Roxy and Honey v. Richland Mill

J-A14005-24

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

ROXY AND HONEY, LLC : IN THE SUPERIOR COURT OF

: PENNSYLVANIA

:

v. :

:

:

RICHLAND MILL, LLC, SHAWN :

TOUHILL, AND RICHLANDTOWN :

ROAD, LLC, DAVID HOFFMAN AND : No. 1721 EDA 2023

ASSOCIATES, LLC, THE SHERMAN :

GROUP :

:

:

APPEAL OF: RICHLAND MILL, LLC, :

SHAWN TOUHILL, AND :

RICHLANDTOWN ROAD, LLC :

Appeal from the Order Entered June 5, 2023

In the Court of Common Pleas of Bucks County Civil Division at No(s):

2022-00297

BEFORE: LAZARUS, P.J., STABILE, J., and LANE, J.

MEMORANDUM BY LAZARUS, P.J.: FILED AUGUST 20, 2024

Richland Mill, LLC (Richland Mill), Shawn Touhill (Touhill), and

Richlandtown Road, LLC (Richlandtown) (collectively Appellants), appeal from

the June 5, 2023 order, entered in the Court of Common Pleas of Bucks

County, granting in part and denying in part Roxy and Honey, LLC’s (Roxy),

motion for discovery and adopting the April 12, 2023 recommendation of the

discovery master. On May 31, 2024, Roxy filed an application to quash with

this Court, arguing that interlocutory discovery orders cannot be appealed as

of right, that Appellants did not request to proceed with an interlocutory

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appeal, and that the collateral order doctrine does not apply to the instant

order. After careful review, we quash in part and remand with instructions.

Roxy filed the instant complaint on January 18, 2022, following a

transaction, involving the purchase of a feed mill business and the lease of

the business property, between Roxy, Richland Mill, Touhill, and Richlandtown.

Roxy raised claims of misrepresentation, breach of contract, promissory

estoppel, and unjust enrichment against Appellants, alleging Appellants failed

to fully disclose information related to the feed mill business’ finances and

assets. Roxy demanded a jury trial; however, the case has not been

scheduled yet for trial. The parties have engaged in a lengthy discovery

process and filed numerous motions. On June 27, 2022, the trial court

appointed a discovery master to address all discovery-related matters in the

instant case.

On April 10, 2023, Roxy filed a motion for discovery of financial condition

to support a punitive damages claim. The discovery master recommended

that Appellants be required to respond, and the trial court adopted the

recommendation. Appellants sought reconsideration, which the trial court

denied on April 25, 2023. All parties then filed memoranda of law in support

of or against Roxy’s motion for punitive damages. After reviewing the various

briefs and memoranda, the discovery master determined that Roxy made out

a prima facie case for punitive damages, rendering no opinion as to whether

Roxy would be successful before a judge or jury at trial, and recommended

that Roxy be permitted pre-trial discovery relevant to punitive damages. On

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June 5, 2023, the trial court adopted the recommendation of the discovery

master and allowed for discovery requests directed at Touhill only. 1 On June

15, 2023, Appellants filed a motion to reconsider, which the trial court denied

on June 23, 2023.

On June 26, 2023, Appellants filed a notice of appeal from the June 5,

2023 order allowing punitive damages discovery with the trial court. Both

Appellants and the trial court have complied with Pa.R.A.P. 1925.

Appellants raise the following questions for our review:

1. Whether, in entering the June 5[, 2023] order, the [trial] court

committed an error of law by failing to properly provide

“appropriate restrictions” as to the time, scope, and dissemination

of [] personal financial and net worth information as required by

[Pa.R.C.P.] 4003.7, [] including, without limitation, a

confidentiality order or some other similar appropriate limitation

on use and disclosure.

2. Whether, in entering its June 5[, 2023] order, the [trial] court

committed an error of law by failing to properly provide

“appropriate restrictions” as to the time, scope, and dissemination

of [] personal financial and net worth information of non-party

Geralyn Touhill ([] Touhill’s wife) as required by Rule 4003.7, []

including, without limitation, a confidentiality order or some other

similar appropriate limitation on use and disclosure.

