Kelly, A. v. Talisman Energy USA Inc.

J. A24041/18
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
ANDREW JOHN KELLY : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
v. :
:
REPSOL OIL & GAS USA, LLC, :
AS SUCC. BY CONVERSION TO :
TALISMAN ENERGY USA, INC. :
AND NICHOLAS HALKIAS :
:
v. :
:
PAUL A. KELLY, INDIVIDUALLY AND AS :
AGENT FOR ANDREW JOHN KELLY : No. 37 MDA 2018
:
APPEAL OF: ANDREW JOHN KELLY :
Appeal from the Judgment Entered February 7, 2017,
in the Court of Common Pleas of Susquehanna County
Civil Division at No. 2013-584
ANDREW JOHN KELLY : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
v. :
:
REPSOL OIL & GAS USA, LLC, :
AS SUCC. BY CONVERSION TO :
TALISMAN ENERGY USA, INC. :
AND NICHOLAS HALKIAS :
:
v. :
:
PAUL A. KELLY, INDIVIDUALLY AND AS :
AGENT FOR ANDREW JOHN KELLY : No. 38 MDA 2018
:
APPEAL OF: PAUL A. KELLY :
Appeal from the Judgment Entered February 7, 2017,
In the Court of Common Pleas of Susquehanna County
Civil Division at No. 2013-584 CP
J. A24041/18
BEFORE: OTT, J., McLAUGHLIN, J., AND FORD ELLIOTT, P.J.E.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED: MAY 1, 2019
Andrew John Kelly and Paul A. Kelly,1 individually and as agent for
Andrew John Kelly (collectively, “appellants”), appeal the February 7, 2018
judgment2 that resulted from the June 12, 2017 order of the Court of Common
Pleas of Susquehanna County that (1) entered judgment in favor of Paul Kelly,
individually and as agent for Andrew Kelly, and Andrew Kelly against
Nicholas Halkias with respect to Count I of the Interpleader Complaint, Void
Assignment – Failure of Consideration; (2) entered judgment in favor of
Nicholas Halkias and against appellants with respect to Count II – Void
Assignment – Violation of Fiduciary Duty/Fraud/Self-Dealing, Count III – Void
Assignment – Improper Notarization, Count IV – Void Assignment –
Vagueness/Assignment Personal to Grantors, and Count V – Misappropriation
of Royalties; and (3) with respect to Andrew Kelly’s complaint against
Repsol Oil & Gas USA, LLC (“Repsol”), as successor by conversion to Talisman
Energy USA, Inc. (“Talisman”), judgment was entered in favor of Repsol and
1 Paul Kelly is the father of Andrew Kelly.
2The captions originally stated that appellants appealed from an order entered
December 6, 2017. However, in the December 6, 2017 order, the trial court
denied post-trial motions. Appellants are actually appealing the February 7,
2018 judgment. The captions have been amended accordingly.
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against Andrew Kelly as to Count I, Conversion, and Count II, Defamation of
Title. After careful review, we affirm.
The trial court also declared void the assignment executed on June 24,
2007, by James P. Halkias and Kerry Halkias, recorded at Instrument
No. 200817634 in the Office of the Register of Wills and Recorder of Deeds for
Susquehanna County; and the Recorder of Deeds was ordered to strike the
document from the records of Susquehanna County. Similarly, the
assignment executed on June 24, 2007 by James Halkias and Kerry Halkias,
recorded at Instrument Number 201309151 in the Office of the Register of
Wills and the Recorder of Deeds for Susquehanna County was declared void,
and the Recorder of Deeds for Susquehanna County was ordered to strike the
document from the records of Susquehanna County.
Andrew Kelly was ordered to disgorge any and all royalty payments,
made pursuant to either assignment to Nicholas Halkias. Repsol was ordered
to furnish any and all royalty payments held in suspense pursuant to this
matter to Nicholas Halkias, to cease any and all royalty payments made to
Andrew Kelly under either assignment, and to furnish all future royalty
payments to Nicholas Halkias. The trial court also scheduled a hearing for
consideration of Respol’s petition for counsel fees and costs.3
3The issue of counsel fees is not before this court in either of these appeals.
However, appellants appealed the trial court’s award of counsel fees at
Nos. 420 and 421 MDA 2018.
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The facts and procedural history, as gleaned from the extensive trial
court opinion, are as follows: On May 8, 2013, Andrew Kelly filed a complaint
against Talisman and sought royalty payments for oil and natural gas
extracted from a parcel of real estate in Susquehanna County. According to
the complaint, James Halkias purchased real estate (“Property”) in
Susquehanna County in early 2006. On June 24, 2007, James Halkias and his
wife, Kerry, executed an oil and gas lease with Fortuna Energy Company
(“Fortuna”) where Fortuna would pay to extract oil and gas from the property.
