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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RONALD SCOTT HANGEY AND : IN THE SUPERIOR COURT OF
ROSEMARY HANGEY H/W : PENNSYLVANIA
:
Appellant :
:
:
v. :
:
: No. 3298 EDA 2017
HUSQVARNA PROFESSIONAL :
PRODUCTS, INC., HUSQVARNA :
GROUP, HUSQVARNA U.S. HOLDING, :
INC., HUSQVARNA AB, AND :
TRUMBAUER'S LAWN AND :
RECREATION, INC. :
Appeal from the Order September 7, 2017
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): No. 1015 March Term, 2017
BEFORE: PANELLA, J., OLSON, J., and McLAUGHLIN, J.
DISSENTING MEMORANDUM BY OLSON, J.: FILED APRIL 01, 2019
I agree with the bulk of the learned majority’s thorough and well-written
memorandum. Indeed, I agree with the majority’s factual and procedural
recitation, with much of its able summary of our law and precedent, and with
its acknowledgement that we review the trial court’s venue decision under an
abuse of discretion standard. See Majority Memorandum at *5; see also
Krosnowski v. Ward, 836 A.2d 143, 146 (Pa. Super. 2003) (en banc) (“[a]
trial court's ruling on venue will not be disturbed if the decision is reasonable
in light of the facts. A decision to transfer venue will not be reversed unless
the trial court abused its discretion. . . . [I]f there exists any proper basis for
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the trial court's decision to grant the petition to transfer venue, the decision
must stand”) (quotations and citations omitted). Nevertheless, I respectfully
disagree with the majority’s conclusion that the trial court abused its discretion
in this case. I believe that the trial court’s determination – that the qualitative
acts Defendant Husqvarna Professional Products, Inc. (hereinafter “HPP”)
performed in Philadelphia County were not “so continuous and sufficient to be
termed general or habitual” – was reasonable in light of our fairly muddled
precedent and the facts of this case. Therefore, I would affirm the trial court
and must respectfully dissent from the learned majority’s decision.
As the majority notes, the key issue on appeal is whether venue in
Philadelphia may be laid against HPP, as HPP is the only remaining defendant
that could arguably be deemed to “regularly conduct business” in Philadelphia
County. See Trial Court Opinion, 3/2/18, at 2; see also Appellants’ Brief at
16. If venue in Philadelphia County is proper as to HPP, Appellants may
maintain their “action to enforce . . . joint and several liability against”
Defendants HPP, Husqvarna Group, and Trumbauer’s Lawn and Recreation,
Inc. in Philadelphia. See Pa.R.C.P. 1006(c)(1) (“an action to enforce a joint
or joint and several liability against two or more defendants . . . may be
brought against all defendants in any county in which the venue may be laid
against any one of the defendants”).
Pennsylvania Rule of Civil Procedure 2179 prescribes venue for personal
actions against corporations. See Pa.R.C.P. 1006(b) (“[a]ctions against the
following defendants, except as otherwise provided in subdivision (c), may be
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brought in and only in the counties designated by the following rules: . . .
corporations and similar entities, Rule 2179”). As is relevant to the current
appeal, Rule 2179(a)(2) declares: “a personal action against a corporation or
similar entity may be brought in and only in . . . a county where it regularly
conducts business.” Pa.R.C.P. 2179(a)(2).1
Our Supreme Court has held that the determination of whether a
corporation “regularly conducts business” in a particular county depends upon
the “quality” and “quantity” of the business conducted within the county.
Thus, for a corporation to “regularly conduct business” in a county:
the business engaged in must be sufficient in quantity and
quality. The term “quality of acts” means those directly,
furthering, or essential to, corporate objects; they do not
include incidental acts. By “quantity of acts” is meant those
which are so continuous and sufficient to be termed general
or habitual. A single act is not enough.
Monaco v. Montgomery Cab Co., 208 A.2d 252, 256 (Pa. 1965) (corrections
and some quotations omitted), quoting Shambe v. Delaware & H.R. Co.,
135 A. 755, 757 (Pa. 1927).
In essence, the venue criteria found at Rule 2179(a)(2) “provide[] a
theory of transient jurisdiction by counties in which the corporation is present
by virtue of its business activities or contacts. In this circumstance, and
provided that the business contacts are more than incidental, a corporation
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1Rule 2179 lists other circumstances in which a plaintiff may properly bring a
personal action against a corporation in a certain county. See Pa.R.C.P. 2179.
However, no other circumstance is applicable to the current appeal. See
Appellants’ Brief at 16.
