Court Opinion

ID: 6499659
Source: CourtListenerOpinion
Date Created: 2022-07-13 16:09:27.417128+00
Date Added: 2024-06-11T09:16:16.536504
License: Public Domain

J-S01041-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    KEM RESOURCES, LP                          :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    DEER PARK LUMBER, INC.,                    :
    RYVAMAT, INC., RYAN A. ANDREWS;            :
    MATTHEW R. ANDREWS; VANESSA                :   No. 619 MDA 2021
    K. DIMEOLO; RONALD A. ANDREWS;             :
    CIRTUS ENERGY CORPORATION                  :
                                               :
                                               :
    APPEAL OF: RYVAMAT, INC.                   :

               Appeal from the Judgment Entered April 29, 2021
       In the Court of Common Pleas of Wyoming County Civil Division at
                             No(s): 2014-CV-857

    KEM RESOURCES, LP                          :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    DEER PARK LUMBER, INC.,                    :
    RYVAMAT, INC., RYAN A. ANDREWS;            :
    MATTHEW R. ANDREWS; VANESSA                :   No. 645 MDA 2021
    K. DIMEOLO; RONALD A. ANDREWS;             :
    CITRUS ENERGY CORPORATION                  :
                                               :
                                               :
    APPEAL OF: KEM RESOURCES, LP               :

               Appeal from the Judgment Entered April 29, 2021
       In the Court of Common Pleas of Wyoming County Civil Division at
                             No(s): 2014-CV-857

BEFORE:      BOWES, J., NICHOLS, J., and COLINS, J.*

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.
J-S01041-22

MEMORANDUM BY COLINS, J.:                              FILED JULY 13, 2022

      These matters are consolidated cross-appeals filed by Ryvamat, Inc.

(Ryvamat) and KEM Resources, LP (KEM) from a judgment entered by the

Court of Common Pleas of the 44th Judicial District Wyoming County Branch

(trial court) in an action for an accounting of a paid-up oil and gas lease

brought by co-owners of the leased property. For the reasons set forth below,

we affirm the trial court’s judgment, except for its award of prejudgment

interest for the period before this action was filed, and vacate and remand

that portion of the prejudgment interest award.

      In March 2008, Ryvamat purchased land in Wyoming County from Deer

Park Lumber, Inc. (Deer Park), a corporation owned by the same family that

owns Ryvamat.     Included in the land that Ryvamat purchased were 4,619

acres that had been owned by Morris S. Kemmerer. Kemmerer sold these

4,619 acres (the Kemmerer properties) in the 1950s pursuant to deeds that

reserved a one-half interest in the oil, gas, and mineral rights underlying the

land. In 2007, Deer Park, which had acquired the Kemmerer properties in

1987, filed a quiet title action with respect to the Kemmerer properties and

obtained a default judgment that it was the sole owner of the oil, gas, and

minerals located on the Kemmerer properties.

      In July 2008, Ryvamat entered into a paid-up oil and gas lease (the

Lease) with Unit Petroleum Company (Unit Petroleum).        Under the Lease,

                                     -2-
J-S01041-22

Ryvamat received a payment on July 21, 2008 of $12,644,512 for lease of the

oil and gas rights on the Kemmerer properties.

      In August 2008, Endless Mountains Hunting Club, Limited (Endless

Mountains) filed a petition to strike Deer Park’s quiet title judgment, claiming

that it was the owner of the one-half interest in the oil, gas, and mineral rights

that Kemmerer had reserved with respect to the Kemmerer properties. In

January 2009, the estates of Kemmerer and his son Morris Kemmerer, Jr. (the

Kemmerer estates) filed a petition to strike the quiet title judgment claiming

that the Kemmerer estates, not Endless Mountains, were the owner of the

same one-half interest in the oil, gas, and mineral rights that Kemmerer had

reserved. In September 2014, the trial court granted the motions to strike

the quiet title judgment. Trial Court Opinion, 7/19/21, at 3. On May 15, 2015,

the trial court granted summary judgment against Deer Park in the quiet title

action and dismissed Deer Park’s quiet title complaint with prejudice. Id.

