Court Opinion

ID: 9350850
Source: CourtListenerOpinion
Date Created: 2022-12-28 19:07:10.997078+00
Date Added: 2024-06-11T16:57:47.970966
License: Public Domain

J-A25007-22

                                2022 PA Super 222

 PAGE PUBLISHING, INC.                     :     IN THE SUPERIOR COURT OF
                                           :          PENNSYLVANIA
                    Appellant              :
                                           :
              v.                           :
                                           :
 DARYL HEMMERICH                           :     No. 289 WDA 2022

                Appeal from the Order Entered March 7, 2022,
              in the Court of Common Pleas of Crawford County,
                     Civil Division at No(s): AD 2021-505.

BEFORE: KUNSELMAN, J., NICHOLS, J., and McCAFFERY, J.

OPINION BY KUNSELMAN, J.:                      FILED: DECEMBER 28, 2022

      Page Publishing, Inc. (“Publisher”) appeals from the order sustaining a

preliminary objection and dismissing its complaint against pro se Defendant,

Daryl Hemmerich (“Author”). Publisher seeks declaratory judgment that an

arbitration clause requires Author to pursue any potential, breach-of-contract

claims against it before an arbitrator, rather than a court. The trial court ruled

that it lacked subject-matter jurisdiction because there is no dispute between

the parties. We agree and affirm.

      When we review an order that sustains preliminary objections, our

“standard of review is de novo, and the scope of review is plenary.” Mazur

v. Trinity Area Sch. Dist., 961 A.2d 96, 101 (Pa. 2008). We reverse “only

when, based on the facts pleaded, it is clear and free from doubt that the

complainant will be unable to prove facts legally sufficient to establish a right

to relief.” Id. Also, this Court “must accept as true all well-pleaded, material,

and relevant facts alleged in the complaint and every inference that is fairly
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deducible from those facts.” Id. Therefore, we turn to Publisher’s complaint

to glean the relevant facts of this appeal.

      In March of 2020, Author agreed to pay Publisher $10,780 in exchange

for publishing, advertising, and distributing four books. See Complaint at 2-

3; see also Complaint Ex. A, B, C, and D at 2.         The parties entered four

contracts (one for each book).

      Those contracts contained an identical arbitration clause as follows:

      Any dispute, controversy, or claim between Publisher and Author
      regarding this Agreement will be submitted to mandatory and
      binding arbitration under the terms of the rules of the American
      Arbitration Assocation as then in effect . . . Arbitration proceedings
      shall be heard in Crawford County, Pennsylvania by a single
      arbitrator . . . Any issue concerning the applicability,
      interpretation, or enforcement of these procedures, including any
      contention that all or part of these procedures are invalid and
      unenforceable, will be governed by the Federal Arbitration Act
      . . . The arbitration award will be final and binding on the parties
      and may be entered in any court having jurisdiction.

Id. at 4.

      Publisher received down payments from Author and began editing,

formatting, promoting, and distributing the books. Author “became hostile”

to Publisher. Id. at 3. He hindered Publisher from using its best efforts to

fulfill the contracts, asserted Publisher was in breach, and threatened legal

action. Publisher believed Author did “not intend to pursue arbitration” as the

four contracts required. Id. at 4. Hence, it filed this action for declaratory

relief, seeking the court to order “that the dispute is subject to the arbitration

clause of the [contracts, to] compel the dispute to arbitration . . . .” Id. at 5.

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      Author filed two preliminary objections to the complaint. First, under

Pennsylvania Rule of Civil Procedure 1028(a)(1), he challenged the trial

court’s subject-matter jurisdiction. According to Author, the issue of whether

the parties’ dispute was subject to arbitration was itself a “dispute,

controversy, or claim” subject to the contracts’ arbitration clauses, rather than

Publisher’s declaratory-judgment action. Preliminary Objections at 2.

      Pro se Author purportedly based his second preliminary objection upon

Pa.R.C.P. 1028(a)(5) (i.e., lack of capacity to sue, nonjoinder of a necessary

party, or misjoinder of a cause of action). See Preliminary Objections at 1.

However, he argued that Publisher failed to plead sufficient facts to establish

a cause of action for declaratory relief. Hence, Author’s second preliminary

objection was really in the nature of a demurrer under Pa.R.C.P. 1028(a)(4).

