J-A05021-17
2017 PA Super 112
DAVID G. OBERDICK IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
TRIZECHAHN GATEWAY, LLC, TRIZEC
R&E HOLDINGS, LLC, SUCCESSOR-BY-
MERGER TO TRIZECHAHN GATEWAY,
LLC, TRIZEC HOLDINGS II, INC., TRIZEC
HOLDINGS II, LLC, F/K/A
TRZ HOLDINGS II, INC., SUCCESSOR-
IN-INTEREST TO TRIZECHAHN
GATEWAY, LLC, KATHLEEN G. KANE,
ESQUIRE, TED R. JADWIN, ESQUIRE,
NEAL H. LEVIN, ESQUIRE, FREEBORN &
PETERS LLP, ALBERT J. ZANGRILLI, JR.,
ESQUIRE, AND YUKEVICH, MARCHETTI,
LIEKAR & ZANGRILLI, P.C.,
SALLY G. OBERDICK
v.
TRIZECHAHN GATEWAY, LLC, TRIZEC
R&E HOLDINGS, LLC, SUCCESSOR-BY-
MERGER TO TRIZECHAHN GATEWAY,
LLC, TRIZEC HOLDING II, INC., TRIZEC
HOLDINGS II, LLC, f/k/a
TRZ HOLDINGS II, Inc., SUCCESSOR-IN-
INTEREST TO TRIZENCHAHN GATEWAY,
LLC, KATHLEEN G. KANE, ESQUIRE, TED
R. JADWIN, ESQUIRE, NEAL H. LEVIB,
ESQUIRE, FREEBORN & PETERS LLP,
ALBERT J. ZANGRILLI, Jr., ESQUIRE,
AND YUKEVICH, MARCHETTI, LIEKAR &
ZANGRILLI, P.C.,
APPEAL OF: TRIZECHAHN GATEWAY,
LLC, TRIZEC R&E HOLDINGS, LLC,
J-A05021-17
SUCCESSOR-BY-MERGER TO
TRIZECHAHN GATEWAY, LLC, TRIZEC
HOLDINGS II, INC., TRIZEC HOLDINGS
II, LLC, f/k/a TRZ HOLDINGS II, INC.,
SUCCESSOR-IN-INTEREST TO
TRIZECHAHN GATEWAY, LLC, KATHLEEN
G. KANE, ESQUIRE, TED R. JADWIN,
ESQUIRE, NEAL H. LEVIN, ESQUIRE,
FREEBORN & PETERS LLP, ALBERT J.
ZANGRILLI, JR., ESQUIRE, and No. 745 WDA 2016
YUKEVICH, MARCHETTI LIEKAR &
ZANGRILLI, P.C.
Appeal from the Order entered April 19, 2016,
in the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD 15-4365, GD 15-4384
DAVID G. OBERDICK IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
TRIZECHAHN GATEWAY, LLC, TRIZEC
R&E HOLDINGS, LLC, SUCCESSOR-BY-
MERGER TO TRIZECHAHN GATEWAY,
LLC, TRIZEC HOLDINGS II, INC., TRIZEC
HOLDINGS II, LLC, F/K/A
TRZ HOLDINGS II, INC., SUCCESSOR-
IN-INTEREST TO TRIZECHAHN
GATEWAY, LLC, KATHLEEN G. KANE,
ESQUIRE, TED R. JADWIN, ESQUIRE,
NEAL H. LEVIN, ESQUIRE, FREEBORN &
PETERS LLP, ALBERT J. ZANGRILLI, JR.,
ESQUIRE, AND YUKEVICH, MARCHETTI,
LIEKAR & ZANGRILLI, P.C.,
SALLY G. OBERDICK
v.
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TRIZECHAHN GATEWAY, LLC, TRIZEC
R&E HOLDINGS, LLC, SUCCESSOR-BY-
MERGER TO TRIZECHAHN GATEWAY,
LLC, TRIZEC HOLDING II, INC., TRIZEC
HOLDINGS II, LLC, f/k/a
TRZ HOLDINGS II, Inc., SUCCESSOR-IN-
INTEREST TO TRIZENCHAHN GATEWAY,
LLC, KATHLEEN G. KANE, ESQUIRE, TED
R. JADWIN, ESQUIRE, NEAL H. LEVIB,
ESQUIRE, FREEBORN & PETERS LLP,
ALBERT J. ZANGRILLI, Jr., ESQUIRE,
AND YUKEVICH, MARCHETTI, LIEKAR &
ZANGRILLI, P.C.,
APPEAL OF: TRIZECHAHN GATEWAY,
LLC, TRIZEC R&E HOLDINGS, LLC,
SUCCESSOR-BY-MERGER TO
TRIZECHAHN GATEWAY, LLC, TRIZEC
HOLDINGS II, INC., TRIZEC HOLDINGS
II, LLC, f/k/a TRZ HOLDINGS II, INC.,
SUCCESSOR-IN-INTEREST TO
TRIZECHAHN GATEWAY, LLC, KATHLEEN
G. KANE, ESQUIRE, TED R. JADWIN,
ESQUIRE, NEAL H. LEVIN, ESQUIRE,
FREEBORN & PETERS LLP, ALBERT J.