      In September 2009, Unit Petroleum assigned the Lease to Citrus Energy

Corporation (Citrus). In August 2010, Citrus filed an action in federal court

(the Citrus action) against Ryvamat and other parties seeking recission of the

Lease with respect to the Kemmerer properties and damages as a result of

the competing claims concerning the Kemmerer properties. Citrus Complaint.

In November 2010, a settlement of the Citrus action was entered into under

which Ryvamat paid Citrus $3,200,000 (the Citrus settlement). N.T. Trial at

45; Citrus Settlement Agreement.

                                      -3-
J-S01041-22

      On July 18, 2014, Endless Mountains and the Kemmerer estates filed a

complaint in the instant action against Ryvamat, Deer Park, Ryvamat’s

principals, and an attorney who represented Ryvamat in connection with the

Lease.   In this complaint, Endless Mountains and the Kemmerer estates

asserted, inter alia, a claim for an accounting seeking one-half of the payment

that Ryvamat received from Unit Petroleum with respect to the Kemmerer

properties based on their status as co-owners of those properties as tenants-

in-common with Ryvamat and a claim for unjust enrichment with respect to

that payment.     Complaint ¶¶34-47, 59-60.       In January 2015, Endless

Mountains and the Kemmerer estates settled their dispute, conveyed to KEM

their rights to the one-half interest in the oil, gas, and mineral rights that

Kemmerer had reserved with respect to the Kemmerer properties, and

assigned their claims in this action to KEM. 1/8/15 Deed; 1/12/15 Assignment

of Rights. KEM was substituted as the plaintiff in this action in February 2015

and, on September 28, 2015, filed an amended complaint naming Ryvamat,

Deer Park, Ryvamat’s principals, and Citrus as defendants. In this amended

complaint, KEM asserted a claim for an accounting against Ryvamat, Deer

Park, and Ryvamat’s principals seeking one-half of the payment that Ryvamat

received under the Lease with respect to the Kemmerer properties based on

its status as a tenant-in-common and a claim for a constructive trust against

Ryvamat, Deer Park, and Ryvamat’s principals based on the assertion that

these defendants were unjustly enriched. Second Amended Complaint ¶¶43-

                                     -4-
J-S01041-22

65. With respect to Citrus, KEM asserted a claim for unjust enrichment with

respect to the $3.2 million that Ryvamat paid to Citrus in the Citrus

settlement. Id. ¶¶66-76.

      On December 3, 2018, KEM filed a motion for partial summary judgment

against Ryvamat and Citrus seeking, inter alia, judgment against Ryvamat in

the amount of $6,322,256 plus interest from July 21, 2008 on its accounting

and constructive trust claims and seeking dismissal of Ryvamat’s affirmative

defenses.    On January 28, 2019, Ryvamat, Deer Park, and Ryvamat’s

principals filed a motion for summary judgment asserting that all of KEM’s

claims against them were barred by the statute of limitations. Deer Park and

Ryvamat’s principals also filed a motion for summary judgment on the ground

that KEM had no cause of action against them and Citrus filed a motion for

summary judgment asserting that KEM’s claims against it were barred by the

statute of limitations.

      On October 24, 2019, the trial court ruled on the summary judgment

motions. In this decision, the trial court rejected Ryvamat’s argument that

the statute of limitations barred KEM’s accounting claim against it and granted

KEM’s motion for partial summary judgment with respect to its right to an

accounting from Ryvamat and Ryvamat’s laches defense and other affirmative

defenses to liability, but concluded that there were disputed issues of fact with

respect to the amount that Ryvamat owed. Trial Court Order and Opinion,

10/24/19, at 6-11, 22-26. The trial court also granted summary judgment in

                                      -5-
J-S01041-22

favor of Deer Park and Ryvamat’s principals on the ground that KEM had no

cause of action against them and granted summary judgment in favor of Citrus

on the ground that KEM’s claims against Citrus were barred by the statute of

limitations. Id. at 13-22.

      On November 19, 2019, the trial court ordered Ryvamat to file an

accounting with respect to the Lease payment that it received with respect to

the Kemmerer properties. On January 13, 2020, Ryvamat filed an accounting

in which it deducted the entire $3.2 Citrus settlement payment, various

commissions and legal fees incurred in connection with the Lease, accounting

fees that Ryvamat allegedly incurred with respect to the Lease, the legal fees

incurred by Ryvamat in the Citrus action, one-half the cost of an easement

acquired by Ryvamat, and income taxes allegedly paid on the Lease payment.

