Ahnert v. Rank America, Inc.

JOHNSON, Judge. Rank America Inc. and Rank-Ahnert Inc. (collectively “Rank”) bring this interlocutory appeal from an order of the Court of Common Pleas of Monroe County which granted the motion of Henry A. Ahnert, Jr., and others (collectively the “Shareholders”) to coordinate Rank’s action in Philadelphia County with the Shareholders’ action in Monroe County. The order transferred the Philadelphia proceeding to Monroe County. The appeal is properly before us, pursuant to Pa. R.A.P. 311(c). We are asked to determine whether the two actions coordinated involve a common question of law or fact, or whether they arise out of the same transaction or occurrence, so as to allow coordination pursuant to Rule 213.1 of the Pennsylvania Rules of Civil Procedure. Finding neither, we conclude that Rule 213.1 may not be utilized and the order which sought to coordinate these two actions in Monroe County must be reversed. The Monroe County action, filed in May 1991, concerns the validity of a July 1990, Settlement Agreement which purports to release the Monroe County Shareholders from an indemnification claim advanced by Rank. The Shareholders seek to have the Settlement Agreement declared valid and enforceable, while Rank seeks to have the Agreement declared void based upon alleged breach of fiduciary obligations and fraudulent misconduct. The Philadelphia action was brought by Rank in May 1992 seeking a declaration that if Rank suffers losses in connection with a third proceeding pending in Dauphin County, then the Monroe Shareholders must indemnify Rank as a result of an [508] alleged breach of material representations and warranties set forth in a March 1988, Acquisition Agreement. The issues in the Philadelphia action are contractual, whereas the issues in the Monroe County action depend upon principles of fraud and breach of fiduciary obligations. In ordering the coordination of the Monroe and Philadelphia claims, the Monroe County trial court declared: Pursuant to Pa.R.C.P. 213.1(c)(1), we find that the record supports that the two actions have predominant and significant common questions of fact and law. Specifically, the scope of the Maryland Claim, the enforceability of the Settlement Agreement and the effect of the Acquisition Agreement are interrelated for purposes of these two actions. Opinion, O’Brien, J., September 28,1992, pages 5-6. The trial court goes on to write: In the Monroe County Action, we must determine whether the Settlement Agreement is enforceable and whether the Agreement encompassed a release, waiver and discharge of all claims arising out of the Maryland allegations. If we find that the Settlement Agreement is enforceable and that the scope of the claims waived involves all claims arising out of the Maryland transactions, then the Philadelphia County Action would be moot. The subsequent waiver rights in the Settlement Agreement would control the former rights granted in the Acquisition Agreement____ In the case at bar, the predominant and significant common question of law and fact arises from litigating the extent of the Maryland Claim waiver and the enforceability of the Settlement Agreement over the Acquisition Agreement. Id. at 7, 8. We do not understand how the “scope” of the Maryland Claim, the “enforceability” of the Settlement Agreement, and the “effect” of the Acquisition Agreement constitute common factual or legal questions, even though they may be, as the trial court suggests, “interrelated.” By the same token, we cannot agree that finding one document enforceable in Monroe [509] County, thereby rendering “moot” separate questions raised in Philadelphia County, permits a conclusion that the same questions would have been raised in both actions. Moreover, we find the only case relied upon by the trial court in resolving these issues to be inapposite. In Richardson Brands, Inc. v. Pennsylvania Dutch Co., Inc., 405 Pa.Super. 202, 592 A.2d 77 (1991), we had occasion to consider the applicability of Pa.R.C.P. 213.1 in a case where the parties brought separate suits in Philadelphia and Cumberland counties arising out of the same contract. The Cumberland County action alleged breach of contract (failure to make royalty payments), while the earlier-filed Philadelphia action was based on an alleged breach of a covenant not to compete. In ruling that Rule 213.1 was applicable when raised in the Philadelphia proceeding, we held that the Cumberland County court had concluded that the issues, relief sought, remedies, and damages were different but stopped short of ruling that common questions of fact were not present. The Philadelphia court was free, therefore, to consider that issue and conclude, inter alia, that “the two cases involve the same set of operative facts.” We find that to be materially different from the situation here, where the Shareholders seek relief in Monroe County relying on a July 1990, Settlement Agreement and Rank seeks relief in Philadelphia County relying upon a March 1988, Acquisition Agreement. The central issue on this appeal is whether the Monroe and Philadelphia actions either (a) involve a common question of law or fact, or (b) arise from the same transaction or occurrence. Pa.R.C.P. 213.1(a). The trial court finds common questions of fact and law in the “scope” of the Maryland Claim, the “enforceability” of the Settlement Agreement, and in the “effect” of the Acquisition Agreement upon the rationale that they are “interrelated for purposes of these two actions.” Opinion, supra at 5-6. We have found no cases, nor does the trial court cite to any, which would hold that the “interrelatedness” of two documents prepared and executed more than two years apart results in the establishment of common questions of either fact or law. [510] It is true that the Shareholders, in their Motion to Coordinate Pursuant to Rule 213.1, filed July 7, 1992 in Monroe County, included Paragraph 15, at page 3 of the Motion, R.R. 97a, stating: This action and the Philadelphia action concern common questions of fact and law. However, there is nothing in the remaining eighteen paragraphs of that motion to support the conclusory averment in Paragraph 15. In their Summary of Argument, the Shareholders proclaim that: The criteria for coordination are easily satisfied given that both actions emerge from common sources; i.e. the Shareholders’ conduct toward Maryland residents and the Agreement. The trial court did not rely upon the “Shareholders’ conduct” to support its belief that common questions of law or fact are present in these two disparate lawsuits. Rank has not agreed, by any statement in its Brief, that both actions arise out of and are related to the Acquisition Agreement. On the contrary, Rank is quite clear in its insistence, on this appeal, that commonality does not exist between these two cases. In its Summary of Argument, Rank sets forth the following: In this case, the Monroe County Court erroneously concluded that the Monroe County and Philadelphia County actions involve a common question of law or fact or arise from the same transaction or occurrence. In fact, the two actions are entirely distinct, as the Monroe County action concerns only the enforceability of the July, 1990 Settlement Agreement as it relates to the release of the Maryland Claim, whereas the Philadelphia County action concerns only Rank’s entitlement to indemnification under the Acquisition Agreement for losses which may be incurred in the Dauphin County action filed on April 16, 1992. Contrary to the Monroe County Court’s assumption, the “Maryland Claim” does not and cannot include the subsequent “Philadelphia Claim.” We find the argument advanced by Rank to be persuasive. We conclude that the trial court committed an error of law in ruling that common questions of fact or law exist insofar as the trial court attempted to rely upon the “scope” of one [511] matter, the “enforceability” of a second matter, and the “effect” of still a third matter in finding commonality. Accordingly, we reverse the order which granted coordination and remand the case for further proceedings not inconsistent with this Opinion. Because we conclude that common questions of fact or of law are lacking, we do not reach Rank’s second question on appeal concerning the appropriate situs, pursuant to Rule 213.1(d)(2), for the transfer of any proceedings properly coordinated. Order granting coordination and transferring the Philadelphia proceeding is REVERSED. Jurisdiction relinquished. BECK, J., files a dissenting opinion.