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Filippi v. City of Erie Pennsylvania

March 6, 2009

RICHARD FILIPPI, APPELLANT
v.
THE CITY OF ERIE PENNSYLVANIA, UNITED NATIONAL GROUP, DIAMOND STATE INSURANCE COMPANY, INSURANCE MANAGEMENT COMPANY, AND SWETT & CRAWFORD



The opinion of the court was delivered by: Senior Judge Flaherty

Submitted: January 27, 2009

BEFORE: HONORABLE DORIS A. SMITH-RIBNER, Judge, HONORABLE JOHNNY J. BUTLER, Judge, HONORABLE JIM FLAHERTY, Senior Judge.

OPINION

Richard Filippi (Filippi) appeals, pro se, from an order of the Court of Common Pleas of Erie County (trial court) which granted the preliminary objections of the City of Erie Pennsylvania (City), the United National Group (Group), Diamond State Insurance Company (Diamond), Insurance Management Company (Insurance) and Swett & Crawford (S&C)(collectively, Appellees) and dismissed Filippi's case against each Appellee, as Group, Diamond, Insurance and S&C do not owe a legal duty to Filippi because the City does not have a legal duty to obtain insurance coverage for an elected official who is accused of committing a crime and as Filippi failed to state a claim for unjust enrichment against the City. We affirm.

In 2002, as the Mayor of the City, Filippi was attempting to redevelop an unused industrial parcel previously operated by International Paper (Site). Filippi entered into negotiations with several possible developers. In March of 2003, Aiko Acquisitions, LLC (Aiko) formed a real estate development company for the purpose of acquiring, renovating and leasing for profit, blighted residential and commercial properties in the City, as well as Erie County. Filippi invested in Aiko with a non-recourse loan of $8,000.00 and acquired a 5% interest. Filippi did not disclose the investment in Aiko on his financial disclosure statement as he felt it was not required under the Public Official and Employee Ethics Act (Act), 65 Pa. C.S. §§1101-1113. Aiko purchased four properties in the vicinity of the Site.

In 2004, the negotiations with one of the prospective developers for the Site broke down. Filippi was then accused of conducting the negotiations and using the powers of his office not for the public good but rather for his own personal gain. Several members of City council actively sought and promoted the institution of criminal proceedings against Filippi. In December of 2004, the Attorney General presented facts to a grand jury which indicted Filippi on several felony and misdemeanor charges, including conflict of interest, accepting improper influence, criminal conspiracy, financial interest statement violations, unsworn falsification to authorities and speculating or wagering on official action. The Commonwealth alleged that Filippi was using confidential information acquired as a result of his negotiations with prospective developers of the Site to further his own private interests, that the actions directed by Filippi to redevelop the vacant property were performed not for the public benefit or the lawful discharge of his official duties, but rather were done in furtherance of his private pecuniary gain.

In 2006, during Filippi's two-week trial, Filippi established that there was never any confidential information regarding the development of the Site and the negotiations with developers. Further, the Commonwealth's witness was determined to be not credible. Thus, Filippi and two co-defendants were acquitted on all criminal charges. Filippi spent approximately $370,000.00 of his own money defending the actions that he allegedly undertook as Mayor of the City.

On December 7, 2006, Filippi filed an action against the City, its insurance carriers and agents. On March 19, 2007, Filippi filed his complaint against the City, and such complaint was amended on April 26, 2007. Thereafter, each Appellee filed preliminary objections to the original and amended complaint. After oral argument, the trial court granted all of the preliminary objections of Appellees by order dated August 6, 2007. The trial court determined that Filippi's "successful defense against a felony criminal indictment did not confer any legal, financial or other benefit unto the City of Erie" and therefore, "[a]s a matter of law, [Filippi] has failed to state a claim for unjust enrichment against the City of Erie." Trial Court Order, August 6, 2007, at 2. On September 5, 2007, Filippi filed a notice of appeal and a statement of matters complained of on appeal pursuant to Pa. R.A.P. 1925(b). Filippi has limited his appeal to his claim against the City.

