Court Opinion

ID: 2851007
Source: CourtListenerOpinion
Date Created: 2015-09-04 00:08:29.962103+00
Date Added: 2024-06-11T08:41:14.425656
License: Public Domain

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

NATIONAL ASSET LOAN MANAGEMENT                    IN THE SUPERIOR COURT OF
LIMITED                                                 PENNSYLVANIA

                            Appellee

                       v.

JOHN MCCANN

                            Appellant                 No. 3309 EDA 2014

                     Appeal from the Order October 30, 2014
             In the Court of Common Pleas of Philadelphia County
            Civil Division at No(s): January Term, 2014, No. 003130

                                          *****

NATIONAL ASSET LOAN MANAGEMENT                    IN THE SUPERIOR COURT OF
LIMITED                                                 PENNSYLVANIA

                            Appellee

                       v.

JOHN MCCANN

                            Appellant                 No. 3312 EDA 2014

                     Appeal from the Order October 21, 2014
             In the Court of Common Pleas of Philadelphia County
            Civil Division at No(s): January Term, 2014, No. 003130

BEFORE: LAZARUS, J., OLSON, J., and PLATT, J.*

MEMORANDUM BY LAZARUS, J.:                        FILED SEPTEMBER 03, 2015

____________________________________________

*
    Retired Senior Judge assigned to the Superior Court.
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        John McCann appeals from the orders of the Court of Common Pleas of

Philadelphia County, entered in favor of National Asset Loan Management

Limited (“NALM”) imposing a charging order1 (the “Charging Order”) and

appointing a financial monitor2 (the “Monitor Order”). Upon careful review,

we affirm in part and quash in part.

        NALM began these proceedings on January 28, 2014, by filing a

praecipe to record a foreign-nation default judgment against McCann. The

Commercial Division of the High Court of the Republic of Ireland had

previously entered this judgment.3

        The civil action in Ireland was commenced by way of summary

summons issued on March 4, 2013. McCann resides outside of the Republic

of Ireland, in Northern Ireland, so it was necessary to attempt to effect

service via the courts in Northern Ireland. The process server in Northern

Ireland was unable to serve the summary summons on McCann, so NALM

sought permission from the Irish court to use substituted service. The Irish

court entered an order directing service of the summary summons be made

by means of substituted service upon Esther McGahon McGuiness & Co.,

____________________________________________

1
    Trial Court Order, 10/21/14, at 1.
2
    Trial Court Order, 10/30/14, at 1.
3
 The Irish judgment was based on McCann’s failure to make payments as
guarantor of certain defaulted loans that had been extended to companies in
which McCann has ownership interests.

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legal solicitors representing McCann with respect to assets located in the

Republic of Ireland.    The summary summons was served on August 13,

2013.

        McCann appeared in the Irish action and filed a motion to set aside the

substituted service order, which the Irish court denied. McCann then failed

to appear at a scheduled hearing before the Irish court and the court

entered judgment by default in favor of NALM on November 15, 2013.

        Thereafter, McCann filed a motion to set aside the default judgment

that had been entered against him. That motion was denied on January 23,

2014.     McCann filed a notice of appeal with respect to the Irish default

judgment on February 12, 2014. That appeal is currently pending.

        On September 5, 2014, NALM filed a motion in the Court of Common

Pleas of Philadelphia County seeking the issuance of the Charging Order with

respect to McCann’s partnership and membership interests in Walnut

Rittenhouse GP, LLC, Walnut Rittenhouse Associates, L.P., Castleway

Properties, LLC, and Castleway Management Services, LLC (collectively, the

“McCann Entities”), which the court granted.       NALM also filed a petition

seeking appointment of a financial monitor to obtain certain financial

information regarding the McCann Entities and McCann’s interests therein,

which the trial court granted.

        On November 17, 2014, McCann filed a timely notice of appeal to this

Court, in which he raises the following claims:

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        I.   Should the Charging Order and Monitor Order both be
             reversed because NALM failed to meet its burden to have
             the underlying Irish default judgment against McCann
             recognized in accordance with applicable law?

       II.   Even if one assumes that NALM used proper procedures to
             seek recognition of its default judgment, should the
             Charging Order and the Monitor Order both be reversed
             because NALM failed to demonstrate that the Irish court
             that entered the default judgment had personal jurisdiction
             over McCann?

