Johnson, A. v. Midnight Realty, LLC

J-S56015-18
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ARLA JOHNSON, POWER OF : IN THE SUPERIOR COURT OF
ATTORNEY FOR JANE S. JOHNSON, : PENNSYLVANIA
SOLE SURVIVING TRUSTEE FOR THE :
JOHNSON FAMILY TRUST :
:
Appellee :
:
v. :
:
MIDNIGHT REALTY, LLC :
:
Appellant : No. 527 MDA 2018
Appeal from the Order Entered February 16, 2018
In the Court of Common Pleas of Lackawanna County
Civil Division at No(s): 2013-CV-6526
BEFORE: GANTMAN, P.J., KUNSELMAN, J., and MUSMANNO, J.
MEMORANDUM BY GANTMAN, P.J.: FILED NOVEMBER 14, 2018
Appellant, Midnight Realty, LLC (“Midnight Realty”), appeals from the
order entered in the Lackawanna County Court of Common Pleas, granting a
petition to terminate an installment sales agreement and for ejectment of
Midnight Realty, who was then in possession of the premises. We affirm.
The trial court set forth the relevant facts and procedural history as
follows:
This case involves an installment sales agreement per
settlement agreement (hereinafter “Installment Sales
Agreement”) regarding a parcel of real estate located in
Spring Brook Township, Lackawanna County Pennsylvania
(hereinafter “Spring Brook Property”). The Johnson Family
Trust is the legal owner of the property as per the Deed
dated July 21, 2001. The Matter is before this Court on Arla
Johnson’s, who is the Power of Attorney for John S. Johnson,
sole surviving trustee of the Johnson Family Trust
(hereinafter “Arla Johnson”), Petition to Immediately
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Terminate Installment Sales Agreement per Settlement
Agreement as Approved by Court Order of May 30, 2014,
and Immediate Surrender and Ejectment from subject
Premises, which was filed on January 16, 2018. (Petition,
01/16/18).
By way of background, under her authority as Power of
Attorney, Arla Johnson entered into an Installment Sales
Agreement with Midnight Realty for the sale of the Spring
Brook Property. Paul Hrywnak is the sole member and
manager of Midnight Realty…. A confession of judgment for
the possession of the premises is located in the Installment
Sales Agreement. On November 27, 2013, Arla Johnson
filed a Complaint in Confession of Judgment. The parties
entered into a Settlement Agreement, which provided that
Midnight Realty then owed Arla Johnson twenty six thousand
two hundred fifty dollars ($26,250.00). Pursuant to the
Order of May 30, 2014, Midnight Realty paid $26,000.00 of
the same and was to pay the additional two hundred and
fifty dollars ($250.00) by June 4, 2014. Midnight Realty was
to continue to make payments per the Installment Sales
Agreement. The Settlement Agreement obligated Midnight
Realty to enter into agreement to pay the back taxes. Arla
Johnson filed a Petition to Immediately Terminate
Installment Sales Agreement per Settlement Agreement as
Approved by Court Order of May 30, 2014, and Immediate
Surrender and Ejectment from Subject Premises, which was
filed on January 16, 2018. (Petition, 01/16/18). This
[c]ourt heard the matter on February 15, 2018 granting Arla
Johnson’s Petition.[1] Thereafter, this [c]ourt issued an
Order dated February [16], 2018. (Order 02/16/18).
Midnight Realty filed a [counseled] Notice of Appeal on
[Monday,] March 19, 2018. This [c]ourt issued an Order
requesting Midnight Realty to file a Statement of Errors.
(Order 05/04/18). Said Statement of Errors was filed on
May 22, 2018. (Statement 05/22/18).
(Trial Court Opinion, dated June 14, 2018, at 1-2).
____________________________________________
1At the hearing, Paul Hrywnak appeared to represent the interests of Midnight
Realty, as the sole member and manager of the corporation. Mr. Hrywnak is
not a licensed attorney.
