2006 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 8-9-2006 

# In Re: E dward Leck

ey P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 05-4479

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2006

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2006 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " In Re: E dwar d L e ckey " (2006). 2006 D e cisio n s . P ape r 600. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2006/6001 NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N O . 05- 4479

________________ I n R e: W / B A SSO C I A T E S, D ebt or E S T AT E P AR T NE RS , L T D.

vs. EDW AR D C . LECK EY, ESQU I RE; THEO DO RE R. PAU L; TRI - STATE M A N A G E M E N T , IN C ; A T L A N T IC NAT I ONAL CA P I T AL CO RP OR AT I ON E dw ar d C . L ecke y , E s q. , A ppel l ant

____________________________________ O n A p p ea l Fro m the U n it ed S tat es D istri ct C o u rt F o r th e W e ste rn D istric t o f P e n n sy lv a n ia ( D . C . C i v. N o. 04- cv- 01404) D i s t r i ctJ udge: H onor abl e D avi d St ew artC er cone

_______________________________________ Subm i t t ed U nderT hi r d C i r cui tL A R 34. 1( a)

A ugus t8, 2006 Be f o r e : FI SHER, ALD I SERT AN D W EI S, CI RCU I T J UD GES

( Fi l ed: A ugus t9, 2006)

_______________ OP I NI ON

_______________In th e B a n k ru p tc yC o u rt , th e p a rt ie s s tip u la te d to th e m o s t r e le v a n t f a c ts . 1 (A p p . at 11 5 a - 1 2 3 a.) 2 P E R C U R I A M.

A lth o u g h e v e n ts re late d to th is c a se sp a n d e c a d e s, w e w ill e n d e a v o r to recoun tno m ore det ai l s than necessarybecau se the p art i es ar e fam i l i ar w i t h the fact s. 1 W /B A sso ciates is th e d eb tor i n the u n d erly ing b an k rup tcyp roc ee d ing . A fter the d eb tor’s s ol e as s et , a thr ee- s t or yoffi ce bui l di ng, w as s ol d, the B ankrupt cyC our tappr oved a l i qui dat i ng pl an of r eor gani zat i on i n w hi ch Est at e Par t ner s , L t d. , ( “Est at e Par t ner s ”) w as nam ed as a d i sputed, un l i qu i dated, and con t i ng ent unsecured credi t or. E st at e P artners’ claim w as b ase d o n a N o v em b er 2 , 1 9 9 4 jud g m en t entere d ag ains t W /B A sso ciates. I n r el evantpart , t he j udgm entw as upon a N ovember1982 $285, 000 pr om i s s orynot e made byW / B A s s oci at es ( her ei naft er“W / B N ot e”) . T heodor e Paul and Edw ar d C . L ecke y b o th a ss e rte d c laim s to th e f u n d s u lti m a telyre c e iv e d b yE sta te P a rtn e rs a n d d e p o site d in to the B ankrupt cyC our t ’ s r egi s t r y . E s t at e Par t ner s i ns t i tut ed an a dver s arypr ocee di ng, s eeki ng a det erm i nat i on as t o w hi ch cl ai m antw as ent i t l ed t o t he moneyi n t he fund.

Paul cl ai m ed al l funds pay abl e t o E s t at e Par t ner s bas ed on a c ons t ruct i ve trus t . I n an ea r l i erl aw s ui t , w hi ch w ended i t s w ayt o us , Paul , a j udgm entcr edi t orof A u b re yG lad sto n e , d e m o n stra ted th a t G lad sto n e h a d f ra u d u len tlyc o n v e y e d h is a ss e ts to E s t at e Partner s ( w hi ch w as composed onl yof G l ads t one’ s w i fe, M ar i anne, and the bui l derO u r op inion in tha t case , P au l v. G lads ton e, N o . 9 5 -34 1 9 , sli p o p . (3d C ir . 2 J u n e 2 8 , 1 9 9 6 ), c a n b e f o u n d in th e A p p e n d ix b e g in n in g o n p a g e 7 6 a . T he D i s t r i ctC our t ’ s Sept ember1996 or deri s i n t he A ppendi x atpages 3 9 6 a -9 7 a . 3 of G l ads t one’ s Fl or i da home) . I n acc or dance w i t h ouri ns t ruct i ons , on r emand, the 2 D istric t C o u rt se t as id e th e tra n sf e r a n d im p o se d a c o n stru c tiv e tru st in f a v o r o f P a u l to the ext entnece s s aryt o s at i s fyt he j udgm entthathe w as ow ed ( $447, 000 pl us i nt er es tand cos t s ) . I ncl uded i n t he as s et s s ubj ectt o Paul ’ s cons t ruct i ve trus tw as the W / B N ot e.

