White, R. v. White, R. ( 2018 )

J-S01028-18
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RONALD WHITE, INDIVIDUALLY AND : IN THE SUPERIOR COURT OF
AS A SHAREHOLDER OF AND : PENNSYLVANIA
DERIVATIVELY ON BEHALF OF R&R :
COAL, INC., AND WHITEY'S BEER :
BARN, INC. :
:
:
v. :
: No. 846 MDA 2017
:
RUSSELL R. WHITE, LISA L. WHITE, :
RICHARD R. WHITE, WHITEY WASH :
ENTERPRISES, WHITE FOODS, INC., :
RR COAL, INC., AND WHITEY'S BEER :
BARN, INC. :
:
:
APPEAL OF: RUSSELL R. WHITE AND :
WHITEY WASH ENTERPRISES :
Appeal from the Order Entered May 12, 2017
In the Court of Common Pleas of Schuylkill County Civil Division at No(s):
S-2559-2013
BEFORE: GANTMAN, P.J., MURRAY, J., and MUSMANNO, J.
MEMORANDUM BY MURRAY, J.: FILED FEBRUARY 08, 2018
Russell White (Russell) and Whitey Wash Enterprises, (Appellants),
appeal from the orders entered on May 12, 2017 and May 17, 2017 denying
their motion for the recusal of Judge John Domalakes (Judge Domalakes)
and their petitions seeking injunctive relief and the removal of Edward
Brennan, Esquire (Attorney Brennan) as guardian/receiver in the above-
captioned matter. For the reasons that follow, we quash Appellants’ appeal
from the May 12, 2017 order denying their motion for recusal, and affirm
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the May 17, 2017 order denying their petitions for injunctive relief and to
remove Attorney Brennan as guardian/receiver.
We summarize the facts and procedural history of this case as follows.
Russell and Appellee, Ronald White (Ronald), each own fifty percent of RR
Coal, Inc., which operates two anthracite coal preparation plants and
Whitey’s Beer Barn, Inc., a beer distributor (the Corporations). On
December 21, 2013, Ronald filed a complaint in which he alleged that
Russell was misusing the assets of the Corporations, which included, inter
alia, purchasing a Ford Mustang and other items with company money for
his own personal use. Ronald requested a preliminary injunction seeking the
appointment of a guardian to manage the operations of the Corporations.
On February 21, 2014, upon finding that Russell and Richard were unable to
operate the Corporations together in a lawful and proper manner, the trial
court issued an order appointing Attorney Brennan as guardian/receiver of
the Corporations.
On October 16, 2015, Appellants filed a petition to remove Attorney
Brennan as guardian/receiver in which they accused him of mismanaging the
Corporations. Appellants sought the removal of Attorney Brennan because
they were dissatisfied with his recommendation to the court to liquidate the
corporations in order to satisfy all outstanding liens and encumbrances
against the entities and because he shut down Whitey’s Beer Barn.
Additionally, Appellants accused Attorney Brennan of repeatedly refusing to
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comply with the mandates of the trial court’s February 21, 2014 order.
Specifically, Appellants alleged that Attorney Brennan failed to file sufficient
accountings of all the financial matters of the Corporations. Additionally,
Appellants challenged the veracity of the financial reports that Attorney
Brennan did file. Subsequently, on March 4, 2016, Appellants filed a petition
seeking the recusal of Judge Domalakes.
On August 23, 2016, the trial court denied both petitions. The trial
court credited Attorney Brennan’s detailed answer, which specifically denied
each of Appellants’ allegations of mismanagement. Trial. Ct. Op., 8/23/16,
at 3-4. The court noted that it was satisfied from all of the reports and
recommendations filed by Attorney Brennan regarding the management of
the Corporations that Attorney Brennan was managing the businesses in a
prudent and reasonable manner. Id. Regarding Appellants’ petition for
recusal, the trial court concluded that Appellants’ claims amounted to little
more than dissatisfaction with the court’s decisions and “its method for
conducting proceedings[,]” which was not a valid for recusal. Id. at 8.
Additionally, in its August 23, 2016 order, the trial court adopted Attorney
Brennan’s recommendation to liquidate the Corporations. Id. at 9.
Appellants appealed the August 23, 2016 order to this Court, but filed
a praecipe to withdraw the appeal on September 7, 2016. On September
19, 2016, Appellants filed a motion to stay the liquidation of the assets of
the Corporations. The same day, the trial court entered an order denying
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the motion without prejudice because Appellants were in the process of
obtaining new counsel. On October 7, 2016, Appellants filed a notice of
appeal from the August 23, 2016 and September 19, 2016 orders. Attorney
Brennan filed a motion to quash the appeal on the basis that the appeal
from the August 23, 2016 order was untimely and the appeal from the
September 19, 2016 order was interlocutory because the trial court denied
that order without prejudice while Appellants hired a new attorney. On
November 30, 2016, this Court granted the motion to quash.
