Opinion
No. 2388 C.D. 2011
06-25-2012
Edward Chaney, Appellant v. Fairmount Park Real Estate Corporation and HCFD Real Estate Corporation (Amended by Stipulation and Order to "HCFD Auctioneering Corporation")
BEFORE: HONORABLE ROBERT SIMPSON, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
In this appeal, Edward Chaney (Claimant) asks whether the Court of Common Pleas of Philadelphia County (trial court) erred in denying his petition for payment from the Real Estate Recovery Fund (Fund) without conducting a hearing or otherwise providing him an opportunity to litigate the merits of his petition. Because we agree the trial court erred in prematurely disposing of Claimant's petition based solely on the parties' filings where disputed factual issues existed, we vacate the trial court's order, and remand for further proceedings.
The Real Estate Recovery Fund, established by the Act of February 19, 1980, P.L. 15, as amended, 63 P.S. §§455.101-455.902, provides recovery for any aggrieved person who is the victim of fraud, misrepresentation or deceit in a real estate transaction involving an individual licensed as a real estate broker in Pennsylvania. Like other such funds in Pennsylvania protecting the public from professional fraud or misconduct, it is funded by the licensing renewal fees paid by each licensee. D.J. Malatesta Assocs., Inc. v. Century 21 Reuter, Inc., 739 A.2d 1076 (Pa. Cmwlth. 1999).
Claimant initially filed suit against two corporations to recover funds he paid as a deposit in connection with a real estate transaction involving Fairmount Park Real Estate Corporation and HCFD Auctioneering Corporation. Claimant's underlying complaint also named an individual as a defendant; however, this individual was dismissed from the suit prior to trial.
Claimant's suit proceeded to trial. On February 22, 2010, the trial court entered a verdict in favor of Claimant and against the defendants in the amount of $64,382.71. Judgment was entered upon Claimant's praecipe on March 9, 2010.
Thereafter, the corporate defendants filed an appeal to the Superior Court, which was dismissed in May 2010 for failure to file post-trial motions.
In February 2011, Claimant filed a petition for recovery against the Fund. The Fund filed an answer with new matter. Based solely on the petition and answer, the trial court issued an order denying Claimant's petition.
Claimant then appealed to the Superior Court, which transferred the matter to this Court. The trial court directed Claimant to file a Pa. R.A.P. 1925(b) Statement, which he did. Thereafter, the trial court issued an opinion pursuant to Pa. R.A.P. 1925(a), in which it explained its decision to dismiss Claimant's petition. The trial court stated:
Claimant also filed a motion for reconsideration before the trial court, and the Fund filed an answer. However, the trial court did not act on the motion for reconsideration before the expiration of the appeal period.
This is simply a matter of [Claimant] not meeting his burden for the requested relief. As [Section 803 of the Real Estate Licensing and Registration Act (Act)] states, [Claimant] must show four things listed in subsections (b)(1-4). [Claimant] did not show or even allege compliance with (b)(1). Subsection (b)(2) compliance was averred but not shown. The [j]udgment was not attached to the [p]etition. Also, it was averred that [Claimant] complied with (b)(3) but there was no factual or evidentiary support given in the [p]etition or in any exhibits or attachments. Subsection (b)(4) was also not alleged to be complied with in the [p]etition.Tr. Ct., Slip Op., 10/24/11, at 6-7 (emphasis in original). This matter is now before us for disposition.
In short, the [p]etition consists of bald allegations of [Claimant's] compliance and entitlement to certain money from the [Fund]. No proof was provided. [Claimant] could have attached the necessary documents and proofs but chose not to. The wording of the statute requires the aggrieved person to 'show' those requirements. Here, there was no showing, just allegations. The statute requires proof. This was not supplied by [Claimant] and was not subsequently shown in [his] [m]otion for [r]econsideration which could have remedied the situation.
