Former city mayor loses appeal
Hippo contends insurance firm wrong to deny coverage
The 3rd U.S. Circuit Court of Appeals has upheld a decision by a federal judge in Johnstown denying former Altoona Mayor Charles Wayne Hippo Jr. coverage by an insurance company in his ongoing legal dispute with a local businessman.
Hippo is a partner in the law offices of Hippo, Fleming and Pertile of Altoona, and from 1998 to 2008, he served as the personal attorney for Greg Morris of Morris Management Inc., a local real estate developer whose many projects include the Logan Town Centre.
In 2008, the relationship came to an end when, according to Morris, he discovered Hippo and others, including partner in the law firm, Jeff Fleming, became part of two competing development firms, Templar Development LLC and Templar Elmerton LLC.
Morris contends in a lawsuit filed in 2015 in Blair County that Hippo not only utilized members of his staff and competed against his firm, but over a five-year period caused him to lose 18 businesses and $250 million in assets.
The Hippo law firm, known as HFP, in 2007 acquired professional liability insurance coverage from Westport Insurance Corp. of Kansas City.
The company issued a policy that required the Altoona law firm to disclose all outside business interests of its partners and had a clause excluding coverage of any outside business activity not disclosed.
HFP named a company called VIP Ventures LLC but did not mention the Templar entities, and when Westport received notification of a possible lawsuit by Morris against HFP and Hippo, it denied coverage.
This led to Hippo suing Westport.
The dispute was moved by Westport to the U.S. District Court in Johnstown.
In his review of the case, Judge Kim R. Gibson pointed out that Morris filed 11 civil charges against HFP and Hippo, including legal malpractice and breach of contract.
Other counts included breach of fudiciary duties, interference with a contractual relationship, violation of a trust, unjust enrichment, a violation of the Unfair Trade Practices and Consumer Protection Act, civil conspiracy, defamation and vicarious liability.
Hippo, through Pittsburgh attorneys Warren L. Siegfried and Richard S. Canciello, focused his argument on the first two civil charges: legal malpractice and breach of contract, contending they do not involve the Templar companies but relate to the attorney-client relationship between Hippo and Morris — therefore contending the alleged outside businesses exclusion of the insurance policy was not breached.
However, Gibson ruled that there was no dispute that Hippo was an “officer, director and partner of the Templar entities.”
The judge noted Fleming also acted as a partner of Templar.
The facts, according to Gibson, showed Hippo distributed business cards indicating he was vice president of operations of Templar Development and he conducted business on behalf of Templar.
The judge concluded Hippo drafted purchase agreements to acquire property, sought out potential buyers and negotiated with potential tenants of Templar businesses.
“There is no dispute that Hippo exercised some degree of control over the affairs of Templar entities. It is undisputed that Hippo performed significant work on behalf of the Templar entities,” Gibson stated in his 31-page opinion issued more than 13 months ago.
One of the properties Hippo was involved in was for a piece of property in Blairsville that was the possible site of a service station, Gibson reported.
“Hippo and Fleming’s involvement with the Templar entities therefore triggers the policy’s Outside Business Exclusion,” the judge stated.
He went on to explain that an insurer “has no duty to defend, however, where all the claims within a cause of action are clearly excluded from coverage under the policy.”
The judge reviewed the civil charges against Hippo:
– He worked in concert with one of Morris’ employees to seek out development opportunities.
– He provided information to Templar to benefit his own competing interests.
– He procured development opportunities for Templar, not Morris Management.
– He charged Morris legal fees and expenses while advancing the interest of Templar.
It is Morris’ contention, the judge stated, “Hippo committed legal malpractice and breach of contract by simultaneously acting as Morris’s attorney and a competing real estate developer.”
Hippo appealed Gibson’s ruling to the 3rd U.S. Circuit Court of Appeals in Philadelphia.
A three-judge panel, including Patty Schwartz, Anthony J. Scirica and Julio Fuentes stated that an examination of Morris’ legal complaint made it clear that Hippo’s Templar-related activities are at the center of both the legal malpractice and breach of contract counts.
The 3rd Circuit opinion issued last week stated, “The first 62 paragraphs of the complaint, which recount Hippo’s alleged pursuit of Templar’s best interests at Morris’ expense, are incorporated by reference into Counts I and II.”
It continued, stating, “In short, we agree with the District Court, under the insurance contract, counts I and II are based upon, arising out of, attributable to or directly or indirectly resulting from Hippo’s Templar involvement, so Westport has no duty to defend.”
The attorneys for Hippo and Morris could not be reached for comment.
Hippo also could not be reached for comment.
Meanwhile the civil case itself is moving slowly through the Blair County Court where visiting Senior Judge Stewart Kurtz of Huntingdon County has twice rejected motions to dismiss the case.
Morris, in an email, stated, “Hippo did it for greed. He wanted to steal my projects, investors and income.”