3 L ecke yas s ert ed thathe w as ent i t l ed t o t he funds bas ed on a c har gi ng l i en forl egal s ervi ces he had pr ovi ded Est at e Par t ner s i n a s i x- y earper i od. Speci fi cal l y , he claim ed that h e h elpe d cre ate o r sec u re the fu n d d ep o sit ed in the B an k rup tcyC o u rt beca us e ( 1) L ecke yover s aw an exe cut i on of j udgm entagai ns ttw o otherpart i es , w hi ch r es ul t ed i n t he del i veryof the W / B N ot e and G uar antyA gr eement s t o t he A l l egheny C ou ntyS heri ff fo r the S heri ff’s Sal e atw hich E st at e P artners t oo k it s j ud gm ent agai nst W / B A s s oci at es ; ( 2) L ecke ydefe nded Est at e Par t ner s ’ r i ghtt o l evyupon and have the W / B N ot e and G uar antyA gr eement s s ol d bythe Sher i ff a gai ns tPaul ’ s cl ai m of ow ner s hi p; ( 3) on behal f of Est at e Par t ner s , L ecke ys ucce s s ful l yappea l ed fr om , and w on v a c a tio n o f

a n o rd e r th a t h a d v o id e d E sta te P a rtn e rs’ rig h t to th e W /B N o te a n d G u a ra n ty A g re e m e n ts; a n d (4 ) L e c k e yd e f e n d e d E sta te P a rtn e rs a g a in st a n o th e r p a rty ’s a ttem p t toL ecke yor i gi nal l yi ncl uded hi s w or k defe ndi ng the fr audul entconvey ance 4 o n b e h a lf

o f E s ta te P a rt n e rs , b u t h e n o lo n g e r r e lie s o n h is w o rk in th o s e p ro c e e d in g s . L e c k e ya l s o f

i l e d a mo t i o n t o q u a s h Ap p e l l e e ’ s Ap p e n d i x t o Br i e f s . He 5 a rg u e s th a t P a u l in c lu d e d b rie f s a n d tra n sc rip ts f

ro m o ra l ar g u m e n ts (a n d e x c e rp ts ther eof) t hatw er e notnece s s aryt o s how thatan i s s ue w as r ai s ed oran ar gum entw as m ade. See L A R 30 . 3. P aul r espon ds t hat he fi l ed an app end i x to i nclude t ho se document s t hathe des i gnat ed as addi t i onal m at er i al t o be i ncl uded i n L ecke y ’ s appendi x, w hi ch Leckeyi nappr opr i at el yr efus ed t o i ncl ude. See Fed. R . A pp. P. 30( b) ( 1) . U pon cons i der i ng t hes e ar gum ent s , as w el l as L ecke y ’ s addi t i onal ar gum enti n r epl yand co n tents o f th e a p p en d ices, w e d en yL ec k ey ’s m o ti o n to q u ash . W e a lso d en yL ec k ey ’s 4 at t ach the W / B N ote and G uarant yA greem ents . 4

Paul and Leckeyfi l ed cr os s - m ot i ons fors um m aryj udgm ent . T he Ba n k ru p t c yCo u r td e n i e d L e c k e y ’ s mo t i o n , h o l d i n g th a tL e c k e yh a d n o ts a t i s f i e d two cr i t er i a nec es s aryfort he i m pos i t i on of a c har gi ng l i en. T he B ankrupt cyC our tgr ant ed Paul ’ s m ot i on, hol di ng t hatPaul had es t abl i s hed hi s cl ai m t o t he fund ba s ed on the p re v io u sly -im p o se d c o n stru c tiv e tru st. T h e B a n k ru p tcy C o u rt a lso h e ld th a t ev e n if L ecke y ’ s cl ai m w er e al l ow ed, Paul ’ s cl ai m w oul d s t i l l have pr i or i t yoverL ecke y ’ s i n the di s tr i but i on of the fund. L ecke yfi l ed a mot i on t o al t eroramend t he j udgm entunder B ankrupt cyR ul e 9023, w hi ch the B ankrupt cyC our tdeni ed. L ecke yal s o appea l ed t o the D i s tr i ctC our t . T he D i s t r i ctC our taff i r m ed the B ankrupt cyC our t ’ s or der . T he D i s t r i ct C our t , not i ng t hati tw as “mer el yaugment i ng” the B ankrupt cyC our t ’ s deci s i on by concl udi ng t hati n addi t i on t o fai l i ng t o m eetthe tw o cr i t er i a ci t ed bythe B ankrupt cy C our t , L ecke ycoul d nots how t hatequi t abl e cons i der at i ons w ei ghed i n hi s favor . L ecke y app eal s. 5m ot i on forr evi ew of the C l erk’ s or dercons t rui ng a l et t ers ubm i t t ed byPaul as a mot i on

