Reed Associates v. Tekton Development Corp.
464 EDA 2017
| Pa. Super. Ct. | Sep 22, 2017Background
- Tekton was general contractor and hired Reed Associates (Appellee) as a subcontractor; disputes arose over unpaid contract balance.
- Tekton and the School District executed a 2010 settlement that placed $28,475.77 in escrow under control of law firm Flamm Walton (Appellant); release required resolution/adjudication of the Tekton–Reed dispute and written authorization from the School District.
- Appellant was retained by Tekton on an hourly-fee agreement; no agreement to look to the escrow for its fees.
- In March 2014 Tekton’s president emailed Flamm Walton suggesting the firm pay itself from the escrow; Tekton later settled with Reed for $28,475, and Reed’s settlement and the School District’s written authorization directed Flamm Walton to release the escrow to Reed.
- Flamm Walton refused to release funds; Reed sued Flamm Walton (and obtained default against Tekton) and moved for summary judgment; trial court granted judgment for Reed for the escrow amount plus prejudgment interest.
Issues
| Issue | Plaintiff's Argument (Reed) | Defendant's Argument (Flamm Walton) | Held |
|---|---|---|---|
| Whether Flamm Walton had a charging lien on the escrow funds | No charging lien; escrow belongs to Reed under settlement and must be released | Firm claims charging lien to secure unpaid legal fees from escrow | No charging lien: firm failed to meet Recht elements (fund distributable on equitable principles; agreement to look to fund; equitable necessity) |
| Whether Tekton assigned escrow to Flamm Walton | Reed: Tekton had no authority to assign; escrow governed by settlement conditions | Firm: Tekton’s president’s email constituted assignment/authorization to pay firm from escrow | No assignment: a suggestion email cannot override express escrow release conditions in settlement agreement |
| Whether prejudgment interest was proper | Reed: entitled to prejudgment interest because Flamm Walton held money that belonged in good conscience to Reed and delay began when School District authorized release | Flamm Walton: objected to prejudgment interest award | Prejudgment interest appropriate as equitable remedy; trial court to recompute correct amount and amend judgment |
| Whether summary judgment was appropriate | Reed: facts undisputed; entitled to judgment as matter of law | Flamm Walton: disputed rights to funds and lien/assignment issues create factual/legal issues | Summary judgment affirmed: no genuine issue of material fact on charging lien, assignment, or entitlement to funds |
Key Cases Cited
- Recht v. Urban Redevelopment Authority of City of Clairton, 168 A.2d 134 (Pa. 1961) (elements required for recognizing a charging lien)
- Step Plan Services, Inc. v. Koresko, 12 A.3d 401 (Pa. Super. 2010) (enforce settlement agreement terms when contract is valid)
- Summers v. Certainteed Corp., 997 A.2d 1152 (Pa. 2010) (standard of review for summary judgment)
- Kaiser v. Old Republic Ins. Co., 741 A.2d 748 (Pa. Super. 1999) (prejudgment interest may be awarded when defendant holds money that in good conscience belongs to plaintiff)
- Stockton v. Stockton, 698 A.2d 1334 (Pa. Super. 1997) (trial court may correct clerical/formal errors on the face of the record post-judgment)