Plum Property v. Mineral Trading ( 2017 )

J-A24009-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
PLUM PROPERTY ASSOCIATES INC. IN THE SUPERIOR COURT
OF
PENNSYLVANIA
v.
MINERAL TRADING COMPANY, LLC, A
CORPORATION, AND JAMES
R. CLARKE, JONATHAN LASKO AND
MELISSA HENNIS, INDIVIDUALS
v.
S&K ENERGY, INC.
APPELLANT
No. 944 WDA 2016
Appeal from the Order February 3, 2016
In the Court of Common Pleas of Washington County
Civil Division at No(s): 2011-5687
BEFORE: MOULTON, J., SOLANO, J., and MUSMANNO, J.
MEMORANDUM BY MOULTON, J.: FILED DECEMBER 27, 2017
S&K Energy, Inc. (“S&K”) appeals from the February 3, 2016 order
entered in the Washington County Court of Common Pleas denying its
objection to the sheriff’s determination of its goods claim. We affirm.
We previously summarized a portion of the relevant history of this
matter as follows:
Mineral Trading Company, LLC (“Mineral Trading”), is an
Ohio corporation engaged in strip-mining and limestone
operations in Hubbard, Ohio.1 Mulligan Mining, Inc. and/or
Mulligan Mining Holdings, Inc. (“Mulligan Mining”), is a strip-
J-A24009-17
mining company in Burgettstown, Pennsylvania. Mineral
Trading and Mulligan Mining share investors. In addition,
Jo[nathan] Lasko (“Lasko”) is the president of Mulligan
Mining and the managing member of Mineral Trading. As
the president and managing member, Lasko had the
authority to act on behalf of Mulligan Mining and Mineral
Trading at all relevant times.
1 Bythe date of the hearing, Mineral Trading was
no longer in business. N.T., 3/15/13, at 17.
On July 27, 2011, Plum Property [Associates, Inc. (“Plum
Property”)] obtained a judgment in its favor in the Allegheny
County Court of Common Pleas, Docket Number GD-10-
001816, against Mineral Trading in the amount of
$85,513.17.2 Plum Property filed a praecipe for writ of
execution in the Court of Common Pleas of Washington
County and levied on five pieces of equipment that Plum
Property asserted belonged to Mineral Trading.
2 In its brief, Plum Property states that it filed
an action against Mineral Trading to collect
payment for coal sales. Plum Property asserts
that “[t]he judgment resulted from the grant of
Plum Property’s Motion for Summary Judgment,
the basis of which was the admission by an
officer of Mineral Trading in a deposition that
Mineral Trading owed Plum Property $75,342
[plus prejudgment interest of $10,171.17, plus
continuing interest and costs].”
On June 28, 2012, Mulligan Mining filed a goods claim,
asserting ownership of the five pieces of equipment upon
which Plum Property levied. On July 9, 2012, the
[Washington County] Sheriff [(“Sheriff”)] determined that
Mulligan Mining owned the equipment. Plum Property
appealed the Sheriff’s determination to the Court of
Common Pleas of Washington County.
The trial court held an evidentiary hearing on March 15,
2013. At the hearing, the parties stipulated that Mulligan
Mining owned four of the five pieces of equipment. Plum
Property’s only remaining issue was the ownership of a CAT
Bulldozer, serial number 9XR170 (the “Dozer”).
-2-
J-A24009-17
The evidence presented at the hearing showed that
Mineral Trading purchased the Dozer for $425,000 in 2009.
Mineral Trading experienced financial difficulties in 2010 and
2011. In order to keep the business afloat, Mulligan Mining
transferred substantial funds to Mineral Trading. At the
hearing, Lasko referred to these transfers as loans. Mineral
Trading made payments to Mulligan Mining during this time,
but the payments occurred without a set schedule or
established interest rate.
Lasko testified at the hearing that Mulligan Mining
executed an equipment purchase agreement and bill of sale
with Mineral Trading to acquire the Dozer because Mineral
Trading owed money to Mulligan Mining for outstanding
loans. The bill of sale indicated that Mulligan Mining
purchased the Dozer from Mineral Trading for $397,443.44,
which Mineral Trading received as a credit against the
balance of the outstanding loans owed to Mulligan Mining.