b yh im f o r l e a v e to f

ile a s u p p le m e n ta l a p p e n d ix a n d g ra n tin g th a t m o tio n . L ecke yatonce c oncede s thathi s appea l r ai s es onl yques t i ons of l aw 6 beca us e the mat er i al fac t s ar e undi s put ed ( A ppel l ant ’ s B r i ef a t7) butdi s put es w hether Paul ’ s cl ai m has al r eadybeen pa i d i n ful l ( A ppel l ant ’ s B r i ef a t2, 25- 27) . T o t he ext ent thathe bas es hi s ar gum enton hi s unw arr ant ed r echa r act er i zat i on of Paul ’ s cl ai m of a cons truct i ve trus t , w e r ej ecti t . T o the ext entthatL ecke yal l udes t o t he pos s i bi l i t yof anotherpaym entt hathe di d notcons i derunt i l the ca s e w as befor e the D i s t r i ctC our ton appea l , w e w i l l notcons i derhi s ar gum entbeca us e i tw as notpr es ent ed t o t he B ankrupt cy C o u rt in th e f

ir s t in s ta n c e . 5 T h e D istri ct C o u rth ad juri sd ict ion to rev iew the B an k rup tcyC o u rt ’s ord ers p u rsua n t t o 2 8 U . S . C . § 1 5 8 (a), an d w e h av e jurisdicti o n to rev iew the D istri ct C o u rt ’s or derunder28 U . S. C . §§ 158( d) , 1291. O urr evi ew of the D i s t r i ctC our t ’ s det erm i nat i on is p le n a ry. S e e K o o l, M a n n , C o f f e e & C o . v . C o f

f e y , 3 0 0 F .3 d 3 4 0 , 3 5 3 (3 d C ir . 2 0 0 2 ). W e re v ie w th e B a n k ru p tc yC o u rt ’s d e te rm in a tio n s a s th e D is tr ic t C o u rt w o u ld . S e e id . W e d o n o t se t as id e f

a c tu a l f in d in g s o f

th e B a n k ru p tcy C o u rt u n les s th e ya re c lea rly err oneous . See i d. W e exe r ci s e pl enaryr evi ew overan or derr es ol vi ng cr os s - m ot i ons

6 f o r s u m m a ry ju d g m e n t. S e e C a n to r v . P e re lm a n , 4 1 4 F .3 d 4 3 0 , 4 3 5 n .2 (3 d C ir . 2 0 0 5 ). W e a sk “ (a ) is th e re n o g e n u in e iss u e o f m a ter ial f

a c t, an d (b ) is o n e p a rtye n tit led to ju d g m e n t a s a m a tte r o f la w ? ” Id . T h e B a n k ru p tc yC o u rt p ro p e rl yg ra n te d s u m m a ry ju d g m e n t in f a v o r o f P a u l. T h e D istric t C o u rt h a d im p o se d a c o n stru c tiv e tru st in f a v o r o f P a u l o v e r th e W /B N o te in r es pons e t o ourear l i errul i ng. T he W / B N ot e w as l i qui dat ed byW / B A s s oci at es ’ pl an of re o rg a n iza tio n , fo rm in g th e f u n d a t issu e . A s th e B a n k ru p tcy C o u rt n o ted , itis w e ll-6

estab li sh ed that a c o n stru cti v e trust run s w ith the p roc ee d s o f a tru st. S ee , e.g., N at’l B ank v. I ns . C o. , 104 U . S. 54, 68 ( 1881) . T her efor e, Paul es t abl i s hed hi s cl ai m t o t he f u n d to th e e x te n t n e c e s s a ry to s a tis f yth e te rm s o f

th e c o n s tru c tiv e tru s t. T he B ankrupt cyC our tal s o pr oper l ydeni ed s um m aryj udgm enti n favorof L e c k e y . U n d e r P e n n sy lv a n ia la w , fiv e c riter ia m u st b e sa tisf ied b e f o re a c h a rg in g lien is re c o g n ize d a n d a p p lied :

[I ] tm us tappea r( 1) t hatther e i s a fund i n cour torot herw i s e appl i cabl e fordi s t r i but i on on equi t abl e pr i nci pl es , ( 2) thatthe s ervi ces of the att or ney op erat ed sub st anti al l yor pri m ari l yt o secure t he fu nd ou tof w hich he seeks t o be pai d, ( 3) t hati tw as agr eed thatcouns el l ook t o t he fund r atherthan th e c lie n t f

o r h is c o m p e n s a tio n , (4 ) t h a t th e lie n c la im e d is lim ite d to c o s ts , fees or ot her di sbursem ents i ncu rr ed in the li t i gati on byw hich the fu nd w as r ai s ed and ( 5) t hatt her e ar e equi t abl e cons i der at i ons w hi ch nec es s i t at e the re c o g n itio n a n d a p p lic a tio n o f th e c h a rg in g lie n . R ec h t v. C lai rt o n U rba n R ed ev elop m en t A u tho ri ty , 1 6 8 A . 2 d 1 3 4 , 1 3 8 -39 (P a. 19 6 1 ).

