What almost every individual, business, and municipality have in common is that they have some sort of insurance coverage, and sooner or later they need to use it.  But if the insurance company won’t hold up its end of the bargain, how does an insured prove that an insurer acted in bad faith?

Although the issue has been well settled since the Superior Court decided Terletsky v. Prudential Property & Casualty Insurance Co. in 1994, there has been much confusion as to whether or not ill motive or ill will is required.  The Pennsylvania Supreme Court, however, recently weighed in, newly confirming the old standard. Continue Reading Rancosky: The (Clarified) Insurance Bad Faith Standard

The ability of school districts to raise additional revenue through means other than tax increases just got a bit more difficult. In an eagerly awaited decision, the Pennsylvania Supreme Court has upheld the ability of taxpayers to challenge on constitutional grounds the practice in certain school districts of engaging in selective assessment appeals – that is, appealing the assessments of only certain classes of properties (commercial properties), while not appealing the assessments of other (residential) properties.

McNees’ Paul Morcom, of the State and Local Tax Practice Group, has the details on this important decision, at the McNees PA Tax Blog, Adding Value.

Litigation can often be long and tiresome. Unfortunately, a successful verdict does not always lead to the desired outcome – the defendant paying up. Previous parts of this series addressed other aspects of collecting and enforcing judgments. Part I of this series discussed collecting a money judgment through the garnishment process. Part II explained a second option, conducting a sheriff’s sale of the defendant’s real or personal property. In the second part of this series, the article assumed that no liens existed against the defendant’s property.

For the third installment in the series, however, we will look at the effect that previous liens against the defendant have on one’s ability to collect on a judgment.

The entry of a judgment by a court acts as a lien on all real property in that county. The judgment essentially acts as an underlying security for the debt owed by the defendant. When a defendant sells his or her real property, the defendant is obligated to first satisfy any liens on the real property, or the new owner cannot take a clean title.

So, how does a judgment creditor know where they stand in relation to other judgments and liens?

State statute dictates the priority in which liens must be paid, and defendants pay liens with the highest priority first. Filed state tax liens have priority over all other liens. Mortgage liens have second priority, and include, but are not limited to, standard mortgages, open-end mortgages, and defeasible deeds in the nature of mortgages. Next in line are verdicts for a specific sum of money. Other adverse judgments from a court have fourth lien priority, followed by amicable judgments, and then writs issued by the court of common pleas. Last are other instruments that, when filed and indexed with the prothonotary of the court of common pleas, create liens against real property.

Lien priority does not last forever, and in many instances priority will be lost if a plaintiff does not take the necessary steps to revive the judgment lien within five years after its entry. Note, tax liens and mortgage liens are distinct from judgment liens because they are not the result of a court judgment. Therefore, plaintiffs do not need to revive tax liens and mortgage liens in order to maintain priority.

Judgment revival occurs in two ways. The first way is through an agreement to revive, which requires the defendant’s signature. If the defendant refuses to sign the agreement to revive or cannot be found, then the plaintiff must pursue the second option and file a praecipe for writ of revival. Defendants have a limited number of defenses against the writ of revival and therefore courts are likely to issue the revival writ upon the filing of the praecipe.

Understanding lien priority is important to ensuring that you are in the best position to receive your long over-due payment. The litigation group at McNees Wallace & Nurick can aid clients in understanding lien priority and avoiding any associated pitfalls.

The author extends special thanks to Erica Koser for her assistance with this article.

For boroughs, townships, municipalities, and cities, eminent domain is a tool used to better the communities in which we live, whether than means widening an increasingly busy road or constructing a new community park.  While eminent domain is an important and powerful tool, condemnors must be sure that they follow the proper procedures, including notice to all property owners, both those of record and those who are not.

Continue Reading How Adverse Possession Can Affect The Eminent Domain Process

You won your lawsuit, and now you want to be paid.  But how do you get an unwilling defendant to cough up the cash?  You have several options.  Part I of this series discussed collecting a money judgment through the garnishment process.  This article explains a second option:  conducting a sheriff’s sale of the defendant’s real or personal property in order to be made whole.