There was no request for an evidentiary hearing. [Claimant] simply did not show the required elements of the [s]tatute. There was nothing in dispute. There was simply no proof of anything. [Claimant] had the burden to prove all of the elements. There was no error on this Court's behalf. There was simply no proof of entitlement to the funds. This lack of proof, coupled with the lack of request for discovery or an evidentiary hearing, led this Court to properly deny the [p]etition.
Act of February 19, 1980, P.L. 15, as amended, 63 P.S. §455.803.
On appeal, Claimant argues the trial court did not adhere to the proper procedure when it dismissed his petition based solely on the parties' filings. He also contends the trial court erred in determining he did not aver sufficient facts to state a claim for recovery against the Fund.
Our review is limited to determining whether the trial court abused its discretion or committed an error of law, or whether findings of facts made by the trial court were supported by substantial evidence. Smith v. I.W. Levin & Co., Inc., 800 A.2d 374 (Pa. Cmwlth. 2002).
I.
Claimant first argues the trial court violated the Pennsylvania Rules of Civil Procedure when it dismissed his petition. He asserts that because his petition is based on Section 803 of the Act, the applicable procedure for resolving it is set forth in Pa. R.C.P. Nos. 206.1-206.7, which require the trial court to issue a rule to show cause and to enter an order permitting the taking of depositions or other discovery in a specified timeframe. See Phila. Civ. R. 206.1(a)(1)(viii). Claimant contends the trial court erred in failing to adhere to this procedure.
Claimant further asserts that while Phila. Civ. R. 206.4(c) appears to vest the trial court with discretion in deciding whether to hold a hearing, Pa. R.C.P. No. 206.7(c) allows a petitioner to take depositions on disputed factual issues, or such other discovery as the court allows. He contends the local rule must yield to the state rule on this point.
The Fund responds the trial court properly disposed of Claimant's petition based solely on the petition and the Fund's answer with new matter, and without holding a hearing or ordering discovery. To that end, the Fund argues the trial court properly treated Claimant's filing as a "motion" as set forth in Pa. R.C.P. No. 208.1. In support, the Fund notes that under Phila. Civ. R. 208.2(c), motions are to be accompanied by a memorandum of law, and both Claimant and the Fund filed memoranda here. After the parties filed these documents, the Fund contends, the trial court properly entered an order disposing of the motion pursuant to Pa. R.C.P. No. 208.4(a)(1). Thus, the Fund maintains, there was no procedural error that would require the trial court to issue a rule to show cause or hold a hearing.
The Fund also points out that Claimant's petition did not include a request for discovery or an evidentiary hearing. In any event, the Fund maintains, even if the trial court erroneously disposed of the filing as a "motion," this is harmless error. See Pa. R.C.P. No. 126 (liberal construction of rules). Further, the Fund asserts, although four months elapsed after Claimant filed his petition, he did not attempt to take depositions or conduct discovery. As such, the Fund contends, this matter was ripe for disposition under Pa. R.C.P. No. 206.7(c).
As to Claimant's assertion that the trial court erred in failing to consider his filing a petition, which is subject to Pa. R.C.P. Nos. 206.1-206.7, Pa. R.C.P. No. 206.1(a) states:
(a) As used in this chapter, "petition" means
(1) an application to open a default judgment or a judgment of non pros, and
(2) any other application which is designated by local rule, numbered Local Rule 206.1(a), to be governed by Rule 206.1 et seq.Id. (emphasis added). In turn, Phila. Civ. R. 206.1(a), states (with emphasis added): "(1) In addition to petitions to open default judgment and petitions to open judgment of non pros, the following applications are designated as 'petitions' and are governed by the procedures set forth in Pa. R.C.P. No. 206.1 et seq.: ... (viii) Statutory Petitions." Id.
