Raw v. Lehnert

Opinion by

Cercone, J.,

On or about March 2, 1973, appellants Charles and Judith Raw filed a complaint in equity in the Court of Common Pleas of Allegheny County against appellees Frank J. Lehnert, Mary Grace Lehnert, Mark Lehnert, Robert E. McKee, Jr., and Marcap, Inc. citing the purchase by appellants of all the stock of Riverview Memorial Park, a cemetery corporation, from appellees under a long term agreement. Under the terms of the agreement, the Lehnerts reserved as security the entire stock of Riverview, to be held by McKee, as escrow agent.

In the equity complaint, appellants alleged, inter alia, that the appellees obstructed them in the operation of Riverview by their failure to turn over assets and records of the business, failure to pay back real estate taxes as called for in the sales agreement, and various other forms of harassment and intermeddling. Further, appellants alleged a conspiracy among the appellees Lehnert and Marcap, Inc. to sell to Marcap certain portions of Riverview. Appellants also set forth specific averments of fraud in the form of misrepresentations made by the Lehnerts concerning Riverview which were relied upon by the appellants when they entered into the sales agreement.

In their prayer for relief, appellants asked for preliminary and permanent injunctions restraining McKee from turning over the Riverview stock to appellees, restraints upon further interference by appellees with appellants’ operation and control of Riverview, and the setting aside of any sales agreement between appellees Lehnert and Marcap, Inc. As an alternative to injunctive relief, appellants sought rescission of their agreement on the grounds of fraud and the return of all sums paid by them to the Lehnerts together with incidental expenses and losses as well as punitive damages in the amount of $75,000.00.

On March 6, 1973, a hearing on the request for preliminary injunction was held before Judge Silvestri of the Allegheny County Court of Common Pleas at which time an order of court was entered denying a preliminary injunction and other equitable relief.¹ This order was not appealed from. Subsequent to the denial of appellants’ request for equitable relief, the appellees filed preliminary objections in the nature of a motion for a more specific pleading concerning the alleged conspiracy, losses,' and damages claimed as a result of the appellees’ alleged fraud. Instead of responding to the appellees’ preliminary objections, the appellants on October 17, 1973, filed a complaint in assumpsit against appellees Lehnert, McKee and Riverview Memorial Park. The first eleven paragraphs of the assumpsit complaint are an incorporation of the averments of the equity complaint. The balance of the assumpsit complaint alleges, inter alia, that appellees Lehnert, without cause: (1) arbitrarily declared appellants in default; (2) on or about March 6, 1973, after the filing of the equity complaint, directed appellee McKee to turn over all of the security held by him under the escrow agreement; (3) that on or about March 14, 1973, the Lehnerts filed a criminal action of fraudulent conversion against appellants to force return of assets and muniments of title to Riverview to the appellees Lehnert; (4) that as a result of the breach of the sales agreements and the criminal action the Lehnerts in connivance with McKee forced appellants out of possession and control of Riverview.² As a result of these wrongs the appellants claimed losses and damages for the amounts already paid by them under the sales agreement, the reasonable value of services rendered by appellants in the operation of Riverview while they were in possession, loss of earnings of $24,000 per year for twenty years, irreparable injury to appellants’ business reputation caused by abuse of process, and legal expenses for the successful defense of the action for fraudulent conversion.

Appellees then filed preliminary objections to the appellants’ complaint in assumpsit alleging, in effect, that the pendency of the action in equity was a bar to the subsequent action in assumpsit. On September 5, 1974, the lower court entered an order sustaining appellees’ preliminary objection and dismissing the second action. Appellants then brought the present appeal from the order dismissing their assumpsit complaint, which order was entered on the .basis of the pendency of the prior equity action.

The only question before us is whether the dismissal of appellants’ assumpsit complaint on the basis of the pendency of a prior action, also designated lis pendens, was proper. We conclude that it was not. Lis pendens is a valid defense only when the parties, the causes of action and the relief sought are the same in both actions. 4 Standard Pennsylvania Practice Chapter 13, § 26; Goodrich-Amram Civil Practice §1017 (b)-15; Hessenbruch v. Markle, 194 Pa. 581 (1900) ; Taylor v. Humble Oil and Refining Company, 225 Pa. Superior Ct. 177 (1973).

Here, appellants seek in their equity action a rescission for fraud and punitive damages. They also seek to recover sums already paid on the installment sales contract and the value of services rendered before they were removed from possession and control. In this action appellants are seeking established equitable remedies.

In the assumpsit action appellants ask for loss of earnings for twenty years at $24,000 per year, as well as the value of services rendered and the return of sums already paid under the installment contract. Principally, appellants seek the benefit of their bargain in the assump-sit action, although they improperly included some resti-tutionary relief in their assumpsit complaint. The as-sumpsit action makes claim for abuse of process and for resulting damages to appellants’ business reputation growing out of actions allegedly taken by appellees after the filing of the equity action. These claims are not abatable by reason of the equity action even though both the equity suit and the assumpsit action may have arisen from the same subject matter. 1 C.J.S. Abatement and Revival § 55.

In essence, appellants seek rescission, punitive damages and restitution in the equity action, and seek the benefit of the bargain, breach of contract damages in the assumpsit suit. These are requests for different kinds of relief and therefore the preliminary objection based upon the pendency of a prior suit was not appropriate here.

However, we feel that it would be proper for the court below to order, upon its own motion, a consolidation of all of these matters under Rule 213, Rules of Civil Procedure. See 1 Goodrich-Amram Civil Practice § 213(a)-11 at pp. 58-62.³

For the reasons stated above, we reverse the lower court’s order dismissing appellants’ assumpsit complaint on the basis of pendency of the equity suit and remand this matter for disposition consistent with this opinion.

1 . It was improper for the trial judge to treat the hearing on an application for a preliminary injunction as a final hearing on the merits and as a basis for final decree unless so stipulated by the parties: Northvue Water Company, Incorporated v. Municipal Water and Sewer Authority of Center Township, Butler County, 7 Pa. Commonwealth Ct. 141, 145, 298 A.2d 677, 679 (1972). Therefore, Judge SilvestRI’s order of March 30 did not properly dispose of all the equitable claims. However, that question is not directly involved in our consideration and was not in any event appealed by the appellants. See also, 8 Standard Pa. Practice, Injunction §105 at 509.

2 . On April 24, 1973, Judge Silvestki entered a second order directing that appellants turn over all assets and records of Kiver-view to appellees Lehnert.

3 . We recognize that appellants may not maintain at the same time in separate counts of one action, or in two different suits, claims for rescission of a contract and restitution on the one hand and for damages for breach of the same contract together with expectation interest, on the other hand. These remedies are essentially inconsistent. Pittsburgh Union Stockyards Co. v. Pittsburgh Joint Stock Company, 309 Pa. 314, 163 A. 668 (1932); Emery v. Third National Bank of Pittsburgh, 308 Pa. 504, 162 A. 281 (1932) ; Clement Martin Inc. v. Gussey, 191 Pa. Superior Ct. 464, 157 A.2d 412 (1959). One may not terminate contractual obligations and seek the return of his consideration based upon the other party’s promise through an action for rescission and restitution, and, at the same time, seek the full benefits of that promise through an action for breach. This would involve an election of remedies problem that is not directly before us, and we need only hold that preliminary objections on the basis of lis pendens, is not available to the appel-lees in the present fact situation. See generally, Dobbs, Remedies (1973) §1.5 at pp. 15-18.