A s t o t he s econd c r i t er i on, i ti s uncl earw hetherL ecke y ’ s s ervi ces oper at ed s ubs t ant i al l yorpr i m ar i l yt o s ecur e the fund outof w hi ch he s eeks t o be pai d. L ecke yw as notdi r ect l yi nvol ved i n cr eat i ng t he fund f r om the l i qui dat i on of the W / B N ot e pur s uant t o the W / B A s s oci at e’ s pl an of r eor gani zat i on. H e w as notcouns el forthe debt ori n the bankrupt cys ui t . See I n r e C l at e, 69 B . R . 506, 510 ( B ankr . W . D . Pa. 1987) ( s ur vey i ng c a se s, n o tin g th a t atto rn e y s a w a rd e d c h a rg in g lien s h a d a tto rn e y -c lien t re latio n sh ip s w ith the fund r eci pi ent s , and r ej ect i ng t he cl ai m of the appoi nt ed trus t ee i n bankrupt cyw ho provided legal services t o the deb t or i n sel l i ng the d ebtor ’s res i den ce). L eckeyargues, h o w e v e r, th a t h e is e n tit led to a c h a rg in g lien b e c a u se h e c re a ted o r se c u re d E sta te7

P a rt n e rs ’ c la im to th e f

u n d th ro u g h h is ro le in e a rl ie r p ro c e e d in g s . D e sp ite th e B a n k ru p tcy C o u rt’s r e lian c e o n it, R e c h t is n o t p a rticu lar ly p ersu asiv e a u tho ri tyfo r or a g ains t L ec k ey ’s claim b ase d o n the s ec o n d crit erion . In deny i ng a cha r gi ng l i en i n R echt , t he Penns y l vani a Supr eme C our tr ej ect ed a c l ai m bas ed o n serv ices ren d ere d in an ea rl ier pro ce ed ing . S ee 1 6 8 A . 2 d at 13 9 . T h e R ec h t cou rt loo k ed o n lyto the li ti g ati o n that d ir ec tl yp rod u ce d the f u n d at i ssu e. S ee id. H o w ev er, R echtdoes notnece s s ar i l ys t and forthe s w eepi ng pr opos i t i on thats ervi ces i n an ea r l i er p ro c e e d in g c a n n o t g iv e ri s e to a c h a rg in g lie n a g a in s t a f u n d c re a te d in a la te r p ro c e e d in g . T he i ni t i at i on of the l at erpr ocee di ng i n R echthad ext i ngui s hed byoper at i on of l aw any aw ar d i n the ea r l i erpr ocee di ng. See 168 A . 2d at139. H er e, unl i ke R echt , ther e w as no d e n o v o a w a rd o f

m o n e y . L e c k e y ’s a c tio n s in e a rlier p ro c e e d in g s p re se rv e d E sta te Par tner s ’ cl ai m agai ns tW / B A s s oci at es i n t he bankrupt cyl i qui dat i on. N onethel es s , t he c irc u m sta n c e s o f

L e c k e y ’s c laim is a typ ica l, i n p a rt b e c a u se h is c laim is b a se d o n h is a c tio n in m u ltip le p ro c e e d in g s .

L ecke yr el i es i n parton t he us e of the pl ur al “pr ocee di ngs ” i n G r eek C a th o lic U n io n o f

R u ss ian B ro th e rh o o d s v . R u ss in , 1 7 A .2 d 4 0 2 , 4 0 3 (P a . 1 9 4 1 ), to s uppor thi s cl ai m t hat“i tm ayt ake the s ervi ces of an a t t orneyi n m or e than one p ro c e e d in g to se c u re a f u n d f o r h is c lien t.” (A p p e llan t’s R e p lyB rie f a t 1 .) H o w e v e r, in the G ree k C atho li c U n ion ca se, th e P en n sy lvan ia S u p rem e C o u rtu sed the term pr ocee di ngs t o di s t i ngui s h betw een c as es i n w hi ch cha r gi ng l i ens ar e i m pos ed and c as es8

in w h ich g e n e ra l o r re tain in g lien s a re im p o se d :

