PENNSYLVANIA BANKERS ASSOCIATION and the Pennsylvania Business Bank, Appellants v. PENNSYLVANIA DEPARTMENT OF BANKING and Trumark Financial Credit Union, Appellees. Pennsylvania Bankers Association, Pennsylvania Business Bank, Fulton Bank, and Premier Bank, Appellants v. Pennsylvania Department of Banking, Pennsylvania Department of Revenue, the Attorney General of the Commonwealth and Freedom Credit Union, Appellees.
Supreme Court of Pennsylvania.
Decided June 16, 2008.
948 A.2d 790
Argued May 14, 2007. Re-Submitted Jan. 11, 2008.
Francis Crowley, Esq., Philadelphia, for Freedom Credit Union.
Daniel T. Fitch, Esq., Philadelphia, Trumark Financial Credit Union.
Richard T. Wargo, Jr., Esq., PA Credit Union Association, for Pennsylvania Credit Union Association.
Howard G. Hopkirk, Esq., Harrisburg, for Attorney General‘s Office and Dept. of Revenue.
BEFORE: CASTILLE, C.J., and SAYLOR, EAKIN, BAER, TODD and McCAFFERY, JJ.
OPINION
Justice BAER.1
This direct appeal arises from a procedurally complex dispute between various members of the banking industry, the credit union industry, and several administrative agencies, concerning the tax treatment of credit unions under the Pennsylvania Credit Union Code (“Credit Union Code“),
Before taking up the specific circumstances of the case sub judice, a brief discussion of the tax treatment of credit unions is in order. Traditionally, credit unions have functioned as cooperative associations that were intended to provide persons of modest means with an opportunity to control their money and improve their economic and social condition.4 In light of these charitable purposes, credit unions enjoy numerous tax exemptions as non-profit corporations that are not enjoyed by banks. For instance, as non-profit corporations, credit unions are exempt from federal taxation, see
Pennsylvania‘s legislation on credit unions originated with the Credit Unions Act of 1933, which has been replaced by the current Credit Union Code.5 Since the inception of legislation in this arena, membership in credit unions has been based on common bonds of association, which are defined in each credit unions’ charter.6 These common bonds are often defined in terms of shared occupations, or by membership in a religious congregation or labor organization. See
The present dispute arose in 2003, when three state-chartered credit unions, including Appellees Trumark Financial Credit Union (“Trumark“) and Freedom Credit Union (“Freedom“), filed formal notices with the Pennsylvania Department of Banking (“the Department“) of their intention to convert their charters to allow membership based on common bonds of geography. The Banks opposed these notices by filing pro-
In January 2005, the Banks filed a petition for review with the Commonwealth Court raising claims purporting to invoke the court‘s appellate and original jurisdiction. The portion of the Banks’ petition invoking the Commonwealth Court‘s appellate jurisdiction challenged the Secretary of Banking‘s orders allowing Trumark‘s and Freedom‘s conversion to geography-based credit unions, as well as the Secretary‘s decision to dismiss the Banks as intervenors. This appellate jurisdiction portion of the Banks’ petition was affirmed by the Commonwealth Court in a published en banc opinion, and is currently pending review by this Court under separate docket numbers. See Pa. Bankers Ass‘n v. Dep‘t. of Banking, 893 A.2d 864 (Pa.Cmwlth.2006), appeal granted, 591 Pa. 729, 920 A.2d 835 (2007).7
The instant appeal concerns the portion of the Banks’ petition invoking the Commonwealth Court‘s original jurisdiction, wherein the Banks raised several alternative declaratory judgment claims alleging that the exemption from taxation provided to credit unions under § 517 of the Credit Union Code,
The Commonwealth Court overruled the Appellees’ preliminary objections with respect to the Banks’ challenges under Article VIII, § 1, and under the Equal Protection Clause. In an unpublished companion opinion, the court reasoned that factual findings would be necessary to determine whether the tax classifications provided under the Credit Union Code violate these provisions, and therefore, it was premature to dismiss these claims on preliminary objections. However, as detailed in the following paragraph, the Commonwealth Court sustained Appellees’ preliminary objections with respect to the Banks’ challenges under Article VIII, §§ 2, 5, and 6, resulting in the dismissal of these claims from the case.9
In dismissing the Banks’ claims under Article VIII, §§ 2 and 5, the court took guidance from two ancient decisions of this Court where we analyzed the predecessors to §§ 2 and 5 under the Pennsylvania Constitution of 1874. In this regard, the Commonwealth Court noted that in Turco Paint and Varnish Co. v. Kalodner, 320 Pa. 421, 184 A. 37, 39-40 (1936), we rejected a constitutional challenge to a tax statute that directed different methods for calculating income taxes for corporations conducting business entirely in the Commonwealth and those conducting only a portion of their business in the Commonwealth. In finding the statute constitutional, we interpreted the predecessors to §§ 2 and 5 as being violated only when a statute exempted all taxation. Id. at 43. Similarly, the Commonwealth Court noted our decision in Commonwealth v. Germania Brewing Co., 145 Pa. 83, 22 A. 240 (1891),
With Turco Paint and Germania Brewing in mind, the Commonwealth Court turned to § 517 of the Credit Union Code and acknowledged that credit unions are exempt from federal and state taxation on their income. See
On March 28, 2006, the Banks filed the instant appeal to this Court, arguing that the Commonwealth Court erred in dismissing their claims based on Article VIII, §§ 2 and 5. According to the Banks, the Commonwealth Court‘s decision was based on inapplicable case law, and failed to take into account fundamental differences between the Pennsylvania Constitution of 1874 and the current Pennsylvania Constitution. In response, the Appellees maintain that this appeal is interlocutory. Accordingly, before we reach the merits of the Banks’ claim, we must first address whether the Commonwealth Court‘s order, which dismissed some, but not all, of the Banks’ constitutional claims, is an appealable final order.