      The trial court did not address either of Author’s preliminary objections

or his arguments. Instead, the court sua sponte questioned its subject-matter

jurisdiction under the Declaratory Judgment Act. The trial court found that

this case presented no controversy in need of adjudication, which deprived it

of subject-matter jurisdiction, as a matter of law.

      The court stated:

         Jurisdiction is provided by the Declaratory Judgment Act [42
         Pa.C.S.A. §§ 7531-7541] as follows:

            Courts of record, within their respective jurisdictions,
            shall have power to declare rights, status, and other
            legal relations whether or not further relief is or could
            be claimed. No action or proceeding shall be open to
            objection on the ground that a declaratory judgment
            or decree is prayed for. The declaration may be either

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          affirmative or negative in form and effect, and such
          declaration shall have the force and effect of a final
          judgment or decree.

       42 Pa.C.S.A. § 7532 (titled “General scope of declaratory
       remedy”); see also [42 Pa.C.S.A.] § 931 (governing
       jurisdiction of the courts of common pleas).

              Granting declaratory relief is a matter within the
       judicial discretion of the court. Avrich by Avrich v.
       General Accident Ins. Co., 532 A.2d 882, 883 (Pa. Super.
       1987). It is “an appropriate remedy only where a case
       presents antagonistic claims indicating imminent and
       inevitable litigation.” Chester Upland Sch. District v.
       Commonwealth, 495 A.2d 981, 983 (Pa. Cmwlth. 1985)
       (emphasis added) . . . see also Tri-State Auto Auction,
       Inc. v. Gleba Inc., 257 A.3d 172, 184 (Pa. Super. 2021)
       (“a plaintiff in a declaratory-judgment action must
       demonstrate that an actual controversy exists.”)           The
       plaintiffs in Avrich, who had been injured in an automobile
       accident, and claimed in a separate suit that the other driver
       had run a stop sign, had submitted claims to the insurance
       carriers for the other driver and for the owner of his vehicle.
       When those claims were denied for lack of coverage, the
       Avriches sought a determination of the insurers’ obligations
       to pay, but the trial court sustained preliminary objections
       and dismissed the action.

              The appellate court affirmed, because no judgment
       had yet been obtained in the personal-injury action. “Since
       the negligent party will not be determined until the outcome
       of that trial and appellees may not be found in any way
       liable, to seek a declaratory judgment to determine the duty
       of the insurers to pay is to seek to determine rights which
       may never occur.” [Avrich, 532 A.2d at 884.]

              Publisher, in merely averring “that Author does not
       intend to pursue arbitration even though the [contracts] are
       in full force,” has not shown that a dispute exists over
       whether the [contracts] contain enforceable arbitration
       clauses. Comp. ¶ 23. This contention, indeed, seems to be
       contradicted by the quotation of the arbitration provision in
       Author’s pleading. Prelim. Objection at 2. Even if there
       were disagreement over the enforceability of that
       provision, Author’s demands and threats of legal action do

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         not equate to “imminent and inevitable litigation” over
         claims of (unspecified) contractual breaches. There is no
         underlying    action   necessitating   preemptive   court
         intervention.

Trial Court Opinion, 3/7/22, at 3-5 (footnotes and some punctuation omitted).

      Thus, the trial court “decline[d] to exercise jurisdiction over this case.”

Id. at 5. It entered an order sustaining preliminary objections and dismissing

the action. This timely appeal followed.

      Publisher raises the following issues:

         1.    Did the trial court abuse its discretion or commit error
               of law when it advocated on behalf of the pro se
               [Author] by sua sponte, and erroneously, granting a
               demurrer?

         2.    Did the trial court abuse its discretion or commit error
               of law by failing to order discovery by “deposition or
               otherwise” under Pa.R.C.P. 1028(c)(2)?

         3.    Did the trial court abuse its discretion or commit error
               of law by declining to hear the declaratory-judgment
               action when it based that decision on findings of fact
               without first hearing evidence on those facts?

         4.    Did the trial court commit error of law by conflating
               the concepts of subject-matter jurisdiction and its
               power to decline to hear a dispute under the
               Declaratory Judgment Act?

Publisher’s Brief at 4-5. We address each issue in turn.

