Estate of Israel, In re

• Decision Date: 27 July 1994
• Citation: 435 Pa.Super. 347,645 A.2d 1333
• Parties: In re ESTATE OF Herman J. ISRAEL, Late of the City of Lower Burrell, Westmoreland County, Pennsylvania, Deceased. Appeal of Betty Ann TAYLOR, an Individual and Henry L. Israel, an Individual.
• Court: Pennsylvania Superior Court

Page 1333

645 A.2d 1333

435 Pa.Super. 347

In re ESTATE OF Herman J. ISRAEL, Late of the City of Lower

Burrell, Westmoreland County, Pennsylvania, Deceased.

Appeal of Betty Ann TAYLOR, an Individual and Henry L.

Israel, an Individual.

Superior Court of Pennsylvania.

Argued April 5, 1994.

Filed July 27, 1994.

Robert O. Lampl, Pittsburgh, for appellants.

Gerald E. Arth, Philadelphia, for Ins. Com'n, participating party.

Before McEWEN, DEL SOLE and BROSKY, JJ.

BROSKY, Judge.

This is an appeal from the order of the trial court which granted appellee-Insurance Commissioner's motion to compel deposition answers/produce documents and denied appellant-executors' motion for a protective order.

Appellants present the following issues for review: (1) whether the trial court erred in granting appellee's discovery motion to compel appellants to answer questions and produce their private/personal records where appellants, in their individual capacities, are not parties to this action; (2) whether the trial court erred in granting appellee's discovery motion because it is overbroad; (3) whether the trial court erred in granting appellee's discovery motion where appellee failed to establish good cause to support her discovery request; and (4) whether the trial court erred in granting appellee's discovery motion to compel the production of appellee's personal documents where compliance will cause unreasonable annoyance, embarrassment, and expense to appellants. For the reasons set forth below, we quash this appeal.

It is necessary to recount the facts and history of this case. In 1968, Herman J. Israel and other individuals assumed ownership of the Rockwood Insurance Company (RIC) following its release from rehabilitation by the Insurance Commissioner. Mr. Israel's and the other owners' management of the company subsequently spawned investigations by the United States Attorney's Office and the Pennsylvania Insurance Department during the mid-1970s. As a result of these investigations, Mr. Israel ultimately entered into consent agreements with the federal and state authorities pursuant to which he was to divest himself of stock and resign his position as chairman of RIC's board of directors. Mr. Israel further agreed not to accept a position as an officer, director or employee of RIC. Notwithstanding his agreement, Mr. Israel and the other RIC directors/officers reorganized the company in 1981 such that it became a wholly-owned subsidiary of Rockwood Holding Company (RHC).

Following the reorganization, RHC created the Rockwood Energy and Mineral Corporation (REMCORP), which was a wholly-owned subsidiary of RIC. In 1984, REMCORP purchased mining equipment from Mr. Israel for the sum of $750,000. RHC/RIC later determined that the equipment sold to REMCORP was not worth this amount. Consequently, RHC's directors recommended that Mr. Israel execute a promissory note in the sum of $500,000 in favor of REMCORP. Mr. Israel executed the note in 1985, but made it payable to RHC rather than REMCORP. No payments were made on the note, despite demand from RHC. RHC did not institute proceedings to collect on the note.

After the reorganization of RIC, the officers and directors of RHC engaged in a series of business transactions which resulted in substantial economic losses to RIC and REMCORP. In addition, several audits disclosed that RIC was grossly underreserved. By 1990, the Insurance Commissioner placed RIC into rehabilitation pursuant to a joint voluntary petition between RIC and the Insurance Commissioner. The rehabilitation plan was unsuccessful and the Insurance Commissioner thereafter placed RIC into liquidation. As RIC's liquidator, the Insurance Commissioner instituted suit in Commonwealth Court against Herman Israel as well as the directors and officers of RHC. See Insurance Commissioner of the Commonwealth of Pennsylvania, as Liquidator of Rockwood Insurance Co. and Rockwood Energy and Mineral Corp. v. Rockwood Holding Company, et al., 158 Pa.Cmwlth. 258, 632 A.2d 335 (1993).

In the course of his involvement with RHC, RIC and REMCORP, Mr. Israel engaged in certain mining operations which resulted in the pollution of streams near the mine. Consequently, actions have been instituted by the Pennsylvania Department of Environmental Resources (DER) and others against Mr. Israel and REMCORP. See Ingram Coal Company, et al. v. Commonwealth of Pennsylvania, Department of Environmental Resources, No. 88H507 (compliance order issued by DER); ¹ A.J. Palumbo v. Clark Ingram, et al. v. Herman Israel, No. 86-1681-CD (Clearfield County); Clark Ingram v. Herman Israel and REMCORP, No. 89-108 (Elk County). ²

Mr. Israel also obtained a loan for the sum of $50,000 from First Seneca Bank (FSB) in 1983. Payments on the FSB loan were current until Mr. Israel's death. Notwithstanding the existence of the FSB loan, the promissory note to RHC, and the other various actions, Mr. Israel began making large gifts of cash and personalty to appellants, Henry L. Israel and Betty Ann Taylor, as well as to Mrs. Taylor's husband and son in 1983. ³ These gifts continued until Herman Israel's death on September 28, 1989.