(Trial court opinion, 6/19/17 at 2.)
According to the complaint, that same day, James Halkias allegedly
executed an assignment that would give Andrew Kelly a 15% share of any oil
and gas royalties from the property. The typed text of the assignment stated:
The undersigned, Grantors, do hereby assign
TO
Andrew John Kelly, Grantee, his heirs or assigns
Fifteen percent of any accrued royalties which may
become due from any energy company as a result of
oil or gas production concerning our lands.
For example: Royalty = $1,000 Kelly receives = $150
Witness our hands and seals this day of May, 2007
intending to be legally bound.
Id. at 2-3. The assignment contained handwritten portions that included the
names “James P. Halkias & Kerry Halkias (w)” written above the identification
of the grantors. To the right side of the page is the notation:
“Halkias 431.24.” (Id. at 2 n.2.) At some point, either Fortuna or its
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successor, Talisman, voided the lease and it is not the subject of this litigation.
(Id. at 3.)
On August 7, 2008, James Halkias entered into a second oil and gas
lease with Alta Resources, LLC (“Alta”). At some point, Alta came under the
control of Talisman. On September 22, 2010, James Halkias executed a fee
simple warranty deed and deeded the property to his father, Nicholas Halkias.
(Id.)
Late in 2012, Talisman paid 15% of royalties to Andrew Kelly in
accordance with the assignment. In February 2013, Talisman received notice
that the Halkias family questioned the validity of the assignment. Talisman
then placed all future royalty payments in suspense. Because of this action,
Andrew Kelly filed the complaint on May 8, 2013, and pled causes of action
for conversion and defamation of title. (Id.)
On August 12, 2013, Talisman filed a petition for interpleader and
asserted that it did not intend to keep the royalty payments but placed the
funds in suspense until the trial court determined who was entitled to the
royalties. On October 28, 2013, the trial court granted Talisman’s interpleader
complaint and ordered Nicholas Halkias to file a complaint. On December 23,
2013, Nicholas Halkias filed an interpleader complaint against appellants. In
the interpleader complaint, Nicholas Halkias alleged that the assignment was
invalid for various reasons, including contract law, tort, and misappropriation
of royalties. Nicholas Halkias asked the trial court to strike the assignment
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from the Office of the Register of Wills and the Recorder of Deeds of
Susquehanna County and that royalties that had been paid to Andrew Kelly
be paid to Nicholas Halkias. Each appellant filed answers with new matter.
(Id. at 3-4.)
The trial court conducted a non-jury trial on January 18-19, 2017.
Andrew Kelly testified that he had seen the assignment before and that
handwriting on the document, which read “Halkias 431.24,” referred to the
Property. Andrew Kelly further testified that even though he was listed as the
grantee on the assignment and James Halkias was the grantor, Andrew Kelly
had never met either Halkias. Andrew Kelly recognized the handwriting on
the assignment as that of his father, Paul Kelly. Andrew Kelly also testified
that he was to receive the royalties for estate planning purposes and the
payments were Paul Kelly’s fees for legal work for James Halkias. (Id. at 8-
9.)
Paul Kelly testified that James Halkias hired him, when Paul Kelly was a
practicing attorney,4 to quiet title on two pieces of property that James Halkias
and a friend had purchased at a tax sale. Paul Kelly also testified that
James Halkias asked Paul Kelly to assist James Halkias in getting an oil and
gas lease for the property and that the assignment was Paul Kelly’s fee for
doing the work on the oil and gas lease. Paul Kelly testified that he drafted
the assignment at the direction of James Halkias even though Paul Kelly had
4 Paul Kelly was later suspended from the practice of law.
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no documentary evidence of the instructions. Paul Kelly also testified that the
phrase “our lands” in the assignment referred to the Property. Paul Kelly
testified that James Halkias was aware that the fee was 15% of any royalties
for securing an oil and gas lease and that James Halkias agreed to it.
Paul Kelly further testified that the handwriting on the assignment was already
present at the time James Halkias executed it. (Id. at 9-12.)
James Halkias testified that he and a friend purchased the property at a
tax sale in 2005, but that his father, Nicholas Halkias, actually paid the
purchase price. James Halkias hired Paul Kelly to quiet title to the Property
and paid him approximately $5,000. While the quiet title action was pending,
Paul Kelly telephoned James Halkias on July 24, 2007. When they met,
Paul Kelly presented James Halkias with an oil and gas lease and the
assignment in a packet of documents. According, to James Halkias, Paul Kelly
told him that if James Halkias signed the documents, James Halkias would
receive $43,000 from an energy company even though the energy companies
never drilled when these types of leases were signed. James Halkias testified
that the assignment did not have any handwriting on it at the time
James Halkias signed it. James Halkias believed that Paul Kelly was
representing him in the quiet title action and not concerning an oil and gas
lease. James Halkias never received the promised money from the energy
company. At some point, James Halkias received copies of the documents
used to secure the oil and gas lease with Fortuna from Paul Kelly that were
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marked void. Included in the packet was a copy of the assignment marked
void. On August 7, 2008, James Halkias entered into an oil and gas lease with
Alta. James Halkias later deeded the property to his father for $50,000. (Id.
at 13-15.)
