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        PRIOR PRINTER'S NO. 418                       PRINTER'S NO. 1248

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 406 Session of 2001


        INTRODUCED BY GERLACH, WAUGH, CORMAN, M. WHITE, TOMLINSON,
           THOMPSON AND EARLL, FEBRUARY 12, 2001

        AS AMENDED ON THIRD CONSIDERATION, JUNE  21, 2001

                                     AN ACT

     1  Amending Title 42 (Judiciary and Judicial Procedure) of the
     2     Pennsylvania Consolidated Statutes, providing for sanctions    <--
     3     for dilatory, obdurate and vexatious pleadings. ESTABLISHING   <--
     4     A CAUSE OF ACTION FOR FRIVOLOUS LITIGATION; FURTHER PROVIDING
     5     FOR WRONGFUL USE OF CIVIL PROCEEDINGS; AND MAKING AN
     6     EDITORIAL CHANGE.

     7     The General Assembly of the Commonwealth of Pennsylvania
     8  hereby enacts as follows:
     9     Section 1.  Section 2503 of Title 42 of the Pennsylvania       <--
    10  Consolidated Statutes is amended to read:
    11  § 2503.  Right of participants to receive counsel fees.
    12     (a)  General rule.--The following participants shall be
    13  entitled to a reasonable counsel fee as part of the taxable
    14  costs of the matter:
    15         (1)  The holder of bonds of a private corporation who
    16     successfully recovers due and unpaid interest, the liability
    17     for the payment of which was denied by the corporation.
    18         (2)  A garnishee who enters an appearance in a matter
    19     which is discontinued prior to answer filed.


     1         (3)  A garnishee who is found to have in his possession
     2     or control no indebtedness due to or other property of the
     3     debtor except such, if any, as has been admitted by answer
     4     filed.
     5         (4)  A possessor of property claimed by two or more other
     6     persons, if the possessor interpleads the rival claimants,
     7     disclaims all interest in the property and disposes of the
     8     property as the court may direct.
     9         (5)  The prevailing party in an interpleader proceeding
    10     in connection with execution upon a judgment.
    11         (6)  Any participant who is awarded counsel fees as a
    12     sanction against another participant for violation of any
    13     general rule which expressly prescribes the award of counsel
    14     fees as a sanction for dilatory, obdurate or vexatious
    15     conduct during the pendency of any matter.
    16         (7)  Any participant who is awarded counsel fees as a
    17     sanction against another participant for dilatory, obdurate
    18     or vexatious conduct during the pendency of a matter.
    19         (8)  Any participant who is awarded counsel fees out of a
    20     fund within the jurisdiction of the court pursuant to any
    21     general rule relating to an award of counsel fees from a fund
    22     within the jurisdiction of the court.
    23         (9)  Any participant who is awarded counsel fees because
    24     the conduct of another party in commencing the matter or
    25     otherwise was arbitrary, vexatious or in bad faith.
    26         (10)  Any other participant in such circumstances as may
    27     be specified by statute heretofore or hereafter enacted.
    28     (b)  Dilatory, obdurate and vexatious pleadings.--
    29         (1)  By presenting to the court, whether by signing,
    30     filing, submitting or later advocating, a pleading, written
    20010S0406B1248                  - 2 -

     1     motion or other paper, an attorney or unrepresented party is
     2     certifying that to the best of the person's knowledge,
     3     information and belief, formed after an inquiry reasonable
     4     under the circumstances:
     5             (i)  it is not being presented for an improper
     6         purpose, such as to harass or to cause unnecessary delay;
     7             (ii)  the claims, defenses and other legal
     8         contentions therein are warranted by existing law or by a
     9         good faith argument for the extension, modification or
    10         reversal of existing law or the establishment of new law;
    11             (iii)  the allegations and other factual contentions
    12         have evidentiary support or, if specifically so
    13         identified, are likely to have evidentiary support after
    14         a reasonable opportunity for further investigation or
    15         discovery; and
    16             (iv)  the denials of factual contentions are
    17         warranted on the evidence or, if specifically so
    18         identified, are reasonably based on a lack of information
    19         or belief.
    20     If, after notice and a reasonable opportunity to respond, the
    21     court determines a violation, the court may, subject to the
    22     conditions stated in paragraphs (2) and (3), impose an
    23     appropriate sanction upon the attorneys, law firms or parties
    24     that are responsible for the violation.
    25         (2)  A motion for sanction under this subsection shall be
    26     made separately from other motions or requests and shall
    27     describe the specific conduct alleged to violate paragraph
    28     (1). It shall be served as provided by rule, but shall not be
    29     filed with or presented to the court unless, within 31 days
    30     after service of the motion, or such other period as the
    20010S0406B1248                  - 3 -