Continue Reading I Have a Judgment, Now What?: Collecting and Enforcing a Money Judgment Through a Sheriff’s Sale

As a plaintiff, you often roam a long and weary road before you achieve your ultimate litigation goal: a judgment against a defendant. Now that you have your prize, what do you do with it? With any luck, the defendant recognizes the error of his or her ways and willingly pays you the full amount that the court has awarded you. Many times, however, the opposing party is not willing to voluntarily pay up. Now what?

Pennsylvania law provides various means to assist a plaintiff in collecting and enforcing a money judgment. One common way of obtaining money from a recalcitrant judgment debtor is through a garnishment action. Garnishment is essentially the process of retrieving a judgment debtor’s assets from a third party. Often times, as many of our financial institution clients know all too well, this means requiring the defendant’s bank to put a hold on their account and for the financial institution to subsequently turn over all non-exempt funds to the plaintiff. This is usually a quick, easy, and fairly inexpensive way to collect on a judgment.

While garnishments are primarily something that financial institutions must deal with, many other clients may be subject to such actions as well. The garnishment rules clearly apply to any party holding an asset for the benefit of a judgment debtor. Such assets are not always bank account funds, but rather could also include collateral such as cars, trucks, heavy equipment, or other tangible assets. For example, we recently assisted a client with a garnishment action where the plaintiff sought to obtain gambling winnings which the client held for a defendant.

If you are not a banking institution, it is unlikely that you have had to navigate the garnishment process. An understanding of that process, however, could prevent major headaches and consequences down the road.

A properly garnished account entails several steps, some mandatory, others optional. First, a writ of execution in garnishment must be filed with the court and served by a sheriff on the party holding the defendant’s assets. Once the writ is received, the garnishee must be very careful to prevent the dissipation of the assets listed in the writ. At this point, we would advise seeking advice from counsel about how to proceed. Many times, the proper response is to turn over the named assets to the plaintiff. That is not always the case, however, as certain types of assets are exempt from execution.

In addition to the writ of execution in a garnishment, you may also receive garnishment interrogatories. Although not mandatory, garnishment interrogatories more often than not accompany the writ of execution. A strong word of caution here: garnishment interrogatories are in essence the start of a complaint, just as if you were being sued in court by the plaintiff. If the interrogatories are not answered within a certain time-frame, the plaintiff is permitted to enter a judgment against you, as the garnishee, for the same amount that the judgment debtor owes the plaintiff. Having an appreciation and understanding of what to do when you are served with these type of documents is essential to preventing the judgment debtor’s woes becoming your own.

Dana W. Chilson is the chair of McNees Wallace & Nurick LLC’s Insurance Group, as well as a member of the Public Sector, Litigation, Financial Services, and Injunction groups. She can be reached at 717-237-5457 or dchilson@mcneeslaw.com

On June 22, 2016, the Pennsylvania Commonwealth Court decided the case of Township of Millcreek v. Angela Cres Trust of June 25, 1998, 1725 C.D. 2015, which decided whether 42 Pa.C.S. § 5505 applies to eminent domain cases.  Section 5505 provides, in pertinent part, “[e]xcept as otherwise provided or prescribed by law, a court upon notice to the parties may modify or rescind any award within 30 days of its entry…except as otherwise provided or prescribed by law.”  Such a provision would typically apply to, for example, a party’s request that a trial order be modified to include attorneys’ fees, when such fees were not ascertainable until after the trial.  Practitioners have become accustomed to the provisions of the judicial code automatically applying to almost all cases.  So why was there any question whether 42 Pa.C.S. § 5505 applies to eminent domain cases?

In Millcreek, the Township of Millcreek filed a Declaration of Taking to condemn a portion of the property of the Angela Cres Trust of June 25, 1988 (the “Trust”) as part of a project to improve the Township’s storm water management system. The Trust filed preliminary objections to the declaration of taking pursuant to what is now Section 306 of the Pennsylvania Eminent Domain Code, 26 Pa.C.S. § 306.[1] (Recall, that preliminary objections in the context of eminent domain, as set forth in Section 306, are different than preliminary objections in a typical civil action under Pennsylvania Rule of Civil Procedure 1028.)  The Trust utilized the preliminary objections under Section 306 to argue that the improvement of the Township’s storm water management system was not a permissible basis for a condemnation under the Second Class Township Code.  The Court of Common Pleas of Erie County agreed with the Trust, and on appeal, the Commonwealth Court affirmed the lower court’s decision.  The Pennsylvania Supreme Court denied allocatur on October 12, 2012.

