WFIC, LLC v. LaBarre, D.
148 A.3d 812
Pa. Super. Ct.2016Background
- Polymer Dynamics, Inc. (PDI) obtained a $12.5M jury verdict (affirmed on appeal); proceeds were placed in escrow and taxes/fees paid, leaving insufficient funds to satisfy PDI’s secured creditor, PAFCO.
- McKissock (Appellant), PDI’s former attorney, had an amended 2008 fee agreement converting his fee to one‑third of the verdict and providing that litigation fund investors (and their loans) would be paid from his increased contingency fee before his own fee.
- Various third‑party investors ("Litigation Fund Investors") and PAFCO had funded or loaned money to PDI in exchange for repayment from any recovery; PAFCO held perfected security interests (UCC‑1) predating distributions.
- WFIC (assignee of a creditor) sued regarding distribution; after prior rulings left only McKissock’s cross‑claim for unjust enrichment, multiple defendants moved for summary judgment.
- The trial court held the 2008 fee agreement champertous and invalid, declined to recognize an attorney charging lien/security interest in the verdict proceeds, and granted summary judgment dismissing McKissock’s unjust enrichment claims; the Superior Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of charging lien / 2008 Fee Agreement | McKissock: agreement created a charging lien securing his fee from the verdict proceeds | Defendants: fee arrangement improperly grants priority to attorney and third‑party investors; champertous | Court: 2008 agreement is champertous, invalid; no charging lien recognized |
| Priority over PAFCO’s security interest | McKissock: his fee right was superior to PAFCO and should be paid first | Defendants: PAFCO held perfected security interests with priority under UCC | Held: moot after invalidating fee agreement; but court noted secured creditor priority over unsecured attorney claim |
| Standing to assert unjust enrichment against non‑clients | McKissock: can recover for unjust enrichment from investors/PAFCO who directly benefited from his services | Defendants: McKissock represented PDI, not investors/PAFCO; discharged attorney cannot pursue third‑party quantum meruit/unjust enrichment | Court: McKissock lacks standing to assert unjust enrichment against non‑clients; claims dismissed |
| Merits of unjust enrichment claim | McKissock: defendants were unjustly enriched by distributions tied to his legal work | Defendants: distributions to perfected secured creditor and repayment to investors were proper; no unjust retention | Court: even on the merits, distribution to PAFCO and investors was not unjust given PAFCO’s perfected priority; claim fails |
Key Cases Cited
- Thompson v. Ginkel, 95 A.3d 900 (Pa. Super. 2014) (summary judgment standard)
- Mager v. Bultena, 797 A.2d 948 (Pa. Super. 2002) (limits on quantum meruit against third parties; discharged attorney’s remedies)
- Frank v. TeWinkle, 45 A.3d 434 (Pa. Super. 2012) (champerty doctrine and invalidity of certain assignments)
- Styer v. Hugo, 619 A.2d 347 (Pa. Super. 1993) (elements and focus of unjust enrichment analysis)
- Belfonte v. Miller, 243 A.2d 150 (Pa. Super. 1968) (definition/elements of champertous agreement)