J-A06030-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
SUBURBAN MANAGEMENT CO. INC. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. :
:
BURKITT GROUP, INC., PAUL J. :
BURKITT, AND DIANNE C. :
BROHOSKI F/K/A DIANE C. BURKITT :
:
Appellee : No. 2476 EDA 2019
Appeal from the Order Entered April 18, 2017
In the Court of Common Pleas of Montgomery County
Civil Division at No(s): No. 2015-30106
SUBURBAN MANAGEMENT CO. INC. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. :
:
BURKITT GROUP, INC., PAUL J. :
BURKITT, AND DIANNE C. :
BROHOSKI F/K/A DIANE C. BURKITT :
:
Appellees : No. 2477 EDA 2019
Appeal from the Order Entered February 19, 2019
In the Court of Common Pleas of Montgomery County
Civil Division at No(s): No. 2015-30106
BEFORE: STABILE, J., KING, J., and STEVENS, P.J.E.*
MEMORANDUM BY KING, J.: FILED MAY 22, 2020
Appellant, Suburban Management Co. Inc., appeals from the orders
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* Former Justice specially assigned to the Superior Court.
J-A06030-20
entered in the Montgomery County Court of Common Pleas, which granted
summary judgment in favor of Appellees, Paul J. Burkitt and Dianne C.
Brohoski f/k/a Diane C. Burkitt. We affirm.
The relevant facts of this case are as follows. Appellees married in 1991
and divorced in 2007. During the marriage, Appellees were the principals of
Burkitt Group, which operated a “Bounce U” franchise providing play and party
settings for children. In May 2005, Appellant and Burkitt Group executed a
commercial lease agreement (“the lease”) for a property in Oaks,
Pennsylvania. Burkitt Group agreed to lease the property from Appellant for
a five-year term, from July 1, 2005 to June 30, 2010. The lease provided for
monthly rent in the amount of $7,890.00, which would increase by two
percent each year. In an addendum to the lease, Appellant granted Burkitt
Group a renewal option for an additional five-year term at fair market rent.
Concurrent with the execution of the lease, Appellees entered into the
following guaranty of lease (“the guaranty”):
TO INDUCE SUBURBAN MANAGEMENT CO. INC. (“Lessor”)
to enter into a lease with PAUL J. BURKITT and DIANNE C.
BROHOSKI (“Lessee”)[1] for all that certain premises in the
Suite 2420 at 99 Brower Ave. Oaks PA (“Leased Space”) as
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1 The trial court noted that the introductory clause of the guaranty “defines
the ‘Lease’ as a lease between [Appellant] and [Appellees], rather than
between [Appellant] and Burkitt Group.” (Trial Court Opinion, filed October
4, 2019, at 5 n. 2). The trial court concluded “the language in question was
an obvious drafting error, and that the parties intended that the Lease under
the Guaranty Agreement was the one between [Appellant] and Burkitt Group.”
(Id.)
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more fully described in the Lease Agreement (“Lease”), and
for good and valuable consideration, the undersigned,
intending to be legally bound, guarantees to Lessor and
becomes surety for the prompt performance,[2] as and when
due, of all Lessee’s obligations under the Lease. The
undersigned hereby waives notice of the acceptance of this
Guaranty and any notice of default by the Lessee, and
consents and agrees that Lessor may at any time and from
time to time in [its] discretion; (1) extend or change the
time for performance of any of Lessee’s obligations; (2)
exchange, release or surrender any security held by it for
the performance of Lessee’s obligations; (3) settle or
compromise with the Lessee; and (4) take or refrain from
taking such other actions as Lessor may in its sole discretion
deem to be in its best interest with respect to the lease, the
Lessee and the Leased Space; all in such manner and upon
such terms as Lessor may deem fit and without notice to or
further assent from the undersigned, who agrees to be and
remain bound by this Guaranty of the term of the … Lease
and any extensions or renewals thereof.
The undersigned agrees that no promises, representations,
agreements, conditions or covenants have been made
relating to this Guaranty other than those contained herein
and that no modifications of the terms hereof shall be
binding on Lessor unless in writing signed by Lessor.
This Guaranty shall bind the undersigned and its successors
and assigns, and the benefits hereof shall inure to Lessor,
its successors and assigns.
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2 “While both guaranty and surety agreements are agreements to be liable for
the debt of another, the principal difference is that the creditor may look to
the surety for immediate payment upon the debtor’s default, without first
attempting to collect the debt from the debtor, whereas the creditor must first
seek payment from the debtor before going after a guarantor.” McIntyre
Square Associates v. Evans, 827 A.2d 446, 451 n. 7 (Pa.Super. 2003).
Here, under the terms of the guaranty, Appellees became sureties. See id.
See also 8 P.S. § 1 (stating every written agreement made by one person to
answer for default of another shall subject such person to liabilities of
suretyship, unless such agreement states in substance: “This is not intended
to be a contract of suretyship”).
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(Lease, dated 5/4/05, at Exhibit D).
On November 16, 2010, Appellant and Burkitt Group executed an
amendment to the lease (“the amendment”).3 In the amendment, the parties
acknowledged Burkitt Group was delinquent under the lease, and it owed over
$35,000.00 to Appellant. Consequently, the parties extended the lease term
to October 31, 2011 and voided the five-year renewal option. The parties also
modified Burkitt Group’s rent obligation “to include both a base amount,
payable weekly, and a percentage rent under a formula based on Burkitt
Group’s gross sales at the premises, also payable weekly.” (Trial Court
Opinion at 6). “Upon an uncured default in the payment of any amount due,
[Appellant’s] remedies would include interest on the unpaid balance at the
annual rate of 15% or 5% above the prime rate as listed in the Wall Street
Journal, whichever is greater, together with attorney’s fees.”4 (Id.)
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3 Mr. Burkitt signed the amendment on behalf of Burkitt Group.
4 The original lease contained the following remedies clause:
The rent for the entire unexpired balance of the term of this
lease, as well as all other charges, payments, costs, and
expenses herein agreed to be paid by the Lessee, or at the
option of Lessor, any part thereof, and also all cost and
officer’s commissions including watchmen’s wages and
further including five percent chargeable by Act of Assembly
to the Lessor, shall, in addition to any and all installments
of rent already due and payable and in arrears and/or any
other charge or payment herein reserved, included or
agreed to be paid by the Lessee which may be due and
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On November 16, 2015, Appellant filed a complaint against Burkitt
Group and Appellees. The complaint alleged Burkitt Group had breached the
lease by failing to pay rent and other charges. Appellant also claimed
Appellees were personally liable pursuant to the guaranty. After the close of
pleadings, the court entered a discovery management conference order on
August 3, 2016. The order included handwritten notations with the following
deadlines: 1) discovery to be completed by November 30, 2016; 2) all
dispositive motions to be filed by December 15, 2017; and 3) all responses to
dispositive motions to be filed by January 15, 2017.5 On December 22, 2016,
Ms. Brohoski filed a summary judgment motion. Following oral argument, the
court granted Ms. Brohoski’s motion on April 18, 2017. Specifically, the court
did “not find a clear and unambiguous agreement demonstrating [Ms.
Brohoski’s] ‘unbridled commitment to guarantee [her] obligation under the
lease.’” (Order, filed 4/18/17, at 2 n. 1) (internal citation omitted).
On November 2, 2017, Mr. Burkitt filed a motion for leave to file a
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payable and in arrears, be taken to be due and payable and
in arrears as if by the terms and provisions of this lease, the
whole balance of unpaid rent and other charges, payments,
taxes, costs and expenses were on that date payable in
advance ….
(Lease at ¶ 14(d)(1)).
5 The court later acknowledged “[t]he obvious intention of the Order was to
require dispositive motions to be filed by December 15, 2016, not 2017.”
(Order, filed 10/24/18, at 1 n. 1).
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summary judgment motion. Mr. Burkitt argued the court had yet to schedule
trial, and granting him leave to file a summary judgment motion would not
create an unreasonable delay:
Thus, inasmuch as the factual and legal predicate for the
[c]ourt’s granting of summary judgment in favor of [Ms.
Brohoski] is directly applicable, if not identical, to the factual
and legal issues extant with [Mr. Burkitt], it would be a
waste of judicial resources to impose a trial on factual and
legal issues that should otherwise be disposed of on a
summary basis.