Lasko further testified that since Mulligan Mining and Mineral
Trading executed the equipment purchase agreement and
bill of sale, the Dozer has been located at Mulligan Mining’s
site, used by Mulligan Mining in its operations, and is listed
as Mulligan Mining’s corporate asset.
On May 14, 2013, the trial court denied Plum Property’s
Objection to Sheriff’s Determination of Ownership of
Property, affirming the Sheriff’s determination that Mulligan
Mining owned the Dozer.
Plum Prop. Assocs., Inc. v. Mineral Trading Co., LLC, No. 970 WDA 2013,
unpublished mem. at 1-4 (Pa.Super. filed July 29, 2014) (internal citations
omitted; some alterations in original).
Plum Property appealed to this Court, and on July 29, 2014, we reversed
the trial court’s May 14, 2013 order; we concluded that the purported transfer
of the Dozer from Mineral Trading to Mulligan Mining was without
consideration and, thus, Mineral Trading owned the Dozer. On November 12,
-3-
J-A24009-17
2014, Plum Property filed a motion to compel the Sheriff to hold a sheriff’s
sale.
On November 21, 2014, as Plum Property proceeded on its execution
with the Sheriff’s Office, S&K filed a goods claim with the Sheriff, asserting
that it owned the Dozer because of its purchase of loans and collateral security
interests from Angus Coal SPE No. 1, LLC (“Angus Coal”). S&K claimed that
it had purchased the loans on March 5, 2013, while Plum Property’s appeal
from the Sheriff’s initial determination was pending in Washington County
Court of Common Pleas. According to this goods claim, the debtors under the
loan were Mulligan Mining (including both Mulligan Mining Holdings, Inc. and
Mulligan Mining, Inc.), Mineral Trading, and New Coal Holdings, LLC. S&K
claimed that the Dozer was collateral security for the loans. S&K also averred
that the debtors had defaulted on the loans, and that it had seized and
foreclosed on the secured collateral, including the Dozer.
The Sheriff denied S&K’s goods claim on November 24, 2014. On
December 23, 2014, the trial court entered an order directing the Sheriff to
hold a sale of the Dozer. On January 13, 2015, S&K filed with the trial court
a motion for reconsideration of the December 23, 2014 order, a petition for
leave to file its objection to the Sheriff’s goods claim determination nunc pro
tunc, and the objection itself. S&K claimed that it had not received timely
notice of the Sheriff’s denial of its goods claim. That same day, the court
-4-
J-A24009-17
granted S&K’s petition for leave to file an objection to the Sheriff’s goods
claim.
On March 5, 2015 and April 9, 2015, the trial court held hearings on
S&K’s objection to the Sheriff’s determination. On February 3, 2016, the trial
court denied S&K’s goods claim and found that Mineral Trading owned the
Dozer pursuant to this Court’s July 29, 2014 determination. S&K then filed a
motion for post-trial relief on February 16, 2016, and a motion for
reconsideration on March 3, 2016. On June 16, 2016, after argument on April
6, 2016, the trial court denied S&K’s motions. On June 28, 2016, S&K filed a
timely notice of appeal.
S&K raises the following issues on appeal:
1. Whether the lower court committed an error of law and
abuse of discretion in determining that the Superior Court’s
ruling that Mineral Trading Company, LLC, was the owner of
the D11 R Dozer was dispositive of the case and that the
S&K Energy, Inc., was estopped from asserting its goods
claim.
2. Whether the lower court committed an error of law and
an abuse of discretion when it found that S&K Energy, Inc.,
failed to meet its burden of proof to demonstrate its
ownership of the D11 R Dozer by clear and convincing
evidence.
3. Whether the lower court committed an error of law and
an abuse of discretion when it failed to find that S&K Energy,
Inc., had a perfected security interest that was superior to
any rights of subsequent creditors and that entitled it to
immediate possession of the D11 R Dozer upon default by
debtors Mulligan Mining, Inc., and Mineral Trading
Company, LLC.
4. Whether the lower court committed an abuse of discretion
or an error of law in awarding reasonable counsel fees to
-5-
J-A24009-17
Plum Property Associates, LLC, pursuant to Pa[.]R.C.P.
3213.
S&K’s Br. at 3 (trial court answers omitted).
We must first determine whether this Court’s previous disposition of the
ownership of the Dozer pursuant to Plum Property’s goods claim precludes
S&K from later asserting an inconsistent goods claim. The trial court
concluded that S&K was estopped from making its claim. See Trial Ct. Mem.