At the close of the trial, appellants moved for compulsory non-suit. The
trial court denied the motion. Following trial, the trial court issued the order
from which these appeals arise. Appellants moved for post-trial relief. The
trial court denied the motion for post-trial relief.
On January 5, 2018, appellants each appealed. By order filed
January 19, 2018, the trial court directed Paul Kelly to file a concise statement
of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). The same
date, the trial court also directed Andrew Kelly to file a concise statement of
errors complained of on appeal. Each appellant complied with the order on
February 2, 2018. On February 26, 2018, the trial court issued a statement
pursuant to Pa.R.A.P. 1925(a) in which it stated that it had addressed the
issues in the June 19, 2017 opinion and order. By per curiam order dated
January 26, 2018, this court consolidated the appeals sua sponte.
Appellants5 raise the following issues6 for this court’s review:
[1.] Whether it was reversible error for the trial court
to sua sponte raise the application of the
5 Although each appellant filed a separate brief, the issues contained in each
respective brief are identical.
6Appellants have not numbered the issues in the briefs. However, this court
will do so.
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discovery rule and fraudulent concealment
doctrine when those defenses/doctrines were
not properly plead [sic] in any of the pleadings
of Nicholas Halkias?
[2.] Whether it was reversible error for the trial court
to apply the discovery rule and fraudulent
concealment doctrines to invalidate the Halkias
to Kelly Assignment when those doctrines were
not applicable to the facts of this case?
[3.] Whether it was reversible error for the trial court
to enter judgment in favor of Nicholas Halkias
on all counts except for Count 1 of his
Interpleader Complaint when [appellants]
properly raised the defense of the statute of
limitations in their responsive pleadings and the
applicable statutes of limitations bar all of the
claims of [Nicholas] Halkias?
[4.] Whether it was reversible error for the trial court
to enter judgment in favor of [Nicholas] Halkias
when [appellants] properly raised the defense
that in Pennsylvania fraud is a personal action
and therefore all of Nicholas Halkias’s fraud
based claims are barred as a matter of law?
[5.] Whether it was reversible error for the trial court
to enter judgment in favor of [Nicholas] Halkias
when [Nicholas] Halkias lacked standing and the
capacity to sue to bring claims that challenged
the enforceability of the Halkias to Kelly
Assignment?
[6.] Whether it was reversible error for the trial court
to enter judgment in favor of [Nicholas] Halkias
and determine that the assignment from
James Halkias to Andrew John Kelly, which was
the subject of the lawsuit below, when
James Halkias never attempted to timely
revoke/rescind the assignment as is required
pursuant to applicable Pennsylvania law?
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[7.] Whether it was reversible error [for] the trial
court to enter judgment in favor of
Nicholas Halkias when the Halkias to Kelly
[A]ssignment was sufficiently specific and met
all legal requirements to be enforceable and to
be binding upon [James] Halkias, his heirs,
successors, and assigns?
[8.] Whether it was reversible error for the trial court
to determine that improper notarization was a
basis to invalidate the Halkias to Kelly
[A]ssignment when the notarization of the
assignment was not required for the assignment
to be valid and enforceable and
[Nicholas] Halkias did not establish that any
improper notarization had occurred and did not
have standing to challenge the purported
improper notarization?
[9.] Whether it was reversible error for the trial court
to enter judgment in favor of [Nicholas] Halkias
when [Nicholas] Halkias failed to state any claim
upon which relief could be granted and
[appellants] proved their cases as a matter of
law such that they were entitled to the relief
requested by them?
[10.] Whether it was reversible error for the trial court
to deny [appellants’] Joint Motion for Post Trial
Relief when for the reasons stated in the Motion,
all of which are incorporated herein by
reference, [appellants] were entitled to the
relief requested in the Motion as a matter of
law?
Andrew Kelly’s brief at 7-8.
This court must apply the following standard of review:
Our appellate role in cases arising from non-jury trial
verdicts is to determine whether the findings of the
trial court are supported by competent evidence and
whether the trial court committed error in any
application of the law. The findings of the trial judge
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in a non-jury case must be given the same weight and
effect on appeal as the verdict of a jury, and the
findings will not be disturbed on appeal unless
predicated upon errors of law or unsupported by
competent evidence in the record. Furthermore, our
standard of review demands that we consider the
evidence in a light most favorable to the verdict
winner.
Baney v. Eoute, 784 A.2d 132, 135 (Pa.Super. 2001) (citation omitted).