(Motion, filed 11/2/17, at ¶ 21). On October 24, 2018, the court granted Mr.
Burkitt’s motion and ordered him to file a summary judgment motion within
seven days.
On October 26, 2018, Mr. Burkitt filed his summary judgment motion.
Appellant filed a response and cross-motion for summary judgment on
November 26, 2018. By order dated February 15, 2019 and entered February
19, 2019, the court granted Mr. Burkitt’s summary judgment motion and
denied Appellant’s cross-motion.
The trial court summarized the subsequent procedural history as
follows:
On March 14, 2019, [Appellant] filed separate Notices of
Appeal to the Superior Court from the orders of April 18,
2017, and February 15, 2019, granting summary judgment
in favor of [Appellees]. The appeals were docketed in the
Superior Court at Nos. 809 and 819 EDA 2019. In each
appeal, on April 17 and 30, 2019, the Superior Court
entered an Order and Rule to Show Cause why the appeal
should not be dismissed for lack of a final order, in view of
the fact that [Appellant’s] claim against Burkitt Group
remained pending in [the trial c]ourt. The Superior Court
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quashed both appeals by Orders dated June 19, 2019.
In the meantime, in late July 2019, counsel for [Appellant]
and Burkitt Group submitted to [the trial c]ourt a Stipulation
for the entry of judgment against Burkitt Group in the
amount of $269,328.65. The Stipulation was approved as
an Order … dated August 5, 2019 (and docketed August 6,
2019). On August 7, 2019, with all claims now determined,
[Appellant] again filed two Notices of Appeal to the Superior
Court from the two Orders granting summary judgment in
favor of [Appellees].
(Trial Court Opinion at 4).
On August 13, 2019, the court ordered Appellant to file a Pa.R.A.P.
1925(b) concise statement of errors complained of on appeal. Appellant
timely filed its Rule 1925(b) statement on August 29, 2019. On September
30, 2019, this Court consolidated Appellant’s appeals sua sponte.
Appellant now raises two issues for our review:
WHETHER THE TRIAL COURT ERRED IN FAILING TO
ENFORCE THE PERSONAL GUARANTY OF LEASE AGAINST
APPELLEES … WHO CONSENTED AND AGREED TO BE
PERSONALLY RESPONSIBLE FOR THE EXTENSION OF THE
LEASE IN THE AMENDMENT TO THE LEASE, SINCE,
PURSUANT TO THE EXPLICIT TERMS OF THE GUARANTY,
APPELLEES, WHO HAD WAIVED ACCEPTANCE OF THE
GUARANTY AND WAIVED ANY NOTICE OF DEFAULT,
CONSENTED AND AGREED, WITHOUT FURTHER NOTICE OR
ASSENT, TO ANY EXTENSION OF THE LEASE, OR ANY
RENEWAL OF THE LEASE?
WHETHER THE TRIAL COURT ERRED IN ALLOWING … PAUL
J. BURKITT TO FILE A MOTION FOR SUMMARY JUDGMENT
ALMOST A YEAR AFTER THE EXPIRATION OF THE COURT
ORDERED DATE TO DO SO?
(Appellant’s Brief at 5).
Our standard of review of an order granting summary judgment requires
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us to determine whether the trial court abused its discretion or committed an
error of law. Mee v. Safeco Ins. Co. of America, 908 A.2d 344, 347
(Pa.Super. 2006).
Judicial discretion requires action in conformity with law on
facts and circumstances before the trial court after hearing
and consideration. Consequently, the court abuses its
discretion if, in resolving the issue for decision, it misapplies
the law or exercises its discretion in a manner lacking
reason. Similarly, the trial court abuses its discretion if it
does not follow legal procedure.
Miller v. Sacred Heart Hosp., 753 A.2d 829, 832 (Pa.Super. 2000) (internal
citations omitted). Our scope of review is plenary. Pappas v. Asbel, 564 Pa.
407, 418, 768 A.2d 1089, 1095 (2001), cert. denied, 536 U.S. 938, 122 S.Ct.