KEM filed objections to this accounting in which it asserted that Ryvamat was

not entitled to any reduction for the Citrus settlement and objected to most

of Ryvamat’s other deductions. On June 22 and 23, 2020, the trial court held

a non-jury trial on Ryvamat’s deductions from KEM’s one-half share of the

$12,644,512 Lease payment.

      On December 11, 2020, the trial court issued a decision on the amount

that Ryvamat owed KEM.       The trial court found that Ryvamat was entitled to

credit for one-half of the Citrus settlement, $1.6 million. Trial Court Decision,

12/11/20, at 2-3. The trial court also found that Ryvamat was entitled to

credits of $206,122 for KEM’s share of the commissions and legal fees incurred

                                      -6-
J-S01041-22

in connection with the Lease and $2,650 for one-half of the legal fees incurred

by Ryvamat in the Citrus action. Id. at 3-4. The trial court rejected Ryvamat’s

claims for income taxes, accounting fees, and acquisition of an easement. Id.

at 4-5. The trial court also held that KEM was entitled to prejudgment interest

from July 21, 2008 at the rate of six percent on the $4,513,484 that Ryvamat

owed KEM. Id. at 6-7.

      Both parties filed post-trial motions, which the trial court denied on April

22, 2021. On April 22, 2021, the trial court also entered judgment in favor of

KEM and against Ryvamat “in the sum of $4,513,484.00, together with simple

interest thereon at the rate of six (6) percent per annum from July 21, 2008

to the date of entry of this judgment ($3,455,968.10), for a total judgment of

$ 7,969,452.10.” Trial Court Judgment. Ryvamat timely appealed from this

judgment and KEM timely filed a cross-appeal.

      In its appeal, Ryvamat raises the following issues: 1) that it was entitled

to judgment in its favor on the grounds that KEM’s claims against it were

barred by the statute of limitations; 2) that the trial court erred in granting

summary judgment against its laches defense; 3) that the trial court erred in

denying a reduction for income taxes; 4) that the trial court erred in allowing

only a $1.6 million reduction for the Citrus settlement; and 5) that the trial

court erred in awarding prejudgment interest from July 21, 2008 and awarding

such interest at the rate of six percent. Ryvamat Brief at 6-7. KEM in its

cross-appeal contends that the trial court erred in granting Ryvamat a $1.6

                                      -7-
J-S01041-22

million reduction for the Citrus settlement and, alternatively, that it erred in

denying KEM interest on that $1.6 million for the period from July 21, 2008

until the date that Ryvamat paid the Citrus settlement. KEM Brief at 62-63.

We address KEM’s cross-appeal issues in our discussion of Ryvamat’s issues

concerning the Citrus settlement and the trial court’s award of prejudgment

interest.

      Ryvamat’s first issue turns on whether KEM’s accounting claim is subject

to a four-year or a six-year statute of limitations. This is an issue of law as to

which our review is de novo and plenary. Commonwealth v. Corban Corp.,

957 A.2d 274, 276 (Pa. 2008). KEM’s assignors commenced this action on

July 18, 2014, more than four years after Ryvamat received the payment

under the Lease on July 21, 2008. In addition, the trial court found that KEM’s

assignors were aware of the Lease by November 2008, Trial Court Order and

Opinion, 10/24/19, at 16, more than four years before their 2014 suit against

Ryvamat. The filing of this action on July 18, 2014, however, was within six

years of the date that Ryvamat received payment under the Lease and

therefore was timely if KEM’s accounting action is subject to a six-year

limitation.

      Pennsylvania’s four-year statute of limitations applies to actions based

on oral and written contracts, other actions based upon writings, and actions

based “upon a contract implied in law.” 42 Pa.C.S. § 5525(a). Pennsylvania’s

six-year statute of limitations applies to “[a]ny civil action or proceeding which

                                      -8-
J-S01041-22

is neither subject to another limitation specified in this subchapter nor

excluded from the application of a period of limitation.” 42 Pa.C.S. § 5527(b).

