Horn, J. v. Schappert, N.

J-A32016-14

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

JAMES T. HORN AND ELIZABETH T. IN THE SUPERIOR COURT OF
HORN, PENNSYLVANIA

Appellees

v.

NANCY A. SCHAPPERT AND CHARLES H.
SCHAPPERT,

Appellants No. 3202 EDA 2013

Appeal from the Judgment Entered June 25, 2013
In the Court of Common Pleas of Chester County
Civil Division at No(s): 2008-13738-CA

BEFORE: PANELLA, OLSON AND FITZGERALD,* JJ.

MEMORANDUM BY OLSON, J.: FILED MAY 13, 2015

Appellants, Nancy A. Schappert and Charles H. Schappert, appeal from

the judgment entered in favor of Appellees, James T. Horn and Elizabeth T.

Horn, on June 25, 2013 in the Civil Division of the Court of Common Pleas of

Chester County. We affirm.

In July 2004, a developer, Carol A. Giblin, entered into a sales

agreement that conveyed to Appellants a ten-acre parcel of land in a

subdivision known as the Giblin Subdivision. This lot was designated as Lot

3 of the Giblin Subdivision.

In August 2004, the developer entered into a common driveway

agreement with Appellants to provide for the construction, use, and

maintenance of a common driveway that would serve Lots 1, 2, and 3 of the

*Retired Justice specially assigned to the Superior Court.
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Giblin Subdivision. The proposed driveway that is the subject of the

common driveway agreement is located entirely upon Lot 3. Under the

common driveway agreement, Appellants were responsible for the initial cost

of installing the driveway and the agreement contemplated that the owners

of Lots 1, 2, and 3 would share the cost of maintaining the driveway.

In April 2006, the developer entered into an escrow agreement with

Appellants to set aside funds for the construction of the common driveway.

Pursuant to the escrow agreement, and in conjunction with Appellants’

closing on Lot 3, the developer contributed $33,457.47 for Lot 1 and

$50,181.70 for Lot 2 into the escrow account. Appellants placed $83,636.17

into the account. The escrow agreement designated Appellants as the

holders and managers of the account.1

On April 17, 2006, the Horns acquired title to Lot 2 of the Giblin

Subdivision and entered into an assumption agreement with the developer.

The assumption agreement acknowledged both the common driveway

agreement and the escrow agreement, and provided that the Horns would

be responsible under both of these agreements as the owners of Lot 2.

When the Horns took title to Lot 2, they reimbursed the developer for

$50,181.70, which the developer previously placed in the escrow account as

____________________________________________

1
Deposits into the escrow account were apportioned as follows: 20% from
Lot 1, 30% from Lot 2, and 50% from Appellants as owners of Lot 3.

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Lot 2’s share of the cost of the design and installation of the common

driveway.

Nancy Schappert was primarily responsible for overseeing the design

and construction of the common driveway. Eventually, a dispute emerged

over Mrs. Schappert’s plans to extend the driveway to a length of 820 feet,

as well as the Horns’ requests for documentation relating to Mrs. Schappert’s

spending from the escrow account. As a result, the Horns filed a civil action

alleging breach of fiduciary duty and breach of contract to compel Appellants

to account for expenditures from the escrow account and to return

improperly dispersed funds. The Horns also sought to have Appellants

removed as escrow agents and asked the court to substitute them in

Appellants’ place.

Following a non-jury trial, the court entered judgment in favor of the

Horns. After the court denied post-trial relief, Appellants filed a timely

notice of appeal. Pursuant to Pa.R.A.P. 1925(b), the court ordered

Appellants to file a concise statement of errors complained of on appeal.

Appellants timely complied and the trial court issued its Rule 1925(a) opinion

on June 26, 2014.

Appellants’ brief raises the following issues for our consideration:

Are [Appellants] entitled to the protection of the indemnification
and hold harmless provisions in the escrow agreement?

Given evidence of reliance on advice of counsel to which no
objection was made and preserved at trial, was it error to

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conclude that [Appellants] had engaged in willful misconduct or
gross negligence?

Given evidence of reliance on advice of counsel, to which no
objection was made and preserved at trial, was it error to deny
[Appellants’] motion to conform the pleadings to the evidence
presented at trial?

Did the trial court err in placing the Horns in control of
[Appellants’] property?

Appellants’ Brief at 8 (complete capitalization omitted).2

Appellants’ opening claim asserts that the trial court erred as a matter

of law in concluding that the indemnification provisions found in the parties’

escrow agreement did not protect them from claims leveled by the Horns.

Noting the language of the escrow agreement, Appellants maintain they are

entitled to protection against all forms of liability “up to, but not including,

willful misconduct or gross negligence.” Appellants’ Brief at 6. Appellants

asserts that the escrow agreement insulates them from claims involving

ordinary negligence, errors in judgment, or mistakes of fact, including their

own alleged failures to exercise due care and caution.

The relevant provisions of the parties’ escrow agreement state as

follows:

4. [Appellants] (A) shall not be liable for any mistake of fact or
error of judgment be it [sic] or for any acts or omissions of any
kind unless caused by willful misconduct or gross negligence,
and shall be entitled to rely and shall be protected in doing so,
____________________________________________

2
We have revised Appellants’ issues to facilitate a more orderly review of
the contentions raised in this appeal.

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upon … (ii) the advice of counsel (which counsel may be of
[Appellants] own choosing) …

5. The Parties hereby release and agree to indemnify
[Appellants] and hold [Appellants] harmless from and against
any and all losses, liabilities and expenses (including reasonable
attorney’s fees and expenses) incurred by [Appellants] arising
out of or in connection with the design, installation, or
construction of the Private Drive and the performance by
[Appellants] of [Appellants’] duties under the Common Driveway
Agreement and hereunder or any dispute between the Parties,
hereto, except those resulting from willful misconduct or gross
negligence by [Appellants].

Escrow Agreement ¶¶ 4-5.

Pennsylvania law governing the interpretation of clauses that relieve a

party of liability for his own negligence is well-settled. “[When] interpreting

the validity and enforceability of indemnity clauses [Pennsylvania law does]

not recognize as effective an agreement concerning negligent acts unless an

express stipulation concerning the indemnitee's negligence was included in

the document.” Topp Copy Products, Inc. v. Singletary, 626 A.2d 98,

100 (Pa. 1993). This principle requires that parties employ express terms to

indicate that “the active negligence of the indemnitee will be assumed by the

indemnitor.” Id. at 101.; Ruzzi v. Butler Petroleum Co., 588 A.2d 1, 4

(Pa. 1991) (“if parties intend to include within the scope of their indemnity

agreement a provision that covers losses due to the indemnitee's own

negligence, they must do so in clear and unequivocal language”).

Relying upon the foregoing principles, the trial court concluded that

the parties’ escrow agreement did not protect Appellants from liability arising

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from their own negligence. After careful review of the parties’ agreement

and the relevant case law, we concur in the trial court’s assessment.

General language purporting to preclude liability arising from “any and all

acts or omissions” (or similar phrases) is insufficient to protect an

indemnitee from his own negligence. See Ruzzi, 588 A.2d at 5 (examining

enforceability of indemnity clause purporting to “exonerate, discharge, and

agree to protect and save harmless and indemnify [an indemnitee] ... from

any and all liability for claims for loss, damage, injury or other casualty”).

For these reasons, we hold that Appellants’ first claim merits no relief.

In their second claim, Appellants assert that, because they “sought

and relied upon the advice of counsel throughout their dealings with the

common driveway” and because they “meticulously accounted for expenses

incurred” during the project, the trial court erred in finding that they

committed willful misconduct or gross negligence. At best, given their

continued reliance upon the advice of counsel, Appellants maintain that they

made only errors in judgment or mistakes as to the facts.

