Melvin Smith Bldg Systems v. Bedford County Humane

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MELVIN W. SMITH BUILDING : IN THE SUPERIOR COURT OF
SYSTEMS, LLC : PENNSYLVANIA
:
Appellant :
:
:
v. :
:
: No. 1158 WDA 2021
BEDFORD COUNTY HUMANE :
SOCIETY
Appeal from the Order Entered September 3, 2021
In the Court of Common Pleas of Bedford County
Civil Division at 1030-2018
BEFORE: MURRAY, J., McCAFFERY, J., and COLINS, J.*
MEMORANDUM BY MURRAY, J.: FILED: MAY 20, 2022
Melvin W. Smith Building Systems, LLC (Appellant), appeals from the
order granting the motion to compel discovery filed by Bedford County
Humane Society (BCHS), in this action involving breach of contract. Upon
review, we remand for the trial court to file a supplemental Pa.R.A.P. 1925(a)
opinion.
On October 2, 2018, Appellant filed a complaint against BCHS pleading
breach of contract, unjust enrichment, and conversion. Appellant claimed it
entered into a contract with BCHS for Appellant to construct a building, and
alleged BCHS breached the contract prior to Appellant’s completion of the
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* Retired Senior Judge assigned to the Superior Court.
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building, causing Appellant to incur monetary damages of approximately
$80,000. On October 22, 2018, BCHS filed an answer, new matter and
counterclaim.
Following proceedings not relevant to this appeal, on March 8, 2021,
BCHS sent Appellant interrogatories and a request for production of
documents.1 BCHS asked Appellant to produce, in pertinent part, “a complete
copy of all business and personal tax returns, with all attachments and
schedules, including federal, state and local [taxes], you filed for every year
in which you worked on this project.”2 Interrogatories and Request for
Production of Documents, 3/8/21, at 15 (unnumbered).
Appellant filed an answer and objections to BCHS’s discovery requests
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1This document is not in the certified record. However, BCHS attached a copy
of the interrogatories and request for production of documents to an
application BCHS filed with this Court. See Application to Quash Appeal,
11/19/21, Ex. B; see also N.T. (motion to compel discovery hearing),
8/24/21, at 3 (counsel submitting the March 8, 2021, document to the court).
2BCHS sought the personal tax returns of Appellant’s owner, Melvin W. Smith
(Smith or Mr. Smith). Smith is not a party to this action.
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on May 13, 2021.3 Appellant objected to BCHS’s request for tax documents,
asserting:
This request is not relevant to any claim or defense and therefore
[is] beyond the scope of permissible discovery. The request also
seeks information that is protected information (bank account
numbers, balances, social security numbers).
Appellant’s Answer and Objections, 5/13/21, at ¶ 14 (see Appellant’s
Reproduced Record at 56(a)).
On June 7, 2021, BCHS filed a motion to compel discovery. Regarding
BCHS’s request for documents related to Appellant’s “business and personal
tax returns,” BCHS asserted:
The documents requested are related to the damages claimed by
[Appellant] and are therefore relevant. The requests do not ask
for sensitive information and any such information that exists on
the documents could be redacted.
Motion to Compel Discovery, 6/7/21, at ¶ 13.
The trial court held a hearing on August 24, 2021. By order entered
September 3, 2021 (Discovery Order), the trial court granted BCHS’s motion
to compel discovery. Regarding BCHS’s request for Appellant’s and Smith’s
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3 The answer and objections is not in the certified record. However, Appellant
included it in the reproduced record. But see Commonwealth v.
Bracalielly, 658 A.2d 755, 763 (Pa. 1995) (“appellate courts may only
consider facts which have been duly certified in the record on appeal. An item
does not become part of the certified record by simply copying it and including
it in the reproduced record.” (citations omitted)); see also Twp. of N.
Fayette v. Guyaux, 992 A.2d 904, 905 n.2 (Pa. Super. 2010) (“It is the
obligation of the appellant to make sure that the record forwarded to an
appellate court contains those documents necessary to allow a complete and
judicious assessment of the issues raised on appeal.” (citation omitted)).
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tax returns, the court ordered Appellant to produce the documents within 30
days.
