Court Opinion

ID: 4436049
Source: CourtListenerOpinion
Date Created: 2019-09-05 16:09:25.175711+00
Date Added: 2024-06-11T14:53:11.428234
License: Public Domain

J-A01004-19

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 HOWARD MCELNEA AND CAROLE                 :   IN THE SUPERIOR COURT OF
 MCELNEA, H/W AND REGINALD                 :        PENNSYLVANIA
 WORTHINGTON AND JULIE                     :
 WORTHINGTON, H/W                          :
                                           :
                                           :
              v.                           :
                                           :
                                           :   No. 1808 EDA 2018
 ESTATE OF JEFFREY VAN SLYKE,              :
 INDRA VAN SLYKE, ADRIAN                   :
 KHILLAWAN, INDRA VAN SLYKE,               :
 TRUSTEES OF THE INDRA C. VAN              :
 SLYKE IRREVOCABLE TRUST DATED             :
 FEBRUARY 2, 2017                          :
                                           :
                                           :
 APPEAL OF: INDRA C. VAN SLYKE             :
 AND THE INDRA C. VAN SLYKE                :
 IRREVOCABLE TRUST DATED                   :
 FEBRUARY 2, 2017                          :

                   Appeal from the Order Entered June 11, 2018
                   In the Court of Common Pleas of Pike County
                    Civil Division at No(s): No. 125-2018 CIVIL

BEFORE: OTT, J., STABILE, J., and McLAUGHLIN, J.

MEMORANDUM BY OTT, J.:                          FILED SEPTEMBER 05, 2019

     Indra C. Van Slyke (Indra) and the Indra C. Van Slyke Irrevocable Trust

dated February 2, 2017 (the Trust) (collectively, Appellants) appeal from the

order entered June 11, 2018, in the Court of Common Pleas of Pike County,

placing proceeds from the sale of the Glen Combe Condominiums, and any

other real estate owned by the Trust into an escrow account controlled by a

receiver until the time of an insurance coverage decision regarding the
J-A01004-19

underlying tort action.      After a thorough review of the submissions by the

parties, relevant law, and the certified record, we vacate and remand.

       The underlying action was commenced by a writ of summons, filed on

January 19, 2018, by Howard and Carole McElnea (h/w) and Reginald and

Julie Worthington (h/w) (collectively, Plaintiffs or Appellees) against the Estate

of Jeffrey Van Slyke, Indra Van Slyke, Adrian Khillawan, and Indra Van Slyke

and Jeffrey Van Slyke, Trustees of the Indra C. Van Slyke Irrevocable Trust

dated February 2, 2017 (collectively, Defendants).           On April 6, 2018,

Appellees, having learned the Trust had entered into an agreement to sell

certain real property for a sum in excess of $1,000,000.00, filed a motion

pursuant to the Pennsylvania Uniform Fraudulent Transfer Act1 (Act), 12

Pa.C.S. § 5101, et seq.2 When the hearing was delayed, Appellants filed a

Motion for Expedited Hearing. Thereafter, a hearing was scheduled and took

place on June 11, 2018. By order of the same date, the trial court granted

Appellees’ motion, and directed the “proceeds from the sale of the Glen Combe

Condominiums, …, and any other real estate owned by the Trust, be placed

into an escrow account controlled by a Receiver, agreed upon by the parties,

until such time as a coverage determination is made.” Order, 6/11/2018.

____________________________________________

1As of February 20, 2018, the Act is known as the Pennsylvania Uniform
Voidable Transactions Act. 12 Pa.C.S. § 5101(a).

2 The matter was scheduled for a hearing without issuance of a rule for
Appellants to respond to the motion. See Order, 4/13/2018.

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       On June 14, 2018, Appellants filed a motion for reconsideration,

challenging the trial court’s decision on the basis that no evidence was

presented at the hearing. The trial court denied the motion for reconsideration

on June 18, 2019 and, on June 19, 2019, Appellants filed this appeal.3

       Preliminarily, we address the issue of our jurisdiction to review the trial

court’s order.

