author: COX, J.,

text:
    GEM Building Contractors and Developers, Inc. v. Patriot Concrete Pumping & Trucking Co., LTD

      C.P. of Lawrence County,
    No. 11421 of 2009

      Christopher P. Skatell, for plaintiff.

      Paul R. Robinson, for defendants.

      October 23, 2013
   COX, J.,

Before the court for disposition is the motion for partial summary judgment filed on behalf of Patriot Pumping & Laser Screeding, Ltd., which argues that Patriot Pumping & Laser Screeding, Ltd., cannot be held liable under the theoiy of successor liability as it did not expressly agree to assume the debts of Patriot Concrete Pumping & Trucking Co., Ltd., and it is not a continuation of that business.

The plaintiff entered into a contract with Patriot Concrete Pumping & Trucking Co., Ltd. (hereinafter “Patriot Trucking”), the predecessor to Patriot Concrete & Laser Screeding, Ltd. (hereinafter “Patriot Laser Screeding”), in which Patriot Trucking agreed to supply concrete pumping and laser screeding services to the plaintiff in connection with a project at Walgreen Drug Stores in New Castle, Lawrence County, Pennsylvania. Patriot Trucking provided the requested services on November 2, 2005, however, the plaintiff avers that it failed to properly operate the screeding equipment, which caused the concrete to fall short of the tolerances for thickness, flatness and levelness required by the project specifications. Those errors caused the plaintiff to incur additional costs to repair the defective slab of concrete and replace the portions that could not be repaired. As a result, the plaintiff filed suit claiming that Patriot Concrete Pumping & Trucking, Co., Ltd., breached an oral contract and Patriot Concrete & Laser Screeding, Ltd., is liable for that breach as a successor in interest to Patriot Concrete Pumping & Trucking, Co., Ltd., as it is merely a continuation of the selling entity.

Gary Parsons, the owner of Patriot Trucking, testified at his deposition that he had discussions with Jim Davis in late 2004 to early 2005 concerning Mr. Parsons selling the assets of Patriot Trucking to Mr. Davis because Mr. Parsons did not have enough time to dedicate to Patriot Trucking as he was also running Parsons Concrete. Mr. Davis was an employee of Patriot Trucking first as a pump operator and laser screed operator, and later moved into management. Mr. Davis purchased all of the assets of Patriot Trucking through the asset purchase agreement that states the buyer was not assuming any liabilities from the seller, Patriot Trucking. In addition, Patriot Trucking agreed to indemnify Patriot Laser Screeding for defending against any such claims. Moreover, Patriot Laser Screeding purchased the assets of Patriot Trucking for $1,952,722.93. Mr. Parsons also signed a covenant not to compete agreeing to not compete for business with Patriot Laser Screeding for a period of 5 years. Mr. Parsons later forgave approximately $300,000 of that debt. Mr. Davis testified that he was the sole owner of Patriot Laser Screeding and he was targeting federal work as a minority-owned business. He obtained funding for the purchase of assets through Unison Bank. Patriot Laser Screeding continued to operate out of the same facility as Patriot Trucking formerly operated with the lease being transferred from Patriot Trucking to Patriot Laser Screeding. Patriot Trucking did not retain any assets under the asset purchase agreement. Mr. Davis, acting on behalf of Patriot Laser Screeding, sent a letter to existing customers informing them that Mr. Parsons is no longer associated with Patriot Laser Screeding and ensuring them that the new company would provide the same high quality products and services. The letter also stated that this was an internal change and it would not affect the overall company policy or manner of conducting business.

Patriot Laser Screeding has now filed this motion for partial summary judgment arguing that it cannot be held liable under a theory of successor liability because it is a separate entity and did not merge or consolidate with Patriot Trucking.

The purpose of the summary judgment rule is to eliminate cases prior to trial where a party cannot make out a claim or defense after the relevant discovery has been completed. Miller v. Sacred Heart Hospital, 753 A.2d 829 (Pa. Super. 2000). The mission of the summary judgment procedure is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for a trial. The summary judgment rule exists to dispense with a trial of a case or, in some matters, issues in a case, where a party lacks the beginnings of evidence to establish or contest a material issue. Ertel v. Patriot-News Company, 544 Pa. 93, 674 A.2d 1038 (1996), reargument denied, (1996), certiorari denied, 519 U.S. 1008 (1996).

Any party may move for summary judgment in whole or in part as a matter of law whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report or if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which, in a jury trial, would require the issues to be submitted to a jury. Pa.R.C.P. No. 1035.2. However, summary judgment is only appropriate when discovery relevant to the motion has been completed. Id. Summary judgment may be granted only in cases where it is clear and free from doubt that there is no genuine issue as to any material fact and that the moving party is entitled to a summary judgment as a matter of law. Kafando v. Erie Ceramic Arts Co., 764 A.2d 59, 61 (Pa. Super. 2000) (citing Rush v. Philadelphia Newspaper, Inc., 732 A.2d 648, 650-651 (Pa. Super. 1999)).

The moving party bears the burden of proving the nonexistence of any genuine issue of material fact. Kafando, supra. A material fact, for summary judgment purposes, is one that directly affects the outcome of the case. Gerrow v. Shincor Silicones, Inc., 756 A.2d 697 (Pa. Super. 2000); Kuney v. Benjamin Franklin Clinic, 751 A.2d 662 (Pa. Super. 2000). The non-moving party must adduce sufficient evidence on issues essential to his case on which he bears the burden of proof such that a jury could return a verdict in his favor. Failure to adduce this evidence establishes that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ertel, supra. The non-moving party must demonstrate that there is a genuine issue for trial and may not rest on averments in its pleadings. DeSantis v. Frick Company, 745 A.2d 624 (Pa. Super. 1999); Merriweather v. Philadelphia Newspaper, Inc., 453 Pa. Super. 464, 469-472, 684 A.2d 137, 140 (1996).

When determining whether to grant a motion for summary judgment, the court must view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Hughes v. Seven Springs Farm, Inc., 563 Pa. 501, 752 A.2d 339 (2000); Dean v. Commonwealth Department of Transportation, 561 Pa. 503, 751 A.2d 1130 (2000). Summary judgment is proper only when the uncontroverted allegations in the pleadings, depositions, answers to interrogatories, admissions of record, and submitted affidavits demonstrate that no genuine issue of material fact exists, and that the moving party is entitled to judgment as a matter of law. P.J.S. v. Pennsylvania State Ethics Comm’n, 555 Pa. 149, 153, 723 A.2d 174, 175 (1999); Basile v. H&R Block, 761 A.2d 1115 (Pa. Super. 2001); Kuney v. Benjamin Franklin Clinic, 751 A.2d 662 (Pa. Super. 2000); Stevens Painton Corporation v. First State Insurance Company, 746 A.2d 649 (Pa. Super. 2000).

Only when the facts are so clear that reasonable minds cannot differ, a trial court may properly enter summary judgment. Basile, supra. If there are no genuine issues of material fact in dispute or if the non-moving party has failed to state a prima facie case, summary judgment may be granted. Dudley v. USX Corporation, 414 Pa. Super. 160, 606 A.2d 916 (1992). Thus, a proper grant of summary judgment depends upon an evidentiary record that either (1) shows the material facts are undisputed or (2) contains insufficient evidence of facts to make out a prima facie cause of action of defense. Rauch v. Mike-Mayer, 783 A.2d 815 (Pa. Super. 2001). The trial court must confine its inquiry when confronted with a motion for summary judgment to questions of whether material factual disputes exist. Township of Bensalem v. Moore, 152 Pa. Cmwlth. 540, 620 A.2d 76 (1993). It is not the function of the Court ruling on a motion for summary judgment to weigh evidence and to determine the truth of the matter. Keenheel v. Pennsylvania Securities Commission, 143 Pa. Cmwlth. 494, 579 A.2d 1358 (1990).

In regards to successor liability, it is well-established in Pennsylvania that when one company sells all of its assets to another company, the purchaser is not liable for debts or liabilities of the seller merely because the buyer acquired the seller’s property. Continental Ins. Co. v. Schneider, Inc., 582 Pa. 591, 599, 873 A.2d 1286, 1291 (2005) (citing Hill v. Trailmobile, 412 Pa. Super. 320, 603 A.2d 602, 605 (1992)). “This general rule of non-liability can be overcome, however, if it is established that (1) the purchaser expressly or implicitly agreed to assume liability, (2) the transaction amounted to a consolidation or merger, (3) the purchasing corporation was merely a continuation of the selling corporation, (4) the transaction was fraudulently entered into to escape liability, or (5) the transfer was without adequate consideration and no provisions were made for creditors of the selling corporation.” Id., 582 Pa. at 599-600, 873 A.2d at 1291.