Appellant timely filed a notice of appeal, followed by a court-ordered
Pa.R.A.P. 1925(b) statement, raising nine claims of trial court error. The court
issued a brief Rule 1925(a) opinion, concluding its Discovery Order “disposed
solely of discovery issues and, as such, was not a final order but rather an
interlocutory one” that is not appealable. Trial Court Opinion, 12/17/21, at 1
(citing Commonwealth v. Nicodemus, 636 A.2d 1118, 1120 (Pa. Super.
1993) (“a final [o]rder is one which ends the litigation or disposes of the entire
case.”)). Accordingly, the trial court suggested this Court quash the appeal
as interlocutory. Id. at 2.
On November 19, 2021, BCHS filed in this Court an application to quash,
arguing the Discovery Order was not appealable because it was neither final
nor collateral. See generally Application to Quash, 11/19/21; see also In
re Estate of Moskowitz, 115 A.3d 372, 388 (Pa. Super. 2015) (explaining,
under our Rules of Appellate Procedure, a party is only permitted to appeal
from: “(1) a final order or an order certified as a final order (Pa.R.A.P. 341);
(2) an interlocutory order as of right (Pa.R.A.P. 311); (3) an interlocutory
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order by permission (Pa.R.A.P. 312, 1322; 42 Pa.C.S. § 702(b)); or (4) a
collateral order (Pa.R.A.P. 313).” (citation omitted)).4 BCHS asserted:
Allowing appeals each time a party requests tax returns from the
opposing party in breach of contract actions would result in the
corrosion in the final order rule. Discovery requests for the tax
returns of a party during relevant times of an action is common
because it is often relevant. They are especially relevant when[,
as in the instant case,] there is a claim for breach of contract in
which a plaintiff claims a loss of income as a result of the breach.
If this Court were to take a collateral appeal each time a party
does not want to turn over tax returns in discovery, it would
amount to a needless burden on the Court and cause undue delays
of countless cases at the Common Pleas level.
Brief in Support of Application to Quash, 11/19/21, at 15 (unnumbered).
Appellant filed an answer to the application to quash on November 29,
2021, asserting that the Discovery Order is immediately appealable as a
collateral order. On January 6, 2022, this Court denied BCHS’s application to
quash without prejudice to its right to raise the issue before the merits panel.
Appellant presents four issues for our consideration:
A. Is a discovery order compelling the disclosure of tax returns
and tax information of a non-party to a lawsuit a collateral
order, thus appealable as of right?
B. Is an order requiring a limited liability company to produce
personal and business tax returns with related forms irrelevant
to any claim or defense where they only relate to work that
was completed and paid for in a claim for breach of contract
seeking money damages; the work extended for two months
in one year and three months in the second year; and the
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4 It is undisputed that the Discovery Order is not a final order, as it does not
dispose of all claims and all parties. Appellant did not request or receive
permission to appeal the Discovery Order pursuant to Pa.R.A.P. 312.
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recoverable damages are the difference between the contract
price and the reasonable cost of completion of the job?
C. Are the payroll expenses and documents for work that was
completed and paid for irrelevant to any claim or defense
where the recoverable damages are the difference between the
contract price and the reasonable cost of completion and an
accounting of the same an unreasonable burden to impose
upon the contractor?
D. Is it an unreasonable burden to require a contactor to
determine and identify what work was done and the cost of
materials and labor between the payment of past draws that
are not at issue where the recoverable damages are the
difference between the remaining contract price and the
reasonable cost of completion of the job?
Appellant’s Brief at 2-3.
Appellant first argues the trial court erred in concluding the Discovery
Order is not appealable as a collateral order.5 Id. at 10. Conversely, BCHS
requests quashal on the basis that the Discovery Order does not satisfy the
collateral order doctrine. BCHS Brief at 8 (“Allowing appeals each time a party
requests tax returns from the opposing party in breach of contract actions
would result in the corrosion of the final order rule.”).
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5 Appellant did not present this issue in its Rule 1925(b) statement. Ordinarily,
“[i]ssues not included in the Statement and/or not raised in accordance with
the provisions of [Rule 1925(b)] are waived.” Pa.R.A.P. 1925(b)(4)(vii).
