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William J. Mansfield, Inc. v. Udren Law Offices, P.C.

United States District Court, E.D. Pennsylvania

August 16, 2019

WILLIAM J. MANSFIELD, INC., Plaintiff,
v.
UDREN LAW OFFICES, P.C., Defendants.

          FINDINGS OF FACT, CONCLUSIONS OF LAW, AND DECISION OF THE COURT

          GENE E.K. PRATTER UNITED STATES DISTRICT JUDGE.

         William J. Mansfield, Inc. provides legal advertising services to foreclosure law firms. Udren Law Offices, P.C. specialized in foreclosure law and procedures and recently wound up its practice. Over nearly 25 years, Mansfield regularly placed advertisements in various publications on behalf of Udren Law. Mansfield alleges that Udren Law owes Mansfield about $138, 000 (plus interest) for these advertising services (invoices for which span the period from January 2018 to August 2018).

         In turn, Udren Law claims that Mansfield employed deceptive billing practices. According to Udren Law, Mansfield's unclean hands prevent it from being paid for such services and instead entitle Udren Law to compensation by way of recovery for Mansfield's hidden “upcharges, ” which were allegedly included in Mansfield's invoices over the years. Udren Law estimates that its damages for the alleged up-charges are about $383, 000.

         The Court conducted a bench trial on April 2, 2019 and later heard oral argument on the parties' proposed findings of fact and conclusions of law. Upon consideration of these proceedings and based upon the evidence presented, the Court concludes, as set forth below, that (1) the record establishes the existence of an enforceable oral contract between Mansfield and Udren Law which Udren Law breached, (2) because Mansfield and Udren Law entered into an enforceable oral contract, unjust enrichment is unavailable as a matter of law, (3) Udren Law is not entitled to any offset because of Mansfield's alleged failure to mitigate its damages, (4) Mansfield is entitled to pre-judgment interest, and (5) Udren Law did not carry its burden of establishing that Mansfield committed conversion by false pretenses.

         I. Findings of Fact[1]

         1. Mark Udren formed the law firm Udren Law Offices, P.C. in April 1995. April 2, 2019 Tr. at 138:22-24. Mr. Udren was the law firm's sole shareholder from its inception to its winding down in 2018. Id. at 138:16-18. The law firm specialized in foreclosure work. Id. at 139:4-18. At its height, Udren Law employed between 250 and 350 people, including law professionals, paralegals, and clerical personnel. Id. at 139:24-140:2.

         2. William J. Mansfield, Inc. is a legal advertising business that was founded in the 1930s. Id. at 64:20-65:4. Currently, Mansfield has three employees. Id. at 66:2-3. The company's current president is Mark Mansfield. Id. at 64:18-19. Mark Mansfield began working at Mansfield in 1999. Id. at 65:14-15. His father, Jim Mansfield, was the previous president of Mansfield. Id. at 130:3-6.

         3. One necessary component of the services Udren Law provided as a part of its foreclosure practice was to publish foreclosure notices in local periodicals, newspapers, journals, or the like, in each foreclosure case. Id. at 23:15-24:4. For more than 20 years, from 1995 until 2018, Udren Law used an outside vendor, Mansfield, to publish Pennsylvania foreclosure notices. Id. at 23:2-5, 25:20-22, 28:25-29:8, 145:12-14.[2] Although the parties worked together for more than two decades, there was no written contract or written agreement between them, other than the invoices sent by Mansfield to Udren Law over the years. Id. at 93:13-94:13. In the four years preceding this litigation, from August 2014 until August 2018, Udren Law paid Mansfield just under $2 million for its advertising services. Id. at 208:3-210:19.

         4. In general, Mansfield placed foreclosure notices on behalf of Udren Law in various publications then sent Udren Law an invoice. Id. at 29:23-30:1. Additionally, after placing a foreclosure notice, Mansfield sent to Udren Law “affidavits of publication, ” notarized and sworn affidavits stating that a particular foreclosure notice appeared in a particular publication on a given date. Id. at 72:16-73:1. Each invoice and affidavit of publication was sent by Mansfield to Udren Law using UPS overnight shipping, [3] except in circumstances where Udren Law required more immediate delivery (in which case Mark Mansfield testified that he would hand-deliver the affidavit). Id. at 73:2-8. Mansfield's invoices to Udren Law are the only written document “identifying what was being charged [by Mansfield] and for what purposes[.]” Id. at 94:9-13.

