The Commonwealth Court has ruled that a Philadelphia trial judge prematurely denied a man’s petition for payment from the state’s Real Estate Recovery Fund.

A three-judge panel unanimously ruled in an unreported opinion to vacate a ruling of Philadelphia Court of Common Pleas Judge Paul P. Panepinto, saying he should not have tossed out claimant Edward Chaney’s petition before a record could be developed on the disputed factual issues raised by the fund’s answer to the petition.

“The trial court erred in dismissing claimant’s petition without providing him an opportunity to develop a record as to whether he is entitled to relief from the Fund,” Judge Robert Simpson wrote. “Only then could the trial court make an informed judgment based on the information presented. By foregoing the proper procedure when presented with claimant’s petition and the Fund’s answer, the trial court denied claimant an opportunity for meaningful review.”

Simpson was joined by Judges P. Kevin Brobson and Rochelle S. Friedman.

In Chaney v. Fairmount Park Real Estate Corp., according to Simpson, Chaney sued two corporations to recover a deposit he made in connection with a real estate transaction involving Fairmount Park Real Estate Corp. and HCFD Auctioneering Corp.

On Feb. 22, 2010, according to Simpson, Chaney won a $64,382 verdict in the suit and the following February filed a petition for recovery against the fund.

Panepinto denied Chaney’s petition based solely on the petition and the fund’s answer to it, Simpson said.

Chaney appealed to the Superior Court, which transferred the case to the Commonwealth Court, at which point Panepinto issued an opinion saying Chaney failed to meet the four requirements under Section 803 of the Real Estate Licensing and Registration Act, according to Simpson.

“‘In short, the [p]etition consists of bald allegations of [claimant's] compliance and entitlement to certain money from the [Fund],’” Panepinto said in his opinion, according to Simpson. “‘No proof was provided. [Claimant] could have attached the necessary documents and proofs but chose not to.’”

On appeal, the fund argued that Panepinto had properly treated Chaney’s filing as a motion under Phila. Civ. R. 208.2(c) rather than as a petition, but Simpson said that while Philadelphia local rules do not define the term “statutory petition,” Black’s Law Dictionary defines a “petition” as “a formal written request presented to a court.”

“Additionally, claimant’s right to relief here is based upon a statute, namely the Real Estate Licensing and Registration Act,” Simpson said. “Thus, claimant’s filing falls within the plain meaning of the undefined term ‘statutory petition,’ and, therefore, is governed by the procedures set forth in Pa. R.C.P. Nos. 206.1-206.7.”

Under Pa. R.C.P. Nos. 206.6 and 206.7, in cases where disputed factual issues exist, a trial court can either hold a hearing or permit depositions or other discovery, Simpson said.

Simpson cited the Superior Court’s decision in the 2000 case Duquesne Light Co. v. Rudolph N. Rohn Co., in which the court held that a trial court erred in granting a petition without giving the opposing party an opportunity to file an answer or giving the parties an opportunity to litigate disputed factual issues.

“Here, upon the filing of claimant’s petition, the trial court did not issue a rule to show cause despite the requirement set forth in Phila. Civ. R. 206.4(c),” Simpson said, adding that Panepinto also erred in failing to hold an evidentiary hearing or permit depositions or other discovery under Pa. R.C.P. Nos. 206.6-206.7.

“The trial court’s decision to forego the appropriate procedure deprived claimant an opportunity to litigate his claim against the fund,” Simpson said.

The fund argued that Chaney’s petition offered only “bald allegations with no information, documentation or other proof” that he was entitled to recover from the fund, according to Simpson.

Section 803 requires a claimant to show that he or she is not a spouse of the debtor or personal representative of a spouse of the debtor and that he or she has obtained a final judgment. It also requires the claimant to show that “all reasonable personal acts, rights of discovery and such other remedies at law and in equity as exist have been exhausted in the collection thereof” and that no more than a year has passed since the termination of the proceedings in the underlying case, including reviews and appeals.

According to Simpson, Chaney said in his petition that the debtors were corporate entities and that he obtained a final judgment against Fairmount Park Real Estate, which is a State Real Estate Commission-licensed broker or agent, and HCFD Auctioneering. Chaney also said in his petition that the judgment was founded on fraud, misrepresentation and deceit.

In its answer, however, the fund disputed that the judgment was against a real estate licensee covered under the Real Estate Licensing and Registration Act and that the judgment was founded on fraud, misrepresentation and deceit, according to Simpson.

“Thus, contrary to the trial court’s determination, the fund’s answer raised disputed factual issues,” Simpson said.

Chaney’s attorney, Arnold Machles of Bala Cynwyd, Pa., said one important issue Simpson addressed in a footnote was the fund’s assertion that Chaney had waived the right to challenge the trial court’s objection to the lack of specificity in his petition because he had failed to raise it in his 1925(b) statement.

Simpson said in the footnote that because the challenge related to the trial court’s rationale that it first expressed in its 1925(a) opinion, Chaney could not have raised the issue any sooner.

Machles said that because there was no opinion from the trial court at the time he drafted his 1925(b) statement, he could only make assumptions about Panepinto’s reasoning.

“That’s something that’s in every case and nobody seems to notice it,” Machles said.

Counsel for Fairmount and HCFD, Paul S. Peters III of Philadelphia, also could not be reached.

(Copies of the 17-page opinion in Chaney v. Fairmount Park Real Estate Corp., PICS No. 12-1275, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •