Five Star Bank suing Harter Secrest & Emery LLP over alleged mishandling of PA case

Five Star Bank has filed a malpractice lawsuit against Harter Secrest & Emery LLP for the law firm’s alleged mishandling of a class-action case in a Pennsylvania court.

The 21-page complaint filed Monday in state Supreme Court in Rochester accuses Harter Secrest & Emery (HSE) of “substandard legal representation” in a lawsuit filed in the Court of Common Pleas in Philadelphia.

Five Star is represented in the lawsuit by the Buffalo law firm of Rupp Pfalzgraf LLP.

In May 2017, a class-action lawsuit was filed against Five Star in the Pennsylvania court involving about 5,000 plaintiffs who are New York state residents and 300 plaintiffs who are Pennsylvania residents.

The New York plaintiffs purchased and financed their cars in New York state, while the Pennsylvania plaintiffs purchased their cars in Pennsylvania.

The Pennsylvania lawsuit seeks statutory damages for Five Star’s issuance of purportedly deficient notices of disposition which are supposed to inform borrowers of their rights after a vehicle is repossessed.

The New York plaintiffs did not sustain any alleged actual injury, according to the Five Star lawsuit, so the New York plaintiffs sought statutory, not actual, damages.

By bringing the lawsuit in Pennsylvania, the New York plaintiffs circumvented New York’s prohibition against no-injury class actions.

The Pennsylvania plaintiffs are seeking damages under Pennsylvania law for loans they took out when they purchased cars in Pennsylvania.

The Five Star lawsuit accuses HSE of failing to file a motion in the Pennsylvania lawsuit at the proper time to dismiss the New York claims and, as a result, forfeited that defense.

“Had (HSE) moved for dismissal of the New York claims … the New York claims would have been dismissed and effectively terminated,” according to the Five Star lawsuit.

“The New York resident-plaintiffs in the underlying lawsuit could not have refiled their claims because the law in New York … explicitly bars no-injury class actions,” according to the complaint.

In a “no injury” class action lawsuit, the plaintiff alleges that a defendant violated a technical statutory requirement, resulting in civil penalties, even though the technical violations may not have caused any actual harm.

A motion to dismiss the New York plaintiffs could have eliminated 95 percent of Five Star’s exposure in the Pennsylvania lawsuit, including legal and mediation fees and increased insurance premiums, the suit claims.

Five Star terminated HSE as their legal counsel in the Pennsylvania lawsuit in October 2021. That case is still pending.

“Had the New York claims been dismissed … only approximately 300 claims by Pennsylvania resident-plaintiffs would have remained in the underlying lawsuit,” according to the Five Star complaint.

“Harter Secrest & Emery will not comment on pending litigation matters,” the firm said via email.

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