2618, 153 L.Ed.2d 802 (2002). In reviewing a trial court’s grant of summary
judgment:
[W]e apply the same standard as the trial court, reviewing
all the evidence of record to determine whether there exists
a genuine issue of material fact. We view 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. Only where there is
no genuine issue as to any material fact and it is clear that
the moving party is entitled to a judgment as a matter of
law will summary judgment be entered. All doubts as to the
existence of a genuine issue of a material fact must be
resolved against the moving party.
Motions for summary judgment necessarily and directly
implicate the plaintiff’s proof of the elements of [a] cause of
action. Summary judgment is proper if, after the
completion of discovery relevant to the motion, including
the production of expert reports, an adverse party who will
bear the burden of proof at trial has failed to produce
evidence of facts essential to the cause of action or defense
which in a jury trial would require the issues to be submitted
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to a jury. In other words, whenever there is no genuine
issue of any material fact as to a necessary element of the
cause of action or defense, which could be established by
additional discovery or expert report and the moving party
is entitled to judgment as a matter of law, summary
judgment is appropriate. Thus, a record that supports
summary judgment either (1) shows the material facts are
undisputed or (2) contains insufficient evidence of facts to
make out a prima facie cause of action or defense.
Upon appellate review, we are not bound by the trial court’s
conclusions of law, but may reach our own conclusions.
Chenot v. A.P. Green Services, Inc., 895 A.2d 55, 61 (Pa.Super. 2006)
(internal citations and quotation marks omitted).
In its first issue, Appellant contends Appellees signed the guaranty,
which was “broad, continuing and unrestricted.” (Appellant’s Brief at 26).
Pursuant to the express terms of the guaranty, Appellant maintains Appellees
assumed the risk of an extension or renewal of the lease, and Appellees
“consented explicitly to material modifications of the relationship between
[Appellant] and the Burkitt Group.” (Id. at 31). Appellant insists
Pennsylvania courts have enforced personal guaranties under similar
circumstances. Appellant concludes the trial court should have enforced the
guaranty against Appellees, and it erred in granting the summary judgment
motions. We disagree.
“Customarily, a suretyship arrangement arises when a creditor refuses
to extend credit to a debtor unless a third party (the surety) agrees to provide
additional security for repayment of the debt by undertaking the debtor’s
obligation to the creditor if the debtor fails to perform.” J.F. Walker Co.,
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Inc. v. Excalibur Oil Group, Inc., 792 A.2d 1269, 1273 (Pa.Super. 2002)
(quoting Continental Bank v. Axler, 510 A.2d 726, 729 (Pa.Super. 1986)).
Cognizant of the problems posed by the three-party
composition of suretyships, Pennsylvania courts have
uniformly recognized that where the creditor and the debtor
materially modify the terms of their relationship without
obtaining the surety’s assent thereto, the surety’s liability
may be affected. A material modification in the creditor-
debtor relationship consists of a significant change in the
principal debtor’s obligation to the creditor that in essence
substitutes an agreement substantially different from the
original agreement on which the surety accepted liability.
Where, without the surety’s consent, there has been a
material modification in the creditor-debtor relationship, a
gratuitous (uncompensated) surety is completely
discharged. A compensated surety is discharged only if,
without the surety’s consent, there has been a material
modification in the creditor-debtor relationship and said
modification has substantially increased the surety’s risk.[6]
* * *
Nevertheless, material modifications in the creditor-debtor
relationship will not serve to discharge the surety where the
surety has given prior consent to such material
modifications as part of the suretyship contract. To
determine whether a surety has consented to a material
modification, the suretyship contract must be given effect
according to its own expressed intention as gathered from
all the words and clauses used, taken as a whole, due regard
being had also to the surrounding circumstances.
Evans, supra at 452 (internal citations and quotation marks omitted). See
also Citicorp North America, Inc. v. Thornton, 707 A.2d 536, 539
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6 The trial court classified Appellees as compensated sureties, “[b]ecause
there is evidence that [Appellees], who were married at the time of the Lease
and Guaranty of Lease, were owners of Burkitt Group[.]” (Trial Court Opinion
at 7).
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(Pa.Super. 1998) (holding surety agreement clearly and unambiguously
demonstrated appellant’s unbridled commitment to guarantee lessee’s
obligation; agreement characterized appellant’s liabilities as unconditional,
continuing, and unimpaired by amendments, extensions, renewals, regardless
of notice or consent).
