Kapcsos v. Benshoff, 227 WDA 2016

194 A.3d 139

Adam K. KAPCSOS

v.Malisha J. BENSHOFF, Appellant

No. 227 WDA 2016

Superior Court of Pennsylvania.

Argued April 24, 2018

Filed July 27, 2018

Russell J. Heiple, Johnstown, for appellant.

David A. Raho, Johnstown, for appellee.

BEFORE: BENDER, P.J.E., PANELLA, J., SHOGAN, J., LAZARUS, J., OLSON, J., STABILE, J., DUBOW, J., KUNSELMAN, J., and MURRAY, J.

OPINION BY KUNSELMAN, J.:

Adam K. Kapcsos moved for en banc reargument of Malisha J. Benshoff's appeal in this partition action. We granted his motion. However, during our deliberations of the issues that Ms. Benshoff raised on appeal, we discovered a significant procedural error by the parties in the trial court. Because this procedural error is fatal to our appellate jurisdiction and the judgment entered below, we must quash this appeal.

Mr. Kapcsos and Ms. Benshoff purchased a piece of real estate "as joint tenants with the right of survivorship." N.T., 5/27/15, Plaintiff's Exhibit A. A few years later, their relationship soured, and Mr. Kapcsos filed a "Complaint in Partition." Complaint, at 1. In his prayer for relief, Mr. Kapcsos requested that the trial court "enter an Order awarding him the property," because he had paid, among other things, all of the acquisition costs, years of mortgage on his own, taxes, and various up-keep and remodeling expenses. Complaint, at 2.¹ Ms. Benshoff filed an Answer and Counterclaim, in which she sought partition and an equitable award based upon her ½ interest in the property. Mr. Kapcsos replied to her Counterclaim, and the pleadings then closed.

Next, Mr. Kapcsos filed a certificate of readiness, requesting a bench trial to divide the property. That trial occurred, and the court entered an order equitably carving-up the property, even though no one had moved for an order legally partitioning it. As a result, the trial court has never entered an order of partition with the Recorder of Deeds of Cambria County.²

After the trial, the court of common pleas ordered:

that upon payment of the owelty of $7,011.33 to [Ms.] Benshoff and proof that the mortgage has been refinanced to remove [Ms.] Benshoff as a debtor, [Mr.] Kapcsos is awarded title to the real estate and that [Ms.] Benshoff shall execute a deed in favor [of Mr.] Kapcsos at that time. Payment of the owelty and transfer of the property shall occur within forty-five (45) days unless the Court, for good cause shown, extends this time.

Trial Court Order, 7/10/15. Ms. Benshoff filed exceptions, which the trial court overruled in a January 11, 2016 Order.

Ms. Benshoff appealed. A three-judge panel of this Court affirmed in part and revered in part. We granted reargument en banc .

Although neither party has challenged our jurisdiction, we may always consider that question on our own motion. See, e.g., M. London, Inc. v. Fedders Corp. , 306 Pa.Super. 103, 452 A.2d 236, 237 (1982). We raise the issue of our jurisdiction now, because we have uncovered a procedural error in the record that prevents us from addressing the merits of this appeal.

"Jurisdiction is purely a question of law; the appellate standard of review is de novo and the scope of review plenary." Commonwealth v. Seiders , 11 A.3d 495, 496–97 (Pa. Super. 2010).

We begin by discussing proper procedure for a partition action, due to its unique nature and the dearth of appellate precedent in this rarely litigated, often confusing, area of the law. Pennsylvania Rules of Civil Procedure 1551 – 1574 split a partition action into two, distinct, chronological parts. Rules 1551 – 1557 govern Part 1, and Rules 1558 – 1574 govern Part 2. Each part, by rule, must produce its own, distinct, appealable order.

The first order, under Pa.R.Civ.P. 1557, directs partition of the parties' legal interests into severalty. See Johnson v. Gaul , 228 Pa. 75, 77 A. 399, 400 (1910) ("partition is a possessory action; its purpose and effect being to give to each of a number of joint owners ... his [or her] share in severalty").

The second order, under Pa.R.Civ.P. 1570, does one of three things. A Rule 1570 order may (1) divide the partitioned property among the parties, (2) force one or more of the parties to sell their interest in the land to one or more of the parties, or (3) sell the land to the general public and distribute the proceeds among the parties.