A s t o the chargi ng l i en, i thas al w ay s been recog nized that i textends onl yt o s ervi ces r ender ed i n t he pr ocee di ngs cr eat i ng the fund a nd nott o serv ices ren d ere d in o ther c ase s: M arti n v . T h roc k m o rt o n , 1 5 P a. S u p erior C t . 632; A ber ' s Pet i t i on, 18 Pa. Super i orC t . 110. T he gene r al orr et ai ni ng l i en, how ever , ext ends notonl yt o cos t s and fe es i n t he part i cul arcaus e i n w hich the p ropertycam e i nto the att orney ' s possess i on , bu tas w el l t o co st s a n d f e e s d u e th e a tto rn e yf

ro m o th e r p ro f

e s s io n a l b u s in e s s . . . . G ree k C atho li c U n ion o f R u ssian B roth erh o o d s, 1 7 A . 2 d at 40 3 . In c o n text, the term “pr ocee di ngs ” does notnece s s ar i l yl end i t s el f t o L ecke y ’ s i nt erpr et at i on. Fur t herm or e, at least on e o f th e c ase s cit ed ab o v e b ythe P en n sy lvan ia S u p rem e C o u rtd o es n o t sup p o rt L ecke y ’ s pr opos i t i on. I n A ber ’ s Pet i t i on, the Penns y l vani a Super i orC our thel d t hatany e q u itab le lie n in f

a v o r o f a tto rn e y s in th a t ca se w a s a c laim f o r th e se rv ice s re n d e re d to r ecove ra fund i n one s ui t , nota cl ai m fors ervi ces r ender ed i n othercas es . See 18 Pa. Super . 110, 114 ( Pa. Super . C t . 1901) . H ow ever , the othercas e ci t ed, M art i n v. T h ro c k m o rto n , arg u a b lysu p p o rts th e im p o sitio n o f a c h a rg in g lien f

ro m w o rk in m u lti p le pr ocee di ngs , atl eas ts ubj ectt o a l i m i t at i on. T he Penns y l vani a Super i orC our ts etthe fol l ow i ng l i m i t at i on t hat“he w ho as an att orneyatl aw has i n anypr ocee di ng col l ect ed m oneyforhi s cl i entcannots etoff a gai ns thi s cl i ent ' s cl ai m forthatm oneya cl ai m due hi m fors ervi ces as couns el i n anypr ocee di ng ot herthan thatoutof w hi ch the money c a m e , u n le s s th e c lie n t h a s e x p re s s ly ag re e d th a t th e f u n d s h a ll b e s o a p p ro p ri a te d .” M arti n v . T h roc k m o rt o n , 1 5 P a. S u p er. 63 2 , 6 3 4 -35 (P a. S u p er. C t. 1 9 0 1 ). H o w ev er, pu t t i ng asi de the qu est i on of an exp res s agreem ent for a m om ent, un l i ke M art i n, this case9

is a typ ica l in a n o th e r w a y– a b a n k ru p tcy pr o c e e d in g h a s b e e n in terp o se d b e tw e e n a p a rty and i t s r i ghtt o a fund. E s t at e Part ner s ’ cl ai m t o t he fund i n t he B ankrupt cyC our ti s bas ed o n its c la im to th e W /B N o te , a n d th o s e c la im s re m a in c o n c e p tu a lly d is tin c t.

Fur t herm or e, w hen a c har gi ng l i en has been i m pos ed aga i ns ta fund aw ar ded i n a l at erpr ocee di ng beca us e of w or k r ender ed i n an ea r l i erpr ocee di ng, the pr ocee di ngs have be en more r el at ed. I n T ur t l e C r eek Bank & T rus tC o. v. M ur dock ( one o f m a n yc a se s c ited in R e c h t), M u rd o c k h ire d c o u n se l w h o h e lp e d h im e sta b lish h is c laim t o t i t l e overa par cel of r eal pr opert y . See 28 A . 2d 320, 321 ( Pa. Super . C t . 1942) . O nce M u rd o c k h e ld tit le, a b a n k re v iv e d , the n e x e c u ted o n , a ju d g m e n t, ca u sin g th e p ro p e rtyto be sold atsheri ff’s s al e. S ee i d. M urdock ’s cou nsel i n the t i t l e dis pu t e w i shed to i m po se a c h a rg in g lien o v e r th e p ro c e e d s o f th e sh e rif

f ’s s a le. S e e id . T h e P e n n sy lv a n ia S u p erior C o u rth eld th at co u n sel w as e n ti tl ed to a c h arg ing li en b ec au se w ith o u t cou n sel’s ef fo rt s, M u rdo ck w o u ld n o t hav e h ad lega l t it le an d there w o u ld n o t hav e b ee n a sh eriff ’s s al e orfund fordi s t r i but i on. See i d. at322 ( hol di ng al s o t hat“the moneyi n t he hands of the s her i ff f

