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07/22/97 C.P.C. v. STATE ETHICS COMMISSION

COMMONWEALTH COURT OF PENNSYLVANIA


July 22, 1997

C.P.C., ESQ., PETITIONER
v.
STATE ETHICS COMMISSION, RESPONDENT

Appealed From No. 95-034-C2. State Agency State Ethics Commission.

Before: Honorable James Gardner Colins, President Judge, Honorable James R. Kelley, Judge (p.), Honorable Charles A. Lord, Senior Judge. Opinion BY Judge Kelley.

The opinion of the court was delivered by: Kelley

OPINION BY JUDGE KELLEY

FILED: July 22, 1997

C.P.C., Esquire (CPC) appeals, by permission, from an interlocutory order of the State Ethics Commission (Commission) which: (1) denied a motion in the form of a preliminary objection filed by CPC to a complaint filed by the Investigative Division of the Commission; (2) directed CPC to file an answer to the complaint; (3) denied a request by CPC for a wrongful use of act review; and (4) determined that its order would not be publicly released. *fn1

CPC is a member of the Pennsylvania Bar and has been licensed to practice law in this Commonwealth since 1982. From January 1992 until November 1993, CPC served as the solicitor for the Borough of Throop (borough). CPC was appointed borough solicitor by a unanimous vote of the Throop Borough Council (Borough Council).

On December 27, 1995, the Investigative Division of the Commission issued a complaint to CPC. The complaint related to alleged violations of section 3(a) of what is commonly referred to as the State Ethics Act (Ethics Act) *fn2 by CPC while he was serving as borough solicitor. The complaint alleged that CPC violated the Ethics Act when: (1) he used the authority of his office to obtain a private pecuniary benefit for himself and/or a business with which he was associated; (2) he advised Borough Council to release funds from a borough-controlled escrow account to the Throop Property Owners Environmental Trust Fund (Fund) for the benefit of the Throop Property Owners Association (Association) at a time when he knew, or should have known, that he would be appointed solicitor for the Fund and/or Association and receive compensation therefrom; (3) he advised Borough Council to pay legal fees and/or court costs to the Association and/or turn the borough's control of the Fund over to the Association at a time when he was being compensated to serve as solicitor for the Fund and/or the Association and at a time when the Association was considering legal action against the borough; and (4) he billed and was paid by the borough for legal services which had already been paid by the borough through a separate agreement.

On February 26, 1996, CPC filed with the Commission a motion in the form of a preliminary objection to the complaint. CPC asserted that the Commission has no jurisdiction over the ethical behavior of members of the Pennsylvania Bar who are part-time borough solicitors. Rather, he argued that the power to investigate and prosecute the activities of attorneys is exclusively vested in our Supreme Court. CPC also asserted that his due process rights were violated because the Commission did not provide him with any notice that it intended to exercise jurisdiction over borough solicitors. CPC asked the Commission to hear evidence and then dismiss the complaint for lack of subject matter jurisdiction, issue an opinion as to its alleged jurisdiction over part-time solicitors, provide him with a full evidentiary hearing should one be necessary, and appoint an objective reviewer to determine whether any person had initiated the proceeding against him in violation of the law.

By amended interlocutory order dated July 3, 1996, the Commission (1) denied, without prejudice, CPC's motion in the form of a preliminary objection; (2) directed CPC to file an answer to the complaint; (3) denied, without prejudice, CPC's request for a wrongful use of act review; (4) determined that its order would not be publicly released; and (5) stated that its order involved a controlling question of law for which an immediate appeal would be appropriate. All proceedings before the Commission were stayed. CPC then filed with this court a petition for permission to appeal which was granted.

On October 3, 1996, CPC filed with this court a motion which requested, inter alia, that the appellate record in this case be sealed from public inspection. By order dated October 18, 1996, this court granted the motion to seal the record from public inspection, but stated that such a determination should be reconsidered by the court at the Conclusion of oral argument in this case.

In this appeal, CPC raises the following issues for our review: (1) whether the Commission lacks jurisdiction to file, prosecute and decide a complaint alleging a conflict of interest under section 3(a) of the Ethics Act against a member of the Pennsylvania Bar who is appointed to be a borough solicitor; (2) whether the Commission's refusal to hold a hearing on the issue of CPC's jurisdictional claim constitutes a denial of his due process rights; and (3) whether the facts in this case are sufficient to warrant granting the relief requested by CPC.

