Lansaw, G. v. Zokaites, F. ( 2017 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
GARTH LANSAW & DEBORAH LANSAW IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellants
v.
FRANK ZOKAITES D/B/A ZOKAITES
CONTRACTING, INC., D/B/A ZOKAITES
PROPERTIES, L.P., ZOKAITES
CONTRACTING, INC., D/B/A ZOKAITES
PROPERTIES, L.P.; ZOKAITES
PROPERTIES, L.P. D/B/A ZOKAITES
CONTRACTING, INC., JEFFREY HULTON,
ESQUIRE F/D/B/A BRANDT,MILNES &
REA, P.C.; AND BRANDT MILNES & REA,
P.C.
No. 708 WDA 2016
Appeal from the Order April 26, 2016
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD 15-018654
BEFORE: PANELLA, J., STABILE, J., and STEVENS, P.J.E.
MEMORANDUM BY PANELLA, J. FILED JUNE 06, 2017
Appellants, Garth and Deborah Lansaw, appeal from the order entered
in the Allegheny County Court of Common Pleas, granting the preliminary
objections of Appellees, Frank Zokaites d/b/a Zokaites Contracting, Inc.,
d/b/a Zokaites Properties, L.P., Zokaites Contracting, Inc., d/b/a Zokaites
Properties, L.P.; Zokaites Properties, L.P. d/b/a Zokaites Contracting, Inc.,
____________________________________________

Former Justice specially assigned to the Superior Court.
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Jeffrey Hulton, Esquire f/d/b/a Brandt, Milnes & Rea, P.C.; and Brandt Milnes
& Rea, P.C., and dismissing Appellants’ complaint. On appeal, Appellants
claim that the trial court erred by dismissing their complaint based upon a
lack of subject matter jurisdiction. After careful review, we affirm.
The trial court summarized the relevant facts and procedural history as
follows.
In 2015, [Appellants] filed a civil complaint in the instant
case. Along with naming [] Zokaites as an individual Defendant,
the complaint names Zokaites Contracting, Inc., and Zokaites
Properties, L.P., apparently on the theory that [] Zokaites did or
does business as or through those entities. [Appellants’]
complaint also names [Attorney Hulton] as counsel or former
counsel for the Zokaites Defendants. Additionally, [Appellants’]
complaint lists Brandt, Milnes, & Rea, P.C. as a [d]efendant,
seemingly because [Appellants] believe [Attorney] Hulton
worked for or through that corporation. The complaint contends
that all [Appellees] should be held liable for abuse of process, for
intentional infliction of emotional distress [(“IIED”)], and for loss
of consortium supposedly caused by [Appellees’] collective
and/or individual behavior. The complaint allegations underlying
these contentions can be summarized as follows.
From roughly 1999 through 2007, as part of their daycare
business, [Appellants] leased certain realty from [] Zokaites.
Disputes between [Appellants] and Zokaites arose with respect
to the rent for the realty. [Appellants] claim that, in the course
of those disputes, Zokaites bullied, intimidated, stalked, and
otherwise harassed [Appellants] in various ways at various
times. Because of the ongoing disputes and Zokaites’ alleged
conduct, [Appellants] decided to end their tenancy with him.
Accordingly, they moved their business from his property.
In alleged retaliation for [Appellants’] decision to end their
tenancy, Zokaited supposedly subjected [Appellants] to bad faith
civil litigation beginning in 2001 and continuing for years
thereafter. During those years of litigation, Zokaites allegedly
instituted one or more baseless suits against [Appellants] and, in
doing so, filed a large number of frivolous docket entries – the
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suit(s) and docket entries having been designated simply to
harass and annoy [Appellants] while causing them undue
expense. Furthermore, [Appellants] contend that, in addition to
engaging in baseless litigation, Zokaites injured [Appellants’]
business by threatening and harassing their customers and
business associates. [Appellants] also allege that, as a result of
Zokaites’ foregoing behavior, [Appellants] were forced to file
bankruptcy in 2006 at No. 06-23936 in the Bankruptcy Court for
the Western District of Pennsylvania.
