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Underground Storage Tank Indemnification Fund v. Morris & Clemm, PC

Commonwealth Court of Pennsylvania

December 30, 2014

Underground Storage Tank Indemnification Fund, Petitioner
v.
Morris & Clemm, PC, Robert F. Morris, Esquire and Patrick J. Stanley, Respondents; Morris and Clemm, P.C., Petitioner
v.
Underground Storage Tank Indemnification Fund and Pennsylvania Insurance Department Bureau of Special Funds, Respondent

Submitted August 22, 2014

Theresa Young, Philadelphia, for petitioner.

Seth D. Wilson, Plymouth Meeting, for respondents.

BEFORE: HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE P. KEVIN BROBSON, Judge.

OPINION

Page 270

P. KEVIN BROBSON, Judge

Morris & Clemm, P.C. (Law Firm), Robert F. Morris (Morris), and Patrick J. Stanley (Stanley) (collectively, Moving Parties), in an action in this Court's original jurisdiction, move for summary judgment against the Underground Storage Tank Indemnification Fund (USTIF). For the reasons discussed below, the motion is denied.

The factual background of this case stretches back more than a decade. In 1998, Stanley installed new underground storage tanks at his place of business, the Penndel Service Center. After installation, the soil surrounding the tank was tested for contaminants. During this testing, one of the tanks was damaged, causing gasoline to leak into the soil. Corrective action, including investigation and remediation, was required as a result of the leak. USTIF, acting in accordance with its statutory obligation, paid for corrective action costs totaling $807,000, and it had a subrogation interest in recovering that amount.[1]

On July 6, 2001, Stanley filed an action in the Court of Common Pleas of Bucks County against Environmental Consulting, Inc.; Northeast Regional Probing, Inc.; and Monridge Construction, Inc. for damages arising from the gasoline leak (Common Pleas Action). Stanley then entered into a contingent fee arrangement with Morris of Law Firm to represent him in the suit. This contingent fee agreement provided that Morris and Law Firm would receive one-third of " whatever sum is paid to [Stanley] or on [his] behalf as a result of this claim, either by way of settlement or verdict." (Moving Parties' Mot. for Summ. J., Ex. C.) USTIF retained its own counsel, Rawel and Henderson, LLP (R& H), and on April 2, 2003, petitioned to intervene in the Common Pleas Action in order to protect its subrogation interest. Stanley and Morris initially opposed USTIF's intervention on the basis that they were adequately protecting USTIF's interests, but they later consented to the intervention.

The parties eventually settled the Common Pleas Action for $752,000. It is from this settlement that the instant case arises. The settlement allocated proceeds between Stanley and USTIF, with Stanley receiving $250,000 and USTIF receiving $502,000. The settlement funds were sent to Morris for distribution. Morris distributed the funds to Stanley, withholding one-third of Stanley's portion (approximately $83,000) in accordance with the contingent fee agreement. Morris also distributed USTIF's funds, after also withholding one-third of USTIF's settlement proceeds (approximately $167,333-the disputed funds). Morris informed USTIF that he had withheld one-third of the funds in payment of his contingent fee based upon the authority of Shearer v. Moore, 277 Pa.Super. 70, 419 A.2d 665 (Pa. Super. 1980). USTIF informed Morris that he had no authority under the terms of the settlement agreement to withhold the disputed funds and that his reliance on Shearer was misplaced.

Shortly thereafter Law Firm commenced an action in the Court of Common Pleas of Montgomery County to compel USTIF to pay the $167,333 as its " pro-rata share of the fee for [Law Firm's] services

Page 271

in recovering the [settlement] funds." Law Firm's complaint contained three counts-equity, an attorney charging lien, and a declaratory judgment action, each asking that the common pleas court recognize Law Firm's right to the disputed funds and allow Law Firm to disburse the disputed funds to itself.[2]

USTIF commenced a separate action in this Court's original jurisdiction against Law Firm, Morris, and Stanley, seeking to recover the remaining portion of its settlement proceeds- i.e., the same $167,333 that was subject to the action in the Court of Common Pleas of Montgomery County. USTIF's complaint also contained three counts-conversion, unjust enrichment, and conspiracy, each asking this Court to enter judgment ...


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