J-A14027-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RX BILLING SERVICES, INC. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
JOSEPH FAZIO
Appellee No. 1778 MDA 2015
Appeal from the Order Entered September 16, 2015
In the Court of Common Pleas of Lackawanna County
Civil Division at No(s): 15 CV 3669
BEFORE: BOWES, J., OTT, J., and PLATT, J.*
MEMORANDUM BY OTT, J.: FILED FEBRUARY 17, 2017
RX Billing Services, Inc. (“RX Billing”), appeals from the order entered
September 16, 2015, in the Lackawanna County Court of Common Pleas,
granting the preliminary objections filed by Joseph Fazio (“Fazio”), and
dismissing RX Billing’s complaint. On appeal, RX Billing claims: (1) the
court erred in finding RX Billing did not set forth a cause of action for abuse
of process; (2) the trial court erroneously granted Fazio’s preliminary
objection by concluding RX Billing failed to set forth a viable claim for
wrongful use of civil proceedings pursuant to 42 Pa.C.S. § 8351;1 and (3)
assuming, arguendo, the complaint failed to set forth a valid claim, the court
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*
Retired Senior Judge assigned to the Superior Court.
1
Section 8351, et seq. is commonly known as the Dragonetti Act.
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erred in not allowing RX Billing to amend the complaint. 2 Based on the
following, we reverse the order granting Fazio’s preliminary objections and
remand for further proceedings.
The facts and procedural history are as follows. James B. Fazio,
Michael R. Fazio, and Kelly Gerrity (who collectively make up Appellant, RX
Billing) as well as Appellee, Fazio, are all family members who formed the
corporation, RX Billing Services, Inc., in 2001 to provide billing services to
physicians and medical facilities.
Around 2013, the relationship between RX Billing Services and Fazio
turned acrimonious. Ultimately, Fazio filed a lawsuit in December of 2014
against RX Billing Services in Lackawanna County at Docket No. 14-CV-
7438, alleging breach of contract and seeking dissolution of the corporation.
RX Billing Services filed preliminary objections, requesting the suit be
dismissed. Fazio filed a response in January of 2015. On March 25, 2015,
the trial court granted the preliminary objections, and dismissed the
complaint with prejudice. The order read as follows:
AND NOW, this 25th day of March 2015, it is hereby
ORDERED AND DECREED that [RX Billing]’s Preliminary
Objections are hereby GRANTED. THUS, IT IS FURTHER
ORDERED AND DECREED that accordingly, Count I and Count
II, are stricken from the Complaint, with prejudice.” (See,
3/25/2015 Order, Lackawanna County docket 14-CV-7438). As
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2
Based on the nature of our analysis, we have restructured RX Billing’s
issues for ease of disposition.
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the Complaint consisted of Counts I and II, the Order dismissed
it in its entirety.
Trial Court Opinion, 9/16/2015, at 2 n.1 (emphasis in original).
On June 4, 2015, RX Billing filed a complaint against Fazio, alleging
the following:
8. For more than 10 years, the individual parties harmoniously
operated the corporation and over the years, various family
members of the parties, including [Fazio]’s wife, worked for the
company.
9. Ultimately, [Fazio]’s wife began to fall behind in her work and
in July, 2013, she quit.
10. That same month, [Fazio] sent an email to [RX Billing]
demanding a list of the business clients within 72 hours and
payment of more than $1,000 per month out of the gross
receipts of the company. Alternatively, [Fazio] demanded that
the individual [p]laintiffs buy out his interest in the company at a
ridiculously inflated number which he deemed appropriate.
11. [Fazio] threatened that if his improper and illegal demands
were not met, he would file a lawsuit against [RX Billing] herein,
even though there was no basis for such a suit.
12. When [RX Billing] refused to submit to [Fazio]’s attempt to
extort money, [Fazio], as Secretary of the corporation, continued
to participate in corporate affairs and attend corporate meetings.
He dissented on every vote which was held and sought to
prevent the company from moving forward.
13. Unhappy that he was being outvoted, and that [RX Billing]
refused to submit to his improper and illegal demands, [Fazio]
made good on his threat of filing a baseless lawsuit.
