Court Opinion

ID: 9867886
Source: CourtListenerOpinion
Date Created: 2023-09-26 17:11:19.940478+00
Date Added: 2024-06-11T13:38:18.904170
License: Public Domain

J-A13010-23

                                  2023 PA Super 183

  THE ESTATE OF ANN JEFFERS                    :   IN THE SUPERIOR COURT OF
  HOGARTY, THE ANN JEFFERS                     :        PENNSYLVANIA
  HOGARTY TRUST, SUSAN H.                      :
  HARRINGTON, ANN J. KAULL,                    :
  MARGARET A. HOGARTY, MICHAEL J.              :
  HOGARTY, TIMOTHY R. HOGARTY                  :
  AND MATTHEW P. HARRINGTON                    :
                                               :
                       Appellants              :   No. 153 MDA 2022
                                               :
                                               :
                v.                             :
                                               :
                                               :
  JEFFERS FARMS, INC., JAMES                   :
  JEFFERS AND DOROTHY                          :
  HAGENBUCH

            Appeal from the Order Entered December 22, 2021
   In the Court of Common Pleas of Susquehanna County Civil Division at
                           No(s): 2018-00752

BEFORE:      BOWES, J., LAZARUS, J., and STEVENS, P.J.E.*

OPINION BY BOWES, J.:                          FILED: SEPTEMBER 26, 2023

       The Estate of Ann Jeffers Hogarty, The Ann Jeffers Hogarty Trust, Susan

H. Harrington, Ann J. Kaull, Margaret A. Hogarty, Michael J. Hogarty, Timothy

R. Hogarty, and Matthew P. Harrington (collectively, “Plaintiffs”) appeal from

the order that: (1) granted the motion for summary judgment filed by Jeffers

Farms,     Inc.,     James   Jeffers,    and   Dorothy   Hagenbuch    (collectively,

“Defendants”) based upon a finding that Plaintiffs’ claims were barred by the

statute of limitations and laches, and (2) denied as moot Plaintiffs’ motion for

partial summary judgment against Defendants. We affirm.

____________________________________________

* Former Justice specially assigned to the Superior Court.
J-A13010-23

         The underlying “litigation involves a dispute over stock certificates from

a family-owned tree farming business, Jeffers Farms, Inc., which is located in

Hartford Township, Susquehanna County, Pennsylvania[,]” as well as Ann

Hogarty’s entitlement to shares with voting rights.           Trial Court Opinion,

12/22/21, at 1. By way of background, Ann’s grandfather, Henry Jeffers, Sr.,

incorporated Jeffers Farms in 1949. He transferred 160 shares of common

stock to each of his three children, namely Louise Hagenbuch, Emily

Ruedemann, and Henry Jeffers, Jr., Ann’s father. In the 1950s, Mr. Jeffers,

Sr. gifted additional shares to his grandchildren, including Ann. Of relevance,

she and her brother, Henry Jeffers, III each received sixty shares of common

stock.

         In 1961, the board of directors of Jeffers Farms proposed a resolution

to the other shareholders to create two new classes of stock known as Class

A shares, which had voting rights, and Class B shares, which did not. All the

shareholders, including Ann, approved the resolution.             Particularly, the

resolution specified that one share of common stock would be converted into

one Class A share and three Class B shares, and that each new share,

regardless of class, would hold the same value:

         WHEREAS, the Articles of Incorporation of this corporation provide
         that the authorized capital stock of this corporation consists of 500
         shares of common stock with a par value of $100.00 per share, of
         which 480 shares are issued and outstanding, and it is the opinion
         of the Board of Directors that the number of shares of authorized
         capital stock shall be reclassified to consist of 2,000 shares of
         which 500 shares shall be voting Class A common stock with a par
         value of $25.00 per share, and 1,500 shares shall be non-voting

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      Class B common stock with a par value of $25.00 per share; and
      further that each issued and outstanding share of common stock
      with a par value of $100 per share shall be surrendered in
      exchange for 1 share of voting Class A common stock with a par
      value of $25.00 per share and 3 shares of non-voting Class B
      common stock with a par value of $25.00 per share.

Defendants’ Brief in Opposition to Plaintiffs’ Motion for Summary Judgment,

9/24/21, Exhibit A (Deposition of Henry Jeffers, III, 9/14/18, at Exhibit P-1

(document entitled “Stockholder’s Meeting” and discussing July 12, 1961

meeting of the shareholders)); see also id. at Exhibit D-9 (same).