ordi s t r i but i ons w as . . . cr eat ed, oratl eas tm ade a vai l abl e, bythe ef for t s of [ c o u n s e l] ” ). D e sp ite re se rv a tio n s a b o u t w h e th e r L e c k e y ’s s e rv ice s o p e ra ted su b sta n tially o rp r i ma r i l yt o s e c u r e t h e f u n d , we wi l l a s s u me a r g u e n d o th a tth e yd i d . No n e t h e l e s s , we st i l l ho l d thatL eckeyw as not ent i t l ed to sum m aryj ud gm ent because he did not es t abli sh the thi r d cr i t er i on of the R echtt es t– t hathe had a n agr eementt o l ook t o t he fund r atherS tu a rt M e rm e ls te in w a s c o u n s e l f o r t h e b u ild e r. 7 10 the cl i entforhi s compensa t i on. A s t he B ankrupt cyC our tconcl uded, ther e ce r t ai nl yw as no agr eementforL ecke yt o expec tpaym entfr om the W / B fund es t abl i s hed thr ough the liq u id a tio n p ro c e e d in g s. M o re o v e r, ev e n if w e w e re to d e f

in e th e f u n d m o re e x p a n siv e ly a s a n yre c o v e ryo n th e W /B N o te, L e c k e yc o u ld n o t es tab lish th a t h e h a d a n a g re e m e n t to lo o k to it f

o r c o m p e n s a tio n . A s e v id e n c e o f

a n a g re e m e n t, L e c k e yp re se n ted a lette r h e se n t to E sta te P artne rs th rou g h it s g en era l partne r, the b u il d er o f G lads ton e’s F lori d a h o m e, on Jan u ary 7, 1994. ( A pp. at143a - 144a. ) I n the l et t er , he s etfor t h hi s under s t andi ng of the pay m ent arrangem ent betw een h i m and E st at e P artners:

T h is le tte r i s to c o n f

ir m m yte le p h o n e c o n v e rs a tio n s in D e c e m b e r, 1993, w i t h StuartS. M erm el s t ei n, E s qui r e, [ ] conce r ni ng the bas i s upon 7 w h ic h I h a v e a g re e d th a t I w ill c o n tin u e to re p re s e n t E s ta te P a rt n e rs , L t d. i n t he A t t achmentE xecut i on . . . the Pr oper t yC l ai m fi l ed w i t h t he Sher i ff of

A l l eghenyC ount ybyT heodor e Paul . . . the Fr audul ent C o n v e ya n c e A c t i o n f

i l e d b y T h e o d o r e P a u l . . . a n d . . . th e D e c l a r a t o r y J u d g m e n t A c tio n f

ile d b yW /B A s s o c ia te s . . . . Fort he s ervi ces w hi ch I have pe r form ed begi nni ng i n J ul y , 1992, th ro u g h N o v e m b e r, 1 9 9 3 , w ith re s p e c t to th e A tta c h m e n t E x e c u tio n . . . a n d lev y in g u p o n th e N o te o f W /B A ss o c iate s . . . a n d m yse rv ice s to concl us i on of thi s m at t er , as w el l as m ys ervi ces . . . i n t he Fr audul ent C onvey ance A ct i on i ns t i tut ed byT heodor e Paul . . . and mys ervi ces . . . in th e D e c la ra to ry Ju d g m e n t A c tio n f ile d b yW /B A s s o c ia te s . . ., I s hal l be compens at ed fr om anyamount s pai d on acc ountof the N ot e fr om W / B A s s oci at es . . . dat ed N ovember30, 1982, and/ orthe G u ara n tees o f th is N o te, inclu d ing tho se p u rch ase d b yB o m ar B ui l der s , I nc. att he Sher i ff’ s Sal e conduc t ed bythe Sher i ff of A ll eg h en yC o u n tyo n A p ri l 2, 19 9 2 , at w h ich I rep rese n ted B o m ar11 B ui l der s , I nc. att he r at e of $250. 00 perhourorfor t y( 40% ) per cent of all such am ou nts paid, w hichever i s l ess. * * * If th e f o re g o in g re f

lec ts o u r u n d e rsta n d in g , p lea se e x e c u te t he enc l os ed copyof thi s l et t erw her e i ndi cat ed and r eturn t he s ame t o m e. (Id.) T he copyof the l ett eri n t he r ecor d i s i ns uffi ci entt o s how the exi s t ence of an ag ree m en t t o sati sfythe th ir d crit erion o f R ec h t. A lth o u g h L ec k eysee k s to u n d ersc o re th e p o rtio n o f

th e lette r th a t in c lu d e s th e p h ra se “ sh a ll b e c o m p e n sa ted f ro m a n ya m o u n ts p aid o n ac co u n t of

the N o te, ” w e f

ind m o st r elev an t th e c o n d it ion al ph rase b eg inn ing “[ i] f the for egoi ng r efl ect s ourunder s andi ng. ” A s L ecke ydoes notdi s put e, the l et t erw as n ev er e x ec u ted b ythe p erso n to w h o m itw as se n t. (A p p . at 14 4 a & 2 1 7 a, ¶ 3 . )

