Melvin W. Smith Bldg. Sys., LLC v. Bedford Cnty. Humane Soc'y, 1158 WDA 2021

279 A.3d 1267 (Table)

MELVIN W. SMITH BUILDING SYSTEMS, LLC, Appellant

v.BEDFORD COUNTY HUMANE SOCIETY

No. 1158 WDA 2021

Superior Court of Pennsylvania.

Filed May 20, 2022

MEMORANDUM BY MURRAY, J.:

Melvin W. Smith Building Systems, LLC (Appellant), appeals from the order granting the motion to compel discovery filed by Bedford County Humane Society (BCHS), in this action involving breach of contract. Upon review, we remand for the trial court to file a supplemental Pa.R.A.P. 1925(a) opinion.

On October 2, 2018, Appellant filed a complaint against BCHS pleading breach of contract, unjust enrichment, and conversion. Appellant claimed it entered into a contract with BCHS for Appellant to construct a building, and alleged BCHS breached the contract prior to Appellant's completion of the building, causing Appellant to incur monetary damages of approximately $80,000. On October 22, 2018, BCHS filed an answer, new matter and counterclaim.

Following proceedings not relevant to this appeal, on March 8, 2021, BCHS sent Appellant interrogatories and a request for production of documents.¹ BCHS asked Appellant to produce, in pertinent part, "a complete copy of all business and personal tax returns, with all attachments and schedules, including federal, state and local [taxes], you filed for every year in which you worked on this project."² Interrogatories and Request for Production of Documents, 3/8/21, at 15 (unnumbered).

Appellant filed an answer and objections to BCHS's discovery requests on May 13, 2021.³ Appellant objected to BCHS's request for tax documents, asserting:

This request is not relevant to any claim or defense and therefore [is] beyond the scope of permissible discovery. The request also seeks information that is protected information (bank account numbers, balances, social security numbers).

Appellant's Answer and Objections, 5/13/21, at ¶ 14 (see Appellant's Reproduced Record at 56(a)).

On June 7, 2021, BCHS filed a motion to compel discovery. Regarding BCHS's request for documents related to Appellant's "business and personal tax returns," BCHS asserted:

The documents requested are related to the damages claimed by [Appellant] and are therefore relevant. The requests do not ask for sensitive information and any such information that exists on the documents could be redacted.

Motion to Compel Discovery, 6/7/21, at ¶ 13.

The trial court held a hearing on August 24, 2021. By order entered September 3, 2021 (Discovery Order), the trial court granted BCHS's motion to compel discovery. Regarding BCHS's request for Appellant's and Smith's tax returns, the court ordered Appellant to produce the documents within 30 days.

Appellant timely filed a notice of appeal, followed by a court-ordered Pa.R.A.P. 1925(b) statement, raising nine claims of trial court error. The court issued a brief Rule 1925(a) opinion, concluding its Discovery Order "disposed solely of discovery issues and, as such, was not a final order but rather an interlocutory one" that is not appealable. Trial Court Opinion, 12/17/21, at 1 (citing Commonwealth v. Nicodemus , 636 A.2d 1118, 1120 (Pa. Super. 1993) ("a final [o]rder is one which ends the litigation or disposes of the entire case.")). Accordingly, the trial court suggested this Court quash the appeal as interlocutory. Id. at 2.

On November 19, 2021, BCHS filed in this Court an application to quash, arguing the Discovery Order was not appealable because it was neither final nor collateral. See generally Application to Quash, 11/19/21; see also In re Estate of Moskowitz , 115 A.3d 372, 388 (Pa. Super. 2015) (explaining, under our Rules of Appellate Procedure, a party is only permitted to appeal from: "(1) a final order or an order certified as a final order ( Pa.R.A.P. 341 ); (2) an interlocutory order as of right ( Pa.R.A.P. 311 ); (3) an interlocutory order by permission ( Pa.R.A.P. 312, 1322 ; 42 Pa.C.S. § 702(b) ); or (4) a collateral order ( Pa.R.A.P. 313 )." (citation omitted)).⁴ BCHS asserted:

Allowing appeals each time a party requests tax returns from the opposing party in breach of contract actions would result in the corrosion in the final order rule. Discovery requests for the tax returns of a party during relevant times of an action is common because it is often relevant. They are especially relevant when[, as in the instant case,] there is a claim for breach of contract in which a plaintiff claims a loss of income as a result of the breach. If this Court were to take a collateral appeal each time a party does not want to turn over tax returns in discovery, it would amount to a needless burden on the Court and cause undue delays of countless cases at the Common Pleas level.