      Accounting is a form of relief incident to a cause of action, not a cause

of action itself. Slomowitz v. Kessler, 268 A.3d 1081, 1106 (Pa. Super.

2021); Buczek v. First National Bank of Mifflintown, 531 A.2d 1122, 1123

(Pa. Super. 1987). Ryvamat argues the six-year catch-all limitation does not

apply because the only cause of action that KEM could have would be a claim

for fraud or breach of fiduciary duty, subject to a two-year limitation period,

42 Pa.C.S. § 5524(7), or a claim for unjust enrichment that it contends is

subject to the four-year statute of limitation. We do not agree.

      Ryvamat is correct that common law unjust enrichment actions are

subject to the four-year statute of limitations for contracts implied in law. 42

Pa.C.S. § 5525(a)(4); Sevast v. Kakouras, 915 A.2d 1147, 1153 (Pa. 2007);

Cole v. Lawrence, 701 A.2d 987, 989 (Pa. Super. 1997). However, KEM’s

cause of action here is not a common law unjust enrichment claim.       Rather,

KEM’s claim is a statutory cause of action to enforce its rights as a co-tenant-

in-common of real property. 68 P.S. § 101 (providing for any “tenants in

common, not in possession, to sue for and recover from such tenants in

possession his or their proportionate part of the rental value of said real

estate”); Sheridan v. Coughlin, 42 A.2d 618, 620 (Pa. 1945). In Sheridan,

our Supreme Court held that such a co-tenant of real property who is not in

possession has a cause of action under 68 P.S. § 101 to obtain an accounting

                                     -9-
J-S01041-22

of its share of income received by the other tenant-in-common from the jointly

owned property. 42 A.2d at 620.

      Ryvamat contends that Sheridan is no longer good law because the

statute on which it was based has been repealed. To the extent that Ryvamat

is arguing that the statute of limitations applied in Sheridan has been

repealed, Ryvamat is correct, and it is our current statutes of limitations that

govern whether KEM’s action is time-barred. The statute on which Sheridan

based the cause of action at issue here, 68 P.S. § 101, has not been repealed,

however, and remains in effect.      Sheridan’s holding that a co-tenant-in-

common, such as KEM, has a statutory cause of action for an accounting

therefore remains good law.

      The four-year statute of limitations, 42 Pa.C.S. § 5525, does not refer

to actions seeking an accounting or actions concerning the rights of co-owners

of real property. In addition, no other provision of Pennsylvania’s statutes of

limitations provides a limitation period for seeking an accounting or for actions

between co-owners of real property for income received from the property.

Because it is not a cause of action covered by any other limitation period, the

statute of limitations applicable to a cause of action between co-tenants-in-

common under 68 P.S. § 101 is the six-year limitation of 42 Pa.C.S. § 5527(b).

See Bednar v. Bednar, 688 A.2d 1200, 1204 (Pa. Super. 1997); Quarello

v. Clinger, No. 544 WDA 2020, at 10 (Pa. Super. March 10, 2021)

(unpublished memorandum).        The trial court therefore correctly concluded

                                     - 10 -
J-S01041-22

that this action, commenced less than six years after the Lease payment was

received by Ryvamat, was not barred by the statute of limitations.

      In its second issue, Ryvamat challenges the trial court’s grant of

summary judgment on its laches defense. Our review of a grant of summary

judgment is de novo and plenary. Pyeritz v. Commonwealth, 32 A.3d 687,

692 (Pa. 2011).

      Ryvamat asserts that there was sufficient evidence before the trial court

to support a laches defense. This argument fails. To bar an action based on

laches, the defendant must show both a delay arising from the plaintiff's

failure to exercise due diligence and that it suffered prejudice as a result of

that delay. Morgan v. Millstone Resources Ltd., 267 A.3d 1235, 1245 (Pa.

Super. 2021); Fulton v. Fulton, 106 A.3d 127, 131 (Pa. Super. 2014).