The plaintiff in this case asserts that Patriot Laser Screeding is liable under the theory of successor liability as it is merely a continuation of Patriot Trucking. In Fizzano Bros. Concrete Products, Inc. v. XLN, Inc., 615 Pa. 242, 42 A.3d 951 (2012), the Pennsylvania Supreme Court addressed the issue of whether the purchasing corporation was a continuation of the selling corporation. In Fizzano, the appellant purchased a license for accounting software manufactured by System Development Group, Inc. (hereinafter “SDG”) to streamline its ability to track sales, maintain accounts receivable and improve record keeping. The appellant was unable to implement the software. XLN acquired the stocks, assets and liabilities of SDG. The appellant filed suit against XLN for breach of contract and breach of express warranty from the failure of the software’s implementation. A company known as XLNT purchased XLN’s assets, including the software at issue. The appellant then joined XLNT and its president claiming that XLNT and XLN entered into a fraudulent transfer of assets. XLNT argued that it, as a mere purchaser of assets, is not potentially liable to the appellant. In response, the appellant asserted that XLNT was liable under the exceptions to successor non-liability regarding the asset sale being a de facto merger and the purchasing corporation was merely a continuation of the selling corporation. It must be noted that the primary asset XLN purchased from SDG, and XLNT purchased from XLN was the right to license the software. The appellant filed a motion for summary judgment against XLN, which was granted by the trial court in the amount of $114,105 as the motion went unanswered by XLN. The case against XLNT proceeded to a three-day bench trial resulting in a verdict for the appellant in the amount of $114,000 because the trial court concluded that the transaction between XLNT and XLN was a de facto merger and XLNT was a mere continuation of XLN. XLNT appealed to the Superior Court of Pennsylvania, which reversed the trial court as it held the record did not support the trials court’s findings for a de facto merger and there was no continuity of ownership between XLN and XLNT. The appellant then filed an appeal to the Supreme Court of Pennsylvania.

The Fizzano court explained that the traditional approach is to be utilized for determining whether a de facto merger occurred when it is a breach of contract claim. Id., 615 Pa. at 266, 42 A.3d at 965. Those factors are as follows: “(1) continuity of ownership; (2) a cessation of ordinary business and dissolution of the predecessor as soon as practically and legally possible; (3) assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the predecessor, and (4) a continuity of management, personnel, physical location, aspects, and general business operation.” Id., 615 Pa. at 262-263, 42 A.3d at 962 (quoting Commonwealth v. Lavelle, 382 Pa. Super. 356, 555 A.2d 218, 227 (1989)). Not all of the factors must be present, they are merely indicators that tend to demonstrate a de facto merger. Id, The court also noted that the de facto merger exception requires a continuity of ownership between the predecessor and successor corporations. Id., 615 Pa. at 266, 42 A.3d at 965 (citation omitted). “Even if the corporation sells to another corporation its entire business operation and all its assets, in exchange for some consideration other than stock, the two corporate entities remain distinct and intact. The corporate entities have not merged, and each is liable for its own debts, absent fraud or one of the other exceptions [to successor liability] listed above.” Id., 615 Pa. at 267-268, 42 A.3d at 966 (quoting Bud Antle, Inc. v. Eastern Foods, Inc., 758 F.2d 1451, 1458 (11th Cir. 1985)). The Fizzano court explained that a court must look beyond the superficial formalities of a transaction and examine the transactional realities and the consequences of the transaction to determine if a de facto merger occurred. Id., 615 Pa. at 272, 42 A.3d at 968 (citing Farris v. Glen Alden Corp., 393 Pa. 427, 143 A.2d 25, 28 (1958)).

The court emphasized that the four shareholders of SDG sold their shares to XLN, which is a corporation owned by investment companies. XLN then sold its assets to XLNT, which was also formed to invest in the software initially sold by SDG. However, the two principal shareholders of SDG held important positions with XLN and XLNT, which were apparently formed to invest in the development of the software. Id., 615 Pa. at 274, 42 A.3d at 969-970. Thus, there was a continuity of ownership between the shareholders of SDG and XLN or XLNT. Id., 615 Pa. at 274, 42 A.3d at 970. The Fizzano court overturned the Superior Court of Pennsylvania because the Superior Court focused on the formalities of the de facto merger and ignored the case law presented in Farris and courts from other jurisdictions regarding continuity of ownership. Id. It must be noted that the Fizzano court did not provide a suggested result concerning whether a de facto merger occurred, but merely rejected the Superior Court’s emphasis of form over substance. Id. The court ultimately held, “Continuity of ownership or stockholder interest in some form must be shown, but the manner by which it may be shown is more extensive and attuned to the transactional realities than Superior Court’s holding supports.” Id.

In the case sub judice, Gary Parsons, the president of Patriot Trucking, contacted Jim Davis in late 2004 and early 2005 to determine if he was interested in purchasing Patriot Trucking. Mr. Davis agreed to purchase Patriot Trucking for $1,952,722.93 and created Patriot Laser Screeding. Subsequently, the parties entered into the asset purchase agreement, which stated that Patriot Laser Screeding would not assume the debts or liabilities of Patriot Trucking. In fact, Mr. Parsons was not aware of any debts or liabilities owed by Patriot Trucking at that time. Patriot Trucking promised to indemnify Patriot Laser Screeding for any costs associated with defending a claim regarding Patriot Trucking’s debts or liabilities. Mr. Parsons also signed a non-compete agreement in which he agreed not to compete with Patriot Laser Screeding for a period of five years. He explained that he wanted to concentrate his efforts on his other business. Prior to the transaction, Mr. Davis was a pump operator and laser screed operator for Patriot Trucking and was promoted to management. After the transaction, Mr. Davis was the sole owner of Patriot Laser Screeding and he hired his wife, who was not employed by Patriot Trucking, as vice president. The court notes that the concrete slab which is the subject of this suit was poured on November 2, 2005, and the transfer of assets from Mr. Parsons to Mr. Davis occurred on December 24, 2005. The court finds it unlikely that the transfer was negotiated and effectuated that quickly in an attempt to avoid liability. It is more likely that it was a negotiated agreement to transfer the entirety of the business and assets from Mr. Parsons to Mr. Davis.

B ased on the evidence presented to the court, the plaintiff has failed to demonstrate that liability could be imposed upon Patriot Laser Screeding based upon successor liability. First, Patriot Laser Screeding did not agree to assume the debts or liabilities as evidenced by the asset purchase agreement, which contained a clause stating the same. Moreover, there is no evidence that the transaction was entered into fraudulently to avoid liability as Mr. Parsons testified that he was unaware of any liabilities or debts prior to entering the agreement and there was clearly adequate consideration as Mr. Davis agreed to pay $1,952,722.93 for the assets owned by Patriot Trucking. Although, Mr. Parsons decided to forgive $300,000.00 from the purchase price at a later time, Mr. Davis still paid adequate consideration in the amount of approximately $1,652,722.93.

Thus, the court must focus its inquiry on whether the transaction amounted to a consolidation or merger and was the purchasing corporation merely a continuation of the selling corporation. As the Fizzano court stated, there must be continuity of ownership to find that a merger has occurred or the purchasing corporation was a continuation of the selling corporation. In the current case, Mr. Davis, the purchaser, was an employee of Patriot trucking prior to the transaction; however, he did not have an ownership interest in Patriot Trucking. He did not obtain an ownership interest until he entered the asset purchase agreement with Mr. Parsons. In addition, Mr. Parsons was the sole owner of Patriot Trucking until his ownership interest was divested in the asset purchase agreement. At that time, Mr. Parsons no longer retained any ownership interest in the business. Instead, Mr. Parsons focused on Parsons Concrete, which was his other business venture. In fact, Mr. Parsons signed a non-compete agreement which indicates that he was completely removed from the new company. Mr. Davis also explained that he entered the transaction to pursue federal contracts for minority business owners, which could not be pursued if Mr. Parsons retained an ownership interest. Furthermore, management personnel were altered by the addition of Mr. Davis’s wife as vice president of Patriot Laser Screeding. In Fizzano, two principal shareholders retained important positions with XLN and XLNT. Conversely, in the current case, Mr. Parsons, as owner of Patriot Trucking, did not retain any ownership interest or management position with Patriot Laser Screeding. The court finds that there is no continuity of ownership between Patriot Trucking and Patriot Laser Screeding. Therefore, the plaintiff has failed to provide sufficient evidence to impose successor liability upon Patriot Laser Screeding.

For the reasons set forth in this opinion, the court grants the defendant’s motion for partial summary judgment.

ORDER OF COURT

Now this 23rd day of October, 2013, this case being before the court for disposition of the motion for partial summary judgment filed by the defendant Patriot. Pumping & Laser Screeding, LTD. with the plaintiff GEM Building Contraactors and Developers, Inc. appearing through counsel, Christopher P. Skatell, Esquire and the defendant Patriot Pumping & Laser Screeding, LTD. appearing through counsel, Paul R. Robinson, Esquire and after review of the various briefs and reply brief and a complete and through review of the applicable record, the court enters the following order and it is hereby ordered, adjudged and decreed as follows:

1. In accordance with the attached opinion, the motion for partial summary judgment filed on behalf of Patriot Pumping & Laser Screeding, LTD. is hereby granted.