Herman Israel died testate; his will nominated appellants as the executors of his estate. Following issuance of letters testamentary and submission of the will for probate, FSB and RHC filed claims against the estate. The executors filed an account in November, 1992 to which FSB, DER, and the Ingrams objected. Objections were also filed by appellee, the Insurance Commissioner of the Commonwealth of Pennsylvania, Cynthia Maleski, in January, 1993. After pleadings pertaining to the propriety of the objections were filed, the trial court dismissed appellants' petitions and agreed to hear the objections.

The parties thereafter attempted to engage in discovery, and both Henry Israel and Betty Ann Taylor were scheduled to be deposed. During Mrs. Taylor's deposition, she was instructed by her counsel not to answer any of appellee's questions relating to the gifts which she had received from her father. Mrs. Taylor also refused appellee's request to produce documents involving these transactions. As a result, appellee filed a motion to compel appellants' compliance with the discovery request. Appellants opposed this motion and responded with a motion for protective order. After argument on the motions, the trial court granted appellee's motion but denied appellants' request for a protective order. Appellants' thereafter initiated this appeal from the trial court's order. ⁴

It is a fundamental principle of law that an appeal will lie only from a final order unless otherwise permitted by rule or statute. ⁵ Motheral v. Burkhart, 400 Pa.Super. 408, 414, 583 A.2d 1180, 1183 (1990) (en banc ). See also 42 Pa.C.S.A. § 742 (providing that the Superior Court shall have exclusive appellate jurisdiction over all appeals from final orders of the courts of common pleas). We must therefore ascertain whether the trial court's order is a final appealable order because the question of appealability implicates the jurisdiction of our court. Motheral v. Burkhart, 400 Pa.Super. at 414, 583 A.2d at 1183-1184; 42 Pa.C.S.A. § 742,supra. The appellate courts have defined a final order as:

one which ends the litigation, or alternatively disposes of the entire case. Conversely phrased, an order is interlocutory and not final unless it effectively puts the litigant out of court. Whether an order is final and appealable is a judicial determination which cannot be made without an examination of the order's practical ramifications. In making this determination, we are guided by the Supreme Court's statement that a pivotal consideration in determining whether an order is final and appealable is whether the plaintiff aggrieved by it has, for purposes of the particular action, been put "out of court" on all theories of recovery asserted against a given defendant for a given loss.

Motheral v. Burkhart, 400 Pa.Super. at 414-415, 583 A.2d at 1184 (citations and quotation marks omitted).

As applied here, it is clear that the trial court's order neither ends the litigation nor puts the parties out of court. Rather, the order does nothing more than direct appellants to comply with appellee's discovery request. The appellate courts have long held that discovery orders are interlocutory and unappealable. See, e.g., Pennsylvania Human Relations Commission v. Jones & Laughlin Steel Corp., 483 Pa. 35, 36, 394 A.2d 525, 526 (1978); Kine v. Forman, 412 Pa. 163, 165, 194 A.2d 175, 176 (1963); Mackowain v. Gulf Oil Corp., 369 Pa. 581, 582, 87 A.2d 314, 314 (1952); Young v. Bradford County Telephone Co., 346 Pa. 90, 94, 29 A.2d 533, 535 (1943); Joyce & Associates v. Pivirotto, 358 Pa.Super. 50, 51-52, 516 A.2d 763, 764 (1986); McManus v. Chubb Group of Insurance Companies, 342 Pa.Super. 405, 408-410, 493 A.2d 84, 86-87 (1985). Consequently, the trial court's order cannot be classified as being final and appealable.

However, our inquiry is not at an end as we must consider whether the order may be deemed final and appealable under the collateral order doctrine. Pursuant to this principle, an order may be appealed if: (1) it is separable from and collateral to the main cause of action; (2) the right involved is too important to be denied review; and (3) the question presented is such that if review is postponed until final judgment in the case, the claimed right will be irreparably lost. Pugar v. Greco, 483 Pa. 68, 73, 394 A.2d 542, 545 (1978) (quoting Cohen v. Beneficial Industrial Loan Corporation, 337 U.S. 541, 546, 69 S.Ct. 1221, 1225-1226, 93 L.Ed. 1528, 1536 (1949)). All three elements must be satisfied for an order to qualify under Cohen. Fried v. Fried, 509 Pa. 89, 95, 501 A.2d 211, 214 (1985). See also Pugar v. Greco, 483 Pa. at 74, 394 A.2d at 545 (although order denying leave to appeal without payment of the arbitration fee was collateral to the basic liability...