SLT Holdings v. Mitch-Well

J-A12008-19
2019 PA Super 259SLT HOLDINGS, LLC, JACK E. IN THE SUPERIOR COURT
MCLAUGHLIN AND ZUREYA A. OF
MCLAUGHLIN, PENNSYLVANIA
Appellees
v.
MITCH-WELL ENERGY, INC. AND
WILLIAM E. MITCHELL, JR., AN
INDIVIDUAL,
Appellants No. 1322 WDA 2018
Appeal from the Order Dated August 8, 2018
In the Court of Common Pleas of Warren County
Civil Division at No(s): A.D. 626 of 2013
BEFORE: BENDER, P.J.E., DUBOW, J., and FORD ELLIOTT, P.J.E.
OPINION BY BENDER, P.J.E.: FILED AUGUST 23, 2019
Mitch-Well Energy, Inc. (“Mitch-Well”) and William E. Mitchell, Jr., an
individual (“Mr. Mitchell”) (collectively “Appellants”) appeal from the August
8, 2018 order, which granted the petition for attorneys’ fees and costs filed
by SLT Holdings, LLC (“SLT”), Jack E. McLaughlin and Zureya A. McLaughlin
(“the McLaughlins”) (collectively “Appellees”), and awarded Appellees
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reasonable attorneys’ fees and costs in the amount of $8,383.40.1, 2 We
affirm.
This matter stems from a dispute over two oil, gas, and mineral (“OGM”)
leases regarding two parcels located in Warren County. The underlying action
was commenced on November 19, 2013, with Appellees’ filing of a complaint
in equity against Appellants. Summary judgment was granted in favor of
Appellees on January 8, 2018. Pending the decision on its motion for summary
judgment, Appellees filed a motion for sanctions against Appellants, seeking
recovery under Pa.R.C.P. 4019(d) for fees and costs incurred as a result of
Appellants’ failure to respond truthfully to Appellees’ request for admissions.
On November 29, 2017, the trial court heard argument on both the summary
judgment motion and the motion for sanctions. The court deferred ruling on
the motion for sanctions until after the issuance of its opinion regarding
summary judgment. Summary judgment was entered in favor of Appellees
on January 9, 2018.
By order of January 10, 2018, the court granted [Appellees’]
motion for sanctions and gave them twenty days to file their
petition for attorneys’ fees and costs. The motion for sanctions
concerned a request for admissions that [Appellees] had served
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1 Appellants filed a separate appeal challenging the trial court’s granting of
summary judgment in favor of Appellees, which is currently pending before
this Court at docket no. 542 WDA 2018.
2 An order granting sanctions under Pa.R.C.P. 4019(d) is final and appealable.
See Christian v. Pennsylania Financial Responsibility Assigned Claims
Plan, 686 A.2d 1, 4 (Pa. Super. 1996) (noting that the finality of the order is
determined not by the entry of judgment in the underlying action, but by the
language and requirements of Rule 4019(d)); see also Pa.R.C.P. 4019(d).
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on [Appellants]. [Appellants] denied every request for an
admission. The most important facts that [Appellants] denied
were that they made no payments to [Appellees] for
approximately 13 years. The leases … required minimum
payments even if no oil or gas was produced. [Appellees] hoped
that if [Appellants] admitted to not making payments, then
[Appellees] could prove that they breached the lease agreements,
and [Appellees] could move for summary judgment without ever
having deposed [Mr. Mitchell]. [Appellees] represented that
because [Appellants] denied all of the requests for admissions,
[Appellees] had to take the deposition of [Mr. Mitchell]. During
the deposition, [Mr. Mitchell] conceded the facts that [Appellees]
had previously asked [Appellants] to admit. He also conceded
that [Appellants] were in error when they denied the relevant
requests for admissions. It was [Appellees’] position that
[Appellants’] wrongful denial of the requests for admissions forced
[Appellees] to incur the costs of[] the deposition, the motion for
sanctions, and the petition for attorneys’ fees and costs. Counsel
for [Appellees] represented that he worked 27.7 hours on relevant
tasks at the agreed-upon rate of $300 per hour. The total is
$8,383.40. Of that amount, $73.40 is costs and the rest[] is
attorney[s’] fees. Counsel included a table with individual line
items in [Appellees’] petition. Attached to the petition are heavily
redacted invoices and an affidavit signed by counsel.
