F. Plaintiff will not be awarded punitive damages
Punitive damages may be awarded when a tortfeasor's "actions are of such an outrageous nature as to demonstrate intentional, willful, wanton or reckless conduct." SHV Coal, Inc. v. Continental Grain Co., 526 Pa. 489, 587 A.2d 702, 704 (Pa. 1991). They are imposed to punish an individual for egregious behavior, as well as to deter him and others from engaging in similar conduct. See Allstate Ins. Co. v. A.M. Pugh Assocs., Inc., 604 F. Supp. 85, 99 (M.D. Pa. 1984). The decision to award such damages must take into account the egregious conduct as well as all the circumstances surrounding the conduct, including the relationship, if any, between the parties. See Brooks ex rel. Stanton v. Astra Pharmaceutical Prods., Inc., 718 F.2d 553, 580 (3d Cir. 1983). The tortfeasor's wealth must also be examined in relation to the harm intended by the punitives. See Kirkbride v. Lisbon Contractors, Inc., 521 Pa. 97, 555 A.2d 800, 803 (Pa. 1989); see also Tunis Bros. Co. v. Ford Motor Co., 952 F.2d 715, 740 (3d Cir. 1991) (citing Kirkbride), cert. denied, 120 L. Ed. 2d 903, 112 S. Ct. 3034 (1992). The granting of punitives is within the fact-finder's discretion. See SHV Coal, 587 A.2d at 705.
On balance, and under the circumstances of the case, this Court will not award punitive damages to the Plaintiff. While Plaintiff's oversight of Defendant's activities conformed to the requisite level of diligence, it lacked the desirable vigilance Rubin Quinn should have displayed in handling client funds. While this was legally sufficient to satisfy the Plaintiff's duty of diligence, the Court will not endorse it as the best prophylactic against financial wrongdoing by an agent. Moreover, any recovery in excess of the loss would go to Plaintiff and not to the actual victims of the conversion, Rubin Quinn's clients. Therefore, the Court finds that the award of punitive damages would bestow upon Plaintiff an unjust windfall.
Finally, the record is devoid of evidence concerning Kennel's wealth. In assessing punitives, this Court is required to assess the impact the damages would have on the Defendant's financial position. See Kirkbride, 555 A.2d at 803. There being no evidence concerning Defendant's wealth, this Court will refrain from awarding punitive damages.
III. CONCLUSIONS OF LAW
1. This Court has jurisdiction over this action in that Plaintiff is a Pennsylvania professional corporation and Defendant is a citizen of Virginia and the amount in controversy is in excess of $ 50,000, exclusive of interest and costs. See 28 U.S.C.A. § 1332(a) (West 1993).
2. Venue is proper in the Eastern District of Pennsylvania in that, inter alia, a substantial part of the events giving rise to the plaintiff's claim occurred within this federal district. See 28 U.S.C.A. § 1391 (a) (West 1993).
3. During the time Defendant was an associate and partner at Rubin Quinn, he converted to his personal use $ 124,927.87 of client funds that were entrusted to him in connection with his handling of real estate transactions for Rubin Quinn's clients.
4. Rubin Quinn is entitled to damages in the amount of $ 124,927.87 as indemnification for the payments it made to Rubin Quinn clients whose funds were converted by Defendant.
5. Rubin Quinn is entitled to damages in the amount of $ 38,008 as indemnification for the attorney fees and costs it incurred in investigating Defendant's misconduct and determining the extent of its clients' losses.
6. Defendant, both as an associate and partner at Rubin Quinn, held a position of trust. Defendant breached his fiduciary duties to Rubin Quinn by converting $ 124,927.87 from the Real Estate Accounts which were entrusted to him in connection with his performance of services as an attorney at Rubin Quinn.
7. As a result of Defendant's breach of fiduciary duty, Defendant caused Rubin Quinn additional damages in the amount of $ 9,399.91 in bank and settlement charges, and $ 12,514.25 for investigation by Rainer and Company.
8. Defendant breached the Partnership Agreement by failing to return to Rubin Quinn the net amount of $ 2,407.15, representing an overpayment to him by Rubin Quinn of his proportionate share of Rubin Quinn's year-to-date profits for the year 1990.
9. The statute of limitations applicable to indemnity claims did not begin to run until at least July 17, 1990, the date of Rubin Quinn's first reimbursement of a third party for losses caused by Defendant's wrongful activities.
10. The statute of limitations applicable to breach of fiduciary duty claims did not begin to run until June 19, 1990, the date on which Rubin Quinn first learned of the misappropriation of client funds.
11. The statute of limitations applicable to breach of contract claims did not begin to run until at least July 31, 1990, when Defendant was expelled from Plaintiff's predecessor.
12. The collateral source rule does not require Rubin Quinn to deduct CNA's payment of $ 100,000 for Defendant's actions as an associate from Rubin Quinn's damages. The payment was from an independent source, since Defendant paid no portion of the Policy's premiums while he was employed as an associate.
13. Plaintiff is not entitled to recover punitive damages. Although Defendant's behavior is wanton and willful, Plaintiff's relative laxity in overseeing Defendant's actions and its failure to present evidence of Defendant's net worth militates against the imposition of punitives.
Defendant is liable for indemnification, breach of duty, and breach of contract. Plaintiff has suffered damages in the amount of $ 184,850.03 and judgment in its favor will be entered.
AND NOW, this 31st day of August, 1993, following a bench trial and for the reasons set forth in the accompanying Findings of Fact, Discussion, and Conclusions of Law, it is ORDERED :
JUDGMENT is entered in favor of plaintiff and against defendant on plaintiff's claims in the amount of $ 184,850.03.
AND IT IS SO ORDERED.
EDUARDO C. ROBRENO, J.