In Part 1, the court must determine whether the property is partitionable under law. In other words, Part 1 is to ascertain:

I. Do the parties jointly own the real estate in question?

II. If so, what fractional legal interests in the property does each party hold?

The answers to these questions may be admitted in the pleadings, or, if they are not, a hearing or jury trial may be needed. If the trial court answers both questions and finds that the plaintiff has established a right to partition, Rule 1557 dictates:

the court shall enter an order directing partition which shall set forth the names of all the co-tenants and the nature and extent of their interests in the property. No exceptions may be filed to an order directing partition.

Critically, any party may immediately appeal that order under Pennsylvania Rule of Appellate Procedure 311(a)(7) (permitting some interlocutory appeals as of right). After a Part 1 order of partition becomes final (either because no one appeals or an appellate court affirms it), only then may parties proceed to Part 2, where the actual division, award, or sale of the partitioned property occurs.

Volume 23, Chapter 122 of STANDARD PENNSYLVANIA PRACTICE 2d sets out the proper procedure for a partition action in minute detail. Adherence to the specific process designed for partition actions is critical to safeguard the rights at stake, as illustrated in DeLoatch v. Murphy , 369 Pa.Super. 255, 535 A.2d 146 (1987). There, the chancellor entered a Part 1 order directing partition and appointed a master to divide the estate. DeLoatch died. Her daughter/executrix moved to substitute as plaintiff and complete the lawsuit. Murphy objected, claiming ownership of the whole property through his right of survivorship. This Court rejected his argument, because the joint tenancy with right of survivorship terminated when the Recorder of Deeds recorded the Part 1 order directing partition. That severed DeLoatch and Murphy's joint tenancy into two, divided, ½ interests in the property. Thus, they held title in severalty, rather than jointly, at DeLoatch's death. With their interests severed, DeLoatch's title passed to her estate, rather than to Murphy. But, had the Part 1 order not been recorded at DeLoatch's death, Murphy would have taken the whole property through survivorship, and DeLoatch's heirs would have inherited nothing.

Therefore, the entry and recording of a Part 1 order directing partition³ is essential to terminate a joint tenancy. Following that, Part 2 is purely an equitable proceeding where the trial judge or master balances the equities to decide what form the partitioning will take. If the property were a pie, the trial court must decide how best to serve it to the parties. There are three ways "to slice" the "pie."

First, the court may determine that the pie should be cut into several pieces and award the pieces of property to the parties as their severally owned parcels (i.e. , "purparts") of land. See Pa.R.Civ.P. 1560. This typically occurs when the pie is so large and the parties so few in number that everyone can receive a fairly sizable and valuable piece. If the court takes this course, in the end, it will convey ownership to the parties by its Part 2 order, which the Recorder of Deeds will record. No deed is executed, because the order serves as the conveyance. The court determines the size and location of each party's parcel based upon the parties' interests and what the court deems to be equitable given the facts and circumstances of the case.

Second, the court might determine that the pie cannot be cut without ruining it.⁴ If that happens, the court may give the whole pie to one party and order that person to pay the other parties for their respective shares. See Pa.R.Civ.P. 1562. In this scenario, one party gets an order of conveyance granting undivided title to the whole property (which is recorded), and the other party receives a cash buy-out, known as "owelty." Id.

The court calculates the owelty based upon the equities of what everyone invested in the land. It takes those investments and then divides them by each parties' fractional interest in the property, as determined in Part 1. See Weiskircher v. Connelly , 248 Pa. 327, 93 A. 1068, 1096 (1915) (Awarding acquisition costs, taxes, mortgage payments, rents, etc. when deciding the owelty, but only by "one half " to reconcile owelty with each party's ½ interest in the property) (emphasis added).

Finally, if neither of the first two scenarios are possible, the court's third option is to order a sale of the pie to the general public and divide the proceeds (if any) among the parties. Once all court costs, attorneys' fees, mortgages, etc. are satisfied from the sale's proceeds, the court awards any remaining funds to the parties according to their investments in the land, divided by their fractional interests, as determined in Part 1.

In the case at bar, the parties did not request and, therefore, the trial court never entered a Part 1 order directing partition under Rule 1557. As a result, the rights of the parties' heirs are in jeopardy, because the deed, which is the last conveyance of record, grants Mr. Kapcsos and Ms. Benshoff a joint tenancy with right of survivorship . The order directing partition, which should have been entered and recorded in the Office of the Recorder of Deeds, would have eliminated that right of survivorship. But, as things stand currently, if one party dies, the surviving party would acquire the property as a whole by operation of law, and the heirs of the decedent would inherit nothing.

"[M]ere pendency of an action in partition, without more , is insufficient to work...