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can be compelled to defend itself.” Purcell v. Bryn Mawr Hosp., 579 A.2d
1282, 1284 (Pa. 1990). The rationale and purpose of the rule is to “permit a
plaintiff to institute suit against the defendant in the county most convenient
for him and his witnesses” while, at the same time, assuring that “the
corporation which has been sued ha[s] sufficient connection to the county.”
Burdett Oxygen Co. v. I.R. Wolfe & Sons, Inc., 249 A.2d 299, 302 (Pa.
1969) (quotations and citations omitted); Purcell, 579 A.2d at 1286.
As the trial court and the parties agree, “there is no question Defendant
[HPP’s] activities in Philadelphia satisfy the ‘quality’ prong” of the “regularly
conducts business” test. Trial Court Opinion, 3/2/18, at 5; see also
Appellants’ Brief at 19; Appellees’ Brief at 22. This is because:
Defendant [HPP] is in the business of distributing consumer
outdoor products, such as lawnmowers, to retailers, who in
turn sell the products to consumers. The uncontroverted
evidence shows Defendant [HPP] furthers this business
objective by distributing products to two Philadelphia
retailers, predominantly DL Electronics, Inc. For this reason,
the activities of [HPP] satisfy the “quality” prong of the [test].
Trial Court Opinion, 3/2/18, at 5 (citations and footnote omitted).
The dispute in the case at bar centers upon the “quantity” prong of the
test. As the trial court explained, Appellants failed to demonstrate that HPP’s
qualitative acts were “so continuous and sufficient to be termed general or
habitual”:
Here, the evidence of record shows that in 2016, only
$75,310.00 out of Defendant [HPP’s] $1.393 billion national
revenue came from direct sales in Philadelphia County; this
amounts to 0.005% of Defendant [HPP’s] annual revenue
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that is attributable to direct sales in Philadelphia County. The
figures from 2014 and 2015 are similar. This de minimis
amount of business . . . is not general and habitual. . . .
Trial Court Opinion, 3/2/18, at 6.
On appeal, Appellants claim that the trial court erred in concluding that
HPP’s qualitative acts in Philadelphia do not satisfy the “quantity” prong of the
test. In particular, Appellants claim, the record evidence demonstrates that
“[HPP’s] consumer outdoor products are continuously offered for sale in
Philadelphia County, and because the sales of those products in Philadelphia
County are occurring on a frequent and recurring basis,” HPP’s qualitative acts
are “so continuous and sufficient to be termed general or habitual.”
Appellants’ Brief at 28.2 Moreover, Appellants claim that the trial court erred
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2 Appellants also claim that the trial court erred when it failed to take into
consideration the “[HPP’s] products sold at big box retailers such as Lowe’s.”
Appellants’ Brief at 26. However, as the trial court explained, HPP does not
sell its products to the “big box retailers” in Philadelphia:
In the case of “big box” retailers, John Stanfield, the
corporate representative for [HPP], testified that [HPP]
delivers its products to the retailers’ distribution
centers, none of which are located in Philadelphia
County. Once the [HPP] products are delivered to the
retailers’ distribution centers, the retailers retain sole
discretion as to where the products will be offered for
sale, including stores located in Philadelphia County.
Trial Court Opinion, 3/2/18, at 3 (emphasis added).
Moreover, and regardless, even if these sales could be considered “direct” –
and not “incidental” – acts of HPP in Philadelphia, Appellants’ claim of error
immediately fails because the record contains no evidence regarding the
quantity of the “big box retailer” sales. Therefore, Appellants cannot establish
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when, in concluding that HPP’s acts did not satisfy the “quantity” prong, the
trial court “focus[ed] exclusively on the numerical result obtained from
dividing the supposed total amount of sales in Philadelphia County by the total
amount of sales nationwide.” Id. at 20. The majority agrees with Appellants
and concludes that the trial court abused its discretion in this case. I disagree.
I believe that the trial court was well within its discretion when it sustained
the preliminary objections to venue.
As noted, for purposes of establishing venue, our Supreme Court has
defined the term “quantity of acts” as acts that “are so continuous and
sufficient to be termed general or habitual. A single act is not enough.”
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that any alleged trial court error caused them prejudice. See Richmond v.
Otter, 70 A.2d 314, 316 (Pa. 1950) (“[h]armful error is requisite to a reversal
upon appellate review”).
On appeal, Appellants fault HPP and, strangely, the trial court for the absence
of this evidence. Appellants’ Reply Brief at 11-12. However, the trial court’s
July 7, 2017 rule to show cause did not limit the scope of the discovery
applicable to the issue of venue; Appellants did not file a motion to compel
the data; and, Appellants do not claim that any trial court ruling caused the
evidence to be absent from the record. Instead, Appellants apparently blame
the trial court for its later determination – in its Rule 1925(a) opinion – that
the “big box retailer” sales were “legally irrelevant to determining whether
[HPP] regularly conducted business in Philadelphia County.” See id. at 11.