I.    Trial Court Did Not Sustain a Demurrer

      First, Publisher claims the trial court erred by sua sponte raising a

demurrer that Author did not assert in his preliminary objections.        Simply

stated, Publisher misunderstands the trial court’s decision.

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      As explained above, the court sua sponte raised the issue of its subject-

matter jurisdiction — not a preliminary objection in the nature of a demurrer.

The trial court analyzed jurisdiction throughout its opinion and concluded by

stating that it “declines to exercise jurisdiction over this case and, accordingly,

enters the following” order dismissing the action. Trial Court Opinion, 3/7/22,

at 5. Thus, Publisher’s first claim of error, challenging an action the trial court

did not take, is facially meritless.

II.   Discovery Unneeded

      Next, Publisher claims the trial court erred by not ordering discovery

over disputed factual issues before dismissing the action for lack of subject-

matter jurisdiction. Specifically, Publisher asserts that the court “believed that

there was no factual dispute that there was an ‘imminent threat’ of litigation.”

Publisher’s Brief at 21. Publisher argues this fact remains in dispute, because

Author did not attach a notice to plead to his preliminary objections, and, thus,

the factual averments therein must be deemed denied.

      Publisher again misconstrues the record. Author never asserted in his

preliminary objections that there was no dispute between the parties, as

Publisher’s brief implies.

      Rather, Author argued to the trial court that this declaratory-judgment

action — regarding whether the arbitration clause applies — is itself a dispute

that must be submitted to arbitration.        Author explained, “[Publisher] is

seeking to assert a claim based on the contracts, which would amount to a

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‘dispute, controversy, or claim between Publisher and Author regarding the

Agreement.’” Preliminary Objections at 2 (quoting Complaint Ex. A, B, C, and

D at 4). Thus, Author never denied that an impending dispute existed for

breach of the contracts in his pleadings; if anything, his pleading agreed with

Publisher that there was a potential, breach-of-contract dispute.       Instead,

Author challenged the trial court’s jurisdiction to resolve this declaratory-

judgment action in the face of the arbitration clause.

       Therefore, the record belies any assertion that the parties disagreed on

issues of fact requiring discovery to resolve. To be sure, the parties agree

that the arbitration clause governs their dispute; the pleadings demonstrate

this. Publisher’s second issue warrants no appellate relief.

III.   No Abuse of Discretion

       Third, Publisher claims the trial court abused its discretion by declining

to hear the declaratory-judgment action, because it allegedly made findings

of fact without hearing any evidence.       Publisher “neglects to define what

constitutes an abuse of discretion or indicate which type of abuse the trial

court allegedly committed.” Getting v. Mark Sales & Leasing, Inc., 274

A.3d 1251, 1259 (Pa. Super. 2022), reargument denied (June 14, 2022). An

abuse of discretion may take one of three forms. It “occurs only where “the

trial court renders a judgment that is (1) manifestly unreasonable, arbitrary,

or capricious; or (2) fails to apply the law; or (3) was motivated by partiality,

prejudice, bias, or ill will.” Id. (some punctuation omitted). Therefore, we

are unpersuaded that an abuse of discretion occurred.

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      As stated above, the parties agree that the arbitration clauses govern

any dispute arising regarding the four contracts. Author conceded that point

in his preliminary objections.

      Based on Author’s concessions, the trial court rationally concluded that

no “dispute exists over whether the [contracts] contain enforceable arbitration

clauses.” Trial Court Opinion, 3/7/22, at 5. Because the Author sought to

enforce the arbitration agreement against Publisher and Publisher sought to

enforce the arbitration agreement against Author, the trial court reasonably

inferred that the parties must agree that the arbitration clause governs their

dispute. Thus, no disagreement over the applicability of that clause existed.

      The court then went on to say, “Even if there were disagreement over

the enforceability of that provision, Author’s demands and threats of legal

action do not equate to ‘imminent and inevitable litigation’ over claims of

(unspecified)   contractual   breaches.    There    is   no   underlying   action

necessitating preemptive court intervention.” Id. (emphasis in original). The

absence of imminent and inevitable litigation was an alternative basis for the

trial court’s conclusion that Publisher presented no controversy in need of

judicial review. These conclusions are well-reasoned.