L ecke yal s o s ubm i t t ed an a ffi davi tfr om Stuar tM erm el s t ei n i n w hi ch M erm el s t ei n averr ed that , upon r ece i ptof the l ett eron t he bui l der ’ s behal f, he had

“ c o n f irm e d th a t h is s u m m a ryo f th e c o n tin g e n t f

e e a rra n g e m e n t w a s a c c u ra te” a n d th a t “it w as m ade c l eart o L ecke yt hatt hi s w as the arr angementunderw hi ch he ha d been r et ai ned and cont i nui ng t o per form s ervi ces as the att orneyforE s t at e Par t ner s . ” ( A pp. at217a2 1 8 a .) H o w e v e r, b e c a u se n o o n e h a d sig n e d th e lette r, L e c k e y ’s o w n d o u b ts a s to w hetherhe had a n agr eementw i t h E s t at e Par t ner s cont i nued atl eas tunt i l 1996, as ev iden ce d b ya later l ett er f rom an o ther E stat e P artne rs ge n era l partne r. (A p p . at 22 2 a.) L e c k e ysu b m itt e d e v id e n c e th a t in A u g u st 1 9 9 6 , a d if f e re n t g e n e ra l p a rtn e r c o n se n ted to12

p ro s p e c tiv e re p re s e n ta tio n b a s e d o n th e te rm s s e t f o rt h in th e J a n u a ry 7 , 1 9 9 4 le tte r. ( A pp. at222a. ) T he 1996 agr eementcannotbe us ed t o s how a paym entagr eementfor s e rv ic e s re n d e re d e a rl ie r.

Fur t herm or e, i n s t at e courtpr ocee di ngs , L ecke yhi m s el f cont es t ed the v a lid ity o f

th e e a rl ie r p u rp o rt e d a g re e m e n t b ya rg u in g th a t it h a d b e e n p ro c u re d b yf ra u d . D es cr i bi ng as a pr opos al t he l ett ert hathe now cont ends w as an agr eement , he al l eged that aft erl earni ng abouta s t ock s al e byM ar i anne G l ads t one on J anuary4, 1995, he had “advi s ed Est at e Part ner s t hatt he pr opos al dat ed J anuary7, 1994, had bee n obt ai ned by f ra u d a n d [ L e c k e y ] w o u ld n o t f u rth e r re p re se n t E sta te P a rtn e rs p u rsu a n t to th is p ro p o sa l, and thati tw oul d be nec es s aryforE s t at e Par tner s and [Lecke y ] t o r eac h a new fee agr eement , w i t houtw hi ch [Lecke y ’ s ] ent i r e r epr es ent at i on of Est at e Par t nes s i nce J ul y2, 1 9 9 2 , an d there af

ter, w o u ld b e o n a q u an tum m eru itb asis. ” (A p p . at 31 9 a, ¶¶ 3 1 -32 . ) L ecke ys eeks t o dow npl aythe s i gni fi canc e of hi s al l egat i ons beca us e he a nd E s t at e Partner s exec ut ed a s ett l ementagr eementi n t he s t at e- cour ts ui t . H ow ever , the s et t l ementagr eementon i t s t erm s di d notr es ol ve the ques t i on of the val i di t yof the pr opos al /purpor t ed agr eement . A s he and Est at e Part ner s agr eed, “[n] ei t herexec ut i on of [the s et t l ement ] A gr eementnorper form ance of i t s t erm s and condi t i ons s hal l be cons i der ed byanypart yorbyanyot herper s ons as admi s s i on of l i abi l i t ybyanyof the p a rties h e re to .” (A p p . at 3 7 1 a .) A lth o u g h L e c k e yis c o rre c t th a t h e c a n n o t ra ise h is c laim s a g a in b e c a u se a se ttl e m e n t o p e ra tes lik e a ju d g m e n t in f a v o r o f a d e f e n d a n t,I n t he B ankrupt cyC our t , i n r el at i on t o hi s char gi ng l i en cl ai m , L ecke y 8 ar gued thathe s houl d be pai d befor e Paul , ci t i ng E as t& W es tC oas tSer vi ce Corp. v. Paphagi s , 25 A . 2d 339 ( Pa. 1942) . ( L ecke y ’ s B r i ef i n Suppor tof Sum m aryJ udgm entat 23 . ) To the ex t ent that he separat es hi s cl ai m un der the p ri ncipl es of E ast& W estC oast S e r v i c e Co rp . f