We will first address appellants’ contention that the trial court committed
reversible errors of law by failing to enter judgment in their favor because the
applicable statute of limitations barred each and every claim and cause of
action of Nicholas Halkias. (Andrew Kelly’s brief at 25.)7
Appellants assert that the original assignment was recorded in 2008,
and therefore James Halkias and then Nicholas Halkias were on notice of the
terms of the assignment from no later than the recording of the assignment
forward as a matter of law. Appellants assert that first James Halkias and
then Nicholas Halkias were on constructive notice that their property was
subject to the assignment. Appellants argue that the trial court erroneously
relied on the discovery rule and fraudulent concealment doctrine to estop
appellants from raising the affirmative defense of the statute of limitations
and to hold that the statute of limitations did not begin to run until the end of
7 The sections in the argument section of the briefs of each appellant do not
directly correspond to the enumerated issues in the statement of questions
involved. As a result, this court has reordered the arguments to reflect more
accurately the order presented in the statement of questions involved.
Appellants essentially address their first three issues together.
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2012 or the beginning of 2013, which contradicted the trial court’s
December 22, 2016 order and opinion. Appellants further argue that
Nicholas Halkias did not properly raise the fraudulent concealment doctrine
and the discovery rule in replies to new matters of each appellant. Appellants
assert that neither Halkias exercised due diligence to discover that the
assignment had been recorded. Further, appellants argue that the trial court’s
ruling violated the law of the case doctrine as it reversed its earlier ruling.
The trial court addressed these issues in its opinion:
In Pennsylvania, actions based upon fraud have a
two-year statute of limitations, while actions for
declaratory relief or actions sounding in contract law
have a four-year statute of limitations. 42 Pa.C.S.[A.]
§§ 5524-5525. . . . It is the duty of the party
asserting a cause of action to use all reasonable
diligence to properly inform themselves of the facts
and circumstances upon which the right of recovery is
based and to institute suit within the prescribed
period. Schaffer v. Larzelere, 189 A.2d 267, 269
(Pa. 1963). “Thus, the statute of limitations begins to
run as soon as the right to institute and maintain a
suit arises; lack of knowledge, mistake or
misunderstanding do not toll the running of the
statute of limitations.” Pocono International
Raceway, Inc. v. Pocono Produce, Inc., 468 A.2d
468, 471 (Pa. 1983). Generally, once the prescribed
statutory period has expired, the complaining party is
barred from bringing suit. Colonna v. Rice, 664 A.2d
979, 980-81 (Pa. Super. 1995) (citing Hayward v.
Medical Center of Beaver County, 608 A.2d 1040,
1042-43 (Pa. 1992)).
However, the statute of limitations doctrine is not
absolute. Two exceptions are germane to this matter:
the doctrine of fraudulent concealment and the
discovery rule. The doctrine of fraudulent
concealment is based on a theory of estoppel, and
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provides that the defendant may not invoke the
statute of limitations, if through fraud or concealment,
he causes the plaintiff to relax his vigilance or deviate
from his right of inquiry into the facts. Fine v.
Checcio, 870 A.2d 850, 860 (Pa. 2005) (citation
omitted). Fraudulent concealment does not require
fraud in the strictest sense encompassing an intent to
deceive, but rather, fraud in the broadest sense,
which includes an unintentional deception. “It is clear
that a ‘defendant’s conduct need not rise to fraud or
concealment in the strictest sense, that is, with an
intent to deceive; unintentional fraud or concealment
is sufficient.’” Krapf v. St. Luke’s Hosp., 4 A.3d
642, 650 (Pa.Super. 2010) (quoting Molineux v.
Reed, 532 A.2d 792, 794 (Pa. 1987)). Our Supreme
Court has held that a “statute of limitations that is
tolled by virtue of fraudulent concealment begins to
run when the injured party knows or reasonably
should know of his injury and its cause.” Fine, 870
A.2d at 861.
If through fraud or concealment the defendant causes
the plaintiff to relax his or her vigilance or deviate
from his or her right of inquiry, the defendant is
estopped from invoking the bar of the statute of
limitations. Lange v. Burd, 800 A.2d 336, 339
(Pa.Super. 2002) (citing Molineux, 532 A.2d at 794).
For the doctrine of fraudulent concealment to be
applicable, “[a] defendant must have committed some
affirmative independent act of concealment upon
which [a] plaintiff[] justifiably relied.” Krapf, 4 A.3d
at 650 (citing Lange, 800 A.2d at 339); see also
Kingston Coal Co. v. Felton Mining Co. Inc., 690
A.2d 284, 291 (Pa. Super. 1997). Mere mistake or
misunderstanding is insufficient. Molineux, 532 A.2d
at 794. Also, mere silence in the absence of a duty to
speak cannot suffice to prove fraudulent concealment.
