J. A15012/16
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
PLAC, INC. AND JAMES S. TUPITZA, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellants :
:
v. :
: No. 2122 EDA 2015
WILLIAM H. LAMB, GUY DONATELLI :
AND LAMB McERLANE, P.C. :
Appeal from the Judgment, July 9, 2015,
in the Court of Common Pleas of Chester County
Civil Division at No. 2009-07242-CA
BEFORE: FORD ELLIOTT, P.J.E., DUBOW AND JENKINS, JJ.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED AUGUST 17, 2016
PLAC, Inc. (“PLAC”), and James S. Tupitza, Esq. (“Tupitza”), appeal
from the trial court’s July 9, 2015 order entering final judgment in favor of
appellees, William H. Lamb, Esq., Guy Donatelli, and Lamb McErlane, P.C.
(the “Lamb Firm”), in the underlying legal malpractice action. After careful
review, we affirm.
The trial court summarized the relevant facts of this case as follows.
PLAC was formed in or about 1991 by Tupitza
and provided title insurance services. In 2003, PLAC
entered a period of expansion and hired Matthew
Fetick and Ryan Peterson. In 2004, the company
acquired a majority interest in Metropolitan Title.
Jim Mitchell, of Metropolitan Title, then began
working as a manager for PLAC. Fetick, Peterson,
Mitchell and Access National Settlement Services,
LLC (together, “ANSS Parties”) sought to acquire
PLAC from Tupitza and a temporary agreement was
J. A15012/16
entered in April[] 2004. Thereafter, PLAC
transferred its assets to the ANSS Parties. In June[]
2004, the ANSS Parties and PLAC/Tupitza formalized
the April temporary agreement. The June
agreement (“Settlement Agreement”) required that
LandAmerica, a creditor, consent to the proposed
transaction as a condition precedent to closing.
LandAmerica never consented because the
conditions it required were never met and therefore
closing never took place.
PLAC and Tupitza [(hereinafter, “appellants”)]
retained the Lamb Firm to sue the ANSS Parties for
damages for refusing to close. The case ended when
summary judgment was entered [on November 6,
2006] in favor of the ANSS Parties and against
[appellants].
Trial court opinion, 8/4/15 at 1-2.
On September 3, 2010, appellants filed a legal malpractice action
against the Lamb Firm, alleging that it provided negligent representation in
appellants’ underlying breach of contract action against ANSS Parties. On
November 12, 2010, the Lamb Firm filed a counterclaim against appellants
sounding in breach of contract for unpaid attorney’s fees. On January 28,
2014, the Lamb Firm sought dismissal of appellants’ legal malpractice action
and filed a motion for summary judgment. Following oral argument, the trial
court entered an interlocutory order on July 31, 2014, granting the
Lamb Firm’s motion for summary judgment on the basis that “[appellants]
cannot demonstrate that they would have succeeded in their underlying
breach of contract case.” (Trial court order, 7/31/14 at ¶ 7.) In reaching
this decision, the trial court noted that the Settlement Agreement
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unambiguously required the consent of LandAmerica as a condition
precedent to the ANSS Parties’ obligation to proceed with the closing, and
this condition precedent did not occur. (Id. at ¶¶ 3, 7.)
Thereafter, on August 18, 2014, appellants filed a motion for
reconsideration, which was denied by the trial court on December 1, 2014.
On June 10, 2015, the parties proceeded to a jury trial on the Lamb Firm’s
counterclaim. Following a two-day trial, a verdict was entered in favor of the
Lamb Firm in the amount of $11,173.18. This verdict was reduced to
judgment on July 9, 2015. That same day, appellants filed a timely notice of
appeal from the trial court’s July 31, 2014 and December 1, 2014 orders.1
Appellants and the trial court have complied with Pa.R.A.P. 1925.
On appeal, appellants raise the following issues for our review.
A. May Summary Judgment be granted where
disputed issues of fact exist?
