Macharg, K. v. Macharg, P.
151 A.3d 187
| Pa. Super. Ct. | 2016Background
- Wife (Karen MacHarg) obtained a Vermont divorce decree/judgment requiring Husband (Peter MacHarg) to pay $416,682.21 (balance later $346,483.41); Vermont order was registered in Mercer County, PA for enforcement.
- Husband owned interests in five Pennsylvania entities: Phillips Steel Corp., Graham Stamping Co., Thomas Metals Co., Rednik II Corp. (corporations) and 1700 Broadway Ltd. (limited partnership).
- County court entered a garnishment order directing corporate garnishees to pay Husband’s distributions to Wife; Wife received distributions but the judgment remained largely unpaid.
- Wife moved under Pa.R.C.P. 3118 for supplementary relief to preserve/produce stock certificates for execution and separately sought a charging order and judicial sale of Husband’s 19.22% limited‑partnership interest in 1700 Broadway Ltd.
- Trial court denied both requests, reasoning (1) garnishees were already paying distributions so preserving the “status quo” was unnecessary, and (2) a sale would be inequitable and disruptive given ongoing distributions.
- Superior Court reversed: it held Rule 3118 relief was appropriate to preserve the debtor’s ownership (prevent transfers), and a charging order plus judicial sale of the limited‑partnership interest was warranted under the court’s equitable powers and 15 Pa.C.S. § 8345.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 3118 relief (preservation/production of stock certificates) is available to prevent transfer of debtor’s corporate shares | MacHarg: She has a registered judgment and garnishees admit Husband owns stock; Rule 3118 may preserve availability of those shares for execution | Defendant/Garnishees: Ongoing garnishment payments preserve Wife’s rights; no need to alter status quo | Court: Reversed trial court — Rule 3118 may be used to preserve the debtor’s ownership (prevent transfers); remand to enter order preserving shares pending execution |
| Whether court may enter charging order and direct judicial sale of Husband’s limited‑partnership interest in 1700 Broadway Ltd. | MacHarg: §8345 authorizes charging and sale; garnishment payments are insufficient to satisfy large judgment, so sale is appropriate | Garnishee: Auburn Steel facts differ; regular distributions reduce need for sale and sale would disrupt partnership and be inequitable | Court: Reversed — §8345 permits sale of a partner’s interest (applies to limited partnerships absent inconsistency with §8563); trial court abused discretion by denying sale given inadequate satisfaction via garnishment and statutory remedies (redemption rights protect partners) |
Key Cases Cited
- Marshall Ruby & Sons v. Delta Min. Co., 702 A.2d 860 (Pa. Super. 1997) (Rule 3118 scope and standards for supplementary relief)
- Gulf Mortg. & Realty Investments v. Alten, 422 A.2d 1090 (Pa. Super. 1980) (shares of corporate stock are property subject to execution)
- Kaplan v. I. Kaplan, Inc., 619 A.2d 322 (Pa. Super. 1993) (predicates for Rule 3118 relief: judgment and property subject to execution)
- Greater Valley Terminal Corp. v. Goodman, 202 A.2d 89 (Pa. 1964) (use of summary proceedings to maintain status quo of debtor’s property)
- Shirk v. Caterbone, 193 A.2d 664 (Pa. Super. 1963) (limits on creditor recovery from partner’s share of profits)
- Northampton Brewery Corp. v. Lande, 10 A.2d 583 (Pa. Super. 1940) (affirming charging order authority)
- Zokaites v. Pittsburgh Irish Pubs, LLC, 962 A.2d 1220 (Pa. Super. 2008) (discussion of limited partnership creditor remedies)