Over a year later, on October 23, 2013, the Trust filed a petition seeking reimbursement of its fees, costs, and expenses by the Township.  The Trust relied on paragraph (g) of Section 306, which states: “If preliminary objections which have the effect of terminating the condemnation are sustained, the condemnor shall reimburse the condemnee for reasonable appraisal, attorney and engineering fees and other costs and expenses actually incurred because of the condemnation proceedings.”  The Township responded by asserting the petition was untimely because, under 42 Pa.C.S. § 5505, the Trust only had 30 days after the trial court’s order sustaining the preliminary objections to file the petition.  The Erie County Court of Common Pleas disagreed, and awarded the Trust $517,868 in attorneys’ fees and $164,000 in expert fees.  The Township appealed to the Commonwealth Court.[2]

The Commonwealth Court affirmed the trial court’s decision.  In affirming the decision, the Commonwealth Court pointed out that Section 102(a) of the Eminent Domain Code specifically provides that the Code is the “complete and exclusive procedure and law to be followed in condemnation proceedings.” Because Section 306(g) does not prescribe a time period when a fee and cost petition must be filed, the Trust’s petition was timely.  The Court specifically rejected the assertion that 42 Pa.C.S. § 5505 applies to eminent domain proceedings.

In addition to providing guidance on when a condemnee must file a fee/cost petition, Millcreek also gives a glimpse into how the Court will view the application of other provisions of the judicial code to eminent domain proceedings.

Dana W. Chilson is the chair of McNees Wallace & Nurick LLC’s Insurance Group, as well as a member of the Public Sector, Litigation, Financial Services, and Injunction groups. She can be reached at 717-237-5457 or dchilson@mcneeslaw.com

[1]           At the time Millcreek was filed, the Eminent Domain Code had not yet been amended.  The provisions relevant to this case, however, remain the same but have been renumbered and reordered under the current version of the Code.  To avoid confusion, this article will reference the current citations to the applicable provisions.

[2]           The Trust also filed a cross-appeal, asserting that the trial court erred by not awarding the full amount of its requested damages.

The Pennsylvania Supreme Court recently announced its decision in the case of Kuren, et al. v. Luzerne County, et al., 57 MAP 2015 and 58 MAP 2015, finding that indigent defendants can be “constructively” denied counsel where underfunding of the Public Defender’s Office creates “widespread, systematic deficiencies” that “deprive indigent defendants of the traditional markers of legal representation.” Slip op.  p. 47. The Court’s decision is expected to result in similar cases filed against other Pennsylvania Counties, putting Counties at risk of being compelled by the courts to increase funding for Public Defender’s Offices.

The Sixth Amendment to the United States Constitution guarantees that “[i]n all criminal prosecutions, the accused shall…have the Assistance of Counsel for his defense.” U.S. Const. Amend VI. A right to counsel is similarly outlined in Article I, Section 9 of the Pennsylvania Constitution. The Supreme Court, in Gideon v. Wainwright, 372 U.S. 335, 342 (1963), held that this right extended not only to federal court proceedings, but also to state court proceedings, and required the states to provide counsel to all criminal defendants who cannot afford to pay for an attorney. Pennsylvania has addressed this obligation by passing the Public Defender Act, 16 P.S. §9960.3, which requires every County to maintain a Public Defender’s office for purposes of compliance with Gideon.

The creation and general operation of a public defender’s office, according to Justice Wecht on behalf of the Court, constitutes a facial attempt to comply with the mandate in Gideon. However, the Court in Kuren found that these offices are “chronically underfunded and understaffed, and are hard-pressed to meet the baseline demands of the Sixth Amendment, raising the disconcerting question of whether counties are complying with Gideon.” Slip op at p. 2. The Plaintiffs’ overarching allegation was that the limited time and resources that the Luzerne County Office of the Public Defender could devote to each case resulted in representation that failed to meet constitutional norms. Slip op. p. 10.

