Zarnecki v. Shepegi

• Decision Date: 13 October 1987
• Citation: 532 A.2d 873,367 Pa.Super. 230
• Parties: Frank ZARNECKI, Appellee, v. Doreen SHEPEGI, Appellant.
• Court: Pennsylvania Superior Court

Page 873

532 A.2d 873

367 Pa.Super. 230

Frank ZARNECKI, Appellee, v. Doreen SHEPEGI, Appellant.

Superior Court of Pennsylvania.

Argued Dec. 9, 1986.

Filed Oct. 13, 1987.

Craig A. Markham, Erie, for appellant.

David G. Ridge, Erie, for appellee.

Before CIRILLO, President Judge, and ROWLEY, OLSZEWSKI, DEL SOLE, MONTEMURO, BECK, TAMILIA, KELLY and POPOVICH, JJ.

KELLY, Judge:

In this residential mortgage foreclosure action, defendant, Doreen Shepegi, appeals a pretrial order which precludes her from asserting that the signature on the mortgage instrument is a forgery. The lower court found that the doctrine of collateral estoppel barred defendant from presenting this defense. A panel of this Court assigned to hear argument certified the appeal to the Court en banc to determine: (1) whether the order of the court below is final and immediately appealable; and (2) whether the lower court erred in entering the order. After careful consideration, we conclude that the order appealed from is final and the appeal is properly before us; we further find that the court below correctly held that presentation of the forgery defense was barred by the doctrine of collateral estoppel. Accordingly, we affirm.

I. Appealability

The order appealed from states that "[i]t ... is deemed established should a trial be necessary on this matter, that defendant did sign the mortgage instrument in question and that her signature is authentic." Before turning to the question of whether the trial court erred in entering this order, we must first determine whether the appeal is properly before us. The Judicial Code provides:

The Superior Court shall have exclusive appellate jurisdiction of all appeals from final orders of the courts of common pleas, regardless of the nature of the controversy or the amount involved, except such classes of appeals as are by any provision of this chapter within the exclusive jurisdiction of the Supreme Court or the Commonwealth Court.

42 Pa.C.S.A. § 742. (Emphasis added).

A final order has been described as "one which usually ends the litigation, or alternatively, disposes of the entire case." Pugar v. Greco, 483 Pa. 68, 73, 394 A.2d 542, 545 (1978); Praisner v. Stocker, 313 Pa.Super. 332, 336-7, 459 A.2d 1255, 1258 (1983). Additionally, if the practical consequence of the trial court's order is to effectively put a defendant "out of court," the order will be treated as final. Ventura v. Skylark Motel, Inc., 431 Pa. 459, 463, 246 A.2d 353, 355 (1968). An order does not put a party "out of court" unless it precludes proof of facts at trial, which if determined in favor of the pleader, would provide him with a complete defense to the action. Posternack v. American Casualty Co. of Reading, 421 Pa. 21, 23-4, 218 A.2d 350 (1966); Ventura, supra, 246 A.2d at 355.

In Bell v. Beneficial Consumer Discount Co., 465 Pa. 225, 228, 348 A.2d 734, 735 (1975), the Pennsylvania Supreme Court stated:

Whether an order is final and appealable cannot necessarily be ascertained from the face of a decree alone, nor simply from the technical effect of the adjudication. The finality of an order is a judicial conclusion which can be reached only after an examination of its ramifications. We follow the reasoning of the United States Supreme Court that a finding of finality must be the result of a practical rather than a technical construction. Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1226, 93 L.Ed. 1528 (1949).

In Posternack v. American Casualty Co. of Reading, supra, the Supreme Court determined that a pretrial order denying a party leave to amend an answer so as to assert a new affirmative defense constituted a final order for purposes of appeal:

The order is not interlocutory, and the motion to quash will be overruled. The new defense proposed is affirmative in nature and must be pleaded, otherwise it is waived. See, Pa.R.C.P. 1030, 1032, and Lang v. Recht, 171 Pa.Super. 605, 91 A.2d 313 (1952). The order involved effectively precludes proof at trial of what might possibly be a complete defense to the cause sued upon. As to this defense, at least, the order appealed from puts the defendant 'out of court.' It is, therefore, an appealable order. See Cohen v. Beneficial Industrial Loan Corp. [supra] and Bell v. Benefic. Consumer Corp., 465 Pa. 225, 348 A.2d 734 (1975).