ZANGRILLI, JR., ESQUIRE, and
YUKEVICH, MARCHETTI LIEKAR &
ZANGRILLI, P.C. No. 1162 WDA 2016
Appeal from the Order Entered April 19, 2016
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD 15-4365
BEFORE: GANTMAN, P.J., BENDER, P.J.E., and MOULTON, J.
OPINION BY BENDER, P.J.E.: FILED APRIL 19, 2017
Appellants, TrizecHahn Gateway, LLC, Trizec R&E Holdings, LLC,
successor-by-merger to TrizecHahn Gateway, LLC, Trizec Holdings II, Inc.,
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Trizec Holdings II, LLC, f/k/a TRZ Holdings II, Inc., successor-in-interest to
TrizecHahn Gateway, LLC (referred to collectively as “Trizec”), Kathleen G.
Kane, Esq., Ted R. Jadwin, Esq., Neal H. Levin, Esq., Freeborn & Peters LLP,
Albert J. Zangrilli, Jr., Esq., and Yukevich, Marchetti, Liekar & Zangrilli, P.C.
(jointly referred to as “Appellants”), appeal from the April 19, 2016 order,
denying their motion for summary judgment. After careful review, we
reverse and remand for proceedings consistent with this opinion.
We glean the following facts and procedural history from the record.
Trizec was the landlord of David G. Oberdick’s (“Mr. Oberdick”) former law
firm. Trizec obtained a $3.3 million judgment against Mr. Oberdick and his
partners for unpaid rent, after they abandoned their office lease and refused
to pay the outstanding rent.1 In 2007, as part of its collection efforts,
Trizec brought a claim against Mr. Oberdick and his wife, Sally G. Oberdick
(“Mrs. Oberdick”) (collectively “the Oberdicks”), in the Court of Common
Pleas of Allegheny County under the Pennsylvania Uniform Fraudulent
Transfer Act (“PaUFTA”) (referred to as “UFTA action”). The Oberdicks filed
preliminary objections to the complaint in the UFTA action.
On January 23, 2008, before the UFTA action proceeded any further in
state court, Mr. Oberdick filed a voluntary Chapter 7 bankruptcy petition in
the United States Bankruptcy Court for the Western District of Pennsylvania.
____________________________________________
1
This judgment was affirmed on appeal by the Pennsylvania Supreme Court.
See Trizechahn Gateway LLC v. Titus, 976 A.2d 474 (Pa. 2009).
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The UFTA action was subsequently removed to the bankruptcy court, at the
Oberdicks’ request, and was litigated therein as an adversary proceeding
(“UFTA adversary action”).2 After the parties engaged in litigation of some
preliminary matters, Trizec filed an Amended Complaint on February 14,
2010. See Bankruptcy Court Opinion (“BCO”), 3/26/13, at 4.3 The
bankruptcy trustee was then substituted for Trizec as the plaintiff in the
____________________________________________
2
On April 22, 2008, the Oberdicks filed a notice of removal in the United
States Bankruptcy Court for the Western District of Pennsylvania at No. 08-
20434 MBM, in which the Oberdicks averred that “the [UFTA action] is a core
proceeding within the meaning of Section 157 of Title 28 of the United
States Code in that it ‘arises under,’ ‘arises in,’ and/or is ‘related to’ a
[d]ebtor’s case under the Bankruptcy Code,” and therefore, they requested
that the “entirety of the [UFTA action]” be removed from the Allegheny
County Court of Common Pleas to the bankruptcy court. See Notice of
Removal, 4/22/08, at 1-3.