Although the Philadelphia local rules do not define the term "statutory petition," the term "petition" is generally defined as "a formal written request presented to a court ...." Black's Law Dictionary 1182 (8th ed. 2004). Additionally, Claimant's right to relief here is based upon a statute, namely the Real Estate Licensing and Registration Act. Thus, Claimant's filing falls within the plain meaning of the undefined term "statutory petition," and, therefore, is governed by the procedures set forth in Pa. R.C.P. Nos. 206.1-206.7. We reject the Fund's undeveloped argument that Claimant's filing does not fall within the plain language of the undefined term, "statutory petition."
With regard to the governing procedure for petitions, Pa. R.C.P. No. 206.4 provides:
(a) A petition shall proceed upon a rule to show cause, the issuance of which shall be discretionary with the court as provided by Rule 206.5 unless the court by local rule adopts the procedure of Rule 206.6 providing for issuance as of course.Id. In turn, Phila. Civ. R. 206.4(c) states (with emphasis added):
(b) The procedure following issuance of the rule to show cause shall be in accordance with Rule 206.7.
The Rule to Show cause process set forth in Pa. R.C.P. [No.] 206.6 is hereby adopted for all petitions filed pursuant to Pa. R.C.P. [No.] 206.1 et seq. Upon the filing of a petition, a rule to show cause shall be issued as of course by the Motion Court clerk on behalf of the Court. The form of rule to show cause order shall be substantially as set forth hereunder. ...Id. Additionally, Pa. R.C.P. No. 206.6 states (with emphasis added):
RULE TO SHOW CAUSE ORDER
AND NOW, this day of , upon consideration of the foregoing Petition, it is hereby ordered that:
(1) a Rule is issued upon the respondent to show cause why the petitioner is not entitled to the relief requested;
(2) the respondent shall file an answer to the Petition within twenty days;
(3) A Hearing or Argument shall be scheduled at the discretion of the Assigned Judge; and
(4) notice of the entry of this order shall be provided immediately to all parties by the petitioner. ...
(a) A rule to show cause shall be issued as of course upon the filing of the petition. The rule shall direct that an answer be filed to the petition within twenty days after service of the petition on the respondent.
* * * *
(c) The petitioner shall attach to the petition a proposed order substantially in the following form:
(CAPTION)
ORDER
AND NOW, this ___ day of ___, ___, upon consideration of the foregoing petition, it is hereby ordered thatId. Further, the Note to this Rule explains, "[i]n counties in which an evidentiary hearing is held, the order should be modified by deleting paragraphs (4) and (5) and substituting new paragraph (4) to read as follows: (4) an evidentiary hearing on disputed issues of material fact shall be held on ___ in Courtroom ___ of the ___ County Courthouse." Id.
(1) a rule is issued upon the respondent to show cause why the petitioner is not entitled to the relief requested;
(2) the respondent shall file an answer to the petition within twenty days of service upon the respondent;
(3) the petition shall be decided under Pa.R.C.P. No. 206.7;
(4) depositions shall be completed within ___ days of this date;
(5) argument shall be held on ___, ___ in Courtroom ___ of the ___ County Courthouse; and
(6) notice of the entry of this order shall be provided to all parties by the petitioner. ...
Next, as stated in Pa. R.C.P. No. 206.7(a), if an answer to a petition is not filed, the petition's factual averments may be deemed admitted. Further, where an answer is filed that does not raise disputed factual issues, the court shall decide the petition based solely on the parties' filings. Pa. R.C.P. No. 206.7(b). However, if an answer raises disputed, material factual issues, the petitioner may take depositions on those issues or such other discovery as the court allows, within the time set forth in the court's order. Pa. R.C.P. No. 206.7(c). Thus, although Phila. Civ. R. 206.4(c) indicates a hearing or argument shall be scheduled at the assigned judge's discretion, Pa. R.C.P. Nos. 206.6 and 206.7 contemplate, where disputed factual issues exist, a common pleas court will either hold a hearing or permit the taking of depositions or other discovery as the court allows.