Lange, 800 A.2d at 339 (citing Sevin v. Kelshaw,
611 A.2d 1232, 1236 (Pa. Super. 1992); see also
Krapf, 4 A.3d at 650. The burden of proving such
fraud or concealment, by evidence which is clear,
precise and convincing, is upon the asserting party.
Lange, 800 A.2d at 339 (citing Nesbitt v. Erie
Coach Company, 204 A.2d 473 (Pa. 1964)).
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At trial, James Halkias presented testimony regarding
alleged concealment of the Assignment by Paul Kelly,
which we find credible. Indeed, James Halkias
testified that during the execution of the Assignment
and the Fortuna lease, Paul Kelly stated he would
receive “free money” in the amount of $43,000.00,
and that energy companies never drill. Further,
James Halkias testified that he simply signed the
documents where Paul Kelly, his then counsel-of-
record in a pending quiet title action, told him to sign.
James Halkias never received the promised “free
money” from the energy companies, and instead
received “void” copies of the Fortuna lease and
Assignment from Paul Kelly. James Halkias testified
that upon receiving the “void” documents, he believed
the Fortuna lease situation was over, and blocked it
out of his mind. Unbeknownst to he [sic] and his
father, however, Paul Kelly recorded the Assignment.
Thereafter, royalties were paid by Talisman to Andrew
Kelly pursuant to the Assignment and the Alta lease,
despite James Halkias having no dealings with
Paul Kelly in regards to the Alta lease. Finally, the
discovery of the royalties being paid to Andrew Kelly
was not known to the Halkiases until late 2012 or early
2013.
Based upon our review of the testimony presented at
trial, we find the doctrine of fraudulent concealment
serves to estop [appellants] from invoking the statute
of limitations as a bar to Nicholas Halkias’[s] claims.
Indeed, credible trial testimony from James Halkias
presents an “affirmative independent act of
concealment” upon which he and his father justifiably
relied. Krapf, 4 A.3d at 650 (citing Lange, 800 A.2d
at 339). Based upon Paul Kelly’s statements,
James Halkias believed he was entitled to “free
money” which he never received, and believed that
energy companies never drilled upon lands. Further,
James Halkias believed that the Fortuna lease
situation [w]as over due to the “void” documents
received from Paul Kelly, despite Paul Kelly’s
recordation of the Assignment.
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These are clear affirmative acts by Paul Kelly upon
which James Halkias justifiably relied to relax his
vigilance into inquiry of any injury, under Krapf,
Lange, Kingston Coal, and Fine. Indeed,
Paul Kelly’s actions rise above the “unintentional fraud
or concealment” which would invoke the doctrine of
fraudulent concealment. Krapf, 4 A.3d at 650 (citing
Molineux, 532 A.2d at 794). It is “clear, precise and
convincing” that Paul Kelly committed these acts and
that they were relied upon by James Halkias. Lange,
800 A.2d at 339 (citing Nesbitt, 204 A.2d at 473).
Accordingly, we find the doctrine of fraudulent
concealment estops [appellants] from invoking the
statute of limitations as a bar to Nicholas Halkias’[s]
claims.
A second exception to the statute of limitations
doctrine is the discovery rule. The discovery rule
provides that where the existence of the injury is not
known to the complaining party and such knowledge
cannot reasonably be ascertained within the
prescribed statutory period, the limitations period
does not begin to run until the discovery of the injury
is reasonably possible. Schaffer, 189 A.2d at 270.
The discovery rule arises from the inability of the
injured party, despite the exercise of reasonable
diligence, to know of the injury or its cause. Pocono
International, 468 A.2d at 471. Its purpose is to
exclude the period of time during which the injured
party is reasonably unaware that an injury has been
sustained so that people in that class have essentially
the same rights as those who suffer an immediately
ascertainable injury. Pounds v. Lehman, 558 A.2d
872, 874 (Pa. Super. 1989). “The standard of
reasonable diligence is an objective or external one
that is the same for all individuals. It is not a
subjective standard.” Colonna, 664 A.2d at 980-81(citation omitted). Further, the level of reasonable
knowledge required is 1) knowledge that one has been
injured; and 2) that his injury has been caused by
another party’s conduct. Id. (citing Cathcart v.
Keene Industrial Insulation, 471 A.2d 493, 500
(Pa. Super. 1984) (en banc)). The failure to make
inquiry when information is available is failure to
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exercise reasonable diligence as a matter of law.
Baumgart v. Keene Building Products
Corporation, 633 A.2d 1189, 1193 (Pa.Super. 1993),
allocatur denied, 645 A.2d 1311 (Pa. 1994).
At trial, testimony was presented regarding the
discovery of the alleged injury sustained by
Nicholas Halkias. James Halkias testified he assists
his father with the management of his financial affairs.
