v.
MJC Industries, Inc.
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
WILLIAM AARON BROSKY, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellee
v.
MJC INDUSTRIES, INC.,
Appellant No. 2138 EDA 2016
Appeal from the Order June 21, 2016
In the Court of Common Pleas of Bucks County
Civil Division at No(s): 2013-03355
BEFORE: PANELLA, SHOGAN, and RANSOM, JJ.
MEMORANDUM BY SHOGAN, J.: FILED MAY 24, 2017
Appellant, MJC Industries, Inc., appeals from the order entered June
21, 2016, in the Court of Common Pleas of Bucks County, granting the
praecipe of Appellee, William Aaron Brosky (“Brosky”) to withdraw Counts I,
IV, and V of his complaint, following the trial court’s previous order granting
Brosky’s motion for partial summary judgment as to counts II and III. We
affirm.
The trial court, partially quoting its prior opinion, summarized the
factual and procedural history of this case as follows:
In 2001, [Brosky] was approximately twelve
(12) years old when he met Michael Mesko [an
adult]. Sometime thereafter, Mesko became
sexually involved with [Brosky]. [Brosky] eventually
reported these incidents leading to Mesko’s arrest by
the Allentown Police Department in February 2010.
Mesko was charged with involuntary deviate sexual
J-A06022-17
intercourse pursuant to 18 Pa. C.S. § 3123. On
October 13, 2010, Mesko pled guilty to this charge
and was sentenced to 5-15 years of incarceration.
Prior to his incarceration, Mesko owned and
operated a landscaping business, Mesko
Landscaping, Inc., which used for its operations
certain real estate owned by Mesko personally. On
October 12, 2010, the day before Mesko’s guilty
plea, he signed a deed transferring his fee simple
ownership of real property located at 3268 Route
212, Springtown, PA 18081 (hereinafter “the Route
212 property”) to Appellant, MJC Industries, Inc., in
exchange for $1.00. In addition, on the same date,
Mesko signed a deed transferring his ownership of
approximately 36 acres of real estate located at
1515 Woodcock Road, Kintnersville, PA 18930
(hereinafter “the Woodcock Road property”) to
Appellant in exchange for $1.00. Mesko also
transferred stock in Mesko Landscaping, Inc. to
Glenn Jackson, CEO of Appellant, MJC Industries,
Inc. Other than the assets transferred, Mesko only
retained a cabin in the Poconos, which he valued
between $25,000 and $40,000. This cabin was
subsequently sold at sheriff’s sale because Mesko
was unable to pay the real estate taxes thereon.
Mesko admitted that he did not retain any other
valuable assets. The 1515 Woodcock Road property
was unencumbered by any mortgage, tax lien or
other liability at the time of transfer. Both Mesko
and Jackson admitted that they believed the value of
this property was approximately $200,000.
[Brosky’s] appraiser valued the property to be
$250,000 in October 2010. The 3268 Route 212
property was encumbered by a $200,000 line of
credit. [Brosky’s] appraiser valued this property to
be $265,000 in October 2010.
On April 1, 2011, [Brosky] filed a civil suit
against Mesko in the Lehigh County Court of
Common Pleas, Docket No. 2011-C-1300, which
resulted in a stipulated judgment against Mesko in
the principal amount of $500,000.00. The judgment
-2-
J-A06022-17
was indexed in the Lehigh County Court of Common
Pleas on December 14, 2012.
On May 13, 2013, [Brosky] filed the instant
action in order to collect upon said judgment. At the
time this suit was brought, [Brosky] had not
collected any sum towards the $500,000 judgment.
On June 26, 2013, Appellant filed an Answer to
[Brosky’s] Complaint. Thereafter, the parties
engaged in discovery, and various motions and
responses were filed by the parties. On December
26, 2013, [Brosky] filed a Motion for Summary
Judgment claiming that the allegations of the
Complaint were uncontroverted and therefore, no
genuine issue of material fact existed. On January
28, 2013, Appellant filed his Response to [Brosky’s]
Motion for Summary Judgment as well as a “Motion
to Dismiss Complaint with Prejudice for Failure to
Join Indispensable Party and Lack of Jurisdiction.”
The parties filed additional supporting memoranda
thereafter.
Trial Court Opinion, 06/30/14, pp. 1-3.
