Kaplan v. I. Kaplan, Inc.

619 A.2d 322, 422 Pa. Super. 215, 1993 Pa. Super. LEXIS 1078
CourtSuperior Court of Pennsylvania
DecidedJanuary 13, 1993
Docket384
StatusPublished
Cited by8 cases

This text of 619 A.2d 322 (Kaplan v. I. Kaplan, Inc.) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kaplan v. I. Kaplan, Inc., 619 A.2d 322, 422 Pa. Super. 215, 1993 Pa. Super. LEXIS 1078 (Pa. Ct. App. 1993).

Opinion

BECK, Judge:

This is an appeal from an Order granting Supplementary Relief in Aid of Execution under Pennsylvania Rule of Civil Procedure 3118. Because we believe that the trial court acted within its discretion in granting the relief sought, we affirm.

In mid-1987, brothers Saul and Harold Kaplan, appellees herein, sold to MGS Acquisition Corporation (MGS) all of their shares in I. Kaplan Inc., a slaughtering and veal processing operation in Olyphant, PA. Each brother owned a 50% share in the company. Following the transfer, MGS changed its name to I. Kaplan, Inc., one of the appellants herein. Appellants’ brief explains in detail the financing terms associated with the sale, including the involvement of the Bank of New Zealand (Bank), which made certain loans to MGS in order to facilitate the purchase. In return for their stock, appellees received from I. Kaplan, Inc. a $500,000. note which contained a confession of judgment provision. The note was due on the earliest of: six years from the date of the note, one year after repayment of the debt to the Bank or upon the refinancing of the debt to the Bank. The note also provided that the debt to the Kaplans was subordinate to the debt to the Bank.

In May, 1991, apparently due to business difficulties, I. Kaplan, Inc. defaulted on its payments to the Bank. Pursuant to an agreement between I. Kaplan, Inc. and the Bank, I. *218 Kaplan, Inc. was acquired by Atlantic Veal and Lamb, Inc. (Atlantic). Atlantic paid the purchase price to acquire I. Kaplan, Inc., $590,000, directly to the Bank. I. Kaplan Inc. remained indebted to the Bank for $650,000. 1 On July 2, 1991 appellees filed a Complaint in Confession of Judgment against appellants; the judgment was entered on that date by the Clerk of Judicial Records of Lackawanna County. Thereafter, appellants filed a Petition to Strike Off or Open Judgment Entered by Confession. The Petition to Strike was denied; however, the Petition to Open was still undecided at the time of argument in the instant matter.

In December 1991, in response to Atlantic’s removal of equipment from the Olyphant plant, appellees filed a Petition For Supplementary Relief in Aid of Execution under Pa. R.C.P. 3118. The petition was granted on December 31, 1991; as a result, appellants were, inter alia, enjoined from removing any machinery or equipment from the Olyphant plant. 2 Appellants timely filed this appeal from the trial court’s order.

In support of its position that the trial court erred in granting relief under Rule 3118, appellants attack the validity of the Judgment entered in this matter and assert that, in order to receive Rule 3118 relief, appellees were required to establish the requirements for a traditional injunction. Atlantic offers several reasons why the underlying judgment is facially invalid, including that Atlantic cannot be subject to the warrant of attorney provision because it was not a signator to the agreement and that, in any event, appellees are not entitled to confess judgment because the agreement requires a default prior to confession, which has not occurred in this case. *219 While these arguments may or may not have substantive merit as to the validity of the judgment, we believe that, procedurally, we are precluded from considering appellants’ assertions on this issue. 3

A grant of relief by a trial court under the authority of Rule 3118 is reviewed for an abuse of discretion. Chadwin v. Krouse, 254 Pa.Super. 445, 386 A.2d 33 (1978). In the instant matter, the parties are in disagreement over what a party is required to establish at a Rule 3118 proceeding. This is not surprising considering the lack of case law addressing the issue and the lack of direction given in the few opinions which have reviewed orders under the rule. Appellants claim that the lower court should have reviewed the validity of the judgment, as well as required appellees to establish the traditional prerequisites for an injunction, specifically, a clear right to relief, great and irreparable harm, and greater injury in denying injunctive relief than in granting it. Appellees, on the other hand, state that relief under Rule 3118 requires no such showing.

“Rule 3118 authorizes summary proceedings in aid of execution for the purpose of maintaining the status quo of the judgment debtor’s property and may be used only for that purpose.” 4 Greater Valley Terminal Corporation v. Good *220 man, 415 Pa. 1, 8, 202 A.2d 89, 94 (1964). In Greater Valley, a judgment creditor sought to set aside alleged fraudulent transfers of the judgment debtor in a proceeding under Rule 3118. The judgment debtor challenged the court’s authority to grant the relief, but the trial court held that full equitable relief was available under Rule 3118 and set aside the conveyances of stock certificates as fraudulent. In holding that the trial court erred, our supreme court stated that the right to supplementary relief under Rule 3118 is given “without the necessity of full dress equity proceedings” and that the rule “envisions something less than a full hearing prior to the granting of relief.” Icl. at 6, 202 A.2d at 93.

In Chadwin v. Krouse, 254 Pa.Super. 445, 386 A.2d 33 (1978), a panel of this court relied on Greater Valley in holding that the summary nature of Rule 3118 proceedings did not permit the trial court to compel a judgment debtor to bring property into the state when there was no evidence that it was ever removed therefrom. Id. at 451, 386 A.2d at 36. The judgment creditor in Chadwin sought to have the debtor deliver to the sheriff securities which were, at all times, located out of state. The court distinguished relief requested under Rule 3118 from traditional injunctive relief and explained: “It is the streamlined nature of a Rule 3118 proceeding, however, which militates against its use for any purpose other than to maintain the status quo with respect to the debtor’s assets.” Id. at 452, 386 A.2d at 37 (emphasis supplied).

We are aware that in these cases, the courts’ insistence that the Rule 3118 proceeding be narrowly focused was of benefit to the debtor, whereas here, it is the debtor who is requesting that the court consider the underlying issues in a broader context. However, the rule of law we extract from *221 the case law is that the nature of a Rule 3118 proceeding is strictly limited, regardless of which party is assisted thereby. We are convinced by the rationale of Greater Valley and Chadwin that the predicates to Rule 3118 relief in this case are the existence of an underlying judgment and property of the debtor subject to execution.

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Cite This Page — Counsel Stack

Bluebook (online)
619 A.2d 322, 422 Pa. Super. 215, 1993 Pa. Super. LEXIS 1078, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kaplan-v-i-kaplan-inc-pasuperct-1993.