In particular, the Plaintiffs contended that: (1) the OPD could not sufficiently train its employees so that they had adequate knowledge of the relevant areas of the law and therefore attorneys lacked proficiency in relevant areas of the law, (2) limited staffing prevented the office from assigning attorneys to assist clients at initial arraignments, (3) limited staffing along with heavy caseloads and inadequate resources resulted in attorneys routinely postponing hearings or having inadequate time to meet fully with clients before significant case decisions had to be made, (4) time constraints prevented rigorous investigation and review of case materials or witness investigations necessary to challenge the facts alleged by the Commonwealth against the indigent defendants, (5) lack of resources impeded public defenders from being able to maintain regular and sustained contact with the client or conduct meaningful discussions about cases beyond brief interactions immediately prior to hearings, and (6) workloads prevented the performance of work with reasonable diligence and promptness. Slip op. pp. 12-14.

While normally a denial of counsel claim is pursued in a post-conviction motion for ineffective assistance of counsel, requiring proof of failures to file motions, interview witnesses and similar deficiencies, the Supreme Court noted that many courts have held that indigent defendants are entitled to prospective relief as well, given that the right to counsel is relevant at almost every single stage of the criminal case. Slip op. pp. 34-36. Deficiencies that do not meet the “ineffectiveness” standard can nonetheless violate the right to counsel even where they did not affect the outcome of the trial, because a defendant may suffer a prolonged pretrial detention, potentially meritorious motions are not filed, and the like. Slip op. p. 47. For the Court, the presence or absence of prejudice at issue in post-conviction right to counsel cases is only relevant because that impacts a particular remedy – the right to a new trial – rather than speaking to the occurrence or non-occurrence of a violation of the right to counsel. Slip op. p. 37, 46.

The Court upheld the right of indigent defendants to bring such a claim for constructive denial of counsel, with the remedy for a meritorious claim being an injunction to force a county to provide increased funding to a public defender’s office, if they can demonstrate “the likelihood of substantial and immediate irreparable injury, and the inadequacy of remedies at law.” To prove this “likelihood of substantial and immediate irreparable injury”, the Court advised that indigent defendants must focus on: “(1) when, on a system-wide basis the traditional markers of representation – such as timely and confidential consultation with clients, appropriate investigation, and meaningful adversarial testing of the prosecution’s case – are absent or significantly compromised; and (2) when substantial structural limitations – such as severe lack of resources, unreasonably high workloads, or critical understaffing of public defender offices – cause that absence or limitation in representation.” Slip op. p. 48.

For the Kuren Plaintiffs, the Court held that the allegations of their amended complaint were sufficient to overcome the preliminary objections filed by the County. Slip op. p. 55. The Court’s decision therefore does not find that there was a constructive denial of counsel by Luzerne County, but rather remands the matter to the trial court for discovery and trial on those issues and in accordance with the test announced by the Court. Slip op. p. 53.

The Court’s recognition of a cause of action against Counties for “underfunded” public defender offices will likely result in additional litigation against Counties, a fact that the Court acknowledged in its decision. However, the Court believed that“the burden of this litigation cannot outweigh the Commonwealth’s obligations to provide counsel to indigent defendants as explained by Gideon.” Slip op. p. 56.

In the wake of the Kuren decision and as Counties begin to consider their budgets for 2017, Counties should consider carefully the requests and recommendations made by their Public Defender’s Offices. Reports of staffing challenges, increasing caseloads, the challenges of funding for experts and investigators, and in particular commentary on the cost and burden of capital cases, all will become fodder for potential class actions for denial of the right to counsel – particularly if those reports go uninvestigated or unaddressed within the budget process. With the DA’s office and national standards the likely comparison points in litigation, Counties would do well to begin looking at those issues sooner rather than later.

While it’s clear that there will be repercussions for Counties as a result of the Supreme Court’s decision, the Supreme Court’s decision suggested that the Commonwealth may have some exposure as well. Noting that Pennsylvania is the only state where public defenders are funded exclusively at the local level and not by the state, the Court stated:

This funding structure necessarily leads to variations in the availability and quality of indigent representation from one county to the next. At the most fundamental level, compliance with Gideon should not – cannot – depend upon the county in which a crime is alleged. It is no surprise that statewide funding is “at the core of nearly every reform recommendation” pertaining to improving the quality of indigent defense.

Slip op. p. 57. With this admonition from the Court, it would not be surprising to see increased discussion about such reforms.