Thursday, March 12, 2009

Appeals Courts Used Strong Language in Overturning Conahan's Decisions

The Legal Intelligencer reported on March 6, 2009 that court cases involving ex-Judge Michael Conahan were overturned with strongly worded opinions.

The owners of a resort hotel on the outskirts of Wilkes-Barre, where reputed mob boss William "Billy" D'Elia was a fixture, received a pair of favorable decisions in the Luzerne County courtroom of disgraced ex-Judge Michael T. Conahan that were later overturned in strongly worded opinions by appellate panels, an examination of court documents and interviews by The Legal Intelligencer have shown.

Based on what sources have told The Legal and a review of obtained documents, there is reason to suspect the case in which D'Elia and Kulick "were both interested" was a zoning case involving The Woodlands.

Conahan rendered decisions — including a $13 million verdict at the conclusion of a bench trial — favorable to the owners of The Woodlands Inn & Resort in two cases where appellate court panels found Conahan had abused his discretion and reversed his decision or remanded the case for retrial.

Sources have told The Legal that D'Elia, in addition to frequenting The Woodlands, is a friend of the owners.

Pennsylvania Department of State records show The Woodlands is owned by Rokom Inc. Gary, Mitchell and Ross Kornfeld are listed as the corporate officers of Rokom. Messages left for Gary, Mitchell and Ross Kornfeld at The Woodlands were not returned.

Mark Kornfeld, who is listed as a plaintiff in both lawsuits, answered the phone in Gary Kornfeld's office. He said the court record "stands for itself," but otherwise declined to discuss the decisions.

According to a Superior Court decision remanding the case for retrial, Conahan awarded the plaintiffs $13 million in damages at the end of a non-jury trial. Luzerne County Common Pleas Judge Peter Paul Olszewski Jr. awarded the plaintiffs $900,000 in damages on retrial in 2005, according to Luzerne County court records.

In her opinion for a three-judge panel that decided the appeal, Judge Phyllis W. Beck wrote that, while the panel agreed that the bank handled the matter improperly, "At worst, the Bank had a pattern of avoiding and being indifferent to its statutory obligations, and at best, it improperly trained and supervised its employees with regard to those obligations."

Beck wrote while the law under which the plaintiffs filed their complaint was designed to punish such behavior, "Our careful review of the record reveals that the enormous verdict in this case did not bear any reasonable relationship to the actual damages suffered by the appellees as a result of the Bank's failure to satisfy the mortgages."

"Indeed, the evidence indicates that appellees were neither hindered in their business practices, nor embarrassed as a result of the Bank's failure. The Kornfelds themselves testified that they suffered no actual damages. Furthermore, nothing in the record indicates that the Bank acted out of malice, or was wanton in its misconduct, or that it achieved any corporate gain by its inaction. In the face of this record, we cannot sustain a $13,000,000 windfall in appellees' favor," Beck wrote.

The court noted that the applicable mortgage satisfaction statutes limit the penalty for a failure to file satisfactions to the face value of the mortgages. In the case of the three mortgages the Kornfelds had taken, the sum total and statutory ceiling of any damages was $8.4 million. For that reason, the court remanded the case for retrial on the damages before a different judge.

The Kornfelds were represented by Steven M. Greenwald, of Wilkes-Barre, and James F. Mundy, of Raynes McCarty in Philadelphia. Neither attorney returned phone calls seeking comment for this article. Richard L. Berkman, of Dechert in Philadelphia, represented Bankers Trust Co., which had acquired Atlantic Financial's interest in the mortgages, during the retrial on damages.

Berkman said the trial attorneys, who were not from Pennsylvania, reported that they felt they'd been "home-towned" during the first trial.

"We felt we were getting a real trial, the second time around," Berkman said, although, he added, the damages awarded seemed excessive in light of the fact that the plaintiffs alleged no economic damages.

The article goes on to describe another case involving the Kornfelds and Conahan.

In the condemnation case, Conahan granted the Kornfelds' preliminary objections to declarations of condemnation filed by the Pennsylvania Department of Transportation 18 months after the declarations were filed. Under Pennsylvania's Eminent Domain Code, preliminary objections to a taking must be filed within 30 days, according to a Commonwealth Court decision reversing Conahan's order.

In order to accomplish the improvements, PennDOT filed declarations of taking in February 2002 for the highway right of way, drainage and a temporary construction easement. Citing concerns about the impact of the improvements, the Kornfelds refused to execute the reimbursement agreement for the takings. After raising questions about the effect of the improvements on the Kornfeld facility's zoning compliance and learning that the project was more expensive and complicated than originally thought, the Kornfelds filed preliminary objections in September 2003.

Conahan sustained the preliminary objections, holding that ongoing negotiations and alterations to the declarations reducing the amount of land to be condemned constituted an "amendment" to the declarations. However, he held the amendment came beyond the statutorily prescribed one-year period during which the condemnor can unilaterally relinquish a taking. Conahan also found the taking caused the property to violate township zoning laws.

In an unreported en banc opinion, Commonwealth Court Judge Renee Cohn Jubelirer wrote that nothing in the record supported the trial court's finding that Kornfeld had cause to file the preliminary objections after the deadline.

"Condemnee cites no case law, nor could this court find precedential support for the proposition that ongoing negotiations, which did not begin until approximately seven months after a Declaration was filed, can be a reason for finding cause to extend the filing deadline for POs," Jubelirer wrote. "In fact, if it were a basis, the simple fact that parties in a case were engaged in negotiations would toll the time for filing POs. This standard is too vague to be workable; it would be subject to manipulation and to arguments as to precisely when the negotiations broke down and the appeal period began to run."

For those reasons, the Commonwealth Court found the Kornfelds failed to show legally sufficient cause for the late filing and that the trial court should have granted PennDOT's motion to dismiss the preliminary objections.

Arthur Piccone, of Hourigan Kluger & Quinn in Kingston, Pa., represented the Kornfelds. He did not return a call seeking comment.

The legal mess that this entire scandal has hatched will more than likely continue for some time. It is a shame because there are fine people and honest and hard-working lawyers and judges in Luzerne County. But the amount of people with a horror story or allegation points out a disturbing pattern with regard to the workings of the county's common pleas court. It will go down as the worst judicial scandal to date in this country.

Law enforcement has an obligation to get at the truth in Luzerne County, no matter how ugly, damaging, or deep-rooted it might be. If the entire Luzerne County Courthouse needs to be turned upside down it should be done. It will be the only way some semblance of decency will return to the halls of River Street.

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