Gurenlian v. Gurenlian

• Decision Date: 25 July 1991
• Citation: 595 A.2d 145,407 Pa.Super. 102
• Parties: E. Cy GURENLIAN, Appellant, v. George GURENLIAN and Pamela Gurenlian. (Two Cases)
• Court: Pennsylvania Superior Court

Page 145

595 A.2d 145

407 Pa.Super. 102

E. Cy GURENLIAN, Appellant, v. George GURENLIAN and Pamela Gurenlian. (Two Cases)

Superior Court of Pennsylvania.

Argued May 9, 1991.

Filed July 25, 1991.

Bill W. Bodager, Media, for appellant.

William Luskus, Media, for appellees.

Before ROWLEY, President Judge, and CIRILLO and JOHNSON, JJ.

ROWLEY, President Judge:

These consolidated appeals arose from two separate actions brought by E. Cy Gurenlian ("Appellant") against his son and daughter-in-law, George and Pamela Gurenlian. The appeal which is docketed in this Court as No. 2357 Philadelphia 1990 involves the amount of prejudgment interest to be awarded appellant on a constructive trust imposed in his favor on appellees' real estate. The appeal docketed in this Court as No. 1940 Philadelphia 1990 involves the statute of limitations in appellant's action for repayment of an alleged loan to appellees. On October 12, 1990, these appeals were consolidated for our review. The pertinent factual and procedural history of each appeal is as follows.

I. FACTUAL HISTORY

A. Appeal at No. 2357 Philadelphia 1990

In 1982, appellant and his two sisters sold their interest in property located on Valley View Road to appellant's son and daughter-in-law, George and Pamela Gurenlian. Pamela typed the agreement of sale which reflected a total purchase price of $45,000.00, consisting of $5,000.00 in cash to appellant and purchase money mortgages of $20,000.00 to each of appellant's sisters. The settlement sheet, however, indicated consideration of $20,000.00 in purchase money mortgages to each sister, but no consideration to appellant. After George and Pamela moved into the Valley View Road property, appellant ate and slept there approximately three times a week from 1982 to 1985. In early 1985, a dispute arose between George and appellant. On May 1, 1985, George notified appellant by certified letter that he would have to vacate the property on Valley View Road.

On August 12, 1985, appellant brought a suit in equity against George and Pamela and requested that the court establish a constructive trust in his favor. The trial court imposed a constructive trust on appellant's behalf in the amount of $5,000.00. Both parties filed appeals. The Superior Court, in an unpublished memorandum, affirmed the trial court's judgment establishing a constructive trust on appellant's behalf, but remanded the case so that the trial court could fashion a decree specifying the manner in which the judgment should be satisfied. 390 Pa.Super. 660, 561 A.2d 824.

On November 1, 1989, the trial court issued an amended decree awarding appellant $6,500.00, which included the $5,000.00 constructive trust plus an award of 6% interest from May 1, 1985, with interest continuing to accrue at the legal rate. Appellant filed a motion to modify the amended decree, but it was denied, and a final order was entered on August 9, 1990. On August 13, 1990, appellant filed an appeal to this Court which has been docketed at 2357 Philadelphia 1990. On appeal, appellant argues that the trial court abused its discretion when it limited the prejudgment interest on the constructive trust to 6%.

B. Appeal at No. 1940 Philadelphia 1990

In June 1982, appellant learned that George and Pamela owed the Internal Revenue Service $5,782.89 in unpaid income taxes. Appellant paid the debt to the I.R.S. for George and Pamela and gave them a receipt. On April 20, 1988, appellant instituted a second action against George and Pamela alleging that they owed him $6,000.00 which he had paid on their behalf to the I.R.S. in 1982. At trial, appellant testified that he had loaned George and Pamela $6,000.00, N.T. 9/7/89, at 7; that there was no oral or written agreement regarding repayment, N.T. 9/7/89, at 7-8; but that appellant understood that George and Pamela would pay him back when they were able, N.T. 9/7/89, at 8; and that George had never tried to pay appellant back, N.T. 9/7/89, at 11, 63. George testified that appellant gave him $4,000.00, N.T. 9/7/89, at 45-46, and that, although George tried to pay appellant back twice in 1982, appellant refused, N.T. 9/7/89, at 47, 51. The trial court found that George attempted to repay the money to appellant but that appellant refused to accept the money and indicated that he did not expect to be repaid. T.C. Op. 12/13/90, at 2.

On November 14, 1989, the trial court concluded that appellant's claim was barred by the statute of limitations and entered a verdict in favor of George and Pamela. Appellant filed post-trial motions which were denied in an order entered on June 21, 1990. On July 2, 1990, appellant appealed to this Court. The appeal was docketed at No. 1940 Philadelphia 1990. On August 7, 1990, judgment was entered on the trial court's order of June 21, 1990. On appeal, appellant argues that the trial court erred in holding that appellant's cause of action was barred by the statute of limitations.

