Barak, G. v. Karolizki, E.

J-A17008-18
2018 Pa. Super. 258
GOLAN BARAK, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
EYAL KAROLIZKI AND GAL ZEEV
SCHWARTZ
No. 1672 WDA 2017
Appeal from the Order Entered, October 26, 2017
in the Court of Common Pleas of Allegheny County,
Civil Division at No(s): GD 16-000990.
BEFORE: OTT, J., KUNSELMAN, J. AND MUSMANNO, J.
OPINION BY KUNSELMAN, J.: FILED SEPTEMBER 18, 2018
I. Introduction
Golan Barak filed a lis pendens1 in the Allegheny County Department
of Court Records’ judgment index against a certain piece of real estate.2 In
reviewing the lis pendens, the trial court applied the wrong legal test –
namely, the standard for a preliminary injunction – and ordered the court
clerks to remove the lis pendens from their judgment index. In that same
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1 Latin, literally meaning “suit hanging” or “suit pending.”
2 A lis pendens, once properly indexed, provides notice to potential buyers
that a piece of property is in litigation. Anyone who buys such property
takes title subject to the lawsuit’s outcome. Hence, so long as a lis pendens
notice remains of record, no one can claim, in good faith, to have purchased
the property without knowledge of the litigation. In other words, anyone
who buys real estate under lis pendens risks that the court might ultimately
rule that they did not purchase good title and strip them of ownership. See
United States National Bank v. Johnson, 487 A.2d 809 (Pa. 1985).
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order, the trial court also erroneously directed that the proceeds from a sale
of the real estate be placed into escrow pending this litigation’s outcome.
Mr. Barak appeals that order, and we vacate it in both respects. However,
jurisdictional concerns and judicial restraint require us to remand, so a trial
judge can apply the second part of Pennsylvania’s lis pendens law in the first
instance.
II. Factual Background
In January of 2016, Mr. Barak filed a “Praecipe for Writ of Summons in
Equity – Index as Lis Pendens” against Eyal Karolizki and Gal Zeev Schwartz
to litigate ownership of a piece of real estate in Wilkinsburg. Mr. Barak’s
complaint contains one count of quiet title. Through it, he prays for (1) the
voiding of Mr. Karolizki and Mr. Schwartz’s deed and (2) restoration of his
title. See Barak’s Second Amended Complaint at 5.
After filing an answer and new matter, Mr. Karolizki and Mr. Schwartz
moved the trial court to strike Mr. Barak’s lis pendens, because they had
found a potential buyer for the property. However, the buyer would not
consummate the sale subject to the lis pendens.
The trial judge conducted a hearing on their motion to strike. Instead
of presenting any competent testimony or evidence of record to prove that
the equities required removal of the lis pendens, counsel for Mr. Karolizki
and Mr. Schwartz offered the court his version of the facts and the law. The
attorney even brought someone out of the gallery, who, without taking an
oath or affirmation, identified herself as “Hope Feldman . . . a real estate
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broker” to give her opinions on the property. N.T., 10/26/17, at 34. Thus,
the defendants’ attorney called no actual witnesses, moved the admission of
no exhibits, and produced no record in support of the motion to strike the lis
pendens.
In Mr. Barak’s complaint, which we will accept as true due to the lack
of any contradictory evidence from the defendants, he claims to be the
rightful owner of the Wilkinsburg property. He further alleges that he
attempted to sell it to Alon Rimoni in 2015,3 and they entered into a sales
agreement to do so. At the closing, after executing a deed of transfer to Mr.
Rimoni, Mr. Barak learned that Mr. Rimoni did not bring any money to pay
for the land. However, Mr. Barak did not tear up or void the signature page
of the executed deed.
Instead, Maximillian F. Beier, Esq., the attorney facilitating the closing,
agreed, in writing, to hold Mr. Barak’s executed deed in escrow until Mr.
Rimoni produced the funds. See Exhibit D of Second Amended Complaint.
A few days later, at the direction of Mr. Rimoni, Attorney Beier used Mr.
Barak’s signature page as grantor from the deed in escrow and attached it to
a new deed. This new deed purported to transfer title from Mr. Barak
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3 Alon Rimoni is not a party in this litigation.
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directly to Mr. Karolizki and Mr. Schwartz. Attorney Beier recorded this
fraudulent deed in the Allegheny County Department of Real Estate.4
Mr. Barak says he received no compensation from that transfer. He
wants to regain legal title to the land, so he sued Mr. Karolizki and Mr.
Schwartz in this action.
At the hearing on the lis pendens, counsel for Mr. Karolizki and Mr.
Schwartz argued that, to maintain a lis pendens in the court’s records,
“plaintiffs have to show six things under the case law . . . because the courts
have said already . . . that a lis pendens acts as an injunction.” N.T.,
10/26/17, at 12-13.
After the defendants’ attorney explained in detail why Mr. Barak did
not deserve a preliminary injunction, he offered a convenient solution:
Now, what I have proposed . . . is that we allow the lis
pendens to be removed and . . . the money from the sale
be placed into the Department of Court Records, and it
cannot be touched by any party during this litigation. In
fact, what I am proposing . . . [is] that we would need a
court order . . . [to] release the funds at the conclusion of
the litigation, not before. And whoever wins takes the
money.