Order, 2/3/16, at 3 (unpaginated). We agree and conclude that S&K is barred
from making its goods claim under the equitable doctrine of laches.
This Court has described the doctrine of laches as follows:
The doctrine of laches is an equitable bar to the
prosecution of stale claims and is “the practical application
of the maxim that ‘those who sleep on their rights must
awaken to the consequence that they have disappeared.’”
The question of whether laches applies is a question of law;
thus, we are not bound by the trial court’s decision on the
issue. The question of laches itself, however, is factual, and
is determined by examining the circumstances of each case.
We have outlined the parameters of the doctrine of
laches as follows:
Laches bars relief when the complaining party is
guilty of want of due diligence in failing to
promptly institute the action to the prejudice of
another. Thus, in order to prevail on an
assertion of laches, respondents must establish:
a) a delay arising from petitioner’s failure to
exercise due diligence; and, b) prejudice to the
respondents resulting from the delay.
Moreover, the question of laches is factual and
is determined by examining the circumstances
of each case.
-6-
J-A24009-17
Fulton v. Fulton, 106 A.3d 127, 131 (Pa.Super. 2014) (internal citations
omitted).
Accordingly, we must determine whether the record supports the trial
court’s finding that S&K knew of the 2012 goods claim and failed to exercise
due diligence by not promptly intervening or instituting an action of its own.
Mulligan Mining filed its goods claim on June 28, 2012, after Plum
Property had obtained a judgment against Mineral Trading and attempted to
levy on the Dozer. At the March 5, 2015 hearing on S&K’s goods claim, Sean
Taylor, S&K’s owner, claimed that he had been unaware of Mulligan Mining’s
previous goods claim. N.T., 3/5/15, at 48. The trial court found this testimony
not credible. See 1925(a) Op. at 6-7 (“The Court did not accept the testimony
that S&K Energy, namely Sean Taylor, did not find out about the goods’ claim
proceeding until after the Superior Court decision. The Dozer was clearly
tagged by the Sheriff. Sean Taylor owned Mulligan which filed the goods
claim.”). The trial court made this determination in light of a complex factual
background involving interrelated individuals and entities, with which it was
intimately familiar, and which we summarize below.
At the March 15, 2013 evidentiary hearing held in connection with the
first goods claim, Lasko testified that he had purchased Mulligan Mining, Inc.
from Sean Taylor, although he named the purchasing company as Mulligan
Mining Holdings, Inc. N.T., 3/15/13, at 7. Lasko testified that while Mulligan
Mining and Mineral Trading share investors, id. at 8, neither Mulligan Mining
-7-
J-A24009-17
nor Mineral Trading ever had an ownership or controlling interest in each
other, id. at 7-8. Lasko also testified that he was the managing member of
Mineral Trading, the president of Mulligan Mining, Inc., and the principal of
Mulligan Mining Holdings, Inc., owning more stock in Mulligan Mining Holdings,
Inc. than any other person. Id. at 39, 41-42. In addition, Lasko testified that
New Coal Holdings, LLC, of which he was the managing member, owned all of
Mineral Trading’s stock. Id. at 39-40.
At the March 5, 2015 hearing on the second goods claim, Taylor testified
on behalf of S&K.1 He stated that he “created and founded and operated
Mulligan Mining[, Inc.] up until the point [he] sold it in July of 2010” to
Mulligan Mining Holdings, Inc. N.T., 3/5/15, at 6-7. Taylor formed S&K in
2010, and “had a five year non-compete” with Mulligan Mining Holdings, Inc.
Id. at 6.
The funding for the purchase of Mulligan Mining, Inc. by Mulligan Mining
Holdings, Inc. came from a reinsurance company headquartered in Bermuda
called RenaissanceRe. Id. at 9. The funds flowed from RenaissanceRe to
Angus Coal, then to Taylor’s lawyer’s account, and then to Taylor’s account at
PNC Bank. Id. at 9-10.
Taylor testified that after selling the company, he had no equity interest
____________________________________________
1We note, as did the trial court, that the attorney representing S&K in
its 2014 goods claim had represented Mulligan Mining in its 2012 goods claim
with respect to the same piece of equipment.