3
In its Memorandum Opinion, the bankruptcy court explained:
The gravamen of the [UFTA adversary action] as set forth in the
Amended Complaint is that [Mr. Oberdick] engaged in fraudulent
transfers when, subsequent to the initiation of the Lease
Litigation in July 2000, he deposited his individual earnings from
the law firm of Meyer, Unkovic & Scott, LLP … into a PNC Bank
checking account that he jointly owned with Mrs. Oberdick in a
tenancy by the entireties…. This was done primarily through the
means of an electronic direct deposit. The contention is that
such deposits constituted “transfers” under PaUFTA, and that
such transfers by [Mr. Oberdick] were fraudulent, either actually
or constructively because they had the effect of shielding [Mr.
Oberdick’s] individual compensation from the reach of his
creditors, such as Trizec, by converting it into entireties
property.
Id. at 5-6.
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UFTA adversary action. After extensive litigation, the bankruptcy court
entered judgment on March 26, 2013, in favor of the Oberdicks, and
dismissed the UFTA adversary action in its entirety.
In March of 2015, after termination of the bankruptcy case, the
Oberdicks each brought a one-count complaint against Appellants under the
Dragonetti Act, 42 Pa.C.S. § 8351, et seq.4 On September 28, 2015, the
Oberdicks each filed amended complaints in their respective cases.
Thereafter, the two matters were consolidated (hereinafter referred to as
“Dragonetti action”).5 Appellants moved for summary judgment and averred
that the Oberdicks’ claims are preempted by the Bankruptcy Code. By order
dated April 19, 2016, the trial court denied Appellants’ motion for summary
judgment.6
____________________________________________
4
Mr. Oberdick filed a Complaint in the Court of Common Pleas of Allegheny
County on March 24, 2015, at No. GD-15-4365. On the same date, Mrs.
Oberdick filed a separate complaint in the Court of Common Pleas of
Allegheny County at No. GD-15-4384.
5
By order of court dated January 28, 2016, the action at GD-15-4384 was
consolidated into the action at GD-15-4365. Notwithstanding consolidation,
the court ordered that Mr. and Mrs. Oberdick would each retain their
independent substantive claims and requests for relief. See Trial Court
Order, 1/28/16.
6
The April 19, 2016 order was amended on May 19, 2016, to include the
following requisite language for a permissive appeal:
[T]his Order involves a controlling question of law as to which
there is a substantial ground for difference of opinion and that an
immediate appeal from the Order may materially advance the
ultimate termination of this matter. In particular, what portion,
(Footnote Continued Next Page)
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On May 25, 2016, Appellants filed a timely notice of appeal at Docket
No. 745 WDA 2016, seeking review of the denial of summary judgment as a
collateral order, pursuant to Pa.R.A.P. 313. On June 17, 2016, Appellants
separately filed a petition for permission to appeal at Docket No. 66 WDM
2016, seeking review of the same order as a discretionary appeal from an
interlocutory order, pursuant to Pa.R.A.P. 1311.7 By per curiam order dated
August 9, 2016, this Court granted Appellants’ petition for permission to
appeal and consolidated the two appeals at Docket No. 745 WDA 2016.8
Herein, Trizec presents the following questions for our review:
1. [Trizec] filed fraudulent-transfer claims against [the
Oberdicks] in state court, which [the Oberdicks] removed to
_______________________
(Footnote Continued)
if any, of [the Oberdicks’] claims are preempted per Stone
Crushed [Partnership v. Kassab Archbold Jackson &
O’Brien, 908 A.2d 875 (Pa. 2006)] (and McCue [v.
Brandywine Realty Trust, 2013 WL 300893 (Pa. Cmwlth.
January 4, 2013)]) and more specifically, whether claims based
upon “procurement, initiation and/or continuation of civil
proceedings” after removal of the underlying matter to
bankruptcy court are preempted as a matter of law.
See Trial Court Order, 5/19/16; see also 42 Pa.C.S. § 702(b).
7
In their petition, Appellants averred a controlling question of law as to
whether federal bankruptcy law preempted the Dragonetti claims, because
the basis for the Dragonetti action, although brought in state court, was
litigated in bankruptcy court.
8
After granting the petition for permission to appeal, this Court transferred
the appeal at miscellaneous Docket No. 66 WDM 2016 to regular appeal
Docket No. 1162 WDA 2016. Thereafter, the appeal at Docket No. 1162
WDA 2016 was consolidated by per curiam order with the appeal at Docket
No. 745 WDA 2016.
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bankruptcy court after one of them filed a voluntary
bankruptcy petition. The Bankruptcy Code and Rules preempt
state-law wrongful-use-of-civil-proceedings claims based on
litigation in bankruptcy court. Where [the Oberdicks]
removed the underlying action to bankruptcy court before
pleadings closed and thereafter litigated exclusively in
bankruptcy court, do the Bankruptcy Code and Rules preempt
any state-law wrongful-use-of-civil-proceedings claim?