       Rule 311(a)(2) of the Pennsylvania Rules of Appellate Procedure

provides for an interlocutory appeal as of right, as follows:

       Attachments, etc.—An order confirming, modifying, dissolving or
       refusing to confirm, modify or dissolve an attachment,
       custodianship, receivership, or similar matter affecting the
       possession or control of property, or similar matter affecting the
       possession or control of property, except for orders pursuant to
       23 Pa.C.S. § 3323(f), 3505(a).

Pa.R.A.P. 311(a)(2).

       Following the filing of the notice of appeal, this Court issued a Rule to

Show Cause (RTSC) upon Appellants as to whether the instant order is

appealable under Pa.R.A.P. 311(a)(2) where the order did not dispose of all

claims or parties and did not appoint a receiver, but directed the parties to

agree upon a receiver.       See Rappaport v. Stein, 520 A.2d 480 (Pa. Super.

1987) (trial court’s order which appointed firm as real estate broker to sell

property of partnership did not act as an order appointing a receiver and thus

was not an appealable interlocutory order). Appellants responded that the

____________________________________________

3 Appellants timely complied with the order of the trial court to file a concise
statement.

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order expressly creates a receivership, and therefore Rappaport is

distinguishable. The RTSC was discharged and referred to the merits panel.

       Based upon our review, we conclude the trial court’s order creating a

receivership for escrow proceeds from the sale of real estate owned by the

Trust falls within Pa.R.A.P. 311(a)(2).4

       We turn, then, to Appellants’ three claims, namely:

       Did the court abuse its discretion in granting relief under 12
       Pa.C.S.A. [§] 5104(a)(1) where Plaintiffs did not offer any
       evidence at hearing whether by way of testimony, documentary
       evidence, request to submit admissions, request for judicial
       notice, or otherwise?

       Did the court abuse its discretion in its factual findings and legal
       conclusions by considering matters outside of the record of
       hearing/proceedings, including, for instance, mere allegations in
       pleadings, hearsay raised through argument of counsel, facts not
       submitted into evidence, and otherwise irrelevant and
       inadmissible evidence?

       Did the court abuse its discretion or commit error of law in finding
       that Plaintiff had met its burden to prove actual intent to hinder
       delay or defraud under 12 Pa.C.S.A. [§] 5104(a)(1) and 12
       Pa.C.S.A. [§] 5104(c)?

Appellants’ Brief at 2. These claims are addressed in Appellants’ brief in one

discussion, and therefore we do likewise.

       Initially, we state our standard of review:

       In prior matters involving review of alleged fraudulent
       conveyances, we have stated that our standard of review of a
____________________________________________

4 To the extent that Appellees claim the order is not appealable because it
falls within Rule 311(a)(2)’s exception regarding 23 Pa.C.S. § 3505(a), we
point out that this exception is for an order in a divorce proceeding, and
therefore has no application to this case.

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      decree in equity is particularly limited and that such a decree will
      not be disturbed unless it is unsupported by the evidence or
      demonstrably capricious. The findings of the [judge] will not be
      reversed unless it appears the [judge] clearly abused the court's
      discretion or committed an error of law. The test is not whether
      we would have reached the same result on the evidence
      presented, but whether the [judge's] conclusion can reasonably
      be drawn from the evidence.

Knoll v. Uku, 154 A.3d 329, 331-32, citing Fell v. 340 Assocs., LLC, 125

A.3d 75, 81 (Pa. Super. 2015) (citation omitted).

      Section 5104 of the Act provides, in relevant part: “A transfer made or

obligation incurred by a debtor is voidable as to a creditor, whether the

creditor’s claim arose before or after the transfer was made or the obligation

was incurred, if the debtor made the transfer or incurred the obligation:

(1) with actual intent to hinder, delay or defraud any creditor of the debtor[.]”