The trial court’s determination that the “big box retailer” sales did not satisfy
the “quality” prong of the test came after the completion of discovery and
after the September 6, 2017 oral argument – and, thus, after Appellants were
given the opportunity, and failed, to demand additional discovery to establish
the quantity of sales of HPP products by big box retailers in Philadelphia
County. Therefore, I would conclude that Appellants cannot obtain relief on
this claim.
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Monaco, 208 A.2d at 256 (corrections and some quotations omitted).
Further, with respect to the “quantity” prong, our Supreme Court has held:
It must be remembered that it is the word “regularly” which
we are construing and not “principally.” A corporation may
perform acts “regularly” even though these acts make up a
small part of its total activities. . . . The question is whether
the acts are being “regularly” performed within the context
of the particular business.
Id. (citations omitted).
In applying the above language, both our Supreme Court and this Court
have held that the “quantity” prong of the test is satisfied where even one to
two percent of a corporation’s total business is consummated in a particular
county. See Canter v. Am. Honda Motor Corp., 231 A.2d 140 (Pa. 1967)
(the foreign defendant “regularly conducted business” in Philadelphia County
where the defendant admitted that “1 or 2 percent [of its total business] was
consummated in Philadelphia;” as to the “quantity” prong of the test, “1 to 2
percent of the total business was sufficient to satisfy the test . . . as to
quantity”); see also Monaco, 208 A.2d at 252 (a taxi cab company “regularly
conducted business” in Philadelphia County, where “[f]rom five to ten percent
of [the company’s] gross business . . . [in] fares [were] collected in
Philadelphia County at the end of rides which involve[d] driving a cab” into
Philadelphia); Zampana-Barry v. Donaghue, 921 A.2d 500, 503 (Pa. Super.
2007) (“quantity” prong of the test satisfied as to Philadelphia County, where
the Delaware County law firm “consistently [] generated approximately three
to five percent of its gross business revenue from cases in Philadelphia
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County”); Lugo v. Farmers Pride, Inc., 967 A.2d 963 (Pa. Super. 2009)
(concluding that the Lebanon County corporation “regularly conducted
business” in Philadelphia County; as to the “quantity” prong of the test, it was
satisfied because “appellee admits that it sells its products to brokers in
Philadelphia County and that the amount constituted less than 0.5% of its
total premium chicken sales and approximately 1.9% of its total B grade
product sales as of July 2006, when appellants first filed suit;” the percentages
of total sales “approximate[] the[] amounts” that our Supreme Court
confronted in Cantor and, thus, “we likewise find that [the defendant]
regularly conducted business in Philadelphia County”).
Nevertheless, this Court has also held that the “quantity” prong of the
“regularly conducts business” test is not satisfied where a corporation
conducts an “extremely small” percentage of its total business in a county –
even if it conducts that business regularly. Battuello v. Camelback Ski
Corp., 598 A.2d 1027, 1029-1030 (Pa. Super. 1991). For example, in
Singley v. Flier, 851 A.2d 200 (Pa. Super. 2004), the plaintiff sued Villanova
University in Philadelphia County, for personal injuries she sustained while on
Villanova’s Delaware County campus. The trial court sustained Villanova’s
preliminary objections to venue and held that Villanova did not “regularly
conduct business” in Philadelphia County. Id. at 201.
On appeal, the plaintiff cited to evidence that Villanova “offers three
graduate level courses in its Electrical and Computer Engineering (ECE)
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Department at the Philadelphia Naval Yard” – and that it had “offered these
courses for many years.” Id. at 202-203. Plaintiff thus claimed:
because the instruction of students and “transmission of
knowledge” is essential to Villanova's corporate object, the
classes that the University offers in Philadelphia County are
of sufficient “quality” to satisfy the regularly conducts
business test. [Further, these classes] . . . satisfy the
“quantity” test “because Villanova has offered these courses
for many years.”
Id. (citations omitted).
This Court held that the plaintiff’s claim failed. Of importance to the
case at bar, we explicitly held:
even if we credit [plaintiff’s] unsupported contention [that]
these courses have been offered for “many years,” we would
still find that the quantity of these contacts – three graduate
level courses – is lacking when viewed in light of the
University's entire academic program, which includes several
graduate degrees, as well as a law school.
Id. at 203 (citations omitted).
