Obermayer Rebmann Maxwell Hippel v. Mascaro, J. ( 2022 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
OBERMAYER, REBMANN, MAXWELL : IN THE SUPERIOR COURT OF
AND HIPPEL, LLP : PENNSYLVANIA
:
:
v. :
:
:
J.P. MASCARO & SONS :
: No. 1601 EDA 2021
Appellants :
Appeal from the Order Entered May 14, 2020
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 1711000901
BEFORE: LAZARUS, J., NICHOLS, J., and McLAUGHLIN, J.
MEMORANDUM BY McLAUGHLIN, J.: FILED APRIL 18, 2022
J.P. Mascaro & Sons (“Mascaro”) appeals from the May 14, 2020 order
entered in the Court of Common Pleas of Philadelphia denying its motion for
post-trial relief in this breach of contract action. We affirm.
In April 2014, Mascaro, a solid waste collection and transportation
company, retained Obermayer Rebmann Maxwell & Hippel, LLP (“Obermayer”)
to represent it in a federal class action and wage hour case under the Fair
Labor Standards Act (“FLSA”) in McKinney v. Solid Waste Services, Inc.
d/b/a J.P. Mascaro & Sons (the “McKinney action”). In the McKinney
action, Mascaro was alleged to have failed to pay its employees overtime.
However, Mascaro asserted that it was exempt from paying overtime due to
a statutory exemption under Section 13(b)(1) of the FLSA (the “13(b)(1)
exemption”). The 13(b)(1) exemption exempts certain employers who are
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under the jurisdiction of the U.S. Department of Transportation and who
transport goods interstate from having to pay their drivers overtime wages.
The plaintiffs in the McKinney action were also seeking a class certification
to file a class action on behalf of other potential Mascaro employees who were
not paid overtime.
At the outset of the McKinney action, Mascaro made Obermayer aware
that it had previously been audited and the 13(b)(1) exemption was found to
apply to Mascaro. Mascaro also alleged that Obermayer was familiar with the
13(b)(1) exemption because Obermayer previously represented Mascaro in a
wage and hour case where the exemption defense was successful in resolving
the case.
Pursuant to the parties’ agreement, Obermayer provided Mascaro with
monthly billing statements, which included detailed entries about the work
that Obermayer was doing in the McKinney action. The agreement also
provided that Mascaro could contact Obermayer at any time if it had any
questions regarding Obermayer’s services and billing practices. After
Obermayer had been representing Mascaro in the McKinney action for
approximately eight months, Mascaro concluded that Obermayer’s legal fees
were excessive and unnecessary, and it directed Obermayer to stop working
on the case. Obermeyer then ceased working on McKinney action and
Mascaro’s general counsel took over the defense of the case. At the time of
termination, Obermayer was preparing to notice the McKinney plaintiffs for
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depositions and was gathering research in anticipation of filing a motion for
summary judgment.
Obermayer subsequently brought this action to collect unpaid legal fees
from Mascaro. A bench trial was held on January 21, 2020. The court issued
findings of fact and conclusions of law and found that Mascaro breached its
contract with Obermayer. It entered a finding in favor of Obermayer and
against Mascaro in the amount of $58,205.59. Mascaro filed a post-trial
motion, which was denied. This appeal followed. Mascaro raises the following
issues:
1. Did Obermayer breach its duty of good faith and fair dealing?
2. Does Obermayer’s breach of its duty of good faith and fair
dealing excuse Mascaro from paying outstanding fees?
Mascaro’s Br. at 4. We will address Mascaro’s two issues together.
Our standard of review in a non-jury trial is well established:
We must determine whether the findings of the trial court
are supported by competent evidence and whether the trial
judge committed error in the application of law. Additionally,
findings of the trial judge in a non-jury case must be given
the same weight and effect on appeal as a verdict of a jury
and will not be disturbed absent error of law or abuse of
discretion.
Davis ex rel. Davis v. Gov’t Employees Ins. Co., 775 A.2d 871, 873
(Pa.Super. 2001) (citation omitted). Our scope of review over questions of law
is plenary. Century Indem. Co. v. OneBeacon Ins. Co., 173 A.3d 784, 802
(Pa.Super. 2017) (citation omitted).
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Mascaro argues that under Pennsylvania law, every contract imposes on
each party a duty of good faith and fair dealing in its performance and
enforcement. Mascaro’s Br. at 18. It contends that the trial court erred when
it failed to recognize that Obermayer breached its duty of good faith and fair
dealing when Obermayer unreasonably billed Mascaro for unnecessary work
in the McKinney action. Id. at 19. Mascaro argues that Obermayer billed tens
of thousands of dollars in reviewing and responding to the McKinney
plaintiffs’ “normal wage and hour” discovery, which it claims was unrelated to
the threshold 13(b)(1) exemption issue. Id. at 9-10. It contends that
discovery should have been limited to the exemption issue and not to all
aspects of the wage and hour claims, as Mascaro “was confident in that
issue[,] it provided the most efficient path to resolution[,] and the case was
‘teed up’ for early and efficient resolution on that issue.” Id. at 20-21. Mascaro
maintains that Obermayer’s discretion in the McKinney action was not
unfettered and Obermayer violated Rule 1.5 of the Rules of Professional
Conduct by using “wasteful procedures.” Id. According to Mascaro,
Obermayer’s breach of its duty of good faith and fair dealing was a material
breach of the contract that excused Mascaro from having to pay the
unnecessary legal fees. Id. at 28.