3. Whether, in entering the June 5[, 2023] order, the [trial] court

committed an error of law by allowing punitive damages

discovery, because [Roxy] has clearly elected the remedy of

rescission; therefore, [Roxy] is [neither] entitled to recover

punitive damages as a matter of law[,] nor conduct punitive

damages-based asset discovery.

4. Whether, in entering the June 5[, 2023] order, the [trial] court

committed an error of law, because [Roxy’s] proposed punitive

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1 Touhill is the sole owner of both Richland Mill and Richlandtown.

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damage[s] discovery . . . is overbroad [and] goes beyond that

reasonably necessary to determine net worth.

5. Whether, in entering the June 5[, 2023] order, the [trial] court

committed an error of law, because [Roxy] failed to establish a

prima facie case of intentional misrepresentation. [Roxy’s]

alleged “badges of fraud” are all things that [Roxy] could have

discovered during due diligence, and, therefore, [Roxy] cannot

claim justifiable reliance based on its own failure to investigate

during contractually provided due diligence. As such, [Roxy] was

not entitled to conduct punitive damages-based asset discovery

under Rule 4003.7[].

6. Whether the [trial] court committed an error of law by

delegating responsibility to the discovery master for determining

whether punitive damages discovery under Rule 4003.7[], was

appropriate and permitted.

Appellants’ Brief, at 7-8 (unnecessary capitalization omitted; emphasis in

original).

In brief, Appellants argue that the June 5, 2023 order violates their

privacy rights because it fails to include any limitations or protections, and

that the trial court erred by allowing punitive damages discovery. On the

other hand, Roxy asks us to quash the appeal, arguing that it does not fall

under any exception to the final order rule, including the collateral order

doctrine.

Initially, we must determine whether this Court has jurisdiction over the

appeal. Generally, an appeal lies only from a final order, unless permitted by

rule or statute. See Shearer v. Hafer, 177 A.3d 850, 855-56 (Pa. 2018). A

final order is one that “disposes of all claims and of all parties.” Pa.R.A.P.

341(b)(1). However, we have recognized an exception to the final order rule

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under the collateral order doctrine. See Shearer, 177 A.3d at 856-57; see

also Pa.R.A.P. 313.

Appellants argue that, while they are appealing from an interlocutory

order,2 this Court has jurisdiction to consider it, pursuant to Rule 313, because

the order allows for financial discovery, including personal tax returns and

financial information.3 Appellants contend that orders for the production of

tax returns and other personal financial information constitute appealable

collateral orders. See Appellants’ Brief, at 2-3. More specifically, Appellants’

main arguments are that the trial court erred by “failing to properly provide

‘appropriate restrictions’ as to the time, scope, and dissemination of that

personal financial and net worth information as [statutorily] required[,]” and

that the court erred by allowing Roxy to pursue punitive damages discovery.

Appellants’ Brief, at 20-30.

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2 In its Pa.R.A.P. 1925(a) opinion, the trial court asserts that the instant appeal

is premature and should be quashed. Specifically, the trial court states that

Appellants did not request to proceed with an interlocutory appeal from the

trial court under Pa.R.A.P. 312, that this appeal does not qualify as an

interlocutory appeal as of right under Pa.R.A.P. 311, and that this appeal does

not fall within the parameters of the collateral order doctrine under Rule 313.

Appellants do not argue that they requested to proceed with an interlocutory

appeal under Rule 312 or that the order is appealable as of right under Rule

311, and thereby confining our review to Rule 313.

3 The discovery master determined that Roxy made out a prima facie case for

an award of punitive damages at trial and, therefore, permitted pre-trial

discovery related to that issue. The discovery order directed Touhill, as sole

owner of the business, to produce certain documents evidencing his personal

wealth.

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Accordingly, to invoke our jurisdiction to review Appellants’ claims, the

order must satisfy the requirements of the collateral order doctrine. Under

Rule 313, a reviewable collateral order is one that is “[1] separable from and

collateral to the main cause of action where [2] the right involved is too

important to be denied review and [3] the question presented is such that if

review is postponed until final judgment in the case, the claim will be

irreparably lost.” Shearer, 177 A.3d at 857 (quoting Pa.R.A.P. 313(b)). Such

orders are appealable as of right. Id.

