Glen Willow Properties v. Industrial Orchards Land

J-A04014-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

GLEN WILLOW PROPERTIES, LLC, IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.

INDUSTRIAL ORCHARDS LAND
ASSOCIATES, LP AND MAHMOOD
CHOUDHURY D/B/A INDUSTRIAL
ORCHARDS ASSOCIATES, LP,

----------------------------------------------

ORCHARDS INDUSTRIAL LAND
ASSOCIATES, LP,

v.

GLEN WILLOW PROPERTIES, LLC,
----------------------------------------------
ORCHARDS INDUSTRIAL LAND
ASSOCIATES, LP,

v.

JP MORGAN CHASE BANK, N.A.,

v.

GLEN WILLOW PROPERTIES, LLC,

APPEAL OF: JP MORGAN CHASE BANK,
N.A.,

Appellant No. 1334 EDA 2016

Appeal from the Judgment Entered April 19, 2016
In the Court of Common Pleas of Bucks County
Civil Division at No(s): 07-05467-26-5

GLEN WILLOW PROPERTIES, LLC, IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
J-A04014-17

INDUSTRIAL ORCHARDS LAND
ASSOCIATES, LP AND MAHMOOD
CHOUDHURY D/B/A INDUSTRIAL
ORCHARDS LAND ASSOCIATES, LP,

----------------------------------------------

INDUSTRIAL ORCHARDS LAND
ASSOCIATES, LP,

v.

GLEN WILLOW PROPERTIES, LLC,
----------------------------------------------
INDUSTRIAL ORCHARDS LAND
ASSOCIATES, LP,

v.

JP MORGAN CHASE BANK, N.A.,

v.

GLEN WILLOW PROPERTIES, LLC,

APPEAL OF: GLEN WILLOW PROPERTIES,
LLC,

Appellant No. 1500 EDA 2016

Appeal from the Judgment Entered April 19, 2016
In the Court of Common Pleas of Bucks County
Civil Division at No(s): 07-05467-26-5

BEFORE: SHOGAN, SOLANO, and PLATT,* JJ.

MEMORANDUM BY SHOGAN, J.: FILED APRIL 24, 2017

____________________________________________

*
Retired Senior Judge assigned to the Superior Court.

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In these consolidated appeals, Glen Willow Properties, LLC (“Glen

Willow”) appeals from the entry of judgment in favor of Industrial Orchards

Land Associates, LP (“Orchards”) and JP Morgan Chase Bank (“JPMC”), and

JPMC appeals from the entry of judgment in favor of Orchards. Upon

review, we affirm in part and reverse in part.

The trial court thoroughly set forth the factual background of this case

in its Pa.R.A.P. 1925(a) opinion. Trial Court Opinion, 7/19/16, at 1–5. In

summary, Orchards and Glen Willow executed a land sale agreement

(“Contract”) on February 8, 2006, whereby Orchards would sell Bucks

County Tax Map Parcel 22-057-004 (“Property”) to Glen Willow for

$5,000,000; Glen Willow intended to develop the Property for the

construction of 100 townhouses. The parties executed an escrow agreement

the next day, and Glen Willow paid its initial, non-refundable deposit of

$150,000 (“Escrow Deposit”).

In the Fall of 2006, the parties negotiated an amendment to ¶ 34(C) of

the Contract that addressed the period in which Glen Willow was required to

obtain development approvals from various government authorities

(“Approvals Period”). The proposed amendment would give Glen Willow an

option to extend the Approvals Period by twelve months upon a written

request and payment of $200,000 to Orchards (“Option”). The amendment

would also excuse Glen Willow from providing the $1,000,000 letter of credit

(“letter of credit”) to Orchards required under ¶ 34(B) of the Contract.

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Pursuant to the parties’ oral negotiations, Orchards’ general partner,

Mahmood Choudhury (“Choudhury”), drafted and sent a document that

reflected the terms of the proposed amendment to James Luke (“Luke”), an

officer of Glen Willow. After some delay, Luke returned a document, signed

and dated December 7, 2006 (“Amendment”). Assured by his real estate

agent, Sandy Farry, that the Amendment was the same document

Choudhury had drafted, Choudhury signed the Amendment without first

reviewing it.