The civil complaint in the instant suit also points out that
[Appellants] and Zokaites were involved in multiple adversary
proceedings as part of [Appellants’] bankruptcy.1
1
The proceedings were numbered 06-02645-TPA, 06-
02659-TPA, and 13-02037-TPA.
During the adversary proceedings, [Appellants] sought financial
and emotional damages as a consequence of Zolkaites’ alleged
actions discussed supra (i.e., harassment, frivolous litigation,
and interference with [Appellants’] business). [Appellants’]
current complaint also contends that, during the adversary
proceedings, Zolkaites continued to engage in abusive and
wrongful conduct by filing hundreds of frivolous docket entries.
The Bankruptcy Court resolved the last of the adversarial
claims by January 2015, when the court issued a memorandum
and order at No. 13-02037-TPA awarding [Appellants] an
aggregate of $50,100.00 in damages against Zokaites.
Thereafter, still in 2015, Zolkaites appealed to the District Court
at No. 2:15-cv-404. The District Court affirmed the Bankruptcy
Court’s judgment and, on April 28, 2016, entered its final order
to that effect.
In October 2015, while the bankruptcy case and Zolkaites’
appeal to the District Court were pending, [Appellants] instituted
the present suit in state court by writ. Subsequently, in
November 2015, they filed the subject complaint. In addition to
containing all of the allegations discussed supra, the complaint
alleges that Zolkaites’ appeal to the District Court (i.e., the
appeal of the award against him in the adversary proceedings)
was frivolous. At [p]aragraph 26, the complaint acknowledges
that the bankruptcy case/litigation was pending when the
complaint was filed. Finally, the complaint seems to contend
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that, by acting as Zokaites’ legal representatives, [Attorney]
Hulton and Brandt, Milnes, & Rea, P.C., took part in Zokaites’
overall alleged misconduct.
By March 2016, all [Appellees] had filed preliminary
objections to [Appellants’] complaint. In their respective
objections, [] Zokaites and Brandt, Milnes, & Rea, P.C. argued,
inter alia, that [Appellants’] claims were preempted by the
Bankruptcy Code, thereby depriving this court of jurisdiction
over the instant suit. [Attorney] Hulton, while raising arguments
of his own, also joined in the preemption theory advanced by the
other [Appellees]. [Appellants] filed various preliminary
objections to all [Appellees’] objections.
[The trial] court held a hearing on all preliminary
objections on April 11, 2016. On April 26, 2016, [the trial] court
overruled [Appellants’] preliminary objections, sustained the
preliminary objections filed by each [Appellee] on the basis of a
lack of subject matter jurisdiction, and dismissed the instant
complaint. The Lansaws subsequently appealed to the Superior
Court at 708 WDA 2016.
Trial Court Opinion, 8/18/16, at 2-5.
On appeal, Appellants contend that the trial court committed an error
of law by dismissing their complaint based upon an alleged lack of subject
matter jurisdiction due to bankruptcy preemption. See Appellants’ Brief, at
9, 16-20. Furthermore, even if the trial court were correct in determining it
lacked subject matter jurisdiction, Appellants argue that the trial court erred
by dismissing their complaint with prejudice. See id, at 9, 19.
Our scope and standard of review concerning issues of subject matter
jurisdiction is as follows.
Jurisdiction over the subject matter is conferred solely by the
Constitution and the laws of the Commonwealth. The test for
whether a court has subject matter jurisdiction inquires into the
competency of the court to determine controversies of the
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general class to which the case presented for consideration
belongs. Thus, as a pure question of law, the standard of review
in determining whether a court has subject matter jurisdiction is
de novo and the scope of review is plenary. Whether a court has
subject matter jurisdiction over an action is a fundamental issue
of law which may be raised at any time in the course of the
proceedings, including by a reviewing court sua sponte.
