Collura, C. v. Peoples Neighborhood Bank ( 2019 )

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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
CHARLES R. COLLURA AND : IN THE SUPERIOR COURT OF
JENNIFER A. COLLURA, HIS WIFE; : PENNSYLVANIA
COLLURA EXCAVATING, LLC AND :
BELLA BAMBINI’S DAY CARE, LLC, :
:
Appellants :
:
v. :
:
PEOPLES NEIGHBORHOOD BANK, :
A DIVISION OF PEOPLES SECURITY :
BANK AND TRUST COMPANY, :
PEOPLES SECURITY BANK AND TRUST : No. 2019 MDA 2018
COMPANY, VANFLEET APPRAISALS, :
INC. AND ROBIN VANFLEET MORSE :
Appeal from the Order Entered February 21, 2018,
in the Court of Common Pleas of Lackawanna County
Civil Division at No. 2017-00841
BEFORE: LAZARUS, J., OTT, J., AND FORD ELLIOTT, P.J.E.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED SEPTEMBER 06, 2019
Charles R. Collura and Jennifer A. Collura, his wife; Collura Excavating,
LLC; and Bella Bambini’s Day Care, LLC (“appellants”) appeal from the
February 21, 2018 order entered in the Court of Common Pleas of Lackawanna
County that sustained the preliminary objections of Peoples Neighborhood
Bank, a Division of Peoples Security Bank and Trust Company; and Peoples
Security Bank and Trust Company (the banking entities will be collectively
referred to as “lenders”); and VanFleet Appraisals, Inc.; and Robin VanFleet
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Morse (VanFleet Appraisals, Inc. and Ms. Morse will be collectively referred to
as “VanFleet”) (all defendants below will be collectively referred to as
“appellees”) and dismissed appellants’ complaint with prejudice. We affirm.
The record reflects that appellants instituted an action against appellees
by filing a complaint on January 30, 2017, wherein they alleged breach of
contract, breach of the implied covenant of good faith, and negligence against
all appellees and included additional counts against lenders wherein they
alleged breach of fiduciary duty, included a claim for accounting, and alleged
interference with contract. The action arose from a $400,000 construction
loan that appellants secured from lenders. The construction loan agreement
contained a draw schedule that provided for the release of specified funds in
accordance with construction-progress valuations that were to be completed
by VanFleet. Appellants alleged that the second loan draw on January 30,
2013, fell short of the specified amount and that the shortfall forced appellants
to use their own funds to finance the project. Appellants further alleged that
the third loan draw also fell short. As a result of the shortfalls, appellants
alleged that they were unable to finish construction, unable to operate their
businesses, and unable to regain sufficient credit.
Although lenders and VanFleet filed separate preliminary objections,
both included challenges to the trial court’s jurisdiction based on untimely
service of process. The trial court ultimately sustained appellees’ preliminary
objections and dismissed appellants’ complaint with prejudice by order
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entered February 21, 2018. The record reflects that on August 16, 2018,
appellants filed a petition for leave to file an appeal nunc pro tunc. On
November 20, 2018, the trial court granted the petition based on its
acknowledgement that appellants never received the February 21, 2018 order
because of a “clerical misstep” on the trial court’s part. (Order of court,
11/20/18.) Appellants filed a timely notice of appeal. The trial court ordered
appellants to file a concise statement of errors complained of on appeal
pursuant to Pa.R.A.P. 1925(b). Appellants timely complied. The trial court
then filed its Rule 1925(a) opinion wherein it relied upon the reasons it set
forth in its February 21, 2018 opinion for sustaining appellees’ preliminary
objections and dismissing appellants’ complaint with prejudice.
Appellants raise the following issues for our review:
[1.] Whether the [trial] court abused its discretion in
sustaining the appellees’ preliminary
objections?
[2.] Whether the appellants’ complaint was timely
filed and served upon appellees to provide
notice to meet due process?
[3.] Whether the appellants alleged sufficient facts
to overcome dismissal at the early stage of
litigation in violation of their constitutional
rights?
Appellants’ brief at 7 (full capitalization omitted).
Our scope of review is plenary when reviewing a trial
court’s order sustaining preliminary objections in the
nature of a demurrer. See Glassmere Fuel Serv.,
Inc. v. Clear, 900 A.2d 398, 401 (Pa.Super. 2006).
“In order to determine whether the trial court properly
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sustained Appellee’s preliminary objections, this court
must consider as true all of the well-pleaded material
facts set forth in the complaint and all reasonable
inferences that may be drawn from those facts.” Id.
at 402. In conducting appellate review, preliminary
objections may be sustained by the trial court only if
the case is free and clear of doubt. See Knight v.