In their briefs, the Banks acknowledge that Pa.R.A.P. 341(b)(1) defines a final order as one that disposes of all claims and all parties.11 Applying this definition, the Banks concede
The Banks also rely on this Court‘s decision in Nationwide Mutual Insurance Co. v. Wickett, 563 Pa. 595, 763 A.2d 813 (2000), where we addressed whether a trial court‘s order sustaining various defendants’ preliminary objections in the nature of demurrers was a final order under Pa.R.A.P. 341(b)(2) and
(1) disposes of all claims and of all parties; or
(2) is expressly defined as a final order by statute; or
(3) is entered as a final order pursuant to subdivision (c) of this rule.
* * *
Shortly thereafter, the trial court entered orders sustaining the preliminary objections, thereby ending the plaintiffs’ declaratory judgment action against these three defendants, and dismissing them from the litigation. Wickett, 763 A.2d at 816. In analyzing whether the order sustaining these preliminary objections constituted a final, appealable order, this Court opined that, because a demurrer is essentially an allegation that a pleading is legally insufficient, the trial court‘s order constituted a declaration that the plaintiffs had no legal basis to recover underinsured motorist benefits under the insurance contract against these three defendants. Id. at 817-18. Accordingly, this Court concluded that, under the plain language of
The Banks maintain that the Commonwealth Court‘s order, like the orders in Wickett, is final and appealable pursuant to
Appellees also rely on Jenkins v. Hospital of the Medical College of Pennsylvania, 535 Pa. 252, 634 A.2d 1099 (1993), where we addressed an order that dismissed a portion of a multi-count complaint. In Jenkins, the plaintiff gave birth to a child with Downs syndrome and, immediately thereafter, underwent a sterilization procedure at the defendant hospital. Following these events, the plaintiff filed a multi-count complaint against the hospital and her physicians, alleging that 1) the defendants had been negligent in failing to perform proper diagnostic tests on plaintiff during the pregnancy that would have alerted her to the presence of Down‘s syndrome in the newborn; and 2) that the defendants had failed to obtain her informed consent prior to performing the sterilization procedure.
In response, the defendants moved for judgment on the pleadings with respect to some of the plaintiff‘s arguments
Although our decision in Jenkins ultimately determined that the trial court‘s order in that case was appealable, Appellees nevertheless rely on Jenkins for the general proposition that, where, as here, a plaintiff files a multi-count complaint setting forth alternative theories of recovery, an order dismissing less than all of the claims is generally considered interlocutory because the plaintiff may still pursue the merits of his or her cause of action based on another theory. In this regard, Appellees note, for example, that if this Court were to adjudicate the Banks’ appeal regarding Article VIII, §§ 2 and 5, our decision might very well be a fruitless exercise because the Banks could still prevail on one of their remaining issues
In light of the foregoing arguments, and after careful review of the applicable law, we agree with Appellees that the Commonwealth Court‘s order is not final and appealable. In reaching this conclusion, we acknowledge the Banks’ argument that an order need not dispose of all claims against all parties if a statute expressly defines the order as final. We also do not take issue with the Banks’ assertion that the Declaratory Judgment Act defines a final order as one that declares the rights of the parties or their legal relationship. See
Our decision in this matter is rooted in this Court‘s well-documented efforts of avoiding piecemeal litigation. See Kowenhoven, 901 A.2d at 1011-13. See also Stevenson v. General Motors Corp., 513 Pa. 411, 521 A.2d 413 (1987) (stating that discouraging interlocutory appeals avoids piecemeal determinations and the consequent protraction of litigation); Fried v. Fried, 509 Pa. 89, 501 A.2d 211, 215 (1985) (stating that the law “abhors piecemeal determinations and the consequent protraction of litigation.“). As we noted in Commonwealth v. Failor, 564 Pa. 642, 770 A.2d 310, 314 (2001), avoiding piecemeal litigation conserves scarce judicial manpower as well as the time of witnesses, jurors, and the use of public resources. Moreover, this Court has noted that a policy that allows for piecemeal appeals “serves only to increase the cost of litigation, and favors the party with the greater resources, who can strategically delay the action at the expense of the indigent party.” Fried, 501 A.2d at 215. Finally, we note that piecemeal litigation, in addition to being inefficient and costly, can often lead to inconsistent results. Kowenhoven, 901 A.2d at 1011.