Id. at 19. Without even hearing Mr. Barak’s side of the case, the trial judge
decided that the “escrow sounds like a good idea to me.” Id. at 20.
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4 Most Pennsylvania counties call this department the recorder of deeds.
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But Mr. Barak’s attorney, skeptical of defense counsel’s proposal, still
wished to be heard. “Your Honor, if I may,” he interrupted, “Your Honor,
Chris Hasson for Golan Barak who’s the plaintiff in this matter.” Id.
Attorney Hasson then attempted to draw the judge’s attention to a
chart and several documents he had passed to the bench. But he managed
two sentences before the judge, fixated on defense counsel’s proposal,
asked:
THE COURT: Well, what's wrong with the escrow?
HASSON: My client doesn't want to sell the
property. He wants to keep the
property.
THE COURT: Well, he sold it already.
HASSON: He did not sell it already.
THE COURT: What was he doing in Beier’s office?
HASSON: He was attempting to sell the
property, but the proceeds for the
sale were never produced.
THE COURT: Well –
HASSON: If Your Honor will give me a moment
to explain what happened . . .
THE COURT: You're going into the whole program.
I want to know why escrow isn't a
good thing.
Id. at 20-21.
After discussing purchase prices, various offers, and where the parties
live, the judge allowed Attorney Hasson to present his argument. See id. at
22-26. He explained that his client filed suit to undo the allegedly fraudulent
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deed that Attorney Beier had created and recorded. He also said that Mr.
Barak has a separate case pending against Attorney Beier for malpractice, in
which Attorney Beier filed an answer admitting “that he took the deed that
was signed” by Mr. Barak, “pulled the coversheet off of that deed, and he
prepared a new coversheet that showed the deed going from Golan Barak to
the defendants in this case, and then he recorded that deed.” Id. at 26.
After this exchange, the hearing went far afield. The judge referenced
the unrelated case of DiSalle v. P.G. Publishing Company, 544 A.2d 1345
(Pa. Super. 1988). Opposing counsel argued with one another. Then, Ms.
Feldman came forward with her unsworn statements. She said that the
property had fallen into disrepair and “[t]axes have not been paid since Mr.
Barak took over the property.” Id. at 34.
Attorney Hasson responded by saying that Mr. Barak had:
paid the taxes when he owned it. [Ms. Feldman’s] clients
have been on the deed for two years and have never paid
the taxes – her clients have not paid the taxes since
they’ve been on the deed. Of course my client hasn’t paid
the taxes. He doesn’t have his name on the deed. They
don’t even allow him in the property. They won’t even
allow him to have an opinion about the sales value here.
If the property is under disrepair, that’s their fault. The
taxes have not been paid, that’s their fault.
Id.
THE COURT: The disrepair is hardly their fault.
HASSON: How is it not their fault? They’ve had
title to the property –
THE COURT: Disrepair in two years?
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HASSON: First of all, the house is worth
$300,000.
THE COURT: No. no. This case does not pass the
smell test. I’ll sign [the defendants’]
order.
* * * * * *
HASSON: A query, Your Honor. Under your
order, you’re removing the lis
pendens. They’re clearly going to
sell the property. They have an
agreement to sell the property. My
client has a pending lawsuit to quiet
title. That’s the only claim, one
count to quiet title. He proves his
case and comes back –
THE COURT: He gets the money.
HASSON: Comes back in six months and proves
that he doesn’t want the money, he
wants the title –
THE COURT: Well, too bad.
HASSON: Is that the Court’s position?
THE COURT: Too bad.
Id. at 35-36.
The trial judge signed the order removing Mr. Barak’s lis pendens from
the judgment index and simultaneously ordered the court clerks to hold any
proceeds from a sale in escrow until the end of the quiet title action.
On November 3, 2017, Mr. Barak filed this appeal. Two weeks later,
this Court issued a per curium rule to show cause why it should not quash
his appeal as interlocutory, pursuant to Levitt v. Patrick, 976 A.2d 581 (Pa.
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Super 2009) (holding that, if any claim remains outstanding, then the order
is generally not appealable).
Counsel for Mr. Barak filed an answer to the rule to show cause. Mr.
Karolizki and Mr. Schwartz did not respond. This Court then discharged its
rule and deferred the question of whether a party may immediately appeal
an order striking lis pendens to this panel.
III. Analysis
Mr. Barak’s appellate brief contains two issues. The first challenges
the striking of his lis pendens as an abuse of discretion and legal error. See
Barak’s Brief at 4. Among other things, Mr. Barak argues that the trial judge
erred as a matter of law when he applied the preliminary-injunction test to
the lis pendens. Mr. Barak’s second issue claims that the order removing his
lis pendens “ignored the admitted fraud of Attorney Beier.” Id.
A. Whether an order striking a lis pendens is immediately
appealable.
Preliminarily, however, we must resolve the jurisdictional question that
this Court raised in November of 2017 – i.e., whether an order striking lis
pendens is interlocutory.
