Unruh Turner Burke & Frees, PC v. Tattersall Dev. Co.

Decision Date30 September 2022
Docket Number555 EDA 2022
Citation283 A.3d 1265
Parties UNRUH TURNER BURKE AND FREES, PC v. TATTERSALL DEVELOPMENT COMPANY t/a Tattersall Properties LP Kenneth C. Hellings and Joyce M. Hellings Appeal of: Kenneth C. Hellings and Joyce M. Hellings
CourtPennsylvania Superior Court

Andrew C. Eckert, West Chester, for appellant.

Kristen W. Ladd, West Chester, for appellee.

BEFORE: LAZARUS, J., MURRAY, J., and McCAFFERY, J.

OPINION BY MURRAY, J.:

Kenneth C. Hellings (Mr. Hellings) and Joyce M. Hellings (collectively, Appellants) appeal from order denying their motion to dissolve the preliminary injunction granted at the request of Appellee Unruh Turner Burke & Frees, P.C. (UTBF). UTBF had obtained a judgment against Appellants, and the trial court's preliminary injunction enjoined Appellants from transferring funds through four entities: Capstone5 LP (Capstone); Embreeville Redevelopment GP, LLC (Embreeville GP); Embreeville Redevelopment, LP (Embreeville LP); and KCH, LLC (KCH) (collectively, the Embreeville Entities)) to avoid payment of the judgment. We affirm.

The trial court summarized the procedural history as follows:

This collection case was initiated in 2012. In 2015, [the trial court] entered judgment against the [Appellants] and the Tattersall Development Company ("Judgment Debtors")[,] and in favor of UTBF in the amount of $131,494.74, plus interest ... ("Judgment").1
1 The Judgment increased to $241,950.32 as of December 1, 2021 due to interest and continues to grow by $43.23 daily.
On June 22, 2018, UTBF petitioned for a charging order alleging that Judgment Debtors had avoided enforcement of the Judgment by refusing to appear for depositions, refusing to disclose assets, refusing to disclose the location of the [Appellants’] residence, and using various shell entities to hold legal title to property for their personal benefit to shield those assets from the Judgment. The Judgment Debtors failed to answer the petition. On August 6, 2018, UTBF was granted relief and a charging order [(Charging Order)] was entered directed to various [of Appellants’] controlled entities, including KCH. The full list of entities subject to the Charging Order were described over two pages of the Charging Order and are referenced herein as the "2018 Charging Order Entities." Pursuant to the Charging Order, the 2018 Charging Order Entities were to pay UTBF all sums due from any of the 2018 Charging Order Entities to any of the Judgment Debtors.
More recently, on October 12, 2021, UTBF filed an Emergency Petition for Special Injunction ("Emergency Petition") seeking relief under Pa.R.C.P. No. 3118(a)(6). UTBF had become of aware of a purported scheme to shield $22,500,000 in proceeds from the sale of a real property in West Bradford Township from UTBF's efforts to collect its Judgment. (Emergency Petition, ¶ 6) [The trial court] granted ex parte relief in the form of an Order that:
1.) amended the Charging Order to include Capstone in the list of entities subject to the Charging Order, and
2.) directed Embreeville GP and Embreeville LP to pay into court all sums due[,] from either[,] to any of the following: the Judgment Debtors, KCH, Capstone, any assignee of KCH's interest in Embreeville GP or Capstone, any assignee of Capstone's interest in Embreeville LP, and any other entity owned by the Judgment Debtors, KCH or Capstone.
In addition, the October 12, 2021 Order set the matter for a hearing on October 15, 2021. The Judgment Debtors have not answered the petition.
On October 15, 2021, the parties agreed to continue the hearing and stipulated to entry of an order maintaining the injunction until such time as a final hearing could be held. Despite agreeing to maintain the injunction until a final hearing, on November 24, 2021, [Appellants] filed a motion to dissolve the preliminary injunction.2 UTBF answered and briefed the motion.3 The motion was denied on January 11, 2022. [Appellants] thereafter timely filed this appeal and, in response to an order so directing, timely filed a statement of matters complained of on appeal.
2 Pa.R.C.P. No. 1531 (c) provides "[a]ny party may move at any time to dissolve an injunction."
3 Judgment Debtors failed to brief their motion as required by Local Rule 208.3(b).

Trial Court Opinion, 4/4/22, at 1-3 (footnotes in original).

