R/S Financial Corp. v. Kovalchick

Citation552 Pa. 584,716 A.2d 1228
PartiesR/S FINANCIAL CORPORATION, Appellant, v. Anthony KOVALCHICK, Sr. and Helen Kovalchick, his wife, t/a Bell Coal Company v. Robert ROSENSTEIN, Harold Saler, William Grant, Additional Defendants and Michael Kovalchick, Cathy Kovalchick, Peter Kovalchick and Donna-Lyn Kovalchick, Garnishees.
Decision Date13 October 1998
CourtUnited States State Supreme Court of Pennsylvania

Richard A. Sprague, Charles J. Hardy, Geoffrey R. Johnson, T. Truxtun Hare, Philadelphia, for R/S Financial Corp.

LLoyd R. Hampton for Michael Kovalchick, et al.

Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO and NEWMAN, JJ.

OPINION OF THE COURT

CASTILLE, Justice.

The issue before this Court is whether the Superior Court exceeded its scope of review when it reconsidered the validity of judgments entered against appellees in 1983. Because we find that the validity of the judgments was previously litigated before the trial courts and before this Court, we hold that the Superior Court exceeded its scope of review and reverse the Superior Court's decision.

This matter has a long and tortured history in the courts of this Commonwealth and in the federal bankruptcy courts over the last sixteen years. On May 20, 1982, a jury verdict in the amount of $1,436,489 was rendered in favor of appellant and against the parents of appellees. In 1983, appellant sought to garnish property of the parents in appellees' possession. 1 Appellees failed to answer garnishment interrogatories; therefore, on August 26, 1983, default judgments were entered against each of the appellees in the amount of $1,436,489. 2

On September 7, 1983, appellees filed petitions to open default judgments requesting that the judgments be stricken or opened. Appellees claimed that the prothonotary had no authority to enter judgment against them and that they had been denied due process because the trial court failed to conduct an assessment of damages hearing in accordance with Pa.R.C.P. 3146. 3 On September 28, 1983, the trial court denied appellees' petitions to strike and ordered them to proceed by deposition on their petitions to open in accordance with Pa.R.C.P. 209(a). 4 Appellees neither appealed the denial of their petitions to strike nor took further action on their petitions to open.

Nearly five years later, on May 31, 1988, appellant filed a praecipe for writ of revival of judgments. On July 1, 1988, appellees filed preliminary objections which the trial court dismissed on November 22, 1988, finding that appellees were attacking the validity of the judgments which can only properly be accomplished either through motions to strike or petitions to open. In response to the dismissal of the preliminary objections, on January 5, 1989, appellees filed a petition to open default judgment and/or strike judgment liens, once again claiming that the prothonotary had no authority to enter judgment against them and that they had been denied due process because the trial court failed to conduct an assessment of damages hearing in accordance with Pa.R.C.P. 3146. The trial court dismissed the petition holding that, because appellees alleged the same grounds for relief as those raised in their 1983 petitions and because they failed to proceed with those petitions, they were precluded from attacking the validity of the judgments.

Appellees appealed to the Superior Court, and on February 13, 1990, the Superior Court affirmed, holding that a party who fails to appeal in a timely manner a trial court's refusal to strike a default judgment is thereafter estopped from collaterally attacking the validity of the judgment in a new petition to strike, particularly where, as here, the issues raised in the new petition are essentially identical to those raised in the earlier petition. Appellees then filed a petition for allowance of appeal which this Court denied on April 1, 1991.

Thereafter, on September 3, 1991, appellees filed petitions to open and for a stay of execution, once again raising the Rule 3146 issue. On November 14, 1991, the trial court, on motion of appellant, struck the petitions on the grounds of laches and res judicata finding the validity of the original and revival judgments had been fully litigated and affirmed on appeal. Appellees did not appeal the November 14, 1991 order striking their petitions.

In November 1991, on the eve of a sheriff's sale of property in execution of the judgments, appellees filed bankruptcy petitions. During the bankruptcy proceedings, the bankruptcy court ruled that the judgments had withstood the many petitions to strike or open, and were "therefore now clearly final." In re Kovalchick, 175 B.R. 863, 872 (Bankr.E.D.Pa.1994). Appellees bankruptcy cases were dismissed on July 13, 1995.

On July 12, 1995, just before the dismissal of their bankruptcy cases, appellees filed a petition to dissolve attachment for failure to prosecute garnishment proceedings raising the same Rule 3146 issue. On October 2, 1995, the trial court denied the petition based on the doctrine of res judicata. Appellees appealed to the Superior Court. The Superior Court agreed with the trial court that the petition should be denied based on res judicata, but nevertheless reviewed the merits of the Rule 3146 argument and vacated the trial court's order on equitable grounds.

The doctrine of res judicata is well-established:

Res judicata, or claim preclusion, is a doctrine by which a former adjudication bars a later action on all or part of the claim which was the subject of the first action. Any final, valid judgment on the merits by a court of competent jurisdiction precludes any future suit between the parties or their privies on the same cause of action. Res judicata applies not only to claims actually litigated, but also to claims which could have been litigated during the first proceeding if they were part of the same...

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  • In re Randall
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania
    • November 1, 2006
    ...could have been litigated during the first, proceeding if they were part of the same cause of action." R/S Financial Corp. v. Kovalchick, 552 Pa. 584, 588, 716 A.2d 1228 (1998); see, e.g., Balent v. City of Wilkes-Barre, 542 Pa. 555, 564, 669 A.2d 309 (1995). Conversely, claim preclusion is......
  • In re Stevenson
    • United States
    • United States State Supreme Court of Pennsylvania
    • March 26, 2012
    ...the previous litigation. Wilkes v. Phoenix Home Life Mut. Ins. Co., 587 Pa. 590, 902 A.2d 366, 376 (2006); R/S Financial Corp. v. Kovalchick, 552 Pa. 584, 716 A.2d 1228, 1230 (1998). The term has come to encompass the effect of one judgment upon a subsequent trial or proceeding, Helmig v. R......
  • Brown v. Tucci
    • United States
    • U.S. District Court — Western District of Pennsylvania
    • May 20, 2013
    ...(1984). A claim can only be precluded by a prior judgment rendered by a “court of competent jurisdiction.” R/S Financial Corp. v. Kovalchick, 552 Pa. 584, 716 A.2d 1228, 1230 (1998), quoting Balent, 669 A.2d at 313. In this case, the relevant question is whether the Court of Common Pleas co......
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    • July 18, 2006
    ...claims in a later action that were raised, or could have been raised, in the previous adjudication. R/S Financial Corporation v. Kovalchick, 552 Pa. 584, 716 A.2d 1228, 1230 (1998). The doctrine of res judicata developed to shield parties from the burden of re-litigating a claim with the sa......
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