Although no party has challenged our jurisdiction on such grounds, we
may always review our jurisdiction sua sponte. See, e.g., M. London, Inc.
v. Fedders Corp., 452 A.2d 236, 237 (Pa. Super. 1982). “Jurisdiction is
purely a question of law; the appellate standard of review is de novo and the
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scope of review plenary.” Commonwealth v. Seiders, 11 A.3d 495, 496–
97 (Pa. Super. 2010).
A party may only appeal:
(1) a final order or an order certified by the trial court as a
final order (Pa.R.A.P. 341); (2) an interlocutory order as of
right (Pa.R.A.P. 311); (3) an interlocutory order by
permission (Pa.R.A.P. 312, 1311; 42 Pa.C.S.A. § 702(b));
or (4) a collateral order (Pa.R.A.P. 313). The question of
the appealability of an order goes directly to the
jurisdiction of the Court asked to review the order.
Moyer v. Gresh, 904 A.2d 958, 963 (Pa. Super. 2006) (citation omitted).
Generally speaking, “Superior Court shall have exclusive appellate
jurisdiction of all appeals from final orders of the courts of common pleas . .
. .” 42 Pa.C.S.A. § 742. “A final order is any order that . . . disposes of all
claims and of all parties . . . .” Pennsylvania Rule of Appellate Procedure
341(b). “An order is final, and not interlocutory, if it prevents a party from
presenting the merits of its claim in the trial court.” Noll by Noll v.
Harrisburg Area YMCA, 643 A.2d 81, 83 (Pa. 1994).
An interlocutory order, on the other hand, is any order that “does not
dispose of all claims and all parties.” Commerce Bank/Harrisburg, N.A.
v. Kessler, 46 A.3d 724, 736 (Pa. Super. 2012). Basically, final orders end
a case. Interlocutory orders do not.
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In most instances, parties may not appeal an interlocutory order when
a trial judge issues it.5 See 16 STANDARD PENNSYLVANIA PRACTICE 2d §86:17
at 197-198, n. 17 (collecting cases). Rather, parties must wait for the court
of common pleas to enter a final order. Once that occurs, all interlocutory
orders become appealable along with the final order. “The reasons for
requiring appeals only from final orders are (1) to preclude piecemeal
determinations and the consequent protraction of litigation and (2) to
prevent cases from being brought to the appellate courts in installments.”
Id. at 198.
Also, the possibility exists that the party against whom a judge ruled
in an interlocutory order might ultimately win the case. Or the matter might
settle without the entry of a final order. In those situations, there is no need
for an appellate court to review the questionable interlocutory order. In this
sense, generally speaking, “discouraging interlocutory appeals furthers the
goals of judicial economy.” Stevenson v. General Motors Corp., 521 A.2d
413, 416 (Pa. 1987).
1. An order striking lis pendens is a final order under binding case law.
In the case at bar, Mr. Barak cited McCahill v. Roberts, 219 A.2d 306
(Pa. 1966), to answer this Court’s inquiry of whether an order striking lis
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5 Some exceptions to that rule appear in Pennsylvania Rule of Appellate
Procedure 311. Ironically, that list includes preliminary injunctions.
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pendens is interlocutory. Mr. Karolizki and Mr. Schwartz neither disputed
Mr. Barak’s reliance upon McCahill nor claimed that we lack jurisdiction over
this appeal.6
McCahill involved an equity action, where the plaintiffs sued “(1) to
have their title to the building judicially declared; (2) to enjoin any sale of
the real estate in question which could prejudice their rights; and, (3) to
obtain other relief deemed to be appropriate.” Id. at 308. Like Mr.
Karolizki and Mr. Schwartz, the defendants in McCahill petitioned the trial
court to strike the plaintiffs’ lis pendens notice, because they had found a
buyer for the land. And, just like the trial judge here, the trial judge in
McCahill entered an order striking lis pendens and “directed that the net
proceeds of the sale be held in escrow pending final adjudication of the
equity action.” McCahill at 308.
The plaintiffs immediately appealed, but the appellees moved to quash
on the grounds that the order striking lis pendens was interlocutory. The
Supreme Court of Pennsylvania, denying quashal said, “We cannot reach this
conclusion. The court’s order is final in that it effectively puts the plaintiffs
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6 That said, an appellee’s silence as to our lack of appellate jurisdiction can
never confer jurisdiction if the order under review is interlocutory. See 42
Pa.C.S.A. § 704(b)(2) (prohibiting the exercise of appellate jurisdiction via
appellee’s waiver when an appellant attempts “to take an appeal from an
interlocutory order which has not been made appealable by law or pursuant
to section 702(b)”).
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‘out of court,’ so far as their present claim is concerned, i.e., full and
complete ownership of the building with the right of removal.” Id.
Twenty years later, however, the Justices said exactly the opposite.
They stated that an order striking a lis pendens is not final, because it does
not settle “rights, duties, or liabilities between the parties, puts no one out
of court, and does not terminate the underlying litigation by prohibiting
parties from proceeding with the action.” U.S. National Bank in Johnston
v. Johnson, 487 A.2d 809, 812 (Pa. 1985). But U.S. Nation Bank did not
consider or expressly overrule McCahill.
