Court Takes On Case Involving Unjust Enrichment After Successful Appeal

Written by: Alan Nochumson

While owning an investment property can be a rewarding and financially successful venture, property owners must navigate through a host of risks to protect their investment, which, if not handled properly, can become quite expensive.

In Metro Real Estate Investment v. Siaway, 2021 Pa. Super. LEXIS 88 (Mar. 2, 2021), the Pennsylvania Superior Court recently determined whether tenants could receive restitution for monies their landlord collected against them by way of execution proceedings based upon a judgment that was subsequently overturned on appeal.

In 2015, the tenants in Siaway entered into a lease agreement with the landlord for a residential property in Philadelphia. Prior to the expiration of the lease, the tenants stopped paying rent and certain utilities, but did not give notice that they intended to terminate the lease, the opinion said.

In 2016, after a landlord-tenant complaint was filed in the Philadelphia Municipal Court, the landlord was ultimately awarded judgment against the tenants in the amount of $4,287.78 as well as possession of the property.

After the tenants vacated from the property, the landlord discovered there was considerable damage to the property.

The landlord then filed a separate breach of contract and negligence action against the tenants in the Philadelphia County Court of Common Pleas, the opinion said.

During the nonjury trial, the landlord presented evidence of breach of the notice provision of the lease as well as damage to the property.

As a result of the property damage, the landlord alleged he had not been able to rent the unit to a new tenant for several months.

The trial court in Siaway held that the tenants breached the lease agreement by failing to give proper notice of their intent to terminate the lease and that they had caused significant damage to the property and, in doing so, the trial court in Siaway awarded the landlord with damages in the amount of $30,000, which was partially offset by the tenants’ security deposit of $3,000.

The tenants appealed the trial court’s ruling to the Superior Court, arguing that the doctrine of res judicata prevented the landlord from filing another lawsuit against them in the Common Pleas Court when the parties previously litigated the same claim in Philadelphia Municipal Court.

The Superior Court in Siaway agreed that the doctrine of res judicata barred the landlord from pursuing his claims in the Common Pleas Court when he had already instituted and won an action in the Philadelphia Municipal Court and could have presented the claims in that action.

Concluding that the landlord could have amended his complaint with the Philadelphia Municipal Court to raise the new claims or file a new complaint and consolidated the actions, the Superior Court in Siaway vacated the judgment against the tenants he obtained in the Common Pleas Court.

While the tenants’ appeal was pending in Superior Court, the landlord filed a praecipe to issue writ of execution against the tenants and a local bank as garnishee.

Subsequently, after a judgment by admission was entered against the local bank as garnishee, it paid the landlord the full amount that it held on deposit for the tenants.

The landlord filed an order to mark the judgment against the local bank as satisfied.

When the Superior Court in Siaway vacated the judgment against the tenants, they filed a motion with the Common Pleas Court for restitution, seeking to recover the full amount that it held on deposit with the local bank plus interest from the landlord.

In response, the landlord alleged that the Common Pleas Court in Siaway did not have jurisdiction over the motion and that the tenants were not entitled to restitution.

Ultimately, the trial court in Siaway denied the motion.

Again, the tenants appealed the trial court’s ruling to the Superior Court.

In their second appeal, the tenants argued that their motion for restitution was properly filed in the Common Pleas Court because long-standing Pennsylvania jurisprudence grants trial court jurisdiction to order restitution following the reversal of a judgment.

The tenants claimed that the satisfaction of judgment entered against the local bank as garnishee did not end the controversy between the tenants and the landlord.

The tenants argued that, while the Pennsylvania Rules of Appellate Procedure allowed them to post a supersedeas bond or seek a stay of execution during their appeal, they did not forfeit their right to restitution by failing to do so.

In support of their motion for restitution, the tenants relied upon a number of cases from the 19th and early 20th centuries allowing for summary restitution for an appellant who successfully obtains a reversal of a judgment on appeal.

In opposition, the landlord argued: once judgment against the local bank was marked satisfied, the full judgment was extinguished and a legal nullity, the Pennsylvania Rules of Appellate Procedure governing supersedeas enacted in 1975 effectively replaced the common law writ of restitution, and the tenants were not entitled to restitution under unjust enrichment principles because they did not seek supersedeas during their prior appeal or move to strike the satisfaction of the judgment.

The Superior Court in Siaway noted that writs of restitution were a well-established equitable principle in early common law, however, it has fallen into disuse and is rarely referenced in case law.

Despite its infrequent use, the Superior Court acknowledged that the writ has never been extinguished by case law, statute or court rule, and the equitable principles underlying the writ remain sound.

Citing to Commonwealth v. McKee, 38 A.3d 879, 882 (Pa. Super. 2012), which held that Rule 2591 of the Pennsylvania Rules of Appellate Procedure enables a trial court to refund court fees and costs in a criminal case when the defendant’s conviction was vacated on appeal, the Superior Court in Siaway concluded that it would be proper for a civil trial court to grant restitution for a judgment executed and subsequently reversed on appeal.

Quoting 42 Pa. C.S. § 931(a), the Superior Court in Siaway emphasized that the trial court has “unlimited original jurisdiction of all actions and proceedings, including all actions and proceedings heretofore cognizable by law or usage in the courts of common pleas.”

In addition, citing to 42 Pa. C.S. Section 323, the Superior Court in Siaway highlighted that all courts retain the power to issue “every lawful writ and process necessary or suitable for the exercise of its jurisdiction and for the enforcement of any order which it may make and all legal and equitable powers required for or incidental to the exercise of its jurisdiction.”

Accordingly, the Superior Court in Siaway concluded that such principles encompass a writ of restitution following reversal of a judgment on appeal because the common law writ of restitution has not been superseded by statute, rule, or case law.

As such, the trial court is empowered to order restitution for the judgment paid to place the parties into the positions they occupied prior to the execution of the judgment.

To conclude, the Superior Court in Siaway, noted that the landlord cannot be faulted for executing his judgment and garnishing funds from the tenants’ accounts based on a judgment that was valid at the time.

However, this enrichment became unjust when the judgment underlying it was vacated by the Superior Court.

Consequently, without restitution, the tenants’ successful appeal would be a hollow victory and the landlord would be enriched without valid legal basis.

To prevent this unjust enrichment, the Superior Court in Siaway determined that the tenants were entitled to restitution for the judgment paid.

Clementa Amazan, an associate at Nochumson P.C., is the co-author of this article.

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