U.S. Nat. Bank in Johnstown v. Johnson

• Decision Date: 13 February 1985
• Citation: 487 A.2d 809,506 Pa. 622
• Parties: UNITED STATES NATIONAL BANK IN JOHNSTOWN, Appellant, v. Charles P. JOHNSON, Jr., Martha Jane Johnson, Pennsylvania Energy Company, Linda Strich, CPJ, Inc., Haws Refractories, Inc., Bantam Four Cinemas, Inc., Sheridan Trucking Company, Sheridan Trucking Company, Inc., Charjim Corporation, Pennsylvania Energy Corporation, G. Gray Garland, and Sheridan Coal Company, Inc., Appellees.
• Court: Pennsylvania Supreme Court

Page 809

487 A.2d 809

506 Pa. 622

UNITED STATES NATIONAL BANK IN JOHNSTOWN, Appellant, v. Charles P. JOHNSON, Jr., Martha Jane Johnson, Pennsylvania Energy Company, Linda Strich, CPJ, Inc., Haws Refractories Inc., Bantam Four Cinemas, Inc., Sheridan Trucking Company Sheridan Trucking Company, Inc., Charjim Corporation Pennsylvania Energy Corporation, G. Gray Garland, and Sheridan Coal Company, Inc., Appellees.

Supreme Court of Pennsylvania.

Submitted Sept. 10, 1984.

Decided Feb. 13, 1985.

[506 Pa. 625] Gilbert E. Caroff, Johnstown, for appellant.

Gary L. Costlow, Johnstown, for Linda Strich and Charjim Co.

James Gordon, Wymard & Dunn, Pittsburgh, for G. Gray Garland, Jr.

Lawrence Davis, Edensburg, for Charles Johnson, Jr., et al.

Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, HUTCHINSON, ZAPPALA and PAPADAKOS, JJ.

OPINION OF THE COURT

PAPADAKOS, Justice.

This is the appeal of the United States National Bank in Johnstown (Appellant) from the Superior Court's Order, 321 Pa.Super. 352, 468 A.2d 515, quashing Appellant's appeal of an order of the Cambria County Court of Common Pleas entered on May 5, 1982, by the Honorable Eugene A. Creany, sustaining G. Gray Garland's (Appellee) preliminary objections in the nature of a demurrer and dismissing him as a defendant.

On January 11, 1982, Appellant filed its Complaint in Equity against various corporations, partnerships, and individuals, alleging violations of the Uniform Fraudulent Conveyance Act. ¹ Preliminary Objections in the nature of a demurrer to the Complaint were filed on February 2, 1982, by the Pennsylvania Energy Company, Pennsylvania Energy Corporation, and Appellee. Appellee argued that the complaint failed to allege any material facts sufficient to support a cause of action against him, and requested the trial court to dismiss him as a defendant.

The Chancellor sustained Appellee's Preliminary Objections by order of May 5, 1982, and dismissed Appellee as a party defendant to this action. For some unexplained reason, an unwarranted procedure was followed and exceptions to that Order were filed on May 12, 1982. Curiously, a court en banc permitted these exceptions to be argued and on August 2, 1982, by an unanimous Opinion and Order, the Chancellor's order dismissing Appellee as a party defendant was affirmed. Nothing happened further until Appellee reduced the court en banc's order to judgment in his favor on October 5, 1982 by filing a Praecipe with the Prothonotary of Cambria County.

On October 28, 1982, Appellant filed a notice of appeal from the judgment to Superior Court. This appeal was quashed as untimely. We granted allocatur because of the confusion regarding the appealability of equity orders generated by Houston-Starr Co. v. Virginia Mansions, 295 Pa.Superior Ct. 480, 441 A.2d 1334 (1982).

In Houston-Starr Co., Superior Court quashed the appeal taken directly from a Chancellor's order striking a lis pendens. Superior Court characterized the Chancellor's action as an "adjudication" triggering the Pa.R.C.P. 1518 exceptions requirements ², and held an appeal would not lie, unless exceptions were filed and a final decree was entered on the order pursuant to Pa.R.C.P. 1519 ³. These rules were clearly intended to become operative after trial and by no stretch of the imagination were they to be applied to pre-trial orders. Appellant argues that Houston-Starr similarly requires exceptions to the sustaining of preliminary objections before they can be appealed. We disagree.

Superior Court correctly quashed the appeal in Houston-Starr, albeit for an incorrect reason. The order striking lis pendens is interlocutory, and therefore, the appeal should have been quashed. R.M. Shoemaker Co. v. Blumenfeld, 443 Pa. 566, 278 A.2d 488 (1971).