Northwest Sav. Bank, 747 A.2d 384, 386
(Pa.Super. 2000).
Wheeler v. Nationwide Mut. Fire Ins. Co., 905 A.2d 504, 505 (Pa.Super.
2006), appeal denied, 916 A.2d 1103 (Pa. 2007).
Appellants’ first and second issues are interrelated. In those issues,
appellants claim that the trial court abused its discretion in sustaining
appellees’ preliminary objections and dismissing their complaint with prejudice
because lenders received actual notice of the complaint within the requisite
time period and because appellants made a good-faith effort to serve lenders.
We note that appellants advance no argument with respect to VanFleet.
Consequently, appellants waive all claims against VanFleet for failure to
advance a legal argument. See Pa.R.A.P.2119(a); see also Berg v.
Georgetown Buildings, Inc., 822 A.2d 810,815 (Pa.Super. 2003)
(reiterating that failure to comply with mandates of an appellate brief set forth
in Rule 2991(a) results in waiver).
The trial court aptly summarized the following:
There is no dispute that the Complaint was filed on
January 30, 2017. Both [lenders] and [VanFleet]
maintain that [appellants] failed to comply with the
requirement that original process be served within
thirty (30) days of the filing of the Complaint.
[Appellants] do not dispute this but, rather, argue that
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on the very day of filing of the Complaint, a copy was
e-mailed to counsel for the [lenders] together with a
request for acceptance of service. It does not appear
to be in dispute that the Complaint was not formally
served on [lenders] or [VanFleet] until sometime in
April, 2017.
After the filing of the Complaint on January 30, 2017,
the next docket activity appears on March 31, 2017
when [appellants] filed a Praecipe to Reinstate the
Complaint. . . .
Trial court opinion, 2/21/18 at 5-6 (record citations omitted).
[After the] Complaint was filed on January 30, 2017[,]
[t]he only effort made to serve the Complaint
pursuant to the Rules [of Civil Procedure] was to
e-mail a copy of the Complaint together with a request
for acceptance of service to [lenders’] counsel. It
does not appear that any similar transmission or
request was made to [VanFleet]. Counsel for
[lenders] communicated that he was not authorized
to accept service on behalf of his client. No other
effort to serve process was made for two months until
the Complaint was reissued on March 31, 2017 and
served personally sometime in mid-April 2017. In the
interim, the statute of limitations expired.
Id. at 8-9 (footnote omitted).
At the outset, we note that the trial court properly concluded that “the
broadest limitations period available in the context of this Complaint” is
four years, which applies to breach of contract claims. (Id. at 9 n.1.) See
42 Pa.C.S.A. 5525(a) (requiring that an action upon a contract be filed within
four years). In their complaint, appellants aver that the breach occurred on
January 30, 2013. (Appellants’ complaint, 1/30/17 at 5, §§ 15-18.)
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Appellants filed their complaint on January 30, 2017, which was the last day
possible to do so before the statute of limitations expired.
Pennsylvania Rule of Civil Procedure 401(a) provides that original
process shall be served within the Commonwealth within 30 days after the
issuance of the writ or the filing of the complaint. Pa.R.Civ.P. 401(a). The
rule also sets forth procedures to extend that period of time if service may not
be made. Id. at (b)(1)-(5). When considering a case where service is delayed
beyond the statute of limitations, our courts have read a “good faith”
requirement into Rule 401; specifically, the filing of a complaint or a writ of
summons “shall remain effective to commence an action only if the plaintiff
then refrains from a course of conduct which serves to stall in its tracks the
legal machinery he has just set in motion.” Sheets v. Liberty Homes, Inc.,
823 A.2d 1016, 1019 (Pa.Super. 2003), quoting Lamp v. Heyman, 366 A.2d
882, 889 (Pa. 1976).
Our supreme court has held that
Lamp requires of a plaintiff a good-faith effort to
effectuate notice of commencement of the action.
Although this good-faith requirement is not apparent
from a reading of the rule itself, we interpret the rule
mindful of the context in which it was announced. The
purpose for the rule, as stated in Lamp, is to avoid
the situation in which a plaintiff can bring an action,
but by not making a good-faith effort to notify a
defendant, retain exclusive control over it for a period
in excess of that permitted by the statute of
limitations.
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Farinacci v. Beaver County Indus. Dev. Auth., 511 A.2d 757, 759 (Pa.
1986) (internal quotations omitted).