Mazur v. Trinity Area School Dist., 961 A.2d 96, 101 (Pa. 2008) (citation
omitted).
Additionally, appeals from orders sustaining a preliminary objection in
the nature of a demurrer are reviewed pursuant to the following standard.
A preliminary objection in the nature of a demurrer is
properly granted where the contested pleading is legally
insufficient. Preliminary objections in the nature of a demurrer
require the court resolve the issues solely on the basis of the
pleadings; no testimony or other evidence outside of the
complaint may be considered to dispose of the legal issues
presented by the demurrer. All material facts set forth in the
pleading and all inferences reasonably deducible therefrom must
be admitted as true.
In determining whether the trial court properly sustained
preliminary objections, the appellate court must examine the
averments in the complaint, together with the documents and
exhibits attached thereto, in order to evaluate the sufficiency of
the facts averred. The impetus of our inquiry is to determine the
legal sufficiency of the complaint and whether the pleading
would permit recovery if ultimately proven. This Court will
reverse the trial court’s decision regarding preliminary objections
only where there has been an error of law or abuse of discretion.
When sustaining the trial court’s ruling will result in the denial of
claim or a dismissal of suit, preliminary objections will be
sustained only where the case is free and clear from doubt.
Thus, the question presented by the demurrer is whether,
on the facts averred, the law says with certainty that no
recovery is possible. Where a doubt exists as to whether a
demurrer should be sustained, this doubt should be resolved in
favor of overruling it.
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Weiley v. Albert Einstein Medical Center, 51 A.3d 202, 208-209 (Pa.
Super. 2012) (internal citations and quotation marks omitted).
Here, the trial court found that the controlling Pennsylvania case law
mandated dismissal of Appellants’ abuse of process claim due to federal
preemption. See Trial Court Opinion, 8/18/16, at 6-7 (citing Stone Crushed
P’ship v. Kassab Archbold Jackson & O’Brien, 908 A.2d 875 (Pa.
2006)). Further, although IIED and loss of consortium claims were not
directly addressed in Stone Crushed, the trial court found that the
reasoning underlying the finding of federal bankruptcy preemption for abuse
of process claims applies to Appellants’ IIED claims and loss of consortium
claims as well. See id., at 6-7. Conversely, Appellants’ contend that the
bankruptcy preemption finding has been deemed dicta by subsequent
courts, and therefore, cannot be a basis for dismissing their complaint. See
Appellant’s Brief, at 16. We agree with the solid reasoning of the trial court.
In Pennsylvania, Stone Crushed is the touchstone case for the matter
of federal bankruptcy preemption of state law tort claims. In Stone
Crushed, our Supreme Court granted allowance of appeal to determine, as
a matter of first impression, whether the Bankruptcy Code preempts the
entire field of bankruptcy. See 908 A.2d at 879-880. At the time the Court
granted allocator, there was a split in the law between our Court’s holding in
Shiner v. Moriarity, 706 A.2d 1228 (Pa. Super. 1998), and the United
States Court of Appeals for the Third Circuit’s holding in U.S. Express
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Lines, Ltd. v. Higgins, 281 F.3d 383 (3d Cir. 2002). Specifically, the Court
in Shiner relied upon cases from other jurisdictions, which held that the
Bankruptcy Code preempts state law entirely, and found that in
Pennsylvania, the “Bankruptcy Code demonstrates Congress’s intent to
create a whole system under federal control therefore mandating the
adjustment of rights and duties within the bankruptcy process itself is
uniquely and exclusively federal, thereby precluding state law remedies for
abuse of its proceeding.” 706 A.2d at 1238. Conversely, the Third Circuit in
the Higgins case found that the Federal Rules of Civil Procedure did not
preempt state law abuse of process claims or similar torts from actions
arising in Bankruptcy Court. See 281 F.3d at 396.
