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[U] Sittig, Cortese & Wratcher, LLC v. New York Life Investment Management LLC

Superior Court of Pennsylvania

February 28, 2014

SITTIG, CORTESE & WRATCHER, LLC, Appellee
v.
NEW YORK LIFE INVESTMENT MANAGEMENT LLC, Appellant

NON-PRECEDENTIAL DECISION

Appeal from the Judgment entered on November 8, 2012 in the Court of Common Pleas of Allegheny County, Civil Division, No. GD 11-017879

BEFORE: PANELLA, OLSON and MUSMANNO, JJ.

MEMORANDUM

MUSMANNO, J.

New York Life Investment Management LLC ("New York Life") appeals from the Judgment entered in favor of Sittig, Cortese & Wratcher, LLC ("SCW"). We affirm.

In 2008, SCW, a law firm specializing in real estate development, was retained by Dominion Capital Management, LLC ("Dominion"), the developer of a distressed shopping center, to provide representation in connection with numerous legal claims resulting from construction defects and sub-surface problems at the shopping center. N.T., 5/31/12, at 36-40. Specifically, SCW was retained to "stave off or defend any claims that were out there in order to preserve the value of [the shopping center]." Id. at 40. Early in the representation, it became clear to SCW that Dominion had no money, and that New York Life, which had an equity interest in the shopping center, was handling the approval and disbursement of payments for expenses relating to the shopping center, including utility and tax bills, in order to preserve the value of its collateral in the property. Id. at 49-59, 178-79. Throughout the course of SCW's representation, which lasted approximately one year, employees of New York Life, including Kevin Smith ("Smith"), whose emails identified him as New York Life's Managing Director and in-house counsel, "called the shots, " strategized and directed SCW's defense of the claims. Id. at 81, 102-03.

New York Life also approved and directed the payment, via three installments, of legal fee invoices submitted by SCW to Dominion totaling $113, 698. Id. at 60-65, 69. Dominion forwarded SCW's legal fee invoices to Smith, who approved the payment of the invoices, and directed another New York Life employee to make an initial $30, 000 installment to SCW. Id. at 60-61, 63-64. The first installment payment of $30, 000 was thereafter wired to SCW. Id. at 71. The wire transaction records referenced the source of the funds as New York Life. Id. at 71-72. When the second installment payment was not received, SCW threatened to withhold its services, and to withdraw from the representation. Id. at 72-73. Thereafter, New York Life approved an additional payment of $45, 000, and directed that the funds be wired to SCW. Id. at 74-75. The wire transaction records for the second installment payment to SCW referenced the source of the funds as New York Life. Id. at 76-77. New York Life thereafter approved the third installment payment to SCW of $38, 698, and directed the funds to be wired to SCW. Id. at 78-79. The wire transaction records for the third installment payment to SCW referenced the source of the funds as New York Life. Id. SCW continued to defend the claims, but New York Life, without any notice or directive to cease working, refused to pay SCW's subsequent legal fee invoices, leaving an unpaid balance of $71, 164. Id. at 209, 322; N.T., 5/31/12, at 140-41, 152-53, 180.

SCW brought suit against New York Life seeking to recover the unpaid balance due for its legal services, asserting in its Complaint claims based on third-party beneficiary and unjust enrichment theories. Following a non-jury trial, the trial court found in favor of New York Life on SCW's third-party beneficiary claim, but found for SCW on its unjust enrichment claim and on a promissory estoppel/detrimental reliance claim that SCW first raised at trial.

New York Life filed a Motion for Post-Trial Relief, which the trial court denied. On November 8, 2012, the trial court entered Judgment in favor of SCW in the amount of $71, 164, plus interest. New York Life filed a timely Notice of Appeal.

On appeal, New York Life raises the following questions for our review:

1. Whether the trial court erred in disregarding the corporate separateness between [] New York Life [] and its subsidiary[, NYLIM-MM, LLC ("NYLIM-MM")] in which [New York Life] held less than one [] percent?
2. Whether the trial court erred in finding that an adverse third party can be unjustly enriched by work performed by an attorney on behalf of his client in light of the special relationship that exists between attorney and client?
3. Whether the trial court erred in allowing SCW to pursue at trial a detrimental reliance/promissory estoppel ...

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