[The trial court] granted [Brosky’s] Motion for Summary
Judgment on February 20, 2014. Appellant filed an initial Notice of Appeal to Superior Court in response to [the] Order, and this Court’s Opinion in support of our Order was docketed on July 2, 2014. On May 18, 2015, [the] Superior Court filed a
Memorandum Opinion quashing Appellant’s Appeal due to lack of jurisdiction, remanding the case for [the trial court] to make an express determination as to whether an indispensable party was absent from the litigation, as well as to resolve [Brosky’s] remaining claims that [the] partial summary judgment Order did not specifically address.
On June 30, 2015, Appellant filed a “Motion to Vacate Order Granting Summary Judgment and Rule on Superior Court’s Order of Remand and Instruction to Rule on Defendant MJC’s Motion to Dismiss for Failure to Name Indispensable Parties.” [The trial court] heard oral argument on said Motion on July 22, 2015, whereupon [it] ordered both parties to brief their arguments. Upon the arguments presented at oral argument and a review of the filings of record and the allegations therein,
[*3]J-A06022-17
[the trial court] determined that Appellant’s Motion was without merit and issued an Order denying the Motion on September 14, 2015.
Appellant filed a Notice of Appeal of this Court’s Order on October 8, 2015, however, [the] Superior Court Quashed the Appeal sua sponte as it was interlocutory in light of the fact that Counts I, IV, and V of [Brosky’s] Complaint were still undecided. [Brosky] filed a Praecipe to Withdraw said Counts on June 9, 2016, which [the trial court] granted in a June 21, 2016 Order. Appellant filed a timely Notice of Appeal from that Order to the Superior Court on July 5, 2016. Trial Court Opinion, 8/4/16, at 1-3 (internal citations omitted). The trial court and Appellant complied with Pa.R.A.P. 1925.
Appellant presents the following issues for our review:
[*4]J-A06022-17
d) In granting summary judgment based on the trial court’s own determination of facts and law the trial court erred as a matter of law and fact by not allowing a jury to ascertain the credibility, demeanor and veracity of the witnesses and draw their own conclusions from testimony given and further the trial court violated the “Nanty-Glo Rule[.]”
[*5]J-A06022-17
We must first address Appellant’s second issue in which it asserts that the trial court erred in failing to grant the motion to dismiss the complaint due to Brosky’s failure to join indispensable parties because such claim implicates our jurisdiction. “Under Pennsylvania law, the failure to join an indispensable party implicates the trial court’s subject matter jurisdiction.” Orman v. Mortgage I.T., 118 A.3d 403, 406 (Pa. Super. 2015) (citation omitted). This issue may be raised sua sponte. Id.
Appellant argues that three indispensable parties were not named in the Complaint. Appellant’s Brief at 21. First, Appellant posits that Michael Mesko, as the debtor who sold the property in question and “who would have to be proven to be in violation of the Uniform Fraudulent Transfer Act,” was an indispensable party. Id. at 21. Second, Appellant identifies Glenn Jackson as an indispensable party and explains that Jackson is “the individual who as sole shareholder, sole director, sole officer and sole negotiator for the shell corporation in who’s [sic] name the real property was placed and who has right and interest related to the claim in the cause of action.” Id. at 21, 27-28. Third, Appellant asserts that Mesko Landscaping is an indispensable party, and in support of such claim maintains that “Mesko Landscaping, as a property of Mr. Mesko and Mr. Jackson and a[n] occupier of the real property in question also has a stake in this matter. It has a crop of trees growing on the property and meets the criteria [for an indispensable party].” Id. at 29.
[*6]J-A06022-17
Pennsylvania Rule of Civil Procedure 1032 provides as follows:
Rule 1032. Waiver of Defenses. Exceptions. Suggestion of Lack of Subject Matter Jurisdiction or Failure to Join Indispensable Party
(a) A party waives all defenses and objections which are not presented either by preliminary objection, answer or reply, except a defense which is not required to be pleaded under Rule 1030(b), the defense of failure to state a claim upon which relief can be granted, the defense of failure to join an indispensable party, the objection of failure to state a legal defense to a claim, the defenses of failure to exercise or exhaust a statutory remedy and an adequate remedy at law and any other nonwaivable defense or objection.
(b) Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter or that there has been a failure to join an indispensable party, the court shall order that the action be transferred to a court of the Commonwealth which has jurisdiction or that the indispensable party be joined, but if that is not possible, then it shall dismiss the action. Pa.R.C.P. 1032.
