Court Opinion

ID: 8406092
Source: CourtListenerOpinion
Date Created: 2022-10-27 16:09:33.711083+00
Date Added: 2024-06-11T16:47:08.033587
License: Public Domain

J-A20003-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    ROSENBAUM AND ASSOCIATES,                  :   IN THE SUPERIOR COURT OF
    P.C., JEFFREY ROSENBAUM AND                :        PENNSYLVANIA
    DAVID ROSENBAUM                            :
                                               :
                       Appellants              :
                                               :
                                               :
                v.                             :
                                               :   No. 1604 EDA 2021
                                               :
    RICHARD L. SCHEFF AND                      :
    ARMSTRONG TEASDALE, LLP                    :

                  Appeal from the Order Entered July 30, 2021
      In the Court of Common Pleas of Philadelphia County Civil Division at
                              No(s): 201000739

BEFORE: STABILE, J., McCAFFERY, J., and PELLEGRINI, J.*

DISSENTING MEMORANDUM BY PELLEGRINI, J.: FILED OCTOBER 27, 2022

        This appeal involves the granting of preliminary objections in the nature

of a demurrer to an action brought by the Rosenbaum parties (Rosenbaum)

against Richard L. Scheff and Armstrong Teasdale, LLP (collectively, Scheff)

for allegedly aiding and abetting a breach of a fiduciary duty to extort the

payment of purported attorneys’ fees claimed by Maurice Mitts of Mitts Law,

LLC (Mitts) who represented Rosenbaum in an action against another law firm,

Morgan & Morgan (Morgan), that resulted in a confidential settlement between

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*   Retired Senior Judge assigned to the Superior Court.
J-A20003-22

Morgan and Rosenbaum.1 The issue in this case is whether Rosenbaum has

sufficiently pled damages to make out a cause of action for aiding and abetting

a breach of a fiduciary duty2 Because I would hold that it has sufficiently pled

a cause of action, I respectfully dissent.

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1 Our standard of review in determining whether a trial court erred in
sustaining preliminary objections in the nature of a demurrer is well settled.

        “[A] trial court’s decision to grant or deny a demurrer involves a
        matter of law, [and] our standard for reviewing that decision is
        plenary.” Donaldson v. Davidson Bros., 144 A.3d 93, 100 (Pa.
        Super. 2016) (citations omitted).

        When reviewing the dismissal of a complaint based upon
        preliminary objections in the nature of a demurrer, we treat as
        true all well-pleaded material, factual averments and all
        inferences fairly deducible therefrom. Where the preliminary
        objections will result in the dismissal of the action, the objections
        may be sustained only in cases that are clear and free from doubt.
        To be clear and free from doubt that dismissal is appropriate, it
        must appear with certainty that the law would not permit recovery
        by the plaintiff upon the facts averred. Any doubt should be
        resolved by a refusal to sustain the objections.

Stewart v. FedEx Exp., 114 A.3d 424, 426 (Pa. Super. 2015) (citations
omitted). “The impetus of our inquiry is to determine the legal sufficiency of
the complaint and whether the pleading would permit recovery if ultimately
proven.” Barton v. Lowe’s Home Centers, Inc., 124 A.3d 349, 354 (Pa.
Super. 2015) (citation omitted). Additionally, we “will reverse the trial court’s
decision regarding preliminary objections only where there has been an error
of law or abuse of discretion.” Id.

2   Section 876 of the Restatement (Second) of Torts provides:

        For harm resulting to a third person from the tortious
        conduct of another, one is subject to liability if he
(Footnote Continued Next Page)

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       It is unnecessary to set forth fully the underlying facts because the

majority ably sets them forth in its Memorandum. Simply, Rosenbaum’s claim

is that Scheff threatened to file a complaint on behalf of Mitts that would

disclose the confidential agreement with Morgan unless the case was settled

at favorable terms to Mitts, and that Rosenbaum also rejected any request

that its complaint be filed under seal. To foreclose that from occurring and

seeking damages for losses claimed, Rosenbaum filed the instant action

seeking damages that it claims flowed from Scheff’s attempted extortion

because it injured its business relationship with Morgan causing it to suffer

damages.