“Every contract imposes on each party a duty of good faith and fair
dealing in its performance and its enforcement.” Kaplan v. Cablevision of
Pa., Inc., 671 A.2d 716, 722 (Pa.Super. 1996) (en banc) (quoting
Restatement (Second) of Contracts, § 205). A breach of the duty of good faith
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and fair dealing “cannot be precisely defined in all circumstances, however,
examples of bad faith conduct include: evasion of the spirit of the bargain,
lack of diligence and slacking off, willful rendering of imperfect performance,
abuse of a power to specify terms, and interference with or failure to cooperate
in the other party’s performance.” Id. (citations and internal quotation marks
omitted). A claim for breach of the covenant of good faith and fair dealing is
subsumed in a breach of contract action and is not itself an independent cause
of action. LSI Title Agency, Inc. v. Evaluation Servs., 951 A.2d 384, 391-
92 (Pa.Super. 2008).
Here, Mascaro did not file a counterclaim against Obermayer alleging
breach of contract. Rather, Mascaro only filed an answer with new matter to
Obermayer’s complaint, alleging “Obermayer. . . breached its implied duty of
good faith in its billing practices to Mascaro in connection with providing the
above-described services.” New Matter, at ¶ 9. Since Mascaro did not file a
breach of contract counterclaim against Obermayer, it cannot now allege that
Obermayer breached its duty of good faith and fair dealing. LSI Title Agency,
Inc., 951 A.2d at 391-92.
Even if Mascaro had properly presented such a claim, it would lack merit.
The court heard evidence that Obermayer kept in regular contact with Mascaro
during discovery in the McKinney action and provided Mascaro with monthly
billing statements with detailed entries regarding the work that was being
completed in that matter. N.T., 1/21/20, at 67, 139-40, 142. Mascaro’s
deputy general counsel, Albert DeGennaro, Esq., confirmed that Mascaro
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received the monthly billing statements and admitted that he never objected
to any specific bill entries throughout the discovery process. Id. at 139-40,
141-42.
An Obermayer attorney who worked on the McKinney action, Thomas
Hearn, Esq., testified that the McKinney action was a hybrid case, namely a
class action and collective action case, and discovery related to wage and hour
was necessary in order to see if there was commonality among the plaintiffs
and also to determine Mascaro’s potential liability if additional plaintiffs opted
to join the action, as well as to ascertain a possible settlement value. Id. at
21-22, 34-35, 59-60. Hearn stated that the wage and hour discovery was
propounded by the plaintiffs and that Obermayer had DeGennaro’s help in
responding to those discovery requests, without any objection from him. Id.
at 54. DeGennaro agreed that he provided documents for discovery to
Obermayer. Id. at 153. Hearn also testified that much of Obermeyer’s
research that was done on the applicability of the 13(b)(1) exemption was
whether the interstate transfer of trash was considered ”goods” within the
meaning of the statute and whether recyclables that were changed from their
native form could fall within the 13(b)(1) exemption. Id. at 18-19.
A former Obermayer attorney who worked on the McKinney action,
Larry Besnoff, Esq., testified that although he previously represented Mascaro
in a wage and hour case where the exemption defense was found to apply to
Mascaro, there were several different factual and legal issues in the McKinney
action that made it unclear whether the 13(b)(1) exemption would apply. Id.
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at 66-67. Besnoff stated that while in the previous case it was clear that the
trash stream was going through interstate commerce, the McKinney action
also involved recyclables, and it was unclear whether recyclables were
considered a different type of goods within the meaning of the statute. Id.
Besnoff further testified that some time had passed since the previous matter
and there was new case law issued on whether trash was considered goods
and therefore, whether it qualified for the 13(b)(1) exemption. Id. at 72.
The trial court’s finding that Mascaro breached its contract with
Obermayer by failing to pay outstanding legal fees for services legitimately
rendered to Mascaro by Obermayer is supported by competent evidence and
the court did not err in its application of the law. The record indicates that the
court heard testimony that Obermayer kept in regular contact with Mascaro
during discovery in the McKinney action and performed appropriate legal
services for Mascaro. Further, the trial court carefully considered the credibility
of the witnesses1 and we are bound by the court’s credibility determinations.
See Williams v. Taylor, 188 A.3d 447, 450 (Pa.Super. 2018) (stating “the
trial judge, as finder of fact, is free to believe all, part, or none of the evidence,
and this Court will not disturb his credibility determinations”). Accordingly,
Mascaro’s claim that Obermayer breached the duty of good faith and fair
dealing is without merit.
Order affirmed.
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1 See Trial Court Order, 5/14/20.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/18/2022
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