An indispensable party is one whose “rights are so connected with the claims of the litigants that no decree can be made without impairing or infringing upon those rights.” Sprague v. Casey, 550 A.2d 184, 189 (Pa. 1988) (citations omitted). See also Commercial Banking Corp. v. Culp, 443 A.2d 1154 (Pa. Super. 1982) (“A person is a necessary and indispensable party only when his rights are so connected with the claims of the litigants that no decree can be made without impairing his rights.”). As this Court has explained: “[i]f no redress is sought against a party, and its
[*7]J-A06022-17
rights would not be prejudiced by any decision in the case, it is not indispensable with respect to the litigation.” Orman, 118 A.3d at 406.
In evaluating this issue, the following factors must be considered:
1. Do absent parties have a right or an interest related to the claim?
2. If so, what is the nature of that right or interest?
3. Is that right or interest essential to the merits of the issue?
4. Can justice be afforded without violating the due process rights of absent parties? Martin v. Rite Aid of Pennsylvania, Inc., 80 A.3d 813, 814 (Pa. Super. 2013) (citation omitted) (quoting Mechanicsburg Area Sch. Dist. v. Kline, 431 A.2d 953 (Pa. 1981)).
A previous panel of this Court remanded this matter and in so doing specifically directed the trial court to address the issue of whether Mesko, Jackson, and Mesko Landscaping were indispensable parties to this action. Brodsky v. MJC Industries, Inc., 760 EDA 2014, 122 A.3d 451 (Pa. Super. filed May 18, 2015).1 Per this Court’s directive, the trial court conducted a thorough analysis regarding each party. Following its cogent and detailed analysis, which spans seven pages, the trial court concluded that none of the three named parties constituted indispensable parties. Trial Court Opinion, 8/4/16, at 16-22. The trial court’s determinations are ____________________________________________
1 We note that in the appeal previously before this Court, Appellee’s name was spelled “Brodsky”.
[*8]J-A06022-17
supported by the evidence of record. We agree with the trial court’s well- reasoned analysis and conclusions and adopt them as our own. Id. Thus, having determined that there were no indispensable parties not named, we conclude that we have jurisdiction over this matter and consider Appellant’s remaining issues. Appellant next argues that the trial court erred as a matter of law in failing to vacate its order granting summary judgment after remand by a previous panel of this Court. Appellant’s Brief at 12. As outlined previously in presenting Appellant’s issues on appeal, Appellant presents four sub- issues in support of this claim. Id. at 3, 12. We repeat them here: [The trial court:] a) failed to recognize the material issues of fact in dispute that should be presented to a jury concerning consideration for the transfer of real property as pointed out by the Superior Court; b) violated the fundamental rule that “the Court is not to decide issues of fact when resolving a motion for summary judgment, but merely to determine whether any such issues exist”; c) failed to recognize that genuine issues of material facts in dispute can be and are established by depositions of the parties; the trial court, despite being presented with the actors testimony by deposition in which they clearly indicate their belief that the transaction was a legitimate and necessary complex transaction between them which included critical non-monetary consideration, the court ignored these factors when granting summary judgment;
[*9]J-A06022-17
d) In granting summary judgment based on the trial court’s own determination of facts and law the trial court erred as a matter of law and fact by not allowing a jury to ascertain the credibility, demeanor and veracity of the witnesses and draw their own conclusions from testimony given and further the trial court violated the “Nanty-Glo Rule.” Appellant’s Brief at 3, 12.
An order granting summary judgment is subject to the following scope and standard of appellate review:
Our standard of review on an appeal from the grant of a motion for summary judgment is well-settled. A reviewing court may disturb the order of the trial court only where it is established that the court committed an error of law or abused its discretion. As with all questions of law, our review is plenary.
In evaluating the trial court’s decision to enter summary judgment, we focus on the legal standard articulated in the summary judgment rule. Pa.R.C.P. 1035.2. The rule states that where there is no genuine issue of material fact and the moving party is entitled to relief as a matter of law, summary judgment may be entered. Where the nonmoving party bears the burden of proof on an issue, he may not merely rely on his pleadings or answers in order to survive summary judgment. Failure of a non-moving party to adduce sufficient evidence on an issue essential to his case and on which he bears the burden of proof establishes the entitlement of the moving party to judgment as a matter of law. Lastly, we will review the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Shepard v. Temple University, 948 A.2d 852, 856 (Pa. Super. 2008) (quoting Murphy v. Duquesne University, 777 A.2d 418, 429 (Pa. 2001)).