Further, if the petitioner does not take depositions or conduct discovery as the court allows within the time set forth in the court's order, the court shall decide the petition based on the petition and answer, and all factual averments responsive to the petition and properly pled in the answer shall be deemed admitted. Pa. R.C.P. No. 206.7(c). Discussing the procedure governing petitions practice in Pennsylvania, the Third Circuit stated:
[U]nder current Pennsylvania Rules of Civil Procedure, once a petition and answer have been filed, and the petitioner has let the court's discovery period elapse, the trial court is permitted to decide the petition on the basis of the parties' filings alone, without notification to the parties that a decision is imminent and without offering the parties an opportunity to offer live testimony.
Pursuant to Phila. Civ. R. 51(C), the Philadelphia Local Rules must be construed as consistent with the statewide procedural rules, where possible. Further, if a conflict exists, the Pennsylvania Rules of Civil of Procedure receive priority. Id.; see also Pa. R.C.P. No. 239(b).
To that end, in Duquesne Light Co. v. Rudolph N. Rohn Co., Inc., 753 A.2d 286 (Pa. Super. 2000), the Superior Court held a common pleas court erred in failing to adhere to the rule to show cause procedure when it granted a petition without affording the opposing party an opportunity to file an answer or allowing the parties to litigate factual issues. Thus, the Court remanded to allow the common pleas court to issue a rule to show cause and permit the parties to proceed as outlined in Pa. R.C.P. No. 206.7.
Here, upon the filing of Claimant's petition, the trial court did not issue a rule to show cause despite the requirement set forth in Phila. Civ. R. 206.4(c). Further, as set forth in detail below, and contrary to the trial court's statement, the Fund's answer to Claimant's petition raised disputed factual issues. As such, the trial court erred in failing to conduct an evidentiary hearing, or to permit the taking of depositions or other discovery within a specified timeframe as contemplated by Pa. R.C.P. Nos. 206.6-206.7. The trial court's decision to forego the appropriate procedure deprived Claimant an opportunity to litigate his claim against the Fund. Duquesne Light. Cf. Murphy v. Today's Props., LTD, 673 A.2d 6 (Pa. Cmwlth. 1996) (where party sought recovery from Fund, party filed petition for rule to show cause, Fund filed answer, and common pleas court held hearings prior to resolving petition). Thus, as set forth in greater detail below, we must vacate the trial court's order and remand for further proceedings. Duquesne Light.
Additionally, even if we agreed with the Fund that the trial court properly classified Claimant's filing a "motion" rather than a "petition," where a motion raises disputed factual issues, the Philadelphia Rules of Civil Procedure provide: "Disputed issues of fact shall be determined as the Court may provide pursuant to Pa.R.C.P. [No.] 208.4(b)." Phila. Civ. R. 208.3(b)(2)(F). In turn, Pa. R.C.P. No. 208.4(b)(1) states:
If the moving party seeks relief based on disputed facts for which a record must be developed, the court, upon its own motion or the request of any party including the moving party,
may enter an order in the form set forth in paragraph (2) providing for the issuance of a rule to show cause. The procedure following issuance of the rule to show cause shall be in accordance with Rule 206.7.
Id.
Here, based on Claimant's petition and the Fund's answer, Claimant sought relief based on disputed facts for which a record needed to be developed. Further, although it was not in the proper form, Claimant's petition included a proposed rule to show cause why his requested relief against the Fund should not be granted. Reproduced Record (R.R.) at 11a. As a result, even if the trial court deemed Claimant's filing a "motion" rather than a "petition," the trial court should have proceeded pursuant to Pa. R.C.P. No. 206.7.
It is noteworthy that, although Claimant's petition did not specifically request a hearing, the Fund's answer requested "a reasonable time to complete discovery" followed by "an evidentiary hearing." Reproduced Record at 46a.
II.