Several weeks later, on or around January 30, 2007, Choudhury

learned from Glen Willow’s real estate agent, Sharon Otto, that the

Amendment did not include the twelve-month extension language. In

response, Choudhury contacted Glen Willow by email on January 31 and

February 2, 2007, declaring the Amendment null and void and notifying Glen

Willow that it was in breach of the Contract for failing to deliver the letter of

credit. In a responsive letter from counsel dated February 2, 2007, Glen

Willow refused to modify the Amendment and to submit the letter of credit.

On April 6, 2007, Choudhury sent an email to Glen Willow terminating the

Contract.

Despite Choudhury’s emails, and in anticipation of the Contract’s

June 8, 2007 settlement date, Glen Willow attempted to exercise the Option

by sending a written request for an extension and a cashier’s check for

$200,000 to Orchards on June 4, 2007. The cashier’s check was issued by

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JPMC. Believing that Glen Willow’s check was a business check, not a

cashier’s check as required under the Contract, Choudhury instructed his

wife to write VOID on the cashier’s check; Choudhury subsequently

misplaced the check.

In April of 2008, Glen Willow directed JMPC to stop payment on the

unpaid cashier’s check; JPMC complied on April 21, 2008. Thirty-three

months after voiding the cashier’s check, Choudhury requested payment on

the cashier’s check from JPMC in March of 2010. JPMC refused, having

already returned the funds to Glen Willow’s account.

Three lawsuits arose from the Contract dispute and unpaid cashier’s

check. First, on July 9, 2007, Glen Willow sued Orchards for specific

performance and indexed a lis pendens against the Property; Orchards

counterclaimed, seeking a declaratory judgment that the Contract was

terminated and requesting liquidated damages. Second, Orchards sued Glen

Willow, requesting reformation of the Amendment, a declaration that Glen

Willow breached the Contract, and damages. In response, Glen Willow

struck the lis pendens on February 9, 2011, abandoned its claim for specific

performance, terminated the Contract as amended due to Orchards’ alleged

breach, and requested damages. Third, Orchards sued JPMC for payment on

the cashier’s check, and JPMC joined Glen Willow seeking indemnification.

The three lawsuits were consolidated for trial.

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Following a nonjury trial, the trial court entered verdicts for Orchards

in all three cases and in favor of JPMC on its indemnification claim against

Glen Willow. The trial court awarded Orchards the $150,000 Escrow Deposit

and $533,333.33 for the lis pendens encumbrance to be paid by Glen Willow

and the $200,000 to be paid by JPMC. The trial court granted JPMC’s

request for indemnification on the $200,000, and awarded it attorneys’ fees,

and costs to be paid by Glen Willow. Glen Willow and JPMC filed post-trial

motions, which the trial court denied. These appeals followed. The parties

and the trial court complied with Pa.R.A.P. 1925.

We address Glen Willow’s appeal first, wherein it presents the

following questions for our consideration:

1. Whether the trial court, being guided by its determinations of
[Glen Willow’s] “delays and deception” that were either
predicated upon errors of law and/or were not supported by
competent evidence of record, erred in rendering its verdict in
favor of Orchards and against [Glen Willow].

2. Whether even if, in the alternative, this Court were to uphold
the trial court’s findings of liability in favor of Orchards, it
must nevertheless find that the damages awarded against
[Glen Willow] were erroneous as a matter of law.

3. Whether the trial court erred as a matter of law in ordering
[Glen Willow] to indemnify JPMC.

Glen Willow’s Brief at 3 (full capitalization omitted).

We apply the following standard of review to a nonjury trial verdict:

Our appellate role in cases arising from nonjury trial
verdicts is to determine whether the findings of the trial court
are supported by competent evidence and whether the trial court
committed error in any application of the law. The findings of

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fact of the trial judge must be given the same weight and effect
on appeal as the verdict of a jury. We consider the evidence in a
light most favorable to the verdict winner. We will reverse the
trial court only if its findings of fact are not supported by
competent evidence in the record or if its findings are premised
on an error of law. However, where the issue . . . concerns a
question of law, our scope of review is plenary. The trial court’s
conclusions of law on appeal originating from a non-jury trial
“are not binding on an appellate court because it is the appellate
court’s duty to determine if the trial court correctly applied the
law to the facts” of the case.