Brief in Support of Application to Quash, 11/19/21, at 15 (unnumbered).

Appellant filed an answer to the application to quash on November 29, 2021, asserting that the Discovery Order is immediately appealable as a collateral order. On January 6, 2022, this Court denied BCHS's application to quash without prejudice to its right to raise the issue before the merits panel.

Appellant presents four issues for our consideration:

A. Is a discovery order compelling the disclosure of tax returns and tax information of a non-party to a lawsuit a collateral order, thus appealable as of right?

B. Is an order requiring a limited liability company to produce personal and business tax returns with related forms irrelevant to any claim or defense where they only relate to work that was completed and paid for in a claim for breach of contract seeking money damages; the work extended for two months in one year and three months in the second year; and the recoverable damages are the difference between the contract price and the reasonable cost of completion of the job?

C. Are the payroll expenses and documents for work that was completed and paid for irrelevant to any claim or defense where the recoverable damages are the difference between the contract price and the reasonable cost of completion and an accounting of the same an unreasonable burden to impose upon the contractor?

D. Is it an unreasonable burden to require a contactor to determine and identify what work was done and the cost of materials and labor between the payment of past draws that are not at issue where the recoverable damages are the difference between the remaining contract price and the reasonable cost of completion of the job?

Appellant's Brief at 2-3.

Appellant first argues the trial court erred in concluding the Discovery Order is not appealable as a collateral order.⁵ Id. at 10. Conversely, BCHS requests quashal on the basis that the Discovery Order does not satisfy the collateral order doctrine. BCHS Brief at 8 ("Allowing appeals each time a party requests tax returns from the opposing party in breach of contract actions would result in the corrosion of the final order rule.").

"The appealability of an order under the Pa.R.A.P. 313 collateral order doctrine presents a question of law, over which our standard of review is de novo and our scope of review is plenary." Brooks , 259 A.3d at 365. "[I]n general, discovery orders are not final, and are therefore unappealable." Jones v. Faust , 852 A.2d 1201, 1203 (Pa. Super. 2004). However, Pa.R.A.P. 313(b) provides that appeals may be taken from collateral orders, i.e. , orders which are

separable from and collateral to the main cause of action where the right involved is too important to be denied review and the question presented is such that if review is postponed until final judgment in the case, the claim will be irreparably lost.

Id. ; see also Meyer-Chatfield Corp. v. Bank Fin. Servs. Grp. , 143 A.3d 930, 936 (Pa. Super. 2016) ("The collateral order doctrine is a specialized, practical application of the general rule that only final orders are appealable as of right."). To satisfy the collateral order doctrine, an appellant must demonstrate the order:

1) is separable from and collateral to the main cause of action; 2) involves a right too important to be denied review; and 3) presents a question that, if review is postponed until final judgment in the case, the claim will be irreparably lost. The first prong, separability, occurs when we can address the issue surrounding the disputed order without analyzing the ultimate issue in the underlying case. As for the second prong, importance, it is not sufficient that the issue be important to the particular parties. Instead, the issue must involve rights deeply rooted in public policy going beyond the particular litigation at hand. We must interpret the collateral order doctrine narrowly, and each of the above prongs must be clearly present for us to deem an order collateral.

Cabot Oil & Gas Corp. v. Speer , 241 A.3d 1191, 1196-97 (Pa. Super. 2020) (citations omitted).

Here, Appellant argues all three prongs of the collateral order doctrine exist because:

The trial court's order compelling the production of Mr. Smith's (a nonparty ) personal income tax returns and related documents is a collateral order because whether those documents are discoverable is [a] separable question from the issues involved in the merits of the case, involves a recognized privacy right that is too important to be denied review, and the privacy of the documents will be irreparably lost if review is postponed until after final judgment.

Appellant's Brief at 8 (emphasis added). After careful consideration, we agree.

With respect to the first prong, separability, Appellant's claim of a recognized privacy right regarding its and Smith's tax return information is distinct from the underlying breach of contract claim. See, e.g., Speer, 241 A.3d at 1197 (first prong of collateral order doctrine was met "because it is possible to address whether [a]ppellants' financial records are discoverable without analyzing the merits of [a]ppellees' actions against [a]ppellants under the Dragonetti Act or for tortious interference with contract."); see also J.S. v. Whetzel, 860 A.2d 1112, 1117 (Pa. Super. 2004) (in...