IN RE: JOSEPH A. STRAUB
MEMORANDUM AND/OR OPINION SIGNED BY HONORABLE C. DARNELL JONES, II ON 7/13/15. 7/14/15 ENTERED AND COPIES MAILED TO PRO SE PARTIES AND E-MAILED.(ti, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN THE MATTER OF:
JOSEPH A. STRAUB,
July 13, 2015
Joseph A. Straub (“Appellant”) appeals the decision of the Bankruptcy Court for the
Eastern District of Pennsylvania (Richard E. Fehling, C.J.) in favor of the Dan Acevedo, et al.
(collectively “Appellees”). See In re Straub, No. 11-22174, 2014 WL 2506297 (Bankr. E.D. Pa.
2014). Upon consideration of Appellant’s Brief, (Dkt No. 4, [hereinafter Appellant Br.]), and
Appellees’ Brief, (Dkt No. 12 [hereinafter Appellee Br.]), the Court hereby affirms the Order of
the Honorable Richard E. Fehling, dated June 3, 2014.
Standard of Review
This Court has jurisdiction over the bankruptcy appeal pursuant to 28 U.S.C. § 158(a)(1).
“[T]he findings of fact made by the bankruptcy court may be reversed only for clear error.” In re
Nelson Co., 959 F.2d 1260, 1263 (3d Cir. 1992) (citing Brown v. Pa. State Employees Credit
Union, 851 F.2d 81, 84 (3d Cir. 1998)); see also Fed. R. Bankr. P. 8013. The court “exercise[s]
plenary review of the legal standard applied by the… [B]ankruptcy [C]ourt.” In re Abbotts
Dairies of Pa., Inc., 788 F.2d 143, 147 (3d Cir. 1986) (citing Universal Minerals v. C.A. Hughes
& Co., 669 F.2d 98, 103 (3d Cir. 1981)).
On December 29, 2005, a class of five named persons, employees of Appellant, filed a
class action on behalf of themselves and others similarly situated against Appellant and others, in
the Court of Common Pleas of Northampton County, docketed at Tam v. Straub, Civil Action
No. 2005-9482. (Dkt No. 4, App’x 1 [hereinafter Class Action Compl.] at A2-22; Dkt No. 4,
App’x 2 [hereinafter Bankr. Ct. FOF] ¶ A1.) On January 18, 2007, the Northampton County
Court granted the class action plaintiffs’ motion for class certification and certified the five
named employees as class representatives. (Bankr. Ct. FOF ¶ A2.) There were approximately
seventy-one unnamed class members. (Bankr. Ct. FOF ¶ A4.) 1
In anticipation of the class action case, David Jones, one of five named class
representatives contracted the services of Vincent A. Coppola, Esq. (Dkt No. 4, App’x 1
[hereinafter Emp. Contract] at A23-24.) 2 The specific language of the fee agreement between
Mr. Coppola and Mr. Jones reads:
[The client] agree[s] to pay an attorney fee of 40% of whatever recovery [Counsel
for Plaintiffs] is able to obtain on my behalf from any responsible party and/or
insurance company. In consideration thereof, Mr. Coppola agrees to litigate this
matter to verdict, if necessary and to file and pursue any and all appeals that we
may direct be filed in the aftermath of such litigation. Such consideration also
includes responding to any and all appeals that may be filed by other parties in the
aftermath of such litigation. Accordingly, the state consideration includes all
appellate functions that may be necessary in the aftermath of successful or
unsuccessful litigation at the trial court level…
Other than those services and claims specified herein, this agreement pertains to
no other claims or causes of action, which must be addressed under a separate
contract in the event I request that such services be rendered.
(Dkt No. 4, App’x 1 [hereinafter Emp. Contract] at A23-24.) The Northampton County Court
ordered that Mr. Coppola serve as class counsel. (Bankr. Ct. FOF ¶ A2 n. 4; Dkt No. 4, App’x 1
The parties do not dispute that seventeen Appellees did not receive notice of the Northampton County
class action lawsuit pursuant to Pa. R. Civ. P. 1712. (Appellee Br. at 19-21.)