However, “[d]ue to the jurisdictional nature of the collateral order doctrine,
[an appellate] Court … may raise it sua sponte.” Brooks v. Ewing Cole,
Inc., 259 A.3d 359, 370 (Pa. 2021); see also Barak v. Karolizki, 196 A.3d
208, 215 (Pa. Super. 2018) (“The question of appealability of an order goes
directly to the jurisdiction of the Court asked to review the order.” (citation
omitted)).
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“The appealability of an order under the Pa.R.A.P. 313 collateral order
doctrine presents a question of law, over which our standard of review is de
novo and our scope of review is plenary.” Brooks, 259 A.3d at 365. “[I]n
general, discovery orders are not final, and are therefore unappealable.”
Jones v. Faust, 852 A.2d 1201, 1203 (Pa. Super. 2004). However, Pa.R.A.P.
313(b) provides that appeals may be taken from collateral orders, i.e., orders
which are
separable from and collateral to the main cause of action where
the right involved is too important to be denied review and the
question presented is such that if review is postponed until final
judgment in the case, the claim will be irreparably lost.
Id.; see also Meyer-Chatfield Corp. v. Bank Fin. Servs. Grp., 143 A.3d
930, 936 (Pa. Super. 2016) (“The collateral order doctrine is a specialized,
practical application of the general rule that only final orders are appealable
as of right.”). To satisfy the collateral order doctrine, an appellant must
demonstrate the order:
1) is separable from and collateral to the main cause of action; 2)
involves a right too important to be denied review; and 3)
presents a question that, if review is postponed until final
judgment in the case, the claim will be irreparably lost. The first
prong, separability, occurs when we can address the issue
surrounding the disputed order without analyzing the ultimate
issue in the underlying case. As for the second prong, importance,
it is not sufficient that the issue be important to the particular
parties. Instead, the issue must involve rights deeply rooted in
public policy going beyond the particular litigation at hand. We
must interpret the collateral order doctrine narrowly, and each of
the above prongs must be clearly present for us to deem an order
collateral.
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Cabot Oil & Gas Corp. v. Speer, 241 A.3d 1191, 1196-97 (Pa. Super. 2020)
(citations omitted).
Here, Appellant argues all three prongs of the collateral order doctrine
exist because:
The trial court’s order compelling the production of Mr. Smith’s (a
nonparty) personal income tax returns and related documents is
a collateral order because whether those documents are
discoverable is [a] separable question from the issues involved in
the merits of the case, involves a recognized privacy right that is
too important to be denied review, and the privacy of the
documents will be irreparably lost if review is postponed until after
final judgment.
Appellant’s Brief at 8 (emphasis added). After careful consideration, we agree.
With respect to the first prong, separability, Appellant’s claim of a
recognized privacy right regarding its and Smith’s tax return information is
distinct from the underlying breach of contract claim. See, e.g., Speer, 241
A.3d at 1197 (first prong of collateral order doctrine was met “because it is
possible to address whether [a]ppellants’ financial records are discoverable
without analyzing the merits of [a]ppellees’ actions against [a]ppellants under
the Dragonetti Act or for tortious interference with contract.”); see also J.S.
v. Whetzel, 860 A.2d 1112, 1117 (Pa. Super. 2004) (in personal injury
action, defendant’s expert medical witness appealed court order requiring
production of 1099 federal tax documents from any insurance company or
attorney; we held that admissibility of the expert’s tax documents “may be
addressed without analyzing [defendant’s] alleged negligence in the
automobile accident.”).
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Appellant also met the second prong because the privacy interest in
Appellant’s and Smith’s tax returns raises a sufficiently important public policy
concern. Speer, 241 A.3d at 1197 (“[a]ppellants fulfill the second prong,
importance, because they have a significant privacy interest in their tax
returns.” (emphasis added) (citing Dougherty v. Heller, 138 A.3d 611, 629
n.10 (Pa. 2016) (individuals have a “privacy interest in information contained
in federal tax returns. … Such information is made confidential per federal
statute.”)); see also J.S., 860 A.2d at 1117 (holding expert witness’s “privacy
interest in his income information raises a sufficiently important public policy
concern.”).
