Garges, K. v. Genisys Credit Union ( 2020 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
KATHERINE S. GARGES : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
GENISYS CREDIT UNION, CUMIS : No. 1196 EDA 2019
INSURANCE SOCIETY, INC., LARRY :
S. EISMAN, KANTROWITZ & :
PHILLIPPI, LLC, STEVEN B. :
KANTROWITZ
Appeal from the Order Entered March 20, 2019
In the Court of Common Pleas of Montgomery County Civil Division at
No(s): No. 2016-29578
BEFORE: LAZARUS, J., NICHOLS, J., and McLAUGHLIN, J.
MEMORANDUM BY McLAUGHLIN, J.: FILED MARCH 06, 2020
Kathryn S. Garges appeals from the entry of summary judgment in favor
of Genisys Credit Union, Cumis Insurance Society, Inc., Larry S. Eisman,
Kantrowitz & Phillippi, LLC, and Steven B. Kantrowitz (“Appellees”). Garges
claims the court erred in granting Appellees’ motions for summary judgment
on her Dragonetti Act1 and abuse of process claims. We affirm.
Garges’ claims arise from a prior action that USA Federal Credit Union
(“Credit Union”)2 filed against her (“Underlying Action”). Garges had three
accounts with the Credit Union—a Credit Card Account, a “Kwik Draw Line of
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1 42 Pa.C.S.A. §§ 8351–55.
2 Genisys Credit Union is the successor in interest to USA Federal Credit Union.
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Credit,” and a vehicle loan. In 2002, after Garges missed payments on the
credit card and Kwik Draw Line of Credit, Garges and the Credit Union
exchanged communications in an effort to reach an agreement underwhich
Garges could pay off the two accounts. In the 2002 communications, Garges
admitted that she was unable to repay the loans, and sought alternate
payment schedules. See, e.g., Motion for Summary Judgment of Defendant
Credit Union at Exh. G, Letter from Garges to Eisman dated Dec. 13, 2002
(stating that Garges’ accounts had been past due for a “year or so”). Also in
2002, the Credit Union repossessed Garges’ vehicle. Answer with New Matter
of Credit Union, filed Aug. 10, 2017, at ¶ 15.
In 2005, the Credit Union filed a Complaint, asserting Garges was
delinquent in payment on the two credit obligations. The Complaint sought
$11,156.14. Larry S. Eisman, Esquire, represented the Credit Union and
signed the Complaint.
Garges filed an Answer with New Matter and Counterclaim. Steven B.
Kantrowitz, of the firm Kantrowitz & Phillippi, LLC, entered an appearance on
behalf of the Credit Union on the Counterclaim. In the Answer, Garges stated
that she “made many timely payments” but admitted that she “did not repay
the entire ending balance on either” account. USA Fed. Cred. Union v.
Garges, No. 2005-02231, Defendant’s Answer to Plaintiff’s Complaint , New
Matter, and Counterclaim, at ¶ 4. In her New Matter, Garges averred that she
had not received any correspondence or telephone calls from the Credit Union
since December 2002, and had not received any statements since February
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2003. She further asserted counterclaims against the Credit Union claiming
that the Credit Union’s conduct: violated the commercial standard of fair
dealing applicable to contracts involving secured transactions under the
Pennsylvania Uniform Commercial Code; constituted unfair or deceptive debt
collection practices in violation of the Pennsylvania Fair Credit Extension
Uniformity Act; and violated the Pennsylvania Unfair Trade Practices and
Consumer Protection Law.
Both sides filed dispositive motions. In July 2008, the trial court granted
the Credit Union’s motion for summary judgment on Garges’ Counterclaims
and denied Garges’ cross motion for summary judgment.
The docket for the Underlying Action contains some discovery motion
practice in the summer of 2009, but then no activity from October 2009
through October 2014. Trial Court Opinion, filed July 2, 2019, at 2 (“1925(a)
Op.”). In October 2014, the trial court issued a Notice to Terminate pursuant
to Local Rule 1901 of the Montgomery County Local Rules of Judicial
Administration. The Notice informed the parties that the court intended to
terminate the case for lack of docket activity for at least two years, but that it
would not terminate the case if any party filed a statement of intention to
proceed within 60 days. No party filed a statement of intention to proceed.