He testified he and his father did not discover that
funds were missing from royalty payments until late
2012 or early 2013. He also testified that he believed
the Subject Property was not subject to any other
document other than the Alta lease, as he had
received a voided copy of the Fortuna lease and the
Assignment in the mail from Paul Kelly. We find this
testimony credible based upon our impression of
James Halkias on the witness stand during trial.
Further, his testimony is supported by the fact that
Talisman did not pay royalties to Andrew Kelly until
late 2012, as only then did Talisman begin to extract
natural gas from the Subject Property. Also, Talisman
stopped the payments in early 2013, when it was
notified by the Halkias family that the Assignment by
which Andrew Kelly was being paid was being
contested.
Based upon the testimony and evidence at trial, we
find the statute of limitations on Nicholas Halkias’[s]
claims did not begin to run until late 2012 or early
2013, when James Halkias found his father was not
receiving all royalties from oil or gas extracted from
the Subject Property. We credit the testimony of
James Halkias, who testified he believed the Fortuna
lease and the accompanying Assignment were
inoperative sometime prior to 2010. We find the
existence of this economic injury was not known to
Nicholas Halkias until he began to receive royalty
payments, which did not occur until Talisman began
to extract natural gas from the Subject Property. We
find Nicholas and James Halkias exercised reasonable
diligence in discovering this economic injury under our
Commonwealth’s case[ ]law, as they had no way of
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knowing of any injury unless and until they began to
receive royalty payments they could verify.
We note our conclusion on statute of limitations
grounds herein, based upon the doctrine of fraudulent
concealment and the discovery rule, comports with
our December 22, 2016 Opinion and Order, where we
addressed statute of limitations in the context of
Nicholas Halkias’[s] proposed amendment and
James Halkias’[s] proposed joinder to the
Interpleader Complaint. In that Opinion, we utilized
September 22, 2010 as the latest date the statute of
limitations could have begun to run, based on the
facts available to us in the pleadings and motions.
See generally December 22, 2016 Opinion and Order
(Harlacher Sibum, J.) (Specially Presiding). In that
Opinion, we found that based on this date,
Nicholas Halkias’[s] Proposed Amendments to the
Interpleader Complaint were barred by Pennsylvania
case[ ]law and the statute of limitations. We stated,
“Most importantly, however, each of the Proposed
Amendments is time barred under the statute of
limitations by at least two years.” Further, we found
that James Halkias’[s] proposed joinder to this action
was barred, where we stated, ‘Were we to permit his
joinder, [appellants] would enjoy a complete defense
to James Halkias’[s] claims on statute of limitations
grounds.’ We reiterate that this conclusion was based
on our use of September 22, 2010 as the latest date
the statute of limitations began to run. Our
December 22, 2016 Opinion and Order did not,
however, address the statute of limitations in the
context of an affirmative defense to
Nicholas Halkias’[s] case-in-chief asserted by
[appellants], but rather solely in the context of
Nicholas Halkias’[s] proposed amendment and
James Halkias’[s] proposed joinder to the lnterpleader
Complaint.
Notwithstanding our December 22, 2016 Opinion and
Order, the testimony and evidence presented at trial
shows the doctrine of fraudulent concealment serves
to estop [appellants] from invoking the statute of
limitations as a bar to Nicholas Halkias’[s] claims, and
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discovery of the economic injury did not occur until
late 2012 or early 2013. In short, our December 22,
2016 Opinion and Order was not based upon the
testimony and evidence at trial, but rather upon the
pleadings and motions available to us at that time,
due to the parties’ failure to provide evidence at the
November 14, 2016 hearing. By contrast, under our
Commonwealth’s discovery rule, the trial testimony
and evidence establishes a discovery date of the
economic injury in late 2012 or early 2013, while the
doctrine of fraudulent concealment serves to estop
[appellants] from invoking the statute of limitations
as a defense to Nicholas Halkias’[s] claims.
Trial court opinion, 6/19/17 at 23-30 (footnote and citations to record
omitted).
The trial court clearly and ably explained its reasoning for determining
that under the discovery rule, the trial testimony and evidence established a
discovery date of economic injury in late 2012 or early 2013 while the doctrine
of fraudulent concealment estopped appellants from invoking the statute of
limitations as a defense to the claims of Nicholas Halkias.
The trial court opinion did not address at all or, at least in any detail,
appellants’ claim that the trial court erred when it raised the application of the
discovery rule and the fraudulent concealment doctrine when those defenses
were not properly pled in any of the pleadings of Nicholas Halkias. Appellants
refer to Rule 1032(a) of the Pennsylvania Rules of Civil Procedure which
provides that a party waives all defenses and objections which are not
presented by preliminary objection, answer, or reply, subject to some
objections which are not applicable here. Pa.R.C.P. 1032(a). Appellants argue
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that Nicholas Halkias did not properly raise the defenses to the applicability of
the statute of limitations such as the fraudulent concealment doctrine and the
discovery rule in replies to the new matters of appellants in that no facts were
pled to trigger the discovery rule and fraudulent concealment doctrine.