Allegheny Energy Supply Co., LLC v. Wolf Run Min. Co., 53 A.3d 53,

60–61 (Pa. Super. 2012) (quoting Wyatt Inc. v. Citizens Bank of

Pennsylvania, 976 A.2d 557, 564 (Pa. Super. 2009) (citations omitted)).

The trial court entered the following summary of findings:

We find that problems between Orchards and [Glen
Willow] began to develop in the Fall of 2006 after [Glen Willow]
received the Zoning Change called for in the Original Contract
but failed to deliver the $1,000,000.00 letter of credit required of
it. In an attempt to resolve the dispute, Mr. Choudhury, the
General Partner in charge of Orchard[s] arranged a meeting with
Mr. Luke, one of the then members of [Glen Willow] at the office
of [Glen Willow’s] zoning attorney, Mr. Marte, who also
participated in the meeting. The meeting resulted in an
agreement to resolve the dispute by providing [Glen Willow] with
an option to extend the time of settlement for one year from the
existing June 8, 2007 deadline by paying Orchard[s] an
additional $200,000.00 at the time the optional extension was
exercised. The agreement also relieved [Glen Willow from] its
pre-existing obligation to post the $1,000,000.00 letter of credit.

Immediately after the meeting in Mr. Marte’s office,
Mr. Choudhury correctly reduced the agreed upon terms to
writing (Exhibit O-2) and submitted it to [Glen Willow] through
the offices of Coldwell Banker, where the real estate agents
representing both [Glen Willow] (Sharon Otto) and Orchard[s]
(Sandra Farry) were located.

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When the written agreement was not returned promptly[,]
follow-up inquiries were initialed [sic] by Mr. Choudhury and
ultimately he was told by Ms. Farry that the Amendment to
Agreement of Sale had been signed by [Glen Willow] and
delivered to her office. At her request, Mr. Choudhury came to
her office and signed the Amendment without the close
examination that would have revealed that it had been altered
by [Glen Willow] to change the extension from a one year period
to an indefinite period.

The delay by [Glen Willow] in executing the agreed upon
amendment increased the level of concern that Orchard[s]
rightfully had over the sincerity of [Glen Willow’s] intentions in
the transaction. That concern was greatly magnified when
Orchard[s] learned the [Glen Willow] had fraudulently changed
the terms of the amendment as indicated above.

From the testimony of Mr. Luke on behalf of [Glen Willow]
and considering the lack of testimony of Steven Plofker, the lead
member of [Glen Willow], it is apparent that one of three
scenarios explain[s] the delay in returning the signed
amendment and the fraudulent altering of it. They include that
Mr. Luke did it with the full authorization of and/or at the
direction of Mr. Plofker, that Mr. Plofker did it or had it done and
instructed Mr. Luke to refrain from letting anyone know it had
been done or that Mr. Plofker did it or had it done and failed to
inform even Mr. Luke that it had been done. In the latter of
those scenarios it is possible that Mr. Luke did not discover the
change or that he did discover it but chose not to reveal it to
Orchard[s]. For purposes of the outcome of this case[,] which
scenario took place is not important. All had the intended end
result of getting Orchard[s] to sign a written document with the
belief that it complied with the agreed upon terms when it did
not.

The fact that the written amendment did not contain the
agreed upon terms is not disputed in this case by [Glen Willow].
However, despite being caught in their deception and
acknowledging the “mistake”, [Glen Willow] refused to correct
the amendment. Orchard[s] had made it clear to [Glen Willow]
that the “mistake” needed to be corrected or [Glen Willow]
would not be entitled to the benefit of not having to post the
$1,000,000.00 letter of credit as called for in the Original
[Contract].

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Because of [Glen Willow’s] aforesaid delays and deception,
Orchard[s] was now rightfully extremely concerned about [Glen
Willow’s] intentions and trustworthiness. Therefore, when [Glen
Willow] requested Orchard[s] to allow [Glen Willow] to apply for
a PennDot Highway Occupancy Permit with a recordable waiver
signed by Orchard[s] at a time when the Permit was not even
needed, Orchard[s] rightfully suggested that either the permit
application be delayed or that instead the permit be applied for
in Orchard[s’] name with the understanding that it would be
transferred to [Glen Willow] when and if the transaction went to
settlement. [Glen Willow’s] contention that Orchard[s’]
reluctance to submit the permit application as originally
requested by [Glen Willow] somehow was a violation of
Orchard[s’] contractual obligations and/or caused any concerns
on [Glen Willow’s] part is simply not credible.

