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GRAZIANO CONSTRUCTION COMPANY v. LAURENCE F. LEE (04/23/82)

filed: April 23, 1982.

GRAZIANO CONSTRUCTION COMPANY, INC., A PENNSYLVANIA CORPORATION, APPELLANT,
v.
LAURENCE F. LEE, JR., BERT A. BETTS, ROY B. DAVIS, JR., N. CLEMENT SLADE, JR., ROBERT M. GREEN, LUTHER H. HODGES, JAMES B. MCINTOSH, ARTHUR W. MILAM, JACK H. QUARTITIUS, FREDERICK H. SCHROEDER, AND JOHN W. YORK, NOT INDIVIDUALLY BUT AS TRUSTEES OF FIDELITY MORTGAGE INVESTORS, A MASSACHUSETTS BUSINESS TRUST; AND DLPST CORPORATION, A PENNSYLVANIA CORPORATION



No. 43 Pittsburgh, 1980, Appeal from the Order of the Court of Common Pleas of Allegheny County, Civil Division, at No. 2313 July Term, 1974.

COUNSEL

Robert W. Doty, Pittsburgh, for appellant.

Richard B. Tucker, III, Pittsburgh, for appellees.

Price, Cavanaugh and Hoffman, JJ.

Author: Price

[ 298 Pa. Super. Page 312]

On May 23, 1974, appellant, Graziano Construction Company, Inc. [hereinafter Graziano] obtained a writ of foreign attachment directing the seizure of certain property owned by Fidelity Mortgage Investors [hereinafter FMI]. The attachment was released on June 25, 1974, when FMI filed a bond in the amount of $275,000 with the court below. On August 29, 1978, the court of common pleas granted FMI's motion to cancel and discharge the bond, reasoning that because Pennsylvania's foreign attachment procedure was held unconstitutional by the United States Court of Appeals for the Third Circuit in Jonnet v. Dollar Savings Bank, 530 F.2d 1123 (3d Cir. 1976), the bond posted by FMI was invalid. Graziano appeals from the order canceling the bond and discharging FMI as principal and United States Fire Insurance Company [hereinafter USFI] as surety, contending that the trial court's retroactive application of the holding in Jonnet was inappropriate. For the reasons stated herein, we conclude that the question presented for decision is moot and, therefore, quash the appeal.

The pertinent facts are largely undisputed. Graziano commenced this action in assumpsit on May 23, 1974, by filing a praecipe for a writ of foreign attachment. After the writ had issued, Graziano filed its complaint against FMI and DLPST Corporation [hereinafter DLPST] on May 28, 1974, seeking recovery of the balance due for the construction of an office building located in the city of McKeesport,

[ 298 Pa. Super. Page 313]

Allegheny County.*fn1 Pursuant to the writ of foreign attachment, various property owned by FMI, including the office building, was attached. The attachment was dissolved and the attached property released when, on June 25, 1974, FMI filed a $275,000 bond with the trial court.*fn2 FMI was principal and USFI surety on the bond, which named the Commonwealth of Pennsylvania as obligee to the use of Graziano.

Having secured the release of the attached property, FMI filed its answer to Graziano's complaint on July 1, 1974. On August 30, 1974 DLPST filed its answer and new matter, to which Graziano replied on December 30, 1974. On January 30, 1975, shortly before the case was placed at issue,*fn3 FMI filed a petition in the United States District Court for the Southern District of New York for a voluntary arrangement under chapter XI of the federal Bankruptcy Act.*fn4 The bankruptcy judge issued an order the following day authorizing FMI to "operate its business and manage its property" as debtor in possession pending further order of the bankruptcy court. (Record at 49a). In view of the bankruptcy proceeding, the court of common pleas entered an order on March 26, 1976, directing that the case sub judice be stricken from issue and continued pending further order of the bankruptcy court. The plan of arrangement submitted by FMI was approved by its creditors and subsequently confirmed by the bankruptcy court on January 4, 1978. FMI was "released from all of its dischargeable

[ 298 Pa. Super. Page 314]

    debts" and all creditors holding dischargeable debts were "enjoined, stayed and restrained from instituting or continuing any action or employing any process to collect such debts as liabilities or obligations of FMI." (Record at 76a-77a).

While the bankruptcy proceeding was pending, two important cases involving Pennsylvania's foreign attachment procedure were decided. In Jonnet v. Dollar Savings Bank, 530 F.2d 1123 (3d Cir. 1976), the United States Court of Appeals for the Third Circuit held that Pennsylvania's Rules of Civil Procedure relating to writs of foreign attachment deprived an alleged debtor of procedural due process and were, therefore, unconstitutional. The holding in Jonnet was applied retroactively by our supreme court in Schreiber v. Republic Intermodal Corporation, 473 Pa. 614, 375 A.2d 1285 (1977). The court there held that Jonnet did not establish a new principle of law which ...


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