On January 5, 2015, the court marked the case “terminated” on the
docket. On January 20, 2015, Garges filed a petition to reinstate, seeking to
reinstate her counterclaim or, in the alternative, all claims. The trial court
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denied the petition to reinstate, and this Court affirmed. The Pennsylvania
Supreme Court denied a petition for allowance of appeal.
In December 2016, Garges filed a Complaint in the present action. In
July 2017, she filed an Amended Complaint, in which she asserted various
claims including a wrongful initiation of civil proceedings claim under the
Dragonetti Act against Genisys and Eisman, a wrongful continuation and use
of legal proceedings under the Dragonetti Act against all Appellees, and a
common law abuse of process claim against all Appellees.3
In support of her Dragonetti Act claim against the Credit Union and
Eisman, Garges claimed the Credit Union filed the Underlying Lawsuit for the
improper purpose of obtaining money from Garges that she did not owe. She
also contended that the suit was in retaliation for her 2002 objections to
allegedly unlawful conduct, and that Eisman knew or should have known the
lawsuit was initiated for an improper purpose. In support of her Dragonetti
Act claim against all Appellees, Garges claimed, inter alia, that Appellees knew
or should have known within a reasonable time of the filing of her Answer with
New Matter and Counterclaim that the Credit Union lacked probable cause for
its claims and Appellees acted with gross negligence and without probable
cause in continuing the lawsuit. Garges further claimed that Appellees’ actions
constituted an abuse of process.
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3 Garges also asserted claims of malicious misuse of civil proceedings, libel,
slander, and false light publicity. See Amended Complaint, at ¶¶ 80-103. The
trial court granted summary judgment as to these claims, and Garges does
not challenge the summary judgment order as to these claims on appeal.
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Her Amended Complaint also included allegations that Appellees refused
to dismiss or withdraw their claims in 2015, asserting that if they had done so
she could have appealed the order granting summary judgment as to her
counterclaims. She further claims that the parties entered settlement
discussions in 2015, but that a claim’s adjuster for Kantrowitz “insisted that
Garges resubmit her complete evidence and legal arguments in the Lawsuit to
the claims adjuster.” Amended Complaint at ¶ 43.
In January 2019, Appellees filed motions for summary judgment and
Garges filed a partial motion for summary judgment. In March 2019, the trial
court granted Appellees’ motions and denied Garges’s motion, and entered
summary judgment in favor of Appellees on all claims. Garges filed a timely
notice of appeal.
Garges raises the following issues on appeal:
1. Did the court err, as a matter of law or because there
were genuine contested material issues of fact, in denying
Garges’s partial motions for summary judgment under the
Dragonetti Act against the Credit Union for procurement and
initiation of the underlying action and against Eisman for
initiation of the underlying action, and in granting each of
[Appellees’] motions for summary judgment on the same
claims?
2. Did the court err, as a matter of law or because there
were genuine contested material issues of fact, in denying
Garges’s partial motions for summary judgment against
each of the Credit Union, Eisman, the Insurance Company,
the Kantrowitz firm, and Kantrowitz for continuation and use
of the underlying action in violation of the Dragonetti Act,
and in granting each of [Appellees’] motions for summary
judgment on the same claims?
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3. Did the court err, as a matter of law or because there
were genuine contested material issues of fact, in granting
the motions for summary judgment of each of the Credit
Union, Eisman, the Insurance Company, the Kantrowitz
firm, and Kantrowitz against Garges’s claims for common
law abuse of process in the underlying action?
Garges’ Br. at 3-4.
Garges challenges the grant of summary judgment. “[S]ummary
judgment is only appropriate in cases where there are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of law.”
Nicolaou v. Martin, 195 A.3d 880, 891 (Pa. 2018) (citing Pa.R.Civ.P.
1035.2(1)). “When considering a motion for summary judgment, the trial
court must take all facts of record and reasonable inferences therefrom in a
light most favorable to the non-moving party and must resolve all doubts as
to the existence of a genuine issue of material fact against the moving party.”