      Following the resolution’s passage, Ann received 240 Class B shares in

exchange for her sixty shares of original common stock. She did not receive

any Class A shares. In 1972 and 1973, Mr. Jeffers, Jr. transferred some of

his Class A shares to Mr. Jeffers, III. In turn, Mr. Jeffers, III transferred some

of his Class B shares to Ann so that the two children of Mr. Jeffers, Jr. would

maintain the same total value of shares in Jeffers Farms. Subsequently, Mr.

Jeffers, III transferred his Class A shares to his son, James Jeffers.       Ann,

likewise, transferred her Class B shares to her children, Susan Harrington, Ann

Kaull, Margaret Hogarty, Michael Hogarty, and Timothy Hogarty.

      Ann passed away in 2015.        In 2017, the executors of Ann’s estate

attempted to obtain the sixty Class A shares that they believed Ann was

entitled to pursuant to the 1961 resolution. Specifically, they contended that

Ann’s sixty original shares common stock should have been converted into

sixty Class A shares and 180 Class B shares, not the 240 Class B shares that

she received. Defendants refused to issue the shares of stock, and on June

1, 2018, Ann’s estate commenced the instant civil action against Defendants

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to compel production and delivery of sixty Class A shares. Additional members

of Ann’s family and the Ann Jeffers Hogarty Trust subsequently intervened in

the action. Eventually, Plaintiffs filed an amended complaint, which alleged

counts at law and equity of fraud, reformation, negligent misrepresentation,

unjust enrichment, declaratory judgment, and constructive trust.

      Defendants filed an answer and new matter, claiming that Plaintiffs’

claims were barred for various reasons. Plaintiffs filed a reply. In February

of 2019, Defendants filed a motion for judgment on the pleadings seeking to

dismiss all counts. Among their several arguments, Defendants averred that

all claims were barred by either the statute of limitations or the equitable

defense of laches. Plaintiffs filed an answer and both parties filed briefs in

support of their positions.   Following oral argument, the trial court denied

Defendants’ motion as to the statute of limitations and laches defenses to

allow for additional discovery to develop the factual record as to “when [Ann]

reasonably could have discovered that she did not receive the voting shares”

to which Plaintiffs claimed she was entitled. Trial Court Opinion, 5/17/19, at

9. The court, nonetheless, granted Defendants’ motion for judgment on the

pleadings as to some of the other issues raised by Defendants, which are not

pertinent to the instant appeal.

      Following additional discovery and various motions, Plaintiffs and

Defendants filed cross motions for summary judgment. Plaintiffs sought an

“[o]rder interpreting the terms of the 1961 Shareholders’ Agreement” and

“declaring that Ann . . . became the holder of sixty shares of Class A stock” in

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1961 as a result thereof. Motion for Partial Summary Judgment, 10/9/20, at

2.   Defendants, for their part, maintained, inter alia, that Plaintiffs’ claims

were barred by the statute of limitations and they had failed to establish any

fraudulent concealment to toll the statute.       See Defendants’ Motion for

Summary Judgment, 6/17/21, at 9-12.

      Oral argument was held on September 30, 2021. Thereafter, the trial

court entered the underlying order, which granted Defendants’ motion for

summary judgment based upon all claims being barred by the statute of

limitations and the doctrine of laches, and denied as moot Plaintiffs’ motion

for partial summary judgment.      Specifically, the court determined that the

statute of limitations began to run in 1961, when Ann received only Class B

shares, and that neither the discovery rule nor the doctrine of fraudulent

concealment tolled the statute of limitations.    Therefore, it concluded that

Plaintiffs were barred from bringing their 2018 action against Defendants.

See Trial Court Opinion, 12/22/21, at 11-15. While the court agreed with

Plaintiffs that a plain reading of the resolution supported their interpretation

that each shareholder was entitled to receive one Class A share and three

Class B shares for each original share of common stock exchanged, thereby

entitling Ann to sixty Class A shares in 1961, it concluded that the disposition

of Defendants’ motion for summary judgment mooted Plaintiffs’ motion. Id.

at 18-19.