[Appellants] filed a response to the petition with several
arguments, including one which duplicates matters raised in the
instant appeal. [Appellants] claimed that the Rule of Civil
Procedure governing sanctions for denials of requests for
admission that are subsequently proven true only allows sanctions
after a trial or hearing. Pa.R.C.P. 4019(d)….
Trial Court Opinion (“TCO”), 11/5/18, at 2-3 (unnecessary capitalization
omitted).
Following argument on Appellees’ petition for attorneys’ fees and costs,
the trial court issued an order on August 8, 2018, granting the petition and
awarding Appellees reasonable attorneys’ fees and costs in the amount of
$8,383.40. On August 27, 2018, Appellants filed a timely notice of appeal,
followed by a timely, court-ordered Pa.R.A.P. 1925(b) concise statement of
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errors complained of on appeal. Herein, Appellants present the following
issues for our review:
1. Did the [t]rial [c]ourt abuse its discretion in awarding counsel
fees as a sanction for [Appellants’] denial of requests for
admissions where SLT was granted summary judgment without
trial?
2. Did the [t]rial [c]ourt abuse its discretion when it awarded
counsel fees as a sanction for the denial of requests for
admissions as SLT was never required to prove the truth of the
facts denied because of the entry of summary judgment in
favor of SLT Holdings?
3. Did the [t]rial [c]ourt err in failing to hold an evidentiary
hearing for sanctions and attorney[s’] fees where the non[-
]moving party had filed a response to the petition for
attorney[s’] fees and costs?
Appellants’ Brief at 4.
“It is well-settled that the specific sanctions imposed under Pa.R.C.P.
4019 for violation of discovery rules are left to the sole discretion of the trial
court.” Christian, 686 A.2d at 5 (citing Sun Pipe Line Co. v. Tri-State
Telecommunications, Inc., 655 A.2d 112, 122 (Pa. Super. 1995)).
Therefore, we apply an abuse of discretion standard when reviewing an order
granting or denying a motion for sanctions pursuant to Rule 4019(d). See id.“An abuse of discretion is not merely an error of judgment. It requires a
showing of manifest unreasonableness, partiality, ill-will, or such lack of
support as to be clearly erroneous. Under this standard, the party challenging
the trial court’s discretion on appeal bears a heavy burden.” Id. (internal
citations omitted).
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We begin with a review of relevant authority. Pennsylvania Rule of Civil
Procedure 4014 provides for discovery through a request for admissions. The
purpose of serving requests for admissions is “to clarify and simplify the issues
raised in prior pleadings in order to expedite the litigation process.”
Christian, 686 A.2d at 5 (citation omitted). Moreover, “Rule 4014 provides
that a party may deny a request for admission that the party considers a
genuine issue for trial. Pa.R.C.P. 4014(b). This denial, however, is subject to
the discovery sanctions of Rule 4019(d).” Id.Rule 4019 provides, in relevant part:
(d) If at the trial or hearing, a party who has requested admissions
as authorized by Rule 4014 proves the matter which the other
party has failed to admit as requested, the court on motion may
enter an order taxing as costs against the other party the
reasonable expenses incurred in making such proof, including
attorneys’ fees, unless the court finds that
(1) the request was or could have been held objectionable
pursuant to Rule 4014, or
(2) the admission sought was of no substantial importance,
or
(3) the party failing to admit had reasonable ground to
believe that he or she might prevail on the matter, or
(4) there was other good reason for the failure to admit.
Pa.R.C.P. 4019(d).
As noted by the trial court:
[Appellants] specifically rely on the part of [Rule 4019(d)]
concerning proof of the previously denied matter at trial or
hearing…. [Appellants] also rely on the fact that this [c]ourt
granted summary judgment…. Summary [j]udgment is
appropriate when, inter alia, there is no genuine issue of any
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material fact as to a necessary element of the cause of action or
defense…. Pa.R.C.P. 1035.2(1). However, the party moving for
summary judgment has the burden of proving the nonexistence
of any genuine issue of fact, while the nonmoving party must
demonstrate that there is a genuine issue for trial and may not
rest on averments in its pleadings. Merriweather v.
Philadelphia Newspapers, Inc., 684 A.2d 137 (Pa. Super.
1996).
TCO at 3.
