. In 2000, the Yenchis had their portfolio independently reviewed. Through this process, they were advised that Holland’s recommendations would be financially devastating to the Yenchis. In April 2001, the Yenchis sued Holland and his company, American Express Financial Services Corporation, American Express Financial Advisors Corporation, and IDS Life Insurance Company. The Yenchis' asserted claims of negligence/willful disregard, fraudulent misrepresentation, violation of the Uniform Trade Practices and Consumer Protection Law ("UTPCPL"), bad faith, negligent supervision, and breach of fiduciary duty. Of relevance here, with respect to the breach of fiduciary duty claim, the trial court held that no fiduciary relationship was established between the Yenchis and Holland because the Yenchis continued to make their own investment decisions. The Pennsylvania Supreme Court concluded that, consistent with its jurisprudence, no fiduciary duty arose in such a situation. Consequently, the Court reversed the Superior Court's decision to the contrary. View "Yenchi v. Ameriprise Financial" on Justia Law

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Morrison Informatics, Inc. (the “Company”) filed a petition for Chapter 7 Bankruptcy relief in September 2009. In May 2011, the Company and two shareholders, who also were officers of the corporation, commenced a civil action in the court of common pleas against Members 1st Federal Credit Union, Mark Zampelli, and Scott Douglass. In the ensuing complaint, the Company and the Shareholders asserted that, beginning sometime after January 2005 and continuing into 2009, the Company’s finance manager, Zampelli, had colluded with a Credit Union relationships officer, Douglass, to embezzle Company funds. The complaint advanced claims against the Credit Union, Zampelli, and Douglass variously sounding in fraud, conversion, civil conspiracy, and negligence. The question this case presented for the Supreme Court's review concerned whether a federal bankruptcy trustee could be substituted as a plaintiff in a civil action previously commenced by the debtor in bankruptcy in a Pennsylvania state court, although the statutory limitations period expired prior to the attempted substitution. "Although we recognize that the interests of a debtor and a trustee may diverge in some respects, we find it most important that trustees’ interests are derivative, and accordingly, they generally cannot assert any greater rights as against defendants than debtors could have in the first instance." The Supreme Court departed from the Superior Court’s focus on the continued “existence” of the Company after the initiation of insolvency proceedings, and the Court rejected a strict rule foreclosing a relation-back approach to substitution of a bankruptcy trustee for a debtor. Instead, the Court held that relation back in favor of a federal bankruptcy trustee was appropriate, at least where the trustee has acted in a reasonably diligent fashion to secure his or her substitution, and there is no demonstrable prejudice to defendants. View "Morrison Info. v. Members 1st FCU" on Justia Law

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Appellant Lower Merion Township was a township of the first class. Article IV of its municipal code required every person engaging in a business, trade, occupation, or profession in the Township to pay an annual business privilege tax calculated as a percentage of gross receipts. Appellees Fish, Hrabrick, and Briskin (“Lessors”) each own one or more parcels of real estate in the Township that they rent to tenants pursuant to lease agreements. The Township notified Lessors that, for every such parcel, they were obligated to purchase a separate business registration certificate and pay the business privilege tax based on all rental proceeds. Lessors sought a declaratory judgment stating that, pursuant to the Local Tax Enabling Act (the “LTEA”), the Township’s business privilege tax could not be applied to rental proceeds from leases and lease transactions. Lessors did not challenge the validity of Article IV generally. Rather, they observed that the LTEA’s general grant of power in this regard is subject to an exception stating that such local authorities lack the ability to “levy, assess, or collect . . . any tax on . . . leases or lease transactions[.]” Lessors argued their real property rental activities fell within the scope of this exception. The trial court granted the Township's motion, denied the Lessors' motion and dismissed the complaint. A divided Commonwealth Court reversed, but the Supreme Court agreed with the trial court's judgment, reversed the Commonwealth Court and reinstated the trial court's order dismissing the complaint. View "Fish v. Twp of Lower Merion" on Justia Law

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In this matter, Appellants John and Kathy St. John challenged the Superior Court’s decision to affirm a declaratory judgment order finding Pennsylvania National Mutual Casualty Insurance Company (“Penn National”) liable for a judgment against its insured LPH Plumbing and Heating under a commercial general liability (CGL) insurance policy in effect from July 1, 2003 to July 1, 2004. The Supreme Court granted review to determine whether, under the facts of this case and the policy language at issue, Penn National was instead liable for the judgment against its insured under a separate policy of CGL insurance as well as a companion umbrella policy in effect from July 1, 2005 to July 1, 2006. Furthermore, the Court also considered whether the multiple trigger theory of liability insurance coverage (adopted by the Supreme Court in "J.H. France Refractories Co. v. Allstate Ins. Co.," 626 A.2d 502 (Pa. 1993)), within the context of asbestos bodily injury claims applied in this case, where property damage was continuous and progressive, to trigger coverage under all policies in effect from exposure to the harmful condition to manifestation of the injury. After review, the Supreme Court affirmed all aspects of the lower court’s decision finding that coverage was triggered under the policy in effect from July 1, 2003 to July 1, 2004, when property damage became reasonably apparent, and declining to apply the multiple trigger theory of liability insurance coverage. View "PA Natl Mut Casualty v. St. John" on Justia Law