We must ascertain which of the two, conflicting, Supreme Court of
Pennsylvania precedents is binding upon this Court. As we discuss below,
the statements from U.S. National Bank are dicta,7 while the holding in
McCahill is directly on point and remains binding precedent. Ultimately, we
find that McCahill controls our disposition of this issue.
The issue in U.S. National Bank was whether an order dismissing a
party from an equity action on preliminary objections constituted a final
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7 Obiter dictum (pl. dicta) is Latin, meaning “something said in passing,” and
is defined as any “judicial comment made while delivering a judicial opinion,
but one that is unnecessary to the decision in the case and therefore not
precedential (although it may be considered persuasive). – Often shortened
to dictum . . . .” BLACK’S LAW DICTIONARY at 1240 (10th. Ed. 2009). “No
court . . . is obliged to treat a dictum of another court (or, for that matter,
its own dicta) as binding precedent.” Maloney v. Valley Med. Facilities,
Inc., 984 A.2d 478, 490 (Pa. 2009) (citation omitted). Because dicta are
not precedential statements, they have no force or effect of law and do not
bind us.
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order for appellate purposes. The case concerned the Uniform Fraudulent
Conveyance Act; a lis pendens notice was not involved. Lis pendens only
came into the discussion because the Supreme Court sought to resolve “the
confusion generated by” Houston-Starr Co. v. Virginia Mansions, 441
A.2d 1334 (Pa. Super. 1982), regarding when to appeal in equity, (i.e.,
whether a decision under the then-existing rules of equity required en banc
review in the trial court before an appeal could be made to the Superior
Court).8 U.S. National Bank at 812. Upon granting review of this issue,
the Supreme Court of Pennsylvania overruled Houston-Starr. The Justices
explained that the “adjudication referred to in Rule 1517 is the chancellor’s
proposed final disposition of a complaint after trial which reaches the very
merits of the action . . . .” U.S. National Bank at 812 (emphasis in
original).
In reaching its decision that en banc review was not necessary, the
Supreme Court of Pennsylvania applied its long-held rule that the “sustaining
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8 In Houston-Starr Co. v. Virginia Mansions, 441 A.2d 1334 (Pa. Super.
1982), this Court held that an order striking lis pendens was an
“adjudication” under former Pennsylvania Rule of Civil Procedure 1517,
governing equity actions. (The Supreme Court of Pennsylvania repealed
Pa.R.Civ.P. 1517 when it merged the courts or law and equity.) Under the
old equity rules, the party who lost before a chancellor had to file exceptions
to an adverse “adjudication” before filing an appeal. Then, the court of
common pleas, sitting en banc, would review the chancellor’s rulings. The
en banc decision from the trial court, then became the final, appealable
order.
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of preliminary objections in the nature of a demurrer and dismissal of the
equity complaint is a final appealable order.” Id. at 813 (citations omitted).
Thus, the Justices quashed the bank’s appeal as untimely; although the bank
dutifully followed the procedure of Houston-Starr, by requesting en banc
review at the trial court, unbeknownst to it, the 30-day-appeal clock ran out.
Notably, the quashing of the bank’s untimely appeal from preliminary
objections in U.S. National Bank had nothing to do with whether an order
striking a lis pendens is interlocutory. Without reconsidering its prior holding
in McCahill, supra., or citing any authority whatsoever, the U.S. National
Bank Court simply stated:
[an] order lifting a lis pendens during the course of an
equity action fixes neither rights, duties, nor liabilities
between the parties, puts no one out of court, and does
not terminate the underlying litigation by prohibiting
parties from proceeding with the action. Accordingly, the
requisite “finality” is not present when a lis pendens is
lifted and the order, therefore, is interlocutory.
Id. at 812.
Those two statements, made in passing, had nothing to do with the
disposition of the issue before the Justices. Thus, we conclude that U.S.
National Bank’s declaration that an order striking a lis pendens is
interlocutory was “unnecessary to the decision in the case . . . .” BLACK’S
LAW DICTIONARY at 1240 (10th. Ed. 2009). Those statements, therefore, are
dicta, and they are “not controlling . . . .” U.S. Steel Co. v. Allegheny
County, 86 A.2d 838 (Pa. 1952).
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Because, procedurally speaking, McCahill is identical to the case at
bar, and because U.S. National Bank failed to acknowledge McCahill as
binding precedent – much less give it the full weight of stare decisis – we
adhere to the rule from McCahill and disregard U.S. National Bank as
dicta.9 Thus, we agree with Mr. Barak, that the order at bar striking the lis
pendens is final under McCahill and immediately appealable.
2. Alternatively, an order striking lis pendens also meets the definition of
a collateral order.
Even if the statements in U.S. National Bank are not dicta and the
Supreme Court of Pennsylvania did covertly overrule McCahill, we still hold
that an order striking lis pendens is immediately appealable. We do so by
applying the collateral order rule.