Following an in-depth analysis of these cases, as well as relevant case
law from other jurisdictions, our Supreme Court concluded that “the
Bankruptcy Code and Federal Rules of Civil Procedure preempt [an
appellant’s] rights pursuant to state law for compensation in a wrongful use
of civil proceedings or abuse of process claim grounded in bankruptcy court
proceedings.” Stone Crushed, 908 A.2d at 887. The Court based its holding
on its findings that Congress intended to govern the entire field of
Bankruptcy, including tort state law claims, and that Fed.R.Civ.P. 11, 28
U.S.C. § 1927, and the Bankruptcy Code “potentially provide for the
equivalent protection afforded by this Commonwealth to its citizens in a
Dragonetti Act claim.” Id., at 880.
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Based upon our independent analysis of Stone Crushed, we reject
Appellants’ contention that the Court’s statement concerning the preemption
of state law abuse of process claims by the Bankruptcy Code was mere
dicta. Our Supreme Court specifically reviewed Stone Crushed in order to
determine whether the Bankruptcy Code preempts state law, and clearly
held that state law abuse of process claims are preempted by the
Bankruptcy Code. See id., at 887. Further, to the extent that Appellants rely
on federal case law that is in conflict with Stone Crushed, see Appellants’
Brief, at 16-18, we remind them that, “absent a United States Supreme
Court pronouncement,” “federal court decisions do not control the
determinations of the Superior Court.” NASDAQ OMX PHLX, Inc. v.
PennMont Securities, 52 A.3d 296, 303 (Pa. Super. 2012) (citation
omitted).
The assertions identified by Appellants in their complaint that they
aver underlie their claims, pertain to conduct in the bankruptcy court.
Specifically, Appellants allege that through Appellee’s filings in Bankruptcy
Court, Appellee “intended to cause [Appellants] severe emotional distress”
and that they caused Appellants “to suffer emotional pain and anguish.”
Appellants’ Complaint, 10/24/15, at ¶¶ 8-9, 12-14 Based upon these
allegations, it is clear that Appellants’ claims are “grounded in bankruptcy
court proceedings,” and therefore preempted by the Bankruptcy Code.
Stone Crushed, 908 A.2d at 887.
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We also find that the reasoning underlying Stone Crushed supports
the trial court’s dismissal of Appellants’ IIED and loss of consortium claims.
Stone Crushed specifically focuses on the intent of Congress to preempt all
state law claims for damages arising from conduct before a federal
bankruptcy court. See 908 A.2d at 887. Here, Appellants’ IIED and loss of
consortium claims were “central to, and were either litigated as part of, or
could have been litigated as part of, the [Appellants’] bankruptcy.” Trial
Court Opinion, 8/18/16, at 6-7 (citing Stone Crushed, 908 A.2d at 887). In
fact, we note that Appellants were successful in litigating their IIED and loss
of consortium claims in federal bankruptcy court. To allow them to re-litigate
these claims in state court would be unjustifiable. Thus, because Appellants’
IIED and loss of consortium claims are also preempted by the Bankruptcy
Code, the trial court did not err by dismissing these claims based upon a lack
of subject matter jurisdiction.
Lastly, we find no merit to Appellants’ contention that the trial court
erred by dismissing Appellants’ complaint with prejudice. “Leave to amend
lies within the sound discretion of the trial court and the right to amend
should be liberally granted at any stage of the proceedings unless there is an
error of law or resulting prejudice to an adverse party.” Blackwood, Inc. v.
Reading Blue Mountain & Northern R. Co., 147 A.3d 594, 598 (Pa.
Super. 2016) (citations omitted). “But liberality of pleading does not
encompass a duty in the courts to allow successive amendments when the
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initial pleading indicates that the claim asserted cannot be established.”
Behrend v. Yellow Cab Co., 271 A.2d 241, 243 (Pa. 1970).
That is the case here. As discussed, federal bankruptcy law preempted
Appellants’ claims. Appellants would never have been able to establish their
right to litigate these claims in state court—regardless of the trial court
permitting them to amend their complaint. Accordingly, the trial court’s
decision to withhold the right to amend the complaint was not in error.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/6/2017
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