      The claims of prejudice that Ryvamat has asserted are the Citrus action

and settlement and the payment of additional income taxes. Ryvamat Brief

at 39. Neither of these harms was caused by any lack of diligence or delay by

KEM’s assignors. The Citrus action and settlement occurred in 2010, before

any significant delay by KEM’s assignors in filing suit. Moreover, the only act

that Ryvamat took that resulted in this harm was the entry into the Lease as

sole owner of the Kemmerer properties in July 2008 and there is no evidence

that KEM’s assignors knew of the Deer Park quiet title action at that time or

that they had notice of anything that would have required them to assert their

rights before Ryvamat entered into the Lease.        The income taxes were

                                    - 11 -
J-S01041-22

incurred based on events that occurred in 2008, Deer Park’s sale of land to

Ryvamat and the entry into the Lease. N.T. Trial at 132, 134, IRS Closing

Agreement at 2. Because there had been no delay or lack of diligence by

KEM’s assignors at that time, any increased tax payments were also not a

result of KEM’s assignors’ delay in bringing suit.

      Ryvamat’s third and fourth issues and KEM’s challenge to the $1.6

million deduction for the Citrus settlement are appeals from the trial court's

non-jury verdict after trial.   On appeal from a non-jury trial verdict, this

Court’s review is limited to determining whether the findings of the trial court

are supported by competent evidence and whether the trial court committed

error in any application of the law. Slomowitz, 268 A.3d at 1093.

      These issues involve questions of whether and in what amounts

Ryvamat is entitled to a credit against KEM’s share of the Lease payment for

monies that Ryvamat claims that it paid.      A tenant-in-common who is forced

to pay its co-tenant’s share of a joint obligation can recover contribution from

the co-tenant. Bednar, 688 A.2d at 1203; In re Lohr’s Estate, 200 A. 135,

136 (Pa. Super. 1938). A tenant-in-common is also entitled to a credit for the

other co-tenant’s proportionate share of expenditures necessary to protect or

preserve the jointly owned property. Bednar, 688 A.2d at 1205; Quarello,

slip op. at 21-22.

      In its third claim, Ryvamat argues that the trial court erred in not

reducing the amount that it owes KEM for income taxes that Ryvamat’s

                                     - 12 -
J-S01041-22

principals paid.1 The trial court rejected the deduction for income taxes on

the grounds that Ryvamat did not show that it paid any income taxes on the

Lease payment or that the tax payments discharged any obligation of KEM.

Trial Court Decision, 12/11/20, at 4-5. These determinations are supported

by the record.

       The taxes that Ryvamat sought to deduct were the subject of an audit

and a settlement with the Internal Revenue Service that addressed Ryvamat’s

and Deer Park’s tax liability with respect to both the Lease payment and Deer

Park’s transfer of land to Ryvamat.            N.T. Trial at 117-23.   The evidence

introduced by Ryvamat showed that under this settlement, the Lease payment

was Deer Park’s income and the taxes paid by Ryvamat’s principals were taxes

owed by them as Deer Park shareholders for a constructive dividend from Deer

Park, not taxes paid by Ryvamat on the Lease payment. Id. at 119-21, 131-

32, 134; IRS Closing Agreement at 3-4 ¶¶4-5, 10. Because Ryvamat failed

to show that it paid income tax on KEM’s share of the Lease payment, the trial

court correctly concluded that there was no basis for allowing Ryvamat to

deduct any income tax payments from KEM’s share of the Lease payment.

       Moreover, as the trial court also correctly concluded, income taxes paid

on the Lease payment would not be deductible from KEM’s share because

there was no evidence that such payments discharged any obligation of KEM

____________________________________________

1Because Ryvamat is a Subchapter S corporation, its income taxes are paid
by its shareholders. N.T. Trial at 39, 115.

                                          - 13 -
J-S01041-22

and its assignors or preserved KEM’s share of the Lease payment. Ryvamat

does not contend that its principals’ tax payments eliminated or lessened

KEM’s obligation to pay income taxes with respect to the Lease payment when

the judgment in this case is paid to KEM.     The income tax payments were a

personal obligation of the taxpayers who received income, not taxes owed on

the jointly owned property and there was no evidence or claim that Ryvamat’s

principals’ income tax payments prevented loss or damage to the Kemmerer

properties or loss of the Lease.

      Ryvamat’s fourth issue and KEM’s primary cross-appeal issue both

challenge the trial court’s $1.6 million credit for the Citrus settlement.