         5. Every invoice from Mansfield to Udren Law contained line items for two types of charges: (1) a line item reading “Service Charge” and (2) a line item reading “Publications.” See Mansfield Exs. 5, 8-14, 16-94. On every at-issue invoice, the only amount for each “Service Charge” line item is $20. Id. The “Publications” line item amounts vary from invoice to invoice. Id. The “Publications” line item on each invoice lists the name of at least one periodical or newspaper and the charge for publishing a foreclosure notice in that periodical or newspaper. Id.

         The “Publications” line item does not include any identifying information as to the costs for each “Publications” line item. Id.

         6. Mr. Udren testified that Udren Law's understanding of the costs included in each line item was based on his “impression after the [first] conversation” between Udren Law and Mansfield. April 2, 2019 Tr. at 28:23-29:4. Mr. Udren's after-the-fact recollection of his firm's relationship with Mansfield was that Mansfield would place legal advertisements for Udren Law and that Mansfield would charge Udren Law the actual publication costs plus a $20 service “fee.” Id. at 27:25-29:4. Mr. Udren's understanding was also shared by Lorraine Geist, Udren Law's former Vice President of Finances, [4] who testified that Mansfield charged Udren Law “$20 and what was listed as publication costs, ” i.e., “[t]he actual cost of the publication.” Id. at 215:3-9.

         7. In other words, Udren Law claims it understood (1) the “Service Charge” line item to represent a $20 fee charged by Mansfield and (2) the “Publications” line item to represent the actual costs incurred by Mansfield for placing a particular notice with a newspaper. Udren Law believed Mansfield's profits were derived entirely from the modest fixed “Service Charge, ” with no other profits or markup-above-costs included in Mansfield's invoices (including the “Publications” line item). Id. at 33:2-8, 52:8-22.

         8. There were a number of key gaps in Mr. Udren's recollection about the arrangement between Mansfield and Udren Law, however. Mr. Udren testified that his memory may have been wrong at least in part, and the “Service Charge” line item billed by Mansfield may have originally been $5 when the parties first started working together, before increasing to $20 over time. Id. at 143:21-11.[5] He was not sure at all on this point. Furthermore, Mr. Udren testified that he was not sure whether he was the one or whether it was his former co-worker at Udren Law who negotiated with Mansfield originally, id. at 28:23-29:21, [6] and moreover, he was not sure who represented Mansfield in those negotiations. Id. at 28:12-13, 29:9-10.[7]

         9. Mark Mansfield testified, on behalf of Mansfield, that Mansfield's actual pricing structure was substantially different from Udren Law's understanding of it as explained by Mr. Udren during the litigation.

         10. First, according to Mark Mansfield, Mansfield's “Publications” line item included both a flat fee and a commission-based fee. Id. at 77:1-10. The flat fee represented a one-time charge for publishing each notice, with the amount of the charge determined by whether the notice was for a foreclosure ($90) or a sheriff's sale ($100). Id. at 77:5-7. The commission-based fee changed from newspaper to newspaper and reflected the “gross” cost for a particular notice, as quoted by a particular newspaper. Id. at 77:23-78:13. Mansfield would include the gross cost for a notice in its invoices, even though it would often achieve discounts from some newspapers based on Mansfield's volume of overall business with that newspaper. Id. In other words, the “Publications” line item on each of Mansfield's invoices represented a combination of charges and exceeded Mansfield's actual costs associated with publication. Id. at 77:11-16.

         11. Second, Mark Mansfield testified that each invoice also included a “Service Charge” line item that represented “an additional fee” of $20, which Mansfield would use to cover the “general cost of doing business, ” such as “correspondence, . . . the cost for the overnight [shipping of affidavits], it would include basic mailing costs, mailing the invoices back to the actual publications.” Id. at 80:23-81:6. The “Service Charge” line item, therefore, was not a driver of Mansfield's profits, and instead accounted for various miscellaneous actual or typical overhead costs incurred during the publication process.

         12. Mansfield employed this pricing structure in its invoices to Udren Law as well as other law firms. Id. at 131:24-132:3. Some other law firms asked for and received a breakdown of Mansfield's prices in advance of Mansfield placing advertisements, but Udren Law never did so. Id. at 81:23-82:15.

         13. Instead, Mark Mansfield testified that no one from Udren Law ever asked him about the pricing or components of Mansfield's service. Id. at 80:15-18. Udren Law never asked Mansfield for a “breakdown” of its charges or for an “explanation of the pricing.” Id. at 82:16- 20. Jim Mansfield similarly testified that he did not recall a conversation that “he or someone else had” with anyone at Udren Law about Udren Law's alleged belief that the “Service Charge” line item was “the only charge” for Mansfield's services. Id. at 130:19-131:1. Finally, Mark Mansfield also testified that over the course of Mansfield's dealings with Udren Law, there was “no change in the methodology of the process of how Mansfield performed services for Udren Law[.]” Id. at 93:9-12, 110:4-7.

