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* Former Justice specially assigned to the Superior Court.

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

LEO J. SHANNON T/D/B/A 

SHANNON REAL ESTATE CO., 

:

:

IN THE SUPERIOR COURT OF

PENNSYLVANIA

:

 Appellant :

:

v. : No. 1221 MDA 2015

:

PRIDE HEALTH CARE, INC. :

Appeal from the Order Entered June 4, 2015,

in the Court of Common Pleas of Luzerne County

Civil Division at No. 2012-10886

BEFORE: FORD ELLIOTT, P.J.E., PANELLA, J., AND STEVENS, P.J.E.*

MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED APRIL 21, 2016

Leo J. Shannon t/d/b/a Shannon Real Estate Co. (“Shannon”) appeals 

from the order of June 4, 2015, sustaining defendant/appellee, Pride Health 

Care, Inc.’s (“Pride”) preliminary objections and dismissing Shannon’s 

amended complaint. After careful review, we affirm.

We have gleaned the following facts from the record. In 1994, Pride 

agreed to buy a tract of land in Exeter, Pennsylvania, from Gruen Marketing 

Corporation (“Gruen”), a watch manufacturing company. Pride is a 

manufacturer of high-end wheelchairs. The agreement of sale, dated 

November 23, 1994, contained the following provisions: 

6.6 Brokers. Buyer [(Pride)] represents to the 

Seller [(Gruen)] that no Broker was 

instrumental in bringing about this sale and 

that all negotiations with respect to the terms 
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of this Agreement were conducted directly 

between Buyer and Seller. Buyer agrees that 

should any claim be made for [a] Broker’s 

commission through or on account of any acts 

of the Buyer or its representatives, including, 

but without limitation, a claim by Leo J. 

Shannon and/or Shannon Real Estate 

Company, the Buyer will defend and hold the 

Seller free and harmless from any and all 

liabilities and expenses therewith, including 

attorney’s fees and costs of suit, subject to 

Buyer’s right, upon notice of such claim by 

Seller, which notice shall be promptly provided 

by Seller, to select and engage counsel of its 

choosing. The provisions of this paragraph 

shall survive the delivery of the Deed.

6.7 Right of First Refusal. As further consideration 

to induce Buyer to purchase the Property, 

Seller grants Buyer a right of first refusal to 

purchase that portion of the tract and 

improvements which Seller is retaining, which 

right of first refusal shall continue as long as 

Seller owns the remaining tract. In 

furtherance of the foregoing, in the event 

Seller receives a bona fide offer to purchase 

the remaining tract and improvements or any 

portion thereof from a reputable arms-length 

third party prospective Purchaser with the 

reasonable capacity to complete the 

acquisition, Seller shall, within three days of 

receipt of such written offer, provide a copy of 

same to Buyer. Within three (3) days of 

receipt of such offer, Buyer shall either elect to 

purchase the remaining tract and make a 

written offer to purchase on the identical terms 

proposed by the third party prospective 

Purchaser, or decline, in which case this right 

of first refusal shall lapse. If Buyer fails to 

respond within the three (3) day period 

afore-referenced, this provision shall lapse.

Agreement of sale, 11/23/94 at 10.
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The question of whether or not Shannon is entitled to a broker’s 

commission on the 1994 sale is the subject of pending litigation at case 

number 1996-C of 1997. In 1998, four years later, Pride purchased an 

adjacent tract of land from PNC Bank. The property had previously been 

owned by Gruen. Shannon claimed that it was also entitled to a broker’s 

commission on the 1998 sale, because of the right of first refusal contained 

in Section 6.7 of the original sales agreement. Shannon brought suit against 

Pride and Gruen at case number 3263 of 2002, and obtained a default 

judgment against Gruen in the amount of $156,130.92. Gruen has not 

appealed that judgment. 