On March 29, 2017, Attorney Brennan filed a motion for a rule to show
cause as to why the guardianship/receivership should not be converted to a
liquidating receivership. The following day, the trial court entered the
requested rule to show cause.
On April 18, 2017, Appellants filed an answer in which they once again
requested the immediate removal of Attorney Brennan as guardian/receiver
and the appointment of Shane Hobbs, Esquire in his place. The same day,
Appellants also filed another motion for the recusal of Judge Domalakes.
Appellants alleged that, inter alia, Judge Domalakes was a material witness
in this case because he issued an ex parte order in this matter on February
27, 2015. On May 8, 2017, Appellants filed a motion for a preliminary and
permanent injunction seeking to enjoin Attorney Brennan from (1) taking
any action relating to liquidating the Corporations, and (2) continuing as
guardian/receiver in this matter. Once again, Appellants accused Attorney
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Brennan of failing to file sufficient formal accountings for the Corporations
and of financially mismanaging the Corporations.
On May 11, 2017, the trial court held a hearing on Appellants’
motions. On May 12, 2017, the trial court entered an order denying
Appellants’ motion for recusal and on May 17, 2012, the trial court denied
their motion to remove Attorney Brennan as guardian/receiver and for
injunctive relief. Appellants appealed to this Court.
On appeal, Appellants raise the following issues for our review:
1. Whether a trial court judge who becomes a
material witness in a case and who fails to enforce
and require obedience to his own court orders
entered in the case should be ordered to recuse
himself from further proceedings in such case?
2. Whether a corporate guardian/receiver who
financially destroys two corporations should be
immediately relieved of the difficulties of his/her
office where he/she commits serial violations of the
mandatory commands contained in the appointing
court’s order directing the corporate
guardian/receiver to preserve and protect the
property of a corporations [sic] and to file yearly
reports of all the financial transactions of the two
corporations?
Appellants’ Brief at 2.
Prior to discussing the issues raised by Appellants, we must first
address Attorney Brennan’s application to quash this appeal, as it implicates
our jurisdiction to review this matter. In his application to quash, Attorney
Brennan argues that this Court should quash Appellants’ appeal as
interlocutory.
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In support of this argument, Attorney Brennan first asserts that the
trial court’s order denying Appellants’ motion for recusal is an interlocutory
order that is not appealable as of right or as a collateral order. In their
answer, Appellants respond by arguing that “[a] decision by a Trial Judge
deciding a motion seeking the Judge’s recusal due to disqualification is an
appealable order pursuant to Pa.R.A.P. 313[,] as it is a collateral order
whereby this recusal issue cannot be addressed and resolved on appeal from
a final judgment in the case.” Answer to Application to Quash, 10/30/17, ¶
14.
This Court may address the merits of an appeal taken from “(a) a final
order or an order certified as a final order; (2) an interlocutory order
[appealable] as of right; (3) an interlocutory order [appealable] by
permission; or (4) a collateral order.” Commerce Bank v. Kessler, 46
A.3d 724, 728 (Pa. Super. 2012), quoting Stahl v. Redcay, 897 A.2d 478,
485 (Pa. Super. 2006) (citations omitted); see also Pa.R.A.P. 341(b). “As a
general rule, only final orders are appealable, and final orders are defined as
orders disposing of all claims and all parties.” Am. Indep. Ins. Co. v. E.S.,
809 A.2d 388, 391 (Pa. Super. 2002); see also Pa.R.A.P. 341(a) (“[A]n
appeal may be taken as of right from any final order of a government unit or
trial court.”).
This Court has routinely held that, pursuant to the above authority, a
pre-trial motion seeking to recuse a judge from further proceedings is not a
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final order. See In re Bridgeport Fire Litig., 51 A.3d 224, 229 (Pa. Super.
2012) (“an order on a motion for recusal is an interlocutory order for
purposes of an appeal”); see also Rohm and Haas Co. v. Lin, 992 A.2d
132, 149 (Pa. Super. 2010); Krieg v. Krieg, 743 A.2d 509, 511 (Pa. Super.
1999); Hahalyak v. Integra Fin. Corp., 678 A.2d 819 (Pa. Super. 1996);
Kenis v. Perini Corp., 682 A.2d 845 (Pa. Super. 1996). Additionally, this
Court has stated that an appeal from the denial of a pre-trial motion to
recuse does not fall within any of the categories listed in Rules 311
(Interlocutory Appeals as of Right) or 313 (Collateral Orders)1 of the
Pennsylvania Rules of Appellate Procedure. Krieg, 743 A.2d at 511.
Therefore, the trial court’s May 12, 2017 denying Appellants’ motion for the
recusal of Judge Domalakes is not a final order or an interlocutory order
____________________________________________
1 Rule 313 provides:
(a) General rule. An appeal may be taken as of
right from a collateral order of an administrative
agency or lower court.
(b) Definition. A collateral order is an order
separable from and collateral to the main cause of
action where the right involved is too important to be
denied review and the question presented is such
that if review is postponed until final judgment in the
case, the claim will be irreparably lost.
Pa.R.A.P. 313.
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appealable as of right or a collateral order. Accordingly, we quash
Appellants’ appeal from the May 12, 2017 order.
Next, Attorney Brennan asserts that the trial court’s May 17, 2017
order denying Appellants’ request for a preliminary injunction and their
petition to remove Attorney Brennan as guardian/receiver was likewise
interlocutory and not appealable as of right. In their answer, Appellants
respond by arguing that an order refusing to modify a receivership or other
similar matter is appealable as of right under Rule 311(a)(2) and that the
May 17, 2017 order constitutes such an order because they were seeking to
have the guardianship/receivership modified by removing Attorney Brennan
as guardian/receiver. Similarly, Appellants contend that under Rule
311(a)(4), an order that grants or denies an injunction is appealable as of
right.
The May 17, 2017 order does not constitute a final order as defined by
Rule 341(b) and Appellants do not dispute this assessment. Rather,
Appellants assert that the order is appealable under Rule 311(a), which
governs appeals as of right from interlocutory orders.
Appellants argue that the instant order is appealable pursuant to either
subsections (a)(2) or (a)(4) of Rule 311. Rule 311(a)(2) provides for an
interlocutory appeal as of right from an order “confirming, modifying or
dissolving or refusing to confirm, modify or dissolve an attachment,
custodianship, receivership or similar matter affecting the possession or
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control of property.” Pa.R.A.P. 311(a)(2). Rule 311(a)(4) permits an
interlocutory appeal to be as of right taken from an order “granting,
continuing, modifying, refusing or dissolving injunctions or refusing to
dissolve or modify injunctions.” Pa.R.A.P. 311(a)(4). In interpreting Rule
311(a), this Court has explained:
Orders involving attachments, receiverships,
custodianships or other similar matters affecting the
possession or control of property, are among the
classes of interlocutory orders which are appealable
as of right. Rule 311(a)(2), supra. Interlocutory
orders involving injunctions are likewise appealable
as of right. Rule 311(a)(4), supra.
Jerry Davis, Inc. v. Nufab Corp., 677 A.2d 1256, 1259 (Pa. Super. 1996).
In this case, the trial court’s May 17, 2017 order denied Appellants’
petition to remove Attorney Brennan as guardian/receiver and their related
petition for injunctive relief. Thus, the trial court’s May 17, 2017 order
constitutes an order refusing to modify a receivership and an order refusing
an injunction. As such, the May 17, 2017 order, although interlocutory, is
immediately appealable as of right under Rule 311(a)(2) and (4).
We now turn our attention to the merits of Appellants’ appeal from the
May 17, 2017 order. Appellants argue that the trial court erred in denying
their petitions for injunctive relief and to remove Attorney Brennan as
guardian/receiver.
Generally, “appellate courts review a trial court order refusing or
granting a preliminary injunction for an abuse of discretion.” Summit
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Towne Ctr., Inc. v. Shoe Show of Rocky Mount, Inc., 828 A.2d 995,
1000 (Pa. 2003).
An abuse of discretion is not merely an error of
judgment. Paden v. Baker Concrete Constr[.],
Inc., [] 658 A.2d 341, 343 ([Pa.] 1995). Rather, an
abuse of discretion exists if the trial court renders a
judgment that is manifestly unreasonable, arbitrary,
or capricious, or if it fails to apply the law or was
motivated by partiality, prejudice, bias, or ill will.
Harman v. Borah, [] 756 A.2d 1116, 1123 ([Pa.]
2000). If the record adequately supports the trial
court’s reasons and factual basis, the court did not
abuse its discretion. Id.
Ambrogi v. Reber, 932 A.2d 969, 974 (Pa. Super. 2007). “[R]eview of a
trial court’s order granting or denying preliminary injunctive relief is ‘highly
deferential.’” Warehime v. Warehime, 860 A.2d 41, 46 (Pa. 2004)
(citation omitted). “This ‘highly deferential’ standard of review states that in
reviewing the grant or denial of a preliminary injunction, an appellate court
is directed to ‘examine the record to determine if there were any apparently
reasonable grounds for the action of the court below.’” Id. (citation
omitted).
A party seeking a preliminary injunction must establish each of the six
following prerequisites and the failure to establish any one of them is fatal to
the request:
First, a party seeking a preliminary injunction must
show that an injunction is necessary to prevent
immediate and irreparable harm that cannot be
adequately compensated by damages. Second, the
party must show that greater injury would result
from refusing an injunction than from granting it,
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and, concomitantly, that issuance of an injunction
will not substantially harm other interested parties in
the proceedings. Third, the party must show that a
preliminary injunction will properly restore the
parties to their status as it existed immediately prior
to the alleged wrongful conduct. Fourth, the party
seeking an injunction must show that the activity it
seeks to restrain is actionable, that its right to relief
is clear, and that the wrong is manifest, or, in other
words, must show that it is likely to prevail on the
merits. Fifth, the party must show that the
injunction it seeks is reasonably suited to abate the
offending activity. Sixth and finally, the party
seeking an injunction must show that a preliminary
injunction will not adversely affect the public
interest.
Duquesne Light Co. v. Longue Vue Club, 63 A.3d 270, 275 (Pa. Super.
2013) (quotations and citation omitted).
Appellants make two primary contentions in support of their argument
that the trial court erred in denying their petitions for injunctive relief and to
remove Attorney Brennan as guardian/receiver. First, Appellants assert that
the trial court should have dismissed Attorney Brennan because he was not
interested in operating Whitey’s Beer Barn (one of the Corporations) on a
day-to-day basis, which he was required to do pursuant to the trial court’s
February 21, 2014 order appointing him as guardian/receiver. Appellants
claim that when a court appoints a guardian/receiver to manage a business,
and that individual “later decides he doesn’t want to operate the business
and unilaterally takes it upon himself to shutter the business, he should be
immediately removed from office[.]” Appellants’ Brief at 10.
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In denying Appellant’s petitions to remove Attorney Brennan as
guardian/receiver and for injunctive relief, the trial court concluded that
Appellants failed to establish that an injunction “is necessary to prevent
immediate and irreparable harm.” Trial Ct. Op., 5/17/17, at 4. The trial
court found that Attorney Brennan was appropriately performing his role as
guardian/receiver. Id. at 5. The court explained:
The Court finds credible the testimony of [Attorney
Brennan] and concludes that he has demonstrated
conscientious, effective and devoted efforts to
properly manage both entities despite interference
and continuous criticism of his efforts. His responses
to the criticisms of [Appellants] demonstrate that he
had cogent reasons for his actions.
Id.
We conclude that the record supports the trial court’s determination.
There is no support in the record for Appellants’ argument that the trial court
should have dismissed Attorney Brennan because he was not interested in
operating the Corporations. Attorney Brennan did state at the May 11, 2017
hearing that he shut down Whitey’s Beer Barn, in part, because he did not
“want to operate the business[.]” N.T., 5/11/17, at 27. Appellants,
however, reference this statement entirely out of context. At the hearing,
Attorney Brennan offered a litany of reasons for why he shut down the
operations of Whitey’s Beer Barn. Attorney Brennan stated that all of the
employees of the business, including the manager, quit; he could not quickly
find a qualified individual approved by the Liquor Control Board to replace
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the manager; and because it is illegal to sell expired beer in Pennsylvania,
he had to return much of the business’ inventory, and consequently, it ran
out of money. Id. at 27-30. The only way he could have kept the business
running would have been to manage it on a day-to-day basis, which he was
unable to do. See id. Moreover, Appellants provide no indication that if
Attorney Brennan had taken over the day-to-day operations of Whitey’s Beer
Barn, it would have been profitable.
Contrary to Appellants’ assertion, there was no requirement in the
February 21, 2014 order appointing Attorney Brennan as guardian/receiver
that required him to manage the day-to-day operations of the Corporations.
Rather, the order provided Attorney Brennan “with the following authority”:
… to manage and conduct the business and
occupation now and heretofore conducted by the
Corporations in such manner as will in Guardian’s
judgment produce most satisfactory results, so that
the operation of the business and occupation of the
Corporations shall be continued in the same manner
as at present, including the extension of the usual
credits to purchasers of merchandise, to exercise the
authority and rights of the Corporations to preserve
and protect the Corporations’ business and
properties in proper condition and repair, so that
they may be safely and advantageously used, to
protect the title and possession of assets, to secure
and develop the business of the Corporations, and in
their discretion to employ and discharge such
persons and make such payments and
disbursements as may be needful in so doing and to
make business, employment and wage, and salary
decisions.