As explained previously, on February 20, 2014, the trial court granted Brosky’s motion for summary judgment as to counts II and III of his complaint. Count II of the complaint alleged that the transfers of the Route
- 10 - J-A06022-17
212 property and the Woodcock Road property to Appellant were fraudulent transfers pursuant to Pennsylvania’s Uniform Fraudulent Transfer Act (“UFTA”), 12 Pa.C.S. § 5104. Specifically, Brosky raised his claim under 12 Pa.C.S. § 5104(a)(2)(ii) which states: (a) General rule.--A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation: *** (2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor: *** (ii) intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due. 12 Pa.C.S. § 5104(a)(2)(ii). Count III of the complaint alleged that the transfers were fraudulent pursuant to UFTA, 12 Pa.C.S. § 5105. Section 5105 provides that: A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation. 12 Pa.C.S. § 5105. - 11 - J-A06022-17 After conducting a thorough analysis based on the evidence presented as to the required elements of these two claims, the trial court concluded that there were no genuine issues of material fact as to any of the elements. Trial Court Opinion, 8/4/16, at 7-14. The trial court opined that: Brosky’s claim arose before the transfers; Mesko did not receive reasonably equivalent value in exchange for the properties; Mesko reasonably should have believed he would incur debts beyond his ability to pay; and, Mesko became insolvent as a result of the transfers. Id. The certified record supports the determinations of the trial court. Accordingly, we adopt its well-reasoned analysis as our own. Id. Thus, we conclude that the trial court did not abuse its discretion in granting Brosky’s motion for summary judgment as to Counts II and III of his complaint. Furthermore, we conclude that Appellant’s fourth sub-issue, wherein it asserts that the trial court violated the Nanty-Glo2 rule, lacks merit. Appellant’s Brief at 13. Appellant contends that “[u]nder Nanty-Glo, the party moving for summary judgment may not rely solely upon its own testimonial affidavits or depositions, or those of its witnesses, to establish ____________________________________________ (_) • . !.ll ... . . ·: ..• ~ v . ,f!:!_ ... , ''1 .~I, ' t';' .... ,,• 'ti '!"4 • " • -·· ·... ~.=·.. . . . . :,. . .U;;.h; . ... ~.. . . ••• . ·-r. , ••.
'... , .-·.r. :::, :,. . . '~. •,,,•' .;::.;.,:.
'.-) provide sufficient evidence to support that reasonably equivalent value was provided in the fonn ~ .. / parties, there can be' no doubt that reasonably equivalent value was not provided by Appellant ( ) even assuming the. $200,000. line of credit constitutes consideration. Thus, reasonably equivalent value was not provided toMesko, satisfying the·element required by Sections S104(a) and 5105.
[*11]3.) Mesko Reasonably Should Have BehevedHe would Incur Debts Beyond His Ability to Pay
12 Pa.C.S. §5104(a)(2)(ii) requires that the debtor have "believed or reasonably should have believed that the debtorwould incur, debts beyond the debtor's ability to pay as they became due."
First, Mesko made the transfers of the property the day before he was pleading guilty to a criminal charge that ultimately led to his imprisonment for a term of 5-15 years. A reasonable person in Mesko's circumstances would have believed that he faced potential civil liability to the victim of his crimes. Appellee initiated his civil suit in April 2011 ~ approximately six months after Mesko's guiltyplea and two months after his incarceration. ('') Furthermore, Mesko stated that he had no savings accounts and last had a checking account prior to his incarceration in February 201.1. This checking account was transferred to Appellant. Mesko Deposition Transcript, pp. 8-9, 25. Additionally, after the transfer of the properties to Appellant, Mesko was left with only a cabin located in Pike County. Mesko Deposition Transcript, pp. 64-65. Aside from the debts Mesko reasonably could have believed he would incur from the victim of his crimes, Mesko also had taxes and other fees associated with the cabin which was still retained in his name. Nonetheless, Mesko. retained no bank accounts nor any interest in his landscaping business. Thus, Mesko either knew or reasonably should have believed that he would be unable to pay these costs associated with the cabin. In fact, the cabin was ultimately sold at sheriff's sale because Mesko failed to pay the property taxes. Mesko Deposition Transcript p. 65.