“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
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9 A panel of this Court, also without analysis, followed the U.S. National
Bank’s dicta in Flitter v. Chandor, 527 A.2d 1050, 1051 (Pa. Super. 1987),
and held “that an order lifting a lis pendens is nonappealable . . . .” That
statement resulted in partial quashal of the appeal. However, the Flitter
Court did not address the issue of whether the U.S. National Bank
statements were dicta before applying them. Also, the Flitter Court did not
grapple with McCahill’s contradictory holding. Therefore, we distinguish
Flitter and decline to follow it, on the grounds that it relied upon the dicta
from U.S. National Bank, in direct contravention of the binding precedent
in McCahill. Essentially, the Flitter Court should have followed the rule in
McCahill, because the Supreme Court of Pennsylvania has not reconsidered
or formally overturned that holding in an on-point case.
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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(b). At the outset, we note that the Supreme Court of Pennsylvania first
adopted Pa.R.A.P. 313 in 1992. This Rule did not exist when the courts
decided U.S. National Bank and Flitter v. Chandor, 527 A.2d 1050 (Pa.
Super. 1987). Thus, neither decision considered Rule 313 or impacts our
analysis under the Rule.
The seminal case on Rule 313(b) is Ben v. Schwartz, 729 A.2d 547
(Pa. 1999). There, plaintiffs sued a dentist for malpractice. As part of the
discovery phase, the trial judge ordered the Bureau of Professional and
Occupational Affairs to disclose certain investigative documents to the
plaintiffs. The Bureau immediately appealed the order directing disclosure.
The Commonwealth Court of Pennsylvania, finding that order interlocutory,
quashed.
The Bureau appealed to the Supreme Court of Pennsylvania, and the
Justices reversed. In so doing, they set forth the parameters “of the [three]
elements defining a collateral order – [i.e.,] separability, importance, and
irreparable loss . . . .” Id. at 550 (quoting Genivia v. Frisk, 725 A.2d
1209 (Pa. 1999).
First, a collateral order must be “separable from and collateral to the
main cause of action.” Pa.R.A.P. 313(b). The element of separability
requires that the merits of the appeal must be resolvable “without analysis
of” the substantive claims in the underlying lawsuit. Ben at 552.
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Whether Mr. Barak may maintain a lis pendens is separable from and
collateral to his claim of title quiet. In determining whether the lis pendens
may be maintained, a court does not analyze who owns the property in
question. Only that analysis would decide the substantive issue raised in Mr.
Barak’s complaint.
Instead, in reviewing the order to strike the lis pendens, a court needs
to analyze (1) whether Mr. Barak’s complaint brought title into question and
(2) whether, after balancing of the equities, the interests of justice weigh in
favor of maintaining the lis pendens or removing it from the judgment index.
See, e.g., Rosen v. Rittenhouse Towers, 482 A.2d 1113, 1116 (Pa.
Super. 1984) (articulating the two-part test for reviewing a lis pendens).
Thus, we may decide whether the trial judge correctly construed and applied
the legal test to strike lis pendens “without analysis of” who owns the
Wilkinsburg property. Ben at 552. Mr. Barak’s appellate issue is separable
from his underlying claim that Mr. Karolizki and Mr. Schwartz stole title to
the property or fraudulently obtained it.
Second, for an order to be collateral, it must involve a “right . . . too
important to be denied review.” Pa.R.A.P. 313(b). “In analyzing the
importance prong, we weigh the interests implicated in the case against the
costs of piecemeal litigation.” Ben at 552 (quoting Geniviva, at 1213).
Also, “it is not sufficient that the issue be important to the particular parties.
Rather it must involve rights deeply rooted in public policy going beyond the
particular litigation at hand.” Id. (quoting Geniviva, at 1213-1214). The
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“issue is important if the interests that would potentially go unprotected
without immediate appellate review . . . are significant relative to the
efficiency interests sought to be advanced by adherence to the final
judgment rule.” Id. In other words, the public policy implications of the
right involved must outweigh our usual aversion to fragmented appeals.
Here, Mr. Barak, is not simply protecting his right to maintain a lis
pendens notice in the Allegheny County Department of Court Records. He
seeks to safeguard the efficiency of our county-by-county recording systems
and the rights of property owners in general.
To begin with, his appeal, if successful, will safeguard our recording
system from abuse. If a court improperly removes a lis pendens from its
judgment index, the party who won that improper removal has defeated the
legislative intent behind the indexing requirement for a lis pendens.
Indexing puts any potential buyers on notice that the property is subject to
court jurisdiction by virtue of Mr. Barak’s cause of action. Indeed, the very
concept of lis pendens arises out of the equitable powers of the court to
order specific performance concerning claims that touch and concern the
land. See Dice v. Bender, 117 A.2d 725 (Pa. 1955). Hence, by putting
potential buyers on notice, the General Assembly desires that all the world
be protected from unintentionally purchasing a lawsuit along with a piece of
land.
Thus, the indexing and proper maintenance of a lis pendens notice is
itself a tool of judicial economy, because it may totally prevent or simplify
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future litigation. Any person who buys a piece of property subject to lis
pendens cannot later plead ignorance of the prior litigation and thereby force
the relitigation of who owns the property. Curtailing secondary lawsuits and
warning potential buyers of the legal ramifications of buying property
upfront outweigh this Court’s general goal of limiting the number of appeals
that arise from one case.