Instantly, the trial court determined the amendment to the lease
constituted a material modification:
[T]here is no doubt that the Amendment materially
increased the risk assumed by [Appellees] under their
Guaranty of Lease. As modified by the Amendment, the
rent included not just base rent but also a percentage rent
calculated on the basis of the sales realized at the leased
premises. In addition, upon default, the lessee was liable
for interest at 15% per annum and attorney’s fees. The
Amendment thus substantially increased the surety’s risk.
(Trial Court Opinion at 8-9) (internal citation and quotation marks omitted).
Further, the court found Appellees did not provide prior consent to
material modifications. Specifically, the court compared the instant guaranty
to the one executed in Thornton, supra:
The guaranty language in Thornton stands in stark contrast
to the language of the Guaranty of Lease in the present
case. The Guaranty of Lease does not guaranty all
obligations which Obligor presently or hereafter may have,
nor does it provide for the continuing enforceability of the
guaranty notwithstanding any … new agreements or
obligations of [Burkitt Group] with or to [Appellant]. To the
contrary, the guaranty is limited to [Burkitt Group’s]
obligations under the Lease. And instead of the sweeping
consent language in the guaranty in Thornton, the
Guaranty of Lease in the present case limits the guarantors’
consent to four specific actions that [Appellant] might take:
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(1) extend or change the time for performance of any
of Lessee’s obligations; (2) exchange, release or
surrender any security held by it for the performance
of Lessee’s obligations; (3) settle or compromise with
the Lessee; and (4) take or refrain from taking such
other actions as Lessor may in its sole discretion deem
to be in its best interest with respect to the lease, the
Lessee and the Leased Space.
Clearly, the first three items do not cover the addition of
percentage rent or the provision for recovery of interest and
attorney’s fees. The meaning of the fourth item, consenting
to actions that [Appellant] may take in its best interest, is
unclear, but it surely is not so definitive as to clearly and
unambiguously demonstrate [an] unbridled commitment to
cover the increased monetary obligations of Burkitt Group
under the Amendment.
* * *
Notably, [Appellant] could have avoided this result by
requiring [Appellees] to expressly consent to the
Amendment when it was agreed to by Burkitt Group or to
enter into a new guaranty agreement. If it failed to make
such a demand, it cannot now complain of the resulting
discharge of the guarantors by operation of law.
Alternatively, if it did make such a demand and then decided
to proceed with the Amendment in the face of the
guarantors’ refusal to consent, then it must accept the
consequences of its decision.4
4 [Mr. Burkitt’s] signature [on] the Amendment in his
capacity as a corporate owner or officer of Burkitt
Group does not constitute consent in his individual
capacity as guarantor. In Evans, the Lease
Amendment and Extension Agreement was signed by
the president of the corporate lessee, … but that
signature was not held to be a consent for purposes
of his personal guaranty.
(Trial Court Opinion at 10-11) (internal citations and quotation marks
omitted).
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Here, the amendment modified the amount of rent to include a minimum
monthly payment and a “percentage rent” to be calculated based on Burkitt
Group’s gross sales. The amendment also contained new terms regarding
default, including additional requirements for Burkitt Group to pay interest
and counsel fees. Taken together, the new terms in the amendment increased
Appellees’ risk and constituted a material modification in the creditor-debtor
relationship. See Evans, supra. See also Magazine Digest Pub. Co. v.
Shade, 330 Pa. 487, 199 A. 190 (1938) (explaining original contract required
magazine distributor to pay fourteen and one-half cents per copy to publisher;
change requiring distributor to pay fifteen cents per copy was “material
alteration,” which discharged guarantors of obligations to distributor).
Additionally, the guaranty did not include broad language demonstrating
Appellees’ consent to the material modifications contained in the amendment.
As the trial court correctly noted, the guaranty expressly set forth four
circumstances under which Appellees provided consent for Appellant to act.