2. The Prothonotary of Lawrence County is directed to enter summary judgment in favor of Patriot Concrete Pumping & Laser Screeding, LTD. t/d/b/a Patriot Concrete Pumping, LTD. on all claims filed by the plaintiff GEM Building Contractors and Developers, Inc. against those defendants only.

3. All claims asserted against Patriot Concrete Pumping & Laser Screeding, LTD. t/d/b/a Patriot Concrete Pumping LTD. are dismissed with prejudice.

4.The prothonotary is directed to serve a copy of this order of court and opinion upon counsel of record, Christopher P. Sketell, Esquire and Paul R. Robinson, Esquire.


source: Caselaw Access Project

author: NEALON, J.,

license: Public Domain

text:
    Wells Fargo Equipment Finance, Inc. v. Knitney Lines, Inc.

      C.P. of Lackawanna County,
    No. 11CV 3954

      Lyndsay E. Rowland, for plaintiff.

      Eugene E Hickey, II, for defendants.
    October 24, 2013
   NEALON, J.,

Plaintiff, Wells Fargo Equipment Finance, Inc. (“Wells Fargo”), has filed a “Motion for Summary Judgment as to Defendant, Hurlow Rowlands, Only” in this action that it has instituted against defendants, Knitney Lines, Inc. (“Knitney”) and Hurlow Rowlands (“Rowlands”), asserting a breach of contract claim against Rowlands and seeking replevin relief from Knitney. Pursuant to Lacka. Co. R.C.P. 211(b) and 1035.2(a), Wells Fargo has opted to submit its motion for summary judgment on briefs and without the necessity of oral argument. By notice dated July 15, 2013, the chief deputy court administrator advised counsel for the parties, pursuant to Lacka. Co. R.C.P. 211(c), that Wells Fargo’s supporting brief was to be filed by August 8, 2013, and that Rowlands’ brief in opposition was to be filed “no later than August 29, 2013.” (Docket entry no. 10). On July 23, 2013, Wells Fargo forwarded its supporting brief to the undersigned and Rowlands’ counsel. (Docket entry no. 11). Although Rowlands has not filed an opposing brief in compliance with Local Rule 211(c) and the briefing schedule established by the chief deputy court administrator, Wells Fargo’s motion for summary judgment is nonetheless ripe for disposition.

According to the parties’judicial admissions contained in their pleadings, Wells Fargo is a financial institution which is engaged “in the business of financing and leasing various types of equipment to commercial entities for use in their business,” and in that capacity, it entered into a combination note and security agreement (the “Agreement”) with Knitney on October 13,2005. (Docket entry no.l at ¶¶1, 4; docket entry no.4 at ¶¶1, 4). The Agreement set forth the terms and conditions for Knitney’s lease of three Freightliner vehicles, including Knitney’s obligation to make monthly payments of $3,782.88 to Wells Fargo for a period of sixty (60) months. (Docket entry no. 1 at ¶4, exhibit A; docket entry no.4 at ¶4). The Agreement was signed by Rowlands as the Executive Vice President of Knitney. (Id, exhibit A at p. 1 of 3). In connection with that lease transaction, Rowlands also executed a personal guaranty (“the Guaranty”) on October 13, 2005, in which he guaranteed Knitney’s performance under the Agreement, including the timely payment of its monthly installment payments. (Docket entry no. 1 at ¶8, exhibit C; docket entry No.4 at ¶8).

On June 29, 2011, Wells Fargo commenced this action following Knitney’s default on July 14, 2010, and seeks to collect the overdue monthly lease payments from Rowlands pursuant to the Guaranty and to secure the return of the leased equipment from Knitney. (Docket entry no.l at ¶¶14, 17-22, 28-29, 36). On June 25, 2012, Wells Fargo forwarded requests for admissions to Knitney and Rowlands. (Docket entry no.6, exhibit D at p. 1). In its requests for admissions, Wells Fargo requested that Knitney and Rowlands admit, inter alia, that: (1) Knitney has failed to make the required monthly payments under the Agreement since July 14, 2010; (2) the Agreement states that if Knitney fails to make such a payment, Knitney’s entire indebtedness under the agreement becomes due and payable immediately; (3) the gross amounts owed by Knitney under the agreement totals $69,913.52; (4) Wells Fargo possessed a security interest in Knitney’s other equipment and proceeded to sell that equipment for $33,486.00; (5) following a set off for the proceeds from the sale of that equipment, the net amount owed by Knitney under the agreement is $36,427.52; and (6) pursuant to the clear language of the guaranty, Rowlands is obligated to pay the foregoing amount which is owed to Wells Fargo by Knitney. (Id. at pp. 3-4, ¶¶6-12).

“Requests for Admissions pursuant to Rule 4014 are a discovery tool intended to clarify issues, expedite the litigation process, and promote a decision based on the merits.” Stimmler v. Chestnut Hill Hospital, 602 Pa. 539, 564 n. 18, 981 A.2d 145, 160 n. 18 (2009). Aparty who is served with requests for admissions must respond to those requests within thirty days of their service. See Pa.R.C.P. 4014(b). If a party fails to timely respond to requests for admissions, the matters set forth in the requests for admissions are deemed admitted. Estate of Borst v. Edward Stover, Sr. Testamentary Trust, 30 A.3d 1207, 1210 (Pa. Super. 2011); Thomas v. Elash, 781 A.2d 170, 177 (Pa. Super. 2001). Any matter admitted under Rule 4014 “is conclusively established unless the court on motion permits withdrawal or amendment of the admission.” Estate ofBorst, supra (quoting Pa.R.C.P. 4014(b)); Reilly v. Ernst & Young, LLP, 929 A.2d 1193, 1199 (Pa. Super. 2007) (same).

Neither Knitney nor Rowlands has ever responded to Wells Fargo’s requests for admissions that were served upon them almost sixteen months ago. By neglecting to file any answers to Wells Fargo’s requests for admissions, Knitney and Rowlands have “admitted the averments set forth therein.” Thunberg v. Strause, 545 Pa. 607, 617 n. 5, 682 A.2d 295, 300 n. 5 (1996). “[Ujnder appropriate circumstances, deemed admissions may support a grant of summary judgment.” Stimmler, supra.

Based upon Rowlands’ judicial admissions in his responsive pleading and his deemed admissions under Rule 4014(b), Wells Fargo originally filed a motion for summary judgment against Rowlands onAugust22,2012. (Docket entry no. 6 at ¶¶5-8, 13). A briefing schedule was established by the chief deputy court administrator, and the motion for summary judgment was scheduled for oral argument before visiting Senior Judge Harold Kane on January 9, 2013. (Docket entry no.7). Although Wells Fargo filed a brief in support of its motion for summary judgment, (Docket entry no.6), Rowlands failed to file a brief or to appear at the scheduled argument on January 9, 2013. On Januaiy 16, 2013, Senior Judge Kane issued an order which stated:

Now, this 16th day of January, 2013, it is hereby ordered that the defendant, Hurlow Rowlands, file a responsive brief to the Plaintiffs Motion for Summary Judgment within thirty (30) days of this Order, with a copy served on the Court. This Court will then decide the Motion on briefs, given the failure of the Defendant to appear at the oral argument on the Motion originally scheduled on January 9, 2013.

(Docket entry no. 8). Rowlands neglected to file a responsive brief within thirty days of January 16, 2013, and the merits of Wells Fargo’s motion for summary judgment were never addressed by Senior Judge Kane.

Consequently, on June 28, 2013, Wells Fargo refiled its motion for summary judgment, supporting brief and praecipe for assignment, and on July 15, 2013, the chief deputy court administrator directed Rowlands to file his opposing brief by August 29, 2013, so that this matter could be submitted on briefs. (Docket entiy no. 9). Wells Fargo maintains that by virtue of Rowlands’ binding admissions, there is no dispute that Knitney owes the net sum of $36,427.52 under the Agreement and that Rowlands is contractually obligated to pay that amount to Wells Fargo pursuant to the terms of the Guaranty that he executed on October 13,2005. (Docket entry no. 6 at ¶¶6-8). As such, Wells Fargo argues that “there is no genuine issue of any material fact in this matter,” and that it is entitled to summary judgment on its breach of contract claim against Rowlands. (Id. at ¶13).