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, 241 A.3d at 1196-97 (citations and quotation marks omitted).

“[W]ith regard to the third prong. . ., our Supreme Court explained that

whether a right is adequately vindicable or effectively reviewable, simply

cannot be answered without a judgment about the value interests that would

be lost through rigorous application of a final judgment requirement.”

Bogdan v. Am. Legion Post 153 Home Ass’n, 257 A.3d 751, 755-56 (Pa.

Super. 2021) (citation omitted).

Upon on review, we conclude that Appellants have satisfied all three

prongs of the collateral order doctrine as it applies to their privacy rights. As

to the first prong, we may analyze the issue of whether the trial court set forth

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appropriate restrictions to the punitive damages discovery order without

analyzing the underlying case, wherein Roxy raises claims of

misrepresentation, breach of contract, promissory estoppel, and unjust

enrichment. See Cabot Oil, 241 A.3d at 1197; see also Thackray-Tadley

v. WTA Real Estate Mgmt. Co., 299 A.3d 901, *6 (Pa. Super. 2023) (Table)

(determining individual tax returns are separable from underlying claims

regarding dissolution of entities).4 Appellants meet the second prong because

they have a significant privacy interest in their tax returns. See Appellants’

Brief, at 4. Finally, were Appellants’ tax information information to be

obtained through discovery without any confidentiality restrictions, Appellants

would be without recourse if the information became publicly available. See

Cabot Oil, 241 A.3d at 1197; see also Holland v. Physical Therapy Inst.,

Inc., 296 A.3d 619, *21-22 (Pa. Super. 2023) (Table) (collateral order

doctrine met when addressing discovery requests for tax returns, bank record,

and net worth documents). Therefore, Appellants’ appeal as to this element

of the discovery order satisfies the collateral order doctrine and we may

proceed to review Appellants’ claims.

Appellants first claim that the trial court erred by failing to provide

appropriate restrictions in its June 5, 2023 order, particularly as required by

Rule 4003.7, including a confidentiality order or other appropriate limitation

on use and disclosure.

____________________________________________

4 See Pa.R.A.P. 126(b) (unpublished non-precedential decisions of Superior

Court filed after May 1, 2019, may be cited for persuasive value).

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Pursuant to Rule 4003.7, “[a] party may obtain information concerning

the wealth of a defendant in a claim for punitive damages only upon order of

court setting forth appropriate restrictions as to the time of the discovery, the

scope of the discovery, and the dissemination of the material discovered.”

Pa.R.C.P. 4003.7. This Court has upheld punitive damages discovery orders

that included proper Rule 4003.7 restrictions, see Cabot Oil, 241 A.3d at

1200, and also reversed and remanded orders for the inclusion of proper

restrictions when lacking Rule 4003.7 restrictions. See Holland, 296 A.3d

619, at *24.

Here, the order at issue states:

[T]he Recommendation of the Discovery Master dated April 12,

2023[,] is hereby adopted as the Order of this Court.

Plaintiff’s motion for discovery of defendants’ financial condition in

support of punitive damages claim is granted in part and denied

in part. Within twenty (20) days from the date of this order,

defendants shall be required to respond to the discovery requests

directed to defendant [] Touhill but shall not be required to

respond to the discovery requests directed to the other

defendants.

Order, 6/5/23 (unnecessary capitalization omitted, emphasis original).

Further review of the discovery master’s recommendation includes the

following limiting language:

As to defendants’ contention that plaintiff’s proposed punitive

damage discovery is overbroad and goes beyond what is

reasonably necessary to determine net worth, the discovery

master agrees that some of the discovery requests are duplicative

and/or not sufficiently relevant to the issue of net worth to require

defendants’ response. In this regard, the discovery master

recommends that only discovery requests directed to [] Touhill

require a response from defendants.

