Court Opinion

ID: 8210807
Source: CourtListenerOpinion
Date Created: 2022-09-30 16:10:06.471208+00
Date Added: 2024-06-11T16:41:56.882460
License: Public Domain

J-A21020-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    TRIDENT MORTGAGE COMPANY, LP               :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    IAN CLARDY, CROSSCOUNTRY                   :
    MORTGAGE, LLC, TIM ROACH,                  :
    BRIAN JOHNSTON AND CONNOR                  :   No. 1026 EDA 2022
    KRIEG                                      :
                                               :
                                               :
    APPEAL OF: CROSSCOUNTRY                    :
    MORTGAGE, LLC

                  Appeal from the Order Entered April 5, 2022
                In the Court of Common Pleas of Chester County
                        Civil Division at 2020-03581-CT

BEFORE: LAZARUS, J., MURRAY, J., and McCAFFERY, J.

MEMORANDUM BY MURRAY, J.:                           FILED SEPTEMBER 30, 2022

       CrossCountry Mortgage, LLC (Appellant),1 appeals from the order

denying Appellant’s petition to strike the praecipe to discontinue filed by

Trident Mortgage Company, LP (Trident). We affirm.

       The trial court summarized the case history as follows:

       Trident brought this action by complaint filed June 5, 2020 seeking
       legal and equitable remedies (“First Action”). Trident alleged that
       three individual defendants, Tim Roach, Ian Clardy and Brian
       Johnston, had resigned their employment at Trident to accept
       employment with a competitor in the residential mortgage
       business, [Appellant], at an office managed by former Trident
       employee and defendant, Connor Krieg. On the same day, Trident
____________________________________________

1Defendants Tim Roach, Ian Clardy, Brian Johnston, and Connor Krieg are not
parties to this appeal.
J-A21020-22

      petitioned for injunctive relief pursuant to Pa. R.C.P. No. 1531(a)
      and moved for expedited discovery. Trident sought, inter alia, to
      enjoin 1.) the misappropriation, use and disclosure of confidential
      information and trade secrets; 2.) the misappropriation, use and
      disclosure of the personal information of Trident’s clients[;] 3.)
      the solicitation of Trident’s clients; and 4.) further recruitment of
      Trident’s employees.        [The trial court] entered an order
      [scheduling] June 29, 2020 for hearing. … [Appellant] answered
      the petition and motion on June 22, 2020. On or about June 25,
      2020, the parties signed a Standstill Agreement and Trident
      withdrew its petition. Thereafter, on February 11, 2021, Trident
      discontinued the First Action without prejudice by praecipe.

      On January 29, 2021, Trident commenced an action against only
      [Appellant] seeking legal and equitable remedies; the action is
      docketed at 2021-00679-TT (“Second Action”). In the Second
      Action, Trident alleged that the First Action had been discontinued
      because the parties had reached a Standstill Agreement. As part
      of the Standstill Agreement, [Appellant] purportedly promised
      that it would not access, use, disclose or reveal Trident’s trade
      secrets and Trident agreed to discontinue the action. In the
      Second Action, Trident accused [Appellant] of hiring away
      additional employees and continuing to misappropriate trade
      secrets and confidential information. Trident accuses [Appellant]
      of breaching the Standstill Agreement. [T]he Second Action was
      … reassigned to [the trial court] on July 13, 2021.

      On March 29, 2021, [Appellant] petitioned in the First Action to
      strike the discontinuance and a standard rule order was entered
      permitting discovery by deposition. Disputes arose concerning
      discovery related to the petition that resulted in motion practice.
      A dispute arose concerning the filing of a reply brief that also
      resulted in motion practice. Eventually, the petition was listed for
      argument on January 20, 2022. Inadvertently, an order was not
      entered denying the petition to strike until April 5, 2022, and from
      that order [Appellant] appeals. [Appellant and the trial court have
      complied with Pa.R.A.P. 1925.]

Trial Court Opinion, 5/10/22, at 1-2.