Summary judgment is appropriate only when the record clearly shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Clausi v. Stuck, 74 A.3d 242, 247-248 (Pa. Super. 2013). The party seeking summary judgment bears the burden of proving the absence of a genuine issue of fact and the movant’s entitlement to judgment as a matter of law, Stimmler, 602 Pa. at 554, 981 A.2d at 154, and in making that determination, the record must be viewed in the light most favorable to the nonmoving party, with all doubts as to the existence of a genuine issue of material fact being resolved against the movant. Kinney-Lindstrom v. Medical Care Availability and Reduction of Error Fund, 73 A.3d 543, 551 (Pa. 2013); Sovereign Bank v. Gawron, 13 Pa. D. & C. 5th 71, 77 (Lacka. Co. 2010). Summary judgment is appropriate “where the right to such judgment is clear and free from all doubt.” Lynn v. Nationwide Insurance Company, 70 A.3d 814, 818 (Pa. Super. 2013) (quoting Toy v. Metropolitan Life Insurance Company, 593 Pa. 20, 34, 928 A.2d 186, 195 (2007)).

Once a properly supported motion for summary judgment is made, the nonmoving party cannot simply rest upon the allegations or denials in its pleadings, and instead must demonstrate facts in dispute. George Stash & Sons v. New Holland Credit Co., LLC, 905 A.2d 541, 542-543 (Pa. Super. 2006), app. denied, 591 Pa. 665, 916 A.2d 633 (2007); Merlino v. Delaware County, 711 A.2d 1100, 1107 n. 4 (Pa. Cmwlth. 1998). Rule 1035.3 expressly states that “the adverse party may not rest upon the mere allegations or denials of the pleadings but must file a response within thirty days after service of the motion....” Pa.R.C.P. 1035.3(a). “Additionally, Rules 1035.2 and 1035.3 of the Pennsylvania Rules of Civil Procedure place a duty upon the non-moving party to respond to a motion for summary judgment.” Devine v. Hutt, 863 A.2d 1160, 1169 (Pa. Super. 2004). Rule 1035.3(d) specifically provides that “[sjummary judgment may be entered against a party who does not respond.” Pa.R.C.P. 1035.3(d). Thus, in the absence of a timely response to a motion for summary judgment, a court may enter judgment in favor of the moving party, but is not required to do so. See Devine, supra; Com. ex rel. Fisher v. Jash Intern., Inc., 847 A.2d 125, 130 (Pa. Cmwlth. 2004); Thomas, 781 A.2d at 177.

Wells Fargo seeks summary judgment with respect to its breach of contract claim against Rowlands. Guaranty contracts are subject to the same rules of interpretation as other contracts, and are enforceable based upon contract principles. See Meeting House Lane, Ltd. v. Melso, 427 Pa. Super. 118, 125, 628 A.2d 854, 857 (1993), app. denied, 537 Pa. 633, 642 A.2d 486 (1994). To recover for breach of contract, Wells Fargo must establish: (1) the existence of a contract with Rowlands, including its essential terms; (2) Rowlands’ nonperformance of a duty imposed by the contract; and (3) resultant damages to Wells Fargo. McCausland v. Wagner, 2013 WL 5296824, at * 6 (Pa. Super. 2013); Busy Bee, Inc. v. Wachovia Bank, N.A., 2006 WL 723487, at * 26 (Lacka. Co. 2006), aff’d, 932 A.2d 248 (Pa. Super. 2007), app. denied, 598 Pa. 778, 959 A.2d 318 (2008). As a result of Rowlands’ failure to file any response to Wells Fargo’s requests for admissions or its motion for summary judgment, it is conclusively established under Pa.R.C.P. Nos. 4014(b) and 1035(a) that a guaranty contract existed between the parties which obligated Rowlands to pay all sums owed by Knitney under the combination note and security agreement in the event of Knitney’s default, that Rowlands is contractually bound to pay the net sum of $36,427.52 to Wells Fargo under the guaranty contract, that Rowlands has failed to pay that amount which is owed to Wells Fargo, and that Wells Fargo has sustained $36,427.52 in damages as a result of Rowlands’ breach of the guaranty contract.

Rowlands has failed to file any answers to Wells Fargo’s requests for admissions that were served upon Rowlands almost sixteen months ago, notwithstanding the requirement in Rule 4014(b) that the requests for admissions be answered within thirty days of service. Rowlands ignored the court notice dated November 14, 2012, directing him to file his opposing brief by December 27, 2012, and to appear for oral argument before Senior Judge Kane on January 9, 2013. Even after Senior Judge Kane graciously afforded Rowlands an additional thirty days to submit his brief, Rowlands defied that order dated January 16, 2013. Rowlands also failed to comply with the subsequent court notice of July 15, 2013, directing him to file his opposing brief by August 29, 2013. His repeated disregard for court directives and deadlines will not be countenanced, and to the contrary, will be treated as a lack of opposition to the entry of judgment against him in the amount of $36,427.52, plus interest. See Pa.R.C.P. 1035.3(d); Lacka. Co. R.C.P. 211(f).

And now, this 24th day of October, 2013, upon consideration of “Plaintiff’s Motion for Summary Judgment as to Defendant, Hurlow Rowlands, Only,” and the exhibits and memorandum of law submitted by plaintiff, and in light of the lack of any opposition thereto by defendant, Hurlow Rowlands, and based upon the reasoning set forth above, it is hereby ordered and decreed that:

1. Plaintiff’s Motion for Summary as to Defendant, Hurlow Rowlands, Only is granted; and

2. Judgment is entered in favor of plaintiff, Wells Fargo Equipment Finance, Inc., and against defendant, Hurlow Rowlands, in the amount of $36,427.50, plus interest, based upon the breach of contract claim set forth in count I of the complaint.

      . Local Rule 211(1) provides that if the non-moving “party fails to timely file and serve a brief, that party may be deemed not to oppose the motion or petition and may not be allowed to present oral argument.” Lacka. Co. R.C.P. 211(1).

      . In support of its motion for partial summary judgment, Wells Fargo has also submitted the affidavit of a Wells Fargo representative, Dennis D. Schmidt. (Docket entiy no.6, exhibit E). Under the Nanty-Glo rule, the party moving for summary judgment may not rely upon testimonial affidavits, even if uncontradicted, to establish the nonexistence of general issues of material fact, since the credibility of the testimony is always a matter for the factfinder. DeArmitt v. New York Life Ins. Co., 73 A.3d 578, 595 (Pa. Super. 2013). Therefore, the affidavit of Mr. Schmidt will not be considered in addressing the merits of Wells Fargo’s motion.


author: WETTICK, J.,

text:
    Untura v. Alcoa, Inc.

      C.P. of Allegheny County,
    No. GD-10-001251

      Michael B. Leh and Joseph Satterley, for plaintiff.

      Michael J.R. Schalk and Cathy Gordon, for defendant.
    October 29, 2013
   WETTICK, J.,

Alcoa’s motion to dismiss this case under 42 Pa.C.S. § 5322(e) is the subject of this opinion and order of court. This section reads as follows:

(e) Inconvenient forum.-When a tribunal finds that in the interest of substantial justice the matter should be heard in another forum, the tribunal may stay or dismiss the matter in whole or in part on any conditions that may be just.

In determining whether a matter should be heard in another forum in the interest of substantial justice, a trial court must consider two important factors: (1) a plaintiff’s choice of the place of the suit will not be disturbed except for weighty reasons, and (2) no action will be dismissed unless an alternative forum is available to the plaintiff. Wright v. Aventis Pasteur, Inc., 905 A.2d 544, 547-48 (Pa. Super. 2006).

In deciding whether weighty reasons exist to overcome the plaintiffs choice of forum, recent Superior Court opinions, Hunter v. Shire U.S., Inc., 992 A.2d 891, 894-95 (Pa. Super. 2010), and Wright v. Aventis Pasteur, Inc., supra, require the trial court to consider the following private and public factors:

The private factors to be considered include:

the relative ease of access to sources of proof; availability of compulsory process for attendance for unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of the premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.
With regard to the public factors a court must consider, this court has recognized that[:] administrative difficulties follow for courts when litigation is piled up in congested centers instead of being handled at its origin. Jury duty is a burden that ought not to be imposed upon the people of a community which has no relation to the litigation. There is appropriateness, too, in having the trial... in a forum that is at home with the state law that must govern the case, rather than having a court in some other forum untangle problems in conflict of laws, and in law foreign to itself.

This lawsuit is brought on behalf of the Estate of Dante Untura Filho (“decedent”). The decedent was a resident and a citizen of Brazil from the date of his birth on December 1, 1950 through the date of his death on February 5, 2010.

The decedent was employed by Alcoa Aluminio, S.A. (“Aluminio”) at a factory in Pocos de Caldas, Brazil, from approximately 1970 to 1987. He died from mesothelioma on February 5, 2010. His causes of action are based on allegations that as a result of his employment as a maintenance man, he worked directly and indirectly with and was directly and indirectly exposed, on a daily or almost daily basis, to various asbestos-containing products.

Alcoa, the only defendant, is a separate corporate entity from Aluminio, and it was a 60% owner of Aluminio. Plaintiff alleges that Alcoa, from its headquarters in Pittsburgh, controlled the safety and industrial hygiene practices (or lack thereof) of the factory where the decedent worked. Plaintiff further alleges that Alcoa obtained asbestos-containing products from Johns Manville Corporation and other manufacturers of asbestos-containing products in the United States and exported them to the factory where the decedent worked. Plaintiff also alleges that the disease which the decedent contracted was caused by his exposure to various asbestos-containing products which Alcoa furnished to Aluminio.