What constitutes a “good faith” effort to serve legal process is a matter
to be assessed on a case-by-case basis. Moses v. T.N.T. Red Star Exp.,
725 A.2d 792, 796 (Pa. Super. 1999). The determination of a good-faith effort
lies within the discretion of the trial court. See McCreesh v. City of
Philadelphia, 888 A.2d 664, 672 (Pa. 2005). Simple neglect and mistake,
or conduct that is unintentional that works to delay notice of the action, may
constitute a lack of good faith on the part of the plaintiff. See Englert v.
Fazio Mech. Services, 932 A.2d 122, 124-125 (Pa.Super. 2007). It is
unnecessary for the plaintiff’s conduct to constitute bad faith or an overt
attempt to delay before Lamp will apply. Id. “Lack of knowledge, mistake
or misunderstanding does not toll the running of the statute of limitations.”
Booher v. Olczak, 797 A.2d 342, 345 (Pa.Super. 2002). Further, it is the
plaintiff’s burden to demonstrate that his efforts at service were reasonable.
See Bigansky v. Thomas Jefferson Univ. Hosp., 658 A.2d 423, 433
(Pa.Super. 1995).
Moreover, our supreme court has embraced a “flexible” approach to the
good-faith determination, “excusing plaintiffs’ initial procedurally defective
service where the defendant has actual notice of the commencement of
litigation and is not otherwise prejudiced.” McCreesh, 888 A.2d at 666, citing
favorably Leidich v. Franklin, 575 A.2d 914 (Pa.Super. 1990) (emphasis
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added). Therefore, where a defendant has actual notice of an action, dismissal
for lack of service will be appropriate “where plaintiffs have demonstrated an
intent to stall the judicial machinery or where plaintiffs’ failure to comply with
the Rules of Civil Procedure has prejudiced defendant.” See McCreesh, 888
A.2d at 674.
Here, appellants filed the complaint four years after the alleged breach
of contract occurred and on the day that the statute of limitations was set to
expire. The complaint was not served on lenders within 30 days of filing as
required by Rule 401(a).1 Appellants claim that lenders had actual notice of
the complaint “by virtue that a time-stamped copy of the [c]omplaint was
e-mailed to [lenders’] attorney of record.” (Id. at 24.) There is no dispute,
however, that counsel informed appellants that he was not authorized to
accept service of process on behalf of lenders. (See, e.g., appellants’ “brief
in opposition to the preliminary objections of [lenders] to plaintiffs’ complaint
and in support of plaintiffs’ preliminary objections thereto,” 6/23/17 at 2.)
After that, appellants did nothing until March 31, 2017, at which time they
filed a praecipe to reinstate the complaint. By that time, however, the statute
of limitations had expired because appellants’ failure to make a good-faith
effort to effectuate service on lenders within the 30-day window that
commenced on January 30, 2017, and ended on March 1, 2017, terminated
1The record reflects that lenders were served with a reinstated complaint on
May 9, 2017.
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the tolling of the limitations period. See Ferrara v. Hoover, 636 A.2d 1151,
1152 (Pa.Super. 1994) (stating that “a plaintiff’s failure to make a good faith
effort to notify the defendant will serve to nullify both the commencement of
the action and the tolling of the statute of limitations” (citation, quotation
marks, and brackets omitted)).
Appellants nevertheless claim that lenders failed to demonstrate that
they suffered prejudice. (Appellants’ brief at 21.) Appellants rely upon
McCreesh to support this contention. McCreesh, however, is inapposite,
because (1) appellants did not establish that they engaged in a good-faith
effort to effectuate service of process on appellees in a timely manner;
(2) service was not effectuated within the statute of limitations; and (3) there
was no actual notice of the commencement of the litigation. Accordingly, we
need not examine the prejudice prong of the analysis.2 See McCreesh, 888
A.2d at 671-674; see also Englert, 932 A.2d at 124-125 (holding that where
no actual notice occurred, a prejudice analysis will not be reached).
2 We nevertheless note that where, as here, actual notice is not provided until
the applicable statute of limitations has expired, the defendant suffers
prejudice because of the delay. See Englert, 932 A.2d at 127 (concluding
that appellees were prejudiced because they were not provided actual notice
of the action until after the statute of limitations had expired); see also
McCreesh, 888 A.2d at 671 (stating that the purpose of the statute of
limitations is to expedite litigation and discourage the presentation of stale
claims that would prejudice the defense of such claims).
We further note that in light of our disposition, we need not address
appellants’ third claim of error.
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Therefore, our review of the record compels the conclusion that the trial
court properly sustained appellees’ preliminary objections and dismissed
appellants’ complaint with prejudice because appellants failed to demonstrate
a good-faith effort to effectuate service within the 30-day tolling period, and
consequently, the trial court lacked jurisdiction over appellees.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/6/2019
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