YMFZ Defends Client’s Multi-Million Dollar Trial Win in Massive, Multi-Party Appeal

In two lengthy, sweeping, unanimous opinions by the Pennsylvania Superior Court, YMFZ has successfully preserved a multi-million-dollar trial victory that it won for one of its clients in 2020.

The Pennsylvania Superior Court affirmed Judge Christine Ward of the Complex and Commercial Litigation Center of the Allegheny County Court of Common Pleas, who found five civil defendants liable for defrauding YMFZ’s client, a non-profit continuing care retirement community in the Pittsburgh suburbs.  The fraud stemmed from a series of repair, renovation, and refurbishment projects at the retirement community’s campus between 2014 and 2015 in which an independently-contracted facilities manager conspired with his personal business associates to establish a sham general contracting company and overcharge the retirement community for construction work performed entirely by subcontractors.

To uncover the fraud, YMFZ conducted a years-long forensic investigation into the finances and records of the defendants and revealed a complex scheme of over-inflated subcontractor invoices, multiple shell companies used to channel and hide funds, and inculpating e-mail correspondence.  Tens of thousands of documents were collected and reviewed, including a comprehensive search and recovery of electronically-stored information (“ESI”).

On appeal, the Superior Court (Bender, P.J.E.) ruled that “The record supports the trial court’s factual findings, and we agree with its legal conclusion that the elements of fraud have been met. [The general contracting company] represented that it was an established general contractor, had no conflicts of interest, and charged reasonable prices. In making these representations, [it] knew that they were false and made them with the intent to mislead [the retirement community].”

Among the issues appealed was an award of attorney’s fees of over $1 million in favor of YMFZ’s client and against the facilities management company pursuant to a “prevailing party provision” in the parties’ facilities management agreement.  Again, YMFZ successfully preserved this award for its client on appeal.  In a published opinion (Riverview Carpet & Flooring, Inc. v. Presbyterian SeniorCare, 299 A.3d 937; 2023 Pa. Super. LEXIS 298 **; 2023 PA Super 119), President Judge Emeritus Bender wrote, “With respect to [the retirement community]’s action, the trial court declared a winner and entered judgment in [its] favor. Based on the foregoing, we deem meritless [Defendant’s] argument that [the retirement community] should not receive attorneys’ fees.”

The case is a rare instance of a plaintiff being awarded damages of a kind and quantity that wholly compensate the plaintiff for all of its losses, including both damages sustained as a result of the defendants’ unlawful acts and the plaintiff’s out-of-pocket attorney’s fees and litigation expenses incurred in prosecuting its claims.  Ordinarily, under the so-called “American Rule,” plaintiffs are responsible for their own legal fees, which often eat into (and in many cases, eclipse) any amounts they are awarded for their losses.

Brian Kassalen, C.P.A., of Baker Tilly (formerly Arnet Carbis Toothman), served as YMFZ’s forensic accounting consultant and expert witness.  Michael Dell’Isola, P.E., of Crawford Consulting, served as a construction practices consultant and expert witness.  bit-x-bit of Pittsburgh provided technical support and e-discovery services.

See further: Pennsylvania Superior Court Docket Nos. 670 WDA 2021, 671 WDA 2021, 672 WDA 2021, 673 WDA 2021, 674 WDA 2021, 675 WDA 2021, 676 WDA 2021, 677 WDA 2021, 733 WDA 2021; Allegheny County Court of Common Pleas Docket No. GD-15-015968.

The successful appeal was led by YMFZ attorneys Chadd Colin and Ron Lefebvre.

YMFZ is an efficient, skilled, closely-held Pittsburgh law firm which for more than 30 years has been offering good counsel, personal attention, and cost-effective representation to its clients for all manner of business legal needs, including commercial litigation, business set-up and finance, commercial and technology contracting (including bank representation), employment law, real estate (including oil and gas), and intellectual property. YMFZ clients include both large national and multi-national corporations and regional and local businesses. For more information on our firm, please visit www.ymfzlaw.com.

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Notice: This article is for informational purposes only. None of the information contained in the article constitutes legal advice. No reader should act on such information without first seeking legal advice from an attorney.