12 Pa.C.S. 5104(a)(1). “The creditor making a claim for relief under

subsection (a) has the burden of proving the elements of the claim for relief

by a preponderance of the evidence.” 12 Pa.C.S. § 5104(c). In considering

“actual intent,” Section 5104 provides 11 factors which the court may

consider, among other factors, namely, whether:

         (1)    the transfer or obligation was to an insider;

         (2)    the debtor retained possession or control of the property
               transferred after the transfer;

         (3)    the transfer or obligation was disclosed or concealed;

         (4)    before the transfer was made or obligation was incurred,
               the debtor had been sued or threatened with suit;

         (5)    the transfer was of substantially all the debtor’s assets;

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         (6)    the debtor absconded;

         (7)    the debtor removed or concealed assets;

         (8)     the value of the consideration received by the debtor
                was reasonably equivalent to the value of the asset
                transferred or the amount of the obligation incurred;

         (9)     the debtor was insolvent or became insolvent shortly
                after the transfer was made or the obligation was
                incurred;

         (10)    the transfer occurred shortly before or shortly after a
                substantial debt was incurred; and

         (11)    the debtor transferred the essential assets of the
                business to a lienor who transferred the assets to an
                insider of the debtor.

12 Pa.C.S. § 5104(b). “Proof of the existence of any one or more of the factors

enumerated in subsection (b) may be relevant evidence as to the debtor's

actual intent but does not create a presumption that the debtor has made a

fraudulent transfer or incurred a fraudulent obligation.” Fell v. 340 Assocs.,

LLC, supra, 125 A.3d at 82 n.10 (quotations and citations omitted).

      Here, based upon the averments of Appellees’ motion, the only relevant

factor appears to be a transfer that is alleged to have occurred after the

institution of litigation. 12 Pa.C.S. § 5104(b)(4). Appellants argue, however,

that at the hearing on Appellees’ motion, Appellees presented no evidence,

and made no requests to place on the record any facts by way of admissions

or judicial notice in support of their allegation. Appellants further assert, at

the time of the hearing, the pleadings had not closed and the amended

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complaint was subject to pending preliminary objections. Appellants maintain

the trial court made numerous findings not supported by any evidence, and

the trial court’s reliance on pleadings, the argument of counsel, and facts

outside the record represents an abuse of discretion. Appellants also point

out that because Appellees presented no evidence at the hearing, there was

nothing for Appellants to rebut, dispute, or challenge.

      Here, the trial court, in its opinion authored in support of the order,

opined:

      At the outset, we note that there is no doubt in the Court’s mind
      that the Defendant Trust was created to operate as a shield to
      protect the real estate parcels from any potential liability as a
      result of this action. Although this case is still in the pleadings
      stage, we agree with Plaintiffs and find that the instant situation
      is exactly what the Act is designed to protect. We find that
      Plaintiffs’ requested relief should be granted particularly because
      of the totality of the circumstances in this case. …

      Initially, we find that the burden of proof for Plaintiffs’ requested
      relief was met. There are facts that were not placed on the
      officially placed on [sic] the record at the hearing but which this
      Court is still entitled to consider and which it did consider.
      Furthermore, the facts that this Court did consider are of public
      record and/or were never disputed but in fact admitted to by
      Defendants.

      First, Defendant Khillawan is facing . . . criminal charges for two
      separate incidents involving his harassment and threatening
      behavior towards Plaintiffs. The fact that he has two separate
      criminal cases pending against him for the very events that form
      the basis of this action demonstrate that the history between
      these parties is of great significance. Defendants are clearly facing
      legal ramifications from both the civil and criminal judicial
      systems, and it is not unreasonable for this Court to view
      Defendant Khillawan’s pending criminal charges as motivation to
      shield certain assets from the Plaintiffs’ reach.

