Publications

Design Professional's Practice Bulletin

Volume 3, Number 3 — December 1999

This Bulletin addresses recent developments affecting Design Professionals as well as business concerns as important as the specific professional and technical issues they face.

Editors: Neil P. Clain and Richard J. Davies

Philadelphia Begins New Commerce Case Management System For "Business Litigation"

By Jonathan K. Hollin, Esquire

Beginning with cases filed on January 3, 2000 (i.e. the first business day of the New Year) business litigation suits in the Philadelphia County Court of Common Pleas will be separately tracked in the Commerce Case Management Program. Certain types of cases involving design professionals will be handled in this new system.

With the introduction of the Commerce Case Management Program, Philadelphia will be the only county in the Commonwealth of Pennsylvania to have a separate system for business litigation and one of less than a dozen places in the United States where such a system exists. The rationale behind the separate system is to foster greater efficiency, consistency, and predictability in the resolution of business litigation.

The system will initially begin with a compliment of two judges, one of which is also the Administrative Judge for the Philadelphia Court of Common Pleas. This highlights the importance the Court is placing on this new program. The new system will also have its own compliment of law clerks.

It is important to realize that the new Commerce Program is not a new court system but a separate track within the Philadelphia court system albeit with its own dedicated judges.

After Pennsylvania enacted it Business Corporation Law in 1988 (which many believe provides for even greater flexibility than that of Delaware) it was thought that the next logical step to encourage business formation in this area would be the creation of a specialized business court system. While such a system had the support of the Philadelphia Bar Association and was introduced in the General Assembly in 1989 and reintroduced in four subsequent sessions, the legislation ultimately died (theoretically due to opposition from more "rural" lawyers).

Given the lack of statewide legislation and having substantially cleared up its case backlog, the Philadelphia Court System though a next logical step in its improvement was the creation of the Commerce Case Management Program to handle "business litigation."

Essentially the division is designed to handle business to business disputes such as the following:

1. Actions relating to the internal affairs or governance, rights or obligations between or among owners (shareholders, partners, members), or liability of officers, directors or managers of corporations, partnerships, limited partnerships, limited liability companies or other business enterprises, including, but not limited to any actions involving the interpretation or the rights or obligations under the Pa. Business Corporation Law, articles of incorporation, by-laws or agreements governing such enterprises;

2. Disputes between or among two or more business enterprises relating to transactions, business relationships or contracts between or among the business enterprises. Examples of such transactions, relationships, and contracts include:

Thus most fee claims against owners' work will be handled within the new system.

3. Actions relating to trade secret or non-compete agreements;

4. "Business torts," such as claims of unfair competition, or interference with contractual relations prospective contractual relations;

5. Actions relating to intellectual property disputes;

6. Declaratory judgment actions brought by insurers, and coverage dispute and bad faith claims brought by insureds, where the dispute arises from a business or commercial insurance policy, such as a Commercial General Liability policy.

An example of cases that would not fall within the division would include the following:

1. Matters involving less than $50,000;

2. Personal injury matters;

3. Individual consumer claims against business or insurers;

4. Malpractice claims, other than those brought by business enterprises against attorneys, or accountants, architects or other professionals in connection with the rendering of professional services tot he business enterprises;

5. Employment law cases, other than those relating to non-competes or trade secrets;

6. Individual residential real estate and non-commercial landlord-tenant disputes.

Thus, malpractice actions by commercial owners against design professionals will be heard in this new system.

To a certain degree the new system is a work in progress and even those judges administering the system acknowledge that there are some gray areas as to where certain cases would fall (i.e. within the new division or the current trial system). A fairly simple mechanism is in place to get a quick judicial determination as to the appropriateness of any given case being placed in the Commerce Program.

One aspect of the Rules governing the Commerce Programs is the availability of mandatory court ordered non-binding mediation. However, the judges currently assigned to the Commerce Programs indicated that at least for now this would be a rarely, if ever, used provision.

It remains to be seen whether the new Commerce Program will indeed result in more expeditious, consistent and predicable "business litigation" resolution. But, there seems to be general agreement that the new Rules, as well as the commitment of the judges initially assigned, are a step in the right direction.

In future issues we will keep your apprised of the progress of the new Commerce Program.

©1999 Powell, Trachtman, Logan, Carrle & Lombardo, P.C.

This bulletin is intended for general information purposes only and does not constitute legal advice. The reader should consult with legal counsel