Court Opinion

ID: 9716653
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:47:08.460305+00
Date Added: 2024-06-11T18:23:47.673201
License: Public Domain

DISSENTING OPINION BY
STEVENS, J.:
¶ 1 I conclude the trial court did not err in finding Gulf Coast has a superior interest to Trevdan to the funds being held by Toll Brothers for the work performed by Houston Drywall, and in addition, Toll Brothers was entitled to attorneys’ fees under 42 Pa.C.S.A. § 2503(4). Therefore, I would affirm the order dividing the inter-pleaded funds as follows: Gulf Coast receiving $89,194.00, Toll Brothers receiving $15,000.00 for attorneys’ fees, and Trevdan *529receiving the remaining $14,740,000. Thus, I respectfully dissent.1
¶ 2 To summarize, I find that the relevant facts are as follows: Trevdan sold materials to Houston Drywall, who performed drywall subcontract work for Toll Brothers, a developer of residential properties. On September 2, 2005, Houston Drywall ceased operations; however, Toll Brothers continued to owe Houston Drywall money for materials, which Trevdan delivered to Houston Drywall for Toll Brothers’ benefit in the residential projects. Trevdan sought money directly from Toll Brothers; however, Toll Brothers refused the request. In so doing, Toll Brothers informed Trevdan that, after Houston Drywall notified Toll Brothers of its intent to file for Chapter 7 bankruptcy, Toll Brothers terminated its contracts with Houston Drywall. Thereafter, Gulf Coast made a demand upon Toll Brothers indicating it had acquired the rights to and was the absolute owner of Houston Drywall’s payments, which were allegedly due and owing to Houston Drywall from Toll Brothers.
¶ 3 Fearful it would be exposing itself to multiple liability for the same funds, Toll Brothers refused to release the money and litigation ensued. Specifically, Trevdan filed a civil complaint on October 11, 2005, Toll Brothers filed a petition for inter-pleader on December 6, 2005, and Gulf Coast filed a civil complaint on February 17, 2006.
¶ 4 In its complaint, Gulf Coast explained that it is a factoring business, which purchases accounts from businesses with which it has a contractual relationship. Gulf Coast averred it purchased from its factoring client, Houston Diy-wall, the unpaid invoices owed to it by Toll Brothers, and as such, Gulf Coast is an “account debtor” under the Uniform Commercial Code (UCC). Gulf Coast further averred Houston Drywall granted to Gulf Coast a continuing first lien, and on October 1, 2004, Gulf Coast filed a UCC Financing Statement with the Texas Secretary of State, thereby perfecting its security interest in the unpaid invoices owed to Houston Drywall from Toll Brothers. Gulf Coast sent a written notice of assignment to Toll Brothers of the fact Houston Drywall had assigned its present and future accounts to Gulf Coast and that all payments, including the payments at issue, due to Houston Drywall must be made directly to Gulf Coast. Gulf Coast further averred that, on November 17, 2005, Houston Drywall filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, Houston, listing as an asset the monies owed to Houston Drywall by Toll Brothers and indicating Trevdan is an unsecured creditor. On December 28, 2005, Gulf Coast, as a secured creditor, obtained an order from the bankruptcy court granting Gulf Coast relief from the automatic stay imposed by Houston Drywall’s bankruptcy filing.
¶ 5 Following litigation, the trial court entered an order directing that, of the $118,934.00 interpleaded into the court by Toll Brothers, Gulf Coast was to receive $89,194.00, Toll Brothers was to receive $15,000.00, and Trevdan was to receive $14,740.00. Trevdan filed this timely appeal.
¶ 6 On appeal, Trevdan avers it had a priority to the money, which had been interpleaded into court by Toll Brothers. Specifically, Trevdan contends that it had *530first priority to the undisbursed funds since, under common law, an unpaid supplier of materials has first priority. Trevdan argues Gulf Coast did not have first priority since Gulf Coast was an as-signee, who merely “stood in the shoes” of Houston Drywall. That is, Trevdan contends Gulf Coast’s priority to the undis-bursed funds is no greater than Houston Drywall’s right to the funds and, since Houston Drywall has no right to the funds since it breached its duty to pay Trevdan, Gulf Coast has no right to the funds. Trevdan also makes assertions that it is entitled to all of the funds as Toll Brothers was unjustly enriched, Trevdan was a third-party beneficiary of Houston Drywall’s and Toll Brothers’ construction contract, and Trevdan is an equitable assignee under the terms of Houston Drywall’s and Toll Brothers’ construction contract. In sum, based on various legal theories, Trevdan argues that the funds being held by Toll Brothers to pay Houston Drywall never became a part of the bankruptcy estate and were being held by Toll Brothers’ for Trevdan’s benefit.