[*12]l)
Therefore, Mesko reasonably should have believed that he would incur debts beyond his ability to pay as they became due, and nonetheless, he made the property transfers to Appellee, satisfying this element of Section 5104(a)(2)(ii).
4.) Mesko Became Insolvent as a Result of the Transfers
Similar to Section 5104's requirement that the debtor believed or reasonably should have believed he would incur debts beyond his ability to pay as they became due, 12 Pa.C.S. §5105 requires that the debtor was insolvent at the time of the transfer or the debtor became insolvent.as a result of the transfer. "A debtor is insolvent if, at fair valuations, the sum of the debtor's debts is greater than all of the debtor's assets." 12 PaC.S. §5102(a). Further, adebtorispresumed to · be insolvent where the debtor ''is generally not paying the debtor's debts as they become due ... . This presumption shall impose on the ·party against whom the presumption 'is directed the burden of proving that the nonexistence of insolvency is more probable than its existence." 12 Pa.C.S. §5102(b).
Mesko's debts included his personal liability to Appellee, a $500,000 stipulated judgment. Mesko admitted that after the transfers, he had no valuable assets in his name. He possessed no saving or checking accounts, sold his interest in his landscaping company toGlenn Jackson, and the only property he retained after the transfer of the twoproperties to Appellant was the cabin in Pike County. Mesko Deposition Transcript, pp. 8-9, 64-65. Mesko's $500,000 debt to Appellee was greater than all of the assets Mesko owned subsequent to the transfer of the properties. Furthermore, Mesko was unable to pay the tax liability of the cabin property, which led to the loss of the property through sheriff's sale. Thus, Mesko paid neither the $500,000, judgment nor the taxes on the cabin property as they became due. This created a preswnption of . insolvency .requiring the .party against whom it was directed, Appellant in this matter.~ the. third C.) party recipient of the transferred property, to prove the nonexistence of insolvency was more probable than its existence. Appellant failed to present any evidence to prove the nonexistence of insolvency. Furthermore, the two transferred properties, valued at acombined $515,000, bad sufficient value to compensate Appellee for the $500,000 judgment. Thus, Mesko's insolvency was the result of the transfers of the two properties satisfying the final element of Section 5105.
[*13]5.). Appellant Failed to Provide Support for the Defense of Laehes
Appellant's Statement of Matters Complained of Number 5 .raises the defense of laches as adefense to Appellee's cause of action. Appellant failed to present thebasis for its claim to this Court. We note however that UFTA, 12 Pa.C.S. §5109(2)provides that a cause ofaction with respect to a fraudulent transfer is extinguished unless the action is brought "under section 5104(a)(2) or 5105 (relating to transfers fraudulent as to present creditors), within four years after the transfer was made or the obligation was incurred." The transfers of the properties in this matter occurred on October 12, 2010 and Plaintiff initiated the cause of action via writ of summons on May 3, 2013. Therefore, the cause of action was timely filed pursuant to the statutory four (4) year standard.
Furthermore, the equitable defense oflaches "requires not only an unjustified delay, but also that the opposing party's position or rights be prejudiced as a result of that delay." Class of Two Hundred Admin. Faculty Members of State· Colleges in Com., by Reeser v. Scanlon, 466 A.2d 103, 105 (Pa._ 1983). The $500,000 stipulated judgment obtained by Appellee in the underlying civil action was not indexed in the Lehigh County Court of Common Pleas until December 14, 2012. Approximately five (5) monthslater, Appellee initiated the instant action to collect upon said judgment. Appellant failed to present evidence to support a meritorious defense through the laches doctrine, (\ ) .
[*14]. !··· ( <.. ) remainder of $65,000 in equity. Thus, the combined equity value of the properties, $315,000, () was awarded to Appellee. II.. This Court properly ruled upon Appellee's Motion for Summary Judgment and Appellant's Motion to Vacate considering that all essential parties to the action were named by Appellee. .