Plaintiff contends that the present case is governed by Hunter v. Shire USA, Inc., supra, and Wright v. Aventis Pasteur, Inc., supra. These cases involve injuries the plaintiffs sustained from taking drugs manufactured by the defendants.

In Hunter, the plaintiff was a resident of Georgia; he was prescribed the drugs in Georgia; he ingested the drugs in Georgia; and the heart attack occurred within Georgia. The lawsuit was filed in Pennsylvania.

The drug manufacturer requested dismissal pursuant to 42 Pa.C.S. § 5322(e), asserting that the plaintiff had no connection to Pennsylvania.

The Superior Court denied the request to dismiss because defendant’s corporate headquarters were located in Philadelphia and the crux of the litigation pertained to decisions of the manufacturers, made in the Philadelphia area, to use and market the substance that allegedly caused the injuries in question. The Superior Court ruled that the lawsuit was properly filed in Pennsylvania because “there is no question that the central issue herein relates to appellant’s development, testing, and marketing of Adderall, and its knowledge of and warnings about the risks of heart attack from ingesting that drug. The events relating to these activities were conducted by appellant’s employees in Pennsylvania.” Id. at 895.

The Hunter opinion relied on Wright v. Aventis Pasteur, Inc., supra, which involved an identical fact situation, and a denial of a request to dismiss pursuant to 42 Pa.C.S. §5322(e).

Hunter and Wright do not cover the fact situation of the present case because in Hunter and Wright the crux of the litigation was not over whether the decedent ingested medicine manufactured by the defendant. The critical issues involved the properties of the drugs and the warning labels. The evidence as to these issues was at the manufacturers’ headquarters in Philadelphia.

In the present case, on the other hand, exposure to asbestos-containing products allegedly provided by Alcoa is a central issue. In asbestos litigation, causation issues will focus on the decedent’s daily activities and the frequency, regularity, and proximity to products containing asbestos allegedly supplied by Alcoa, the type of safety equipment, if any, that was provided, whether the safety equipment was used, and the like. These are fact-specific issues that require the testimony of witnesses. This is particularly so where, as in this case, the employee died before his deposition could be taken and where the issue is whether the asbestos to which decedent was exposed was supplied by Alcoa.

The other central issue in this litigation concerns the manner in which Aluminio conducted its business. Did it, as Alcoa contends, have its own industrial hygiene program in Brazil, staffed by Brazilians seeking to comply with Brazilian law? Was Aluminio, as Alcoa contends, in charge of its own operations, including working conditions? Was Alcoa’s role only to assist Aluminio in improving its occupational health practices, as it so contends? Do the records of Aluminio during the period of decedent’s employment (1970-1987) show that it complied with Brazilian occupational health laws? What do the records of Aluminio show as to the sources of asbestos-containing products that Aluminio purchased?

The evidence described above is located in Brazil. Furthermore, in all likelihood, nearly all the witnesses will speak Portuguese as a first language, and the records, described above, in Aluminio’s possession, custody, and control will probably be in Portuguese.

In discovery, plaintiff listed seven United States witnesses supposedly with knowledge about Alcoa’s hygiene program. However, the first witness (the president of Aluminio during half the time decedent worked for the company) now lives in Brazil. Two of the other seven witnesses are deceased. None of the remaining four witnesses are current employees.

Through discovery, Alcoa has already produced documents within its possession, custody, and control related to the relationship between Alcoa and Aluminio on industrial hygiene issues. It has also answered interrogatories submitted by plaintiff relating to the use of asbestos at Aluminio and what decisions were made in Pittsburgh by Alcoa.

Alcoa has agreed that it is subject to the jurisdiction of the courts of Brazil and to supply all information, if it has not already done so, that would be available to plaintiff in litigation in this court.

At pages 2 and 3 of plaintiff’s brief, plaintiff contends that Allegheny County is the natural forum to litigate plaintiff’s claims for the following reasons:

Alcoa, Inc. controlled its Brazilian subsidiary and the use of asbestos at the subsidiary’s plant from Alcoa, Inc.’s headquarters in Pittsburgh, PA, and similarly controlled health and industrial hygiene procedures, if any, and management of the plant from Pittsburgh, PA;
Alcoa, Inc. possessed knowledge of the health hazards of asbestos in Allegheny County, controlled the subsidiary and the use of asbestos at the subsidiary’s plant from Alcoa, Inc.’s headquarters in Pittsburgh, PA, and similarly controlled health and industrial hygiene procedures, if any, from Pittsburgh, PA;
Alcoa made decisions from Allegheny County to purchase asbestos products in the United States and export them to the Pocos de Caldas plant;
Alcoa, Inc. failed to warn or adequately warn plaintiff and intentionally exposed plaintiff to asbestos and caused his mesothelioma, and that those decisions were made from Allegheny County;....

Whether there are reasons to deny defendant’s motion depends upon an examination of the private and public factors set forth at pages 1-2 of this opinion.

I initially consider “the relative ease of access to sources of proof.”

For plaintiff to prevail in this litigation, plaintiff must establish exposure to asbestos in the workplace during the period of decedent’s employment (1970-1987) and a causal connection between the exposure and decedent’s illness. Since Mr. Filho died before his deposition was taken, findings of exposure (or the lack of exposure) will be based on the testimony of others employed at the same workplace between 1970 and 1987.

All witnesses, documents, and other evidence concerning exposure and causation are in Brazil. The first, and possibly only, language of most witnesses will be Portuguese. Since credibility will be an issue, live testimony is desirable. In addition, all medical records and other evidence regarding damages are in Brazil.

If exposure and causation are established, the next issue is whether the asbestos products on which the exposure claim is based were shipped by Alcoa, and received, and used by Aluminio. The records of Aluminio are the best source for establishing Aluminio’s receipt of asbestos-containing products from Alcoa and the use of such products. Furthermore, employees and former employees of Aluminio are the best source of information with respect to plaintiff’s claims that Alcoa controlled Aluminio.

Through discovery, Alcoa has already produced all records and answered all interrogatories concerning plaintiff’s claims that Alcoa arranged for the shipment of asbestos-containing materials to Aluminio and assumed responsibility for the environmental policies of Aluminio. Any remaining records are likely to be in Brazil (i.e., records of Aluminio showing the sources of products containing asbestos used in places where the decedent worked).

In summary, the factor of relative ease to the sources of proof overwhelmingly favors Alcoa.

The second factor-the availability of compulsory process for attendance of unwilling witnesses and the cost of obtaining attendance of willing witnesses-also favors Alcoa. All of the witnesses in the exposure, causation, and damages phases of the litigation are in Brazil. The records of Aluminio are in Brazil. The witnesses who can answer questions regarding these records (Aluminio employees and former employees) are in Brazil. These same witnesses are also likely to be able to offer testimony regarding the relationship between Alcoa and Aluminio.

The third factor does not apply.

The fourth factor-all other practical problems that make trial of a case easy, expeditious, and inexpensive-favors Alcoa because (1) it would appear that the substantive law of Brazil will apply to this fact situation where a citizen and resident of Brazil was injured at a workplace in Brazil, (2) the first language of most of the witnesses will be Portuguese, and (3) most of the witnesses live in Brazil.

None of the public factors favor plaintiff.

The fact situation in this case is similar to that in Auxer v. Alcoa, Inc., 2010 WL 1337725 (W.D. Pa. 2010), aff’d Auxer v. Alcoa, Inc., 406 Fed. Appx. 600 (3d Cir. 2011), in which the litigation was dismissed on the ground that Allegheny County was an inconvenient forum.

The Auxer litigation involved 244 plaintiffs (all Australian residents with one exception) who claimed to have suffered personal injuries caused by their exposure to emissions from three aluminum refineries in Western Australia. The refineries were owned and operated by Alcoa of Australia which is 60% owned by a subsidiary of Alcoa.

The federal district court focused on the relative ease of access to sources of proof. All sources regarding where and to what the individual was exposed, duration of the exposure, injury, and impact on individual lifestyles were located in Australia.

The court stated that Alcoa would need access to non-party witnesses regarding the injuries, medical treatment, local climatic anomalies, refinery operations, environmental and public health regulations, and enforcement thereof. All sources of proof regarding these matters were in Australia. In response to the plaintiffs’ argument that there were important witnesses and/or documents located in Pennsylvania, the court found that documentary evidence from a party was much more accessible than the evidence from Australian non-parties required by Alcoa to defend those actions.

The court also found that the other factors favored Alcoa.

The court of appeals affirmed; it found that the district court did the appropriate balancing and reached a conclusion well within the scope of its discretion.