Ryvamat argues that the entire $3.2 million settlement should have been

credited against its liability to KEM and KEM contends that none of the

settlement can be credited against its share of the Lease payment.            We

conclude that neither party’s position is meritorious and that the trial court did

not err.

      The trial court found that Ryvamat paid $3.2 million to settle the Citrus

action to prevent the loss of the entire Lease payment and that the expedited

settlement insured that the remaining $9,444,512 in proceeds from the Lease

would not be lost. Trial Court Decision, 12/11/20, at 2-3. These findings are

supported by the record. The Citrus action sought recission of the Lease as

its primary relief in all of its counts. Citrus Complaint at 6-8, 10-14. The

attorney who represented Ryvamat in the Citrus action testified that the

                                     - 14 -
J-S01041-22

reason for paying the $3.2 million was to preserve as much of the Lease

payment as possible and that he recommended that Ryvamat settle the Citrus

action for that amount at that time to prevent the risk of losing the Lease

payment and to reduce the attorney fee expenses in defending the Citrus

action.   N.T. Trial at 183, 195-98.     The trial court found the attorney’s

testimony credible and persuasive.      Trial Court Decision, 12/11/20, at 2.

Because the Citrus settlement was entered into to preserve over $9 million of

the Lease payment in which both Ryvamant and KEM’s assignors had a 50%

interest, the trial court properly credited one-half of that $3.2 million

settlement against KEM’s share. Bednar, 688 A.2d at 1205; Quarello, slip

op. at 21.

      Ryvamat contends that KEM should nonetheless bear the entire cost

because its assignors’ actions caused Citrus to file the Citrus action. The trial

court properly rejected this argument. As the trial court found, the conduct

of KEM’s assignors that led to the Citrus action consisted of their assertion of

their ownership rights concerning the Kemmerer properties and was therefore

not a ground for penalizing KEM by charging it for more than its share of the

settlement payment.      Trial Court Decision, 12/11/20, at 2.        Moreover,

Ryvamat did not show that the $3.2 million settlement benefited KEM more

than it benefited Ryvamat.      While the possibility of reducing the Lease

payment to provide a separate fund for KEM’s assignors was raised in the

settlement discussions, N.T. Trial at 174-75, 177, 195, the actual settlement

                                     - 15 -
J-S01041-22

provided no fund for their benefit, Citrus Settlement Agreement, and there

was no evidence that KEM or its assignors received any payment from Citrus.

      KEM argues that none of the $3.2 million settlement should be charged

to its share because the preservation of over $9 million under the Lease

allegedly did not benefit it, because the Citrus settlement was a voluntary

payment by Ryvamat and not payment of a joint obligation of Ryvamat and

KEM or its assignors, and because the Citrus action and settlement included

claims against defendants other than Ryvamat. Each of these arguments fails.

      While the settlement did not preserve the Kemmerer properties

themselves or the oil, gas, and mineral rights at issue and KEM’s share was

not set aside by Ryvamat, KEM was in fact benefited by the Citrus settlement.

KEM’s recovery from Ryvamat is based on the fact that Ryvamat received

monies under the Lease and that it as a 50% co-tenant is entitled to 50% of

those funds. If the Lease had been rescinded, there would be no such funds

and KEM’s 50% share would be $0. By preserving over $9 million of the Lease

payment of which KEM is entitled to a 50% share, the Citrus settlement plainly

benefited KEM, in addition to benefiting Ryvamat.

      With respect to the second of these arguments, KEM is correct that a

tenant-in-common cannot recover from the other co-tenant for voluntary

payments of the other co-tenant’s obligations or for payment of obligations

that are not joint obligations of both parties. Bednar, 688 A.2d at 1203; In

re Lohr’s Estate, 200 A. at 136. That, however, is beside the point. The

                                    - 16 -
J-S01041-22

trial court did not give Ryvamat credit for half of the Citrus settlement because

it paid an obligation of KEM; it did so because the Citrus settlement preserved

over $9 million of the Lease payment in which KEM had a 50% interest.