Therefore, the Singley Court held that even consistent and
longstanding business activity in a particular county is not enough to satisfy
the “quantity” prong of the test. Instead, as we held, to satisfy the “quantity”
prong, the qualitative acts must be “so continuous and sufficient to be termed
general or habitual” – and, to determine whether the qualitative acts are
sufficient, an important consideration is the percentage of total business
consummated in the county. See id.; see also Monaco, 208 A.2d at 256
(emphasis added). Similar results were obtained in PECO Energy Co. v.
Philadelphia Suburban Water Co., 802 A.2d 666 (Pa. Super. 2002) and in
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Battuello, 598 A.2d at 1027. See PECO Energy Co., 802 A.2d at 666 (venue
in Philadelphia held improper because Philadelphia Suburban Water Co.
(“PSWC”) did not “regularly conduct business” in the county; specifically,
PSWC’s contacts with Philadelphia did not satisfy either the “quality” or
“quantity” prong of the test, where “approximately one mile of PSWC's
transmission pipeline runs through Philadelphia County, although it provides
no water to Philadelphia County residents and accounts for only .036% of
PSWC's overall piping system. Furthermore, [PSWC made] a one-time
purchase in the year 2000 of 300,000 gallons of water from the City of
Philadelphia in Philadelphia County, which accounted for only .0007% of
PSWC's overall water purchases over the last ten years”); Battuello, 598 A.2d
at 1027 (in plaintiffs’ personal injury lawsuit filed in Philadelphia County
against Camelback, a Monroe County ski area, venue was not proper in
Philadelphia, even though “a Philadelphia tour company regularly sends its
customers to Camelback and . . . Philadelphia residents ski at Camelback;”
the contacts with Philadelphia failed the “quantity” prong of the test because
“the number of Philadelphia season pass holders is extremely small in relation
to the total number of season passes sold” and “less than one percent of
Camelback's business consists of skiers sent by [the tour company, which] ...
is far too small to qualify as ‘general or habitual’”).
In the case at bar, the only record evidence of HPP’s direct acts in
Philadelphia is that HPP derives approximately $75,000.00 of revenue per year
in direct, Philadelphia sales to two authorized dealers, and that these sales
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account for a mere 0.005% of HPP’s annual national revenue.3 The trial court
considered this evidence and concluded that HPP’s qualitative acts in
Philadelphia were “de minimis” and, thus, were not “so continuous and
sufficient to be termed general or habitual.” Trial Court Opinion, 3/2/18, at
6.
In this case, the majority holds that the trial court abused its discretion
when, in concluding that HPP’s acts did not satisfy the “quantity” prong, it
focused upon the percentage of HPP’s total business consummated in
Philadelphia County. According to the majority, it would have placed more
emphasis on the fact that HPP is a large, multi-billion dollar corporation that
had “at least one authorized dealer [] in Philadelphia to which it delivered
products for sale” – and that it sold approximately $75,000.00 in product per
year in Philadelphia. See Majority Memorandum at *9.
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3 At oral argument, Appellants requested that we remand the case so that
additional discovery may be conducted regarding the quantity of Husqvarna
products sold at Philadelphia “big box retailers.” Appellants did not request
this relief either at the trial court level or in their brief on appeal. Therefore,
the claim is waived. Pa.R.A.P. 302(a) (“[i]ssues not raised in the lower court
are waived and cannot be raised for the first time on appeal”);
Commonwealth v. Spotz, 716 A.2d 580, 585 n.5 (Pa. 1999) (“[the
Pennsylvania Supreme Court] has held that an issue will be deemed to be
waived when an appellant fails to properly explain or develop it in his brief”).
Even if not waived, remand would not be appropriate under the facts of this
case. As previously noted, Appellants were given an opportunity to conduct
discovery relevant to the issue of venue. Appellants failed to take action at
the trial court level to obtain this information; therefore, remand would not
be proper, as Appellants are not entitled to a second bite at the proverbial
apple.
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However, and respectfully, in rendering its decision, the trial court did
not consider irrelevant the dollar figure of HPP’s direct Philadelphia sales or
the fact that HPP is a large, multi-billion dollar corporation and it did not rely
solely on the percentage of HPP’s total sales conducted in Philadelphia.
Rather, the trial court’s opinion demonstrates that it considered the totality of
the evidence, but concluded that evidence of HPP’s de minimis percentage of
total business conducted in Philadelphia was important and weighty enough
to carry the day and to render venue in Philadelphia improper. See Trial Court
Opinion, 3/2/18, at 1-6 (trial court notes all of the evidence the majority cites,
but concludes that venue in Philadelphia is not proper because “in 2016, only
$75,310.00 out of [HPP’s] $1.393 billion national revenue came from direct
sales in Philadelphia County; this amounts to 0.005% of [HPP’s] annual
revenue that is attributable to direct sales in Philadelphia County. The figures
from 2014 and 2015 are similar. This de minimis amount of business . . . is
not general and habitual”).