-8-
J-A24009-17
in Mulligan Mining, Inc., Mulligan Mining Holdings, Inc., Mineral Trading, or
New Coal Holdings. Id. at 10. He also stated that Angus Coal had no equity
interest in the companies. Id. Taylor testified that after the sale closed, he
continued to do “day-to-day type consulting” for Mulligan Mining, Inc. and was
still primarily responsible for selling coal for the mine for a set commission.
Id. Taylor stated that he had daily contact with supervisors at Mulligan Mining
and weekly contact with Lasko. Id. at 11. Taylor also did some consulting
work for Lasko at Mineral Trading. Id.
Taylor further testified that in early 2011 he began to be aware of
serious financial problems with Mulligan Mining and Mineral Trading. Id. at
12. Taylor discussed the financial problems with Lasko, who told Taylor that
he was working on a restructuring deal with Angus Coal. Id. at 12. The
restructuring deal, which consolidated earlier loans, id. at 14-15, was
completed in 2012. Id. at 13. Taylor testified that Lasko continued to have
financial problems after the restructuring. Id. at 13. Taylor said that Lasko
“basically, . . . threw up his hands and said, I can’t go anymore.” Id. After
Lasko told Taylor that he was “done,” Taylor went to Angus Coal to gauge
whether it had an interest in selling its assets to Taylor. Id. at 13-14. Taylor
and Angus Coal decided that the best plan was for Taylor to purchase Angus
Coal’s secured loan and the accompanying collateral and security, and then to
foreclose. Id. at 14.
-9-
J-A24009-17
Against this background, the trial court concluded that S&K was aware
of Plum Property’s 2012 goods claim against the Dozer, but nonetheless failed
to act until November 21, 2014, after Plum Property had filed a motion to
compel the Sheriff to put the Dozer up for sale. As we have said many times,
”this Court will not revisit the trial court’s determinations . . . regarding the
credibility of the parties.” Woods v. Cicierski, 937 A.2d 1103, 1105
(Pa.Super. 2007). Therefore, we conclude that the record supports the trial
court’s finding that S&K knew of the claim.
Further, it is undisputed that S&K failed either to intervene in the 2012
goods claim or to file its own goods claim in 2012. Rather, it waited until
November 2014, more than two years after Mulligan Mining had filed its goods
claim, to file its own claim. We agree with the trial court that S&K failed to
exercise due diligence and further conclude that this failure caused a
substantial delay.2
____________________________________________
2 S&K argues that as a secured creditor, it did not have to intervene in
a proceeding between unsecured creditors. S&K’s Reply Br. at 2-4. S&K
further claims that Plum Property’s assertion that S&K’s goods claim was
untimely fails because Angus Coal, as predecessor to S&K, would have had no
reason to file a goods claim, since the debtors had not defaulted at the time
the sheriff originally levied on the equipment. Id. at 3. S&K claims that at
some point between the filing of Mulligan Mining’s original goods claim and
the trial court’s denial of Plum Property’s objection to the goods claim, Mineral
Trading and Mulligan Mining defaulted on the loans they had received from
Angus Coal. Id. at 9. Accordingly, S&K asserts that it took possession of the
Dozer after purchasing the Angus Coal loan on March 5, 2013. Id. at 20.
Notwithstanding this complex factual history, aside from asserting that it was
not aware of the previous goods claim, an assertion the trial court discredited,
- 10 -
J-A24009-17
We next address whether Plum Property has been prejudiced by the
delay. We conclude that it has. Plum Property litigated this case from 2011
through our July 29, 2014 decision. Despite our decision that effectively
authorized Plum Property to execute against the Dozer to satisfy its judgment
against Mineral Trading, S&K now claims that it is entitled to the Dozer.
Therefore, more than six years after obtaining judgment against Mineral
Trading, Plum Property continues to have to litigate its rights to the Dozer.
We will neither reward nor incentivize a party that lays in wait, allows an
adverse party to litigate its claim to completion, and then later claims that
those proceedings do not matter.
Accordingly, we agree with the trial court that S&K is estopped from
making its goods claim. In light of our disposition, we need not address S&K’s
remaining issues on appeal.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/27/2017
____________________________________________
S&K fails to explain why it did not file its own goods claim sooner, especially
in light of the ongoing dispute between Plum Property, Mineral Trading, and
Mulligan Mining regarding the Dozer.
- 11 -