¶ 7 In response, Gulf Coast avers that Trevdan is simply an unsecured creditor of a bankrupt debtor (Houston Drywall) and, therefore, Trevdan has no legal right to the funds interpleaded into court by Toll Brothers in payment of the invoices owed to Houston Drywall. Gulf Coast further argues that it has a security interest in the invoices and has obtained relief from the Bankruptcy Court’s automatic stay. Gulf Coast notes that the automatic stay prevents secured and unsecured creditors from attempting to collect on the invoices, which were specifically listed as assets of Houston Drywall’s bankruptcy estate, and therefore, only those creditors granted relief from the bankruptcy stay may proceed.
¶ 8 After reviewing the well-reasoned opinion of the Honorable Arthur R. Tilson, I conclude it adequately addresses the issues raised by Trevdan. See Trial Court Opinion filed 3/20/09. See also Demharter v. First Federal Savings & Loan Association of Pittsburgh, 412 Pa. 142, 194 A.2d 214 (1963) (indicating the right to pay under a contract is different from the duty to pay and only the latter can be enforced by the materialman); United States Fidelity and Guaranty Company v. United Penn Bank, 362 Pa.Super. 440, 524 A.2d 958 (1987) (holding corporate surety’s payment of unsecured claims of defaulting subcontractor’s suppliers would not confer upon surety interest in subcontractor’s inventory superior to that of bank which held perfected security interest in inventory); Himes v. Cameron County Construction Corp., 289 Pa.Super. 143, 432 A.2d 1092 (1981), affirmed, 497 Pa. 637, 444 A.2d 98 (1982) (holding surety, which issued payment bonds, could not be subrogated to rights of materialman against subcontractor unless and until surety paid material-man’s claims for materials sold to subcontractor; that is, under terms of contract, contractor did not receive proceeds until suppliers of material were paid, and as between unsecured subcontractor and unsecured creditor, subcontractor had priority); Kreimer v. Second Federal Savings and Loan Association of Pittsburgh, 196 Pa.Super. 644, 176 A.2d 132 (1961) (where contract indicated funds shall be held for materialman, materialman was a third party beneficiary of the funds); In re Buono, 119 B.R. 498 (Bkrtcy.W.D.Pa.1990) (held funds general contractor owed to subcontractor were part of the bankruptcy estate, constructive trusts are to applied sparingly in the bankruptcy context, and attempt to create agreement with materialman constituted improper avoidable preferential transfer). Therefore, I respectfully dissent on this basis.
*531¶ 9 Trevdan’s final claim is that the trial court erred in awarding Toll Brothers any legal fees and expenses since Toll Brothers unreasonably and in bad faith forced Trevdan to file a lawsuit to obtain the monies owed to it. I find no merit to this claim.
¶ 10 As the Majority indicates, 42 Pa. C.S.A. § 2503 provides, in relevant part, the following:
§ 2503. Right of participants to receive counsel fees
The following participants shall be entitled to a reasonable counsel fee as part of the taxable costs of the matter:
(4) A possessor of property claimed by two or more other persons, if the possessor interpleads the rival claimants, disclaims all interest in the property and disposes of the property as the court may direct.
42 Pa.C.S.A. § 2503(4) (bold in original),
¶ 11 Here, Toll Brothers indicated that, although it was willing to pay Trevdan the monies owed to it by Houston Drywall for supplies, Gulf Coast had made a demand upon Toll Brothers for the same funds. Therefore, unsure as to which company should be paid, and unwilling to face multiple liability, Toll Brothers filed a petition for interpleader requesting the trial court direct to which company payment should be made. By order entered on January 9, 2008, the trial court directed Toll Brothers to pay into court $118,934.00, which represented the amount Toll Brothers owed to Houston Drywall, and discharged Toll Brothers from the lawsuit. On February 1, 2008, Toll Brothers paid into the court the requested amount.
¶ 12 Based on these facts, I conclude the trial court properly awarded Toll Brothers reasonable attorneys’ fees and costs pursuant to 42 Pa.C.S.A. § 2503(4). I find no evidence that Toll Brothers unreasonably or in bad faith declined to pay Trevdan in this matter, and to the extent Trevdan continues to argue Toll Brothers should have paid Trevdan on the basis it had priority over Gulf Coast, I disagree for the reasons discussed supra.
¶ 13 For all of the foregoing reasons, I would affirm the trial court’s order, and therefore, I dissent.

. I note that I agree with the Majority denying Gulf Coast's motion for sanctions with regard to Trevdan’s reproduced record.