Pa. judge overseeing FJD's legal malpractice case dismisses defendant's counterclaims

By Jon Campisi | Oct 19, 2012

The western Pennsylvania judge who was specially appointed to preside over the First

Judicial District’s legal malpractice case stemming from the botched family court deal has dismissed two counterclaims that had been filed by the attorney who is being sued by Philadelphia’s court system.

In an Oct. 10 order, Judge R. Stanton Wettick, Jr., the Allegheny County trial court judge overseeing the case in Philadelphia, dismissed without leave to amend an unjust enrichment claim that was filed by Deilwydd Property Group.

The jurist also dismissed with leave to amend Deilwydd’s breach of contract counterclaim.

Deilwydd was a limited liability corporation set up by Jeffrey B. Rotwitt, a former attorney with the Philadelphia firm Obermayer Rebmann Maxwell & Hippel.

Rotwitt, Deilwydd and Obermayer are defendants in a legal malpractice suit that was initiated by the First Judicial District late last year over allegations that Rotwitt failed to disclose his dual role in the botched family court deal.

Rotwitt had been hired by the FJD to help scout out a potential location for a new family court facility in downtown Philadelphia, but it later came out that Rotwitt was being compensated in his capacity as a co-developer on the project.

The FJD sued Rotwitt, his former law firm and Rotwitt’s property group for legal malpractice.

Pennsylvania Supreme Court Chief Justice Ronald D. Castille is a co-plaintiff in the case because he was the high court’s liaison justice to the family court project at the time.

Deilwydd recently filed its two counterclaims, both of which were met by preliminary objections filed by the FJD.

In Deilwydd’s breach of contract counterclaim, the defendant alleged that it was owed $1.79 million plus prejudgment interest.

Deilwydd claimed that it and the co-developer, an entity called Northwest 15th Street Associates, which was operated by developer Donald Pulver, were to be paid a total of $5.23 million, evenly split between the two, and that at the date of the contract’s termination, Deilwydd had only received $825,000.

In his ruling, however, Wettick wrote that the FJD correctly stated that a breach of contract claim cannot be based on the full amount that the FJD would owe if the construction had been completed.

The FJD had terminated its agreement with Deilwydd pursuant to a provision that allowed either party to terminate the agreement on no less than three days’ prior written notice, and limiting the FJD’s payment obligations, following termination, to ‘costs incurred prior to the effective date of termination,’” according to the court ruling.

Deilwydd’s counterclaim doesn’t describe any costs it incurred prior to the effective date of termination for which it has not been paid, Wettick wrote.

The judge did, however, permit Deilwydd to file an amended counterclaim that sets forth any costs incurred as of the termination date for which payment has not been made.

“The First Judicial District contends that the parties understood that the costs incurred would not exceed the amount of the monthly payments,” the ruling states. “However, no language in the letter agreements supports this position.

“If the parties had intended to limit the First Judicial District’s obligations upon termination to unpaid monthly payments as of the date of termination, this is what the writing would have said,” the ruling continued. “It would not have referred to ‘costs incurred’ prior to the effective date of termination.”

In its objections to Deilwydd’s unjust enrichment counterclaim, the FJD argued that, as per case law, the doctrine of unjust enrichment is inapplicable where the relationship between the parties is founded on a contract.

“If the First Judicial District had intended to contest Deilwydd’s contention that it is a third-party beneficiary, it could not be seeking dismissal of the unjust enrichment claim on the ground that the relationship between the parties is governed by a contract,” Wettick’s ruling states. “Consequently, by seeking dismissal on the ground that the letter agreements define the relationship between Deilwydd and the First Judicial District, the First Judicial district cannot in this litigation challenge Deilwydd’s contention that it is a third-party beneficiary.”

Deilwydd cited a Pennsylvania Superior Court ruling that determined a party who is seeking monetary relief under a breach of contract claim would also plead an unjust enrichment claim pursuant to the Rules of Civil Procedure allowing a party to plead alternative causes of action.

However, Wettick wrote, where the defendant or counterclaim defendant is not disputing the plaintiff’s allegations that the relationship between the plaintiff and the defendant is governed by the contract upon which the plaintiff bases its breach of contract claim, the plaintiff or counterclaim plaintiff can no longer pursue its unjust enrichment count.

For the above reason, the judge wrote, he had no choice but to dismiss Deilwydd’s unjust enrichment counterclaim without leave to amend the counterclaim.

No trial date has been set as of yet in the case.

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