By deciding Mr. Barak’s claim that the trial court erroneously struck his
lis pendens now, we will not only be disposing of this one issue. We will also
be reducing the odds of another lawsuit entering our court system, should
the underlying case end in Mr. Barak’s favor.
Reduction of future lawsuits and efficiency of our recording systems
assuage our disapprobation for interlocutory appeals. We therefore conclude
that an order striking a lis pendens notice satisfies the second element of a
collateral order.
Third, when a “claim will be irreparably lost,” the order is collateral.
Pa.R.A.P. 313(b). “In essence,” the question is whether an erroneous trial
court ruling “cannot be undone.” Ben at 552.
Clearly, an order striking lis pendens satisfies this prong. As explained
in more detail below, once a lis pendens is removed from the judgment
index, the record owners – here, Mr. Karolizki and Mr. Schwartz – could sell
the property to an unwitting third party. In fact, this case proves that the lis
pendens notice served its purpose well. Mr. Karolizki and Mr. Schwartz had
a buyer lined up for the property, but their buyer did not wish to take the
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land subject to lis pendens. In other words, the lis pendens notice helped
the would-be buyer to make a fully informed decision about whether to buy
both the property and its accompanying litigation.
But, if we fail to review the order striking this lis pendens immediately,
the harm that could result if Mr. Barak is the rightful owner of the land would
be unfixable. If the order stands and the court clerks in Allegheny County
remove the lis pendens while the litigation is still pending, Mr. Karolizki and
Mr. Schwartz might find another potential buyer for the property without
mentioning this litigation to that person. If they make the sale, it would
essentially end Mr. Barak’s quiet title action against Mr. Karolizki and Mr.
Schwartz, because they would no longer have record title for Mr. Barak to
recoup. Indeed, at that point, the order striking lis pendens would become
moot, because Mr. Karolizki and Mr. Schwartz would clearly no longer own
the property at bar.
Little wonder then that the McCahill Court concluded that an order
striking lis pendens “effectively puts the plaintiffs ‘out of court.’” McCahill,
219 A.2d at 308. Hence, the question of whether the trial judge erred in
striking the lis pendens would then evade our appellate review.
And Mr. Barak would have to institute another lawsuit against the new
buyer to recover title. In that new case, he would need to show that the
buyer did not take as a subsequent bona fide purchaser for value – a heavy
lift – likely leaving Mr. Barak without the title he wanted from Mr. Karolizki
and Mr. Schwartz. The injustice of such a result is clear.
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We conclude, therefore, that an order striking a lis pendens impacts a
claim that Mr. Barak will irreparably lose if we do not review that order now.
Critically, if the trial court erred, and if Mr. Karolizki and Mr. Schwartz illicitly
resell the property, that harm “cannot be undone.” Ben at 552.
Because an order striking a lis pendens notice satisfies all elements of
Pa.R.A.P. 313, it meet the definition of a collateral order. Thus, Mr. Barak
may appeal that order “as of right . . .” Pennsylvania Rule of Appellate
Procedure 313 (a).
We therefore conclude that an order striking a lis pendens notice is an
immediately appealable order, either as a final or collateral order. As such,
this Court has appellate jurisdiction over Mr. Barak’s appeal.
B. Lis pendens notices are NOT preliminary injunctions.
We limit the remainder of our review to Mr. Barak’s claim that the trial
judge applied the incorrect substantive law when he struck the lis pendens
notice, because that error requires us to vacate and remand.
Which rule of law to apply is itself a question of law. As a result, “our
standard of review is de novo, and our scope of review is plenary.” Snead
v. Society for Prevention of Cruelty to Animals of Pennsylvania, 985
A.2d 909, 912 (Pa. 2009).
Mr. Karolizki and Mr. Schwartz contend on appeal, as they did in the
trial court, that a lis pendens “is analogous to a preliminary injunction
because it effectively prevents, or enjoins, the record owner of real property
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from transferring its interest in the property for full market value, or from
undertaking construction.” Karolizki/Schwartz Brief at 7-8. They claim that
“for a court to maintain a lis pendens against a property, there are six
essential prerequisites that the plaintiffs must establish prior to obtaining
preliminary injunctive relief in the form of a lis pendens.” Id.
To support their position, Mr. Karolizki and Mr. Schwartz rely upon
Philadelphia Waterfront Partners, L.P. v. Churchill Development
Group, LLC, 2007 Phila. Ct. Com. Pl. LEXIS 175 (C.C.P. Philadelphia 2007)
and Warehime v. Warehime, 860 A.2d 41 (Pa. 2004). At oral argument,
their attorney asserted that Warehime stands for the proposition that a lis
pendens notice is analogous to a preliminary injunction order. He was quite
mistaken.
Warehime deals with a family feud over a closely held corporation
and a preliminary injunction to enjoin a shareholders’ meeting. Thus,
Warehime contains no quiet title action, no lis pendens, and no relevance.