14. On December 8, 2014, [Fazio] filed a baseless and frivolous
lawsuit against [RX Billing] seeking in excess of $50,000.00 all in
a malicious effort to harass and intimidate them into submitting
to his demands and/or to cause financial and emotional injury to
them, knowing that it would cost [RX Billing] money and time to
litigate [Fazio]’s baseless suit.
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Complaint, 6/4/2014, at 3-4.3
On July 7, 2015, Fazio filed preliminary objections to RX Billing’s
complaint. He alleged RX Billing’s complaint fails in the following way:
5. [RX Billing’s] complaint fails to identify in a concise form the
material facts upon which the purported cause of action is based
in that [RX Billing] fail[s] to identify or allege facts which
establish an improper purpose/[abuse] of process by [Fazio].
6. [RX Billing’s] complaint fails to identify in a concise form
material facts to establish the nature or extent of
harm/damages.
7. [RX Billing’s] complaint fails to state sufficient material facts
to establish a claim for abuse of process as it fails to factually
specifically identify any actionable harm to [RX Billing] and as it
fails to establish or define the alleged monetary loss.
8. [RX Billing’s] complaint fails to state sufficient material facts
to establish a claim for abuse of process as it fails to factually
identify the act or threat not authorized by process.
Preliminary Objections, 7/7/2015, at ¶¶ 5-8.
Oral argument was heard before the court. On September 16, 2015,
in an order and corresponding memorandum, the trial court granted Fazio’s
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3
Fazio, however, asserts the disagreement arose over his “believed failure
to receive his share of the Corporation’s more than $27,000.00 in earned
profits, as well as $6,825.00 in ordinary income, for the tax year 2013,” and
led him to file the December 2014 lawsuit. Fazio’s Brief at 2.
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preliminary objections and dismissed RX Billing’s complaint. This appeal
followed.4
Our standard of review regarding a trial court’s decision to sustain
preliminary objections is well settled:
Our standard of review of an order of the trial court
overruling or [sustaining] preliminary objections is to determine
whether the trial court committed an error of law. When
considering the appropriateness of a ruling on preliminary
objections, the appellate court must apply the same standard as
the trial court.
Preliminary objections in the nature of a demurrer test the
legal sufficiency of the complaint. When considering preliminary
objections, all material facts set forth in the challenged pleadings
are admitted as true, as well as all inferences reasonably
deducible therefrom. Preliminary objections which seek the
dismissal of a cause of action should be sustained only in cases
in which it is clear and free from doubt that the pleader will be
unable to prove facts legally sufficient to establish the right to
relief. If any doubt exists as to whether a demurrer should be
sustained, it should be resolved in favor of overruling the
preliminary objections.
Feingold v. Hendrzak, 15 A.3d 937, 941 (Pa. Super. 2011) (internal
citation omitted).
In some contexts, when issues of fact are raised by preliminary
objections, the trial court may receive evidence by depositions or
otherwise. Pa.R.Civ.P. 1028, 42 Pa.C.S.A.; Slota v. The
Moorings, Ltd., 343 Pa.Super. 96, 494 A.2d 1 (1985).
However, preliminary objections in the nature of a demurrer
require the court to resolve the issues solely on the basis of the
pleadings; no testimony or other evidence outside of the
complaint may be considered to dispose of the legal issues
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4
The court did not order RX Billing to file a concise statement of errors
complained of on appeal under Pa.R.A.P. 1925(b).
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presented by a demurrer. International Union of Operating
Engineers, Local No. 66 v. Linesville Construction
Company, 457 Pa. 220, 322 A.2d 353 (1974). In order to
sustain a demurrer, it is essential that the face of the complaint
indicate that its claims may not be sustained and that the law
will not permit a recovery. Gekas v. Shapp, 469 Pa. 1, 364
A.2d 691 (1976). If there is any doubt, it should be resolved by
the overruling of the demurrer. Gekas v. Shapp, Id.
Mellon Bank, N.A. v. Fabinyi, 650 A.2d 895, 899 (Pa. Super. 1994).
In RX Billing’s first issue, it claims the court erred in concluding it did
not set forth an abuse of process claim. See RX Billing’s Brief at 15.