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       Second, Defendants admitted that the Glen Combe Condominiums
       are under an Agreement of Sale. Defendants did not dispute that
       the property was listed for sale contemporaneously with the filing
       of this lawsuit. Defendants verified to this Court that the units in
       the Condominiums can bring in about $13,500.00 in rent per
       month. Defendants argued that the Defendant Trust would retain
       the cas[h] from the sale of the properties and subsequently invest
       it; however, as noted during the hearing, there is no guarantee
       that Defendants will not disburse the assets to third parties. We
       did not and do not agree with Defendants that it is not the purpose
       of the Act to guarantee a debtor will not disburse assets.

       Even if Defendants’ argument that the burden should not be
       shifted upon them was accepted, we still find that Plaintiffs’
       burden was met as this Court considered the appropriate and
       relevant facts. Again, we note the volatile history between the
       parties which culminated in the death of Jeffrey Van Slyke and
       criminal charges for Defendant Khillawan. The Condominiums
       were listed for sale contemporaneously with the filing of this
       lawsuit. Defendants are not Pennsylvania residents, which as
       noted by Plaintiffs, could allow them to remove the assets from
       this jurisdiction. The assets from any sale of the property could
       easily be converted to cash. The trustees of Defendant Trust are
       Indra Van Slyke and Andre Khillawan[5], who both obviously have
       a significant interest in the assets. Both Plaintiffs and Defendants
       acknowledged at the hearing that coverage has not been
       determined and there is no established date for such a
       determination to be made.

       Finally, we note the Act specifically permits the Court to use
       discretion in granting injunctive relief to appoint a receiver to
       manage the funds and control the assets.

       Based on above-stated reasoning, we determined that the Act is
       designed to protect against the instant situation, and we
       concluded that Defendants were motivated to create the
       Defendant Trust in order to shield various assets from liability.

____________________________________________

5 Andre Khilliwan is the son of Indra and successor trustee upon the death of
Jeffrey Van Slyke. Andre Khilliwan is not to be confused with the defendant
Adrian Khilliwan. See N.T., 6/11/2018, at 11-12.

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Trial Court Opinion, 8/14/2018, at 6-8.

       The trial court’s finding that “the Defendant Trust was created to operate

as a shield to protect the real estate parcels from any potential liability as a

result of this action,”     id. at 6-7, is negated by the Trust document itself,

which is dated February 2, 2017, well before Appellees instituted the present

action on January 19, 2018. Appellees never offered a deed into evidence

which would prove the date the real estate was transferred to the Trust or

that the trustees would dissipate the proceeds of the sale of the real estate.

       However, Appellees appear to concede that the property was placed in

the Trust when it was created on February 2, 2017.6 Additionally, Paragraph

18 of the Second Amended Complaint avers the trouble between the parties

began in June, 2017, four months after the property was placed in trust. The

incident that underlies this lawsuit did not occur until November 2, 2017, nine

months after the property was placed in trust. Accordingly, it is temporally

impossible for the Trust to have been created and the property placed in trust

“to operate as a shield to protect the real estate parcels from any potential

liability as a result of this action,” as determined by the trial court.

____________________________________________

6 “In an effort to unlawfully shield themselves and Khillawan from liability
arising out of Khillawan’s mental illness and violent propensities, and with
actual knowledge of same, Indra and Jeffry created the Trust on or about
February 2, 2017, and placed their real estate and non-real estate assets into
the Trust.” Second Amended Complaint, Paragraph 97.

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      Furthermore, without knowing the provisions of the Trust document,

which was not placed in evidence, the trial court could only speculate that the

sale of the real estate would place the proceeds beyond the reach of any

potential creditor of Indra, individually, or her son, Khillawan, who may or

may not be a beneficiary of the Trust.

      Because the underlying rationale relied upon by the trial court is not

supported by the evidence available to the trial court at the time of the

hearing, we must reverse the June 11, 2018 order granting Appellees’ Motion

for Relief under the Pennsylvania Uniform Fraudulent Transfer Act.

      Order vacated.      Case remanded to the trial court.        Jurisdiction

relinquished.

      Judge McLaughlin joins this memorandum.

      Judge Stabile joins this memorandum and files a concurring statement.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 9/5/19

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