II. APPEAL AT NO. 2357--PREJUDGMENT INTEREST

Appellant first argues that the trial court abused its discretion when it limited the award of prejudgment interest on the constructive trust to the statutory rate of 6%. Our scope of review of an equity matter is very limited. We must accept the trial court's findings of fact, and cannot reverse the trial court's determination absent a clear abuse of discretion or error of law. Walley v. Iraca, 360 Pa.Super. 436, 441, 520 A.2d 886, 889 (1987). A final decree in equity "will not be disturbed unless it is unsupported by the evidence or demonstrably capricious." Sack v. Feinman,89a 89a. 152, 166, 413 A.2d 1059, 1066 (1980).

The determination of whether to award pre-judgment interest and the rate of such interest is left to the sound discretion of the trial court in equity. Sack v. Feinman, at 165, 413 A.2d at 1065-66; Park v. Greater Delaware Valley Sav. & Loan Ass'n, 362 Pa.Super. 54, 60, 523 A.2d 771, 774 (1987). A court of equity is not limited to awarding merely the statutory rate of interest, but may award interest above the statutory rate. Ball v. Rolling Hill Hosp., 359 Pa.Super. 286, 302, 518 A.2d 1238, 1246 (1986); Rizzo v. Haines, 357 Pa.Super. 57, 65, 515 A.2d 321, 325 (1986), aff'd, 520 Pa. 484, 555 A.2d 58 (1989). See also Lexington Ins. Co. v. Abington Co., 621 F.Supp. 18 (E.D.Pa.1985); Peterson v. Crown Financial Corp., 553 F.Supp. 114 (E.D.Pa.1982). "The fairest way for a court is to decide questions pertaining to interest according to a plain and simple consideration of justice and fair dealing." Murray Hill Estates, Inc. v. Bastin, 442 Pa. 405, 411, 276 A.2d 542, 545 (1971) (quoting McDermott v. McDermott, 130 Pa.Super. 127, 130, 196 A. 889 (1938)).

In the instant suit in equity, appellant acknowledges that the rate of pre-judgment interest to be awarded was within the discretion of the trial court. Appellant claims, however, that the trial court, by awarding interest at the statutory rate of six percent, did not exercise its discretion. He contends that an award of prejudgment interest at a rate higher than the statutory rate was necessary to avoid unjust enrichment to George and Pamela. He also contends that the rate of interest awarded to him should have been either 12%, which his two sisters, the noteholders on the property, received or the market rate of interest which he could have earned on his principal. According to appellant, restitution will not be complete until he is awarded either 12% or the market rate of interest.

Appellant relies on both Pennsylvania and federal cases to support his contention that the trial court abused or failed to exercise its discretion in awarding prejudgment interest at only the statutory rate of six percent. However, the cases on which appellant relies are readily distinguishable from the instant case. In Rizzo v. Haines, 357 Pa.Super. 57, 515 A.2d 321, (1986), aff'd, 520 Pa. 484, 555 A.2d 58 (1989), unlike in the instant case, the defendant's conduct was fraudulent. Rizzo involved a legal malpractice action brought by a client against his attorney, who had wrongfully and fraudulently taken $50,000.00 of the client's money. The trial court awarded the client prejudgment interest at the statutory rate of six percent. The Superior Court ordered the trial court to compute the interest at the market rate. ¹ The Supreme Court affirmed the award of interest at the market rate:

Haines must pay interest at the market rate on the $50,000 that he fraudulently induced his client to transfer to him. Courts in this Commonwealth should not permit a person guilty of fraudulently withholding the funds of another to profit therefrom. Accordingly, where funds are wrongfully and intentionally procured or withheld from one who seeks their restoration, the court should calculate interest on these monies at the market rate.

Rizzo v. Haines, 520 Pa. at 508, 555 A.2d at 70 (citations omitted).

In Sack v. Feinman, 489 Pa. 152, 413 A.2d 1059 (1980), the defendant fraudulently converted savings bonds placed in trust for the plaintiff. The chancellor declined to award the plaintiff prejudgment interest. The Supreme Court remanded the case to enable the chancellor to make specific findings. The Court concluded that, although the plaintiff was not entitled to prejudgment interest as a matter of right, the chancellor had erred in failing to place on the record findings of fact and conclusions of law from which the Supreme Court could determine whether the chancellor's denial of prejudgment interest was supported by the evidence or was demonstrably capricious. After remand, the Supreme Court found that the chancellor had abused his discretion in awarding no prejudgment interest, and the Court again remanded the case for the chancellor to determine the rate of prejudgment interest to be awarded. Sack v. Feinman, 495 Pa. 100, 432 A.2d 971 (1981).

In Lexington Ins. Co. v. Abington Co., 621 F.Supp. 18 (E.D.Pa.1985), the defendants, insurance brokers,...