Specifically, RX Billing states that in the complaint, it alleged: (1) Fazio used
a legal process against it; (2) his actions were used to accomplish a purpose
for which the process was not designed – to harass and intimidate RX Billing
in attempt to extort money from them; and (3) RX Billing was caused both
financial and emotional harm. See id. at 16-17. RX Billing also asserts:
[T]he trial court improperly acted as factfinder and concluded
that [RX Billing] failed to “demonstrate” or prove that [Fazio]
“acted primarily to accomplish a purpose for which the process
was not designed.” The court concluded that “[RX Billing]
fail[ed] to establish [Fazio]’s litigation was primarily to
accomplish a purpose other than that which it was designed to
accomplish.”
Id. at 17. Moreover, RX Billing contends the trial court imposed an
additional requirement upon RX Billing, wherein the court “found that since
the underlying action never made it past the pleading stage, because it was
dismissed by the court at its first opportunity, there could not have been an
abuse of process.” Id. at 17-18.
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Pennsylvania common law defines a cause of action for abuse of
process as follows:
The tort of “abuse of process” is defined as the use of legal
process against another primarily to accomplish a purpose
for which it is not designed. To establish a claim for abuse
of process it must be shown that the defendant (1) used a
legal process against the plaintiff, (2) primarily to
accomplish a purpose for which the process was not
designed; and (3) harm has been caused to the plaintiff.
This tort differs from that of wrongful use of civil
proceedings in that, in the former, the existence of
probable cause to employ the particular process for its
intended use is immaterial. The gravamen of abuse of
process is the perversion of the particular legal process for
a purpose of benefit to the defendant, which is not an
authorized goal of the procedure. In support of this claim,
the [plaintiff] must show some definite act or threat not
authorized by the process, or aimed at an objective not
legitimate in the use of the process…; and there is no
liability where the defendant has done nothing more than
carry out the process to its authorized conclusion, even
though with bad intentions.
Shiner v. Moriarty, 706 A.2d 1228, 1236 (Pa. Super. 1998),
appeal denied, 556 Pa. 711, 729 A.2d 1130 (1998).
The gravamen of the misconduct for which the liability
stated … is imposed is not the wrongful procurement of
legal process or the wrongful initiation of criminal or civil
proceedings; it is the misuse of process, no matter how
properly obtained, for any purpose other than that which it
was designed to accomplish. Therefore, it is immaterial
that the process was properly issued, that it was obtained
in the course of proceedings that were brought with
probable cause and for a proper purpose, or even that the
proceedings terminated in favor of the person instituting or
initiating them. The subsequent misuse of the process,
though properly obtained, constitutes the misconduct for
which the liability is imposed….
Rosen v. American Bank of Rolla, 426 Pa. Super. 376, 627
A.2d 190, 192 (Pa. Super. 1993).
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Lerner v. Lerner, 954 A.2d 1229, 1238-1239 (Pa. Super. 2008).
Here, the trial court found the following:
Applying the elements of an Abuse of Process claim to [RX
Billing’s] Complaint reveals the claim must fail, as [RX Billing
has] failed to demonstrate [Fazio] acted primarily to accomplish
a purpose for which the process was not designed.
Tur[n]ing to the Complaint, [RX Billing] make[s] vague
allegations that [Fazio] presented “improper and illegal
demands” upon them, and ultimately when such demands were
not met, filed a “baseless and frivolous lawsuit.” [RX Billing]
further allege[s] that [Fazio], while acting within his corporate
capacity dissented on every vote in an attempt to derail the
corporation. As [RX Billing] fail[s] to establish [Fazio]’s litigation
was primarily to accomplish a purpose other than that which i[t]
was designed to accomplish, [RX Billing’s] claim must fail.
Considering the short life-span of the underlying litigation
(approximately four months) as well as the fact that the docket
reveals it never proceeded past preliminary objections (See,
Lackawanna County docket no 14-CV-7438) [RX Billing is]
unable to submit that [Fazio] morphed an otherwise legitimate
process into an illegitimate one by the methods used to proceed.
Clearly, the actions taken in the underlying case were minimal
based upon its short life-span.
Trial Court Opinion, 9/16/2015, at 6-7.