Because Warehime is inapposite, Mr. Karolizki and Mr. Schwartz must
rely upon Philadelphia Waterfront as their only supporting authority. In
that case, the Court of Common Pleas of Philadelphia held – for the first time
in Pennsylvania jurisprudence – that a lis pendens “is analogous to another
equitable remedy, the preliminary injunction, because it effectively prevents,
or enjoins, the record owner of real property from transferring its interest in
the property for full market value, or . . . from undertaking construction.”
Philadelphia Waterfront, supra, at 8-9.
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To be clear, that is not common law, and it has never been common
law. A lis pendens in no way “prevents or enjoins” the sale or improvement
of property, and lis pendens is totally unrelated to preliminary injunctions.
A lis pendens is simply a “notice, recorded in the chain of title to real
property . . . to warn all persons that certain property is the subject matter
of litigation, and that any interests acquired during the pendency of the suit
are subject to its outcome.” BLACK’S LAW DICTIONARY at 1073 (10th. Ed.
2014). A preliminary injunction, on the other hand, is a “temporary” “court
order commanding or preventing an action . . . issued before or during trial
to prevent an irreparable injury from occurring before the court has a chance
to decide the case.” Id. at 909 (combined definitions of “injunction” and
“preliminary injunction”).
Unlike a lis pendens, which functions in rem against the land and
therefore does not command or prevent anyone from doing anything, an
“injunction is a judicial process or mandate operating in personam by which,
upon certain established principles of equity, a party is required to do or
refrain from doing a particular thing.” 1 Howard C. Joyce, A T REATISE ON THE
LAW RELATING TO INJUNCTION § 1, at 2 (1909). Thus, the fact that a lis
pendens notice may discourage potential buyers from purchasing a piece of
land is entirely a consequence of market forces. This result, if it comes to
pass, has nothing to do with any court order, because the lis pendens is not
a court order. It is a notice to curtail a future claim that someone took the
land as a subsequent, bona fide purchaser for value, not subject to the
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result of the underlying litigation. Therefore, analogizing a lis pendens to a
preliminary injunction misses the mark. We hold preliminary injunctions and
lis pendens notices are two distinct legal concepts, and we overrule any
common pleas holding to the contrary.10
Here, the trial judge applied a preliminary injunction standard to strike
the lis pendens notice. Thus, he erred.
We, instead, now turn to the law of lis pendens notices to resolve this
appeal. The Supreme Court of Pennsylvania has said that a “lis pendens is
not to establish actual liens upon the properties affected nor has it any
application between the parties to the action themselves; all that it does is
give notice to third persons that any interest they may acquire in the
properties pending the litigation will be subject to the result of the action.”
Dice v. Bender, 117 A.2d 725 (Pa. 1955). So, a third party remains free to
buy the property subject to the litigation. If the third party, after reviewing
the pending lawsuit, is convinced that a would-be seller will prevail, the third
party may purchase the land and take whatever title the seller can legally
convey – which may be nothing at all, an unencumbered fee simple, or
anything in between. The lis pendens merely gives notice that, whatever
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10 See, e.g., Philadelphia Waterfront Partners, L.P. v. Churchill
Development Group, LLC, 2007 Phila. Ct. Com. Pl. LEXIS 175 (C.C.P.
Philadelphia 2007); and Patriots Corp. (USA) v. Ord, 2008 Pa. Dist. &
Cnty. Dec. LEXIS 177 at 6 (C.C.P. Westmoreland 2008) (relying, in part,
upon the erroneous standard from Philadelphia Waterfront to review a lis
pendens notice).
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that title may be, remains in question. Thus, the third party cannot, later
on, claim lack of knowledge of the suit.
To determine whether a lis pendens notice should be stricken from the
judgment indices, our appellate courts have developed a two-part test. Just
last year, this Court made clear that step one “is to ascertain whether title is
at issue in the pending litigation.” In re: Foremost Industries, Inc. v.
GLD, 156 A.3d 318, 322 (Pa. Super. 2017). If this first prong is satisfied,
the analysis proceeds to a second step where:
the [trial] court must balance the equities to determine
whether (1) the application of the doctrine is harsh or
arbitrary and (2) whether the cancellation of the lis
pendens would result in prejudice to the non-petitioning
party.
Id. at 322-323 (quoting Rosen v. Rittenhouse Towers, 482 A.2d 1113,
1116 (Pa. Super. 1984).
In Foremost Industries, we reversed a trial judge’s refusal to strike
a lis pendens at the first step of the test. There, a lis pendens was filed
against a piece of real estate known as “Greencastle” in relation to a federal
suit. In that lawsuit, however, the plaintiff only alleged breach of contract,
fraud, and unjust enrichment. Thus, who owned Greencastle was not before
the federal court. This Court found that the plaintiff never truly claimed that
he was the “rightful owner of Greencastle,” nor did “he seek the return of
real estate assets transferred pursuant to the [contract].” Id. at 323. We
explained that:
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[i]mportantly, [the plaintiff] does not dispute that GLD
now owns Foremost Industries’ rights, titles, and interests.
Rather, [the plaintiff] contends that GLD failed to pay a
substantial portion of the contract price . . . The outcome
of the underlying contractual dispute will not affect who
has title to Greencastle. Rather, [the plaintiff] demands
money damages.