1
We note that this appeal properly lies from the trial court’s July 9, 2015
order. As noted, the July 9, 2015 order reduced the jury’s June 11, 2015
verdict on the Lamb Firm’s counterclaim to judgment, and thus, constituted
a final order pursuant to Pa.R.A.P. 341. See Nat'l Cas. Co. v. Kinney, 90
A.3d 747, 754 (Pa.Super. 2014) (stating, “an order is final and appealable if
it disposes of all claims and all parties. . . .”), citing Pa.R.A.P. 341(b)(1).
The trial court’s July 31, 2014 interlocutory summary judgment order, in
turn, merged into the July 9, 2015 final order and is reviewable. See
Commonwealth v. Fulmore, 25 A.3d 340, 345 (Pa.Super. 2011), appeal
denied, 34 A.3d 827 (Pa. 2011) (stating, “the merger rule merges into a
final judgment all prior non-final orders for purposes of appellate review.”
(citation omitted)); Quinn v. Bupp, 955 A.2d 1014, 1020 (Pa.Super. 2008),
appeal denied, 989 A.2d 918 (Pa. 2009) (stating, “interlocutory orders that
are not subject to immediate appeal as of right . . . become reviewable on
appeal upon the trial court’s entry of a final order.” (citations and brackets
omitted)).
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B. Where a seller of assets is required, by
contract, to fully perform and deliver all assets
before the buyer pays, if the buyer thereafter
avoids the contract, claiming failure of a
condition, may that buyer keep the assets
without paying?
C. Does the general rule, “unjust enrichment is
not available where the relationship of the
parties is founded on a contract,” apply where
there has been full performance by one party,
and the other party avoids the contract, yet
retains the full fruits of the contract[?]
D. May the [trial c]ourt re-write a contract to
insert a condition, modifying the common law
duty of restitution, so as to allow the buyer to
both, avoid the contract, yet keep all the
assets, without making any payment?
Appellants’ brief at 5-6.
Our standard of review of a trial court’s order granting summary
judgment is well settled:
A reviewing court may disturb the order of the
trial court only where it is established that the court
committed an error of law or abused its discretion.
As with all questions of law, our review is plenary.
In evaluating the trial court’s decision to enter
summary judgment, we focus on the legal standard
articulated in the summary judgment rule. The rule
states that where there is no genuine issue of
material fact and the moving party is entitled to
relief as a matter of law, summary judgment may be
entered. Where the non-moving party bears the
burden of proof on an issue, he may not merely rely
on his pleadings or answers in order to survive
summary judgment. Failure of a non-moving party
to adduce sufficient evidence on an issue essential to
his case and on which it bears the burden of proof
establishes the entitlement of the moving party to
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judgment as a matter of law. Lastly, we will view
the record in the light most favorable to the
non-moving party, and all doubts as to the existence
of a genuine issue of material fact must be resolved
against the moving party.
JP Morgan Chase Bank, N.A. v. Murray, 63 A.3d 1258, 1261-1262
(Pa.Super. 2013) (citations and internal quotation marks omitted); see also
Pa.R.C.P. 1035.2.
Preliminarily, we note that a legal malpractice claim may be brought
by an aggrieved client in either tort or contract. Wachovia Bank, N.A. v.
Ferretti, 935 A.2d 565, 570 (Pa.Super. 2007). “The elements of a legal
malpractice action, sounding in negligence, include: (1) employment of the
attorney or other basis for a duty; (2) failure of the attorney to exercise
ordinary skill and knowledge; and (3) that such failure was the proximate
cause of the harm to the plaintiff.” Id. at 570-571 (citations and internal
quotation marks omitted).
In essence, a legal malpractice action in
Pennsylvania requires the plaintiff to prove that he
had a viable cause of action against the party
he wished to sue in the underlying case and that
the attorney he hired was negligent in prosecuting or
defending that underlying case (often referred to as
proving a “case within a case”).