A lis pendens is the jurisdiction, power, or control which courts acquire over property involved in a suit, pending the continuance of the action, and until its final judgment thereon. Bungar v. St. Michael's Greek Catholic Church, 272 Pa. 402, 116 A. 389 (1922). The existence of a lis pendens merely notifies third parties that any interest that may be acquired in the res pending the litigation will be subject to the result of the action and is not therefore an actual lien on the property. Dice v. Bender, 383 Pa. 94, 117 A.2d 725 (1955). An order lifting a lis pendens during the course of an equity action fixes neither rights, duties, nor liabilities between the parties, puts no one out of court, and does not terminate the underlying litigation by prohibiting parties from proceeding with the action. Accordingly, the requisite "finality" is not present when a lis pendens is lifted and the order, therefore, is interlocutory.

Superior Court's acceptance in Houston-Starr of the opinion accompanying the order striking lis pendens as an "adjudication" for purposes of Pa.C.P.R. 1517 ⁴ was unfounded. The adjudication referred to in Rule 1517 is the chancellor's proposed final disposition of a complaint after trial which reaches the very merits of the action; not interlocutory orders nondispositive of the case sub judice. From the filing of such an adjudication and decree nisi, which is final to all parties and to the whole of the subject matter, a party could, of course, take exceptions to a chancellor's order striking lis pendens or any other interlocutory ruling. Houston-Starr can permit no more. Appellant's arguments to the contrary are meritless and dismissed.

Appellant also argues that the May 5, 1982, and August 2, 1982, orders cannot be the basis of an appeal, but become appealable only when they have been reduced to judgement. Since Appellant appealed to Superior Court within thirty (30) days of the entry of judgment, Appellant argues that its appeal was timely. We reject this argument.

The May 5, 1982 order sustained the preliminary objections in the nature of a demurrer of Appellee, and dismissed Appellee as a defendant to Appellant's action. This order terminated the litigation as far as Appellant was concerned by prohibiting it from proceeding with the action against Appellee, and was therefore a final appealable order. While the Chancellor did not dismiss the complaint, its dismissal of Appellee as a defendant had the same effect. We can find no authority or rule of procedure which requires or permits such an order to be reduced to judgment.

We have long held that the sustaining of preliminary objections in the nature of a demurrer and dismissal of the equity complaint is a final appealable order. Otto v. American Mutual Insurance Company, 482 Pa. 202, 393 A.2d 450 (1978); J.A. and W.A. Hess, Inc. v. Hazle Township, 465 Pa. 465, 350 A.2d 858 (1976); Hudock v. Donegal Mutual Insurance Company, 438 Pa. 272, 264 A.2d 668 (1970); Unger v. Hampton Township, 437 Pa. 399, 263 A.2d 385 (1970); Local No. 163 International Union, etc. v. Watkins, 417 Pa. 120, 207 A.2d 776 (1965); Sullivan v. Philadelphia, 378 Pa. 648, 107 A.2d 854 (1954); Ahrens v. Goldstein, 376 Pa. 114, 102 A.2d 164 (1954); Smith v. Philadelphia v. Reading Railroad, 286 Pa. 55, 132 A. 804 (1926); Armstrong, et al. v. Espy, et al., 220 Pa. 48, 69 A. 69 (1908).

Moreover, the dismissal of a complaint as to one defendant upon its preliminary objections is a final appealable order, Alessandro v. State Farm Mutual Automobile Ins. Co., 487 Pa. 274, 409 A.2d 347 (1979), J.A. & W.A. Hess Inc. v. Hazle Township, 465 Pa. 465, 350 A.2d 858 (1976); Love Administrators v. Temple University, 422 Pa. 30, 220 A.2d 838 (1966), which becomes res judicata if not appealed within the prescribed appeal period. ⁵ In Re: Estate of Litostansky, 499 Pa. 321, 453 A.2d 329 (1982); Estate of Gasbarini v. Medical Center, 487 Pa. 266, 409 A.2d 343 (1979); Love, id.

Accordingly, the May 5, 1982 order was final and appealable, becoming res judicata upon the expiration of the thirty (30) day appeal period. Rather than pursue appellate review, Appellant took the novel approach of filing exceptions to the May 5, 1982 order which more surprisingly were considered and disposed of by a court en banc. It would appear that Superior Court in its Houston-Starr opinion confused and misled them. Nowhere in our Rules are exceptions permitted from the disposition of preliminary objections and such practice is expressly disapproved.

Preliminary objections are permitted in equity actions by Pa.R.C.P. 1509 which incorporates the entire preliminary objection practice of actions in assumpsit. Orders sustaining preliminary objections, which are final, may be appealed as of right pursuant to Pa.R.A.P. 341(a), without resort to filing exceptions or reducing any order to judgment. "Our rules and case law require litigants to file exceptions to nisi determinations of trial courts ..." (Emphasis...