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Recommendation of Discovery Master, 6/1/23, at 3 (unnecessary

capitalization omitted). While the order appears to limit the scope and time,

agreeing to Roxy’s request, it does not include any appropriate restrictions as

to the dissemination of the material as required by Rule 4003.7. See

Holland, 296 A.3d 619, at *24. Thus, the court erred by failing to include

appropriate restrictions on the discovery of Touhill’s personal financial

information and, accordingly, we must remand for the trial court to impose

such restrictions on any punitive damages discovery.

Next, Appellants cannot appeal the order on the basis that it infringes

on the privacy rights of non-party Geralyn Touhill because they “lack standing

to assert the alleged deprivation of another’s rights.” Cabot Oil & Gas Corp.

v. Speer, 241 A.3d 1191, 1196 (Pa. Super. 2020) (citing Commonwealth v.

Butler, 291 A.2d 89, 90 (Pa. 1972)). Therefore, Appellants’ second claim is

quashed.

In their third claim, Appellants argue that the trial court erred by

allowing Roxy punitive damages discovery because Roxy “clearly elected” the

remedy of rescission. Appellants’ Brief, at 21. Appellants argue that because

Roxy has pursued rescission as an option, Roxy is therefore not entitled to

recover punitive damages or conduct discovery related to punitive damages.

See id. at 22-23, 29-30. Appellants’ claim is premature.

Claims of fraud or misrepresentation may allow for the recovery of

punitive damages. See Smith v. Renaut, 564 A.2d 188, 192-93 (Pa. Super.

1989). Generally, with respect to damages, a “plaintiff in an action for fraud

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may recover all actual losses caused by the defendant’s fraud. The plaintiff

may also recover punitive damages where there are aggravated

circumstances.” Id. at 193 (Pa. Super. 1989) (citations omitted). “[F]or

punitive damages to be awarded[,] there must be acts of malice,

vindictiveness[,] and a wholly wanton disregard of the rights of others.” Id.

Requests for punitive damages do not stand as independent causes of action,

but rather should be made as part of the relief requested. See Nix v. Temple

Univ. of Commonwealth Sys. of Higher Educ., 596 A.2d 1132, 1138 (Pa.

Super. 1991). “[T]he purpose of punitive damages is to punish outrageous

and egregious conduct done in a reckless disregard of another’s rights; it

serves a deterrence as well as a punishment function.” Johnson v. Hyundai

Motor Am., 698 A.2d 631, 639 (Pa. Super. 1997).

Upon our review, at the time of filing this appeal, the trial court had not

ruled specifically on the appropriateness of punitive damages, nor had the

court indicated which of Roxy’s claims could support a punitive damages

award. Therefore, it is premature to speculate whether Roxy has elected the

remedy of rescission or punitive damages. We, thus, leave for the trial court

to determine whether Roxy has elected a remedy that would prohibit punitive

damages, and so Appellants’ third claim, that Roxy is not entitled to recover

punitive damages because it clearly elected the remedy of rescission, is

premature. See Holland, supra. On remand, the court must determine

whether allowing for punitive damage discovery is appropriate.

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Next, we discern that Appellants’ fourth, fifth, and sixth claims are

ineligible for interlocutory review, insofar as they each request this Court to

go beyond the scope for which we granted collateral review. Not one of the

three claims relates to the privacy interest involving a right too important to

be denied review. See Shearer, supra; Cabot Oil, supra. Further,

Appellants’ fifth claim is not separable from the main cause of action, as it

asks us to address the underlying cause of action—namely Roxy’s claims of

misrepresentation. See Shearer, 177 A.3d at 858 (discussing first prong of

collateral order doctrine); Cabot Oil, 241 A.3d at 1196-97 (the same).

Moreover, no rights are irreparably lost if Appellants’ final three claims are

postponed until final judgment in the case. See Shearer, supra.

Accordingly, Appellants have failed to invoke our jurisdiction with respect to

the above claims.5 See Shearer, supra. Therefore, claims four, five, and

six are quashed.

Appeal quashed in part. Order reversed for the inclusion of proper Rule

4003.7 restrictions. Case remanded with instructions. Jurisdiction

relinquished.

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5 In addition, in light of our disposition of Appellants’ first claim, our

instructions on remand may sufficiently address these concerns.

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Date: 8/20/2024

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