      III.   Even if one assumes that the Irish default judgment
             against McCann has been properly recognized, should the
             Charging Order and the Monitor Order be reversed because
             NALM utilized incorrect execution procedures?

Brief of Appellant, at 5-6.

      McCann first claims that both orders should be reversed because NALM

failed to meet the burden of having the underlying Irish default judgment

against McCann recognized in accordance with applicable law.             McCann

argues that NALM was required to initiate a civil action by complaint to

comply with principles of comity. Instead, NALM filed a praecipe to enter its

foreign-nation   default   judgment,   under   the   Uniform   Foreign    Money

Judgment Recognition Act (the “Recognition Act”), 42 P.S. §§ 22001-22009,

in order to have it recognized and enforced through the Enforcement of

Foreign Judgments Act (the “Enforcement Act”), 42 Pa.C.S. § 4306. McCann

claims that the Recognition Act did not disturb the common law principles of

comity and that a complaint must still be filed in order for the foreign nation

judgment to be recognized. McCann argues that since NALM failed to do so,

the judgment is void and therefore the Charging Order and Monitor Order

have no legal basis and should be reversed.

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      McCann’s argument requires this Court to engage in statutory

interpretation of the Recognition Act. “Statutory interpretation is a question

of law, and therefore our scope of review is plenary, and our standard of

review is de novo.” Commonwealth v. Giulian, 111 A.3d 201, 203 (Pa.

Super. 2015).

      When interpreting a statute:

      [W]e look to ascertain and effectuate the intention of the
      General Assembly. Additionally, we must give effect to all of the
      law[’]s provision[s] and are not to render language superfluous
      or assume language to be mere surplusage. If the text of the
      statute is clear and free from all ambiguity, the letter of it is not
      to be disregarded under the pretext of pursuing its spirit.

In re T.P., 78 A.3d 1166, 1174 (Pa. Super. 2013) (citations and quotation

marks omitted).

      We now turn to the applicable statute, section 22003 of the

Recognition Act, which provides:

      Except as provided in sections 4 and 5, a foreign judgment
      meeting the requirements of section 9 is conclusive between the
      parties to the extent that it grants or denies recovery of a sum of
      money.      The foreign judgment is enforceable in the same
      manner as the judgment of another state which is entitled to full
      faith and credit.

42 P.S. § 22003.

      In Pennsylvania, the enforceability of the judgment of another state is

controlled by the Enforcement Act, which provides, in relevant part, as

follows:

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       § 4306. Enforcement of foreign judgments.

                                          ***

       (b) Filing and status of foreign judgments. — A copy of any
       foreign judgment including the docket entries incidental thereto
       authenticated in accordance with an act of Congress or this title
       may be filed in the office of the clerk of any court of common
       pleas of this Commonwealth. The clerk shall treat the foreign
       judgment in the same manner as a judgment of any court of
       common pleas of this Commonwealth.

42 Pa.C.S. § 4306.

       Historically, foreign judgments were not judgments, but rights of

action, and one must have commenced a civil action in order to have it

recognized and enforced. Morrissey v. Morrissey, 713 A.2d 614, 616 (Pa.

1998).    However, in Morrissey, which both parties cite for support, the

Pennsylvania Supreme Court held that “in enacting the various statutes

providing for registration of foreign judgments, the legislature implemented

streamlined procedures for domesticating foreign judgments, establishing

registration as an alternative to the commencement of a civil action.” Id. at

617 (emphasis added). The Court held that through the applicable statute,

RURESA,4 a Texas child support order became immediately enforceable in

Pennsylvania upon its registration. Id.

       In Louis Dreyfus Commodities Suisse SA v. Fin. Software Sys.,

99 A.3d 79 (Pa. Super. 2014), this Court held that “because foreign nation

judgments are not entitled to full faith and credit, but rather are subject to
____________________________________________

4
 Revised Uniform Reciprocal Enforcement of Support Act (RURESA), 23 Pa.
Cons. Stat. §§ 4501-4540 (repealed).

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the principles of comity, a foreign nation judgment cannot be enforced in the

Commonwealth pursuant to the Enforcement Act unless it is recognized as

valid pursuant to the Recognition Act.”     Id. at 84.   The plaintiff in Louis

Dreyfus erred by filing a praecipe to transfer a foreign money judgment

while citing to the Enforcement Act rather than the Recognition Act as the

basis for the court’s authority to enter the judgment.           Id. at 85-86.