      Appellant raises a single issue on appeal:

      Did the trial court commit reversible error in denying [Appellant’s]
      Petition to Strike [Trident’s] Praecipe to Discontinue, where the

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      discontinuance effectively deprived [Appellant] of its procedural
      rights under Rules 229(b)(1) and 1033(a) of the Pennsylvania
      Rules of Civil Procedure?

Appellant’s Brief at 2.

      Rule 229 provides, in relevant part, as follows:

      Rule 229. Discontinuance

      (a) A discontinuance shall be the exclusive method of voluntary
      termination of an action, in whole or in part, by the plaintiff before
      commencement of the trial.

      (b)(1) Except as otherwise provided in subdivision (b)(2), a
      discontinuance may not be entered as to less than all defendants
      except upon the written consent of all parties or leave of court
      upon motion of any plaintiff or any defendant for whom plaintiff
      has stipulated in writing to the discontinuance.

      ...

      (c) The court, upon petition and after notice, may strike off a
      discontinuance in order to protect the rights of any party from
      unreasonable inconvenience, vexation, harassment, expense, or
      prejudice.

Pa.R.Civ.P. 229(a), (b)(1) and (c).

      A discontinuance in strict law must be by leave of court, but it is
      the universal practice in Pennsylvania to assume such leave in the
      first instance. However, the discontinuance is subject to be
      stricken for cause shown:

            The causes which will move the court to
            withdraw its assumed leave and set aside the
            discontinuance are addressed to its discretion,
            and usually involve some unjust disadvantage to
            the defendant or some other interested party[.]

      A discontinuance that is prejudicial to the rights of others should
      not be permitted to stand even if it was originally entered with the
      expressed consent of the court.

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      In determining whether to strike a discontinuance, the trial court
      must consider all facts and weigh equities. Further, the trial court
      must consider the benefits or injuries which may result to the
      respective sides if a discontinuance is granted. In Foti [v.
      Askinas, 639 A.2d 807 (Pa. Super. 1994)], the case had been
      pending for approximately five years at the time of the
      discontinuance. Depositions had been taken, interrogatories
      exchanged and several motions ruled on by the court. This Court
      ultimately held that the trial court had abused its discretion in
      granting the discontinuance where appellants, who endured the
      burden of litigating the initial suit for almost five years, may again
      be subjected to the same litigation. [Foti, 639 A.2d 809-10.]

      Additionally, discontinuances may be improper where there is a
      dispositive motion pending. In Nichols [v. Horn, 525 A.2d 1242
      (Pa. Super. 1987)], this Court concluded the trial court abused its
      discretion by refusing to strike a discontinuance where a motion
      for summary judgment was pending. This Court explained:

            We think prejudice has been shown where, as here, a
            motion for summary judgment has been filed and the
            party seeking to strike the discontinuance would be
            entitled to summary judgment if the discontinuance
            was not allowed. Under these circumstances, the
            court abused its discretion in refusing to find
            prejudice.

      Our courts have also held that discontinuances are improper
      where it is apparent that the purpose of plaintiffs’ discontinuance
      is to “forum shop.” In Brown [v. T.W. Phillips Gas & Oil Co.,
      74 A.2d 105, 108 (Pa. 1950)], the plaintiffs sought to discontinue
      their case in an effort to pursue a similar action that had begun in
      federal court. The Court explained, “[O]nce the jurisdiction of a
      competent court has attached, discontinuance of the action ought
      not to be permitted over objection of the adversary if the only
      reason for discontinuing is the plaintiffs’ desire to institute action
      for the same cause in another forum.” Id. at 108.

Pohl v. NGK Metals Corp., 936 A.2d 43, 46–47 (Pa. Super. 2007) (some

citations omitted).

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       A party challenging a trial court’s exercise of discretion bears a “heavy

burden.”   Marra v. Smithkline Beecham Corp., 789 A.2d 704, 706 (Pa.

Super. 2001) (citation omitted).

       It is not sufficient to persuade the appellate court that it might
       have reached a different conclusion under the same factual
       situation. An abuse of discretion is not merely an error of
       judgment, but if in reaching a conclusion the law is overridden or
       misapplied, or the judgment exercised is manifestly unreasonable,
       or the result of partiality, prejudice, bias or ill-will, as shown by
       the evidence or the record, discretion is abused.

