Court Opinion

ID: 4157422
Source: CourtListenerOpinion
Date Created: 2017-04-03 16:15:23.484596+00
Date Added: 2024-06-11T14:31:01.397218
License: Public Domain

J. A32009/16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

BLUE HAVEN POOLS,                          :     IN THE SUPERIOR COURT OF
                                           :          PENNSYLVANIA
                         Appellant         :
                                           :
                    v.                     :
                                           :
SKIPPACK BUILDING CORPORATION,             :
AND BS TRUST, EB TRUST, JE TRUST           :
AND SJ TRUST, GARNISHEES                   :
                                           :
                                           :     No. 1226 EDA 2015

                  Appeal from the Order Entered March 23, 2015
              In the Court of Common Pleas of Montgomery County
                         Civil Division at No(s): 05-26165

BEFORE: DUBOW, RANSOM, AND PLATT,* JJ.

MEMORANDUM BY DUBOW, J.:                              FILED APRIL 03, 2017

        Appellant, Blue Haven Pools, appeals from the March 23, 2015 Order

denying its Post-Trial Motion.1 After careful review, we affirm on the basis of

the trial court’s well-reasoned Opinion.

*
    Retired Senior Judge Assigned to the Superior Court.
1
  The trial court’s docket reflects that on January 23, 2017, Judgment was
entered against Appellant and in favor of Appellees. Because the trial court’s
March 23, 2015 Order denying Appellant’s Post-trial Motion was later
reduced to Judgment, and was the court’s final pronouncement on the
matter, it is properly appealable. See Johnston the Florist, Inc. v.
TEDCO Constr. Corp., 657 A.2d 511, 513 (Pa. Super. 1995) (en banc)
(holding that, although the appeal was taken from an order denying post-
trial relief, “jurisdiction in appellate courts may be perfected after an appeal
notice has been filed upon the docketing of a final judgment.”).
J. A32009/16

      The trial court’s Pa.R.A.P. 1925(a) Opinion includes a thorough and

complete narrative of the lengthy factual and procedural history of this case,

which we adopt for purposes of this appeal. See Trial Court Opinion, dated

7/15/16, at 2-11. While we will not go into exhaustive detail here, some of

the relevant facts are as follows.

      On November 1, 2005, Appellant filed a civil action for breach of

contract against Appellee Skippack Building Corporation (“Skippack”), citing

Skippack’s failure to make payments due on a construction contract. During

the pendency of the civil action, Skippack distributed nearly half a million

dollars in funds to its shareholders (BS Trust, EB Trust, JE Trust, and SJ

Trust, or “Garnishees”), leaving Skippack with only $375 in assets.         A

portion of the funds transferred were initially classified as “loans to

shareholders” in Skippack’s 2008 and 2009 tax returns, but by 2010,

Skippack had reclassified the loans as distributions in tax filings.

      On November 1, 2010, Appellant received a Judgment in its favor

against Appellee Skippack in the amount of $74,131.73, which was later

reassessed at $94,754.10. Since that date, Appellant has been involved in

extensive litigation trying to enforce the Judgment through garnishment

proceedings and, eventually, an attempt to void the transfer to Garnishees

as fraudulent.   At issue in the instant appeal is the procedural posture by

which Appellant attempted to void the fraudulent transfer, as well as the

characterization of the transfers as a distribution rather than a loan.

                                      -2-
J. A32009/16

      Specifically, Appellant raises five issues on appeal:

      1. Whether the trial [c]ourt committed an abuse of discretion or
      error of law in failing to enter judgment against Garnishees, BS
      Trust, EB Trust, JE Trust[,] and SJ Trust (the Trusts), jointly and
      severally, in the amount of $94,754.10.

      [2.] Whether the trial [c]ourt committed an abuse of discretion
      or error of law in failing to find that Skippack Building
      Corporation’s “Loans to shareholders” (that is, loans to each of
      the Trusts) in the amount of $231,573.00 were subject to
      execution, when [Skippack] and the Trusts admitted, and when
      the unrefuted and uncontradicted [sic] evidence was, that they
      were “assets” and “receivables” of the corporation, and were
      never repaid.

      [3.] Whether the trial [c]ourt committed an abuse of discretion
      or error of law in finding that it was without the authority to
      determine or adjudicate conflicting rights to property in the
      possession of third parties, including alleged fraudulent
      transfers, when the [c]ourt was duly authorized, and
      subsequently conducted, “an independent full dress,” “plenary”
      trial on the merits.

      [4.] Whether the trial [c]ourt committed an abuse of discretion
      or error of law in finding that the distributions of cash made by
      Skippack Building Corporation to shareholders (that is,
      distributions to each of the Trusts), in the aggregate amount of
      $464,568.00, were fraudulent conveyances, when the unrefuted
      and uncontradicted [sic] evidence was that they effectively
      stripped the corporation of any assets.

      5. Whether the trial [c]ourt committed an abuse of discretion or
      error of law in failing to find that the elimination or writing off of
      “Loans to shareholders” (that is, loans to each of the Trusts), by
      “distributing” them to shareholders, as if no money were owed,
      were fraudulent conveyances.

Appellant’s Brief at 4 (reordered for ease of disposition).