       The trial court granted Scheff’s preliminary objections and dismissed the

action without prejudice. It did so because while the other elements for a

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             (a) does a tortious act in concert with the other or pursuant
       to a common design with him, or

             (b) knows that the other’s conduct constitutes a breach of
       duty and gives substantial assistance or encouragement to the
       other so to conduct himself, or

             (c) gives substantial assistance to the other in
       accomplishing a tortious result and his own conduct, separately
       considered, constitutes a breach of duty to the third person.

Restatement (Second) of Torts § 876 (emphasis added); see also Linde v.
Linde, 220 A.3d 1119, 1145 (Pa. Super. 2019) (recognizing a claim for aiding
and abetting a breach of fiduciary duty under Section 876).

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breach of a fiduciary duty had been established, there was not a breach until

the confidential agreement had been disclosed, and until it was disclosed, any

claim of damages was premature. In doing so, the trial court stated:

              The Rosenbaum parties’ complaint against [Appellees] is
      really a complaint that the latter engaged in extremely aggressive
      litigation tactics in the underlying action, which may even rise to
      the level of a failed extortion attempt. So far, the Rosenbaum
      parties[’] only losses or injuries that were allegedly caused by
      [Appellees’] actions appear to be the attorneys’ fees the
      Rosenbaum parties are incurring representing themselves in this
      action and the underlying action. Claims for such fees are better
      asserted after the underlying litigation is resolved, such as by way
      of an abuse of process or malicious prosecution claim if the
      Rosenbaum parties prevail on the claims asserted against them in
      the counterclaim and joinder complaint.

      The majority agrees with the trial court that the complaint has not

sufficiently pled a claim because Rosenbaum proffered no allegations in its

complaint to establish causation that Scheff’s conduct led to the destruction

of the Morgan-Rosenbaum business relationship. However, the majority then

goes on to reverse the trial court’s order because the trial court’s dismissal of

the action was based on the “mistaken belief that the alleged aiding and

abetting breach of fiduciary duty has yet to occur” when, according to the

Rosenbaum complaint, its purported aiding and abetting the breach of a

fiduciary duty and injury have already occurred according to the allegations in

the complaint.

      Unlike the majority, I would hold that Rosenbaum has pled a cause of

action that Scheff, in his representation of Mitts, has aided and abetted Mitts

in breaching his fiduciary duty that he owed to Rosenbaum. In its dismissal,

                                      -4-
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the trial court was of the belief that until the confidential document was

disclosed, there was no breach of a fiduciary duty and necessarily no damages

until that occurred. However, the confidential agreement did not have to be

disclosed for there to be a breach of a fiduciary duty because an attorney,

when representing a client in a matter, owes a duty to act in a client’s best

interest and not to use the threatened disclosure of a confidential agreement

to extort a settlement of its fees on favorable terms. Moreover, Scheff, by

threatening to disclose the confidential agreement and refusing to file the

matter under seal, aided and abetted in breaching Mitts’ fiduciary duty to

Rosenbaum making him liable for any damages caused by his threats.

       While the majority does not disagree that aiding and abetting a breach

of a fiduciary duty occurred by Scheff’s threat to disclose the confidential

settlement, it finds that the cause of action was not made out because the

complaint does not plead that Rosenbaum has incurred damages because of

that threat.3     However, in paragraph 71 of the complaint, Rosenbaum

contended      that   Scheff’s     breach      “negatively   impacted   Rosenbaum’s

relationship with Morgan & Morgan” and in paragraph 76 of the complaint

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3“To prevail on [a] breach of fiduciary duty claim[], [a plaintiff is] required to
prove the following elements: the existence of a fiduciary relationship
between [the p]laintiff and [the defendant], that [the defendant] negligently
or intentionally failed to act in good faith and solely for [the plaintiff’s] benefit,
and that [the plaintiff] suffered an injury caused by [the defendant’s] breach
of [its] fiduciary duty.” Snyder v. Crusader Servicing Corp., 231 A.3d 20,
31 (Pa. Super. 2020) (citations and footnote omitted; emphasis added).

                                            -5-
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asked that “damages to the interference of [Rosenbaum’s) business

relationship with Morgan, together with punitive damages” be awarded. It is

even obvious that Scheff made the threat because he knew that it would

damage Rosenbaum’s business with Morgan; otherwise, why would he make

the threat. In any event, paragraphs 71 and 76 were sufficient to satisfy the

requirement that Rosenbaum plead that he suffered damages that were

caused by Scheff’s threats.

     Accordingly, for the foregoing reasons, I respectfully dissent.

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