Id. (citation omitted).

       The gravamen of Appellant’s complaint is that the trial court erred in

considering the facts and weighing the equities; Appellant claims the trial

court “failed to recognize that Trident’s gamesmanship deprived [Appellant]

of its procedural rights under Pennsylvania Rules of Civil Procedure

229(b)(1) and 1033(a).” Appellant’s Brief at 17 (emphasis added). Thus,

Appellant asserts that it does not have to demonstrate actual prejudice,

because “such a deprivation of procedural rights amounts to legal prejudice

that requires the denial of a discontinuance.” Id. Appellant also criticizes the

trial court’s adherence to our decision in Pohl. See id. at 17-18. We are not

persuaded by Appellant’s argument.

       As noted above, Pennsylvania Rule of Civil Procedure 229(b)(1) provides

that

       a discontinuance may not be entered as to less than all
       defendants except upon the written consent of all parties or
       leave of court upon motion of any plaintiff or any defendant for
       whom plaintiff has stipulated in writing to the discontinuance.

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Pa.R.Civ.P. 229(b)(1) (emphasis added).

      Rule 1033(a) provides:

      A party, either by filed consent of the adverse party or by leave of
      court, may at any time change the form of action, add a person
      as a party, correct the name of a party, or otherwise amend the
      pleading.    The amended pleading may aver transactions or
      occurrences which have happened before or after the filing of the
      original pleading, even though they give rise to a new cause of
      action or defense. An amendment may be made to conform the
      pleading to the evidence offered or admitted.

Pa.R.Civ.P. 1033(a).

      By its plain terms, Rule 229(b)(1) is applicable in cases involving partial

discontinuances. Here, Trident discontinued the First Action in its entirety.

See Praecipe to Discontinue Without Prejudice, 2/11/21. Moreover, Trident

did not file an amended complaint in the First Action; it filed a new action.

Accordingly, Rule 1033(a) does not apply. As neither Rule of Civil Procedure

relied upon by Appellant is applicable, its claim concerning Trident’s violation

of the two Rules lacks merit. Appellant appears to acknowledge as much, but

emphasizes that Trident engaged in “gamesmanship” and “maneuvering”

which “deprived [Appellant] of its procedural rights.” Appellant’s Brief at 17

and 20.    Appellant contends the Second Action, “largely duplicated the

allegations and claims of the First Action.” Id. at 20.

      The trial court rejected this contention, stating:

      [T]he actions are not identical. Trident has determined not to sue
      its former employees. The Second Action raises a breach of
      contract claim not available at the time the First Action was filed.
      The Second Action cites to events occurring after the First Action

                                      -6-
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      was filed, including [Appellant’s] purported hiring away of
      additional Trident employees. Finally, Trident raises claims for
      breach of fiduciary duty by misappropriation of confidential
      information and violation of the Pennsylvania Mortgage Licensing
      Act that were not raised in the First Action.

Trial Court Opinion, 5/10/22, at 4-5.

      We have reviewed the complaints in both actions and agree. The record

reflects the complaint in the First Action concerned events which took place in

and around Memorial Day Weekend 2020, when three of the individual

defendants allegedly acted in concert with Appellant to violate their

employment contracts, misappropriate confidential information, and give the

information to Appellant. See Complaint in First Action, 6/5/20, at 10-18.

The complaint in the Second Action concerns a different set of events, which

occurred more than seven months later, when different Trident employees

allegedly acted in concert with Appellant. See Complaint in Second Action,

1/29/21, at 8-23.   Thus, Appellant’s claim that the actions are duplicative

lacks support.

      Likewise, Appellant’s contention that the trial court should have

presumed “legal prejudice” lacks support.        Appellant’s Brief at 17-18.

Appellant relies on our decision in Hileman v. Morelli, 605 A.2d 377 (Pa.

Super. 1992). See id. at 17-18, 27-32. However, that decision is inapposite

and does not support Appellant’s conclusion that “legal prejudice” occurs when

the Rules of Civil Procedure are violated.