There was no fee agreement between Mr. Coppola and any of the unnamed class members. However,
the Northampton County Court certified the five named class members as class representatives and Mr.
Coppola as class counsel. Thus, the fee agreement governs the relationship between Mr. Coppola and the
unnamed class members.
On March 2, 2010, a jury returned a liability verdict against Appellant, finding that
Appellant committed fraud, deceit, and misrepresentation when he underpaid his employees.
(Bankr. Ct. FOF ¶ A13.) On December 10, 2010, the Northampton County Court entered a
damages verdict of $635,278.23. (Bankr. Ct. FOF ¶ A5.) On January 7, 2011, the Northampton
County Court entered the judgment. (Bankr. Ct. FOF ¶ A7.) On March 10, 2011, Mr. Coppola
petitioned the Northampton County Court for an additional award of fees and expenses. (Bankr.
Ct. FOF ¶ A8.) By May 5, 2011, the Northampton County Court entered an additional verdict for
attorneys’ fees and costs in the amount of $307,007.39. The total class action judgment stands at
$942,130.53. (Bankr. Ct. FOF ¶ A9.)
Following the jury’s liability verdict, but prior to the Northampton County Court’s award
of damages, Appellant filed for bankruptcy.
On January 6, 2011, Mr. Coppola filed a claim on behalf of “Victor Berkey,” a named
class member, against Appellant’s former co-Defendants in a matter related to the class action
against Appellant in the Court of Common Pleas in Lehigh County. (Dkt No. 4, App’x 1 at A 5768; Bankr. Ct. FOF ¶ A6.) Mr. Coppola never filed a motion for class certification in the Lehigh
On August 16, 2011, an involuntary bankruptcy was filed against Appellant by Mr.
Coppola on behalf of three of the named class members in the Eastern District of Pennsylvania
Bankruptcy Court. (Appellant Br. at 5; Bankr. Ct. FOF ¶ B1.) On February 3, 2012, Appellant
filed his Schedule F, listing all five named class members and Mr. Coppola’s name and address.
(Bankr Ct. FOF ¶ B2.) By April 4, 2012, the Bankruptcy Court set a “last day to oppose
discharge or dischargeability” as July 17, 2012. (Appellant. Br. at 5; Bankr. Ct. FOF ¶ B3.)
On May 30, 2012, Mr. Coppola filed a Petition to apply recovery to recoup expenses in
the Northampton County Court against Appellant. (Dkt No. 4, Ex. 4 at A51-56; Bankr. Ct. FOF ¶
A11.) That same day, the Northampton County Court granted Mr. Coppola’s petition. (Bankr.
Ct. FOF ¶ A12.)
By July 17, 2012, no member of the class, named or unnamed, filed a complaint
objecting to the dischargeability of the debt owed to them by Appellant. (Appellant. Br.at 5;
Bankr. Ct. FOF ¶ B5.) On September 17, 2012, the Bankruptcy Court discharged the debts owed
to the class pursuant to Section 727 of the Bankruptcy Code. (Appellant. Br. at 5; Bankr. Ct. FOF
On September 19, 2015, Mr. Coppola filed an adversary action with the Bankruptcy
Court objecting to the discharge of this debt, on behalf of the unnamed members of the class.
(Appellant. Br. at 5; Bankr. Ct. FOF ¶ B7.) The named class members were not at issue in that
adversary action. (Bankr. Ct. FOF ¶ B8.)
Appellant filed a motion to dismiss the adversary action, which the Court denied.
(Appellant. Br. at 5; Bankr. Ct. FOF ¶ B9.) A hearing on the matter was heard before the
Honorable Richard E. Fehling. (Appellant. Br. at 5; transcript available at Dkt No. 4, App’x 2
[hereinafter Class Action MTD Hrg] at A69-100.) This motion was denied. (Class Action MTD
Hrg at A97, 29:17-19; Bankr. Ct. FOF ¶ B9.) Following discovery, both parties filed motions for
summary judgment. (Appellant. Br. at 5; Bankr. Ct. FOF ¶ B10.) Both motions were denied.