In this appeal, Appellants present the following claims for our review:

1. Did the trial court err in denying [Appellants’] Motion to Dissolve the Preliminary Injunction as to [the Embreeville Entities] ... as the entities were never served with the Emergency Petition for Special Injunction (hereinafter "Underlying Petition") thus depriving the trial court of jurisdiction?
2. Did the trial court err in denying AppellantsMotion to dissolve the preliminary injunction as [UTBF] ... failed to name the Embreeville Entities, who are indispensable parties to the Underlying Litigation, depriving the trial court of jurisdiction?
3. Did the trial court err in failing to dissolve the preliminary injunction[ ] as the property at issue does not belong to Appellants, but rather, it belongs to the Embreeville Entities, which are not parties to this proceeding, and a [c]ourt cannot make determinations as to the conflicting rights to property held by third parties based on the limited purposes of Pennsylvania Rule of civil Procedure 3118 ?
4. Did the trial court err in failing to dissolve the preliminary injunction as "reverse piercing of the corporate veil" related to a non-debtor third party, not a party to the litigation, is improper relief under Pennsylvania Civil Procedure 3118 ?

AppellantsBrief at 5 (some capitalization omitted).

In reviewing the grant of a preliminary injunction,

we do not inquire into the merits of the controversy, but only examine the record to determine if there were any apparently reasonable grounds for the action of the court below. Only if it is plain that no grounds exist to support the decree or that the rule of law relied upon was palpably erroneous or misapplied will we interfere with the decision of the [court].

Allegheny Anesthesiology Associates, Inc. v. Allegheny General Hosp. , 826 A.2d 886, 891 (Pa. Super. 2003).

To obtain a preliminary injunction, a petitioner must establish that:

(1) relief is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by money damages; (2) greater injury will occur from refusing to grant the injunction than from granting it; (3) the injunction will restore the parties to their status quo as it existed before the alleged wrongful conduct; (4) the petitioner is likely to prevail on the merits; (5) the injunction is reasonably suited to abate the offending activity; and (6) the public interest will not be harmed if the injunction is granted.

Shepherd v. Pittsburgh Glass Works, LLC , 25 A.3d 1233, 1241 (Pa. Super. 2011).

A mandatory preliminary injunction, such as the one imposed here, is designed to restore the status quo to the "last actual, peaceable [and] noncontested status which preceded the pending controversy." Commonwealth v. Coward , 489 Pa. 327, 414 A.2d 91, 99 (1980) (citation omitted). It "should be issued only in rare cases and certainly more sparingly than one which is merely prohibitory." Roberts v. School Board of the City of Scranton , 462 Pa. 464, 341 A.2d 475, 478 (1975).

In their first issue, Appellants challenge the trial court's jurisdiction to enter a preliminary injunction involving the Embreeville Entities, as UTBF never served the Embreeville Entities with its preliminary injunction petition. AppellantsBrief at 11. Appellants argue UTBF failed to comply with Pennsylvania Rules of Civil Procedure 3118(a) and 440. Id. at 11, 13. Appellants acknowledge UTBF served their own "undersigned counsel" with a copy of the petition. Id. However, Appellants claim their counsel does not represent the Embreeville Entities:

[T]here is no evidence that counsel for Appellants was authorized to accept service on the Embreeville Entities’ behalf. There is no provision in either Pa.R.C.P. 3118(a) or 440 that even allows for service in such a manner.

Id. Appellants dispute the trial court's finding that:

Because the allegations and supporting documentation that [Appellants] and Embreeville Entities are one in the same and [Appellants] have been served and are participating in the proceedings, there is no issue.

Id. (citing Trial Court Opinion, 4/4/22, at 10). According to Appellants, there is no presumption as to the validity of service upon the Embreeville Entities. Id. at 15. In the absence of valid service, Appellants maintain the trial court lacked jurisdiction over the Embreeville Entities. Id. Appellants thus claim the trial court erred in not dissolving the preliminary injunction. Id. at 15-16.

UTBF responds that they served the preliminary injunction petition on Robert Burke, Esquire (Attorney Burke), counsel for each of the Embreeville Entities. Appellee's Brief at 13. UTBF observes the Embreeville Entities

had the right to file a response to the Petition and chose not to. Moreover, [UTBF] is not seeking to attach property of [the Embreeville Entities].

Id. (emphasis added).

Notably, Appellants, not the Embreeville Entities, challenge the lack of service on the Embreeville Entities.1 This Court is unable to discern how Appellants, in their individual capacities, are prejudiced by the lack of service upon the Embreeville Entities.

In McCreesh v. City of Philadelphia , 585 Pa. 211, 888 A.2d 664, 674 (2005), our Supreme Court stated that when a defendant has actual notice of an action, dismissal for lack of service will be appropriate "where plaintiffs have demonstrated an intent to stall the judicial machinery or where plaintiffs’ failure to comply with the Rules of Civil Procedure has prejudiced defendant." In other words, "a plaintiff will not be punished for technical missteps if he has satisfied the statute of limitations by supplying a defendant with actual...

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