In Gotwalt v. Dellinger, 577 A.2d 623 (Pa.Super. 1990), this court
stated that Rule 1029(d) of the Pennsylvania Rules of Civil Procedure:
governs when a party must file a responsive pleading
to an averment contained in a new matter or other
pleading. Rule 1029(d) provides that averments in a
pleading to which no responsive pleading is required
shall be deemed to be denied. If a party’s new matter
does not contain facts supporting an affirmative
defense, but rather contains merely conclusions of
law, no denial is required because such averments are
deemed to be denied. Because such averments are
deemed to be denied, they are, therefore, in issue,
and no judgment may be entered based upon a
party’s failure to respond to those averments.
Gotwalt, 577 A.2d at 626.
Here, each appellant in new matter merely stated that the action was
barred by the applicable statute of limitations. As this was a conclusion of law
without facts supporting the affirmative defense, Nicholas Halkias was not
required to respond under Pa.R.C.P. 1029(d). Because he did not have to
respond, Nicholas Halkias cannot be precluded from presenting evidence at
trial regarding the discovery rule and the fraudulent concealment doctrine on
the basis that he did not raise those issues in response to each appellant’s
new matter.
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Appellants next contend that the trial court erred when it entered
judgment in favor of Nicholas Halkias when appellants properly raised the
defense that fraud was a personal action such that Nicholas Halkias’s claims
based on fraud were barred as a matter of law.
The trial court found that appellants waived this issue because neither
appellant raised the issue in preliminary objections. Challenges to a litigant’s
capacity to sue must be raised either in an answer or in preliminary objections.
In re Estate of Alexander, 758 A.2d 182, 189 (Pa.Super. 2000).
Here, appellants did not raise the issue of standing in either an answer
or preliminary objections, though each appellant raised standing in new
matter. Technically, appellants did waive the issue.
Assuming arguendo that appellants preserved this issue, this court
determines that the trial court did not err or abuse its discretion, when it
determined that Nicholas Halkias had standing to bring the fraud-based
actions.
We have stated as a general policy that “[a] party
seeking judicial resolution of a controversy in this
Commonwealth must, as a prerequisite, establish that
he has standing to maintain the action.” Bergdoll v.
Kane, 557 Pa. 72, 731 A.2d 1261, 1268 (1999)
(citation omitted). Our Commonwealth’s standing
doctrine is not a senseless restriction on the utilization
of judicial resources; rather, it is a prudential,
judicially-created tool meant to winnow out those
matters in which the litigants have no direct interest
in pursuing the matter. Such a requirement is critical
because only when “parties have sufficient interest in
a matter [is it] ensure[d] that there is a legitimate
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controversy before the court.” In re T.J., 559 Pa.
118, 739 A.2d 478, 481 (1999).
In re Hickson, 821 A.2d 1238, 1243 (Pa. 2003) (footnote omitted).
In practical terms, we are assured that there is a
legitimate controversy if the proponent of a legal
action has somehow been “aggrieved” by the matter
he seeks to challenge. Independent State Store
Union v. Pennsylvania Liquor Control Board, 495
Pa. 145, 432 A.2d 1375 (1981). A litigant can
establish that he has been “aggrieved” if he can show
that he has a substantial, direct and immediate
interest in the outcome of the litigation in order to be
deemed to have standing. Bergdoll[, supra].
Id. at 136, 821 A.2d at 1243.
Here, Nicholas Halkias acquired the property from his son,
James Halkias. Under the applicable lease, Respol agreed to pay royalties to
James Halkias for the extraction of oil and/or gas from the property.
As the trial court stated in its opinion, a covenant to pay royalties runs
with the land. Nigro v. Don-Mar Corp., 85 A.2d 21, 22 (Pa. 1951). In
addition, when a grantor, after entering into such a royalty agreement,
conveys his interest in the property, the grantee receives the right to receive
the royalty unless the grantor expressly reserves such royalty. Appeal of
Baird, 6 A.2d 306, 312 (Pa. 1939).
The trial court concluded:
Applying our Supreme Court’s longstanding case[
]law, as embodied in Nigro and Baird,
Nicholas Halkias took possession of the right to
receive royalty payments from the Subject Property
upon execution of the deed. The deed shows no
express reservation for any oil and gas royalty interest
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from the grantor. Therefore, Nicholas Halkias is
entitled to bring suit concerning any royalty payments
from the Subject Property not paid to him since that
deed was executed, as he would be “aggrieved” by not
receiving a royalty payment he would be entitled to as
record owner of the Subject Property. Finally,
Nicholas Halkias continues to own the Subject
Property, as evidenced by Interpleader Defendant’s
Exhibit 2 and other testimony at trial. In short, the
deed from which Nicholas Halkias took ownership of
the Subject Property gives him capacity to bring suit
for recovery of oil and gas royalties from the Subject
Property under our Commonwealth’s standing
doctrine.