In their first two claims, Appellants aver that the trial court erred in
awarding attorneys’ fees and costs as a sanction for Appellants’ denial of
requests for admissions, where summary judgment was granted in favor of
Appellees, and maintain that because of the entry of summary judgment,
Appellees were never required to prove the truth of the facts denied by
Appellants. Appellants’ Brief at 9-15. Appellants argue that all of the requests
for admissions were properly denied in accordance with Rule 4014(b), and
acknowledge that a verification executed by Mr. Mitchell, president of Mitch-
Well, was attached to their response. Id. at 10. Appellants take the position
that they are “not required to admit to the requests for admissions. They can
deny them[,] which they did[,] and that is their right. The fact that [Appellees
were] not happy with the answers [or] did not agree with the answers[] is not
a basis for sanctions against [them]….” Id. at 11.
Appellants’ argument regarding whether the granting of sanctions was
appropriate places an emphasis on the words “if at the trial or hearing … a
party … proves” contained in Rule 4019. Appellants assert that there was no
trial in this case, but rather an entry of summary judgment and, thus,
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Appellees were not forced to prove anything at trial. Id. at 11-12. Appellants
further contend that Appellees were not forced to take the deposition of Mr.
Mitchell as a result of its denial of the requests for admissions and that “the
request[s] for admissions were of no substantial importance” in this case. Id.
at 12, 14-15.
In response to Appellants’ claims, the trial court opined:
The facts that [Appellants] denied pursuant to [Appellees’]
Request for Admissions were proven true at [Mr. Mitchell’s]
deposition[,] by his admissions at that time. The [c]ourt relied on
the deposition testimony, especially that concerning the lack of
marketable production at the oil wells, when it entered summary
judgment. Thus, the need for a trial or an evidentiary hearing
before the [c]ourt was obviated. [Appellants] argue that a literal
reading of Pa.R.C.P. 4019 … only allows for an award of
attorney[s’] fees and costs whenever denials of requests [for]
admissions are proven false at a trial or hearing. Preliminary [sic],
it is the opinion of this [c]ourt that [Appellants’] argument is
unreasonably sophist. However, even if the [c]ourt engages with
[Appellants’] argument, the argument fails because [Appellees]
did prove that the facts which were initially denied by [Appellants]
were true for purposes of summary judgment. Had the [c]ourt
not been convinced that there was no genuine issue as to whether
there was marketable production at the well sites during the
relevant timeframe, then [Appellees] would have likely failed to
meet their burden of proof. Concerning [Appellants’] argument
about the lack of a trial (or as Rule 4019 states “trial or hearing”),
the [c]ourt notes that it did hear argument on [Appellees’] motion
for partial summary judgment.[3] If [Appellants] take the position
that the rule requires testimony before the [c]ourt, meaning
before a judge and not just before a person authorized to
administer oaths, then it is again the opinion of this [c]ourt that
[Appellants’] reading of Rule 4019 is unreasonable because it
defeats the overall meaning of the rule.
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3 We further note that immediately following the argument on summary
judgment, testimony was heard on the motion for sanctions. See N.T.
Hearing, 11/29/17, at 36-43.
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TCO at 4-5 (emphasis added and unnecessary capitalization omitted). Based
on the foregoing, we discern no abuse of discretion by the trial court.
Lastly, Appellants assert that the trial court erred by failing to hold an
evidentiary hearing on the petition for attorneys’ fees and costs as sanctions.
Appellants’ Brief at 15. Appellants acknowledge that they are unable to cite
to any authority which mandates a hearing before awarding sanctions under
Rule 4019(d). Id. at 23-24. Nevertheless, they insist that because there was
no trial, sanctions under Rule 4019(d) are inappropriate. Id. at 16.
In response to Appellants’ assertions, the trial court explained:
[T]he record was sufficient for the [c]ourt to decide the issue after
hearing argument [on the motion for sanctions]. There were no
issues of facts concerning the initial denials of requests for
admissions and subsequent recantation of those denials. The
[c]ourt was able to read the recantations in the transcript of the
sworn deposition testimony given by the individual [Appellant].
Furthermore, when it came time for the [c]ourt to decide on the
reasonableness of the fees and costs requested in [Appellees’]
Petition for Attorneys’ Fees and Costs, the [c]ourt had the benefit
of an itemized breakdown of the requested fees and also an
[a]ffidavit from counsel for [Appellees].
TCO at 5. After careful review, we discern no abuse of discretion by the trial
court in granting Appellees’ petition for attorneys’ fees and costs. Moreover,
we deem the amount of attorneys’ fees and costs awarded to be reasonable
and adequately supported by the record.
In light of the foregoing, the trial court’s August 8, 2018 order awarding
reasonable attorneys’ fees and costs in the amount of $8,383.40 to Appellees
is affirmed.
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Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/23/2019
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