[*15]Appellant argues in his sixth through ninth Matters Complained· of on Appeal that this Court erred in holding that Michael Mesko, Glenn Jackson, and Mesko Industries were not indispensable parties. These contentions will be discussed collectively below,
:Pa.R.C.P. § l 032 dictates that "whenever it appears by suggestion of the parties or otherwise that ... there has been a failure to join an indispensable party, the court shall order •.. that the indispensable party be Joined, but if that is not possible, then 'it shall dismiss the action." Generally, this Court will find that a party isindispensable to an equity action when:
... he has such an interest that a final decree cannot be made without affecting it, or leaving the controversy in such a condition that a fiaal determination may be wholly inconsistent with equity and good-conscience. That is to say, his· presence (') as a party is indispensable where his rights are so connected with the claims of the litigants that no decree can be made between them. without impairing such rights. Mechanicsburg Area Sch. Dist. v.'K.line, 431 A.2d 953., 956 (Pa. 1981).
· The Pennsylvania Supreme Court has offered at least four factors that a court should consider before making a determination as to the existence of an indispensable party. These 'include (1) whether an absent party has a right/interest related to the claim, (2) identifying that right/interest, (3) establishing whether that right/interest is essential to the merits of the case, and (4) ensuring that justice can be done without violating the due process rights of the absent party. Id. "All [these] considerations ... are themselves conclusions of law to be made by the court after due consideration. Bare factual allegations of a party arc not dispositive for. the issues underlying the indispensable party question." I~ at 958. n.8.
16'
To establish whether a right or interest is essential to the merits of the case requires a court to conduct a further inquiry. An absent party's asserted right must be "so essential to the merits of the question,' such that it must be 'so much affected by the decree, that the court cannot proceed to a final decision of the cause, until they are parties." lg, at 97, citing RusseUv. Clark's Ex'rs, 11 U.S. 69, 98 (1812). The Pennsylvania Supreme Court has further interpreted this question of essentialness to revolve around the directness of the connection between the asserted right and the particular case. In Columbia Gas Trans,portation Corp. v. Diamond Fuel Co., the Court held that "an indispensable party. is one whose rights are so directly connected with and affected ~Y litigation that he must be a party of record to protect such rights, and his absence renders any order or decree of court null and void for want of jurisdiction.'.' 346 A.2d 788, 789 (Pa 1975). The rights and interests asserted by Michael Mesko, Glenn Jackson, and Mesko Industries donot meet the abovementioned standard.
A. Michael Mesko () In his deed conveying the properties at issue to.Appellant,· Michael Mesko did not retain. any legal interest in those properties. Appellant alternatively claims that, as evidenced in Mesko' s deposition testimony, Mesko did retain an option to repurchase the properties as well as the promise-of future employment on the properties after his eventual release from incarceration. However, Pennsylvania law regarding contract interpretation is well-settled as follows:
The fundamental rule in contract interpretation is to ascertain the intent of the contracting parties. In cases of a written contract, the intent of the parties is the writing itself .... When the terms of a contract are clear and unambiguous, the . intent of the parties is to be ascertained from the document itself. Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co., 905 A.2d 462, 468 (Pa. 2006) (citations . omitted).
Mesko transferred . . each of the. properties at issue to MJC Industries,. Inc. in exchange ' .• for. . · . ·
· $1.00-by deeds dated October·12, 2010! :whereupon hedid not retain any interest to the . 17 •• properties. The terms of the contract are clear and unambiguous. There is no clause or any other indication that Mesko reserved a right for himself in the properties. As such; Mesko cannot satisfy even the first factor laid out by the Pennsylvania Supreme Court, that he has an existing right or interest. ,·· Appellant further offers that Mesko is an indispensable party due to his status as the transferor of the properties in this fraudulent transfer, claiming that a transferor must always be named in any action by a creditor. However, there is no support for this position in Pennsylvania law. In Temtex Products. Inc. v. Kramer, 479 A.2d 500 (Pa. Super. 1984) the SuperiorCourtwas presented with a situation where a creditor attempted to seek relief from a fraudulent transfer engaged in by a debtor. The debtor, who was the :fraudulent transferor, sought a stay of the action as a result of his pending bankruptcyproceeding; however, Superior Court denied bis motion. The Court reasoned that "[t]he BankruptcyCode does·not bar proceedings in a case in which the· bankruptcy debtor has no interest-in the property at issue." Id. at 509. We find this reasoning persuasive,' as Superior Court implicitly held that the transferor in a fraudulent transfer action has no interest in transferred property after completion · of the transfer.