     1     court may prescribe, the challenged paper, claim, defense,
     2     contention, allegation or denial is not withdrawn or
     3     appropriately corrected. If warranted, the court may award to
     4     the party prevailing on the motion the reasonable expenses
     5     and attorney fees incurred in presenting or opposing the
     6     motion. Absent exceptional circumstances, a law firm shall be
     7     held jointly responsible for violations committed by its
     8     partners, associates and employees.
     9         (3)  On its own initiative, the court may enter an order
    10     describing the specific conduct that appears to violate
    11     paragraph (1) and directing an attorney, law firm or party to
    12     show cause why it has not violated paragraph (1) with respect
    13     thereto.
    14     Section 2.  This act shall take effect in 60 days.
    15     SECTION 1.  CHAPTER 83 OF TITLE 42 OF THE PENNSYLVANIA         <--
    16  CONSOLIDATED STATUTES IS AMENDED BY ADDING A SUBCHAPTER TO READ:
    17                            SUBCHAPTER E
    18                        FRIVOLOUS LITIGATION
    19  SEC.
    20  8350.1.  FRIVOLOUS LITIGATION.
    21  8350.2.  ELEMENTS OF CAUSE OF ACTION.
    22  8350.3.  PROCEDURE.
    23  8350.4.  DAMAGES.
    24  8350.5.  OTHER REMEDIES.
    25  8350.6.  JOINT LIABILITY.
    26  § 8350.1.  FRIVOLOUS LITIGATION.
    27     (A)  CAUSE OF ACTION ESTABLISHED.--THERE IS ESTABLISHED A
    28  SEPARATE CAUSE OF ACTION FOR DAMAGES ARISING OUT OF THE FILING
    29  OF A FRIVOLOUS CIVIL COMPLAINT, COUNTERCLAIM OR JOINDER
    30  COMPLAINT BY AN ATTORNEY AND THE LAW FIRM OF WHICH THE ATTORNEY
    20010S0406B1248                  - 4 -

     1  IS A MEMBER OR BY A PARTY WHO IS NOT REPRESENTED BY AN ATTORNEY.
     2  THE INJURED PARTY MUST FILE THIS ACTION IN THE SAME COURT AND
     3  DIVISION WHERE THE ORIGINAL ACTION OR MATTER WAS FILED. THIS
     4  ACTION SHALL NOT BE COLLATERAL TO THE ORIGINAL ACTION AND SHALL
     5  PROCEED WITHOUT REFERENCE TO ITS STATUS.
     6     (B)  TIME FOR FILING ACTION.--AN ACTION BROUGHT PURSUANT TO
     7  THIS SUBCHAPTER MAY BE FILED BEFORE THE CHALLENGED PROCEEDING ON
     8  THE CIVIL COMPLAINT, COUNTERCLAIM OR JOINDER COMPLAINT IS
     9  TERMINATED.
    10     (C)  RELATIONSHIP TO OTHER ACTION.--THE ACTION ESTABLISHED
    11  UNDER THIS SUBCHAPTER IS A SEPARATE CAUSE OF ACTION THAN THAT
    12  PROVIDED FOR UNDER SUBCHAPTER E.1 (RELATING TO WRONGFUL USE OF
    13  CIVIL PROCEEDINGS). A PERSON MAY NOT BE PRECLUDED FROM BRINGING
    14  AN ACTION PURSUANT TO SUBCHAPTER E.1 ON THE SOLE BASIS THAT THE
    15  PERSON FIRST BROUGHT AN ACTION UNDER THIS SUBCHAPTER.
    16  § 8350.2.  ELEMENTS OF CAUSE OF ACTION.
    17     A COMPLAINT, COUNTERCLAIM OR JOINDER COMPLAINT SHALL BE
    18  PRESUMED TO BE NOT FRIVOLOUS UNLESS ONE OF THE FOLLOWING
    19  ELEMENTS IS PROVEN BY A PREPONDERANCE OF THE EVIDENCE:
    20         (1)  THE CIVIL COMPLAINT, COUNTERCLAIM OR JOINDER
    21     COMPLAINT IS PRESENTED PRIMARILY FOR AN IMPROPER PURPOSE,
    22     INCLUDING, BUT NOT LIMITED TO, HARASSMENT, BUSINESS
    23     INTERRUPTION, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS OR
    24     UNWARRANTED PECUNIARY GAIN;
    25         (2)  THE CLAIMS SET FORTH IN THE CIVIL COMPLAINT,
    26     COUNTERCLAIM OR JOINDER COMPLAINT ARE NOT WARRANTED BY
    27     EXISTING LAW OR BY A REASONABLE ARGUMENT FOR THE EXTENSION,
    28     MODIFICATION OR REVERSAL OF EXISTING LAW OR THE ESTABLISHMENT
    29     OF NEW LAW;
    30         (3)  THE ALLEGATIONS AND OTHER FACTUAL CONTENTIONS HAVE
    20010S0406B1248                  - 5 -