The four enumerated circumstances did not include Appellees’ consent to all
forms of material modification, including future changes to the lease’s financial
terms. See Reliance Ins. Co. v. Penn Paving, Inc., 557 Pa. 439, 734 A.2d
833 (1999) (holding parties’ continuing indemnification agreement did not
contain any language constituting consent to material increase in risk of
liability to appellants or language expressly waiving notice of material
modification in risk of liability; waiver provisions also failed to expressly refer
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to material modification). Compare Axler, supra (concluding sureties signed
contract that allowed creditor to make material modification without notice to
surety, and sureties would be obligated for liabilities of any successor
business). Based upon the foregoing, the court properly entered summary
judgment in favor of Appellees. See Chenot, supra.
In its second issue, Appellant asserts Mr. Burkitt’s untimely filing of a
summary judgment motion violated Pa.R.C.P. 1035.2. Further, Appellant
contends Mr. Burkitt untimely filed his summary judgment motion after the
deadline set forth in the court’s August 2016 discovery management
conference order. Appellant acknowledges the August 2016 order contained
an erroneous deadline date, but “the court’s intention [was] to have all
dispositive motions filed on or before December 15, 2016.” (Appellant’s Brief
at 32). Appellant concludes the trial court erred as a matter of law in granting
Mr. Burkitt’s motion for leave to file a summary judgment motion. We
disagree.
Rule 1035.2 provides, in pertinent part:
Rule 1035.2. Motion
After the relevant pleadings are closed, but within such
time as not to unreasonably delay trial, any party may move
for summary judgment in whole or in part as a matter of law
(1) whenever there is no genuine issue of any
material fact as to a necessary element of the cause of
action or defense which could be established by
additional discovery or expert report, or
(2) if, after the completion of discovery relevant
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to the motion, including the production of expert reports,
an adverse party who will bear the burden of proof at
trial has failed to produce evidence of facts essential to
the cause of action or defense which in a jury trial would
require the issues to be submitted to a jury.
* * *
Explanatory Comment—1996
* * *
New Rule 1035.2 provides that a party may move for
summary judgment after the “relevant” pleadings are closed
and, in order to provide discretion in the lower court,
within such time so as not to “unreasonably” delay the trial.
Pa.R.C.P. 1035.2 (emphasis added).
Instantly, the trial court acknowledged the fact that the discovery
management conference order provided an incorrect deadline for the filing of
dispositive motions:
It is the usual practice of this [c]ourt to dismiss motions for
summary judgment that are untimely under a case
management order. The instant case, however, presented
the highly unusual situation where a motion was filed
within the deadline as literally construed, although not as
construed in accordance with its apparent intention.
Combined with this circumstance was the fact that [Mr.
Burkitt’s] Motion for Summary Judgment was made on the
identical grounds on which [Ms. Brohoski] had already
been granted summary judgment.
(Trial Court Opinion at 11-12) (emphasis in original). Given the court’s
discretionary authority to manage its trial schedule, it opted to allow Mr.
Burkitt to file a summary judgment motion.
Here, the court’s decision to allow Mr. Burkitt to file a summary
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judgment motion that did not comply with the “apparent intention” of the
discovery management conference order did not, by itself, constitute a
violation of Pa.R.C.P. 1035.2 or an abuse of discretion. See Robertson v.
Port Authority of Allegheny County, 144 A.3d 980 (Pa.Cmwlth. 2016)
(explaining mere fact that summary judgment is sought on day of trial does
not require that trial court deny motion; rather, issue is whether plaintiff has
received full and fair opportunity to respond to motion); Schreck v. North
Codorus Tp., 559 A.2d 1018 (Pa.Cmwlth. 1989) (concluding summary
judgment motion was not untimely, even though it was not filed until almost
three years after completion of discovery; case had not yet been listed for
trial, and there was no evidence that motion was filed to delay trial).7 Because
Mr. Burkitt raised the same issues as Ms. Brohoski, and Appellant received a
full opportunity to respond, Appellant is not entitled to relief on its second
issue. See id. Accordingly, we affirm.
Orders affirmed.
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7See also Petow v. Warehime, 996 A.2d 1083, 1089 n.1 (Pa.Super. 2010),
appeal denied, 608 Pa. 648, 12 A.3d 371 (2010) (stating: “This Court is not
bound by decisions of the Commonwealth Court. However, such decisions
provide persuasive authority, and we may turn to our colleagues on the
Commonwealth Court for guidance when appropriate”).
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/22/20
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