On July 18, 2011, Shannon and Pride appeared before the Honorable 

Kenneth D. Brown, S.J., on Shannon’s motion to confirm indemnification and 

enforce judgment against Pride. Shannon sought to enforce the 

indemnification provision in Section 6.6 of the sales agreement. Shannon 

argued that Pride was responsible for paying the default judgment entered 

against Gruen. Shannon also noted that, “just for procedural purposes, we 

filed a motion to bifurcate the issues against Gruen versus Pride for the sole 

purpose of coming here today to enforce the judgment.” (Notes of 

testimony, 7/18/11 at 14.)

In response, Pride argued that the right of first refusal was not 

exercised. (Id. at 17.) According to Pride, a bona fide offer was made to 

Gruen for the second parcel and Pride refused to exercise its option to 
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purchase it at that time. (Id.) Pride did not purchase the second parcel 

from PNC Bank until 1998, and another broker was involved in that 

transaction. (Id. at 17-18.) Pride denied that the 1998 sale was 

consummated pursuant to Section 6.7 of the 1994 sales agreement. (Id. at 

18.) Therefore, Pride argued that it had no duty to indemnify Gruen for 

Shannon’s broker’s commission. (Id.)

In addition, Pride argued that Shannon was not a party to the 1994 

sales agreement and, in fact, was specifically excluded by Section 6.6. (Id.

at 17.) The contract was only between Pride and Gruen. (Id.) Pride also 

argued that Shannon was not an intended third-party beneficiary. (Id.) 

Therefore, Shannon would lack standing to enforce the indemnification 

clause. (Id. at 19.)

According to Shannon, it was a third-party beneficiary and the 

judgment against Gruen allowed it to proceed to levy against Pride under the 

indemnification clause. (Id. at 6.) Shannon pointed out that it was 

specifically referenced in Section 6.6 by name and the parties clearly 

contemplated that Shannon was going to attempt to collect a broker’s 

commission from the sale. (Id. at 15.) Regarding the application of 

Section 6.7 to the second sale, Shannon argued that Section 6.7 did not 

place any time restriction on the right of first refusal. (Id. at 22.) The right 

of first refusal remains in effect as long as the seller owns the remaining 

tract. (Id. at 22-23.)
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Counsel for Pride suggested that perhaps the matter should be 

litigated in a separate action, rather than as a motion to confirm 

indemnification in the case before Judge Brown:

[JOSEPH L. VULLO, ESQ.]: My thought would be 

that it would have to be a third -- another action that 

would have to be litigated based upon the facts of 

this. Sort through the facts, whether this 

indemnification clause applies to the second fouryear-later sale.

THE COURT: Would it potentially behoove both 

parties to treat this matter as a declaratory 

judgment issue that requires an evidentiary hearing?

MR. VULLO: If the Court would allow some period of 

discovery, yes, that would not -- I don’t think Pride 

would be opposed to that.

THE COURT: It just appears to me offhand that it 

seems like it’s a declaratory judgment because the 

Plaintiff is asking the Court to declare these rights 

and resolve an issue.

Id. at 20-21.

Counsel for Shannon disagreed that the indemnification issue could not 

be litigated as part of the case pending before Judge Brown:

[WILLIAM E. VINSKO, JR., ESQ.]: While we don’t 

believe it’s premature at this point because we have 

a judgment, we believe that we can enforce this 

indemnification. For judicial economy sake, I don’t 

believe that a full declaratory judgment action is 

necessary only because the facts and the issues of 

how much is owed were actually litigated with 

counsel present for Pride. And when we had this 

hearing --

THE COURT: In your judgment against Gruen?
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MR. VINSKO: Judgment against Gruen; I apologize. 

So any issues that could have been raised could 

have been raised at that time, and they were not. 

So, therefore, the evidentiary work, you know, is 

addressed.

Id. at 23-24. Counsel for Pride disagreed that there were no evidentiary 

issues outstanding:

And as far as counsel’s claim that the evidentiary 

issues have been resolved by virtue of the default 

judgment against Gruen, the only evidentiary issues 

that were resolved there were the amount of 

damages against Gruen, not whether Pride has any 

obligation to indemnify Gruen relative to that second 

sale.

Id. at 25.