As our Supreme Court has emphasized:
When a court comes to a conclusion through the exercise of
its discretion, there is a heavy burden to show that this
discretion has been abused. It is not sufficient to persuade
the appellate court that it might have reached a different
conclusion, it is necessary to show an actual abuse of the
discretionary power. An abuse of discretion will not be found
based on a mere error of judgment, but rather exists where
the court has reached a conclusion which overrides or
misapplies the law, or where the judgment exercised is
manifestly unreasonable, or the result of partiality, prejudice,
bias or ill-will. Absent an abuse of that discretion, we will
not disturb the ruling of the trial court.
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Commonwealth v. Eichinger, 915 A.2d 1122, 1140 (Pa. 2007) (citations
omitted).
From a review of our case law, it is apparent that, in determining
whether a corporation’s qualitative acts satisfy the “quantity” prong, our
Supreme Court and this Court have consistently looked at the percentage of
a corporation’s total business consummated within the county. Given this, I
believe that the majority is incorrect to assail the trial court’s method of
analysis. Further, given the facts of this case and our chaotic precedent
regarding the specific metrics that suffice to fulfil the “quantity” prong, I
believe that the majority is incorrect to find that the trial court abused its
discretion in transferring venue. Specifically, in light of our precedent and the
facts of this case, it cannot be said that the trial court’s determination was
“manifestly unreasonable” and it certainly cannot be said that the
determination was “the result of partiality, prejudice, bias or ill-will.” See
Nat’l Penn Bank, 672 A.2d at 328.
In conclusion, I quote from Judge Klein’s concurring opinion in
Zampana-Barry, which I find particularly apt:
in my opinion, there are no clear standards to guide the trial
court in determining whether or not the “quantity” test has
been met. Our case law is inconsistent and lacks specific
guidelines for determining the appropriate quantity of
contacts necessary to obtain venue over a corporation under
Pa.R.C.P. 2179(a)(2). Whether or not the “quantity” test has
been met is determined more by the gut feeling of the trial
judge rather than by any objective standard. I note this
because I believe that the matter at least merits clarification
by a Court en banc, if possible.
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...
As our case law has developed, it would be the rare case
where we could say that the trial court erred no matter which
way it ruled on the “quantity” test. I do not believe it serves
justice to have such a loose standard. In many of these cases,
it would be just as easy to achieve justice by going to the
Atlantic City casinos and betting “red” or “black” on roulette
as by having a judicial determination.
As the majority notes, “quantity of acts” means those that
are so continuous and sufficient as to be considered habitual.
A single act is not enough. The determination of what
quantity is sufficient to confer venue must be made on a
case-by-case basis. See Purcell [579 A.2d at 1285]. The
only problem is that there is no guidance in a close case. Is
it 2%? 4%? 6%? 8%? It seems to depend less on the type of
business than on the attitude of the trial judge.
...
In my view, none of the cases offers any clear guidance for
trial courts in determining what quantity of contacts is
sufficient to confer venue over a corporation under Rule
2179(a)(2). It appears that a plaintiff can file suit against a
corporate defendant in any county where it conducts any
amount of business, even if it is as little as 1 or 2%. I am
concerned about the precedent we are setting by allowing
venue to stand in Philadelphia County against a
[corporation], where it is undisputed that none of the
activities giving rise to the litigation arose in Philadelphia. We
may be giving plaintiffs too much leeway in selecting a forum
in which to litigate their claims against a corporation.
Zampana-Barry, 921 A.2d at 506-509 (Klein, J. concurring) (some citations
omitted).4
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4 Respectfully, Rule 2179(a)(2) and the majority’s decision today open the
Philadelphia County courts up to hearing and deciding cases that have no
factual relationship to Philadelphia – and to which Philadelphia has little
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I respectfully dissent.
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interest. To be sure, HPP has no physical store, office, or employees in
Philadelphia; Appellants’ cause of action did not arise out of and is not related
to HPP’s activities in Philadelphia; no part of the “transaction or occurrence”
that led to Appellants’ injuries happened in Philadelphia; and, HPP’s
Philadelphia revenue accounts for a mere five-thousandths of one percent of
its national revenue. Yet, Philadelphia must bear the public costs associated
with hearing and deciding this case and those like it, including increased court
congestion, the consumption of judicial and staff resources, and the
expenditure of juror time.
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