Id. We reverse a grant of summary judgment if there has been an error of
law or an abuse of discretion. Id. at 892. Because the issue of whether there
is a genuine issue of material fact is a question of law, our standard of review
is de novo and our scope of review is plenary. Id.
In her first two issues, Garges claims that the court erred in granting
summary judgment as to her Dragonetti claims.
The Dragonetti Act provides as follows:
(a) Elements of action.—A person who takes part in the
procurement, initiation or continuation of civil proceedings
against another is subject to liability to the other for
wrongful use of civil proceedings [if]:
(1) he acts in a grossly negligent manner or without
probable cause and primarily for a purpose other than
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that of securing the proper discovery, joinder of
parties or adjudication of the claim in which the
proceedings are based; and
(2) the proceedings have terminated in favor of the
person against whom they are brought.
42 Pa.C.S.A. § 8351(a).
To establish a claim under the Dragonetti Act, a plaintiff must prove all
of the following:
(1) The defendant has procured, initiated, or continued the
civil proceedings against him.
(2) The proceedings were terminated in his favor.
(3) The defendant did not have probable cause for his
action.
(4) The primary purpose for which the proceedings were
brought was not that of securing the proper discovery,
joinder of parties or adjudication of the claim on which the
proceedings were based.
(5) The plaintiff has suffered damages as set forth in section
8353.
Perelman v. Perelman, 125 A.3d 1259, 1263-64 (Pa.Super. 2015) (quoting
42 Pa.C.S.A. § 8354).
Probable cause for the procurement, initiation, or continuation of civil
proceedings exists if the defendant “reasonably believe[d] in the existence of
the facts upon which the claim is based,” and either:
(1) reasonably believes that under those facts the claim may
be valid under the existing or developing law;
(2) believes to this effect in reliance upon the advice of
counsel, sought in good faith and given after full disclosure
of all relevant facts within his knowledge and information;
or
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(3) believes as an attorney of record, in good faith that his
procurement, initiation or continuation of a civil cause is not
intended to merely harass or maliciously injure the opposite
party.
Id. at 1264 (quoting 42 Pa.C.S.A. § 8352). Further, “an action for wrongful
use of civil proceedings pursuant to the Dragonetti Act does not require a
prima facie showing of actual malice, but such action requires proof that the
defendant acted in a grossly negligent manner.” Id. (quoting Hart v.
O'Malley, 781 A.2d 1211, 1218 (Pa.Super. 2001)).
In her first issue, Garges claims the trial court erred in granting
summary judgment as to her Dragonetti Act claim against the Credit Union
and Eisman. She argues that although she admitted she owed debt in 2002,
she did not admit that she owed debt in 2005. She claims the Credit Union
and Eisman filed with the complaint, and produced in discovery, falsified
versions of the card terms and conditions. She further claims that her car was
damaged during repossession and, although she had not known it had been
damaged, Appellees should have been aware. She further claims the Credit
Union “waived by laches and estoppel all amounts it claimed were owing by
deliberately ceasing collection activity and communications with Garges other
than sending Garges quarterly statements which showed no balances owing
and purporting to be statements of all her accounts.” Garges’ Br. at 22. Garges
states Eisman’s actions did not have a reasonable basis in law or fact because
they included making a record of false documents, and he verified the
Complaint and discovery on his own knowledge, not on good faith belief that
he relied on his client. Garges notes that the Credit Union failed to withdraw
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or proceed with the case, and did not attempt to meet its burden of proof in
arbitration. Garges further claims the trial court opinion “implicitly credits
[Appellees’] stated defense” that they decided not to proceed because it
became apparent any judgment would be uncollectible due to lack of assets.
Id. at 25. She claims there was no evidence to support this defense.
The trial court concluded Garges failed to come forward with evidence
sufficient to create a genuine dispute as to whether Appellees, including the
Credit Union and Eisman, acted in a grossly negligent manner or without
probable cause. It found that the Credit Union’s collection complaint was
supported by probable cause, noting Garges admitted she had outstanding
accounts with the Credit Union and never asserted she paid them in full.
1925(a) Op. at 6. The court noted that Garges “contended she was relieved
of any obligation to pay them, primarily for three reasons—that [the Credit
Union] was unable to produce documentation related to the accounts, that Ms.
