by Ted Babiy
Our small family homebuilding business has been shattered by a nightmarish loophole that undermines Pennsylvania’s entire legal system. By refusing to publish 94% of its Decisions, the Superior Court denies transparency, accountability, and the fair judicial process we all rely on, with calamitous results. These include: 1.) Ensuring case outcomes remain known only to the parties involved; 2.) Preventing these cases from being cited as precedent, or even referenced in future legal proceedings; 3.) Enabling a lower legal, intellectual, and scholarly judicial standard; 4.) Enabling judicial inconsistency in Decisions, and; 5.) Virtually guaranteeing denial of further judicial review since their “unpublished” status stigmatizes and relegates them to a status generally viewed as insufficiently important to warrant further scrutiny. This convenient loophole also allows the Court to avoid accountability, judicial embarrassment, and adverse publicity or consequences for even deeply flawed Decisions. In our case this resulted in the guilty party’s actually being rewarded while as victims, we were punished seeking nothing more than simple justice.
Our problems began without warning in December, 2008 – three months into the financial crisis – when our bank abruptly informed us it would not honor its agreement, despite advancing less than half the loan amount and leaving us “over a barrel.” Until that day in 2008, we had a good banking relationship and repaid every loan, and every development project we had undertaken since starting our business in 1995 had been successful. Asked why it refused to honor the contract, the bank president could only reply, “I’m sure there’s something in the loan documents we can find.” The next day the bank called to say it had “reconsidered,” and might advance the remaining funds but now at a much higher interest rate, and requiring a deposit of over $150,000 – which we did not have. We asked them to put anything they had to say in writing, along with its reason for failing to honor the contract. When it finally arrived, the letter predictably listed various sudden so-called “failures” to meet the precise loan terms, none previously mentioned, let alone in writing with 30 days to comply as the contract specifically and reasonably required. Our attorney called it “business extortion.” Even if we could comply with the “new” terms, which we couldn’t, who would trust the bank after this? Without the remaining loan, we couldn’t develop the property we had already bought by constructing a new house to sell and repay the bank, as we had for every other project. The bank then confessed judgment against us under the same contract it breached using the guarantees we had signed in good faith, and we were forced to file suit.
Although it was our first time ever in court, with compelling testimony and evidence we easily prevailed in the three-day bench trial, by the end of which the bank was reduced to attempting to limit its damages to us. All the Decision’s findings supported us and not the bank, including; “the loan was performing and that all data the Bank collected supported the viability of the loan“; that “(t)he Bank was obligated to fund …the loan under the …Agreement”; that it “attempted to negotiate a new Loan Agreement…with terms more favorable to the Bank”; and characterizing “(t)he Bank’s decision not to fund the loan …arbitrary, unreasonable, and reckless.”
Despite these compelling findings, the Decision abruptly concluded by dramatically contradicting itself: the judge inexplicably accepted the bank’s own calculations of damages (favorable to itself), then proceeded to award the bank a judgment for more money than if it had honored the agreement (exactly as the bank had requested.) Then just as horrifying, without challenging our expert’s credentials, extensive experience in estimating damages, or even mentioning her testimony, the judge ignored her detailed report based on the same budget approved by the bank and instead awarded us less than 5% of this amount, exactly as the bank had suggested. Experts were baffled, describing the Decision – which was unambiguously in our favor – as “internally inconsistent, contradictory,” and “like it fell off a cliff,” and that the wrong measures of damages were used, among other things. Whether confused by our business, the contract, or the bank’s effort to minimize liability, the judge inexplicably later also described the bank’s sudden failure to fund over half the loan as “not material,” even blaming us and calling us “stubborn” for not accepting the so-called “new offer,” while completely ignoring the bank’s requirement of a now-$160,000 deposit from us- that we did not have.
The awards left us without the capital to even operate our business, so we appealed to the Superior Court. In mediation, a highly-regarded retired Superior Court judge took the unusual step of bluntly suggesting the bank “may be in for a shock” if it expected to escape paying appropriate damages. Still it refused, and the appellate hearing occurred months later before a three-judge panel. Their role as the “error-correcting” court was not to re-try the already decided case, but defer to the facts established by the trial court as fact finder and correct any errors in conclusion, in our case the obviously flawed awards. The findings had already established the bank’s guilt and materiality of the breach, which should have nullified the contract and prevented its use against us as the bank had done. New facts were not permitted or necessary, the record already provided the correct and appropriate measures on which to base the awards. For its part, the bank could only re-argue the case it had already lost, now describing our appeal as an effort to avoid repaying the funds advanced, which was their creation and never the case.