On August 8, 2011, Judge Brown denied Shannon’s “Motion to Confirm 

Indemnification and Enforce Judgment Against Pride Health Care, Inc.,” 

without prejudice, “because the relief sought by [Shannon] should more 

properly be considered in the context of a separate and distinct cause of 

action rather than in the context of the instant motion.” (Order, 8/8/11 at 1 

¶1; RR at 97.) Shannon brought the instant declaratory judgment action by 

filing a complaint against Pride on July 2, 2012, alleging that pursuant to 

Section 6.6 of the 1994 sales agreement between Pride and Gruen, Pride is 

responsible for the liability created by the judgment entered against Gruen. 

Shannon sought a declaratory determination by the court that the 1994 

sales agreement requires Pride to pay the liability established through the 

judgment against Gruen in the amount of $156,130.92 plus interest and 
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costs; and that Shannon may immediately commence execution on said 

judgment against Pride.

Pride filed preliminary objections to the complaint, and on 

February 20, 2015, Pride’s preliminary objections were sustained and 

Shannon’s complaint was dismissed, with leave to file an amended complaint 

within 25 days. An amended complaint was filed on March 16, 2015. Pride 

again filed preliminary objections on April 6, 2015, together with a brief in 

support, arguing, inter alia, that Shannon lacked standing to sue under the 

1994 sales agreement and also failed to join an indispensable party (Gruen). 

Shannon filed an answer to Pride’s preliminary objections on May 1, 2015. 

On June 4, 2015, the Honorable Michael T. Vough sustained Pride’s 

preliminary objections and dismissed Shannon’s complaint with prejudice. 

Judge Vough attached a memorandum opinion explaining his reasons for 

sustaining Pride’s preliminary objections in the nature of a demurrer. 

Initially, Judge Vough determined that Shannon lacked standing to sue 

under the 1994 sales agreement where it was neither a party to that 

agreement, nor a third-party beneficiary. (Trial court opinion, 6/4/15 at 2.) 

Judge Vough also found that Shannon failed to join an indispensable party. 

(Id.) Gruen clearly had an interest related to Shannon’s claim, and no 

decree could be entered without impairing that interest. (Id. at 3.) 

Therefore, Shannon’s failure to join Gruen as a defendant deprived the court 

of jurisdiction. (Id.)
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A timely notice of appeal was filed on July 6, 2015. On August 3, 

2015, Shannon was ordered to file a concise statement of errors complained 

of on appeal pursuant to Pa.R.A.P. 1925(b) within 21 days; Shannon 

complied on August 25, 2015, asserting that this declaratory judgment 

action was filed as a direct consequence of the directive of Judge Brown. 

(Rule 1925(b) statement, 8/25/15 at 2.) On September 8, 2015, 

Judge Vough issued a statement in lieu of opinion pursuant to 

Pa.R.A.P. 1925(a)(1), relying on his June 4, 2015 memorandum.

Shannon has raised the following issue for this court’s review:

WHETHER THE TRIAL COURT COMMITTED AN ERROR 

OF LAW OR ABUSED ITS DISCRETION IN 

SUSTAINING THE PRELIMINARY OBJECTIONS AND 

DISMISSING THE AMENDED COMPLAINT IN THE 

INSTANT CASE WHEN THE HONORABLE SENIOR 

JUDGE KENNETH BROWN DIRECTED THIS COURSE 

OF ACTION IN A COLLATERAL MATTER?

Shannon’s brief at 3.

Our scope of review is plenary when reviewing a trial 

court’s order sustaining preliminary objections in the 

nature of a demurrer. See Glassmere Fuel Serv., 

Inc. v. Clear, 900 A.2d 398, 401 (Pa.Super. 2006). 

“In order to determine whether the trial court 

properly sustained Appellee’s preliminary objections, 

this court must consider as true all of the wellpleaded material facts set forth in the complaint and 

all reasonable inferences that may be drawn from 

those facts.” Id. at 402. In conducting appellate 

review, preliminary objections may be sustained by 

the trial court only if the case is free and clear of 

doubt. See Knight v. Northwest Sav. Bank, 747 

A.2d 384, 386 (Pa.Super. 2000).
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Wheeler v. Nationwide Mut. Fire Ins. Co., 905 A.2d 504, 505 (Pa.Super. 