SUMMARY

Plaintiff has identified only five witnesses (all former employees of Alcoa) who may be in a position to offer testimony regarding the relationship and dealings between Alcoa and Aluminio during the period between 1970 and 1989. Three live in Western Pennsylvania, one lives in Texas, and the remaining witness lives in Brazil.

The four witnesses living in the United States can be deposed, pursuant to a court order, if they will not voluntarily appear. If the testimony of these witnesses is favorable to plaintiff, plaintiff will not be prejudiced by submitting the oral testimony through a deposition (which can be videotaped).

With respect to the first phase of the litigation (the asbestos phase of the litigation), Brazil is the source of all evidence. With respect to the second phase (Alcoa’s alleged shipment of asbestos-containing products and control over Aluminio’s industrial hygiene practices), and in light of Alcoa’s document production and answers to interrogatories, the primary sources of evidence will be the testimony of witnesses in Brazil familiar with the operation of Aluminio during the period between 1970 and 1989 and the documents in the possession, custody, and control of Aluminio describing the relationship and dealings between Alcoa and Aluminio.

For these reasons, I enter the following order of court:

ORDER OF COURT

On this 29 day of October, 2013, it is hereby ordered that this action is stayed pursuant to 42 Pa.C.S. § 5322(e).

It is further ordered that Alcoa, Inc. shall submit to the jurisdiction of the courts of Brazil, it shall not in litigation in Brazil raise any statute of limitation defenses to any lawsuit filed in the courts of Brazil within the next year, and it shall provide any discovery that it would have been required to furnish under the Pennsylvania rules of civil procedure.

      . The case law which applies the “oppressive and vexatious standard” set forth in Cheeseman v. Lethal Exterminator, Inc., 701 A.2d 156 (Pa. 1997), applies only to intrastate forum challenges pursuant to Pa.R.C.P. No. 1006(d)(1). Id at 548, n.9.

      . These promises may be enforced in this court if this lawsuit is stayed, rather than dismissed.

      . This court required Alcoa to submit to the jurisdiction of the Australian courts as a condition for dismissal.

      . Plaintiff never contends that there is no alternate forum available to plaintiff


author: HODGE, J.,

text:
    Kimmel v. Kimmel

      C.P. of Lawrence County,
    No. 11135 of 2010, C.A.

      Charles S. Cusick, Jr., for plaintiff.

      John J. Bongivengo, for defendant.
    October 31, 2013
   HODGE, J.,

Before the court for disposition are competing exceptions to the report and recommended order entered by the equitable distribution master. The plaintiff, Susan L. Kimmel (hereinafter, “wife”), and the defendant, Randall D. Kimmel (hereinafter, “husband”), were married on September 15, 1984 and separated in October, 2008. Wife is currently 52 years old. During the course of the parties’ marriage, wife served primarily has a homemaker and caregiver for the parties’ minor children. Following the parties’ separation, wife began working in the retail sector, which eventually resulted in working for Nordstrom’s Department Store as a personal stylist. Wife receives a minimal base salary, and her compensation is largely dependent on her commission. Husband is currently 55 years old. Husband initially worked in a family owned business with his father and brother, Big K Liquidators. Following the parties’ separation, husband began his own business, SBK Liquidators. In July 2011, husband was no longer able to run SBK Liquidators at a profit, and he attempted to work for various companies. Husband ultimately obtained employment with Family Dollar as a store manager.

The majority of the parties’ marital assets subject to equitable distribution include their marital residence and various IRAs, savings and investment accounts and vehicles. The marital debt is comprised of a mortgage on the marital residence and a home equity line of credit. Following several days of equitable distribution hearings, the master entered a report and recommended order dividing the marital estate. Pursuant to the master’s recommendations, wife was awarded the marital residence, provided wife made a lump sum payment to husband. The IRA and savings accounts were liquidated and distributed to the parties. Additionally, wife was awarded alimony and counsel fees.

The parties each filed timely exceptions to the master’s report and recommendations. Wife contends that the master committed the following errors:

1. The master erred in permitting husband to testify as to his reasonable monthly expenses.

2. The master erred in his determination of husband’s reasonable and necessary monthly expenses.

3. The master erred in his valuation of the manulife account, the Pioneer IRA, Big K and SBK Liquidators.

4. The master erred in determining that a post separation withdrawal in the amount of $15,908.00 was used for marital purposes and by assigning this debt to wife.

5. The master erred in his valuation of the fair rental value of the marital home.

6. The master erred in his determination of husband’s annual earning capacity.

7. The master erred in recommending that wife borrow additional money when refinancing the marital residence to provide husband with a lump sum equitable distribution payment.

8.The master erred in limiting wife’s alimony award to $1,000.00 per month for one year and $800.00 per month for the following six years.

Husband asserted the following sixteen exceptions to the master’s report and recommendations:

1. The master erred in his valuation of the marital portion of the Pioneer IRA account.

2. The master erred in his valuation of the marital portion of the Manulife account.

3. The master erred in his valuation of the SBK Liquidator’s account.

4. The master erred in determining the Schneider Roth IRA is partially non-marital property.

5. The master erred in determining that wife took $10,709.42 from a marital account and used the funds to open a separate IRA.

6. The master erred in failing to provide husband with a $2,293.75 offset for additional funds wife withdrew from the parties’joint Janney Montgomery account.

7. The master erred in awarding the entire Schneider Roth IRA account to wife.

8. The master erred in awarding wife a portion of the SBK Liquidator account.

9. The master erred in determining that the 2007 BMW has any marital value.

10. The master erred in determining that the 2011 Mercedes has any marital value.

11. The master erred in determining that the 2003 Audi has any marital value.

12. The master erred in his valuation of the marital residence.

13. The master erred in awarding wife 62.5% of the equity from the marital residence.

14. The master erred in awarding wife alimony.

15. The master erred in awarding wife counsel fees.

16. The master erred in requiring husband to obtain life insurance to secure wife’s alimony award.

In disposing of these exceptions, the court observes that while a master’s report is advisory only, it is to be given great deference. Fiorelli v. Fiorelli, 195 A.2d 369 (1964); Morschhauser v. Morschhauser, 516 A.2d 10 (1986). A reviewing court has a duty to make a complete and independent review of the proceeding below. Rollman v. Rollman, 421 A.2d 755 (1980).

In reviewing master’s considerations, the report should be given “fullest consideration” particularly on issues of credibility. Kohl v. Kohl, 564 A.2d 222 (1989). The review is intended to discover inherent improbabilities in the stories of the witnesses, inconsistencies and contradictions, bias, interest, and opposition to incontrovertible physical facts by which credibility may be ascertained. Rollman, supra. However, because the master is the person hearing the testimony and observing the demeanor and appearance of the witness, any issue of credibility must be resolved by giving the master’s findings the fullest consideration. Rorabaugh v. Rorabaugh, 448 A.2d 64 (1982). With this standard in mind, the following is a discussion and disposition of the parties exceptions.

Wife’s Exception 1

Wife’s first exception contends that the master erred in permitting husband to testify as to his reasonable monthly expenses because husband failed to include an expense statement in his pre-trial statement. Rule 1920.33 of the Pennsylvania Rules of Civil Procedure precludes a party from offering testimony or evidence regarding his or her monthly expenses if they fail to file a rule 1910.27 (c) (2) (B) expense statement. Rule 1920.33 is mandatory in nature, and leaves little discretion for the trier of fact to circumvent the rule’s requirements. This court has established a strict adherence to Rule 1920.33 in prior cases. See e.g. Wetzel v. Wetzel, No. 11925 of 2009, C.A. (a party who fails to comply with rule 1920.33 shall be precluded from offering any testimony or introducing evidence in support of his or her economic claims).

The court concludes that it was error for the master to permit husband to testify as to his reasonable monthly expenses.

Wife’s Exception 2

Wife’s second exception compounds her first by arguing that the master erred in his determination of husband’s reasonable and necessary monthly expenses because the master improperly considered testimony offered by husband in this regard. Also the master offered husband significant leniency in the testimony husband offered to establish his living expenses, the court finds harmless error occurred. Wife’s exception 2 is therefore denied.

Wife’s Exception 3

Wife next takes exception to the master’s valuation of the Manulife account, the Pioneer IRA, and the Big K and SBK Liquidators accounts. Husband also takes exception to the master’s valuation of the Pioneer IRA, Manulife stock and SBK Liquidators account in his first, second and third exceptions. Wife contends that each of these assets are in the exclusive possession and control of husband. Wife argues that, because husband failed to establish a pre-marital value for any of these assets, their value is entirely marital in nature. Husband alternatively argues that these assets are entirely non-marital property and should not have been subject to equitable distribution.