Initially, we note that preliminary objections, the end result of which would be dismissal of a cause of action, should be sustained only in cases that are clear and free from doubt. Bower v. Bower, 531 Pa. 54, 611 A.2d 181 (1992). The test is whether it is clear from all of the facts pleaded that the pleader will be unable to prove facts legally sufficient to establish his or her right to relief. Firing v. Kephart, 466 Pa. 560, 563, 353 A.2d 833, 835 (1976).

CPC first asserts that the Commission had no jurisdiction over his conduct. He argues that only an attorney who is a salaried employee of a governmental agency or body on a full-time basis is governed by the provisions of the Ethics Act, the same as any other full-time, salaried public employee.

It is clear that the General Assembly is precluded from exercising powers which have been entrusted to the judiciary. Kremer v. State Ethics Commission, 503 Pa. 358, 469 A.2d 593 (1983). Our Supreme Court has been given the authority to regulate the courts by Article V, Section 10 of the Pennsylvania Constitution which provides, in pertinent part, as follows:

(a) The Supreme Court shall exercise general supervisory and administrative authority over all the courts and Justices of the peace ... .

(c) The Supreme Court shall have the power to prescribe general rules governing practice, procedure and the conduct of all courts, Justices of the peace and all officers serving process or enforcing orders, judgments or decrees of any court or Justice of the peace, including the power to provide for ... the administration of all courts and supervision of all officers of the judicial branch, if such rules are consistent with this Constitution and neither abridge, enlarge nor modify the substantive rights of any litigant, nor affect the right of the General Assembly to determine the jurisdiction of any court or Justice of the peace, nor suspend nor alter any statute of limitation or repose.

Pursuant to this constitutional authority, our Supreme Court has adopted The Rules of Professional Conduct *fn3 and Rules of Disciplinary Enforcement, *fn4 both of which govern the professional and ethical conduct of attorneys admitted to practice in this Commonwealth. In particular, Pennsylvania Rule of Disciplinary Enforcement 103 *fn5 provides, in pertinent part, as follows:

The Supreme Court declares that it has inherent and exclusive power to supervise the conduct of attorneys who are its officers (which power is reasserted in Section 10(c) of Article V of the Constitution of Pennsylvania) ... .

Our Supreme Court has stated that adherence to the highest ethical standards by attorneys practicing in both the public and private sectors of this Commonwealth is the cornerstone of our legal system. Maunus v. State Ethics Commission, 518 Pa. 592, 544 A.2d 1324 (1988).

In considering the extent to which the conduct of an attorney is governed by the provisions of the Ethics Act, our Supreme Court has held that a township and borough solicitor is neither a "public employee" nor a "public official" within the scope of the Ethics Act. *fn6 Ballou v. State Ethics Commission, 496 Pa. 127, 436 A.2d 186 (1981). *fn7 Our Supreme Court pointed out in Ballou that case law and the statutory language governing the duties of a borough solicitor *fn8 made it clear that a solicitor functioned as a legal advisor to an appointing body. Id. at 133, 436 A.2d at 189. The Supreme Court noted that it would be erroneous to conclude that because a solicitor was compensated by public funds, he was therefore employed by the Commonwealth. Id. Rather, by functioning as a legal advisor to the appointing body, the municipal solicitor closely resembled a consultant who performed professional or advisory services and received a fee or similar compensation for such services. Id. at 133-34, 436 A.2d at 189.

Our Supreme Court further stated in Ballou that, unlike a public employee, a solicitor had no enforceable right to continue in his position for the tenure of his appointment. Id. at 134, 436 A.2d at 189. The Supreme Court pointed out that our cases have held that, as a consequence of the solicitor's confidential relationship with the appointing body which he serves, the solicitor is removable at the will of the appointing power. Id. Even if appointed for a fixed term and salary and subsequently terminated, the solicitor has no contractual right to recover any resulting loss in compensation. Id.