2006), appeal denied, 916 A.2d 1103 (Pa. 2007).

The Declaratory Judgments Act provides: “When declaratory relief is 

sought, all persons shall be made parties who have or claim any interest 

which would be affected by the declaration, and no declaration shall 

prejudice the rights of persons not parties to the proceeding.” 42 Pa.C.S.A. 

§ 7540(a).

Section 7540(a)’s requirement that all who have an 

interest in the declaration be made parties to the 

action is mandatory. Konidaris v. Portnoff Law 

Assocs., Ltd., 884 A.2d 348 (Pa.Cmwlth.2005), 

appeal granted, 588 Pa. 760, 903 A.2d 539

(2006); Allegheny County v. Commonwealth, 71 

Pa.Cmwlth. 32, 453 A.2d 1085 (1983). A party is 

indispensable when his rights are so connected with 

the claims of the litigants that no decree can be 

made without impairing those rights. Sprague v. 

Casey, 520 Pa. 38, 550 A.2d 184 (1988). Failure to 

join or serve parties as required by the statute is a 

jurisdictional defect, and may be raised by a court on 

its own motion at any time, even on appeal. 

Konidaris; Polydyne, Inc. v. City of Phila., 795 

A.2d 495 (Pa.Cmwlth.2002). Where the defect 

exists, dismissal is appropriate. Konidaris.

Pilchesky v. Doherty, 941 A.2d 95, 101 (Pa.Cmwlth. 2008). “The burden 

of proving that all interested persons have been made parties to the action, 

or have received reasonable notice, is on the petitioner.” Moraine Valley 

Farms, Inc. v. Connoquenessing Woodlands Club, Inc., 442 A.2d 767, 

769 (Pa.Super. 1982).

In Mechanicsburg Area School District v. Kline, 

494 Pa. 476, 481, 431 A.2d 953, 956 (1981), our 
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Supreme Court set forth the following guidelines for 

determining whether a party is to be considered 

indispensable in pending litigation:

1. Do absent parties have a right or interest 

related to the claim?

2. If so, what is the nature of that right or 

interest?

3. Is that right or interest essential to the 

merits of the issue?

4. Can justice be afforded without violating 

the due process rights of absent parties?

It has been held that an inquiry into whether a party 

is indispensable is to be from the prospective [sic] of 

protecting the rights of the absent party, not from 

the view of whether the joinder or nonjoinder of a 

party would make the matter more difficult to 

litigate. See E-Z Parks, Inc. v. Philadelphia 

Parking Authority, 103 Pa.Cmwlth. 627, 521 A.2d 

71 (1987), appeal denied, 517 Pa. 610, 536 A.2d 

1334 (1987).

Grimme Combustion, Inc. v. Mergentime Corp., 595 A.2d 77, 81 

(Pa.Super. 1991), appeal denied, 607 A.2d 254 (Pa. 1992).

In this case, even assuming Shannon has standing to enforce the 

indemnification provision between Pride and Gruen, we agree with the trial 

court that Gruen is an indispensable party. Gruen’s rights relative to the 

default judgment entered against it will be affected by the outcome of this 

case. Clearly, Gruen has an interest related to Shannon’s claim, and no 

decree can be entered without impairing that interest. Therefore, Shannon’s 

failure to join Gruen as a defendant deprived the trial court of jurisdiction.
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Shannon complains that Judge Brown denied its motion to confirm 

indemnification and enforce judgment against Pride and indicated that 

Shannon should re-raise the issue in a separate declaratory judgment 

action, as it has done. However, Judge Brown’s decision in a separate case 

would not excuse Shannon’s failure to join an indispensable party. 

Moreover, nothing in Judge Brown’s order would excuse the failure to include 

an indispensable party in the declaratory judgment action.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 4/21/2016