United States District Court, E.D. Pennsylvania
WILLIAM J. MANSFIELD, INC., Plaintiff,
UDREN LAW OFFICES, P.C., Defendants.
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND DECISION OF
E.K. PRATTER UNITED STATES DISTRICT JUDGE.
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
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.
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.
Findings of Fact
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.
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.
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. 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.
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,  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.
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.
“Publications” line item does not include any
identifying information as to the costs for each
“Publications” line item. Id.
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,  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.
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.
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. 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,  and moreover, he was not sure who
represented Mansfield in those negotiations. Id. at
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.
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.
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.
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.
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.
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. 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.
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
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.
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.
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.
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. 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.
amount unpaid for the invoices at issue totals $138, 241.08.
See Mansfield Exs. 5, 8-14, 16-94.
Conclusions of Law
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,