This court has very recently addressed the issue of who carries the initial burden of production in valuating an asset at the time of marriage. See Boyd v. Boyd, No. 10104 of 2011, C.A. (Court of Common Pleas of Lawrence County, October 7, 2013). In Boyd, wife requested that husband carried the burden of establishing the premarital value of husband’s business at the time of equitable distribution. Husband objected to the court placing a burden upon him, and he argued that wife was free to present whatever evidence she deemed necessary to establish the business’ value as of the date of marriage. Id. at 2. This court ultimately determined that because husband maintained exclusive control and possession over the evidence necessary to establish a pre-marital value for his business, husband carried the initial burden of production. Id. at 4 (citing Smith v. Smith, 653 A.2d 1259, 1265-66 (Pa. Super. 1995). This court also stated, however, that if husband failed “to offer sufficient evidence to establish a premarital value, the Equitable Distribution master can properly accept wife’s evidence as credible.” Id. at 5.

Applying the same standard this court adopted in Boyd to the case sub judice, and after the court reviewed the transcripts from the equitable distribution hearings, the court determines that the only competent evidence offered to the equitable distribution master regarding the subject accounts was their present day value. Thus, neither husband nor wife presented sufficient evidence to succinctly establish the pre-marital value of the accounts in question. The master utilized the present value to establish the marital value of the accounts by multiplying the present value by the length of marriage and dividing this value by the length of the applicable account’s existence. The master applied a similar valuation method to determine the marital portion of the Big K and SBK Liquidators accounts. See master’s report, pp. 35-36. The court finds no error in the master’s findings of fact and corresponding analysis. Wife’s exception 3 is therefore denied.

Wife’s Exception 4

Wife’s fourth exception contends that the master erred in designating a post separation withdrawal in the amount of $15,908.00 as marital debt and by assigning this debt to wife.

On page 41 of the master’s report, the master concludes that husband used a portion of the $15,908.00 drawn from the home equity line of credit to pay for their children’s college tuition. The master’s conclusion is supported by the notes of testimony and factual findings set forth on page 23 of the master’s report. The master justified assigning the debt as marital because the funds were used for the benefit of the parties’ children, and the master declined to credit the draw to husband’s equitable distribution award. The master’s determination, however, is inconsistent with Pennsylvania case law in determining that the debts of a spouse acquired after separation cannot be enforced against the opposing spouse or the marital home. Fidelity Bank v. Carroll, 610 A.2d 481, 483 (Pa.Super. 1992). Wife’s exception 4 is therefore granted.

Wife’s Exception 5

Wife next asserts that the master erred in establishing a fair rental value for the marital residence because this issue was not raised by either party prior to or during the equitable distribution hearings. A thorough review of the master’s report indicates that the marital residence was valued after considering an appraisal from January, 2013, and each of the parties’ respective opinions regarding the marital residence’s fair market value. See master’s report, pp. 18 and 40. The master’s discussion of distributing the equity and debt associated with the marital residence is found on pages forty through forty-one of his report. In footnote ten of the master’s report, the master provides:

The master shall use the current balance owed on the mortgage for valuation purposes because the master finds that wife’s habitation of the home and payments of the mortgage and costs related to the home are offset by husband not receiving an award for fair rental value of the residence.

Master’s report, p. 40, n. 10.

The master’s conclusion, as set forth above, establishes why the master determined that using the current balance of the mortgage versus the mortgage balance as of the date of separation was appropriate. The master acknowledged that wife made all mortgage payments since the parties’ separation because she continued to reside in the residence. This is consistent with the support requirements and guidelines. See Pa.R.C.P. 1910.16-6(e). The master determined that allocating the equity established by wife’s mortgage payments against wife was appropriate because wife received the sole benefit of living in the marital residence since separation. The court finds no error in the master’s analysis. See Gee v. Gee, 460 A.2d 358 (Pa. Super. 1983). Wife’s exception 5 is therefore denied.

Wife’s exception 6

Wife next contends that the master erred in his assessment of husband’s annual earning capacity. Wife argues that the master under-valued husband’s annual earning capacity in reaching an ultimate determination regarding alimony.

The master succinctly summarized husband’s employment history on pages nine through twelve of his report. Husband was the primaiy wage earner during the course of marriage. While working with his father and brother, husband successfully operated a furniture business and wholesale supplies business. Husband was unable to maintain a business venture with his brother after their father passed away in October 2009. Thereafter, husband started his own business, SBK Liquidators, selling wholesale groceries. Husband stated that he could no longer operate his business because he lost his main supplier in 2011. Thereafter, husband utilized his business to sell furniture and scratch and dent items.

In June 2013, husband became employed as a manager with Family Dollar. Husband’s current salary is $44,500.00 annually. The master arrived at husband’s monthly income by dividing his annual salary by twelve ($44,500.00/12 = $3,708.00). Wife contends that husband should be assessed a higher earning capacity because he maintains the ability to supplement his salary by continuing to sell furniture and wholesale items, consistent with his conduct in 2012. Wife’s argument is consistent with this court’s prior determination following a denovo support hearing and subsequent order entered on May 18, 2012, which assessed husband’s net monthly earnings at $4,526.00.

The master considered husband’s skills and experience in the wholesale business in assessing husband an earning capacity of $85,000.00. Although wife argued that husband’s earning capacity is in excess of $100,000.00, the court finds the master’s conclusion to be appropriate. The court makes this finding based upon the fact that husband is currently employed full time as a store manager for Family Dollar. Husband has appropriately obtained other employment following the loss of his business. Alternatively, husband still possesses the knowledge and skill necessary to supplement his salary as he did in 2012. For this reason, the court finds that the master properly assessed husband an earning capacity of $85,000.00. Wife’s exception 6 is therefore denied.

Wife’s Exception 7

Wife’s seventh exception contends that the master erred by requiring wife to make a lump sum payment to husband to satisfy the global economic distribution. Although the master awarded the marital residence to wife, the master’s recommendation specified that upon refinancing the marital residence, wife should borrow an additional $13,437.89 to satisfy the lump sum awarded to husband. See master’s report, p. 42.

Wife’s seventh exception correlates to her fourth exception because husband’s withdrawal against the home equity line of credit in the amount of $15,908.50 was ultimately assigned to wife by requiring wife to assume full responsibility for the remaining mortgage and home equity loan. Wife does not contest her responsibility to pay the $2,950.00 husband withdrew and used to make repairs to the marital residence, but wife argues that if the master properly assigned the remaining, balance of the post-separation withdrawal to husband ($12,958.50), wife would not owe husband a lump sum payment.

Based upon the court’s review of wife’s exception 4, the court finds that it is appropriate to grant wife’s exception 7, which would otherwise result in a $479.39 ($13,437.89 — $12,958.50) distribution in husband’s favor. The court will address the adjustment in the remaining portion of this opinion.

Wife’s Exception 8

Wife’s last exception asserts that the master erred in limiting wife’s alimony award to $1,000.00 per month for one year and $800.00 per month for the following six years. Husband also takes exception to the master’s recommendation regarding alimony in husband’s exception 14. The court has thoroughly reviewed the master’s report where he specifically addresses each of the seventeen factors set forth in section 3701 of the divorce code. The court finds that the master carefully considered all of the relevant factors and placed appropriate weight in reaching an overall recommendation regarding alimony. Wife’s exception 8 is therefore denied.

Having disposed of wife’s exceptions to the master’s report and recommendation, the court turns to husband’s exceptions. In his brief to the court, husband consolidated his exceptions as set forth above. The court will therefore address husband’s exceptions in a similar manner.

Husband’s Exceptions 1, 2 and 3

Husband’s first three exceptions all contend that the master erred in establishing the marital component of the Pioneer IRA account; the marital portion of the Manulife account; and the marital portion of the SBK Liquidator’s account. The court previously addressed these issues in wife’s exception 4. The court fully incorporates its findings of fact and conclusions as though fully set forth herein. Husband’s exceptions 1, 2, and 3 are therefore denied.

Husband’s Exception 4

Husband’s fourth exception contends that the master erred in determining that the Schneider Roth IRA is partially non-marital property belonging to wife. Husband supports his contention by arguing that wife established the IRA with money wife received from her father and with funds taken from a marital account. Husband believes that the entire IRA should be characterized as marital in nature because wife co-mingled marital and non-marital assets.

In general, when inherited funds are co-mingled with marital funds, it is permissible to conclude that the entirety of the funds is marital property. Verholek v. Verholek, 741 A.2d 792 (Pa. Super. 1999). However, an exception can be made if the non-marital portion of the funds can be appropriately traced back to their original source. Busse v. Busse, 921 A.2d 1248 (Pa. Super. 2007). Additionally, when considering whether an asset is marital property the court must consider the parties’ intent. Barner v. Barner, 527 A.2d 122 (Pa. Super. 1987).

The master addressed the Schneider Roth IRA on pages 33 and 34 of the master’s report. The master determined that the IRA was established from funds wife received from her father and from $10,709.72 wife withdrew from a separate marital account. The master ultimately considered the $ 10,709.72 as an equitable advance to wife. The master further concluded that in order to promote an overall equitable distribution of marital assets the entire IRA should be distributed to wife.