Even though [Glen Willow] obtained preliminary land
development plan approval in March of 2007 and could have
immediately taken steps to submit the application for final
approval, [Glen Willow] instead chose to do nothing further until
its June attempt to exercise the option to extend the settlement
deadline by one year.

Summary of Findings and Verdict, 9/18/15, at 2–4 (emphasis in original).

Glen Willow challenges the trial court’s conclusion that Glen Willow was

liable to Orchards for breach of the Contract. Glen Willow’s Brief at 28.

According to Glen Willow, the trial court’s finding that Glen Willow engaged

in fraud regarding the Approvals Period was not supported by the record

because there was no testimony or documents establishing that Glen Willow

“made any misrepresentations as to what Choudhury was signing or made

any inducements in this regard.” Id. at 32. Glen Willow also disputes the

trial court’s finding that Orchards “justifiably relied upon any alleged fraud

on the part of Glen Willow” because Choudhury “admittedly failed to read

the Amendment before signing it.” Id. at 35. Glen Willow concludes that

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the trial court “could not have enforced any contract between the parties

and could not have determined if either had performed/not

performed . . . due to the uncorrected mutual mistake” regarding the

Option. Id. at 37.

Initially, we address the fraud underpinnings of this case. “Under

Pennsylvania law, a cause of action framed as a tort but reliant upon

contractual obligations will be analyzed to determine whether the cause of

action properly lies in tort or contract.” Autochoice Unlimited, Inc. v.

Avangard Auto Fin., Inc., 9 A.3d 1207, 1212 (Pa. Super. 2010). “In

general, courts are cautious about permitting tort recovery based on

contractual breaches. In keeping with this principle, this Court has

recognized the ‘gist of the action’ doctrine, which operates to preclude a

plaintiff from re-casting ordinary breach of contract claims into tort claims.”

Hart v. Arnold, 884 A.2d 316, 339 (Pa. Super. 2005). The doctrine bars

tort claims:

(1) arising solely from a contract between the parties; (2) where
the duties allegedly breached were created and grounded in the
contract itself; (3) where the liability stems from a contract; or
(4) where the tort claim essentially duplicates a breach of
contract claim or the success of which is wholly dependent on
the terms of a contract.

Id. at 340 (quoting eToll, Inc. v. Elias/Savion Adver., 811 A.2d 10, 19

(Pa. Super. 2002)). “The question of whether the gist of the action doctrine

applies is an issue of law subject to plenary review.” eToll, Inc., 811 A.2d

at 15.

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In the case sub judice, Orchards alleged fraud in connection with the

Contract as amended in its new matter to Glen Willow’s complaint for

specific performance, stating, “[Glen Willow] obtained [Orchards’] signature

on [the Amendment] by fraudulent means.” Answer, New Matter, and

Counterclaim, 8/29/07, at ¶ 30. However, in its own complaint against Glen

Willow, Orchards raised claims of breach of contract and unjust enrichment,

but not fraud. Complaint, 5/4/10, at ¶¶ 19–29.

Our thorough review of the record indicates that the subject matter of

the underlying litigation was the Contract as amended. It is clear to this

Court that the rights Orchards seeks to vindicate specifically arise from its

contractual relationship to Glen Willow and not from a general societal policy

embodied by the law of torts. We conclude, therefore, that Orchards’ claim

is properly viewed as an action on the Contract as amended and that its

allegations of fraud are barred by the gist-of-the-action doctrine. Thus, we

further conclude that the trial court erred in its application of the law to the

facts by making fraud-based conclusions in this contract action. Accord

Allegheny Energy Supply, 53 A.3d at 60–61 (instructing that conclusions

of law on appeal from a nonjury trial “are not binding on an appellate court

because it is the appellate court’s duty to determine if the trial court

correctly applied the law to the facts” of the case).

Reviewing this controversy from the proper legal perspective, the

following principles govern our interpretation of a contract:

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Because contract interpretation is a question of law, this Court is
not bound by the trial court’s interpretation. Our standard of
review over questions of law is de novo and to the extent
necessary, the scope of our review is plenary as the appellate
court may review the entire record in making its decision. With
respect to factual conclusions, we may reverse the trial court
only if its findings of fact are predicated on an error of law or are
unsupported by competent evidence in the record.