Id. at 323–24. Under such facts, a lis pendens was inappropriate, because
the federal lawsuit did not involve title to Greencastle.
Here, by contrast, the exact opposite is true. Mr. Barak’s complaint is
solely a quiet title action, and he seeks a determination of who owns the
Wilkinsburg property. In his complaint, he claims to be the rightful owner.
Thus, unlike the underlying litigation in Foremost Industries, Mr. Barak’s
cause of action touches and concerns title to the property against which he
filed his lis pendens. Title is clearly the issue that Mr. Barak sought to
litigate by suing Mr. Karolizki and Mr. Schwartz.
Moreover, when the trial judge accepted defense counsel’s suggestion
to allow a sale to go forward and then place the proceeds into escrow, the
judge mistakenly ignored Mr. Barak’s prayer for relief. The trial judge asked
why Mr. Barak would not agree to the defendants’ proposal of “escrow.”
N.T., 10/26/17 at 21. He could not accept the proposed escrow solution,
because monetary damages would be incongruous with the allegations in his
complaint. The defendants’ escrow idea impermissibly converted Mr. Barak’s
quiet title action for ownership into a breach of contract action for damages.
Hence, the portion of the trial judge’s order ordering the creation of an
escrow account violated the common law of property and the common law of
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contracts, because there was (and is) no contract at bar. Unlike Foremost
Industries, where the plaintiff sought damages for a breach of a sales
agreement, here, according to the complaint, Mr. Barak had no sales
agreement with Mr. Karolizki and Mr. Schwartz. His sales agreement was
with Mr. Alon Rimoni.11 See Barak’s Second Amended Complaint at 1-2.
Thus, any action for a breach of contract must be litigated between Mr.
Barak and Mr. Rimoni, not the parties of this case. It is legally impossible
for Mr. Barak to maintain a breach of contract action against Mr. Karolizki
and Mr. Schwartz, because the three of them never signed a contract. As
such, the escrow solution and the judge’s insistence that Mr. Barak “gets the
money,” if he wins, forced upon Mr. Barak an inappropriate remedy for a
quiet title action. N.T., 10/26/17, at 36.
We therefore conclude that, because Mr. Barak’s prayer for relief is for
title, his prayer, if granted will directly and immediately implicate who holds
title to the Wilkinsburg property. Against that property, the Allegheny
County Department of Court Records indexed his lis pendens. Thus, our
application of the first step of the lis pendens test dictates that Mr. Barak’s
____________________________________________
11Because the issue is not before us, we express no opinion as to whether
Mr. Barak’s quiet title action could have survived a demurrer or will survive
summary judgment. We note, however, that “it is well-established law here
that when the Agreement of Sale is signed, the purchaser becomes the
equitable or beneficial owner through the doctrine of equitable conversion.
The vendor retains merely a security interest for the payment of the unpaid
purchase money.” DiDonato v. Reliance Standard Life Insurance Co.,
249 A.2d 327, 329 (Pa. 1969).
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lis pendens may be indexed under the first part of the two-part test, as a
matter of law.
But that only resolves one half of this case. Under the second part of
the lis pendens test, a trial judge must decide if such a notice should be
maintained, as a matter of equity. A trial judge must ascertain, in the first
instance, “whether (1) the application of the doctrine is harsh or arbitrary
and (2) whether the cancellation of the lis pendens would result in prejudice”
to Mr. Barak. Rosen, supra, at 1116. Because the trial court applied the
wrong legal test, that step-two determination has not yet occurred.
When trial judges, sitting in equity, apply the correct law, appellate
judges must narrowly and deferentially review their decrees. The Supreme
Court of Pennsylvania has held that:
appellate review of equity matters is limited to a
determination of whether the chancellor committed an
error of law or abused his discretion. The scope of review
of a final decree in equity is limited, and [the decree] will
not be disturbed unless it is unsupported by the evidence
or demonstrably capricious.
Sack v. Feinman, 413 A.2d 159, 1066 (Pa. 1980).
Given that our review of a step-two decree is so highly deferential, and
given that a “chancellor” has not yet considered the two questions posed in
Rosen, supra, at 1116, principles of judicial restraint command that we halt
our appellate review. We cannot deferentially review equitable decrees that
a “chancellor” has not yet rendered. Indeed, if we were to reach step-two
on this record, we would not be reviewing anything at all. In other words, if
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we were to balance the equities ourselves, we would usurp the court of
common pleas’ “unlimited original jurisdiction.” 42 Pa.C.S.A. § 931. This we
may not do. See 42 Pa.C.S.A. § 741 (establishing the nearly nonexistent
original jurisdiction of the Superior Court of Pennsylvania; limited to some
writs of mandamus and prohibition and the Great Writ of habeas corpus).
IV. Conclusion
We must remand this case to the Court of Common Pleas of Allegheny
County to apply step two of lis pendens test to the record as it currently
stands, in its original jurisdiction. However, no supplemental hearing or oral
argument shall occur on this issue. The trial judge may exercise discretion
on whether to allow briefs or memorandums of law on the question.
Order striking lis pendens vacated; case remanded with instructions;
jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/18/2018
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