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County of Beaver v. Sainovich

Commonwealth Court of Pennsylvania

July 16, 2014

County of Beaver, by and through the Beaver County Board of Commissioners and the Beaver County Controllers Office
v.
Myron R. Sainovich, an individual and Sainovich, Santicola & Steele, a Professional Corporation (formerly known as Sainovich & Santicola, P.C.), Appellants

Argued April 23, 2014.

Page 422

Appealed from No. 11864-2011. Common Pleas Court of the County of Beaver. Bozza, J.

Charles W. Garbett, New Castle, for appellants.

Albert A. Torrence, Beaver, for appellee Beaver County Board of Commissioners.

BEFORE: HONORABLE DAN PELLEGRINI, President Judge, HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE BONNIE BRIGANCE LEADBETTER, Judge, HONORABLE RENÉ E COHN JUBELIRER, Judge, HONORABLE P. KEVIN BROBSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge. OPINION bye JUDGE COHN JUBELIRER. DISSENTING OPINION BY JUDGE McGINLEY.

OPINION

Page 423

RENÉ E COHN JUBELIRER, Judge

The events leading to this monetary dispute between the County of Beaver (County) and Myron R. Sainovich began in 2006 when the Beaver County Board of Commissioners (County Commissioners) appointed Sainovich, pursuant to Section 901 of The County Code,[1] as its solicitor for a term beginning January 1, 2006, for which he was paid a fixed annual salary. The County Commissioners also appointed Sainovich to serve as an interest arbitrator on its behalf commencing January 1, 2006 for additional compensation. When Sainovich's duties as interest arbitrator ended on July 19, 2006, he and his law firm, Sainovich, Santicola & Steele, a Professional Corporation (formerly known as Sainovich & Santicola, P.C.), billed the County for his services as interest arbitrator at an hourly rate and the County paid him $44,050.00. In 2011, the County determined that the $44,050.00 payment to Sainovich violated The County Code; the County, by and through the County Commissioners and The Beaver County Controllers Office (County Controller), therefore, filed a civil action against Sainovich seeking to recover the $44,050.00 payment. Once the pleadings closed, Sainovich and the County filed cross-motions for summary judgment.[2] By Order entered August 27, 2013, the Court of Common Pleas of Beaver County (trial court) granted the County's motion for summary judgment and denied Sainovich's motion. The crux of the issue on appeal here is whether the work Sainovich performed as the interest arbitrator constituted work as " County Solicitor" such that he could not be compensated for that work over and above the fixed annual salary he received as the County's solicitor.

I. THE COUNTY CODE

Section 901 of The County Code, 16 P.S. § 901, authorizes a county's commissioners to " appoint a county solicitor, who shall be an attorney-at-law admitted to practice in the courts of this Commonwealth." Id. Section 1605 of The County Code, 16 P.S. § 1605, mandates that an appointed county officer, which includes a county solicitor, be paid a fixed and specific salary for his or her services. Id.; Snyder v. Naef, 36 Pa.Cmwlth. 39, 389 A.2d 212, 214 (Pa. Cmwlth. 1978). The salary is fixed by a salary board, which consists of the county commissioners and the county controller. Sections 1620 and 1622 of The County Code, 16 P.S. § § 1620, 1622; Snyder, 389 A.2d at 214. The county solicitor is required, " before entering upon the duties of his office, [to] file with the county commissioners an agreement to pay all fees, attorney's fees, and commissions received from every source as county solicitor into the county treasury." 16 P.S. § 901. The duties of a county solicitor are set forth in Section 902 of The County Code which provides:

He shall commence and prosecute all suits brought, or to be brought, by the county, wherein or whereby any rights, privileges, properties, claims or demands of the county are involved, as well as defend all actions or suits brought against the county, and shall perform all duties now enjoined by law upon county solicitors, and shall do all and every professional act and render

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legal advice incident to the office which may be required of him by the commissioners.

16 P.S. § 902.

II. FACTS

Sainovich served as the County's solicitor from January 1, 2006 until June 23, 2011. (Trial Ct. Op. at 3.) During Sainovich's tenure as the County's solicitor, the County also retained outside counsel.[3] In 2003, the County had retained the law firm of Thorp, Reed & Armstrong (Thorp Reed) to act as the County's legal counsel in various legal matters. (Trial Ct. Op. at 2.) In 2005, in an attempt to save money, the County Commissioners began discussing the possibility of outsourcing some of the operations at the County's jail. (Trial Ct. Op. at 2-3.) The County engaged Thorp Reed to provide legal advice with respect to the possibility of outsourcing this work. During this time, the collective bargaining agreement between the County and the Union representing the corrections officers employed at the County's jail was about to expire. (Deposition of Joseph Friedman, Esquire at 16, R. Item 40.) Consequently, the County and the Union entered into negotiations; however, the parties could not agree on the terms of a new agreement. (Friedman's Dep. at 16.) Therefore, the dispute regarding the terms of the new agreement proceeded to interest arbitration. (Friedman's Dep. at 16.) During the interest arbitration, the County was represented by Attorney Joseph Friedman of Thorp Reed. (Trial Ct. Op. at 3.) The interest arbitration was heard by a panel of three arbitrators. (Friedman's Dep. at 21-22.) Thus, the County was required to name one person to represent the County's interests during the arbitration proceedings. (Friedman's Dep. at 21-22.) Attorney Friedman recommended that the County appoint Sainovich as its interest arbitrator. (Friedman's Dep. at 22.)

