Court Opinion

ID: 9918848
Source: CourtListenerOpinion
Date Created: 2024-01-16 18:09:58.50489+00
Date Added: 2024-06-11T08:06:26.841774
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Leonard Tyson,                        :
                   Appellant          :
                                      :      No. 519 C.D. 2022
             v.                       :
                                      :      Argued: November 6, 2023
City of Philadelphia, Sears Holdings  :
Corp. d/b/a Kmart, Kmart Corporation, :
Wakefern Food Corp., 909 Group L.P., :
909 Group L.P., a Delaware Limited    :
Partnership, Bellevue Realty Co.,     :
Bellevue Holding Company              :
                                      :
             v.                       :
                                      :
Charles Cowen, Charles Coen, Pinali   :
and Darshil, LLC, “Aramingo           :
News”                                 :

BEFORE:      HONORABLE PATRICIA A. McCULLOUGH, Judge
             HONORABLE MICHAEL H. WOJCIK, Judge
             HONORABLE MARY HANNAH LEAVITT, Senior Judge

OPINION
BY JUDGE McCULLOUGH                                  FILED: January 16, 2024

             Leonard Tyson (Appellant) appeals from the November 8, 2021 order of
the Court of Common Pleas of Philadelphia County (trial court), which denied
Appellant’s Petition to Open the Administratively Dismissed Action (Petition to Open)
and dismissed his premises liability/negligence action against the City of Philadelphia;
Sears Holdings Corp., doing business as Kmart; Kmart Corporation; 909 Group, L.P.,
Bellevue Realty Co., Bellevue Holding Company; and Wakefern Food Corporation.
Upon careful review, we vacate and remand.
                                Facts and Procedural History
               The facts are not in dispute. On December 24, 2016, Appellant was
allegedly injured when he tripped and fell on an uneven broken sidewalk along 3300
Aramingo Avenue, in Philadelphia, Pennsylvania. (Reproduced Record (R.R.) at 7a.)
On August 29, 2018, Appellant filed a two-count complaint sounding in negligence
against the City of Philadelphia; Sears Holdings Corp., doing business as Kmart; Kmart
Corporation; 909 Group, L.P., Bellevue Realty Co., Bellevue Holding Company; and
Wakefern Food Corporation. After service was perfected, the named defendants filed
their respective answers with new matter and/or crossclaims. Id. at 17a-84a. On
October 9, 2018, 909 Group, L.P., 909 Group L.P., a Delaware Limited Partnership,
Bellevue Realty Co., and Bellevue Holding Company (Bellevue Holding/909 Group)
filed a joinder complaint against Charles Cowen, Charles Coen, Pinali & Darshil, LLC,
and Aramingo News. Id. at 86a-92a.
               On October 18, 2018, Sears Holding Corporation (Sears Holding), and its
debtor affiliates, provided the trial court with notice that a voluntary bankruptcy
proceeding was commenced in the United States Bankruptcy Court for the Southern
District of New York (Bankruptcy Court), which necessitated a stay of the action
pursuant to 11 U.S.C. § 362(a)(1).1 Id. at 121a-81a.

      1
          11 U.S.C. § 362(a)(1) entitled “Automatic Stay,” provides:

               (a) Except as provided in subsection (b) of this section, a petition filed
               under section 301, 302, or 303 of this title, or an application filed under
               section 5(a)(3) of the Securities Investor Protection Act of 1970,
               operates as a stay, applicable to all entities, of-

                      (1) the commencement or continuation, including the issuance
               or employment of process, of a judicial, administrative, or other action
               or proceeding against the debtor that was or could have been
               commenced before the commencement of the case under this title, or
(Footnote continued on next page…)

                                                   2
              On January 1, 2021, approximately three-and-a-half years after the last
docket entry, the trial court’s Prothonotary forwarded counsel of record a notice of
intent to terminate the action due to inactivity (Notice of Termination) pursuant to Rule
230.2 (Termination of Inactive Cases) of the Pennsylvania Rules of Civil Procedure 2
(Pa.R.Civ.P.). Id. at 2584a. The Notice of Termination contained the date of the
proposed termination and the procedure to avoid termination.                       Id.      Because no
statement of intention to proceed was filed, the Prothonotary entered an order on April
5, 2021, administratively terminating the matter for failure to prosecute. Id. at 2585a.