(Appellant Br. at 5; Bankr. Ct. FOF ¶ B10.) A trial was held before Judge Fehling on November
25, 2013. (Appellant. Br. at 5; Bankr. Ct. FOF ¶ B11.) The sole issue at trial was whether or not
the adversary proceeding complaint was timely filed. (Bankr. Ct. FOF ¶ B11.) 3
Appellant did not and does not contest that the debt owed to the class is nondischargeable under 11
U.S.C § 532(a).
By opinion and Order dated June 3, 2014, Judge Fehling held in favor of the class and
against Appellant. (Appellant. Br. at 5-6; Bankr. Ct. at A101-21.) The Bankruptcy Court found
that the members of the class had not received proper notice of the “last day” they could request
nondischargeability; thus, their late filing of nondischargeability was allowed.
On November 13, 2014, Appellant appealed the Bankruptcy Court’s decision about the
nondischargeability. (Dkt No. 1.) 4
A debtor may discharge all debts that were the personal liability of the debtor. 11 U.S.C.
§ 524(a)(1). The debtor cannot be discharged of debt that is neither listed nor scheduled. Id. at
§523(a)(3). However, the debt may be discharged if the creditor had “notice or actual
knowledge” of the impending discharge and failed to object. Id. at § 523(a)(3)(A). The issue
before the Court is whether notice to Mr. Coppola was sufficient to fulfill the listing or
knowledge requirement for the unnamed class members. The Court finds that notice to Mr.
Coppola was insufficient.
As a general rule, “notice served upon counsel satisfies any requirement to give notice to
the party. Linder v. Trump’s Castle Associates, 155 B.R. 102, 104 (D.N.J. 1993) (citing Irwin v.
Dept. of Veterans Affairs., 498 U.S. 89, 92 (1990)). However, “an attorney given notice of the
bankruptcy on behalf of a particular client is not called upon to review all of his or her files to
ascertain whether any other client may also have a claim against the bankrupt.” Maldonado v.
Ramirez, 757 F.2d 48, 51 (3d Cir. 1985). Further, “an attorney’s representation of a party in one
In a separate case before this Court this year, In the Matter of Joseph A. Straub, Debtor, Civil Action
No. 14-6607, 2015 WL 1279510 (E.D. Pa. 2015), the unnamed class members argued that Appellant
should not have been allowed to bring this appeal before this Court. In the referenced opinion, this Court
ruled that it was appropriate for the Court to hear this appeal. This Court placed this case into suspense
pending the outcome of this other appeal. Once this Court determined that Appellant had a right to appeal,
this Court took this case out of suspense.
action does not make the attorney an agent for the party in an unrelated case between the same
parties.” Id. at 51 (citing Schultz v. Schultz, 436 F.2d 635 (7th Cir. 1971)).
Thus, the Court must analyze whether or not Mr. Coppola was serving as the unnamed
class members’ counsel at the time of the filing of notice, or whether his representation of the
unnamed class members had ceased, thus making the bankruptcy filing an “unrelated case
between the same parties.”
The terms of the fee agreement show that Mr. Coppola’s contractual relationship with the
unnamed members of the class action had ceased at the time of the filing of the notice. The fee
agreement establishes that Mr. Coppola would represent the class “to verdict” and on “any and
all appeals that we may direct be filed in the aftermath of such litigation” in return for a
percentage of the “recovery…obtain[ed].” (Emp. Contract at A23-24.) In the class action case, a
jury returned a liability verdict on March 2, 2010, and the Court entered a final verdict as to
judgment on May 5, 2011. (Bankr. Ct. FOF ¶¶ A13, A9.) No appeal was taken. Thus, the final
verdict occurred roughly one year before Mr. Coppola received notice in the bankruptcy case on
April 4, 2012. (Bankr. Ct. FOF ¶ B3.)