      Understanding the decision in Hileman to be narrow, we stated:

                                     -7-
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      This case presents a difficult procedural question concerning the
      interrelationship    between        the   joinder    rules   and
      discontinuance practice.        The question itself can only be
      understood in light of the peculiar scenario in which it
      arose[.]

Hileman, 605 A.2d at 378-79 (emphasis added).

      In Hileman, the plaintiffs filed a wrongful death and survival action

against a hospital and the estate of the decedent’s deceased treating

physician. Id. at 379. Both defendants filed preliminary objections, which

the trial court granted; the trial court directed the plaintiffs to file an amended

complaint with more specific allegations against the defendants. Id. Instead

of complying with this directive, the plaintiffs filed an amended complaint

removing the hospital as a defendant. Id. After procedural maneuvering and

over the physician’s estate’s objections, the trial court granted the plaintiffs’

oral motion to dismiss the hospital pursuant to Pa.R.Civ.P. 229(b)(1), but gave

the physician’s estate 30 days to “file a writ or complaint against [the h]ospital

to preserve any rights of contribution or indemnity.” Id. at 380, see also id.

at 379-80.

      On appeal, this Court held that the trial court erred “in granting a

discontinuance as to the hospital without preserving the full battery of

joinder rights provided to the estate under the rules of civil

procedure.” Id. at 381 (emphasis added). We did not discuss much law

regarding discontinuances, but focused on joinder, the statute of limitations,

causes of action, and joint and several liability. Id. at 381-86. In addition,

                                       -8-
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we did not use the term “legal prejudice” or conclude that prejudice is

presumed in when the Rules of Civil Procedure are violated. Id. Rather, we

concluded the physician’s estate had demonstrated actual prejudice. Id. at

385-86. We noted that because the statute of limitations for the plaintiffs to

file a complaint against the hospital had passed, the trial court’s dismissal of

the hospital deprived the physician’s estate of its defense that the hospital

was solely liable for the alleged malpractice. Id. We concluded the trial court

should have either denied the request for a partial discontinuance, or allowed

the physician’s estate to join the hospital nunc pro tunc. Id.

      We see nothing in Hileman of relevance to this case. In the thirty years

since this Court decided Hileman, we have only cited it on five occasions;

none of those occasions has involved the rules regarding discontinuances or

“legal prejudice.” See Sehl v. Neff, 26 A.3d 1130, 1133-34 (Pa. Super. 2011)

(citing Hileman in discussing joint and several liability); L.B. Foster Co. v.

Caracciolo, 777 A.2d 1090, 1095 (Pa. Super. 2001) (citing Hileman briefly

with respect to joint and several liability); Lawrence v. Meeker, 717 A.2d

1046, 1048 n.4 (Pa. Super. 1998) (citing Hileman in footnote reference to

joint and several liability); Gordon v. Sokolow, 642 A.2d 1096, 1099 (Pa.

Super. 1994) (citing Hileman for definition of “cause of action”); Bianculli

v. Turner Const. Co., 640 A.2d 461, 465 (Pa. Super. 1994) (citing Hileman

in string cite as part of discussion of joinder). As such, Appellant’s contention

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that Hileman mandates a presumption of “legal prejudice” in cases involving

a violation of a Rule of Civil Procedure fails.

      In contrast, the trial court properly analyzed Appellant’s motion to strike

under the principles articulated in Pohl, supra. The court considered all facts

and weighed equities in finding that Appellant

      demonstrated no prejudice through the discontinuance of the First
      Action. There is no duplication in effort;1 there is no waste of
      resources. Trident has not acted to avoid the outcome of a
      dispositive motion. Trident is free to reframe its litigation and to
      proceed solely against [Appellant] on its claims, if it so chooses.

            1  [Appellant] only responded to the petition for
            injunctive relief in the First Action and had not even
            answered the complaint.

Trial Court Opinion, 5/10/22, at 5 (footnote in original).

      As the trial court did not abuse its discretion, we affirm the order

denying Appellant’s petition to strike the praecipe to discontinue. Marra, 789

A.2d at 706.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 9/30/2022

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