              to recover a claim against the debtor that arose before the
              commencement of the case under this title[. . . .]
       2
         Rule 230.2 requires the courts to initiate proceedings to automatically terminate cases in
which there has been no activity of record for more than two years. Rule 230.2 provides an
administrative method for termination of inactive cases. Rule 230.2 is not to be confused with Rule
3051 (Relief from Judgment of Non Pros), which applies to judgments of non pros entered by the
court upon praecipe of a party. Rule 230.2 provides, in pertinent part, as follows:

                      (a) At least once a year, the court shall initiate proceedings to
              terminate cases in which there has been no activity of record for two
              years or more.
                      (b)(1) For each case identified pursuant to subdivision (a), the
              court shall serve a notice of proposed termination on counsel of record,
              and on the parties if not represented, thirty days prior to the date of the
              proposed termination. The notice shall contain the date of the proposed
              termination and the procedure to avoid termination.
                      (2) The notice shall be served electronically pursuant to
              [Pa.R.Civ.P.] 205.4(g)(1), or pursuant to [Pa.R.Civ.P.] 440 on counsel
              of record and on the parties, if not represented, at the last address of
              record.
                      (c) If no statement of intention to proceed has been filed on
              or before the date of the proposed termination, the prothonotary
              shall enter an order as of course terminating the matter for failure
              to prosecute.

Pa.R.Civ.P. 230.2(a)-(c) (emphasis added).

                                                  3
             On October 14, 2021, Appellant filed a Petition to Open. Id. at 189a-95a.
In his Petition to Open, Appellant asserted that he was not aware of the April 5, 2021
administrative dismissal. Id. at 193.
             On November 8, 2021, the trial court entered its order denying the Petition
to Open.    Id. at 310a.      On November 12, 2021, Appellant filed a motion for
reconsideration. Id. at 311a-448a. On January 11, 2022, Bellevue Holding/909 Group
filed an opposition to Appellant’s motion for reconsideration.         Id. at 452a-59a.
Thereafter, the trial court entered an order on March 23, 2022, denying Appellant’s
motion for reconsideration.
             On April 4, 2022, Appellant filed a second motion for reconsideration,
arguing that the April 5, 2021 administrative dismissal was improper as no action
should have been taken in the matter due to the pending bankruptcy of Sears Holding
and the automatic stay issued on October 18, 2018, pursuant to 11 U.S.C. § 362(a). Id.
at 530a.   Bellevue Holding/909 Group opposed Appellant’s second motion for
reconsideration. Id. at 2459a-534a. On April 22, 2022, the trial court entered an order
denying Appellant’s second motion for reconsideration. Id. at 2544a. On May 5, 2022,
the trial court issued an opinion stating the reasons it denied the Petition to Open. The
trial court explained that the Notice of Termination was entered on January 1, 2021,
through automatic administrative dismissal. The parties were automatically notified of
that administrative filing. The notice specifically stated that, despite receiving notice
that he could stop the trial court from terminating the case “by filing an intention to
proceed,” Appellant failed to do so. (Trial Ct. Op., 5/5/22, at 2-3; R.R. at 2545a-47a.)
The trial court further explained Appellant did not file his Petition to Open until
October 14, 2021, which was over six months after the April 5, 2021 administrative
dismissal. The trial court then addressed the two-prong test in Rule 230.2(d)(3) for

                                           4
acceptance of a late petition to open an administratively terminated case.3 With respect
to the first prong (timeliness of the Petition to Open following the administrative
dismissal), the trial concluded that the Petition to Open was not prompt because it was
filed six months late. Id. Regarding the second prong (reasonable explanation or
legitimate excuse for failure to file the statement of intention to proceed and the Petition
to Open within 60 days of the entry of the administrative dismissal), the trial court first
concluded that Appellant failed to show a reasonable excuse for his failure to file the
statement of intention to proceed prior to the entry of the Notice of Termination under

       3
          If an action has been terminated pursuant to Rule 230.2, an aggrieved party may petition the
court to reinstate the action. Pa.R.Civ.P. 230.2(d)(1). If such petition is filed within 60 days after the
entry of the order of termination on the docket, the court must grant the petition to reinstate the action.
Pa.R.Civ.P. 230.2(d)(2). However, if the petition is filed more than 60 days after the entry of the
order of termination on the docket, the court must grant the petition and reinstate the action if (i) the
petition was timely filed following the entry of the order for termination, (ii) there is a reasonable
explanation or legitimate excuse for the failure to file (A) the statement of intention to proceed prior
to the entry of the order of termination on the docket, and (B) the petition to open and reinstate the
action. Pa.R.Civ.P. 230.2(d)(3)(i), (ii). Rule 230.2(d) provides, in this regard, as follows:

                       (d)(1) If an action has been terminated pursuant to this rule, an
               aggrieved party may petition the court to reinstate the action.
                       (2) If the petition is filed within sixty days after the entry of the
               order of termination on the docket, the court shall grant the petition and
               reinstate the action.
                       (3) If the petition is filed more than sixty days after the entry of
               the order of termination on the docket, the court shall grant the petition
               and reinstate the action upon a showing that
                       (i) the petition was timely filed following the entry of the order
               for termination and
                       (ii) there is a reasonable explanation or a legitimate excuse for
               the failure to file both
                       (A) the statement of intention to proceed prior to the entry of
               the order of termination on the docket and,
                       (B) the petition to reinstate the action within sixty days after the
               entry of the order of termination on the docket.

Pa.R.Civ.P. 230.2(d)(1)-(3).

                                                    5
Rule 230.2(d)(3)(ii)(A) because Appellant merely stated that “he did not receive” the
Notice of Termination.            The trial court noted that notices of termination are
automatically sent by the courts, and Appellant failed to demonstrate that he did not
receive the notice and there was nothing on the docket indicating that the notice was
deemed undeliverable. Id. at 3-4; R.R. at 2547a-48a. The trial court further held that
Appellant failed to show, pursuant to Rule 230.2(d)(3)(ii)(B), a reasonable excuse for
his failure to file his Petition to Open within 60 days after the entry of the April 5, 2021
administrative dismissal. For these reasons, it denied Appellant’s Petition to Open.
               On appeal,4 Appellant argues that the trial court abused its discretion by
administratively dismissing his complaint despite the active Sears Holding bankruptcy
proceeding and lack of order from the Bankruptcy Court allowing the matter to
proceed. Relying on bankruptcy court decisions from other jurisdictions, Appellant
maintains that if a bankruptcy proceeding is ongoing and the stay is in place, a trial
court may not dismiss the action for failure to prosecute. Thus, he argues, the April 5,
2021 administrative dismissal should be overturned and the complaint be reinstated.
                                              Discussion
               In general, when a debtor files for bankruptcy, the bankruptcy acts as an
automatic stay of most legal proceedings against the debtor while the bankruptcy
proceeding is pending. ANR Freight System v. Workers’ Compensation Appeal Board
(Bursick), 728 A.2d 1015, 1020 n.7 (Pa. Cmwlth. 1999). Under section 362(a)(1) of
the federal Bankruptcy Code, 11 U.S.C. § 362(a)(1), the filing of a petition for
bankruptcy operates as an automatic stay of “the commencement or continuation . . .
of a judicial, administrative, or other action or proceeding against the debtor that was

       4
         Administrative dismissal rests within the discretion of the trial court and will not be disturbed
absent an abuse of that discretion or an error of law. Wheeler v. Red Rose Transit Authority, 890 A.2d
1228, 1230 (Pa. Cmwlth. 2006).

                                                    6
or could have been commenced” before the debtor filed for bankruptcy. Id.; see also
ANR Freight Systems, 728 A.2d at 1020 n.7 (The automatic stay provision of section
362 of the Bankruptcy Code halts “continuation of any legal proceedings against a
debtor while a bankruptcy administration is pending.”); Citizens Bank of Pennsylvania
v. Myers, 872 A.2d 827, 833 (Pa. Super. 2005) (“The automatic stay [set forth in 11
U.S.C. § 362(a)(1) upon the filing of a bankruptcy petition] precludes any non-
bankruptcy court, including state and federal courts, from continuing judicial
proceedings pending against the debtor.”). The stay remains in force until the case is
closed or dismissed, or a discharge is granted or denied. 11 U.S.C. § 362(c)(2).
             Our review of Pennsylvania precedent has uncovered no on-point decision
regarding the interplay between Rule 230.2 and 11 U.S.C. § 362(a), in particular
whether a plaintiff must meet the requirements of Rule 230.2 in a case that has been
administratively dismissed despite an active bankruptcy stay. Other jurisdictions have
addressed the issue. In Traweek v. Finley, 235 Cal. App. 3d 1128, 1135 (Ct. App.
1991), a California court of appeals held that the trial court lacked power to dismiss a
case against defendants who were subject to a federal bankruptcy stay based on the trial
court’s concern with administrative efficiency. In Boatmen’s National Bank v. Moss,
953 S.W.2d 583, 585-86 (Ark. 1997), the Supreme Court of Arkansas held that a
mortgage foreclosure action could not be dismissed for want of prosecution while an
automatic stay was in effect in the mortgagor’s bankruptcy case. And, in Bowman v.
Peele, 413 So.2d 90, 91 (Fla. Dist. Ct. App. 1982), a Florida district court held that if
an action is stayed as to one or more of the parties either by court order or by an
automatic stay invoked because of the federal bankruptcy act, it will not be dismissed
for failure to prosecute.