r o m h i s c h a r g i n g l i e n c l a i m a n d p r e s e n t s i tf o rth e f i r s tt i me o n a p p e a l , we w ill n o t co n sid e r it. H o w e v e r, to th e e x ten t th a t L e c k e yra ise s a n iss u e o f e n tit lem e n t to p a ym e n t th a t th e B a n k ru p tc yC o u rt h a d a n o p p o rt u n ity to p a s s o n , w e c o n s id e r h is c la im . N onethel es s , w e conc l ude thatE as t& W es tC oas tSer vi ce Corp. and C hamber s v. C h am b ers, 17 6 A . 2 d 6 7 3 (19 6 2 ), (w h ich L ec k eycit es f o r th e sa m e p ri n ciple) a re i nappl i cabl e. I n E as t& W es tC oas tSer vi ce Corp. , an appe al fr om an or deri m pos i ng a cons truct i ve trus t , t he Penns y l vani a Supr eme C our tdefi ned the l i m i t s of a c ons t ruct i ve trus tovert he pr ofi t s of a c onces s i on t o excl ude moneys penton m ai nt ai ni ng the co n ce ssion . S ee 2 5 A . 2 d at 34 1 . In C h am b ers, a co n stru cti v e trust i m p o sed o v er a pr oper tyi nt er es tw as m ade s ubj ectt o a r ei m bur s ementof the cons t ruct i ve trus t ee f or expendi tur es t o m ai nt ai n and i m pr ove the pr oper t y . See 176 A . 2d at677. U nl i ke the Penns y l vani a Supr eme C our ti n t he ca s es ci t ed byL ecke y , w e ar e notnow cons i der i ng wh e th e ra n d t o wh a te x t e n ta c o n s t ru c t i v e tru s ts h o u l d b e i mp o s e d i n f a v o ro f P a u l ( a s we 13 see Su stri k v . Jones & L aug hli n S t eel C orp. , 19 7 A . 2d 44 , 46 (Pa. 19 64 ); B ars on ’s & O verbr ook, I nc. v. A r ce Sal es C orp. , 324 A . 2d 467, 468 ( Pa. Super . C t . 1974) , he does nots how t hatw e ca nnotcons i dert he al l egat i ons as bear i ng on t he ques t i on of the exi s t ence of a va l i d agr eement . Fur t herm or e, even i f w e agr eed w i t h hi m thatthe s et t l ement“had the ef

fec tof an a dj udi cat i on thatL ecke y ’ s R epr es ent at i on L et t erw as not obt ai ned byfr aud, ” ( A pp. B r i ef a t20) , w e w oul d s t i l l be l eftw i t h hi s char act er i zat i on of the l et t eri n t hats ui tas a pr opos al i ns t ead of an agr eement . L ecke y ’ s char act er i zat i on of the l et t eras a pr opos al , al one and i n combi nat i on w i th otherevi dence i n t he r ecor d, r ai s es d o u b ts a s to th e e x iste n c e o f a n a g re e m e n t an d h is s a tisf a c tio n o f th e th ird c riter io n in R e c h t. A c c o rd in g ly , the B a n k ru p tcy C o u rt p ro p e rlyd e n ied su m m a ryju d g m e n t o n h is cl ai m of a c har gi ng l i en. 8and the D i s t r i ctC our thave pr evi ous l ycons i der ed) . Fur t herm or e, unl i ke the part i es

s eeki ng t o l i m i tt he cons t ruct i ve trus t s i n t hos e ca s es , L ecke yi s notthe cons t ruct i ve 

### trus tee. C ont r aryt o L ecke y ’ s as s ert i ons , the D i s t r i ctC our t , char act er i zi ng the

9 B a n k ru p tcy C o u rt’s d e c isio n a s “ w e ll-re a so n e d ” a n d “ m e re lya u g m e n tin g ” it w ith addi t i onal anal y s i s , di d notm ake f actual fi ndi ngs bey ond i t s author i t y . I n r e C ohn, 54 F .3 d 1 1 0 8 (3 d C ir . 1 9 9 5 ) i s d is tin g u is h a b le . 14 I n s um , beca us e the B ankrupt cyC our tpr oper l ydeni ed s um m aryj udgm ent i n favorof Leckeyand pr oper l ygr ant ed s um m aryj udgm enti n favorof Paul , the D i s t r i ct C our t ’ s or derw i l l be af fi r m ed. 9