Sabella v. Estate of Milides, 992 A.2d 180, 187 (Pa.Super. 2010), appeal
denied, 9 A.3d 631 (Pa. 2010) (citation omitted; emphasis added).
Following our careful review of the record, including the briefs of the
parties, the applicable case law, and the well-reasoned opinion of the trial
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court, it is our determination that there is no merit to the issues raised on
appeal. We conclude that the trial court’s August 4, 2015 opinion
appropriately disposes of all the claims raised by appellants. In sum,
appellants cannot demonstrate that they possessed a viable cause of action
in the underlying breach of contract case against the ANSS Parties, and thus,
the grant of summary judgment in favor of the Lamb Firm in this legal
malpractice case was entirely warranted. Accordingly, we adopt the trial
court’s opinion as our own for purposes of this appellate review. A copy of
this opinion is attached hereto for ease of reference.2
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/17/2016
2
Additionally, appellants voluntarily abandoned their rights to appellate
review of the federal summary judgment action, and therefore cannot
establish cognizable injury to support their negligent misrepresentation
claim.
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Circulated 07/27/2016 03:41 PM
PLAC, INC and JAMES S. TUPITZA
Plaintiffs
v.
NO. 2009-07242
WILLIAM H. LAMB, GUY DONATELLI and
LAMB MCERLANE, PC CIVIL ACTION - LAW
Defendants
OPINION
Plaintiffs, PLAC, Inc. and James S. Tupitza, brought this action to assert legal
malpractice claims against attorneys William H. Lamb and Guy Donatelli and the firm,
Lamb, McErlane, P.C. (together, "Lamb Firm"). The Lamb Firm counterclaimed for
breach of contract for legal services provided. Plaintiffs' claims were disposed of by
summary judgment entered July 31, 2014 and upheld, on a request for reconsideration,
on December 1, 2014. A jury heard the Lamb Firms' counterclaims and awarded the
Lamb Firm $11,173.18 on or about June 11, 2015. Thereafter, on July 9, 2015,
Plaintiffs filed a notice of appeal from the orders entered July 31, 2014 and December 1,
2014. On July 28, 2015 Plaintiffs timely filed an amended statement of matters
complained of on appeal consisting of seven claims. We have addressed all of the
issues raised by Plaintiffs in the footnotes to our two orders, with the exception of their
first claim and part of their second claim. Reproduced below, for the convenience of the
reviewing court, are the two footnotes. Thereafter, we address the two remaining
claims. First, we have briefly reviewed the history of this matter.
PLAC was formed in or about 1991 by Tupitza and provided title insurance
services. In 2003, PLAC entered a period of expansion and hired Matthew Fetick and
Ryan Peterson. In 2004, the company acquired a majority interest in Metropolitan Title.
Jim Mitchell, of Metropolitan Title, then began working as a manager for PLAC. Fetick,
Peterson, Mitchell and Access National Settlement Services, LLC (together, "ANSS
Parties") sought to acquire PLAC from Tupitza and a temporary agreement was entered
in April, 2004. Thereafter, PLAC transferred its assets to the ANSS Parties. In June,
2004, the ANSS Parties and PLACff upitza formalized the April temporary agreement.
The June agreement ("Settlement Agreement") required that LandAmerica, a creditor,
.·"....\,,\ .
'
' - I
consent to the proposed transaction as a condition precedent to closing. LandAmerica
never consented because the conditions it required were never met and therefore
closing never took place.
PLAC and Tupitza retained the Lamb Firm to sue the ANSS Parties for damages
for refusing to close. The case ended when summary judgment was entered in favor of
the ANSS Parties and against PLAC and Tupitza. PLAC and Tupitza claim the
summary judgment resulted from negligent representation provided them by the Lamb
Firm and brought the within action to pursue that claim.