Claimant also argues that the trial court's summary dismissal of his petition was improper. Specifically, he argues his petition averred sufficient facts to satisfy each of the four prerequisites for recovery against the Fund set forth in Section 803(b) of the Act, and he was not required to plead evidence.
Further, at oral argument, Claimant directed our attention to the companion cases of Byard F. Brogan, Inc. v. Holmes Electric Protective Company of Philadelphia, 501 Pa. 234, 460 A.2d 1093 (1983) and DeAngelis v. Newman, 501 Pa. 144, 460 A.2d 730 (1983). In Byard F. Brogan and DeAngelis, our Supreme Court invalidated local rules that mandated automatic dismissal of a suit based on a party's non-prejudicial procedural error, such as failure to timely file a brief in response to preliminary objections or a motion for summary judgment. See also Pa. R.C.P. No. 239(f) (no civil action or proceeding shall be dismissed for failure to comply with a local rule).
The Fund responds that, based on Claimant's petition and the Fund's answer, it was apparent that Claimant did not plead, and could not show, he met the criteria necessary to obtain payment from the Fund. As a result, the trial court properly denied his claim on the merits. The Fund asserts the petition set forth bald allegations with no information, documentation or other proof regarding the real estate transaction underlying Claimant's claim or the civil suit that gave rise to his alleged right to recover from the Fund. As a result, the Fund maintains, Claimant did not prove he is entitled to collect from the Fund.
Section 803 of the Act states, as pertinent:
(a) When any aggrieved person obtains a final judgment in any court of competent jurisdiction against any person licensed under this act, upon grounds of fraud, misrepresentation or deceit with reference to any transaction for which a license or registration certificate is required under this act ... the aggrieved person may, upon termination of all proceedings, including reviews and appeals, file an application in the court in which the judgment was entered for an order directing payment out of the Real Estate Recovery Fund of the amount unpaid upon the judgment.
(b) The aggrieved person shall be required to show:
(1) That he is not a spouse of the debtor, or the personal representative of said spouse.
(2) That he has obtained a final judgment as set out in this section.
(3) That all reasonable personal acts, rights of discovery and such other remedies at law and in equity as exist have been exhausted in the collection thereof.
(4) That he is making said application no more than one year after the termination of the proceedings, including reviews and appeals in connection with the judgment.63 P.S. §455.803(a), (b).
As to the first requirement, Claimant's petition did not specifically aver that he is not a spouse of the debtors, or the personal representative of such spouse. However, Claimant's petition did aver that the debtors were corporate entities. R.R. at 13a. Clearly, Claimant's failure to specifically aver he is not the spouse of a corporate entity did not warrant dismissal of his petition, particularly where that fact could be inferred from his averments that the debtors are corporate entities. Id.
With regard to the second requirement, Claimant's petition averred he obtained a final judgment against Fairmount Park Real Estate Corporation, an entity licensed as a real estate broker or agent by the State Real Estate Commission, and HCFD Auctioneering Corporation. Id. He further averred this judgment was founded upon fraud, misrepresentation and/or deceit, including violations of various real estate laws and regulations as well as the Unfair Trade Practices and Consumer Protection Law. R.R. at 14a.
Act of December 17, 1968, P.L. 1224, as amended, 73 P.S. §§201-1-201-9.3.
As to the third requirement, Claimant's petition alleged he "exhausted all reasonable acts and efforts including rights of discovery and other such remedies at law and in equity as exist by which he might collect the judgment from either defendant." Id. Claimant then alleged:
8. It is believed that defendants have ceased doing business and, in fact, there is a judgment against the parent corporation of these companies as well as the owner of these companies for approximately $4 million in unpaid debt. Said owner has declared personal bankruptcy.R.R. at 14a-15a.
9. Plaintiff determined that defendants maintained several bank accounts and attempted garnishment of same which resulted in responses from banks that the accounts either had been closed or had minimal balances of $10.00 or less. Copies of Answers to Garnishment Interrogatories are attached as Exhibit 'A'.