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Midnight Realty raises one issue for our review:
DID THE ISSUANCE OF A RULE TO SHOW CAUSE WHICH
DID NOT CONFORM TO PA.R.C.P. 206.6 AND LR 206.4(C)
DENY [MIDNIGHT REALTY] DUE PROCESS OF LAW BECAUSE
IT FAILED TO INFORM [MIDNIGHT REALTY] OF ITS
OBLIGATION TO ANSWER THE PETITION PRIOR TO THE
HEARING, AND/OR BECAUSE IT FAILED TO PROPERLY
INFORM [MIDNIGHT REALTY] THAT ITS RIGHT TO PROCEED
BY USE OF DEPOSITIONS HAD BEEN ABROGATED?
(Midnight Realty’s Brief at 5).
Midnight Realty asserts the Rule to Show Cause was flawed because it
did not conform to Pa.R.C.P. 206.6. Specifically, Midnight Realty contends the
Rule failed to inform Midnight Realty that it had to answer the petition within
twenty days and that the use of depositions and argument had been abrogated
in favor of an evidentiary hearing. Midnight Realty concedes the outcome of
the proceedings might be the same had the Rule conformed to Rule 206.6.
Midnight Realty also argues Rule 206.6 makes no provision for the filing of
preliminary objections to a flawed rule to show cause. Midnight Realty insists
the use of the deficient Rule to Show Cause denied Midnight Realty procedural
and substantive due process of law and calls the validity of the order at issue
into question. We disagree.
Our well-settled standard of review is:
[T]he findings of a trial court sitting without a jury have the
same force and effect on appeal as a jury’s verdict. We will
reverse the trial court only if its findings are predicated upon
an error of law or are unsupported by competent evidence
in the record. On review, it is not within our province to find
facts or to substitute our judgment for that of the trial court.
Moreover, the trial court is free to believe all, part, or none
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of the evidence that is presented, to make all credibility
determinations, and to resolve any conflicts in the evidence.
Scobell Inc. v. Schade, 688 A.2d 715, 718 (Pa.Super. 1997) (quoting
Hodges v. Rodriquez, 645 A.2d 1340, 1343 (Pa.Super. 1994)).
Rule 206.6 provides for the issuance of a rule to show cause as of course
upon the filing of a petition. Pa.R.C.P. 206.6. “A Rule to Show Cause is one
that is made ex parte, directing an adverse party to show cause why an action
should not be taken; the Rule is not, except by statute, a proper substitute
for original process, but is auxiliary.” Petition of Tax Claim Bureau of
Westmoreland Cty., 613 A.2d 634, 638 (Pa.Cmwlth. 1992) (quoting
Rusbarsky by Rusbarsky v. Rock, 471 A.2d 107 (Pa.Super. 1984)). A court
or a judge must order the Rule to Show Cause. Petition of Tax Claim
Bureau of Westmoreland Cty., supra. The party who has received the rule
has the burden of proof at the hearing on the rule to show why the court
should not grant the requested relief. Id. In modern practice, the Rules of
Civil Procedure govern pleadings in civil actions and define what is a civil
action. Id. The Rules of Civil Procedure do not require a Rule to Show Cause
to conform to the Rules of Civil Procedure; “thus, failure to answer a Rule to
Show Cause or to enter an appearance upon it is of no moment.” Id. at 638.
“The only requirement to a Rule to Show Cause is to appear on the return day.
If the hearing is held and a party fails to appear, it is bound by the decision
rendered….” Id. In other words, the purpose of the rule to show cause is to
give the parties notice of a hearing and an opportunity to be heard. Id.
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“Corporations may appear and be represented in Pennsylvania courts
only by an attorney at law ‘duly admitted to practice.’” David R. Nicholson,
Builder, LLC v. Jablonski, 163 A.3d 1048, 1052 (Pa.Super. 2017), appeal
denied, ___ Pa. ___, 173 A.3d 266 (2017) (emphasis added).
The reasoning behind the general rule governing counseled
representation of corporations is…a corporation can do no
act except through its agents and…such agents representing
the corporation in [c]ourt must be attorneys at law who
have been admitted to practice, are officers of the court and
subject to its control. This rule holds even if the corporation
has only one shareholder. The purpose of the rule requiring
corporations to appear in court through counsel is not the
protection of stockholders but the protection of the courts
and the administration of justice, and that a person who
accepts the advantages of incorporation for his…business
must also bear the burdens, including the need to hire
counsel to sue or defend in court.
Id. The rule requiring counseled representation for corporations in
Pennsylvania also applies to limited liability corporations. Id. at 1052-54.