We disagree. Our review of RX Billing’s complaint reveals that it did
sufficiently plead an abuse of process cause of action. Specifically, RX Billing
alleged:
14. On December 8, 2014, [Fazio] filed a baseless and frivolous
lawsuit against [RX Billing] seeking in excess of $50,000.00 all in
a malicious effort to harass and intimidate them into submitting
to his demands and/or to cause financial and emotion injury to
them, knowing that it would cost [RX Billing] money and time to
litigate [Fazio]’s baseless suit.
…
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18. Given the baseless nature of the suit which was filed, [RX
Billing] wrote to [Fazio] and demanded that he withdraw the
baseless suit he filed. See letter attached hereto as Exhibit “A”.
19. Instead of withdrawing the baseless suit he filed, [Fazio]
again attempted to extort money from [RX Billing] by suggesting
they settle the baseless suit he filed.
20. On or about December 23, 2015, [RX Billing] herein filed
Preliminary Objections to the baseless and frivolous lawsuit
brought against them by [Fazio].
21. On or about March 25, 2015, after briefing and oral
argument, this honorable court sustained the Preliminary
Objections and dismissed with prejudice the baseless and
frivolous Complaint which had been filed. See Order attached
hereto as Exhibit “B”.
…
24. [Fazio] wrongfully used and abused the legal process
against [RX Billing] in an effort to harass and intimidate them
into submitting to his unreasonable demands and/or to cause
financial and emotional injury to them, knowing that it would
cost [RX Billing] money and time to litigate [Fazio]’s baseless
suit.
25. [Fazio] used and perverted the legal process in an effort to
accomplish purposes for which it was not designed.
26. As a direct and proximate result of [Fazio]’s aforementioned
malicious abuses of process, [RX Billing has] been caused to
expend considerable time, effort and money to defend the
baseless and frivolous suit brought by [Fazio].
Complaint, 6/4/2014, at 4-7.
RX Billing’s averments plainly, although generally, set forth the
elements for an abuse of process claim: (1) Fazio used the underlying legal
suit against RX Billing, (2) with the primary purpose for which the process
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was not designed – to harass and intimidate RX Billing into submitting to his
demands; and (3) harm, in the form of effort and costs, has been caused to
RX Billing. See Shiner, supra. Indeed, one can reasonably infer the crux
of RX Billing’s complaint is Fazio misused the underlying legal proceeding to
seek retribution for his wife’s departure as an employee at the corporation.
Based on our standard of review with regard to preliminary objections, at
this time in the procedural posture of the case, it is not “clear and free from
doubt” that RX Billing “will be unable to prove facts legally sufficient to
establish [its] right to relief.” Feingold, 15 A.3d at 941.
It merits mention again that “preliminary objections in the nature of a
demurrer require the court to resolve the issues solely on the basis of the
pleadings” and “no testimony or other evidence outside of the complaint
may be considered to dispose of the legal issues[.]” Mellon Bank, N.A.,
650 A.2d at 899. Here, and contrary to the trial court’s emphasis, we note
the duration of a litigation proceeding is not an essential criteria for an abuse
of process claim. Whether a lawsuit persists for two weeks or several years,
the parties still incur costs to defend, which may constitute harm/damage.
Accordingly, we find the trial court erred in determining RX Billing’s
complaint did not plead, with legal sufficiency, the elements necessary to
prove an abuse of process claim.
With respect to RX Billing’s remaining two issues, we will address them
together. In RX Billing’s second issue, it contends the court erred in
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concluding that it had failed to set forth a viable Dragonetti Act claim.
Specifically, RX Billing argues its complaint sets forth all the necessary
elements for wrongful use of civil proceedings: (1) Fazio initiated and
continued a civil proceeding against RX Billing; (2) Fazio lacked probable
cause to pursue the suit based on the allegation that after his wife quit
working for the corporation, he threatened to file, and actually did file, a
baseless lawsuit when RX Billing did not submit to his demands, and he
sought to dissolve the corporation by falsely claiming that it was not viable
when he knew that it was; (3) when Fazio was requested to withdraw the
suit, he refused to do so and used the baseless suit in an effort to extort
money from RX Billing Services as well as continuing the baseless process
which he began; and (4) the earlier lawsuit was terminated in favor of RX
Billing. Id. at 13-14.5 With respect to RX Billing’s final claim, it states that
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5
Moreover, RX Billing claims:
Rather than looking at the allegations of the Complaint,
the trial court acted as finder of fact and concluded that [RX
Billing] failed to present “evidence” or “demonstrate” that [Fazio]
acted without probable cause. The trial court improperly
concluded that the underlying complaint “demonstrates a
[legitimate] dispute between the parties.”