10. Plaintiff caused a levy to be done at corporate defendants' places of business which resulted in levy reports being issued by the Sheriff of Philadelphia County as shown on Exhibit 'B'. The Sheriff advised that property claims were filed but refused to provide same or schedule a hearing on same. The persons involved with that activity in the Sheriff's office have been put on leave or similar [sic] related to federal investigation of the Philadelphia Sheriff's office. Requests to the acting Sheriff to conduct a hearing have been ignored.
[11]. Efforts to depose the president of the company have been unsuccessful and have been met by delay and avoidance. Continued efforts to obtain court orders to force compliance with outstanding and unfulfilled discovery orders are being pursued with little hope of success.
With regard to the fourth requirement, although Claimant's petition did not specifically aver he filed his petition within one year after the termination of the underlying proceedings, he did allege that he obtained a judgment on March 9, 2010 (and a subsequent appeal to the Superior Court was quashed). R.R. at 13a-14a. Also, the cover page of Claimant's current petition is date stamped February 24, 2011. R.R. at 13a. Thus, from the face of Claimant's petition, it appears he complied with the limitations period in Section 803(b)(4) of the Act.
In response to Claimant's petition, the Fund filed an answer in which it disputed the judgment Claimant obtained was entered against a real estate licensee covered under the Act, and that Claimant filed his petition within one year after the termination of the underlying proceedings. R.R. at 40a-41a. The Fund also denied Claimant's averment that his underlying judgment was predicated on grounds of fraud, misrepresentation or deceit, stating Claimant "failed to provide evidence that the judgment that was entered by the Court was based upon grounds of fraud, misrepresentation or deceit." R.R. at 42a. The Fund also responded that it lacked sufficient knowledge or information as to Claimant's collection efforts against the defendants in the underlying action. R.R. at 42a-43a.
Thus, contrary to the trial court's determination, the Fund's answer raised disputed factual issues. The trial court erred in dismissing Claimant's petition without providing him an opportunity to develop a record as to whether he is entitled to relief from the Fund. Only then could the trial court make an informed judgment based on the information presented. By foregoing the proper procedure when presented with Claimant's petition and the Fund's answer, the trial court denied Claimant an opportunity for meaningful review.
As a result, we vacate the trial court's order denying Claimant's petition. Further, we remand with directions that the trial court issue an appropriate rule to show cause. After issuance of the rule to show cause, the parties should proceed as outlined in Pa. R.C.P. No. 206.7(c). See Duquesne Light.
Claimant also asserts the trial court erred in essentially raising an objection to lack of specificity in Claimant's petition on its own motion.
Although the Fund asserts Claimant waived this issue by failing to raise it in his 1925(b) Statement, this issue relates to the trial court's rationale as first expressed in its 1925(a) Opinion; therefore, Claimant could not have raised this issue previously. As such, Claimant did not waive this issue. See Pa. R.A.P. 1925(b)(4)(vi).
In any event, for the reasons stated throughout this opinion, the trial court erred in dismissing Claimant's petition without following the proper procedure. Thus, further discussion of this issue is unnecessary.
/s/_________
ROBERT SIMPSON, Judge ORDER
AND NOW, this 25th day of June, 2012, the order of the Court of Common Pleas of Philadelphia County is VACATED, and this matter is REMANDED for proceedings consistent with the foregoing opinion.
Jurisdiction is relinquished.
/s/_________
ROBERT SIMPSON, Judge
Fed. Deposit Ins. Corp. v. Deglau, 207 F.3d 153, 163 (3d. Cir. 2000) (emphasis added); see also 3 Standard Pennsylvania Practice 2d. §15:41 (2009 ed.).
Here, the trial court did not issue an order setting forth a timeframe for discovery. Therefore, Claimant did not allow any discovery period to lapse, and, as explained more fully throughout this opinion, the trial court acted prematurely when it disposed of this matter based solely on the parties' filings.