Finally, the third prong, irreparable loss, is met, as any privacy interest
Appellant and Smith have in their respective tax returns will be forever lost if
they comply with the Discovery Order and produce the documents. J.S., 860
A.2d at 1117 (holding third prong was met where “[a]ny privacy interest
[expert witness] may have in the [federal tax] forms will be irreparably
violated if he complies with the order and produces the documents.”); see
also Merithew v. Valentukonis, 869 A.2d 1040, 1043 (Pa. Super. 2005)
(holding third prong was met in motor vehicle accident case, where
defendant’s privacy interest in her financial worth would be irreparably lost if
she complied with discovery order to disclose financial information instead of
taking collateral order appeal). Accordingly, we conclude the Discovery Order
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is a collateral order from which Appellant properly appeals. Thus, we examine
Appellant’s remaining issues.
In issues two, three and four, Appellant claims the trial court erred in
entering the Discovery Order and improperly compelling Appellant’s
production of private information that is not relevant to the action. See
Appellant’s Brief at 8-9, 12-17. Appellant argues:
This Court should reverse the trial court’s [Discovery O]rder …
because it requires the disclosure of information, [i.e., business
and personal tax returns,] that is not relevant to any claim or
defense making it beyond the scope of discovery. The order
should also be reversed because it imposes an unreasonable
burden on [Appellant] in the form of an accounting and forensic
investigation into matters that can be learned from records or are
equally available to [BCHS].
Id. at 8; see also id. at 9 (“the court gave no consideration to the privacy
interests of those required to disclose confidential tax returns and
information.”).
We are mindful that “on review of an order concerning discovery, an
appellate court applies an abuse of discretion standard.” McNeil v. Jordan,
894 A.2d 1260, 1268 (Pa. 2006); see also Dougherty, 138 A.3d at 629
(observing a “trial court is in the best position to weigh fairly the competing
needs and interests of parties affected by discovery.” (citation omitted)).
An abuse of discretion is not merely an error of judgment, but if
in reaching a conclusion the law is overridden or misapplied, or
the judgment exercised is manifestly unreasonable, or the
judgment is the result of partiality, prejudice, bias or ill-will, as
shown by the evidence of record, discretion is abused.
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LSF8 Master Participation Tr. v. Petrosky, 2022 PA Super 45, *4 (Pa.
Super. 2022) (citation and brackets omitted).
The trial court in this case offered a conclusory, one-sentence merits
analysis of Appellant’s multiple claims, stating:
In the event the appellate court finds [Appellant’s] appeal should
not be quashed, we … granted the Motion to Compel inasmuch as
we found [BCHS’s] request was reasonably calculated to lead to
the discovery of admissible evidence, especially pertaining to the
averred breach and damages in dispute.
Trial Court Opinion, 12/17/21, at 2 (italics omitted).
“It is incumbent upon a trial court to provide this Court with its Rule
1925(a) opinion addressing an appellant’s issues, with citation to the record,
to permit a meaningful and effective review of the issues raised and efficient
use of judicial resources.” Commonwealth v. Widger, 237 A.3d 1151, 1165
n.5 (Pa. Super. 2020). Instantly, to properly exercise our review, we require
sufficient reasoning from the trial court before we can meaningfully address
Appellant’s issues. Where a trial court’s failure to comply with Rule 1925(a)
hampers our ability to conduct a meaningful review, the remedy is to remand
the case to the trial court with instructions to prepare an opinion and return
the case to this Court. K-B Bldg. Co. v. Hermara Assocs., 709 A.2d 918,
919 (Pa. Super. 1998); cf. Cooke v. Equitable Life Assur. Soc. of U.S.,
723 A.2d 723, 727 (Pa. Super. 1999) (remand for preparation and filing of
Rule 1925(a) opinion unnecessary where lack of opinion did not hamper this
Court’s review of a question of law). Accordingly, we are constrained to
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remand this case to the trial court for the issuance of supplemental Rule
1925(a) opinion within 60 days of this filing.
Case remanded with instructions. Jurisdiction retained.
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