Trial court opinion, 6/19/17 at 22-23 (citation omitted).
Appellants next contend that it was reversible error for the trial court to
enter judgment in favor of Nicholas Halkias and determine that the
assignment from James Halkias to Andrew Kelly when James Halkias never
attempted to revoke the assignment.
However, in making this argument, appellants ignore the credibility
determinations of the trial court. The trial court explicitly found James Halkias
to be credible and credited his testimony over that of Paul Kelly. In a non-jury
trial, the fact-finder is free to believe all, part, or none of the evidence, and
this court will not disturb the credibility determinations of the trial court.
Assessments of credibility and conflicts of evidence are for the trial court to
resolve. Gutteridge v. J3 Energy Group, Inc., 165 A.3d 908, 916
(Pa.Super. 2017). Because of these credibility determinations, the trial court
found that there was no agreement for Paul Kelly to secure an oil and gas
lease for James Halkias, and consequently, there was no agreement for
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James Halkias to sign the assignment. (Trial court opinion, 6/19/17 at 36.)
Because there was no valid assignment, James Halkias did not have to revoke
the assignment.
Appellants next contend that it was reversible error for the trial court to
enter judgment in favor of Nicholas Halkias when the assignment was
sufficiently specific and met all legal requirements to be enforceable and
binding upon James Halkias, his heirs, successors, and assigns.
The objective in interpreting instruments relating to oil and gas interests
is to determine the intention of the parties. Syzmanowski v. Brace, 987
A.2d 717, 720 (Pa.Super. 2009), appeal denied, 997 A.2d 1179 (Pa. 2010).
Once again, appellants ignore the credibility determinations of the trial
court. Appellants argue that the assignment clearly describes the Property to
consist of 431.24 acres. However, the trial court found credible
James Halkias’s testimony that the handwriting including this designation of
the size of the Property was not present on the assignment form when
James Halkias signed it. (Trial court opinion, 6/19/17 at 37-38.) The trial
court concluded that the handwriting was added after the execution of the
assignment. (Id. at 39.)
In the alternative, appellants argue that if this court determines that the
documents do not sufficiently identify the interest conveyed, there is sufficient
parol evidence to establish both the interest conveyed and the lands from
which the interest derives because the 431.24-acre parcel was the only
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property of its kind owned at the time of the conveyance, and the only
property owned by James Halkias individually at any time in Susquehanna
County. However, there is nothing on the assignment to indicate that the
property was located in Susquehanna County, and the trial court found that
James Halkias owned 100 pieces of property, which made a reference to
“our lands” in the assignment ambiguous. (Trial court opinion, 6/19/17
at 45.) Once again, appellants ignore the trial court’s credibility
determinations which led it to conclude that there was no intent to assign
royalties from James Halkias to Andrew Kelly.
Appellants next contend that it was reversible error for the trial court to
determine that improper notarization was a basis to invalidate the assignment
when the notarization of the assignment was not required for the assignment
to be valid and enforceable and Nicholas Halkias did not establish that any
improper notarization had occurred.8
In Count III of his interpleader complaint, Nicholas Halkias asserted that
the assignment should be void on grounds of improper notarization. The trial
court found that the assignment was the result of fraud. Furthermore, the
trial court found that James Halkias credibly testified that no other person was
present when he executed the assignment. The trial court found that the
assignment was not notarized at the time of execution but after the fact.
8Appellants also allege that Nicholas Halkias lacked standing. However, we
have already determined that Nicholas Halkias did have standing.
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In challenging this determination, appellants essentially raise
arguments that we have already discounted, such as the standing of
Nicholas Halkias, the lack of a timely effort to rescind the assignment, and the
running of the statute of limitations. The trial court did not err or abuse its
discretion when it ordered that the assignment be struck.
Appellants next contend that the trial court committed reversible error
when it entered judgment in favor of Nicholas Halkias when Nicholas Halkias
failed to state any claim upon which relief could be granted and appellants
proved their cases as a matter of law such that they were entitled to the relief
they requested. As we have already determined that the trial court did not
err, we need not address this issue.9
Judgment affirmed.
Ott, J. joins this Memorandum.
McLaughlin, J. concurs in the result.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/1/2019
9Appellants waive their last issue, whether it was reversible error for the trial
court to deny appellants’ joint motion for post-trial relief when appellants do
not address the issue in the argument section of their brief. See
Commonwealth v. J.F., 800 A.2d 942, 946 n.10 (Pa.Super. 2002).
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