Step Plan Servs., Inc. v. Koresko, 12 A.3d 401, 408 (Pa. Super. 2010)

(internal quotation marks, citations, and modifications omitted).

We must view the evidence of record in a light most favorable to

Orchards, the verdict winner. In doing so, we conclude the following

findings of fact by the trial court are supported by competent evidence of

record: Glen Willow received the Zoning Change called for in the Contract,

but it failed to deliver the letter of credit required of it. The parties

negotiated an amendment, giving Glen Willow the Option and waiving the

letter-of-credit obligation. Although the Amendment did not include the

twelve-month-extension language, both parties signed it. The provision at

issue reads as follows:

Notwithstanding the terms of the Contract, the Approval Period,
as defined in Paragraph 34(c) of the Contract will be extended
automatically on the written request of the Buyer, provided it is
accompanied with a payment in the amount of $200,000.00,
payable in certified funds or by wire transfer, on or before June
8, 2007. No new extensions will be granted. Paragraph 35(5) is
hereby being superseded by this Amendment. This extension
will be valid only if payment of $200,000, as stated hereinabove
is received and acknowledged by the Seller.

Amendment, 12/4/06, at ¶ 2. Pursuant to the Amendment, Glen Willow

attempted to exercise the Option by sending a written request for an

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extension and a $200,000 cashier’s check to Orchards on June 4, 2007.

Orchards received the check but voided it. Orchards subsequently

demanded the letter of credit and gave Glen Willow additional time in which

to deliver it. When Glen Willow did not provide the letter of credit, Orchards

terminated the Contract. Glen Willow requested a stop payment on the

cashier’s check, which JPMC executed. Despite nullifying the Amendment,

denying Glen Willow an extension of the Approvals Period, and terminating

the Contract, Orchards requested payment on the cashier’s check from

JPMC, which JPMC refused.

These facts give rise to the following conclusions of law: Glen Willow’s

initial failure to deliver the letter of credit constituted a breach of the

Contract. Orchards did not acknowledge the $200,000 cashier’s check as

payment for an extension under the Amendment, as evidenced by

Choudhury having the cashier’s check marked “void” and his subsequent

notices to Glen Willow. Pursuant to ¶ 2 of the Amendment, therefore, Glen

Willow did not obtain an extension of the Approvals Period and remained in

breach of the Contract. Despite Orchards’ renewed demand for the letter of

credit, Glen Willow failed to deliver the letter of credit within the sixty-day

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cure period under ¶ 16 of the Contract1 and the additional time afforded by

Orchards through Choudhury’s emails. Based on the foregoing, we discern

no error in the trial court’s ultimate conclusion that Glen Willow breached the

Contract by failing to deliver the letter of credit.

Glen Willow’s second issue raises an alternative argument that, even if

the trial court’s conclusion that Glen Willow breached the Contract was

correct, its award of damages was “erroneous as a matter of law.” Glen

Willow’s Brief at 38. Glen Willow argues that Orchards’ sole remedy under ¶

17 of the Contract was liquidated damages, i.e., the Escrow Deposit. Id. at

39. Therefore, Glen Willow contends, the trial court erred in reforming the

Amendment, extending the Approvals Period to September 18, 2015, “more

than eight years after the expiration of the originally intended one-year

extension of the Approvals Period,” and awarding $533,333.33—which was

the uncontested value of the Approvals Period extended and pro-rated for

the actual length of time the Property was subject to Glen Willow’s lis

____________________________________________

1
This provision reads as follows:

16. Correcting Defects. There shall be no event of default or
right to terminate this Contract unless sixty (60) days prior
written notice is given to the other party in which to cure or
correct such defect or case for termination and can be
terminated by either party with written notice if the written
notice does not take place within the 60-day period.

Contract for Buy/Sale of Real Estate, 2/8/06, at ¶ 16.

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pendens. Id. at 36, 39 (emphasis in original).2 We agree with Glen Willow

that the trial court’s award of additional damages to Orchards was

erroneous.

In a breach of contract action, damages are awarded to
compensate the injured party for loss suffered due to the
breach. The purpose of damages is to put the plaintiff in the
position he or she would have been in but for the breach.