We finally look to the Fraudulent Transfer Act itself to find support for our ruling that Mesko is not an-indispensable party. 12 Pa.C.$. § 5107(a) spec~fically provides, "[i]n an action for relief against a transfer or obligation under this chapter, a creditor ... may obtain:
(1) · Avoidance of the transfer or obligation to the extent necessary to ·satisfy the creditor's claim. (2) An attachment or other provisional remedy against the asset transferred or other . property of the transferee in accordance with the procedure prescribed by applicable law. · (3) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure: . (i) an injunction against further disposition by the debtor or a transferee, or ~~th,of~heasset transferred or.ofother ~roperty; . · (ii) appointment of a receiver to take charge of the asset transferred or of other () property of the transferee; or (iii) any other relief the circumstances may require." (emphasis added). The statute clearly authorizes a creditor to seek damages from the original transferor OR the transferee OR the asset transferred. The statute does not mandate that a transferor must be-named in a recovery action, and on its face, seems to suggest otherwise,
[*18]Additionally, and perhaps more significantly, the Comments to the statute offer further insight. In particular, Comment (4) r~ ' "As under the Uniform Fraudulent Conveyance Act, a creditoris not required to obtain ajudgment.against the debtor-transferor or to have a matured claim in order to proceed under subsection (a)." We observe that if a transferor were a necessary party to a fraudulent transfer action, it would be superfluous for the legislature to authorize a creditor t~ proceed without a judgment against ~ party that must be joined in the underlying action, Appellant's main argument for Mesko being an indispensable party would create a· logical incongruity within the statute itself: and therefore, it is without merit By allowing a creditor to proceed under the Act without obtaining a prior judgment against the transferor, the legislature asserts that such a party is not indispensable to the action. As a result of this finding, Mesko is. not an indispensable party.
B. Glenn Jackson
Glenn Jackson likewise fails to meet the standard to be considered an indispensable party as he does not have a direct right implicated in this litigation. Appellant stresses to this Court that as the owner and sole shareholder ofMJC Industries, Jackson has a corresponding interest in the outcome of this case. Appellant further claims that this right stems from the losses that Jackson stands to bear as. a result of this Court's potential entry of summary judgment against MJC Industries, his company. However, even if we accept Appellant's arguments, this right does not
19 l.) satisfy the third factor provided by the Pennsylvania Supreme Court, that any right must be essential to the merits of the case.
Inorder to be.essential, Jackson's right must be so "directly connected with and affected
by litigation that he must be a party of record to protect such.rights." The Superior Court, in deciding a case involving a shareholder's derivative action against the directors of its wholly owned subsidiary, provided the following in dicta: "An injury to a corporation may, to be sure, .
result in injury to the corporation's stockholders. Such injury, however, is regarded· as "indirect", and insufficient to give rise to a direct cause of action by the stockholder," Burdon v. Erskine, 401 A.2d 369, 370 (Pa. Super. 1979). While the case at bar involves a different factual scenario than Burdon, any injury that Jackson may suffer as a result of the present litigation would necessarily result from injury to MJC Industries. f',.s such, Jackson's interest would be derivative of his holdings in MJC Industries, which stands in stark contrast to having a direct interest
implicated in the litigation. (:) Furthermore, we observe that the Superior Court directly addressed Jackson's potential status as an indispensable party in its May 18, 2015 Memorandum Opinion, writing:
It would be unusual, to say the least, that Jackson would be an indispensable party solely based upon his ownership of MJC. On its face, this would run counter to one of the purposes of the corporate form: To create a separatelegal entity conferring upon its owner(s) the substantial benefit of protection from personal liability. Moreover, one need ponder only a moment to recognize that, were we to treat owners of corporate parties to litigation as indispensable to any litigation affecting the corporation, we would wreak havoc on the roles of shareholders in corporations subject to suit.
Super. Ct. Memorandum Opinion, 05/1&/15, p. 15. In remanding the case to this Court, the Superior Court qualified its view, adding:
However, we cannot say with certainty that factual matters not of record would ·· · · · · · reveal complications to this general.truth such that Jackson or Mesko.would emerge as indispensable. .,.,parties.. to this litigation. . .. ... . .. .. . . . . ... Tb.is ..is especially .. . . .. true. inasmuch . . . . .. the . as . .... / \_ ' )' ... '.
[*20]