      Plaintiffs timely filed a notice of appeal and, upon order from the trial

court, filed a concise statement of errors complained of on appeal pursuant to

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Pa.R.A.P. 1925(b). In response, the trial court directed us to its December

22, 2021 opinion and order.        Plaintiffs raise the following issues for our

consideration:

    I.     Should Defendants’ motion for summary judgment be denied,
           where Plaintiffs’ claims did not accrue in 1961, but rather
           accrued in 2017 and 2018 when Defendants refused Plaintiffs’
           demands to recognize the Class A stock Plaintiffs received from
           Ann Hogarty and to allow Plaintiffs to exercise their voting
           rights as holders of Class A stock?

   II.     Should Defendants’ motion for summary judgment be denied,
           where even if Plaintiffs’ claims accrued in 1961, genuine
           disputes of material fact preclude summary judgment on
           Defendants’ statute of limitations and laches defenses?

  III.     Should Plaintiffs’ motion for partial summary judgment be
           granted, where under the plain meaning of the Resolution, Ann
           Hogarty became an actual owner of 60 shares of Class A stock
           and 180 shares of Class B stock when she surrendered to the
           Company 60 shares of common stock pursuant to the
           Resolution?

Plaintiffs’ brief at 5 (reordered for ease of disposition).

         We consider Plaintiffs’ challenge to a grant of summary judgment within

the following legal parameters:

         Our standard of review of an order granting summary judgment
         requires us to determine whether the trial court abused its
         discretion or committed an error of law. Our scope of review is
         plenary. In reviewing a trial court’s grant of summary judgment,
         we apply the same standard as the trial court, reviewing all the
         evidence of record to determine whether there exists a genuine
         issue of material fact. We view the record in the light most
         favorable to the non-moving party, and all doubts as to the
         existence of a genuine issue of material fact must be resolved
         against the moving party.

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Wright v. Misty Mountain Farm, LLC, 125 A.3d 814, 818 (Pa.Super. 2015)

(cleaned up). It is axiomatic that summary judgment may be entered “[o]nly

where there is no genuine issue as to any material fact and it is clear that the

moving party is entitled to a judgment as a matter of law[.]” Id. (cleaned

up). Finally, since “[t]he application of the statute of limitations to an alleged

cause of action is a matter of law to be determined by the court[,]” we review

de novo an order granting summary judgment based upon a finding that the

claims were barred by the statute of limitations. See Valley Nat'l Bank v.

Marchiano, 221 A.3d 1220, 1222 (Pa.Super. 2019) (cleaned up).

      Turning to Plaintiffs’ first claim, we must determine when the statute of

limitations began to run. “Generally, a cause of action accrues, and thus the

applicable limitations period begins to run, when an injury is inflicted.” In re

Risperdal Litig., 223 A.3d 633, 640 (Pa. 2019) (cleaned up). An injury is

inflicted “when . . . the corresponding right to institute a suit for damages

arises.”   Gleason v. Borough of Moosic, 15 A.3d 479, 484 (Pa. 2011).

Pennsylvania law dictates that complaints of reformation, declaratory

judgment, and unjust enrichment “must be commenced within four years[,]”

42 Pa.C.S. § 5525; complaints of fraud and negligent misrepresentation

“within two years[,]” 42 Pa.C.S. § 5524; and complaints of constructive trust

“within five years[,]” 42 Pa.C.S. § 5526. “[O]nce the prescribed statutory

period has expired, the complaining party is barred from bringing suit.”

Gleason, supra at 484. (cleaned up).

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      Defendants aver that the claims accrued in 1961, when Ann received

only Class B shares. Plaintiffs, on the other hand, allege that they did not

accrue until 2017 and 2018, when Defendants refused to allow Plaintiffs to

vote via the Class A shares to which Ann was entitled. As noted, the trial court

agreed with Defendants that the statute of limitations began to run in 1961

when Ann exchanged her original stocks and received no Class A shares in

return. See Trial Court Opinion, 12/22/21, at 11.

      Plaintiffs claim the trial court erred in this regard. At the outset, they

reject the import of Ann receiving certificates stating that she only received

Class B shares because as a “matter of fact and law” Ann “became an actual

owner of Class A shares in 1961.” Plaintiffs’ brief at 28. They posit that the

certificates were incorrect and should not be considered as evidence of what

class of shares she received. Rather, they argue that Ann’s claims did not

accrue in 1961 because she was entitled to Class A shares when she

exchanged her common stock in 1961, and, therefore, she de facto received

Class A shares at that time. Instead, they argue it was not until Plaintiffs

attempted to vote in 2017 based upon possession of Ann’s unsubstantiated

Class A shares and were denied the right to vote that an injury occurred. See

id. at 30-31.