In the within action, the Lamb Firm moved for summary judgment on Plaintiffs'
claims, which motion was granted for the following reasons:
To overcome Defendants' Motion for Summary Judgment, Plaintiffs are
required to show that but for Defendants' alleged malpractice, they would
have succeeded in their underlying breach of contract case. In other
words, Plaintiffs must be able to show that they would have prevailed in
their case within the case. Myers v. Robert Lewis Seigle, P.C., 751 A.2d
1182, 1184 (Pa.Super.2003).
In their summary judgment motion, Defendants contend that Plaintiffs
will fail because LandAmerica's consent was a condition precedent to the
ANSS Parties' obligation to close under the Settlement Agreement and
LandAmerica never consented. (Plaintiffs' Reply at 111136, 45, 46, pp. 31,
32-33)
All parties agree that LandAmerica's consent was a condition
precedent to closing under the Settlement Agreement and that as of the
termination date of the Settlement Agreement, LandAmerica had not
consented to the sale of PLAC's assets to the ANSS Parties. (Plaintiffs'
Reply at ,T,I36, 45, 46, pp. 31, 32-33; June 3, 2004 Settlement Agreement
attached as Defendants' Exh. G at §1.f.)
LandAmerica prepared and circulated for signature a document titled
Assignment, Assumption, Consent and Release Agreement ("Assignment
and Assumption Agreement"), which imposed new obligations on the
parties that were not part of the Settlement Agreement. (Defendants' Exh.
I) Among the new obligations was a requirement that James Mitchell, one
of the ANSS Parties, personally guarantee a $100,000 loan. The parties
are in agreement that Mitchell refused to extend his personal guarantee.
(Plaintiffs' Reply at ,I41, p. 32)
According to Plaintiffs, Tupitza agreed to retain his guarantee on this
loan. (Plaintiffs' Reply at ,I41, p. 32). Although Tupitza fails to provide any
evidentiary support for this claim, we accept it as true for the purpose of
this motion. Plaintiffs argue that because Tupitza agreed to retain his
guarantee on the $100,000 loan, the problem was resolved and the ANSS
2
Parties had no basis to refuse to sign the Assignment and Assumption
Agreement.
However, Plaintiffs fail to allege that LandAmerica accepted Tupitza's
agreement to retain his guarantee on the loan and no longer required
Mitchell's personal guaranty. There is no evidence that the requirement of
Mitchell's personal guaranty was ever waived by LandAmerica. In fact,
the packet of documents supplied by LandAmerica on August 13, 2004,
three days before the termination date of the Settlement Agreement,
required Mitchell's personal guaranty. (Plaintiffs' Exhs. 29, 30)
Because Mitchell was not required to accept an additional term
imposed by LandAmerica and LandAmerica withheld its consent, which it
was free to do for any reason, the condition precedent to closing never
occurred. (Defendants' Exh. A, 221 :9-23) Plaintiffs therefore cannot
demonstrate that they would have succeeded in their underlying breach of
contract case.
(July 31, 2014 Order)
Plaintiffs sought reconsideration of an order granting Defendants' motion
for summary judgment. Summary judgment was entered in this legal
malpractice action after finding that Plaintiffs could not prevail in the
underlying action, which involved a contract for the sale of a business
("the Settlement Agreement"). Plaintiffs had sued in that action for breach
of contract, but we found that a condition precedent never occurred
alleviating the obligation of the defendant, ANSS Parties, to close under
the terms of the Settlement Agreement. Plaintiffs asked for
reconsideration of their claim for unjust enrichment.
Plaintiffs assert the right to pursue unjust enrichment in the underlying
action because, they allege, the ANSS Parties had challenged the validity
or enforceability of the Settlement Agreement, distinguishing our case
from the precedent of Wilson Area School District v. Skepton, 586 A.2d
513, 895 A.2d 1250 (Pa. 2006) and Cambria Savings and Loan
Association v. Gross, 294 Pa. Super. 351, 439 A.2d 1236 (Pa.Super.