After reviewing the master’s recommendation, the court finds no error in the master’s analysis. The master was able to accurately trace all funds contained in the Schneider Roth IRA. Further, the master determined that wife placed marital funds into her IRA following separation to make payments on the parties’ home equity line of credit. Husband never had access to the IRA. Thus, it is proper to conclude that wife never intended to treat the IRA as marital property. Husband’s exception 4 is therefore denied.

Husband’s Exception 5

Husband next contends that the master erred in determining that wife took $10,709.42 from a marital account and used the funds to open a separate IRA. As discussed in husband’s fourth exception, the court determined that the master properly traced the assets contained in the Schneider Roth IRA prior to making a determination regarding the allocation of the IRA. The record clearly supports the master’s conclusion that $10,709.42 was withdrawn by wife from the parties’ Janney Montgomery account. Husband’s exception 5 is therefore denied.

Husband’s Exception 6

In his sixth exception, husband alleges that the master erred in failing to provide husband with a $2,293.75 offset for additional funds wife withdrew from the parties’joint Janney Montgomery account. Husband argues that wife used these funds to pay for the marital residence while having exclusive possession of said residence. Husband seeks credit against equitable distribution for wife’s withdrawal.

The master determined that because wife applied the funds against the existing home equity line of credit, husband was not entitled to an offset for wife’s withdrawal. See master’s report, p. 32. The court finds that the master’s conclusion was appropriate given the fact that wife applied the marital funds to a marital debt. Husband’s exception 6 is therefore denied.

Husband’s Exception 7

Husband next argues that the master erred in awarding the entire Schneider Roth IRA account to wife. Husband’s seventh exception has been previously discussed in husband’s exceptions 4 and 5. Consistent with the court’s prior analysis, husband’s exception 7 is denied.

Husband’s Exception 8

In his eighth exception, husband argues that the master erred in awarding wife a portion of the SBK Liquidator account. Husband established his SBK Liquidators business in October of 2009, one year after the parties’ separation. The record and master’s report do not indicate that husband started this business with any marital funds or assets received from husband’s prior business endeavors. See master’s report, pp. 9-10 (husband received no compensation upon leaving Mr. Office and Big K). The master further finds that SBK Liquidators was not generating any sale or income at the time of the parties’ separation. Id. at 30. The master’s conclusion is consistent with the evidence establishing that husband started SBK Liquidators after separation. The master further concluded that it was inappropriate to assign any marital value to husband’s SBK Liquidator’s account. Id. at 39. However, the master’s ultimate recommendation was inconsistent with his factual findings and conclusions because the master assigned $5,231.46 to Wife from husband’s SBK Liquidator’s account. The master reasoned that the approximate value of this account consistently carried a value of $8,719.10 throughout 2011. The master then assigned 60% of the $8,719.10 balance to wife because “this is the balance that should have existed in the account...as of the date of separation.” Id. at 36.

The court finds that assigning any marital value to the SBK Liquidator’s account is error. It is further error to distribute any of this account to wife. Husband’s exception 8 is therefore granted. The court will address the redistribution of these funds in its final analysis.

Husband’s Exceptions 9, 10 and 11

Husband exceptions 9, 10 and 11 contend that the master erred in assigning marital value to the parties’ 2007 BMW, 2011 Mercedes and 2003 Audi. The parties purchased a 2007 BMW during the course of marriage. Following the parties’ separation, husband sold this vehicle and used the proceeds to purchase a Range Rover for one of the parties’ children. Similar to the court’s disposition of wife’s exception 4, the court determines that because the 2007 BMW was sold following the separation and applied to a non-marital asset, the debt is properly assigned against husband. The court specifically differentiates husband’s conduct from wife’s withdrawal from the parties’ Janney Montgomery account because wife applied the funds to a marital debt. If husband had sold the 2007 BMW and purchased a subsequent vehicle for his son prior to separation, husband’s exception would be warranted. However, because husband sold the vehicle post-separation, the court finds that the master properly assigned some marital value to the 2007 BMW to wife. Husband’s ninth exception is therefore denied.

The court adopts a similar rationale to justify the master assigning marital value to the 2011 Mercedes and 2003 Audi. Husband’s exceptions 10 and 11 are also denied.

Husband’s Exception 12

Husband’s next exception contends that the master erred in his valuation of the marital residence. Husband asserts that the master erroneously considered wife’s testimony regarding the current value of the marital residence because husband offered an expert appraisal in support of a higher valuation. The appraisal was performed on January 3, 2013.

Wife’s testimony establishes that the appraisal fails to consider various deficiencies regarding the current condition of the residence. Wife referenced the facts that the windows need replaced; various plumbing problems exist in the kitchen and one of the bathrooms; and the garage doors need replaced. Husband’s own pretrial statement and testimony contend that the marital residence has a present value of $185,000.00. Husband’s valuation of the marital residence is consistent with that of the master. Husband’s twelfth exception is therefore denied.

Husband’s Exception 13

The master erred in awarding wife 62.5% of the equity from the marital residence. The court has extensively addressed the master’s valuation and distribution of the equity assigned to the marital residence in its prior analysis. The court fully incorporates its previous findings. Husband’s exception 13 is denied.

Husband’s Exception 14

See wife’s exception 8. The court incorporates its findings as thorough fully set forth herein. Husband’s exception 14 is denied.

Husband’s Exception 15

Husband’s fifteenth exception states that the master erred in awarding wife counsel fees. A thorough review of the master’s report indicates that the master properly considered the applicable case law and equitable factors in awarding wife attorney’s fees in the amount of $3,000.00. However, given the court’s findings with respect to wife’s exception 7 and husband’s exception 8, the court finds that attorney’s fees are not longer warranted.

As previously indicated the court made the following adjustments to the equitable distribution recommendations of the master:

a) Not requiring wife to make a lump sum payment to husband in the amount of $13,437.89 based upon the court’s assessing $12,958.50 against husband as set forth below.
b) Reassigning the sum of $12,958.50 husband withdrew from the parties’ home equity line of credit against husband.
c) Not assigning any marital value to husband’s SKB Liquidator’s account, which resulted in a distribution of $5,231.46 in husband’s favor.

The court’s adjustments result in an overall distribution in the amount of $5,710.85 in husband’s favor. By granting husband’s fifteenth exception and not requiring husband to pay wife $3,000.00 in attorney’s fees, husband is left with a net equitable distribution lump sum award of $2,710.85.

Husband’s Exception 16

Husband’s last exception contends that the master erred in requiring husband to obtain life insurance to secure wife’s alimony award. The court finds no basis in husband’s last exception, as 23 Pa.C.S.A. §3502(d) specifically permits the court to direct one party to purchase a life insurance policy and assign beneficiary designations to protect the interest of the other party. Husband’s exception 16 is therefore denied.

Consistent with this opinion the court will enter the following order of court:

ORDER OF COURT

And now, this 31st day of October, 2013, with this matter being before the court for arguments on competing exceptions to the report and recommendations of the equitable distribution master, with Charles S. Cusick, Jr., Esquire, appearing on behalf of the plaintiff, Susan L. Kimmel, and with John J. Bongivengo, Esquire, appearing on behalf of the defendant, Randall D. Kimmel, and with the court considering the exceptions filed on behalf of the respective parties, in addition to thoroughly reviewing the report and recommendations of the equitable distribution master, the court makes the following findings and hereby orders and decrees as follows:

1. Plaintiff’s/wife’s exception 1 is granted.

2. Plaintiff’s/wife’s exception 2 is denied.

3. Plaintiff’s/wife’s exception 4 is granted.

4. Plaintiff’s/wife’s exceptions 5 and 6 are denied.

5. Plaintiff’s/wife’s exception 7 is granted.

6. Plaintiff’s/wife’s exception 8 is denied.

7. Defendant’s/husband’s exceptions 1,2,3,4,5,6, and 7 are denied.

8. Defendant’s/husband’s exception 8 is granted.

9. Defendant’s/husband’s exceptions 9, 10, 11, 12, 13, 14, are denied.

10. Defendant’s/husband’s exception 15 is granted.

11. Defendant’s/husband’s exception 16 is denied.

12. Consistent with the court’s findings as stated in the attached opinion, the overall adjustments to the total equitable distribution award results in wife owing husband a lump sum payment of $2,710.85.

13. Husband’s lump sum award shall be applied directly to the fees husband currently owes to the equitable distribution master in the amount of $2,869.53. Wife shall deposit the sum of $2,710.85 with the office of the prothonotary within thirty (30) days from the date of this order of court.

14. Husband shall immediately pay the balance owed on the equitable distribution master’s fees in the amount of $158.68.

15. All other provisions of the master’s recommended order, not inconsistent with this order of court, are affirmed and fully incorporated herein as a final order of court.

16. The prothonotary shall properly serve notice of this order of court upon counsel of record for the parties and upon any unrepresented party at their last known address as contained in the court’s file.