      KEM’s remaining argument is likewise without merit.          While Citrus

sought relief against two other defendants in its complaint, the trial court

found that the sole reason for Ryvamat’s $3.2 million settlement payment was

to prevent the entire Lease payment from being lost, not to protect defendants

from individual liabilities to Citrus for their conduct.   Trial Court Decision,

12/11/20, at 2-3. The record supports this finding. The attorney who settled

the Citrus action testified that the crux of the case was the deficiency in the

title of the properties that were the subject of the Lease and that the claims

asserting misrepresentations and nondisclosures under which defendants

other than Ryvamat could be liable were “make weight” claims that were “thin

at best, arguably frivolous.” N.T. Trial at 186-89, 202. As discussed above,

he also testified that the reason for the settlement was to preserve as much

as of the Lease payment as possible.     N.T. Trial at 183, 197. Moreover, the

Citrus settlement was paid entirely by Ryvamat, the recipient of the Lease

payment, not by any other defendant. Trial Court Decision, 12/11/20, at 3;

N.T. Trial at 45, 219; Citrus Settlement Agreement ¶2.           The trial court

therefore did not err in reducing the amount of the Lease payment that

Ryvamat owes KEM by one-half of the Citrus settlement.

                                     - 17 -
J-S01041-22

      Ryvamat’s and KEM’s remaining issues concern the trial court’s award

of prejudgment interest.     Ryvamat argues that the trial court erred in

awarding six percent interest and awarding prejudgment interest for the entire

period from July 21, 2008.     KEM argues that the trial court erred in not

awarding interest on its $1.6 million share of the Citrus settlement for the

period prior to the payment of that settlement.

      Prejudgment interest may be awarded when a defendant holds money

or property which belongs to the plaintiff. Linde v. Linde, 220 A.3d 1119,

1150 (Pa. Super. 2019); Kaiser v. Old Republic Insurance Co., 741 A.2d

748, 755 (Pa. Super. 1999). While a plaintiff in a contract action for failure

to pay a liquidated sum has right to prejudgment interest over which the court

has no discretion, TruServ Corp. v. Morgan's Tool & Supply Co., Inc., 39

A.3d 253, 264 (Pa. 2012), the decision whether to award prejudgment interest

in a non-contract action for wrongfully withheld funds and the amount of such

an award are matters of equity subject to the court’s discretion.      Sack v.

Feinman, 413 A.2d 1059, 1065-66 (Pa. 1980); Linde, 220 A.3d at 1150;

Gurenlian v. Gurenlian, 595 A.2d 145, 148 (Pa. Super. 1991). We review

challenges to a court’s award of prejudgment interest for abuse of discretion.

Linde, 220 A.3d at 1150.

      The trial court held that KEM was entitled to prejudgment interest from

July 21, 2008 because Ryvamat received the Lease payment on that date and

kept all of the funds for itself despite having notice by August 2008 of a claim

                                     - 18 -
J-S01041-22

of 50% ownership of the rights for which the Lease payment was made. Trial

Court Decision, 12/11/20, at 6. The trial court concluded that KEM as a co-

tenant was automatically entitled to prejudgment interest for this entire period

under Sheridan, regardless of whether Ryvamat had beneficial use of all of

the Lease payment for the entire period and without considering any other

factors or evidence. Trial Court Decision, 12/11/20, at 6-7. The trial court

concluded that the statutory rate of six percent was the appropriate rate of

interest because it could not be determined what rate KEM and its assignors

would have earned on the funds. Id.

      We conclude that the trial court did not abuse its discretion in awarding

prejudgment interest at the rate of six percent for the period after this action

was commenced on July 18, 2014. In determining the rate of interest, the

trial court recognized its discretion to set a rate based on considerations of

justice and fairness and fully considered the evidence before it concerning

lower and higher rates of return that could have been earned. Trial Court

Decision, 12/11/20, at 6-7.    Where the court has properly understood its

authority and considered the evidence and there is no showing that a different

rate of interest is necessary to compensate the plaintiff or prevent the

defendant from retaining profit from its wrongful conduct, award of

prejudgment interest at the statutory rate of six percent is not an abuse of

discretion.   Gurenlian, 595 A.2d at 149.      The only other argument that

Ryvamat asserts with respect the award of prejudgment interest from July

                                     - 19 -
J-S01041-22

2014 is the claim that no prejudgment interest should have been awarded for

the period before KEM’s assignors settled their dispute in 2015 because until

that date, the identity of the co-owner of the oil and gas rights was uncertain.