     1     NO REASONABLE EVIDENTIARY SUPPORT OR ARE NOT LIKELY TO HAVE
     2     REASONABLE EVIDENTIARY SUPPORT, AFTER A REASONABLE
     3     OPPORTUNITY FOR FURTHER INVESTIGATION OR DISCOVERY; OR
     4         (4)  THE COUNTERCLAIM OR JOINDER COMPLAINT HAS NO
     5     REASONABLE EVIDENTIARY SUPPORT OR IS NOT LIKELY TO HAVE
     6     REASONABLE EVIDENTIARY SUPPORT, AFTER A REASONABLE
     7     OPPORTUNITY FOR FURTHER INVESTIGATION OR DISCOVERY.
     8  § 8350.3.  PROCEDURE.
     9     (A)  NOTICE TO DEFENDANT.--BEFORE FILING AN ACTION UNDER THIS
    10  SUBCHAPTER, THE PLAINTIFF MUST NOTIFY THE DEFENDANT IN WRITING
    11  OF THE INTENTION TO FILE THE ACTION AND ATTACH A COPY OF THE
    12  PROPOSED COMPLAINT. EACH RECIPIENT OF THE COMPLAINT SHALL HAVE
    13  20 DAYS IN WHICH TO WITHDRAW OR OTHERWISE CURE THE CIVIL
    14  COMPLAINT, COUNTERCLAIM, OR JOINDER COMPLAINT GIVING RISE TO THE
    15  CLAIM OF FRIVOLOUS LITIGATION.
    16     (B)  EFFECT OF WITHDRAWAL OR CURE.--IF THE CIVIL COMPLAINT,
    17  COUNTERCLAIM, OR JOINDER COMPLAINT IS WITHDRAWN OR OTHERWISE
    18  CURED, THERE SHALL BE NO BASIS FOR THE CAUSE OF ACTION, EXCEPT
    19  THAT THE PLAINTIFF SHALL BE ENTITLED TO RECOVER COURT COSTS AND
    20  REASONABLE ATTORNEY FEES IF THE PLAINTIFF FILES A MOTION FOR
    21  SUCH RECOVERY WITHIN 30 DAYS OF A WITHDRAWAL.
    22     (C)  EFFECT OF RECOVERY.--RECOVERY BY AN INJURED PARTY UNDER
    23  THIS CHAPTER SHALL NOT PRECLUDE THE INJURED PARTY FROM
    24  RECOVERING DAMAGES, OTHER THAN REASONABLE ATTORNEY FEES AND
    25  COURT COSTS, PURSUANT TO SUBCHAPTER E.1 (RELATING TO WRONGFUL
    26  USE OF CIVIL PROCEEDINGS).
    27  § 8350.4.  DAMAGES.
    28     WHEN ANY ELEMENT SET FORTH IN SECTION 8350.2 (RELATING TO
    29  ELEMENTS OF CAUSE OF ACTION) HAS BEEN PROVEN BY A PREPONDERANCE
    30  OF THE EVIDENCE, THE INJURED PARTY IS ENTITLED TO RECOVER THE
    20010S0406B1248                  - 6 -

