The opinion of the court was delivered by: REED
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND VERDICT
In an Order dated July 14, 1998, this Court granted summary judgment in favor of plaintiff Allianz Insurance Company ("Allianz") as to liability on its claim that defendants Pennsylvania Orthopedic Associates, Inc. ("POA") and Anthony J. Balsamo, M.D. ("Balsamo") defaulted on a lease agreement for a 1992 Mercedes Benz 300SE sedan.
(Document No. 39). A bench trial was held before this Court on August 31, 1998 on the issue of damages only.
Having conducted a non-jury civil trial on the issue of damages at which counsel for all parties participated, and based upon the pleadings, the evidence and testimony presented at trial, and the arguments of counsel, I make the following findings of fact and conclusions of law:
1. POA and Balsamo entered into a Motor Vehicle Lease Agreement (Ex. P-1) with Mercedes Benz Credit Corporation ("MBCC") on May 20, 1992 for a 1992 Mercedes Benz 300SE sedan. The lease term was thirty-six months, from May 20, 1992 to May 20, 1995.
2. On April 10, 1994, Balsamo's son was involved in an accident in the vehicle which severely damaged the vehicle and injured his son.
3. The defendants stopped paying lease payments after the accident in April of 1994. The defendants were required to make thirty-six monthly payments under the lease. (Ex. P-1 at P 2).
4. In a letter dated April 18, 1994, the defendants sent notice to MBCC that the car had been damaged in an accident. (Ex. D-2).
5. Balsamo and his wife brought suit on behalf of their son against Mercedes Benz of North America ("MBNA"), claiming that the driver's side airbag did not deploy during the accident of April 10, 1994. During discovery in that case, the vehicle was dismantled for testing. Experts on behalf of the Balsamos and MBNA conducted testing on the vehicle, which entailed dismantling of various parts of the interior of the car. It is unclear which if any of these parts were completely and permanently removed from the vehicle.
6. Ferdinand Gonzales was qualified as an expert in auto appraising at trial, and finding him a credible witness, I credit his testimony. On July 18 and July 19, 1995, Gonzales was retained by the defendants to inspect the car and dismantle it. Gonzales testified that the car was a total loss as of the date of the accident, even before the car was dismantled for testing. Gonzales testified that the salvage value of the car was reduced by the dismantling because of the high replacement value of the parts that were dismantled, but he was not able to testify as to the salvage value of these parts nor quantify the amount that the salvage value of the car was reduced.
7. As the products liability action was proceeding, MBCC brought an action in replevin to recover the vehicle. Sometime after this action was filed, the defendants agreed to return the vehicle to MBCC. I find that the defendants' efforts to initially defend against the replevin action demonstrates that the defendants withheld the vehicle from Allianz for their own personal, albeit legitimate, reasons to further the product liability action against MBNA.
8. The motor vehicle which was the subject of the lease between MBCC, POA, and Balsamo was recovered by MBCC in a severely damaged condition. (Ex. P-33, Stipulation of Uncontested Facts).
9. John Kelly was qualified as an expert in auto appraising at trial, and finding him to be a credible witness, I credit his testimony and his report. When MBCC recovered the car after the replevin action, it retained Kelly to inspect the car. Kelly inspected the car in February of 1996. Kelly reported to MBCC in his final status report that the car was a "obvious total loss." (Ex. P-7). Kelly concluded that the car was a total loss from accident damage, and he did not attempt to quantify the value of the dismantled parts.
10. MBCC sent to the defendants and the defendants received a notice of termination of the lease dated August 11, 1995. (Ex. P-11). The notice informed the defendants that the car was going to be sold, and that if the sale of the vehicle was not sufficient to cover the lease balance and any other amounts owed to MBCC, the defendants were obligated to pay the remaining balance. In order to ascertain the current balance owed, the defendants were informed they would have to call MBCC. (Ex. P-11).
11. Allianz paid $ 62,752.69 to MBCC for the losses and costs associated with the vehicle pursuant to an insurance policy Allianz had issued to MBCC. (Ex. P-33, Stipulation of Uncontested Facts).
12. The repossessed vehicle was disposed of at the Manheim Auction for $ 13,250.00 as set forth in the payoff breakdown by MBCC. (Ex. P-33, Stipulation of Uncontested Facts). MBCC paid this salvage recovery to Allianz. (Ex. P-33, Stipulation of Uncontested Facts). Thus, the net payment by Allianz was $ 49,502.69. (Ex. P-33, Stipulation of Uncontested Facts).
13. David Ginsberg, Esq., was originally retained as counsel by Allianz to handle this case, and he subsequently retained local counsel, who conducted this litigation and tried the case before this Court. David Ginsberg testified at the trial, and finding him a credible witness, I credit his testimony. Ginsberg has an arrangement with Allianz whereby he will receive a contingency fee of one third of any amounts recovered by Allianz. Ginsberg must compensate any local counsel he retains to assist in his case on behalf of Allianz.
14. Ginsberg sent a letter dated October 16, 1996 to counsel for defendants proposing that if the defendants would settle the case, Allianz would waive attorney fees and interest owed under the contract. (Ex. P-18). Ginsberg received no response from the defendants to this offer. A payoff breakdown was sent to the defendants with the letter. (Ex. P-8). This ...