1982). However, a review of the motion for summary judgment filed in the
underlying action by the ANSS Parties demonstrated that they did not
challenge the validity or enforceability of the Settlement Agreement, but
rather expressly relied upon the Settlement Agreement and its condition
precedent terms to defeat Plaintiffs' claims. (Exh. M to Lamb Firm's
Motion for Summary Judgment) Similarly, our grant of summary judgment
was anchored to the validity and enforceability of the Settlement
Agreement and the non-occurrence of the agreed upon condition
precedent. Because a written contract governed the relationship between
Plaintiffs and the ANSS Parties, Plaintiffs have no entitlement to quasi-
contractual remedies. The failure of an express condition precedent, Land
America's consent to the sale, did not render the Settlement Agreement
"void" or "unenforceable". The failure of an express condition, which
terminates a party's duty to perform a contractual obligation, is unrelated
3
to enforceability and will not create a remedy under quasi-contract
theories of liability. Id. at 359, 439 A.2d at 1241. Plaintiffs conflate and
confuse "enforceability" with a failure of a condition precedent, which
terminates a duty. Shovel Transfer and Storage. Inc. v. PLCB, 559 Pa.
56, 59, 739 A.2d 133, 134 (Pa., 1999); Cambria Savings, supra. The
failure of a condition precedent does not render a contract legally
unenforceable or void, but rather terminates one or more obligations of
one or more contracting party. !sl at 357, 439 A.2d at 1239 ("what we
have here is not a void contract, but rather a contract that continued in
force until an event constituting a condition of the contract occurred to
terminate duty"). Unjust enrichment does not permit recovery in the face
of a written contract that terminated as a result of the failure of a condition
precedent.
Cambria Savings involved an unjust enrichment claim by the assignee
of a contractor who had installed aluminum siding on the defendant's
home pursuant to the parties' written agreement. The agreement stated
that it was to be "null and void if customer cannot get disability and death
and sickness insurance." Id. at 353, 439 A.2d at 1237. After the
contractor had installed the siding, the homeowners' application for
insurance was denied and the homeowner refused to make payment on
the ground that his obligation to pay terminated when he was unable to
obtain the required insurance. Id. at 354, 439 A.2d at 1238. The Superior
Court held that the failure of the insurance condition did not invalidate the
contract, but instead terminated the homeowner's obligation to make
payment to the contractor. !Q. at 357, 439 A.2d 1239-40. The Superior
Court held further that regardless of how harsh or unfair the result might
first appear, the contractor assumed the risk that the homeowner would be
relieved of any payment obligation if the required insurance was not
obtained, and therefore, the contractor's assignee could not recover under
unjust enrichment or any other quasi-contract theory as the written
contract expressly governed the rights and obligations of the parties.
This is not, in fact, a case of unjust enrichment upon which a
quasi-contractual right can be raised in law. The parties made a
bargain and its terms were complied with, until, upon the
happening of a specified event, the purchaser was released
from his duty of payment.
Appellant's brief cites numerous cases supporting the
proposition that courts will not rescue parties from the harsh
results of their freely contracted agreements. See, e.g., Third
National Bank and Trust Co. of Scranton v. Lehigh Valley Coal
Company, 353 Pa. 185, 44 A.2d 571 (1945); Durham Terrace
Inc. v. Hellertown Borough Authority, 394 Pa. 623, 148 A.2d 899
(1959).
Subsequent events have made the contractor's bargain a
poor one. However, he knew when the clause was written into
the agreement that he had conceded something unusual to his
4
customer as a part of the bargaining process. He also knew,
and admits he knew, that Mr. Gross never promised to waive
the written condition, and that it was possible that the work
could be done and yet the insurance refused. The injury the
contractor and its assignee, the Savings and Loan Association,
have suffered, is not through a failure of duty of the purchasers,
but from their own risks freely assumed under the contract.
~ at 359, 439 A.2d at 1240-1241.