Garges debts were fully satisfied because her vehicle was damaged during
repossession by [the Credit Union], and that [the Credit Union] had waived its
right to collect the balances due by discontinuing the sending of periodic
statements and/or by sending statements showing zero balances.” Id. at 6-
7. The court concluded that “these arguments are not so clearly dispositive as
to establish that [Appellees] acted in a grossly negligent manner or without
probable cause in pursuing and continuing” the collection action. Id. at 7.
The trial court stated the following as to the defenses:
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First, Ms. Garges argues that [Appellees] lacked probable
cause or were grossly negligent because they failed to
produce in the Underlying Action certain documentation
relating to the credit accounts. This failure does not
establish that [the Credit Union’s] claims were wholly
lacking in merit. Ms. Garges did not deny the existence of
the accounts and did not assert that she had paid them in
full. [The Credit Union] could readily have established its
claim without such documentation—for example, by
showing that Ms. Garges made periodic charges on her
credit card account or specific draws on her line of credit.
Next, Ms. Garges argues that [Appellees] lacked probable
cause to pursue the Underlying Lawsuit because of alleged
damage caused to her car when [the Credit Union]
repossessed it. Specifically, Ms. Garges contends that [the
Appellees] were aware
that there was possible damage to Garges’s car
caused in course of the repossession but did not
pursue this information and therefore never met
[their] legal obligation to obtain the true value on sale
of the car, which created an unrebutted presumption
under applicable law that nullified any legal right to
claim amounts owing on [their collection] claim." [Pl.
Garges's Br. in Supp. of Her Mot. for Partial Summ. it.
Against Def Genisys Credit Union [hereinafter,
"Garges Br."], at 20.]
Despite this contention, Ms. Garges failed to present
evidence, in either the Underlying Action or the present
case, that her car was damaged during its repossession.
More importantly, the contention that any such damage
would create a "presumption" that all debts owed by her to
USA were somehow “nullified” lacks any legal support and
is contrary to common sense.5
5While Ms. Garges could have plausibly argued that
her indebtedness was reduced by the monetary
amount of any damage caused to the vehicle, that is
not the argument that she made in the Underlying
Action or the present case.
Finally, Ms. Garges argues that [the Credit Union]
"deliberately ceased collection activity and communications
with Garges after January, 2003, other than sending Garges
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quarterly statements which showed no balances owing and
purported to be statements of all her accounts, which
waived any rights by laches and estoppel." (Garges Br., at
20-21.) As noted [above], Ms. Garges acknowledged in the
Underlying Action that she had not paid her accounts with
[the Credit Union] in full. She thus does not assert that the
zero-balance statements sent by [the Credit Union] were
accurate. Rather, she contends that by sending such
statements, [the Credit Union] waived its right to collect the
unpaid amounts. Ms. Garges cites no authority to support
her waiver argument. To the contrary, if Ms. Garges was
aware, as she apparently acknowledges, that the
statements were not accurate, then there is no basis for her
to argue that she was somehow lulled into complacency or
that [the Credit Union] otherwise waived its right to collect
the balance actually owed. In short, this defense, like Ms.
Garges' other defenses, is not so clearly dispositive as to
support a claim of gross negligence or lack of probable cause
on the part of [Appellees].
It is also relevant that Ms. Garges filed a Cross-Motion for
Summary Judgment in the Underlying Action, seeking
dismissal of [the Credit Union’s] claims against her, and that
the Cross-Motion was denied. (Genisys Mot., Ex. J, L.)
Although it is not clear whether the denial of a defendant’s
motion for summary judgment establishes per se that there
was probable cause to pursue the claim against the
defendant, the Superior Court has made clear that such
denial of summary judgment is an important factor in
making the probable-cause determination. See Meiskin v.
Howard Hanna Co., 590 A.2d 1303, 1307 (Pa. Super
1991) (holding that existence of probable cause was
“confirmed” by denial of summary judgment in the
underlying action).
1925(a) Op. at 7-9.