Therefore, this Court held that the plaintiff’s praecipe to enter the foreign

money judgment was fatally flawed and void on its face. Id. at 86.

      In Olympus Corp. & Keymed (Med. & Indus. Equip.) Ltd. v.

Canady, 962 A.2d 671 (Pa. Super. 2008), the plaintiff filed a praecipe in the

Allegheny County Court of Common Pleas to enter a foreign judgment from

the United Kingdom.      This Court held that the use of a praecipe was

sufficient to enter an order enforcing the foreign judgment.         This Court

stated that the Recognition Act “makes clear, a foreign judgment is

enforceable in the same manner as the judgment of another state which is

entitled to full faith and credit." Id. at 673 (citing 42 P.S. § 22003) (internal

quotations removed).

      Here, NALM filed a praecipe to enter a foreign money judgment that

expressly invoked the Recognition Act. See Praecipe to Enter Foreign Money

Judgment, 1/28/14, at 1.     According to Louis Dreyfus, invocation of the

Recognition Act is required for the foreign nation judgment to be enforced

pursuant to the Enforcement Act. The text of the Recognition Act is clear

that the foreign judgment is enforceable in the same manner as the

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judgment of another state, which is controlled by the Enforcement Act. The

Enforcement Act allows the enforcement of a foreign judgment if a copy of

that judgment is filed with the clerk of the court of common pleas of the

relevant county, which NALM did.

      As in Morrissey, the relevant statute here, the Recognition Act, was

implemented to streamline procedures for domesticating foreign nation

judgments,     and   established   registration   as   an   alternative   to   the

commencement of a civil action. Morrissey, supra. NALM, like the plaintiff

in Olympus, filed a praecipe invoking the Recognition Act to record a foreign

judgment. Accordingly, NALM’s praecipe was procedurally sufficient for the

trial court to recognize the foreign judgment.

      McCann next argues that even if NALM used proper procedures to seek

recognition of its default judgment, the Charging Order and the Monitor

Order should both be reversed because NALM failed to demonstrate that the

Irish court that entered the default judgment had personal jurisdiction over

McCann.     McCann claims that the lack of personal jurisdiction by the Irish

court means that the foreign judgment is not conclusive and should not be

enforced.    Because there were issues with serving McCann his summary

summons, McCann claims that there was not a full and fair trial abroad and

that he was denied due process.

      As noted in section 22003 of the Recognition Act, there are exceptions

to the rule that foreign judgments are entitled to the same full faith and

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credit as those of another state.   The relevant exceptions are provided as

follows:

      § 22004. Grounds for nonrecognition

      A foreign judgment need not be recognized if:

      (1) the defendant in the proceedings in the foreign court did not
      receive notice of the proceedings in sufficient time to enable him
      to defend[.]

42 P.S. § 22004.

      § 22005. Nonconclusive judgments

      A foreign judgment is not conclusive if:

                                     ***

      (2) the foreign court did not have personal jurisdiction over the
      defendant[.]

42 P.S. § 22005.

      Section 22006 of the Recognition Act lists factors that satisfy the

requirements for personal jurisdiction and are, in relevant part, as follows:

      § 22006. Personal jurisdiction

      The foreign judgment shall not be refused recognition for lack of
      personal jurisdiction if:

      (1) the defendant was served personally in the foreign state;

      (2) the defendant voluntarily appeared in the proceedings other
      than for the purpose of protecting property seized or threatened
      with seizure in the proceedings or of contesting the jurisdiction
      of the court over him.

42 P.S. § 22006.

      We will first examine the notice served upon McCann.        Due process

requires notice “reasonably calculated, under all the circumstances, to

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apprise interested parties of the pendency of the action and afford them an

opportunity to present their objections.”     Mullane v. Central Hanover

Bank & Trust Co., 339 U.S. 306 (1950). In United Student Aid Funds,

Inc. v. Espinosa, 559 U.S. 260 (2010), the defendant received actual

notice of the filing and the United States Supreme Court held that this more

than satisfied the defendant’s due process rights.     The Court further held

that the failure to serve a summons and complaint did not entitle the

defendant to relief as he received actual notice.