Like the contractor in Cambria Savings, when Plaintiffs insisted that the
ANSS Parties take possession of PLAC's assets prior to closing they
"conceded something unusual" and expressly assumed the risk that one
or more of the conditions to closing would not occur. The injury suffered
by Plaintiffs resulted from a risk they assumed as part of their effort to
dispose of PLAC's business. The law will not create an implied contract to
relieve Plaintiffs of the risk they assumed under the express terms of their
contract.
Plaintiffs also argue that the contract was voidable as defined in the
Restatement (Second) Contracts, §7:
A voidable contract is one where one or more parties have the
power, by a manifestation of election to do so, to avoid the legal
relations created by the contract, or by ratification of the contract
to extinguish the power of avoidance.
Comment:
b. Grounds of avoidance. Typical instances of voidable
contracts are those where one party was an infant, or where the
contract was induced by fraud, mistake, or duress, or where
breach of a warranty or other promise justifies the aggrieved
party in putting an end to the contract. Usually the power to
avoid is confined to one party to the contract, but where, for
instance, both parties are infants, or where both parties enter
into a contract under a mutual mistake, the contract may be
voidable by either one of the parties. Avoidance is often referred
to as "disaffirmance."
REST 2d CONTR § 7. Under this section of the Restatement 2d, "[a)
claim that a contract is voidable does not challenge the existence or prima
facie validity of the underlying agreement, but charges that inequitable
conduct associated with the formation or performance of the agreement
renders it unenforceable at the election of the aggrieved party." FDA
Packaging Inc. v. Advance Personnel Staffing, Inc., 73 Pa. D. & C.4th 420,
429 -430 (Pa.Com.Pl. 2005) citing Sandvik AB v. Advent lnt'I Corp., 220
F.3d 99, 107-109 (3d Cir. 2000). The Settlement Agreement between
Plaintiffs and the ANSS Parties was not terminated because of inequitable
conduct associated with its formation. The Settlement Agreement was not
terminated at all. Instead, the ANSS Parties had no duty to close under
the Settlement Agreement as a result of the failure of a condition
5
precedent. The failure of the express condition did not "avoid the legal
relations created by the contract", nor did the ANSS Parties assert
rescission.
Finally, Plaintiffs have asserted a claim for restitution; however,
restitution is a remedy for unjust enrichment, not a separate cause of
action. Wilson Area School District, supra at 521, 895 A.2d at 1254.
(December 1, 2014 Order)
The only claims Plaintiffs have raised in their statement of matters complained of
on appeal that were not addressed in our footnotes are set forth in their first and second
paragraphs. Paragraph 1 alleges that we
resolved a disputed issue of fact in favor of the Defendants (it determined
that the factual allegations made in the underlying case, to the effect that
all assets of PLAC, Inc. were not delivered to the underlying defendants,
was true; and that the Plaintiffs' testimony that all assets were delivered
was not credible).
Our resolution of this case on summary judgment did not require us to make nor did we
make any determination regarding whether, in the underlying case, all the assets of
PLAC had been delivered to the ANSS Parties. If we accept Plaintiffs' position that all
of PLAC's assets were delivered to the ANSS Parties, the outcome of our case is not
changed because our disposition rests on the failure of a condition precedent.
Paragraph 2 of the statement of matters complained of on appeal alleges that we
did not consider conversion in the underlying action. The tort of conversion requires
proof of "the deprivation of another's right of property in, or use or possession of, a
chattel, or other interference therewith, without the owner's consent and without lawful
justification." Stevenson v. Economy Bank of Ambridge, 413 Pa. 442, 197 A.2d 721, 726
(Pa.1964). The ANSS Parties came into possession of the PLAC assets with the
consent of PLAC and Tupitza and retained their possession with lawful justification.
Accordingly, PLAC and Tupitza could not establish conversion in the underlying case.
For all of the reasons stated, we entered summary judgment in favor of the Lamb
Firm in this matter.
BY THE COURT:
Date: August ~. 2015
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