Finally, “Issues not raised in the [trial] court are waived and cannot be
raised for the first time on appeal.” Pa.R.A.P. 302(a). Instead, an appellant
must raise the claim at the appropriate point in the proceedings so that the
court can address it and correct any error immediately. See generally Tong-
Summerford v. Abington Memorial Hosp., 190 A.3d 631, 645 (2018). This
requirement bars an appellant from raising “a new and different theory of
relief” for the first time on appeal. Commonwealth v. Wanner, 158 A.3d
714, 717 (Pa.Super. 2017) (quoting Commonwealth v. York, 465 A.2d
1028, 1032 (Pa.Super. 1983)). Likewise, an appellant cannot raise new issues
in a motion for reconsideration of a court order; issues raised in that manner
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are generally waived. See generally Kelly v. Siuma, 34 A.3d 86 (Pa.Super.
2011).
Instantly, the defendant in this case is Midnight Realty, LLC. As Midnight
Realty is a corporation, a licensed attorney at law is the only suitable
representative for Midnight Realty in the courts of Pennsylvania. See
Jablonski, supra. Here, Paul Hrywnak is not a licensed attorney, yet he
attempted to represent Midnight Realty at the rule-to-show-cause hearing,
acting as the sole member and manager of Midnight Realty. Mr. Hrywnak
chose to reduce his personal liability and accept the benefits of incorporating
his business as an LLC. By accepting these benefits, Mr. Hrywnak also
accepted the duty to retain licensed legal counsel in order to appear in court.
As Mr. Hrywnak is not a licensed attorney, he could not represent Midnight
Realty in court. See id. Moreover, the bulk of Mr. Hrywnak’s assertions at
the hearing dealt with his personal investment in the property by way of
money and sweat effort. Mr. Hrywnak could offer the court no defenses on
behalf of Midnight Realty, because the court had no jurisdiction to address the
matters Mr. Hrywnak raised on behalf of Midnight Realty during those
proceedings.
With respect to Midnight Realty’s Rule 206.6 claim on appeal, concerning
the purported flawed rule to show cause, the purpose of the rule to show cause
was to give Midnight Realty notice of the hearing and an opportunity to be
heard. Midnight Realty did not have to file preliminary objections to the rule
to show cause. See Petition of Tax Claim Bureau of Westmoreland Cty.,
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supra. Nevertheless, Midnight Realty did have to hire counsel and preserve
the objection at the hearing. See Jablonski, supra. Midnight Realty had
notice of the hearing where Mr. Hrywnak appeared in court on the scheduled
date. At the hearing, the court established Midnight Realty was a corporation
and gave Mr. Hrywnak the chance to explain why Midnight Realty was not
represented by counsel and patiently allowed Mr. Hrywnak to tell his story.
Midnight Realty first raised a challenge to the rule to show cause in a
counselled motion for reconsideration of the court’s order directing Midnight
Realty to vacate and surrender the property at issue. By failing to hire counsel
and raise this issue before the court at the rule to show cause hearing,
Midnight Realty waived any objection to the form of the rule to show cause.
See Pa.R.A.P. 302(a); Kelly, supra. In this regard, the court reasoned:
Mr. Hrywnak was under the obligation to retain an attorney
for the hearing at hand. The hearing was scheduled in
January 2018, and Mr. Hrywnak was afforded adequate time
to retain counsel before said hearing. Furthermore, since
Mr. Hrywnak was not capable of representing the company
and no attorney appeared to do so, that is a failure to appear
on behalf of the company, and the [c]ourt may proceed
without the party. Since Mr. Hrywnak, the sole owner of the
company, appeared at the hearing despite some unforeseen
circumstances, this is proof that proper notice was given.
Therefore, any objections made at the hearing by Mr.
Hrywnak were not proper.
…Mr. Hrywnak failed to retain an attorney to raise this issue
prior to the hearing or at the time of the hearing. Therefore,
this issue is waived.
(Trial Court Opinion at 5). Midnight Realty’s failure to appear at the hearing
on the rule return date with counsel was tantamount to a non-appearance
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and allowed the court to enter a binding decision against Midnight Realty. See
Petition of Tax Claim Bureau of Westmoreland Cty., supra. The record
supports the court’s decision, and we have no reason to disturb it.
Accordingly, we affirm.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/14/2018
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