Filippi contends that the trial court erred in holding, as a matter of law and prior to any discovery being conducted, that he has not stated a legally recognizable claim of unjust enrichment.

In ruling on preliminary objections, this Court must accept as true all well-pleaded material allegations in the complaint, as well as all inferences which may reasonably be deduced therefrom. Hawks by Hawks v. Livermore, 629 A.2d 270 (Pa. Cmwlth. 1993). This court need not accept as true conclusions of law, unwarranted inferences from facts, argumentative allegations, or expressions of opinion. Id. In order to sustain preliminary objections, it must appear with certainty that the law will not permit recovery and any doubt should be resolved by a refusal to sustain them. Id.

Filippi contends that he has pled the requisite facts to establish that his claim for restitution under unjust enrichment received by the City has merit. Filippi states that he has conferred many benefits upon the City, that at all times he was acting within his official duties as Mayor of the City in working to redevelop the Site. Filippi further states that he has endured tremendous personal economic loss in having to defend his actions from alleged and ultimately unproven criminal charges that pertained to the misuse of his public office and the Site redevelopment. The City has not reimbursed Filippi for his legal expenses in defending his actions as Mayor and for executing his official duties in good faith for the public good. Filippi believes this is a question for a jury and should not have been dismissed.

Count one of the amended complaint states that the City owes Filippi a duty of restitution under the equitable principle of "unjust enrichment." Unjust enrichment is shown when "benefits conferred on defendant by plaintiff, appreciation of such benefits by defendant, and acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value." Wiernik v. PHH U.S. Mortgage Corp., 736 A.2d 616, 622 (Pa. Super. 1999), appeal denied, 561 Pa. 700, 751 A.2d 193 (2000). The application of this doctrine depends on the particular factual circumstances of the case at issue. In determining if the doctrine applies, our focus is not on the intention of the parties, but rather on whether the defendant has been unjustly enriched. State Farm Mutual Automobile Insurance Company v. Jim Bowe & Sons, Inc., 539 A.2d 391, 393 (Pa. Super. 1988), citing Myers-Macomber Engineers v. M.L.W. Construction Corp. & HNC Mortgage and Realty Investors, 414 A.2d 357 (Pa. Super. 1979).

Filippi relies on Shenck v. K.E. David, 666 A.2d 327 (Pa. Super. 1995), to support his case. In Shenck, K.E. David, LTD., and Kenneth David (appellants) appealed from an entry of judgment following a non-jury verdict in favor of Peter F. Shenck and Elizabeth K. Ainslie, of the law firm Ainslie & Schenck (appellees). Appellees represented appellants in a federal criminal antitrust trial, at which appellants were acquitted of all charges. Subsequently, appellees represented appellants in civil antitrust proceedings brought by various parties, one of which was the Commonwealth of Pennsylvania. The Commonwealth sought damages in excess of $225,000.00. Appellees negotiated a settlement agreement whereby appellants were obligated to pay only $82,000.00 to the Commonwealth. The settlement included an agreement by the Commonwealth that it would attempt to collect $32,000.00 of the settlement amount from another settling defendant. Appellants then paid $40,000.00 to the Commonwealth and their insurance company paid another $10,000.00, leaving only the $32,000.00 outstanding. However, the other settling defendant died and his company became insolvent. Thereafter, the Commonwealth notified appellees that appellants were responsible for the debt. Without notifying appellants, appellees advanced the $32,000.00 out of the law firm funds. Appellants then refused to repay appellees, resulting in litigation.

The trial court found in favor of appellees on the basis that appellants had been unjustly enriched. Appellants appealed to the Superior Court, claiming that the trial court erred in applying the doctrine of unjust enrichment to the facts of this case. The Superior Court affirmed the trial court and determined that the appellees paid the debt of appellants with the reasonable expectation that it would be reimbursed and with the belief that it had the implied authority to pay such debt on behalf of appellants. The Superior Court stated that "it ...


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