If this Court were to find this appeal proper, it would raise many of the same concerns regarding piecemeal litigation outlined in our discussion above. We note the following scenario. Initially, this Court adjudicates the Banks’ claims regarding §§ 2 and 5 and concludes that these theories would not provide the Banks with relief. The case then goes back to the Commonwealth Court on the Banks’ remaining claims, where the Appellees move for judgment on the pleadings regarding the Banks’ equal protection claim. In response, the
Thus, while this Court has considered this matter under Article VIII, §§ 2 and 5, the Commonwealth Court has not had jurisdiction to adjudicate the Banks’ claims under § 1, or its equal protection claim. As discussed later in this opinion, seriatim reviews of various theories of relief by the Commonwealth Court and this Court will protract the litigation and add substantial expense to resolving this dispute.
The Banks nevertheless argue that the Commonwealth Court‘s order constitutes a final, appealable order pursuant to Wickett. We find Wickett distinguishable, however, for the following reasons. In Wickett, the trial court‘s order put certain defendants out of court by dismissing all of the plaintiff‘s claims against them. In so doing, the order prevented the plaintiffs from obtaining any relief against these parties. It would therefore be appropriate in this context to characterize the trial court‘s order as a final order under
In contrast, as we emphasized earlier in this opinion, the Commonwealth Court‘s order in this case did not dismiss any party, but merely narrowed the scope of the Banks’ declaratory judgment action, which raised alternative theories of relief. Because the Banks might still obtain the relief they are seeking based on one of their remaining constitutional theories, the Commonwealth Court‘s order sustaining the Appellees’ preliminary objections has no certain effect upon the ultimate relief to which the Banks may be entitled. Thus, we find that the Commonwealth Court‘s order in this case did not declare the parties’ rights within the meaning of
The Banks’ reliance on American Rehabilitation is also unavailing. As we noted earlier in this opinion, in American Rehabilitation, this Court entered a per curiam order, citing to Wickett, in reversing a Superior Court decision which held that an order, which granted summary judgment on one of two claims, was not a final order. While the Banks argue that
that would align declaratory judgment jurisprudence with that which applies to civil actions generally. See Wickett, 763 A.2d at 819 (Saylor, J., dissenting). Subsequently, in Motorists Mutual v. Pinkerton, 574 Pa. 333, 830 A.2d 958 (2003), Justice Saylor authored a concurring opinion in which he repeated his concerns regarding Wickett, and urged this Court to reassess the practical consequences of that decision. While we note Justice Saylor‘s prior position in these cases, we find the instant matter distinguishable from Wickett for the reasons outlined in the body of this opinion. Moreover, as none of the parties in this matter are advocating that we overturn our decision in Wickett, we decline to do so at this juncture.
For the reasons outlined above, we conclude that the Commonwealth Court‘s order in this case, which sustained the Appellees’ preliminary objections in the nature of demurrers with respect to some, but not all, of the Banks’ constitutional claims, is not a final, appealable order. Our conclusion today is not only informed by our well-established policy of avoiding piecemeal litigation, it also recognizes that such an order does not represent an affirmative or negative declaration of the parties’ rights within the meaning of
Chief Justice CASTILLE, Justice EAKIN, Justice TODD and Justice McCAFFERY join the opinion.
Justice SAYLOR files a concurring opinion.
Justice SAYLOR, concurring.
The majority adopts a policy-based rationale in reaching its present determination concerning whether orders in a declaratory judgment action foreclosing some but not all avenues of relief should be deemed final under Rule of Appellate Procedure 341(b)(2). See Majority Opinion, op. at 14, 948 A.2d at 798 (explaining that “[o]ur decision is rooted in this Court‘s well-documented efforts of avoiding piecemeal litigation.“). The difficulty is that the Court in Nationwide Mutual Insurance Company v. Wickett, 563 Pa. 595, 763 A.2d 813 (2000),
At this juncture, I believe that it would be preferable: to concede that this Court has had great difficulty with Wickett in the years since its issuance; to recognize that Wickett‘s rationale is irreconcilable with a scheme of appealability implementing considered limits designed to control piecemeal litigation; and therefore, to limit Wickett to its facts.