      We are not persuaded by Plaintiffs’ ideational argument. While we agree

with Plaintiffs that pursuant to the 1961 resolution Ann was entitled to Class

A shares in 1961, this does not mean that she automatically received them.

Were that true, this litigation would not be before us. Rather, it is apparent

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from the record that she did not receive the Class A shares to which she was

entitled at the time of the conversion. Thus, Ann was injured in 1961 when

she did not receive what she was entitled to under the resolution, and that is

when the statute of limitations began to run. By virtue of receiving only Class

B shares, Ann was on notice that she received no voting shares and was thus

injured because the conversion did not comply with the plain language of the

1961 resolution. Indeed, the Plaintiffs’ inability to vote arose directly as a

result of Ann not being issued Class A shares in 1961. It is of no consequence

that Plaintiffs waited until 2017 to first attempt to vote. This is not when the

injury arose. Accordingly, we discern no error in the trial court’s conclusion

that the statute of limitations began to run in 1961 when Ann was deprived of

the benefit of the 1961 resolution. Based on the foregoing, Plaintiffs are not

entitled to relief on their first claim.

      Having determined that the statute of limitations began to run far longer

than four years before Plaintiffs initiated the instant action in 2018, we next

consider whether the discovery rule or the doctrine of fraudulent concealment

tolled the running of the statute of limitations.   Before reaching Plaintiffs’

arguments, we set forth the relevant legal principles guiding our review of

these doctrines.

      We begin with the discovery rule, which “provides that where the

complaining party is reasonably unaware that his or her injury has been

caused by another party’s conduct, the discovery rule suspends, or tolls, the

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running of the statute of limitations.” Gleason, supra at 484. (cleaned up).

Specifically,

      [t]he discovery rule will toll the applicable statute until a plaintiff
      could reasonably discover the cause of his action, including in
      circumstances where the connection between the injury and the
      conduct of another are not readily apparent. Pennsylvania’s
      reasonable diligence standard is objective; the question is not
      what the plaintiff actually knew of the injury or its cause, but what
      he might have known by exercising the diligence required by law.

In re Risperdal Litig., supra at 640 (cleaned up).

      In determining whether reasonable diligence has been exercised,
      a court must determine whether the plaintiff exhibited those
      qualities of attention, knowledge, intelligence and judgment which
      society requires of its members for the protection of their own
      interests and the interests of others. Because this determination
      typically involves many fact determinations, it is normally for the
      jury to decide it. Pennsylvania’s formulation of the discovery rule
      represents a more narrow approach than is mandated in some
      other jurisdictions, as it places a greater burden on plaintiffs
      because the commencement of the limitations period is grounded
      on inquiry notice that is tied to actual or constructive knowledge
      of at least some form of significant harm and of a factual cause
      linked to another’s conduct, without the necessity of notice of the
      full extent of the injury, the fact of actual negligence, or precise
      cause.

Id. (cleaned up).

      We bear in mind that these “determinations are fact-intensive inquiries

that should typically be left for juries to decide,” and, therefore, “summary

judgment is appropriately granted only in cases where reasonable minds

would not differ in finding that the plaintiff knew or should have known, based

upon the exercise of reasonable diligence, of his injury and its cause.” Id. at

641 (cleaned up).

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     Separate from the discovery rule, Plaintiffs also invoke the doctrine of

fraudulent concealment, which this Court has explained thusly:

     Where, through fraud or concealment, the defendant causes the
     plaintiff to relax his vigilance or deviate from his right of inquiry,
     the defendant is estopped from invoking the bar of the statute of
     limitations. Moreover, [the] defendant’s conduct need not rise to
     fraud or concealment in the strictest sense, that is, with an intent
     to deceive; unintentional fraud or concealment is sufficient. Mere
     mistake, misunderstanding or lack of knowledge is insufficient
     however, and the burden of proving such fraud or concealment,
     by evidence which is clear, precise and convincing, is upon the
     asserting party.

     Moreover, in order for fraudulent concealment to toll the statute
     of limitations, the defendant must have committed some
     affirmative independent act of concealment upon which the
     plaintiffs justifiably relied.

Kingston Coal Co. v. Felton Min. Co., 690 A.2d 284, 290–91 (Pa.Super.