That argument is without merit. Where the defendant knows that it has an

obligation to pay some party and choses to simply retain the funds for itself,

it is not inequitable to require it to pay interest on those funds for the period

after suit has been filed against it. See Schiller v. Royal Maccabees Life

Insurance Co., 759 A.2d 942, 945 (Pa. Super. 2000).

      The situation with respect to the period prior to July 2014, however, is

different. Nearly six years passed between Rymavat’s receipt of the Lease

payment before any action was brought to recover KEM’s share. Although

KEM’s assignors were aware of the Lease payment for almost all of that period,

Trial Court Order and Opinion, 10/24/19, at 16, the evidence at trial was

undisputed that KEM’s assignors made no demand for payment to Ryvamat

before suit was filed in July 2014. N.T. Trial at 171, 261; Dildine Dep. at 121.

Moreover, KEM’s assignors’ petitions to strike the quiet title judgment were

pending for approximately six years before that judgment was stricken in

September 2014.      Evidence was introduced at trial that KEM’s assignors

disputed each others’ standing in the quiet title action and sought to litigate

and resolve their disputes with each other before resolving the petitions to

strike or asserting any claim against Ryvamat. N.T. Trial at 165-71.

                                     - 20 -
J-S01041-22

      The trial court made no findings concerning whether or how much of

this lengthy period of delay was caused by KEM’s assignors, whether it was

equitable to award interest for periods of delay that were KEM’s responsibility,

or whether interest for such a period should be limited to the amount of

interest or investment income earned by Ryvamat on KEM’s share during that

period. Instead, it concluded, without evaluating this evidence, that it was

automatically equitable to award KEM prejudgment simply because KEM “as a

cotenant, is entitled to prejudgment interest, irrespective of whether or not

the defendant had beneficial use of those funds.”        Trial Court Decision,

12/11/20, at 7.

      That ruling was error.    The sole authority cited by the trial court,

Sheridan, does not compel a court to ignore evidence of the cause of delay.

The Court’s language in Sheridan was a statement in passing that the court

on remand should award interest “from the dates when payment should have

been made,” without mention of the appropriate interest rate and without any

indication that equitable grounds had been shown for limiting the plaintiffs’

recovery of prejudgment interest. 42 A.2d at 621. Moreover, later decisions

have made it clear that the award of interest in these cases is to be governed

by equitable considerations.     Sack, 413 A.2d at 1065-66; Murray Hill

Estates, Inc. v. Bastin, 276 A.2d 542, 545 (Pa. 1971); Linde, 220 A.3d at

1150; Gurenlian, 595 A.2d 148. Because the trial court failed to consider

and make findings concerning whether and what length of the delay before

                                     - 21 -
J-S01041-22

July 2014 was caused by KEM’s assignors and whether it is equitable to award

KEM interest for periods of its own delay and at what rate, we must vacate

the award of interest for the period from July 21, 2008 and July 18, 2014 and

remand for the trial court to make those determinations.

      Although KEM’s prejudgment interest issue relates to this period, there

is no need for the trial court to consider that issue on remand as it is without

merit. Prejudgment interest is awarded on the amount that the defendant

owes the plaintiff after all deductions to which the defendant is entitled.

Cresci Construction Services, Inc. v. Martin, 64 A.3d 254, 261 n.10 (Pa.

Super. 2013); Burkholder v. Cherry, 607 A.2d 745, 748 (Pa. Super. 1992).

Because KEM’s $1.6 million share of the Citrus settlement is not money that

Ryvamat owes KEM, the trial court properly awarded interest only on the

amount of $4,513,484.

      For the foregoing reasons, we affirm the trial court’s $4,513,484

judgment in favor of KEM and against Ryvamat and its award of prejudgment

interest on that amount from July 18, 2014 until the entry of the judgment.

We, however, vacate the trial court’s award of prejudgment interest for the

period from July 21, 2008 to July 18, 2014 and remand this case to the trial

court to make further findings concerning whether and what length of the

delay in that period was caused by KEM’s assignors and to determine whether

and at what rate it is equitable to award KEM interest for such periods.

                                     - 22 -
J-S01041-22

      Judgment affirmed in part and vacated in part.   Case remanded for

further proceedings. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/13/2022

                                    - 23 -