                                           7
             After careful consideration, we are persuaded that the bankruptcy stay
precluded the entry of the April 5, 2021 administrative dismissal. The stay, by its
statutory words, operates against “the commencement or continuation” of judicial
proceedings. No specific reference is made to the “dismissal,” administratively or
otherwise, of judicial proceedings. Nevertheless, it seems to the Court that the stay
must be construed to apply to dismissals as well. This is because the entry of an order
of a dismissal, even if entered administratively by the prothonotary, constitutes a
judicial act towards the disposition of the case, and hence may be construed as a
“continuation” of a judicial proceeding.       See Pope v. Manville Forest Products
Corporation, 778 F.2d 238, 239 (5th Cir. 1985). Here, even though a stay was in place,
a Notice of Termination was entered on January 1, 2021. (R.R. at 2584a.) The parties
were automatically notified of this administrative filing. Id. The notice stated that
Appellant “may stop the court from terminating the case by filing an intention to
proceed.” Id. The entry of the Notice of Termination had the effect of moving the
case forward on the docket, and eventually resulted in an administrative dismissal. We
conclude that the Notice of Termination, therefore, constituted a judicial act towards
the disposition of the case and thus a “continuation” of judicial proceedings – which
was prohibited by 11 U.S.C. § 362(a).
             Any action in violation of the stay is void.       See Maritime Electric
Company, Inc. v. United Jersey Bank, 959 F.2d 1194, 1206 (3d Cir. 1991); In re
Highway Truck Drivers & Helpers Local Union # 107, 888 F.2d 293, 299 n.9 (3rd Cir.
1989) (holding that the Pennsylvania Supreme Court’s grant of reargument was
rendered in violation of the automatic stay because, once the petition for bankruptcy
was filed, the state court was “deprived of the power and jurisdiction” to continue with
the appellate proceedings). Because of the stay, the trial court had no power or

                                           8
jurisdiction to enter the Notice of Termination. It was void ab initio. Therefore,
Appellant’s alleged failure to meet his burden necessary for acceptance of a late filing
to open an administratively terminated case under Rule 230.2, was of no moment.
             It is undisputed that Sears Holding was discharged in bankruptcy on
January 11, 2023. Since that bankruptcy action is concluded, the stay is now lifted,
and the matter may again be dealt with by the trial court. We therefore vacate the trial
court’s order and remand this case for further proceedings.
             Jurisdiction is relinquished.

                                             ________________________________
                                             PATRICIA A. McCULLOUGH, Judge

                                             9
             IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Leonard Tyson,                        :
                   Appellant          :
                                      :       No. 519 C.D. 2022
             v.                       :
                                      :
City of Philadelphia, Sears Holdings  :
Corp. d/b/a Kmart, Kmart Corporation, :
Wakefern Food Corp., 909 Group L.P., :
909 Group L.P., a Delaware Limited    :
Partnership, Bellevue Realty Co.,     :
Bellevue Holding Company              :
                                      :
             v.                       :
                                      :
Charles Cowen, Charles Coen, Pinali   :
and Darshil, LLC, "Aramingo News"     :

                                     ORDER

            AND NOW, this 16th day of January, 2024, the November 8, 2021 order
of the Court of Common Pleas of Philadelphia County is hereby VACATED. The
matter is remanded for further proceedings.
            Jurisdiction is relinquished.

                                            ________________________________
                                            PATRICIA A. McCULLOUGH, Judge