      This Court’s scope and standard of review on appeal following a bench

trial is well-settled:

                                      -3-
J. A32009/16

      Our appellate role in cases arising from non-jury trial verdicts is
      to determine 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. The findings of
      fact of the trial judge must be given the same weight and effect
      on appeal as the verdict of a jury. We consider the evidence in a
      light most favorable to the verdict winner. We will reverse the
      trial court only if its findings of fact are not supported by
      competent evidence in the record or if its findings are premised
      on an error of law. However, where the issue . . . concerns a
      question of law, our scope of review is plenary.

      The trial court's conclusions of law on appeal originating from a
      non-jury trial are not binding on an appellate court because it is
      the appellate court's duty to determine if the trial court correctly
      applied the law to the facts of the case.

Stephan v. Waldron Elec. Heating and Cooling LLC, 100 A.3d 660, 664-

65 (Pa. Super. 2014) (citation and quotation omitted).      The trial court, as

the finder of fact, is free to believe “all, part[,] or none of the evidence

presented.” Ruthrauff, Inc. v. Ravin, Inc., 914 A.2d 880, 888 (Pa. Super.

2006). “Issues of credibility and conflicts in evidence are for the trial court

to resolve; this Court is not permitted to reexamine the weight and

credibility determinations or substitute our judgment for that of the

factfinder.” Id. (citation and internal quotation marks omitted).

      As a preliminary matter, although Appellant lists five issues in his

Statement of Questions Involved, they are better understood as two issues.

In fact, the argument portion of Appellant’s Brief is broken into only two

sections, and the trial court addressed Appellant’s five issues as only two

distinct arguments.   Similarly, we will combine Appellant’s issues into the

two underlying arguments.

                                     -4-
J. A32009/16

     First, Appellant argues that the trial court erred in finding that the

Trusts lacked any assets of Skippack subject to execution, averring that at

least a portion of the distributions made to Garnishees was in fact a loan.

Appellant’s Brief at 26-36. The Honorable Thomas P. Rogers has authored a

comprehensive, thorough, and well-reasoned Opinion, citing to the record

and relevant case law in addressing Appellant’s claim. After a careful review

of the parties’ arguments and the record, we affirm on the basis of that

Opinion, which found that “Garnishees owed no money to and possessed no

property of [Appellee] Skippack subject to execution when the Montgomery

County Sheriff’s Department served the writs of execution on August 19,

2011, or thereafter.” Trial Court Opinion at 13-17.

     Second, Appellant avers that Appellee Skippack’s distributions to

Garnishees were fraudulent transfers, and that the trial court erred in

concluding that it was precluded from adjudicating the merits of a fraudulent

transfer claim in a garnishment proceeding brought pursuant to Pa.R.C.P.

No. 3118.   Appellant’s Brief at 36-47.   Judge Rogers’ Opinion includes a

comprehensive, thorough, and well-reasoned discussion of this claim, with

citations to the record and relevant case law. After a careful review of the

parties’ arguments, and the record, we affirm on the basis of that Opinion,

which recognized binding precedent from our Supreme Court holding that,

absent a waiver by the parties, a trial court may not properly adjudicate a

fraudulent transfer claim in a garnishment proceeding, and a plaintiff must

                                    -5-
J. A32009/16

instead bring a separate action in equity.     Trial Court Opinion at 17-25

(citing, inter alia, Greater Val. Terminal Corp. v. Goodman, 202 A.2d 89

(1964)).    In the instant case, Appellee Skippack and Garnishees did not

waive their objection to the trial court adjudicating the fraudulent transfer

claim; accordingly, the trial court properly concluded that it was without

authority to hear the matter.

      Our analysis, and that of the trial court’s well-written Opinion, is

unaffected by this Court’s recent holding in Knoll v. Uku, __ A.3d __, 2017

PA Super 6 (filed January 12, 2017).       In Knoll, this Court reviewed the

merits of a fraudulent transfer claim that was brought pursuant to Pa.R.C.P.

No. 3118.    There, the parties did not object to the trial court hearing the

fraudulent transfer claim within a Rule 3118 proceeding, and on appeal,

neither party asked this Court to consider whether a fraudulent transfer

claim may properly be brought in a Rule 3118 proceeding over the

objections of the garnishees.

      The instant case, however, is distinguishable from Knoll.       Appellee

Skippack and Garnishees did, in fact, object to the trial court adjudicating

the fraudulent transfer claim in a Rule 3118 proceeding.         As discussed

supra, our review confirms that the trial court properly concluded that it

was without authority to hear the matter.2

2
  At oral argument, Appellant raised a third theory of relief, arguing that the
fraudulent transfer claim was raised under Pa.R.C.P. No. 3147, and not

                                     -6-
J. A32009/16

      The parties are directed to attach a copy of the trial court’s July 15,

2016 Opinion to all future filings.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 4/3/2017

pursuant to Pa.R.C.P. No. 3118. Appellant has waived this argument by
failing to develop it in its Brief to this Court. See Commonwealth v.
Hardy, 918 A.2d 766, 771 (Pa. Super. 2007). Moreover, Rule 3147 applies
after a court has entered judgment for a plaintiff against a garnishee upon
pleadings or after trial; nothing in Rule 3147 authorizes a plaintiff to file
pleadings or request a trial. See Pa.R.C.P. No. 3147 (“If the court enters
judgment for the plaintiff and against the garnishee upon pleadings or after
trial, the judgment shall be for the property of the defendant found to be in
the garnishee's possession, but no money judgment entered against the
garnishee shall exceed the amount of the judgment of the plaintiff against
the defendant together with interest and costs.”)

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