United Leasing, Inc. v. Burton

20 Pa. D. & C.4th 481, 1993 Pa. Dist. & Cnty. Dec. LEXIS 123
CourtPennsylvania Court of Common Pleas, Somerset County
DecidedJuly 27, 1993
Docketno. 609 Civil 1992
StatusPublished

This text of 20 Pa. D. & C.4th 481 (United Leasing, Inc. v. Burton) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Somerset County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United Leasing, Inc. v. Burton, 20 Pa. D. & C.4th 481, 1993 Pa. Dist. & Cnty. Dec. LEXIS 123 (Pa. Super. Ct. 1993).

Opinion

FTKE, P.J.,

This case is before the court on (1) defendants’ petition to transfer; (2) defendants’ motion to disqualify plaintiff’s counsel; and (3) defendants’ preliminary objection in the nature of a demurrer.

This action stems from a lease agreement entered into on November 4, 1988, between plaintiff, United Leasing, Inc., (hereafter referred to as “United”), and Burton. Moving and Storage, Inc. (hereafter referred to as “Burton Moving”). The subject of the lease agreement was a tractor which was leased to Burton Moving.

In response to a request by United, defendants, George and Georgine Burton, signed a guarantee as personal guarantors of the lease between United and Burton Moving.

On May 1,1991, Burton Moving entered into Chapter 11 bankruptcy. The Bankruptcy Court for the Western District of Pennsylvania approved a reorganization plan. As part of the plan, United reacquired possession of [482]*482the tractor and became an unsecured creditor for the balance due under the lease in the amount of $ 10,704.81. The plan provided for 100 percent creditor pay back over a 10 year period.

On November 1, 1992, plaintiff, United, filed suit against defendants, George and Georgine Burton (hereafter referred to as “Burtons”), for breach of the personal guarantee. Plaintiff contends that it is entitled to payment in full by the Burtons as personal guarantors of the lease.

DISCUSSION

First, we must determine whether this court has jurisdiction to hear the case.

In deciding whether subject matter jurisdiction exists, the court must decide whether it “has the power to determine controversies of the general class to which the case belongs (citation omitted); ... the controlling question is the fundamental one of whether the court has the power to embark upon the inquiry raised by the complaint in a particular action which has been commenced (citation omitted).” Stevens v. Erie Insurance Exchange, 50 Somerset Leg. J. 40, 45 (1987).

As a general principle, a breach of contract action is within the competence of the common pleas court to hear and decide. Id. at 55. In the instant case, the plaintiff sued defendants based on breach of a guaranty contract. Ordinarily, we would not hesitate to embark upon the inquiry raised by the plaintiff’s complaint.

The issue, however, is clouded by the fact that the corporation, Burton Moving, whose debt was guaranteed by the Burtons, filed for bankruptcy and by the fact that a subsequent plan for reorganization was approved by the Bankruptcy Court. In this connection [483]*483it is important to note that the guarantor, George Burton, is the principal of the debtor corporation.

Despite these factors and the intervention of bankruptcy proceedings, however, we conclude that the instant suit may proceed. According to applicable federal authority, guarantors may be sued in a state court, even though bankruptcy proceedings are pending against the principal debtor in a federal district court. In re Magnus Harmonica Corporation, 233 F.2d 803 (3rd Cir. 1956); Browning Seed, Inc. v. Bay les, 812 F.2d 999 (5th Cir. 1987).

In In re Magnus Harmonica Corporation, supra, the president of the corporation, Finn Magnus, and the secretary of the corporation, Elsie Magnus, guaranteed the debt of the corporation. Id. at 803. The corporation then entered into Chapter 11 bankruptcy reorganization. Thereafter, the obligee of the guaranty instituted suit in state court against the Magnuses on the contract of guaranty. The Magnuses sought an injunction to have the proceeding stayed, which was subsequently granted by the district court. Id.

The obligee filed a motion to stay the injunction. In staying the injunction, the court held that the federal court had no authority to enjoin a state court action against the guarantors, although the debtor corporation was in bankruptcy. In re Magnus Harmonica Corporation, supra. In determining that a suit could proceed in state court against the guarantors of the debt at the same time the debtor corporation was in bankruptcy reorganization, the court reasoned that the federal court in bankruptcy proceedings did not have “exclusive jurisdiction over all controversies that in some way affect the debtor’s estate.” Id. at 804.

Accordingly, we find that jurisdiction in the instant case is proper.

[484]*484Having determined that we have jurisdiction, we next address defendants’ motion to disqualify plaintiff’s counsel.

Defendants rely on Canon 9 of the Code of Professional Responsibility as authority for their proposition that plaintiff’s attorney must be disqualified. Defendants contend that a lawyer has the ethical obligation “[to] avoid even the appearance of professional impropriety. ...” Pa. Code of Prof. Resp., Canon 9. This necessarily refers to conduct which “might cause an average layman to think that his interest might be adversely affected by the conduct.” Id.

Specifically, defendants contend that a “layman may perceive that District Attorney Flower in this non-official capacity could use his official position to benefit the civil claims of his private client (United Leasing).” Defendants assert that this situation evokes an inherent appearance of bias, which jeopardizes defendants’ right to a fair and impartial jury trial. Defendants further contend that the “disadvantage of the defendants is further compounded by the arcadian nature of Somerset County as well as the fact that no substantial separation exists in county criminal proceedings or county civil proceedings.”

We observe preliminarily, that as pointed out by plaintiff, Pennsylvania no longer adheres to the “appearance of impropriety” standard. Rather, the Rules of Professional Conduct require the existence of an actual impropriety. Pennsylvania Bar Association Comm, on Ethics and Professional Responsibility, Inquiry no. 91-21 (1991); Rules of Professional Conduct Rule 1.7 cmt. (1987). We must bear this in mind as we proceed to address defendants’ motion.

It is accepted practice in this state, and in particular Somerset County, that an elected part-time district attorney be permitted to maintain a private practice. Commonwealth v. Gunsallus, 2 D.&C.4th 359, 362 (1989). It [485]*485is recognized that in the course of maintaining such a practice, conflicts may arise which warrant close scrutiny by the court. Id. at 363. Defendants, however, are not raising a conflict of interest claim, nor is Attorney Flower engaged in a situation which would warrant such an analysis. Rather, defendants claim that District Attorney Flower has an unfair advantage because of his political position.

It is established law that a “plaintiff’s choice of counsel is entitled to substantial deference.” Hamilton v. Merrill Lynch, 645 F. Supp. 60, 61 (1986). Defendants present us with no evidence of actual impropriety. Any potential problem with possible bias or partiality can be addressed and resolved at the voir dire stage. We will deny defendants’ motion for disqualification.

Defendants also contend that the cause of action should be transferred to the Court of Common Pleas of Cambria County on the basis of forum non conveniens.

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Bluebook (online)
20 Pa. D. & C.4th 481, 1993 Pa. Dist. & Cnty. Dec. LEXIS 123, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-leasing-inc-v-burton-pactcomplsomers-1993.