Our Supreme Court also stated in Ballou that, unlike a public official, the solicitor is responsible only to the appointing body and may act only pursuant to that body's authorization. Id. The solicitor owes no independent duties to the public and exercises none of the powers of sovereignty. Id. Our Supreme Court concluded that where an attorney is retained as legal advisor to a municipal client which is itself directly accountable to the public and must authorize his actions, the exclusion of the attorney from the scope of the Ethics Act is appropriate because the attorney is neither a "public employee" nor a "public official." Id. at 135, 436 A.2d at 190.

We point out that the present case is distinguishable from Maunus v. State Ethics Commission, 518 Pa. 592, 544 A.2d 1324 (1988). In Maunus, two attorneys who had allegedly failed to comply with the financial disclosure requirements of the Ethics Act were employed by the Pennsylvania Liquor Control Board and had conceded that they were "public employees" within the meaning of the Ethics Act. Our Supreme Court concluded that, as salaried employees of a state agency, these two individuals were not entitled to an exemption from the disclosure requirements of the Ethics Act simply because they were attorneys. Maunus, 518 Pa. at 599, 544 A.2d at 1327. The conduct of these two attorneys was governed by the provisions of the Ethics Act to the same extent as any other public employees. Id. at 597-98, 544 A.2d at 1326-27.

As clearly stated in Ballou, a borough solicitor, unlike the two attorneys in Maunus, is not a "public employee" within the scope of the Ethics Act. In accordance with our Supreme Court's Conclusions in Ballou and Maunus, this court recently pointed out that Ballou is distinguishable from Maunus because the position of a municipal solicitor is different from the position of a salaried attorney who is employed by the government or a public agency. P.J.S. v. Pennsylvania State Ethics Commission, 669 A.2d 1105 (Pa. Commw. 1996).

In P.J.S., this court noted that, because the Maunus decision held that section 4 of the Ethics Act required financial disclosure by salaried employees of the Commonwealth, and because that decision declined to overrule Ballou which exempts municipal solicitors from such disclosure requirements, the General Assembly chose to amend the Ethics Act in 1989 to specifically require such financial disclosure by solicitors. Id. at 1112. This court further noted that at the same time as the General Assembly amended the financial disclosure requirements of the Ethics Act, it also amended section 2 of the Ethics Act to include a definition of the term "solicitor." *fn9 Id. However, this court pointed out in P.J.S. that the General Assembly did not add or include "solicitors" in its definitions of "public employees" or "public officials" whose conduct is regulated by section 3 of the Ethics Act. Id. As such, this court stated that it could not conclude that it was clearly the General Assembly's intent to include "solicitors," who are not normally full-time public employees, but more like consultants, among the class of persons required to comply with the regulations regarding ethical and professional conduct under section 3 of the Ethics Act. Id.

In the present case, the Commission averred in its complaint that at the January 6, 1992 meeting of the Borough Council, CPC was appointed borough solicitor. Original Record, complaint, p. 4. The Commission included in its complaint excerpts of the invoices which were submitted by CPC to the borough for services rendered. Id. at 15-18. The Commission also averred in its complaint that CPC was required to provide the borough with an itemized accounting of the hours that he spent on any of his solicitor-related projects. Id. at 23.

Based upon our review of the pleadings in this case and our analysis of Ballou, Maunus and P.J.S., we conclude that CPC's conduct is not governed by the provisions of the Ethics Act and that he is not subject to the jurisdiction of the Commission. *fn10 Accordingly, the order of the Commission is reversed with respect to its denial of CPC's preliminary objection to the Commission's complaint. *fn11

JAMES R. KELLEY, Judge

ORDER

NOW, this 22nd day of July, 1997, it is hereby ordered:

1. The order of the State Ethics Commission, dated July 3, 1996, at No. 95-034-C2, is reversed with respect to its denial of a motion in the form of a preliminary objection filed by C.P.C., Esquire to a complaint filed by the Investigative Division of the Commission.

2. This case is remanded to the State Ethics Commission with instructions that the Commission dismiss the complaint filed against C.P.C., Esquire in accordance with the foregoing opinion.

3. In accordance with this court's order dated October 18, 1996, the record in this case shall remain sealed from public inspection.

Jurisdiction relinquished.

JAMES R. KELLEY, Judge


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