2. [The Oberdicks] filed wrongful-use-of-civil-proceedings claims
based on fraudulent transfer litigation that they removed to
bankruptcy court, and which were litigated there by the
bankruptcy trustee. The federal Barton [D]octrine bars
actions against bankruptcy trustees, trustee’s counsel, and
other officers of the court without the bankruptcy court’s
leave. Did [the Oberdicks] have to obtain leave to pursue
their action against a creditor, and its attorneys, that, among
other things, financed the trustee’s litigation, and therefore
functioned as the equivalent of court-appointed officers?
3. [Appellants] were denied summary judgment based on the
federal Barton Doctrine. Pennsylvania courts have previously
recognized that an order denying summary judgment based
on a complete federal defense to a state law claim is
appealable as a collateral order. Is the denial of summary
judgment based on the Barton Doctrine defense appealable as
a collateral order?
Appellants’ Brief at 3-4.
Our standard of review with respect to a trial court’s decision to grant
or deny 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 non-moving party bears the burden
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of proof of 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 it bears the burden of proof
establishes the entitlement of the moving party to judgment as a
matter of law. Lastly, we will 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.
Thompson v. Ginkel, 95 A.3d 900, 904 (Pa. Super. 2014) (citations
omitted).
Appellants argue that they were entitled to summary judgment as a
matter of law, because the Dragonetti action brought by the Oberdicks in
state court is entirely preempted by the Bankruptcy Code and Federal Rules
of Civil Procedure. The Oberdicks counter that preemption does not apply
here, because the Dragonetti action arises from litigation “procured, initiated
and continued in Pennsylvania state court.”9 Oberdicks’ Brief at 8.
____________________________________________
9
The Oberdicks’ Dragonetti action asserts wrongful use of civil proceedings
pursuant to 42 Pa.C.S. § 8351(a), which provides:
(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.
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We begin our analysis with a review of the controlling case law
regarding bankruptcy law preemption. In Stone Crushed, the Supreme
Court of Pennsylvania granted allowance of appeal to determine, as a matter
of first impression for the Court, whether the Bankruptcy Code preempts the
entire field of bankruptcy, including a state tort claim for abuse of process
based upon bankruptcy court proceedings. The Court conducted an in-depth
review of the relevant case law from other jurisdictions. Ultimately, the
Court concluded that “the Bankruptcy Code and Federal Rules of Civil
Procedure preempt [an appellant’s] rights pursuant to state law for
compensation in a wrongful use of civil proceedings or abuse of process
claim grounded in bankruptcy court proceedings.” Stone Crushed, 908
A.2d at 887 (emphasis added). The Court based its holding on the following
reasons: (1) Congress evinced an intent to govern the whole field; 10 and (2)
____________________________________________
10
In reaching its conclusion, the Stone Crushed Court explained:
The Supremacy Clause of the United States Constitution controls
federal preemption. Congress has the undisputed power to
preempt state law in areas of federal concern. Such preemption
does not need to be explicit in a statute invalidating a state law.
If the area in question is one of traditional state concern, it
should be presumed that Congress did not intend to supersede
state authority absent a clear and manifest legislative purpose to
the contrary.
Congress’ intent to preempt state law may be express or implied
and … may be found where Congress has legislated in a field so
comprehensively that it has implicitly expressed an intention to
occupy the given field to the exclusion of state law.
(Footnote Continued Next Page)
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Fed.R.Civ.P. 11 (“Rule 11”), 28 U.S.C. § 1927, and the Bankruptcy Code
potentially provide for the equivalent protection afforded by this
Commonwealth to its citizens in a Dragonetti Act claim. Id. at 880.
Following the holding in Stone Crushed, it is clear to this Court that,
at the very least, the Dragonetti Act claims related to Appellants’ actions in
bankruptcy court are preempted by bankruptcy law. It is the preemption of
the claims which relate to Appellants’ actions in state court prior to the
removal to bankruptcy court, however, that remains in question. Guided by
the Court’s reasoning in Stone Crushed, we conclude for the reasons stated
herein that the entire Dragonetti action brought against Appellants is
preempted by the Bankruptcy Code and Federal Rules of Civil Procedure.
First, despite the fact that the underlying UFTA action was initially filed
in state court, the Oberdicks did not even wait for a ruling on their
preliminary objections to the complaint before removing the case to
bankruptcy court. Trizec subsequently filed an amended complaint in
bankruptcy court, which then became the basis of the UFTA adversary
action. The matter was fully litigated in bankruptcy court. Hence, the
underlying action which gave rise to the Dragonetti action is clearly
“grounded in bankruptcy court proceedings.” See id. at 887.