Order, 2/21/14, ¶ 5(a).
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Given the several challenges facing Whitey’s Beer Barn, both from a
personnel and financial standpoint, the record supports the trial court’s
finding that Attorney Brennan properly exercised his authority when he
determined that the most appropriate course of action for Whitey’s Beer
Barn was to shut it down. See N.T., 5/11/2017, at 27-30. To the extent
that it would have even been feasible, or permitted by the Liquor Control
Board, Attorney Brennan was under no obligation to assume management of
the day-to-day operations of the business. Therefore, the trial court did not
abuse its discretion by declining to remove Attorney Brennan as
guardian/receiver on this basis.
Second, Appellants contend that the trial court should have removed
Attorney Brennan as guardian/receiver because he failed to provide
sufficient reports tracking the financial transactions of the Corporations as
mandated by the court’s February 21, 2014 order. In connection with
Attorney Brennan’s alleged failure to file proper financial reports, Appellants
also challenge the veracity of the accountings filed by Attorney Brennan and
accuse him of financial “maladministration” of the Corporations. Appellants’
Brief at 21.
As with Appellants’ first argument, there is no record to support their
contention that the trial court should have removed Attorney Brennan
because he failed to provide appropriate reports tracking the financial
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transactions of the Corporations. With respect to financial reporting, the
February 21, 2014 order provided :
On a yearly basis, the Guardian shall file with the
Protonotary’s office a formal accounting of all
financial matters of the corporations and supply to all
the parties a copy of that accounting to which any of
the parties may file objections.
Order, 2/21/14, ¶ 5(a).
The record contains numerous financial reports and accountings for
both Corporations. See, e.g., Guardian’s Second Formal Accounting and
Report for Whitey’s Beer Barn, 6/23/16; Guardian’s Formal Accounting and
Report for RR Coal, Inc., 3/9/16; Guardian’s Formal Accounting and Report
for Whitey’s Beer Barn, 4/1/15; see also Petition Seeking Immediate
Removal of Receiver, 4/18/17, Exhibit 41. These reports cover the financial
matters of the Corporations dating back to 2014, when the trial court
appointed Attorney Brennan as guardian/receiver. Additionally, Attorney
Brennan also testified at the May 11, 2017 hearing that he disclosed
everything asked of him and that he on numerous occasions invited
Appellants and their attorney to his office to review anything that they
wanted related to the Corporations, but they never did. N.T., 5/11/17, at
15-25.
To the extent Appellants challenge the veracity or completeness of
these reports, as noted above, the trial court found Attorney Brennan’s
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reports and testimony to be credible. See Trial Ct. Op., 5/17/17, at 4-5;
Trial. Ct. Op., 8/23/16, at 3-4. This Court has routinely held:
the credibility of witnesses is an issue to be
determined by the trier of fact. On appeal this Court
will not revisit the trial court's determinations ...
regarding the credibility of the parties. Thus, [an]
argument, which would require this Court to revisit
and essentially reverse the [trial court] on his
credibility determinations, provides no grounds for
relief.
Stephan v. Waldron Elec. Heating & Cooling LLC, 100 A.3d 660, 667
(Pa. Super. 2014) (quotations and citations omitted). Thus, we cannot
conclude that the trial court abused its discretion by declining to remove
Attorney Brennan as guardian/receiver for his alleged failure to file proper
financial reports and accountings for the Corporations.
Finally, we note that this is not the first attempt by Appellants to
remove Attorney Brennan as guardian/receiver, and the trial court has
previously denied their attempts to do so. In general, Appellants largely
seek the removal of Attorney Brennan based on their dissatisfaction with the
long-term decisions he has made regarding the liquidation of the
Corporations. Appellants provide no authority for the proposition that such
dissatisfaction constitutes a basis upon which a trial court may remove a
guardian/receiver. Indeed, their appellate brief lacks citation to any binding
or relevant authority that would support the removal of Attorney Brennan for
any of the reasons articulated by Appellants. Accordingly, because the
record supports the trial court’s decision to deny Appellants’ petition to
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remove Attorney Brennan as guardian/receiver and their motion for
injunctive relief, we affirm the trial court’s May 17, 2017 order.
Appeal quashed in part and affirmed in part.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 02/08/2018
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