The opinion of the court was delivered by: Judge Caputo
Presently before the Court is Defendants Kevin and Juanita Veneski's Motion to Dismiss, or, alternatively, Motion for Summary Judgment, as to Plaintiff Legal Asset Funding, LLC's Complaint. For the reasons set forth below, the Court will GRANT in part and DENY in part Defendants' Motion for Summary Judgment. The Court has jurisdiction over this matter based on diversity of citizenship. 28 U.S.C. § 1332(a).
Plaintiff Legal Asset Funding, LLC is a limited liability company existing under the laws of, and with its principal place of business in, the State of New Jersey. (Doc. 1 ¶ 1). Plaintiff is engaged primarily in the business of purchasing legal receivables, such as anticipated legal fees in pending cases. Id.
In late 1999, Plaintiff was contacted by Norman Leonard Cousins ("Cousins"), a New York attorney, about the possibility of Plaintiff purchasing a large legal contingency fee Cousins anticipated receiving in a medical malpractice case in which he represented Kevin and Juanita Veneski, the Defendants in the case at bar.*fn1 (Doc. 1 ¶ 11). Cousins represented that he was entitled to a fee of one-third of Defendants' recovery. (Doc. 1 ¶ 14). Such a representation would have been false as New York places a statutory cap on contingency fees awarded in medical malpractice cases, absent court approval of an application for additur of counsel fees. See N.Y. JUD. L. 474-a (McKinney Supp. 2003).
After initially rejecting Cousins' request, on January 10, 2000, Plaintiff entered into a written contract with Cousins to purchase through assignment a portion of Cousins' anticipated fees and reimbursement of expenses in the Veneskis' case, in consideration for Plaintiff's advancing $125,000 to Cousins. (Doc. 1 ¶ 16). The contract did not contain a representation by Cousins that he was entitled to a one-third fee. (Doc. 1-3 Ex. 4).
The Veneski case proceeded to trial and, on February 2, 2000, a jury awarded Kevin Veneski damages in the amount of $4,215,300. (Doc. 5 ¶ 10). Juanita Veneski was awarded no damages. (Doc. 5 ¶ 11). After the verdict, Cousins feared that his law practice would not be able to economically survive an appeal, and so offered Plaintiff the opportunity to purchase an additional portion of his contingency fee. (Doc. 1 ¶ 18).
Plaintiff responded that it was unsure whether the verdict would be sustained on appeal and whether Cousins' legal fee would cover an additional payment. (Doc. 1 ¶ 19). In response to Plaintiff's hesitance, Cousins provided Plaintiff with an affidavit executed by Kevin Veneski on February 26, 2000 to support a potential application for an additur to Cousins' contingency fee. (Doc. 19-2 ¶ 2). In the affidavit (hereinafter referred to as the "additur affidavit"), Kevin Veneski stated that, in the event that Cousins was not given a one-third contingency fee by the court, he would nevertheless pay the difference in the form of a gift or gratuity. (Doc. 1-3 Ex. 5). Along with the additur affidavit, Cousins himself represented to Plaintiff that he was entitled to a one-third contingency fee, which he allegedly insisted would easily cover another purchase by Plaintiff. (Doc. 19-2 Ex. C; Doc. 1 ¶ 20). Thereafter, on February 28, 2000, Plaintiff and Cousins entered into an agreement providing that Plaintiff would advance an additional $125,000 to Cousins in exchange for an additional portion of Cousins' contingency fee. (Doc. 1 ¶ 25). In the written agreement, Cousins represented that, of the $4,215,300 verdict, he was entitled to at least $450,000 in fees, but that he had the additur affidavit in which Kevin Veneski affirmed that Cousins was entitled to one-third of the recovery. (Doc. 19-3 Ex. C ¶ 1(a)).
Plaintiff alleges that the additur affidavit was only created to induce it to make an additional purchase, stating that, at the time the additur affidavit was executed and provided to Plaintiff, an application for additur of counsel fees was "only a hypothetical possibility because of the pending appeal." (Doc. 1 ¶ 22). Plaintiff notes that no additur application was ever filed. Id. Plaintiff avers that, but for the additur affidavit and Cousins' representations, it would not have paid additional funds to Cousins. (Doc. 1 ¶ 26).
On July 5, 2001, the Appellate Division of the New York State Supreme Court vacated the jury verdict and remanded the Veneski case for retrial. (Doc. 5 ¶ 16). Afterwards, Cousins again sought money from Plaintiff in exchange for giving them an additional portion of his potential contingency fee. (Doc. 1 ¶ 30). Plaintiff replied that it would not enter into another purchase agreement unless Cousins posted additional security. (Doc. 1 ¶ 31). Cousins agreed and posted such additional security in the form of assigning the Litigation Financing Agreement he had entered into with Defendants to Plaintiff. (Doc. 5 ¶ 21). Plaintiff also required that Defendants simultaneously enter into a consent agreement providing for this assignment and to promise that they would execute any and all documents to the benefit of Plaintiff to effectuate the assignment. Id. As another condition of advancing Cousins additional funds, Plaintiff proposed that Defendants guarantee all of Cousins' debt to Plaintiff. (Doc. 5 ¶ 19). Cousins refused to allow Defendants to do so. (Doc. 5 ¶ 20). Nevertheless, Plaintiff and Cousins then entered into a third purchase agreement on November 10, 2001 providing that Plaintiff would advance Cousins another $100,000 in exchange for an additional assignment of Cousins' legal fee in the Veneski case. (Doc. 1-4).
The Veneski case was retried in November of 2002. (Doc. 1 ¶ 36). After several days of trial, the case was settled for $3,369,472.*fn2 Id. At the time of the settlement, Juanita Veneski had discontinued her cause of action for the loss of her husband's services and waived any right to share in the proceeds of his recovery. (Doc. 5 ¶ 23).
Despite the large settlement, Cousins applied to the court only for the statutorily prescribed fee of $212,500 and, as previously mentioned, did not file an application for additur. (Doc. 1 ¶ 66). Plaintiff alleges that there is an understanding between Cousins and Defendants whereby Cousins accepted a substantially smaller "fee" for the representation and that Defendants have made or will make a "gift" to Cousins so that Cousins receives one-third of Kevin Veneski's recovery. (Doc. 1 ¶ 67). This, Plaintiff avers, was done so as to deprive it of its full share of the legal fees it had purchased. (Doc. 1 ¶ 68).
To date, Plaintiff has received only $217,490.17, which Cousins represented as the monies owed to Plaintiff pursuant to the assignment of the Litigation Financing Agreement between Cousins and Defendants. (Doc. 1 ¶ 42). Plaintiff claims that it is still owed $884,166.66, comprising its $250,000 investment from the first two purchases plus the $666,666.66 it was promised by Cousins.*fn3 (Doc. 1 ¶ 71).
On May 27, 2004, Plaintiff commenced this action by filing a Complaint in this Court. (Doc. 1).*fn4 The Complaint contains four claims: (1) promissory estoppel and imposition of a constructive trust (Count I); (2) fraud and/or misrepresentation (Count II); (3) unjust enrichment and quantum meruit (Count III); and (4) an action for relief from a fraudulent conveyance under Pennsylvania's Uniform Fraudulent Transfers Act ("PUFTA"), 12 PA. CONS. STAT. § 5101, et seq. (Doc. 1 ¶¶ 52-74). On June 29, 2004, Defendants filed a Motion to Dismiss the Complaint ...