HARRISBURG – The Superior Court of Pennsylvania is considering whether or not to affirm a Bucks County trial court’s decision to deny a motion to strike lis pendens, in a dispute where a business’s former counsel and longtime partner made such a filing on property owned by that same business.
Appellee Robert Rosin, Esq., former counsel and partner of appellants PA Associates and Gary Schmidt, withdrew from their business partnership in January 2021 amid an ongoing dispute – a move entered by an arbitrator and which is not contested in the case at hand.
Rosin’s ownership interest in a Warminster-based warehouse property owned by the appellants was then transferred to “Gary Schmidt t/a PA Associates”. However, Rosin filed a petition to enforce a separate arbitration award and in May 2021, a praecipe to index lis pendens, which is a notice to any parties interested in a particular piece of real estate that the property is connected to litigation.
According to the appellants, that move was done to discourage sale of the property and they filed a motion to strike the lis pendens filing. In February 2022, the Bucks County Court of Common Pleas, without entertaining oral argument or a hearing, ruled to deny the motion to strike.
Thus, Schmidt and PA Associates appealed to the Superior Court, arguing that the trial court erred when it denied its motion to strike, since Rosin no longer had any legal ownership interest in the property at issue.
On Aug. 19, the appellant filed a brief with the Superior Court, outlining their position.
“The trial court abused its discretion and committed reversible error of law when it denied Schmidt’s motion to strike lis pendens. Where title is not at issue in the pending litigation and since the outcome of the underlying litigation will not affect title to the property, a lis pendens is inappropriate under the facts of this case,” according to the appellants’ brief.
“The trial judge improperly determined and held that Rosin was seeking to resolve a title dispute. This is a factually incorrect finding and not based upon the evidence of record. Rosin’s petition to enforce the arbitration award seeks to compel the execution of a judgment note and a general release and does not concern or request an interest in the title or bring the title into question. This Court should vacate the trial court order and strike the lis pendens.”
The brief continued that, under the terms of the agreement Rosin entered into when leaving the business partnership in January 2021, he is being paid monthly installments of $19,635 over the following five-year period – for a grand total of $1,178,100, and had signed over the deed to the property.
“Schmidt is the legal, equitable, beneficial and actual record owner of the property,” the brief states.
On Oct. 6, counsel for Rosin filed their own brief to the Superior Court, seeking that it uphold the denial of the motion to strike handed down by the Bucks County Court of Common Pleas.
“The trial court did not commit reversible error in refusing to strike the lis pendens. The Honorable Brian T. McGuffin of the Bucks County Court of Common Pleas correctly applied the two-part test to determine whether the application of the lis pendens was proper. In so doing, the trial court concluded that the first prong of the test was met. The lis pendens secured the property interest of Robert Rosin in the warehouse, pending the payment of the buyout monies to Robert Rosin on an installment basis. Robert Rosin’s ownership interest in the purchase price of the real property in question was at issue before the arbitrator and is at issue in the present case,” the appellee’s brief said.
“Having determined that title was at issue, the Court then addressed the second prong of the test, namely the balancing of the equities to determine: (a) Whether the application of the doctrine was harsh or arbitrary; and (b) Whether the cancellation of the lis pendens would prejudice the non-petitioning party. In this regard, the trial court correctly concluded that the application of the doctrine was not harsh or arbitrary. The trial court then determined that the removal of the lis pendens would be unduly prejudicial to Robert Rosin. Robert Rosin had exercised his right to withdraw from the partnership and, as a result, he was to be paid, on an installment basis, his 20 percent interest over a period of 60 months.”
The brief continues that the partnership agreement and a related amendment mandated that the payment of those monies be secured by a judgment note to be recorded in the Bucks County Court of Common Pleas.
“Gary Schmidt has refused to sign the judgment note in violation of orders of the Court and the arbitrator. As such, the striking of the lis pendens would be unduly prejudicial to Robert Rosin, leaving him without any recorded interest in the property; thereby allowing Gary Schmidt to sell the property and refuse to honor the remaining obligations of payment pursuant to the terms of the buyout. The trial court correctly concluded, therefore, that the lis pendens was proper and that the motion to strike the lis pendens should be denied. It is respectfully requested that the decision of the trial court be affirmed,” the brief stated.
Counsel for Rosin argued that the only reason Schmidt would want the lis pendens stricken was that he wants to sell the warehouse and stop paying Rosin – and further, was “operating as it should and equity requires that it remain.”
Oral arguments took place before the Superior Court earlier this week, where the action remains pending.
Superior Court of Pennsylvania case 797 EDA 2022
Bucks County Court of Common Pleas case 2021-01629
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com