On July 13, 2006, the County Commissioners adopted a resolution appointing Sainovich as the County's " 'professional legal counsel for the position of Arbitrator for Beaver County'" commencing January 1, 2006. (Trial Ct. Op. at 3 (quoting Complaint ¶ ¶ 9-10, Exs. 5 and 6).) Sainovich's duties in this capacity included serving as the arbitrator representing the County's interests on the panel of three arbitrators hearing the interest arbitration between the County and the Union representing the corrections officers. (Complaint ¶ ¶ 11, 13.) With respect to Sainovich's compensation for this position, the resolution referenced a fee agreement, a copy of which was to be attached to the resolution.[4] (Trial Ct. Op. at 3.)

While he was serving as the County's interest arbitrator, Sainovich worked with Attorney Friedman. (Trial Ct. Op. at 3.) It was difficult for Attorney Friedman to discern over the course of his working relationship with Sainovich when Sainovich was acting as the County's solicitor and when he was acting as the County's interest arbitrator; however, it was apparent to Attorney Friedman that Sainovich participated in planning legal strategy and otherwise representing the County's interests. (Trial Ct. Op. at 3-4.) Sainovich consulted with Attorney Friedman as to how much Sainovich should bill the County for his

Page 425

services as the interest arbitrator. (Trial Ct. Op. at 4.) Sainovich and Attorney Friedman agreed that Sainovich should charge the same hourly rate that Attorney Friedman was charging, which was $250.00 per hour. (Trial Ct. Op. at 4.)

Sainovich's services as interest arbitrator ended on July 19, 2006. (Trial Ct. Op. at 3.) Thereafter, on July 25, 2006, Sainovich submitted a bill in the amount of $44,050.00 to the County solicitor's office for his services related to the " Beaver County Jail Arbitration." (Trial Ct. Op. at 3; Complaint ¶ 12, Ex. 7.) The County Controller issued a check payable to Sainovich's law firm on August 2, 2006 with the notation that the check was for " Legal Fees/Jail." (Trial Ct. Op. at 3; Complaint, Ex. 8.)

Almost five years later, in March 2011, after conducting an investigation regarding the propriety of additional work proposed for Sainovich, the County Controller questioned the $44,050.00 payment made to Sainovich in 2006 for the work he performed as the interest arbitrator. (Trial Ct. Op. at 4; Complaint ¶ 21.) The County Controller reported the payment to the County Commissioners and requested that they conduct an independent review. (Complaint ¶ 22.) After obtaining an independent legal opinion the County Commissioners believed that, because Sainovich had also received a salary for his services as the County's solicitor during this time period, the additional payment of $44,050.00 violated The County Code; therefore, the Commissioners requested that Sainovich return the $44,050.00. (Trial Ct. Op. at 4; Complaint ¶ 23.) Sainovich refused and the County initiated legal action against Sainovich and his law firm to secure the return of the $44,050.00 payment. (Trial Ct. Op. at 4.)

III. PROCEEDINGS IN TRIAL COURT

After the close of the pleadings, the parties filed cross-motions for summary judgment. In support of his motion for summary judgment, Sainovich argued, inter alia, before the trial court that because his activities as the interest arbitrator did not constitute the practice of law or require any specialized legal skill, these activities were separate and apart from the legal work he performed as a licensed attorney for the County as its solicitor. Therefore, the $44,050.00 payment was not in violation of the law.

In support of its cross-motion, the County argued that the separate payment to Sainovich of $44,050.00 for his services as the interest arbitrator while he was receiving annual compensation from the County as its solicitor violated Sections 901 and 902 of The County Code. The County argued that Sainovich was appointed as " professional legal counsel" in connection with the interest arbitration; therefore, the duties he performed were legal in nature and incidental to his duties as the County's solicitor. The County argued further that, pursuant to The County Code, Sainovich could not be compensated over and above his fixed salary as the County's solicitor.

The parties agreed before the trial court that there were no material facts in dispute. (Trial Ct. Op. at 1, August 27, 2013.) Upon review, the trial court concluded that the $44,050.00 payment to Sainovich for legal services above his fixed annual salary as the County's solicitor was ...


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