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On Friday, January 9, 2009, after business hours, an unidentified motor vehicle crashed into and felled a utility pole carrying electric lines owned and operated by Duquesne Light. Several wires were connected to Burton L. Hirsh’s Funeral Home, and at least one was stripped from the attachment point to the building’s electrical system located on the structure. In addition to the funeral home, a number of other local buildings lost power as a result of the incident, although no structure other than Hirsh’s was connected directly to the downed pole. The issue this case presented for the Supreme Court's review, as framed by appellant, was “[w]hether the Superior Court erred in imposing upon electric utilities a burdensome and unprecedented duty to enter customers’ premises and inspect customers’ electrical facilities before restoring power after an outage” The Supreme Court affirmed the Superior Court, finding that Duquesne Light failed to adequately confront the common-law duties invoked by Hirsh or the warnings dynamic tempering the Superior Court’s ruling. The Superior Court did not err to the extent that it recognized a duty, on the part of an electric service provider, to take reasonable measures to avert harm in a scenario in which the utility has actual or constructive knowledge of a dangerous condition impacting a customer’s electrical system, occasioned by fallen and intermixed electrical lines proximate to the customer’s premises. The Court offered no opinion as to whether Duquesne Light had actual or constructive knowledge of an unreasonable risk in this scenario, since the electric company’s summary judgment effort was not staged in a manner which would have elicited an informed determination on such point. View "Alderwoods (PA), Inc. v. Duquesne Light" on Justia Law

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This case arose from the liquidation proceedings of Reliance Insurance Company. One of Reliance's policyholders, Warrantech Consumer Products Services, Inc., submitted various proofs of claim seeking reimbursement under two insurance policies in which Reliance agreed to indemnify Warrantech for all future liabilities arising under certain warranty/service contracts Warrantech entered during the applicable policy period. The Commonwealth Court denied Warrantech's claims, holding that 40 P.S. 221.21 of the Insurance Department Act applied to terminate coverage for all "risks in effect" under a policy of insurance no later than thirty days after the respective insurer enters liquidation, notwithstanding that the relevant policies of insurance were cancelled prior to the date of liquidation. Finding no reversible error, the Supreme Court affirmed the Commonwealth Court's judgment. View "Warrantech v. Reliance Ins Co." on Justia Law

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Appellant, in his capacity as vice-president of Izett Manufacturing, Inc., executed a guaranty in connection with a loan agreement entered into by the company. The loan agreement entitled Izett Manufacturing to borrow up to $50,000 and was secured by a promissory note. The note and the guaranty both were dated 1999, and Appellant personally guarantied the payment of all liabilities under the note. The guaranty included a confession of judgment clause and stated that it was "executed under seal," with the designation "(SEAL)" as part of the signature line. By 2001, the company had borrowed $50,000 under the agreement. At that time, Appellee Osprey Portfolio, LLC purchased the loan and was assigned the note and guaranty. In late 2005, Osprey sent a letter to Izett Manufacturing, declaring the loan to be in default and demanding payment in full. Izett failed to remit payment. More than four years later, Osprey filed a Complaint in Confession of Judgment against Appellant as the guarantor of the loan. The court entered judgment the same day. Thereafter, Appellant filed a Petition to Strike and/or Open Judgment, claiming, in relevant part, that Osprey's action was precluded by Section 5525(a)(8) of the Judicial Code, which establishes a four-year limitation period for "[a]n action upon a contract, obligation or liability founded upon a writing . . .under seal . . ." The Supreme Court allowed this appeal to determine the limitation period that applies to an action on a guaranty executed under seal. Upon review, the Court held that the loan guaranty executed under seal by Appellant was an "instrument in writing under seal" subject to a 20-year limitation period set forth in Section 5529(b)(1) of the Judicial Code. Therefore, the Superior Court was affirmed. View "Osprey Portfolio, LLC v. Izett" on Justia Law

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At issue before the Supreme Court was whether the common pleas court appropriately decertified a class based on its conclusion that a necessary element of the plaintiffs' proof (the presence of a confidential relationship) was not amenable to class treatment. In 1993, Sandra J. Basile commenced a civil action against H&R Block, Inc., H&R Block Eastern Tax Services, Inc. and Mellon Bank. She alleged, among other things, that the Block companies maintained maintained and breached fiduciary duties in connection with their "Rapid Refund" program. Basile sought to assert claims on behalf of herself and others who were similarly situated. However, summary judgment subsequently was awarded in Block's favor on the ground that it had no fiduciary relationship with the plaintiffs. The common pleas court's conclusion, in this respect, was based on the premises that Block was not the plaintiffs' agent and that no confidential relationship otherwise existed between the parties. In the ensuing appellate litigation, the court's decision on the agency score ultimately was conclusively sustained. In 2001, the Superior Court overturned the common pleas court's summary-judgment award, finding that Ms. Basile had proffered sufficient evidence to establish a prima facie case of a confidential relationship. In 2003, upon consideration of the appellate rulings, the common pleas court determined that class treatment was no longer appropriate. The common pleas court found that the need for individualized inquiries on the dispositive question of trust precluded a finding that common issues predominated. Upon review of the matter, the Supreme Court held that that the common pleas court did not err in decertifying the class based on its conclusion that the presence of a confidential relationship was not amenable to class treatment. The order of the Superior Court was reversed, the common pleas court's decertification order was reinstated, and the matter was remanded for further proceedings. View "Basil. v. H & R Block, et al." on Justia Law

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Mason-Dixon Resorts, L.P. made a direct appeal to the Supreme Court to challenge a Pennsylvania Gaming Control Board decision that awarded a Category Slot Machine 3 slot machine license to intervenor Woodlands Fayette, L.L.C. Upon review, the Supreme Court affirmed: "[w]e have no doubt that there may have been other applicants for this remaining Category 3 license, including appellant, whose facilities may not have been appropriate for the award of a license. Our task, however, is not to determine for ourselves which of the facilities was the best one, but instead to pass upon the specific claims raised, under the standard review established by the Act. . . . finding no error warranting relief, we affirm the Board's Order." View "Mason-Dixon Resorts v. PA Gaming Control Board" on Justia Law