We agree with the trial court’s analysis and its finding that no genuine
issues of material fact exists, and conclude the trial court did not err or abuse
its discretion. As outlined by the trial court, the evidence establishes Appellees
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did not act in a grossly negligent manner or without probable cause in initiating
the underlying lawsuit.
In her second issue, Garges argues that the trial court erred because its
analysis of the Dragonetti Act did not separate her claims in Count 1 of her
Complaint, which dealt with the initiation of the lawsuit, from Count III, which
dealt with continuation of the lawsuit. She claims Appellees made “at least
four separate decisions not to withdraw the claims prior to their dismissal.”
Garges’ Br. at 28. Garges claims the Credit Union “knew there was unusual
inactivity on its claims and that Eisman was delaying and trying to coerce
settlement and that the inactivity was tied to Garges’s ability to appeal the
interlocutory summary judgment order against her counterclaims.” Id. at 30.
She claims the insurance company worked with Kantrowitz to “deliberately
deceive Garges and discourage her appeal and attempts to settle the case by
ambiguous representations of authority to settle the Dragonetti Act claims,
and by requiring that Garges re-submit all her evidence and legal arguments
to the claims adjustor in order to discuss settlement.” Id. at 31.
This claim is meritless. As discussed above, the Underlying Action was
supported by probable cause and Appellees did not act with gross negligence
in initiating, and continuing to pursue, the claims. That Garges raised
affirmative defenses does not alter this. Further, that the Credit Union did not
dismiss or withdraw its claims does not impact the analysis here, as probable
cause supported the initiation and continuation of the proceedings.
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In her third claim, Garges argues the trial court erred in granting
summary judgment on her common law abuse of process claim. She argues
she presented sufficient evidence to show Appellees violated the legal process
standard for an improper purpose, including “coercing [her] into paying money
she did not legally owe, harassing and maliciously injuring Garges, avoiding
exposure of falsehoods and false documentation, coercing settlement, and
preventing Garges from obtaining consideration of the merits of her
counterclaim.” Garges Br. at 35. She claims the Credit Union and its attorneys
“refused to withdraw or agree to dismissal of its claims” and “continued to act
to achieve its improper purposes by opposing Garges throughout he
attempted appeal.” Id. at 36. She claims that, contrary to the court’s
conclusion, she did not have a way to force the case to proceed. She argues
Appellees told her that they were going to proceed. She also notes that the
Appellees did not agree to dismiss the case in the settlement conference that
occurred after she filed her motion to reinstate.
To establish a claim for abuse of process, the plaintiff must show that
the defendant “(1) used a legal process against the plaintiff, (2) primarily to
accomplish a purpose for which the process was not designed; and (3) harm
has been caused to the plaintiff.” P.J.A. v. H.C.N., 156 A.3d 284, 288
(Pa.Super. 2017) (quoting Werner v. Plater–Zyberk, 799 A.2d 776, 785
(Pa. Super. 2002)). “Abuse of process is, in essence, the use of legal process
as a tactical weapon to coerce a desired result that is not the legitimate object
of the process.” Id. (quoting Werner, 799 A.2d at 785). Further, “the
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gravamen of this tort is the perversion of legal process to benefit someone in
achieving a purpose which is not an authorized goal of the procedure in
question.” Id. (quoting Werner, 799 A.2d at 785).
The trial court concluded that the Credit Union is not liable for abuse of
process where it chose to allow the case “die a natural death through
administrative termination,” rather than discontinuing the case. 1925(a) Op.
at 10. It pointed out that Garges could have “invoked procedures to achieve
an earlier disposition of [the Credit Union’s] claims.” Id. She could have
sought consent to the filing of a trial praecipe, and, if the Credit Union refused,
could have sought a conference and requested the case be deemed ready for
trial. Id. Alternately, she could have sought dismissal for lack of prosecution
by filing a motion for non pros. Id. The court concluded that “Garges is not
faulted for failing to move the case forward. But she cannot argue that [the
Credit Union], in an abuse of legal process, delayed her ability to appeal from
a final judgment when she had the means available to move the case forward
herself.” Id. at 10-11.
We agree, and conclude the trial court did not err or abuse its discretion.
Garges has not established a genuine issue of material fact regarding any
element of the abuse of process claim.
Order affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/6/20
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