At the preliminary objection stage, [RX Billing] need not
present “evidence” or “demonstrate” the strength of their claim.
It is for the factfinder at trial, not the court at the preliminary
objection stage, to determine if the underlying suit was
legitimate. [RX Billing] need only “allege” these things. That
was done here and the trial court clearly erred in requiring more.
(Footnote Continued Next Page)
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if the complaint failed to set forth a valid claim, the court erred in failing to
allow an amendment. Id. at 18. RX Billing states: “Even where a trial
court sustains preliminary objections on their merits, it is generally an abuse
of discretion to dismiss a complaint without leave to amend.” Id., citing In
re Luongo, 823 A.2d 942 (Pa. Super. 2003), appeal denied, 847 A.2d 1287
(Pa. 2003).
Before we may address the merits of these claims, we note RX Billing
did not raise a Dragonetti Act cause of action6 in its complaint. See
_______________________
(Footnote Continued)
The court further concluded that the claim fails because
the judge in the underlying suit did not issue an opinion as to
why that action was dismissed. The court improperly imposed
upon [RX Billing] an additional element which is not required in a
wrongful use of civil proceedings claim. By requiring proof, in
the form of an opinion, that the underlying action was dismissed
because it was wrongfully brought, the trial court essentially
required [RX Billing] to prove their wrongful use of civil
proceedings claim in the underlying action rather than in the
current action. This is completely contrary to the law.2
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2
Despite [the trial court]’s contention, it is clear that the
underlying action was dismissed because it had no basis in
law or fact. [Fazio] herein took no appeal from that
dismissal.
___________________
Id. at 14-15 (reproduced record citations).
6
The Dragonetti Act defines a cause of action for wrongful use of civil
proceedings, in pertinent part, as follows:
(Footnote Continued Next Page)
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Complaint, 6/4/2014, at 2-7. As the trial court points out, RX Billing raised
the Dragonetti Act claim for the first time in its brief in opposition to Fazio’s
preliminary objections. See Trial Court Opinion, 9/16/2015, at 3-4
(“Although [RX Billing’s] Complaint appears to set forth a claim for an Abuse
of Process action, [its] brief in opposition to [Joseph Fazio]’s Preliminary
Objections indicates the Complaint seeks recovery under the Dragonetti
Statute (42 Pa.C.S.A. §8351); however, [RX Billing’s] legal argument
contained within their brief is focused on the tort of Abuse of Process.”); see
also RX Billing’s Brief in Opposition to Preliminary Objections, 9/1/2015, at
5-7. Nevertheless, the trial court addressed both causes of action in its
companion memorandum to the September 16, 2015, order sustaining
Fazio’s preliminary objections and dismissing RX Billing’s complaint.
_______________________
(Footnote Continued)
(a) Elements of action.-- A person who takes part in the
procurement, initiation or continuation of civil proceedings
against another is subject to liability to the other for wrongful
use of civil proceedings:
(1) he acts in a grossly negligent manner or without
probable cause and primarily for a purpose other than that
of securing the proper discovery, joinder of parties or
adjudication of the claim in which the proceedings are
based; and
(2) the proceedings have terminated in favor of the person
against whom they are brought.
42 Pa.C.S. § 8351(a). “The essence of the tort of wrongful use of civil
proceedings is the institution of a civil action for a malicious purpose and
without probable cause.” Rosen v. Am. Bank, 627 A.2d 190, 193 (Pa.
Super. 1993).
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With respect to this procedural predicament, we are guided by the
following:
It is not necessary that a plaintiff identify the specific legal
theory underlying the complaint. Burnside v. Abbott
Laboratories, 351 Pa. Super. 264, 505 A.2d 973, 980 (Pa.
Super. 1985); Weiss v. Equibank, 313 Pa. Super. 446, 460
A.2d 271, 275 (Pa. Super. 1983). Yet, pursuant to Pa.R.C.P.