The only other term in the fee agreement referring to the termination of the contract is the
reference to counsel’s payment. The fee agreement states that counsel will receive a percentage
of the “recovery…obtain[ed].” Emp. Contract at A23-24.) The reference to recovery does not
impact the contract’s language clarifying that Mr. Coppola’s representation would cease upon
“verdict” or appeal. The fee agreement does not say that Mr. Coppola will represent the parties
“to recovery.” The fee agreement also does not say that the “recovery obtain[ed]” must be so
obtained through the work of Mr. Coppola. The Court finds no ambiguity on the face of the fee
agreement. 5 The fee agreement clearly states that Mr. Coppola will “litigate this matter to
verdict,” absent any appeals that the class may direct Mr. Coppola to make. (Emp. Contract at
A23-24). Once judgment was awarded to the class and no appeal of that judgment was filed, Mr.
Coppola’s contemplated services under that contract were satisfied in full.
Further, Mr. Coppola was not representing the unnamed class members in any new suit
following the verdict. Appellant argues that Mr. Coppola was representing the unnamed class
members in both the case in the Court of Common Pleas in Lehigh County and in the involuntary
bankruptcy case. The Court finds that he was not.
First, Mr. Coppola filed the case in Lehigh County on behalf of named class member
“Victor Berkey” and others similarly situated. However, Mr. Coppola never moved for class
certification. Thus, the unnamed class members were never part of that case, and therefore, Mr.
Coppola never represented their interests in that case.
Second, Mr. Coppola was not representing the unnamed class members when he filed the
involuntary bankruptcy action against Appellant. Appellant argues that Mr. Coppola’s testimony
shows that Mr. Coppola “believed when he filed the proofs of claims…that he in fact was
representing the interests of the entire class.” (Appellant Br. at 10.) In support of this contention,
Appellant points to the fact that Mr. Coppola initially filed the entire amount of the class-action
debt in the involuntary bankruptcy claim. (Appellant Br. at 10.) Even if Mr. Coppola’s subjective
understanding when he filed the involuntary bankruptcy action was that he was representing the
unnamed class members, such subjective understanding does not change the fact that,
The Court further notes, assuming, arguendo, that the contract is ambiguous—and it is not—there is no
evidence from deposition testimony that the unnamed class members reasonably believed that the
representation went past verdict. When there is ambiguity, “the client’s reasonable understanding of the
scope of the representation controls.” RESTATEMENT (THIRD) OF THE LAW GOVERNING
LAWYERS § 31 cmt. h (1998).The Court agrees with the Bankruptcy Court that any finding that the
unnamed class members believed that the representation went beyond verdict and appeal would be
“nothing more than conjecture and speculation.” In re Straub, 2014 WL 2506297, at *6.
contractually, he was not. The notice requirement is meant to protect the unnamed class
members. Such members had no existing contract with Mr. Coppola. Mr. Coppola and the
unnamed class members had not instituted a new contract. The Court must look at whether Mr.
Coppola was in fact their representative, not whether Mr. Coppola believed himself to be their
representative. The unnamed class members’ right to notice cannot be mitigated by the
subjective belief of a person who was not contractually their attorney. Given that the Court has
already held that Mr. Coppola’s contract with the unnamed parties had ceased at the time of the
filing of the involuntary bankruptcy action, the Court cannot find that Mr. Coppola was serving
as the representative of the unnamed class members during the involuntary bankruptcy.
Mr. Coppola was not serving as counsel for the unnamed class members at the time that
he received notice of the deadline by which any creditors had to oppose the dischargeability of
Appellant’s debts. Notice to Mr. Coppola did not constitute notice to the unnamed class
members. Maldonado, 757 F.2d at 51. Without proper notice or actual knowledge imputed,
Appellees were not required to comply with the previous discharge deadline. Appellees’
Complaint with the Bankruptcy Court was filed in a timely fashion.
The Court AFFIRMS the decision of the Bankruptcy Court for the Eastern District of
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?