     1  FOLLOWING:
     2         (1)  THE HARM NORMALLY RESULTING FROM ANY ARREST OR
     3     IMPRISONMENT OR ANY DISPOSSESSION OR INTERFERENCE WITH THE
     4     ADVANTAGEOUS USE OF THE INJURED PARTY'S LAND, CHATTELS OR
     5     OTHER THINGS SUFFERED BY THE INJURED PARTY DURING THE COURSE
     6     OF THE PROCEEDING.
     7         (2)  THE HARM TO THE INJURED PARTY'S REPUTATION BY ANY
     8     DEFAMATORY MATTER RELATING TO THE PROCEEDING.
     9         (3)  THE COST OF LITIGATION, INCLUDING, BUT NOT LIMITED
    10     TO, ANY REASONABLE ATTORNEY FEES.
    11         (4)  LOST INCOME THAT THE INJURED PARTY HAS INCURRED IN
    12     DEFENDING HIMSELF.
    13         (5)  ANY OTHER PECUNIARY LOSS THAT HAS RESULTED FROM THE
    14     PROCEEDING.
    15         (6)  ANY OTHER NONECONOMIC LOSS CAUSED BY THE
    16     PROCEEDINGS.
    17  § 8350.5.  OTHER REMEDIES.
    18     NOTHING IN THIS SUBCHAPTER SHALL BE CONSTRUED TO PRECLUDE THE
    19  COURT FROM EXERCISING ITS INHERENT SUPERVISORY POWER OR FROM
    20  IMPOSING APPROPRIATE NONMONETARY OR MONETARY SANCTIONS UPON
    21  ATTORNEYS, LAW FIRMS AND UNREPRESENTED PARTIES WHO HAVE ENGAGED
    22  IN FRIVOLOUS OR BAD FAITH LITIGATION UNDER EXISTING LAW AND
    23  RULES OF PROCEDURE.
    24  § 8350.6.  JOINT LIABILITY.
    25     ABSENT EXCEPTIONAL CIRCUMSTANCES, A LAW FIRM SHALL BE HELD
    26  JOINTLY RESPONSIBLE FOR A FRIVOLOUS CIVIL COMPLAINT,
    27  COUNTERCLAIM OR JOINDER COMPLAINT FILED BY ATTORNEYS OF THE
    28  FIRM.
    29     SECTION 2.  THE HEADING OF SUBCHAPTER E OF CHAPTER 83 OF
    30  TITLE 42 IS AMENDED TO READ:
    20010S0406B1248                  - 7 -

     1                         SUBCHAPTER [E] E.1
     2                 WRONGFUL USE OF CIVIL PROCEEDINGS
     3     SECTION 3.  SECTION 8351 OF TITLE 42 IS AMENDED BY ADDING A
     4  SUBSECTION TO READ:
     5  § 8351.  WRONGFUL USE OF CIVIL PROCEEDINGS.
     6     * * *
     7     (C)  RELATIONSHIP TO OTHER ACTION.--THE ACTION ESTABLISHED
     8  UNDER THIS SUBCHAPTER IS A SEPARATE CAUSE OF ACTION THAN THAT
     9  PROVIDED FOR UNDER SUBCHAPTER E (RELATING TO FRIVOLOUS
    10  LITIGATION). A PERSON MAY NOT BE PRECLUDED FROM BRINGING AN
    11  ACTION PURSUANT TO THIS SUBCHAPTER ON THE SOLE BASIS THAT THE
    12  PERSON FIRST BROUGHT AN ACTION UNDER SUBCHAPTER E.
    13     SECTION 4.  THE PROVISIONS OF THIS ACT ARE SEVERABLE. IF ANY
    14  PROVISION OF THIS ACT OR ITS APPLICATION TO ANY PERSON OR
    15  CIRCUMSTANCE IS HELD INVALID, THE INVALIDITY SHALL NOT AFFECT
    16  OTHER PROVISIONS OR APPLICATIONS OF THIS ACT WHICH CAN BE GIVEN
    17  EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION.
    18     SECTION 5.  THIS ACT SHALL TAKE EFFECT IN 60 DAYS.








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