      Publisher suggests — but does not identify — what “legal procedure” the

trial court was required to follow once it determined the parties agree that the

arbitration clause applies. Publisher’s Brief at 2. Without citing any Rule of

Civil Procedure or precedent, Publisher summarily lists the steps it wishes the

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trial court would have taken to ascertain what the pleadings plainly revealed

— the parties agree that the arbitration clause binds them.

      Rather than explaining which abuse occurred, Publisher suggests what

it thinks the trial court “should have” done before dismissing due to the lack

of a legal question in need of judicial resolution. However, “abuse of discretion

is not merely an error of judgment, but rather a misapplication of the law or

an unreasonable exercise of judgment.” Johnson v. Johnson, 222 A.3d 787,

789 (Pa. Super. 2019). Thus, there is no abuse of discretion merely because

the trial court “reached a decision contrary to the decision that the appellate

court would have reached.” B.B. v. Dep't of Pub. Welfare, 118 A.3d 482,

485 (Pa. Cmwlth. 2015) (some punctuation omitted).

      Accordingly, we dismiss Publisher’s third appellate issue as meritless.

IV.   Trial Court Lacked Subject-Matter Jurisdiction

      Finally, Publisher asserts the trial court erred by conflating the concepts

of subject-matter jurisdiction and its authority to decline to hear a dispute

under the Declaratory Judgment Act. It believes that, because the courts of

common pleas have “unlimited original jurisdiction of all actions and

proceedings,” that the trial court had subject-matter jurisdiction over this

declaratory-judgment matter. Publisher’s Brief at 24 (quoting 42 Pa.C.S.A. §

931. Publisher takes issue with the trial court’s use of the word “decline”

regarding subject-matter jurisdiction, because a “trial court can no more

decline subject-matter jurisdiction where it had it than [the court] could grant

it where none existed.” Id. at 25.

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      In most cases, Publisher would be correct. Typically, courts may not

decline jurisdiction over a case, once it is vested.    However, as explained

below, actions for declaratory are the exception. As Publisher acknowledged

in its previous argument, a trial court “has discretion to decline to take a

declaratory-judgment action . . . .” Id. at 22.

      “Whether a court has subject matter jurisdiction over an action is a

fundamental issue of law which may be raised at any time in the course of

the proceedings, including by a reviewing court sua sponte.” Mazur, 961

A.2d at 101. (emphasis added). This extends to trial courts. “Whenever it

appears . . . that the court lacks jurisdiction of the subject matter . . . the

court shall order that the action be transferred to a court of the

Commonwealth which has jurisdiction or . . . if that is not possible, it shall

dismiss the action.” Pennsylvania Rule of Civil Procedure 1032(b); see also,

e.g., Clay v. Advanced Computer Applications, Inc., 536 A.2d 1375, 1379

(Pa. Super. 1988), rev'd on other grounds, 559 A.2d 917 (Pa. 1989) (holding

that a trial court may, sua sponte, raise subject-matter jurisdiction). Thus,

the trial court was within its discretion to raise the question of subject-matter

jurisdiction at the preliminary-objections stage of the proceedings.

      “Jurisdiction over the subject matter is conferred solely by the

Constitution and laws of the Commonwealth.”          Mazur, 961 A.2d at 101.

According to the state charter, “There shall be one court of common pleas for

each judicial district . . . having unlimited original jurisdiction in all cases

except as may otherwise be provided by law.” Pa. Const. art. V, § 5(b)

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(emphasis added). In the declaratory-judgment context, the law providing

otherwise is the Constitution of the Commonwealth of Pennsylvania and the

precedents applying it.

      It is settled law that a “court may refuse to assume jurisdiction of an

action for declaratory judgment where there is no actual controversy and

should refuse to grant declaratory relief where it would not resolve the

uncertainty or controversy which spurred the request.”        11 Standard Pa.

Practice 2d § 66:26 (citing Odette's, Inc. v. Commonwealth, 699 A.2d 775,

779 (Pa. Cmwlth. 1997)). Indeed, this Court applied that test in a case that

Publisher has cited — In re Mampe, 932 A.2d 954 (Pa. Super. 2007).

      There, an elderly, senile mother rewrote her will and transferred assets

inter vivos to one of her three daughters. When the other daughters learned

of these events, they filed a declaratory-judgment action challenging the new

will and inter vivos gifts. A week before trial, mother died. The trial court

proceeded with the declaratory-judgment action, ruled that one daughter

exerted undue influence over mother, and invalided the new will and gifts.