218 A.2d at 351. (Emphasis added). Subsequent cases have followed the rule of Posternack, holding that an order precluding a defendant from presenting its affirmative defenses or refusing to allow evidence of a possibly meritorious defense is a final and appealable order. Pennsylvania Turnpike Commission v. Atlantic Richfield Co., 482 Pa. 615, 394 A.2d 491 (1978); Commonwealth of Pennsylvania, Department of Environmental Resources v. Wheeling-Pittsburgh Steel Corp., 473 Pa. 432, 375 A.2d 320 (1977) cert. denied 434 U.S. 969, 98 S.Ct. 515, 54 L.Ed. 456 (1977); Brunetti v. Southeastern Pennsylvania Transportation Authority, 329 Pa.Super. 477, 478 A.2d 889 (1984); Roman v. Pearlstein, 329 Pa.Super. 392, 478 A.2d 845 (1984); Sechler v. Ensign-Bickford Co., 322 Pa.Super. 162, 469 A.2d 233 (1983).

Appellee argues that a recent panel decision of this Court in Elderkin, Martin, Kelly, Messina & Zamboldi v. Sedney, 354 Pa.Super. 253, 511 A.2d 858 (1986), requires us to quash the instant appeal as interlocutory. Elderkin involved an appeal from a sanctions order which precluded the defendants from entering any evidence in their own defense or from opposing the claims of the plaintiff. The panel held that the order was interlocutory and the appeal premature. In reaching this conclusion, the panel applied the three-part appealability test set forth in Cohen v. Beneficial Industrial Loan Corp., supra, and adopted by the Pennsylvania Supreme Court in Bell v. Beneficial Consumer Discount Company, supra. The Court in Elderkin stated:

Under Cohen, an order is considered final and appealable 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. Id. 337 U.S. at 546, 59 S.Ct. at 1226, 93 L.Ed. at 536.

511 A.2d at 859, quoting Fried v. Fried, 509 Pa. 89, 501 A.2d 211 (1985). The panel in Elderkin found that the order appealed from did not satisfy the third prong of the Cohen test, since the question of the propriety of the court's order would not be irreparably lost if review were postponed until final judgment in the case. Elderkin, 511 A.2d at 860.

The Elderkin case does not require us to quash the instant appeal. This Court, sitting en banc, recently reexamined the appealability question and expressly disapproved of the suggestion made in Elderkin, supra, that the appropriate test to be applied in determining finality is the three-prong Cohen test. In Fidelity Bank v. Duden, 361 Pa.Super. 124, 521 A.2d 958 (1987), we stated:

... The Cohen test has nothing to do with determining 'finality.' If an order adjudicates an action finally, it is appealable. Conversely, if the order does not determine the action finally, it is interlocutory and generally nonappealable. ... Cohen created an exception to the rule allowing appeals solely from final orders .... It has application only to orders which are interlocutory.

* * *

* * *

The suggestion made in Elderkin, Martin, Kelly, Messina & Zamboldi v. Sedney, [supra] that because of Fried, 'the appropriate test to be applied in determining finality is the three prong Cohen test,' is disapproved. According to long-standing precedent, an order is final where it puts a litigant out of court or otherwise terminates the litigation by precluding a party from presenting the merits of a claim or defense to the trial court. Cohen, to repeat, has nothing to do with determining finality; it has application only to orders which admittedly are interlocutory but which are collateral to and separable from the main action.

521 A.2d at 960 (emphasis added) (citations omitted). ¹

The order appealed from in the instant case precluded defendant from presenting a possibly meritorious and complete defense in the mortgage foreclosure action. As the order put defendant "out of court," at least as to this defense, it is a final and appealable order. See Posternack, supra. The appeal by defendant, taken from a final and appealable order, is properly before this Court for review.

II. Merits of the Appeal

The facts of this case may be briefly summarized as follows. In May 1977, the defendant became the sole record title owner of the residential property which is the subject of the instant mortgage foreclosure action. The parties agree that the property was purchased through the joint efforts of the plaintiff and defendant. Plaintiff claims that in consideration for a loan he made to defendant, defendant executed and delivered a mortgage and a promissory note in the amount of $44,000. Defendant denies this claim, stating that at plaintiff's request she executed a will, naming plaintiff as sole beneficiary, and that she pledged future payments to be obtained from her separately owned income property.

On August 13, 1980, the relationship between the parties apparently having soured, plaintiff confessed judgment against defendant for $44,000, in accordance with the terms of the purported promissory note. Defendant filed a petition to open the judgment on October 30, 1980, alleging that the signature appearing on the promissory note was a forgery. The parties agreed that they would be bound by the decision of a neutral handwriting expert, chosen by the court, as to the authenticity of the signature appearing on the promissory note.

Several documents were submitted to the handwriting expert, including samples of defendant's actual signature. However, for reasons which are not apparent of...