Empire Properties, Inc. v. Equireal, Inc., 674 A.2d 297, 304–305 (Pa.

Super. 1996) (internal citations omitted).

Here, the Contract expressly provides for damages as follows:

17. Termination of Contract. If this Contract is legally and
rightfully terminated by the Buyer for reasons permitted
hereunder, the Escrow Deposit and the Letter of Credit shall be
refunded to the Buyer, without interest. If the Contract is
terminated by the Seller because of Buyer’s default, the
Escrow Deposit shall be retained by the Seller as
liquidated damages. In the event Seller defaults in its
obligations hereunder, Buyer shall have the right to seek specific
performance.

Contact for Buy/Sale of Real Estate, 2/8/06, at ¶ 17 (emphasis in text

supplied). Pursuant to ¶ 17, the trial court’s award of the Escrow Deposit to

Orchards was proper.

____________________________________________

2
Orchards argues that this claim is waived because it does not appear in
Glen Willow’s Pa.R.C.P. 1925(b) statement. Orchards’ Brief at 20. Our
review of the record confirms that Glen Willow’s challenge to reformation of
the Amendment was not expressly included in its Rule 1925(b) statement;
however, we find that this claim is fairly subsumed in Glen Willow’s
arguments related to the damages awarded to Orchards.

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The trial court based its award of additional damages to Orchards on

Glen Willow’s alleged fraud and the lis pendens:

The fraudulent Amendment that spurred this litigation was
entered on or around December 4, 2006 with an effective date of
June 8, 2007. The lis pendens was lifted on February 9, 2011.
See Praecipe to Strike Lis Pendens p. 1. It is undisputed that
prior to the Amendment’s execution, both parties had orally
agreed that the cost of a one-year extension on the line of credit
requirement was $200,000. Therefore, we reasoned that
Orchard[s] should recover $200,000 for every year from the
effective date of the Amendment until the time the lis pendens
was lifted. Orchard[s] was awarded $200,000 per year pro rated
for the period from June 8, 2007 through February 9, 2011,
which totaled $733,333.33.

Damages we awarded to Orchard[s] from Glen Willow are
the direct result of Glen Willow’s conduct in trying to fraudulently
obtain an indefinite extension of the original Contract’s time
limit. The original Contract required Glen Willow to post a one
million dollar letter of credit once it received zoning approval.
Having received such approval[,] Glen Willow engaged in a
course of conduct to avoid that requirement by instead agreeing
to pay $200,000.00 of [sic] a one-year extension. It then
fraudulently got Orchard[s’] signature on an Amendment that
gave it an unlimited extension. When caught in its fraud, Glen
Willow began a course of conduct that attempted to paint
Orchard[s] as the defaulting party. In determining how to
calculate damages, we granted Orchard[s] the benefit of the
bargain it and Glen Willow actually agreed to when the terms of
the Amendment were negotiated. We could have found that the
Amendment was null and void as Orchard[s] requested and
awarded Orchard[s] the one million dollars they would have
received had Glen Willow posted the letter of credit called for by
the original Contract and then defaulted. We chose not to do so
because we felt that considering the facts as we found them, the
award we made was the most appropriate since it put the parties
in the position they would have been had the terms actually
agreed upon when the Amendment was negotiated were
implemented.

Trial Court Opinion, 7/19/16, at 17–18 (emphasis in original).

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Upon review, we conclude that the trial court’s award of damages in

excess of the Escrow Deposit was erroneous for several reasons. First, upon

Orchards’ termination of the Contract, it was entitled to retain only the

Escrow Deposit as liquidated damages. Contact for Buy/Sale of Real Estate,

2/8/06, at ¶ 17. Contrary to the trial court’s assertion, therefore, it could

not have awarded Orchards one million dollars under the letter of credit.

Second, Glen Willow did not successfully exercise the Option because

Orchards voided the cashier’s check and nullified the Amendment.

Stipulation of Agreed-Upon Facts, 9/11/15, at Exhibit B. Therefore, Glen

Willow did not owe—and Orchards was not entitled to—$200,000. Third, the

trial court’s endorsement of Orchards’ fraud allegations as a basis for

damages in this action for breach of contract violates the gist-of-the-action

doctrine.