The panel’s opinion arrived many months later. We were stunned; it had completely reversed the Trial Court, vacated our small award (never paid) and then in a final blow actually found us, the victims, now liable for the bank’s legal fees. (Our own have exceeded $400,000.) With decades of experience in appellate law, our attorney described this Opinion as “draconian” and one of the worst he had ever seen. The court had effectively granted JNOV, or “Judgment Notwithstanding the Verdict,” an extreme legal measure rarely invoked. To achieve this it ignored the findings, the record, the contract, the trial court’s Decision, and the appellate court’s own appropriate limitations. Its version of events was rife with factual errors, misinterpretations, and overt ignorance of or disregard for the documented findings, and was completely irreconcilable with the trial court’s decision. Most importantly, it ignored the mandate of deference to the trial court, and from a 15-minute hearing arbitrarily determined no breach had occurred at all! It reinterpreted events and arrived at its unwarranted and reckless conclusion only by rejecting the entire trial process and its unambiguous verdict, allowing the “arbitrary, unreasonable, and reckless” losing bank not only to escape punishment but even be rewarded, while our hard-won victory was replaced by a perversion of “justice” both sickening and unrecognizable. Was the judicial election process a factor – perhaps influencing the lead member of the panel running for retention at the time, who possibly didn’t want to alienate a potential donor in the half-billion dollar bank? As a small family business, we had no such clout.
When requested by our counsel to simply publish its decision, the panel refused, effectively sealing our fate. Failing in our multiple efforts to elicit a simple review by either the full (en banc) Superior Court or the troubled state Supreme Court, we finally appealed to The United States Supreme Court, arguing that in routinely failing to publish Decisions, Pennsylvania’s Courts effectively deny the Constitutional Right to Due Process to its citizens by avoiding judicial scrutiny or further review, the ability to be cited, or their own accountability. Not deemed to be “of national importance,” the U.S. Supreme Court declined our case. All of our legislative representatives contacted refused to even advocate for us, despite the obvious injustice. Our state senator said he was “afraid of rocking the boat,” and jeopardizing his pending retirement.
When a half-billion dollar bank ignored its obligation and turned its vastly superior resources against us, we could only turn to the court for help. With the achievements and savings of our lifetimes on the line, the stakes could not have been higher for us as we relied on the simple facts, evidence, testimony, and the competence of the courts to ensure justice. Our fortunes rested with a judiciary apparently unaware, then unconcerned by its own errors and omissions, yet carrying the full weight of the law no matter how error-ridden or “off the rails.” The higher courts violated an even greater duty to ensure justice by yielding to hubris to improperly supersede the trial court, safe in the knowledge their unpublished opinon would escape further review.
The courts’ addiction to unpublished decisions has created a secretive system fully capable of denying basic justice to victims while refusing to examine itself, its process, or the opinions that result. For us, the errors and failures have been financially devastating, despite our trial “victory,” cynically rewarding the “arbitrary, unreasonable, and reckless” bank, and leaving us to endure the consequences. This flawed process allows courts to ignore their own guidelines and responsibility, yet remain unaccountable for the results they deliberately bury in obscurity. It has allowed a fundamentally simple case to deal a crippling blow to our previously successful business. It has also caused other catastrophic losses for us, as years of savings, retirement accounts, and previously excellent credit are gone, quite possibly along with our home of fifteen years. Ignoring the vast difference in size and resources between the parties, the court turned a blind eye to the effects of its decisions on us, while in truth they represent an existential threat that has – even if inadvertently – shut down our business and only source of income (which should never be permitted, under any circumstances), causing undue and unnecessary acute hardship. Due entirely to the bank’s breach and the utter failures and punitive measures of the courts and through no fault of our own, the business we worked so hard to establish, the financial security we earned, and the normal life we and our children previously enjoyed, have all been shattered by this almost six-year-long ordeal.
Even if unintentional, unpublished opinions fail to provide fairness and accountability, and create a glaring and obvious conflict of interest in the courts of a state that elects its judiciary. It allows judges to flagrantly disregard trial courts’ findings, craft opinions suited to their limited understanding (though not their proper role), and even their own interests all the while ensuring their decisions will not be further scrutinized for fairness, integrity, or sound basis in fact and law. Able to “make it up as they go along,” unpublished opinions rife with demonstrable errors, ineptitude, indifference, intellectual laziness or more sinister motives, conveniently avoid the cleansing light of day. Rather than embrace the reasonable and hardly controversial notion that “Any fair and accurate decision should withstand scrutiny,” the courts dodge accountability, and callously ignore those left in the wake of a self-serving system that exists under its own rules. This systemically flawed and shameful process undermines public confidence in the judiciary and even the law, making it all the more compelling to rid the system of unpublished opinions.
In the above case (Diamond Development Group v. Continental Bank, NO. 09-05874 and NO. 09-07789, consolidated), the unpublished Superior Court Decision remanded the case to the Honorable Edward Griffith, the trial court judge who authored the original contradictory Decision that found the bank guilty, but then rewarded it and initiated this judicial nightmare. He will now determine the legal fees our company, Diamond Development Group, owes to Continental Bank, completely ignoring his own facts, findings, and outcome of the very trial he conducted. The Hearing is scheduled for Tuesday, November 18th at 9:30 a.m. in Chester County, Courtroom #11. As to Superior Court, we remain confident that if published, the panel’s (Justices Bowes, Donahue, and Colville) fatally flawed decision would have received the attention it deserves to vacate their opinion, reverse the outcome, end this egregious injustice and restore some measure of credibility to the judicial system.