After carefully describing the definitions of gross negligence and willful

misconduct under Pennsylvania law, Trial Court Opinion, 6/26/14, at 6-7,

the trial court explained in detail the basis for its conclusion that Appellants

exhibited gross negligence and willful misconduct within the context of the

driveway construction project. Specifically, the trial court found that

Appellants committed gross negligence and willful misconduct in the

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following ways: (1) Mrs. Schappert failed to consult qualified professionals

for advice despite her responsibility for installing the common driveway and

her inability to read subdivision plans and professional drawings (this led to

the expenditure of escrow funds for Appellants’ personal benefit and

prevented Appellants from understanding the proper length of the common

driveway and determining responsibility to install and maintain a shared

storm water trench); (2) Mrs. Schappert used escrow funds to pay her

attorney for her settlement but refused to pay for installation of a water line

that connected to the Horns’ property; (3) Mrs. Schappert used escrow

funds for multiple purposes other than the installation and maintenance of

the common driveway, including the erection of a boundary fence, lawn

maintenance of the easement over which the common driveway passed, and

the installation of cobblestones on Appellants’ own driveway; (4) Appellants

failed to produce the contract for the common driveway and failed to consult

the Horns regarding the placement of their driveway connection. Id. at 18-

20. Apart from their argument that they kept detailed records and consulted

with counsel, Appellants have no substantive response to the trial court’s

determinations. We therefore conclude that this claim merits no relief.

Appellants’ third issue asserts that the trial court erred in refusing their

request to amend their answer to conform to the evidence introduced at

trial. Here, Appellants assert that the trial court should have permitted them

to amend their answer four months after trial in order to assert the

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affirmative defense of reliance on the advice of counsel. Appellants argue

that the Horns would not have been prejudiced by the post-trial amendment

since it was well-known that Appellants intended to assert this defense

based upon the parties’ escrow agreement.

Pennsylvania Rule of Civil Procedure 1033 provides in pertinent
part that “[a] party ... by leave of court, may at any time ...
amend his pleading. The amended pleading may aver
transactions or occurrences which have happened before or after
the filing of the original pleading, even though they give rise to a
new ... defense.” Pleadings may be amended at the discretion of
the trial court after pleadings are closed, while a motion for
judgment on the pleadings is pending, at trial, after judgment,
or after an award has been made and an appeal taken
therefrom. Our courts have established as parameter a policy
that amendments to pleadings will be liberally allowed to secure
a determination of cases on their merits. A trial court enjoys
broad discretion in evaluating amendment petitions.

Despite this liberal amendment policy, Pennsylvania appellate
courts have repeatedly ruled that an amendment will not be
permitted where it is against a positive rule of law, or where the
amendment will surprise or prejudice the opposing party. The
prejudice, however, must be more than a mere detriment to the
other party because any amendment requested certainly will be
designed to strengthen the legal position of the amending party
and correspondingly weaken the position of the adverse party.
The mere fact that the adverse party has expended time and
effort in preparing to try a case against the amending party is
not such prejudice as to justify denying the amending party
leave to amend [by asserting] an affirmative defense which has
a substantial likelihood of success.

* * *
[D]enial of a petition to amend, based on nothing more than
unreasonable delay, is an abuse of discretion. The timeliness of
the request to amend is a factor to be considered, but it is to be
considered only insofar as it presents a question of prejudice to
the opposing party, as by loss of witnesses or eleventh hour
surprise.

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Capobianchi v. BIC Corp., 666 A.2d 344, 346-347 (Pa. Super. 1995)

(internal quotations and citations omitted).

The trial court denied the requested amendment in this case because

the record did not support Appellants’ contentions. Specifically, the trial

court determined that Mrs. Schappert never testified that she relied on the

advice of counsel and that counsel’s advice was never made a part of the

trial court record. We agree with the trial court. The proposed amendment

involved a substantial change in Appellants’ defense strategy and was never

proposed until four months after the closure of the evidentiary record. As

such, Appellants’ proposed amendment constituted an eleventh-hour

surprise.

In their final claim, Appellants assert that the trial court exceeded its

authority in replacing them as escrow agents in favor of the Horns.

Appellants maintain that this decision effectively transferred their property

rights to the Horns. Appellants conclude that only monetary relief should

have been available to the Horns.

This claim merits no relief for the reasons set forth in the trial court’s

opinion filed on June 26, 2014. As the trial court has adequately and

accurately addressed this issue, we adopt this portion of the trial court’s

opinion as our own. See Trial Court Opinion, 6/26/14, at 22-23. The

parties are instructed to include a copy of the trial court’s decision in all

future filings involving our disposition of this appeal.

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Judgment affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 5/13/2015

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