Finally, the trial court’s reliance on the lis pendens as a basis for

reforming the Amendment and awarding additional damages conflicts with

our recent decision in In Re: Foremost Industries, Inc. v. GLD Foremost

Holdings, LLC, ___ A.3d ___, 2017 PA Super 37 (Pa. Super. filed February

16, 2017). The appeal of Foremost Industries arose out of “the lower

court’s denial of GLD’s emergency petition to strike the lis pendens on

properties owned by Foremost Industries.” Id. at *6. We explained the law

of lis pendens as follows:

Lis pendens is construed to be the jurisdiction, power, or control
which courts acquire over property involved in a suit, pending

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the continuance of the action, and until final judgment. Lis
pendens may be imposed when the property is subject to
litigation and that any interest acquired by the third party will be
subject to the result of the litigation.

The doctrine of lis pendens is based in common law and
equity jurisprudence, rather than in statute, and is wholly
subject to equitable principles. The doctrine does not establish
an actual lien on the affected property. Its purpose is merely to
give notice to third persons that the real estate is subject to
litigation and that any interest which they may acquire in the
real estate will be subject to the result of the action.

If title to the property is not subject to the result of the
litigation, then there is no reason to provide notice to a third
party about the litigation. To impose lis pendens in such a case
would prove to be an arbitrary application of the doctrine and,
equity can and should refuse to give it effect, and, under its
power to remove a cloud on title can and should cancel a notice
of lis pendens which might otherwise exist.

Thus, a two-part analysis emerges from the common law
that the courts should apply to determine whether exerting the
court’s control over real property is appropriate. The first step is
to ascertain whether title is at issue in the pending litigation.
The second step is an equitable inquiry:

The lower court must balance the equities to
determine whether the application of the doctrine is
harsh or arbitrary and whether the cancellation of
the lis pendens would result in prejudice to the non-
petitioning party.

Id. at *6–7 (internal quotation marks and citations omitted).

Here, the underlying action does not involve a dispute over title to the

Property, but rather a contract dispute. Technically, therefore, Glen Willow

had “no reason to provide notice to a third party about the litigation.”

Foremost Industries, 2017 PA Super 37, at *6. The second step of the lis

pendens analysis is informed by the record. Glen Willow sued Orchards for

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specific performance of the Contract and recorded a lis pendens. Orchards

filed suit against Glen Willow for breaching the Contract. Glen Willow

cancelled the lis pendens on February 9, 2011, when it withdrew its action

for specific performance. Prior to Glen Willow’s cancellation of the lis

pendens, Orchards did not move to strike it, nor has Orchards claimed the

loss of any potential sale of the Property as a result of the lis pendens. The

Contract limits Orchards’ damages for Glen Willow’s breach to the Escrow

Deposit. Agreement for Buy/Sale of Real Property, 2/8/06, at ¶ 17. In light

of this record, we discern no basis for the trial court’s equitable award of

damages to Orchards based on the lis pendens.

In sum, we conclude that the trial court’s award of the Escrow Deposit

to Orchards was authorized under ¶ 17 of the Contract. Contrarily, the trial

court erred in awarding $733,333.33 to Orchards by reforming the nullified

Amendment and using the lis pendens to calculate damages. Thus, we

reverse the entry of judgment in favor of Orchards and against Glen Willow

for $733,333.33 and the entry of judgment in favor of Orchards against

JPMC for $200,000.3

Glen Willow’s final issue challenges the trial court’s ruling that Glen

Willow must indemnify JPMC. Glen Willow’s Brief at 40. On JPMC’s
____________________________________________

3
In light of this holding, JPMC is not liable to Orchards for the unpaid
cashier’s check. Therefore, we need not address the challenges raised in
JPMC’s appeal to the trial court’s rejection of JPMC’s defenses. JPMC’s Brief
at 10–11.

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indemnification claim, the trial court awarded JPMC its defense costs of

$161,084.99 through August 31, 2015, and the $200,000 payable to

Orchards in the event JPMC paid that amount and was not immediately

reimbursed by Glen Willow. Summary of Findings and Verdict, 9/18/15 at 5.

Subsequently, the trial court awarded JPMC an additional $47,088.34 in

post-August 31, 2015 attorneys’ fees and expenses. Order, 3/22/16.