1997) (cleaned up).

     Plaintiffs argue that “[t]here was a severe power imbalance between

Ann . . . and the parties misrepresenting her ownership interest[,]” namely,

Ann’s father and other family members involved in the operation of Jeffers

Farms. Plaintiffs’ brief at 34-35. Plaintiffs allege that, beginning in 1961,

those family members led a campaign of disinformation meant to mislead Ann

as to her voting rights. Plaintiffs state that this is evidenced by the stock

certificates which did not mention Ann’s ownership of Class A shares, as well

as statements from company insiders telling Ann that she did not have voting

rights. They argue that because these misrepresentations were often made

by family members, Ann was more likely to believe what was said without

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further question. Finally, they contend that “[w]hether it was reasonable for

Ann . . . to relax her vigilance in reliance on misrepresentations by the

[c]ompany’s directors regarding her ownership interest is at least a genuine

dispute of material fact precluding summary judgment.” Id. at 36.

      The trial court disagreed, finding the discovery rule inapplicable because

Ann was a college-educated woman who later worked in real estate and “was

not unsophisticated[.]” Trial Court Opinion 12/22/21, at 12. Moreover, she

attended the 1961 shareholders meeting and signed the resolution. Id. When

she exchanged her original sixty shares of common stock pursuant to the 1961

resolution, she received certificates evidencing only Class B shares.       She

subsequently received more Class B shares from her brother, and expressly

transferred her Class B shares to her children. Id. Given these facts, the

court concluded that Ann

      certainly had the ability, exercising reasonable diligence, to
      ascertain that she had not received Class A voting shares as
      required by the 1961 resolution when she exchanged her original
      common stock shares for the new shares in 1961. Nevertheless,
      [Ann] failed to complain when she did not receive Class A shares
      in 1961 nor did she complain when she received additional Class
      B shares from her brother in 1972 and 1973.

Id. at 12-13 (footnote omitted).

      As to Plaintiffs’ invocation of the doctrine of fraudulent concealment, the

court held that Plaintiffs had “failed to present any evidence supporting” their

allegation that Ann’s family had misrepresented to her that she was not

entitled to Class A voting shares. Id. at 14. Indeed, the court determined

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“[t]here [wa]s nothing in the record showing that there was any act of

concealment or fraud on the part of Jeffers Farms that would have prevented

[Ann] from discovering that she should have received Class A voting stock.”

Id. at 15 (footnote omitted).

      Our review of the certified record bears out the trial court’s conclusions.

Ann was provided with the language of the 1961 resolution and voted to

approve it. Further, it is evident that Ann had actual knowledge of an injury

in 1961, when she received only Class B shares instead of a combination of

Class A and Class B shares, and again in 2008 and 2009 when she expressly

transferred her shares, which only comprised Class B shares and which she

described as Class B shares, to her children. Thus, the discovery rule provides

Plaintiffs no relief from the application of the statute of limitations because

“reasonable minds would not differ in finding that [Ann] knew or should have

known, based upon the exercise of reasonable diligence, of [her] injury and

its cause” in 1961. In re Risperdal Litig., supra at 641 (cleaned up).

      As for fraudulent concealment, Plaintiffs were unable to provide any

evidence that Ann was informed that she was not permitted to vote. Indeed,

in discovery depositions, Plaintiffs admitted that they had no knowledge of

any documentation or witnesses supporting such allegations. Having provided

no evidence supporting the existence of fraudulent or misleading statements

made to Ann, they failed to establish any “independent act of concealment

upon which [Ann] justifiably relied.” See Kingston Coal Co., supra at 291

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(cleaned up).       Therefore, we conclude that the doctrine of fraudulent

concealment is inapplicable. See id. at 290-91 (requiring plaintiffs to set forth

“clear, precise and convincing” evidence of concealment (cleaned up)). Thus,

the statute of limitations was not tolled and Plaintiffs were barred from

bringing the instant action.1

       In light of the foregoing, the trial court did not err in granting summary

judgment in favor of Defendants. As such, we discern no error in the court

denying as moot Plaintiffs’ motion for partial summary judgment. Accordingly,

we affirm the trial court’s order in its entirety.

       Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 09/26/2023

____________________________________________

1 Since we affirm on the basis of the statute of limitations, we need not
consider Plaintiffs’ arguments as to the doctrine of laches.

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