      Here, McCann received actual notice of the summons; this was

evidenced by his appearances and motions filed in the Irish court such as

the affidavit accompanying his motion to set aside the substituted service

order. Affidavit of John McCann, 9/12/13, at 1. This is also supported by

his supplemental affidavit, which stated, in relevant part:

      I say that I take no issue with [NALM’s] claim that service was
      effected on me and as previously stated to this Honorable Court,
      I withdrew any challenge to service at the earliest opportunity
      having taken legal advice.

Supplemental Affidavit of John McCann, 12/23/13, at 1-2. In addition, the

substituted service upon a company McCann had previously done business

with, Esther McGahon McGuiness & Co., was reasonably calculated, after

repeated failures to serve him personally in Northern Ireland, to apprise him

of the pendency of the action. Mullane, supra.

      Section 22006 of the Recognition Act governs the manner in which the

personal jurisdiction requirement may be satisfied.      As demonstrated by

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certain pleadings he filed with the Irish court, McCann voluntarily appeared

in the proceedings not only to contest jurisdiction, but also to move to set

aside the judgment.     Notice of Motion by McCann, 12/9/13, at 1.         This

appearance, along with the actual service upon McCann, satisfies the

personal jurisdiction requirement of the Recognition Act under section

22006. Accordingly, the Irish judgment is final, conclusive, and enforceable

under the Recognition Act and the Enforcement Act, and McCann’s claim that

the Irish court did not have personal jurisdiction over him fails.

      McCann next argues that NALM has used the incorrect procedure to

secure the Charging Order and the Monitor Order. McCann claims that NALM

should have proceeded by filing and serving appropriate writs of execution

rather than filing motions seeking mandatory relief.        Because the wrong

procedures were utilized, McCann alleges that the four McCann Entities that

are sought to be charged are not parties to this proceeding and are being

forced to pay a third party. McCann also argues that even if the Charging

Order were appropriate, NALM is not entitled to any information from the

McCann Entities sought to be monitored, as three of the four entities are

limited liability companies.   Additionally, McCann alleges that the Monitor

Order should be reversed because McCann is not a resident or domiciliary of

this Commonwealth.

      Of the four McCann Entities involved, one is a limited partnership and

three are limited liability companies.        Regarding the limited partnership

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entity, the Pennsylvania Limited Partnership Act, 15 Pa.C.S. § 8501, governs

and provides, in respect to the judgment creditors of a partner, as follows:

      On application to a court of competent jurisdiction by any
      judgment creditor of a partner, the court may charge the
      partnership interest of the partner with payment of the
      unsatisfied amount of the judgment with interest. To the extent
      so charged, the judgment creditor has only the rights of an
      assignee of the partnership interest.

15 Pa.C.S. § 8563.

      For the three limited liability companies, the Pennsylvania statute on

the limited transferability of membership interest provides, in relevant part,

as follows:

      The interest of a member in a limited liability company
      constitutes the personal estate of the member and may be
      transferred or assigned as provided in writing in the operating
      agreement.       Unless otherwise provided in writing in the
      operating agreement, if all of the other members of the company
      other than the member proposing to dispose of his interest do
      not approve of the proposed transfer or assignment by
      unanimous vote or written consent, which approval may be
      unreasonably withheld by any of the other members, the
      transferee of the interest of the member shall have no right to
      participate in the management of the business and affairs of the
      company or to become a member. The transferee shall only be
      entitled to receive the distributions and the return of
      contributions to which that member would otherwise be entitled.

15 Pa.C.S. § 8924 (emphasis added).

      In Zokaites v. Pittsburgh Ir. Pubs, LLC, 962 A.2d 1220 (Pa. Super.

2008), this Court held that a judgment creditor is “entitled to the debtor-

member’s economic rights to satisfy the member’s indebtedness by seeking

an order of court for the distributions and the return of contributions which

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[the judgment debtor] is entitled to from his limited liability companies.” Id.

at 1226.

      Here, the Charging Order only attaches to McCann’s individual

partnership and membership economic interests, and does not include any

right to participate in the management of the business or to become a

member.    Accordingly, NALM, as a judgment creditor, followed the proper

procedure in seeking a charging order for the partnership interest and

membership economic interests in the McCann Entities.

      McCann also asserts that the McCann Entities are wrongfully being

coerced by the court to pay NALM because they were not properly served

with process and should be parties to this proceeding.