_______________________
(Footnote Continued)
Id. at 880-881 (internal citations omitted). After its analysis of the relevant
case law, the Court was persuaded that “the [Bankruptcy] Code’s provision
of remedies and sanctions implies an intent to govern sanctions as they
relate to bankruptcy court proceedings.” Id. at 886.
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We further note that the majority of the assertions made by the
Oberdicks in their amended complaint refer to Appellants’ conduct in
bankruptcy court. See Oberdicks’ Amended Complaint, 9/28/15.
Specifically, the Oberdicks aver - among other things - that Trizec failed to
timely respond to discovery requests during the adversary action,
disregarded deadlines set by the bankruptcy court and applicable bankruptcy
rules of procedure, and failed to identify any specific, allegedly fraudulent
transfers during the adversary litigation. See id. at 6-10. The Oberdicks
further allege that Appellants failed to respond to their efforts at resolution
of the adversary action. Id. at 12. After careful review of the record, it is
abundantly clear that the Oberdicks’ claims under the Dragonetti Act are
“grounded in bankruptcy court proceedings,” so as to subject them to
preemption by the Bankruptcy Code and Federal Rules of Civil Procedure.
See Stone Crushed, 908 A.2d at 887.
Finally, the Oberdicks chose to litigate the UFTA action in bankruptcy
court and subjected themselves to the federal bankruptcy rules and laws.
As stated in Stone Crushed, the Oberdicks were provided equivalent - if not
greater - protection under the Bankruptcy Code,11 the federal rules,12 and 28
____________________________________________
11
See 11 U.S.C. § 105(a) (providing “[t]he court may issue any order,
process, or judgment that is necessary or appropriate … to prevent an abuse
of process”).
12
See Fed.R.Civ.P. 11; see also Fed.R.Bank.P. 9011 (adopting Rule 11 for
purposes of bankuptcy cases.)
(Footnote Continued Next Page)
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U.S.C. § 1927,13 against frivolous claims and/or abuse of process, as
afforded them under the Dragonetti Act. Nevertheless, the Oberdicks failed
to avail themselves of these protections during the seven year duration of
Mr. Oberdick’s Chapter 7 bankruptcy case. As a matter of policy, it seems
only fair that the Oberdicks should now be precluded from benefiting from a
similar state cause of action. As acknowledged by the Pennsylvania
Supreme Court, “part of the policy underlying preemption … is to prevent
litigants from forum shopping to achieve a different result in federal court
than they could obtain in state court.” Stone Crushed, 908 A.2d at 887
_______________________
(Footnote Continued)
Rule 9011 requires … that attorneys’ submissions to the court
not be “presented for any improper purpose, such as to harass
or to cause unnecessary delay or needless increase in the cost of
litigation,” that legal assertions be “warranted by existing law,”
and that “factual contentions have evidentiary support.”
Fed.R.Bankr.P. 9011(b). If any of these requirements is
violated, a court has the discretion … to impose sanctions, which
may be initiated by motion or sua sponte by the court. Id.
9011(c).
In re Miller, 730 F.3d 198, 203 (3d. Cir. 2013). See also Fed.R.Bank.P.
1008 (requiring filings to be verified or contain an unsworn declaration of
truthfulness under penalty of perjury). Bankruptcy Rules 1008 and 9011
provide protection against perjury and frivolous claims, similar to Rule 11.
Stone Crushed, 908 A.2d at 886.
13
“Any attorney … who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the court to satisfy
personally the excess costs, expenses, and attorneys’ fees reasonably
incurred because of such conduct.” 28 U.S.C. § 1927.
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(quoting Werner v. Plater-Zyberk, 799 A.2d 776, 782 (Pa. Super.
2002)).14
Based on our determination that bankruptcy law preempts the claims
asserted in the state court Dragonetti action, we need not address the
remainder of Appellants’ claims. We reverse the trial court’s denial of
summary judgment and remand for proceedings consistent with this opinion.
Judgment reversed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/19/2017
____________________________________________
14
The Werner court further explained that “the Bankruptcy Code
demonstrates Congress’s intent to create a whole system under federal
control therefore mandating that the adjustment of rights and duties within
the bankruptcy process itself is uniquely and exclusively federal, thereby
precluding state law remedies for abuse of its proceedings.” Werner, 799
A.2d at 791.
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