         14. Despite what has now appeared to be the parties' very different understandings about Mansfield's pricing structure, they worked together cooperatively for “many years.” Id. at 23:2-5, 25:20-22. During this period, Mr. Udren confirmed that his approach was “if it ain't broke, don't fix it[.]” Id. at 25:23-25.[8] Both Mr. Udren and Mark Mansfield testified that the companies never discussed Udren Law's supposed contrary reading of Mansfield's invoices, and no one from Udren Law ever sought clarification about Mansfield's invoices. Id. at 87:3-10, 47:4- 14.

         15. In July 2018, Udren Law began to experience “financial difficulties, ” causing Mr. Udren to begin to contemplate closing the firm. Id. at 158:15-24, 197:11-18. Mansfield received Udren Law's final request for services on July 17, 2018. See Mansfield Ex. 102 (MANSFIELD0016).

         16. Because of Udren Law's struggles, the firm fell behind on paying Mansfield's invoices. April 2 Tr. at 29:23-30:11. Although Mansfield ultimately received payments for some of the invoices it sent Udren Law in 2018, id. at123:24-124:2, it is undisputed that there are currently more than 80 invoices that remain unpaid. See id. at 87:24-89:7, 134:24-137:2; see also Mansfield Exs. 5, 8-14, 16-94. It is also undisputed that Mansfield actually placed the legal advertisements underlying the at-issue unpaid invoices, id. at 23:6-8, and that Udren Law itself was fully paid by its clients for the foreclosures (and notice services) that appeared in the advertisements Mansfield placed. Id. at 24:11-21, 62:25-63:3.

         17. Udren Law conceded that its failure to pay Mansfield's invoices initially resulted from the law firm's insolvency and “not because of [any] alleged upcharge issue[.]” Id. at 27:14- 19. Udren Law claims it did not learn how Mansfield calculated the amounts charged in its invoices until around the time Mansfield commenced litigation against Udren Law. Id. at 27:20- 24.

         18. In August 2018, as Udren Law began winding down (and around the same time it stopped paying Mansfield), it transferred some of its clients to other law firms, id. at 50:17-25, including sending one of its major client portfolios, the Ocwen portfolio, to the firm RAS Citron. Id. at 49:7-50:8. As part of the arrangement between Udren Law and RAS Citron, RAS Citron paid Udren Law $500, 000 to allow Udren Law to stay open while it transitioned the files associated with the Ocwen portfolio to RAS Citron. Id. Although RAS Citron took control of the Ocwen portfolio, Udren Law “never transferred any of its accounts receivable to RAS Citron.” Id. at 48:1-6. Udren Law used the $500, 000 it received from RAS Citron to “pay its employees for work that they did in August 2018[.]” Id. at 50:13-16.

         19. After RAS Citron began to work with several of Udren Law's former clients, Mark Mansfield communicated with an employee at RAS Citron to see whether the law firm would pay, voluntarily, Mansfield for 21 invoices-worth of work that Mansfield had already done on behalf of Udren Law. Id. at 116:4-12. To process Mansfield's invoices, RAS Citron required invoices not just from Mansfield but also the underlying invoices from the publishers with whom Mansfield worked. Id. at 118:16-119:6, 223:17-226:5.[9] When Mansfield was unable to provide the publishers' invoices because the company “didn't even have” them, RAS Citron refused to pay the 21 invoices. Id. Although RAS Citron did not pay Mansfield for those 21 invoices, each of (1) counsel for Udren Law and (2) a representative of RAS Citron ultimately provided Mansfield with a few separate checks for work that Mansfield had previously done on behalf of Udren Law. Id. at 123:24-124:17. Counsel for the parties agreed that the invoices relating to those separate checks are not included in the invoices currently at-issue, and those checks do not reduce Mansfield's damages calculation. Id. at 135:3-23; see also Mansfield Exs. 5, 8-14, 16-94.

         20. The amount unpaid for the invoices at issue totals $138, 241.08. See Mansfield Exs. 5, 8-14, 16-94.[10]

         II. Conclusions of Law

         As set forth below, the Court will enter judgment in favor of Mansfield. Mansfield brings two claims to recover for the balance of the unpaid invoices. Because the Court determines that Udren Law breached the oral agreement between the parties, it need only discuss the breach of contract claim (along with Mansfield's request for pre-judgment interest). In addition to opposing Mansfield's claims, Udren Law argues that any damages should be offset by Mansfield's failure to mitigate damages. The Court rejects this argument Udren Law also brings a counterclaim, alleging ...


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