      The Pennsylvania Limited Partnership Act provides, with respect to the

limited partnership entity, that the judgment creditor only possesses the

rights of an assignee of the partnership interest for the payment of the

unsatisfied amount of the judgment.      15 Pa.C.S. § 8563.     Regarding the

three limited liability companies, the Pennsylvania Limited Liability Company

Law of 1994 provides, in relevant part, that the “interest of a member in a

limited liability company constitutes the personal estate of the member and

may be transferred or assigned as provided in writing in the operating

agreement.” 15 Pa.C.S. § 8924.

      Here, the interests sought in the charging order only impact the

economic interests of the member or partner, McCann. The McCann Entities

themselves are not directly affected by this order. The entities are merely

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making the same payments, but to a different party, NALM, rather than

McCann.       Accordingly, the McCann entities were not necessary and

indispensable parties to this order and were not required to be parties to the

proceeding.

        McCann’s next two claims are arguments against the Monitor Order.

However, NALM claims that the Monitor Order is not appealable and should

be quashed. McCann argues that the Monitor Order is appealable for three

reasons:     it provides for injunctive relief;5 it will affect the possession or
                         6
control of property;         and it will finally and incurably dispose of valuable

property rights.7

        McCann claims that the Monitor Order is appealable as an injunction

under Pa.R.A.P. 311(a)(4) because he is required to cooperate with and

provide information to the appointed financial monitor. Specifically, McCann

must provide the financial monitor with access to persons, places, and

information as requested.

        Appellate courts have generally been reluctant to extend the right to

appeal an injunction under Rule 311(a)(4) to other types of orders that are

similar to injunctions, but which do not involve formal injunctive relief. See

____________________________________________

5
    Pa.R.A.P. 311(a)(4).
6
    Pa.R.A.P. 311(a)(2).
7
    Pa.R.A.P. 341.

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Ronald Darlington, Pa. Appellate Practice, § 311:47 (2014-15). In fact,

this Court has denied many orders that impose significant obligations, but

were held not to be appealable as injunctive relief.        See Beckman v.

Abramovitz,     496 A.2d 53 (Pa. Super. 1985) (orders requiring corporate

assets to be frozen pending settlement agreement); Valley Coal Co. v.

Int’l Union, United Mine Workers, 586 A.2d 436 (Pa. Super. 1991)

(orders directing parties to mediate their differences under supervision).

      Here, the Monitor Order is even more limited than the orders in

Beckman and Valley Coal and only requires McCann to cooperate with a

financial monitor.   The Monitor Order is not an order for formal injunctive

relief and this Court will not extend the right of appeal under Rule 311(a)(4).

      McCann also argues that the Monitor Order will result in the loss of

valuable property rights and is therefore akin to an order affecting the

possession or control of property under Pa.R.A.P. 311(a)(2). McCann does

not further this argument in his brief and did not preserve it at trial. We can

infer, however, that McCann claims that the Monitor Order requires the

disclosure of confidential information and trade secrets.

      As a general rule, issues that are not raised in the lower court are

waived and cannot be raised for the first time on appeal. Pa. R.A.P. 302(a).

Even if an appellant had preserved his right to appeal, a claim would be

“waived by his failure to provide proper argument in the brief that he filed

with this Court.”    Kraus v. Taylor, 710 A.2d 1142, 1146 n.3 (Pa. Super.

1998).

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     Here, McCann did not preserve his “trade secret” argument and did not

provide a proper argument in his brief on this subject.      Accordingly, this

argument is waived for purposes of appeal.

     Lastly, McCann argues that the Monitor Order is appealable as of right

because it will finally and incurably dispose of valuable property rights

under Pa R.A.P. 341. This argument is waived as well. McCann did not raise

this issue in his response to NALM’s petition for appointment of a financial

monitor, or at the hearing on that motion.       Further, McCann does not

provide proper argument on this issue.       Kraus, supra.     Moreover, the

Monitor Order does not finally dispose of any valuable property rights; it

merely requires disclosure of information.     Therefore, this argument is

waived for purposes of appeal.     Accordingly, McCann’s appeal from the

Monitor Order is quashed.

     The order of October 21, 2014 imposing a Charging Order is hereby

affirmed; the appeal from the October 30, 2014 Monitor Order is hereby

quashed.

     Affirmed in part; quashed in part.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 9/3/2015

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