1019(a), a complaint must not only apprise the defendant of the
claim being asserted, but must also summarize the essential
facts to support the claim. Dickerson v. Brind Truck Leasing,
362 Pa. Super. 341, 524 A.2d 908, 910 (Pa. Super. 1987);
Burnside, 505 A.2d at 980; Weiss, 460 A.2d at 274-75; Alpha
Tau Omega Fraternity v. University of Pennsylvania, 318
Pa. Super. 293, 464 A.2d 1349, 1352 (Pa. Super. 1983). If a
plaintiff fails properly to plead a separate cause of action, the
cause he did not plead is waived. Garcia v. Community Legal
Services Corp., 362 Pa. Super. 484, 524 A.2d 980, 982 (Pa.
Super. 1987). We recognize that the Rules of Civil Procedure
are to be interpreted liberally. See Pa.R.C.P. 126. “However,
liberal construction does not entail total disregard of those rules
concerning pleading.” Duquesne Light Co. v. U.S. Indus.
Fabricators, 334 Pa. Super. 444, 483 A.2d 534, 536 (Pa.
Super. 1984).
Zitney v. Appalachian Timber Prods., 72 A.3d 281, 290-291 (Pa. Super.
2013).
Furthermore, Pennsylvania Rule of Civil Procedure 1028 states, in
pertinent part: “A party may file an amended pleading as of course within
twenty days after service of a copy of preliminary objections.” Pa.R.C.P.
1028(c)(1). Nevertheless, a panel of this Court has opined:
A busy trial judge is entitled, and required, to rely on the
pleadings in deciding preliminary objections to the sufficiency of
the complaint. See, Morley v. Gory, 2002 PA Super 421, 814
A.2d 762, 764 (Pa. Super. 2002) (preliminary objections in the
nature of demurrer require court to resolve issues solely on basis
of pleadings). The trial court does not have to use a fine-tooth
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comb on each exhibit to see if there is some factual basis for a
cause of action not pled by a party. Likewise, there is no
obligation to allow an amendment of pleadings after a party
loses.
Phila. Factors, Inc. v. Working Data Grp., Inc., 849 A.2d 1261, 1264
(Pa. Super. 2004).
Here, RX Billing did not set forth a separate Dragonetti Act count in its
complaint, and more importantly, it did not provide any Dragonetti Act
terminology like “grossly negligent manner” or “without probable cause” to
maintain such an cause of action. See 42 Pa.C.S. § 8351(a). Furthermore,
Fazio only responded to the abuse of process cause of action in his
preliminary objections. See Preliminary Objections, 7/7/2015. Additionally,
there is no indication in the record that RX Billing sought, either by filed
consent of Fazio or by leave of court, to amend its complaint when Fazio
filed his preliminary objections or when the trial court dismissed its
complaint.7 Accordingly, RX Billing’s Dragonetti Act and amended pleading
issues do not appear to be properly before us.8 As such, we need not
address these claims further as any analysis would amount to an advisory
opinion. See Sedat, Inc. v. Fisher, 617 A.2d 1, 4 (Pa. Super. 1992) (“An
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7
It merits mention that when the trial court entered the order dismissing
RX Billing’s complaint, it did not indicate whether it was with or without
prejudice. See Order, 9/16/2015.
8
Upon remand, RX Billing may seek permission to file an amended
complaint in order to raise a Dragonetti Act claim.
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advisory opinion is one which is unnecessary to decide the issue before the
court, and … the courts of this Commonwealth are precluded from issuing
such advisory opinions.”); U.S. Bank, N.A. v. Pautenis, 118 A.3d 386, 403
(Pa. Super. 2015) (same).
In conclusion, because we find the trial court committed an error of
law in sustaining Joseph Fazio’s preliminary objections, we reverse the
court’s order and remand for proceedings consistent with this memorandum.
Order reversed. Case remanded for proceedings consistent with this
memorandum. Jurisdiction relinquished.
Judge Platt joins this memorandum.
Judge Bowes files a concurring and dissenting memorandum.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/17/2017
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RX Billing Services, Inc. v. Fazio, J.
Combined Opinion