      On appeal, this Court, sua sponte, raised the issue of whether mother’s

death deprived the trial court of subject-matter jurisdiction. Specifically, the

Mampe Court asked whether there was no longer a controversy in need of

declaratory judgment. We observed that a case may not proceed “under the

Declaratory Judgment Act unless there exists an actual controversy indicating

imminent and inevitable litigation, coupled with a clear manifestation that the

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declaration sought will render practical help in ending the dispute.” Id. at

958.

       This jurisdictional limitation on declaratory judgment is constitutional.

When the General Assembly first passed a declaratory-judgment act in the

early 1900s, litigants attacked its constitutionality. They argued that the act

extended court jurisdiction to matters not ripe for judicial review and

converted courts from judicial tribunals to advisory bodies.      The Supreme

Court of Pennsylvania allayed those concerns by interpreting the Declaratory

Judgment Act as only conferring jurisdiction over case where a real or

imminent controversy exits.

       As the Supreme Court explained, “under declaratory-judgment statutes,

relief [may] be had only in cases where an actual controversy existed or was

imminent . . . .” In re Cryan's Est., 152 A. 675, 677 (Pa. 1930). Otherwise,

the act would be “unconstitutional, as a legislative effort to turn the courts

from tribunals organized to determine controversies judicially into those for

the giving of legal advice, a function not contemplated by our organic law.”

Id. In all jurisdictions with declaratory-judgment actions, “it is a matter of

judicial discretion whether or not jurisdiction will be taken to any particular

case.” Petition of Kariher, 131 A. 265, 271 (Pa. 1925) (emphasis added).

“[J]urisdiction will never be assumed unless the tribunal . . . is satisfied that

an actual controversy, or the ripening seeds of one, exists between parties all

of whom are sui juris and before the court, and that the declaration sought

will be a practical help in ending the controversy.” Id.

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      As such, the trial court did not conflate subject-matter jurisdiction with

its power under the Declaratory Judgment Act. They are one and the same.

See id.

      Moreover, we agree with the trial court’s refusal to exercise jurisdiction.

A “party seeking declaratory relief must demonstrate:            (1) an actual

controversy related to the invasion or threatened invasion of one’s legal rights

and indicating imminent and inevitable litigation; and (2) a direct, substantial,

and present interest, as contrasted with a remote or speculative interest.” 11

Standard Pa. Practice 2d § 66:26.

      Here, subject-matter jurisdiction is constitutionally lacking, because a

pending or imminent controversy is lacking regarding the issues that Publisher

filed this complaint to resolve. The parties’ pleadings reveal that they agree

on three fundamental points:      (1) the four contracts contain an identical,

arbitration clause; (2) that arbitration clause applies to disputes arising under

the contracts; and (3) that clause compels them to proceed in arbitration.

These are the very issues which Publisher sought to resolve by seeking

declaratory judgment.     Hence, the trial court properly found that it lacks

subject-matter jurisdiction under the Declaratory Judgment Act, because

there is no controversy over the applicability of the arbitration clause.

      Publisher focuses upon the trial court partially basing its decision on the

absence of a pending action by Author against Publisher. That concern seems

misplaced, given that Author conceded in a court filing that the arbitration

clause is in effect and that it binds the parties. See Preliminary Objections at

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2; see also, e.g., Marra v. Marra, 831 A.2d 1183, 1187 (Pa. Super. 2003)

(“Judicial estoppel is a doctrine that prohibits a party from taking a position in

a subsequent judicial proceeding that is inconsistent with the party’s position

in a prior judicial proceeding.”) Because the parties are on record asserting

that the arbitration clause governs their disputes, the pleadings ensure that

any future dispute between them will go to arbitration.1

       In sum, the applicability of the arbitration clause is resolved; it applies.

Thus, the trial court correctly dismissed this declaratory-judgment action due

to a lack of subject-matter jurisdiction.

       Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/28/2022

____________________________________________

1 Of course, this statement presumes the parties do not subsequently agree
to amend or to rescind the arbitration clause, which is their right. “It is an
elementary proposition that any contract can be modified with the assent of
both contracting parties . . . .” Betterman v. Am. Stores Co., 80 A.2d 66,
71 (Pa. 1951).

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