The trial court explained its two-part indemnification ruling as follows:

We were further reasonable and logical when we granted
JPMC’s request for indemnification and attorney fees against
[Glen Willow]. At trial, we found JPMC’s argument regarding the
indemnification claims convincing. JPMC stated that
indemnification is provided for both in its contract with [Glen
Willow] and the UCC [Uniform Commercial Code]. In the
agreement Plofker signed for [Glen Willow] when he opened
[Glen Willow’s] account with JPMC, he agreed to indemnify the
bank for any claims brought against it because of services
provided to [Glen Willow] as a customer. N.T. 9/14/2015, p.
187. The processing of the stop payment request was clearly a
service provided to [Glen Willow] as a customer. Further,
§ 3312 of the UCC provides protection to a bank if a cashier’s
check has been outstanding for longer than ninety days. N.T.
9/14/2015, p. 189. Finally, counsel for JPMC submitted detailed
documentation regarding its costs incurred in litigating this case.
N.T. 9/14/2015, p. 190. See Post-Trial Petition of JPMC for an
Award Against [Glen Willow] of Additional Legal Fees &
Expenses, 1/14/2016. The undersigned did not abuse its
discretion in awarding JPMC $208,173.33 in fees and
expenses[.]

Trial Court Opinion, 7/19/16, at 18.

In response to the trial court’s indemnification decision on the cashier’s

check, Glen Willow relies on the rule of contract interpretation that specific

language controls general language, and it directs our attention to the Stop

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Payment Affidavit executed by Plofker. Glen Willow’s Brief at 41 (citing

Southwestern Energy Production Co. v. Forest Resources, LLC, 83

A.3d 177 (Pa. Super. 2013)); Stipulation of Agreed-Upon Facts, 9/11/15, at

Exhibit E. The Stop Payment Affidavit provision reads as follows:

THAT if the check was issued not more than 90 days ago,
in consideration of your issuing a duplicate of the said
check/crediting account number ______________, the
undersigned agrees to indemnify [JPMC] against any loss,
damages, suits, counsel fees, expenses and liabilities which it
may incur in connection with any claim which may be made with
respect to the original check or duplicate check in connection
with the honoring or declining to honor whether through
inadvertence or otherwise either of the said checks, and further
agrees to promptly surrender the original check to [JPMC] for
cancellation if located.

Id. at 2 (emphasis in original). According to Glen Willow:

JPMC would only be indemnified if the check on which a stop-
payment was requested was issued less than 90 days from the
request to stop payment. Here, the Bank Check was issued well
beyond 90 days from the request to stop payment and, as such,
there was no duty on the part of [Glen Willow] to indemnify
JPMC with respect to it.

Glen Willow’s Brief at 42 (emphasis in original). Additionally, Glen Willow

asserts “there is no provision in section 3312 of the Uniform Commercial

Code, 13 Pa. C.S.A. § 3312 (“Lost, destroyed or stolen cashier’s check,

teller’s check or certified check”), that even mentions the word

‘indemnification’ or any variation or idea of it.” Id. at 42.

In contrast, JPMC argues that the specific provision in the Stop

Payment Affidavit does not nullify, supersede, abrogate, or conflict with the

general indemnification provision in the parties’ agreement. JPMC’s Brief at

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7–10 (citations omitted). JPMC further argues, “The provision in the Stop

Payment Affidavit does not apply because the check had been outstanding

for more than 90 days.” Id. at 10–13 (citing 13 Pa.C.S. § 3312(b)(2)).

Upon review of the parties’ arguments, the law, and the certified

record, we reverse the trial court’s indemnification ruling in part and affirm

in part. As explained above, Orchards did not acknowledge the cashier’s

check as payment under the Amendment, and it nullified the Amendment;

therefore, there was no extension of the Approvals Period. Consequently,

Glen Willow was not required to pay $200,000; Orchards was not entitled to

payment on the cashier’s check; JPMC was not liable to Orchards for

nonpayment of the cashier’s check; and Glen Willow was not required to

indemnify JPMC for the $200,000. Based on the foregoing conclusions of

law, we reverse the trial court’s order directing Glen Willow to indemnify

JPMC.

As for the second component of the trial court’s indemnification ruling,

Glen Willow does not mount any challenge to the order requiring it to

indemnify JPMC for attorneys’ fees and costs. Glen Willow’s Brief at 40–42.

Nor could it as the record supports the trial court’s findings, and we discern

no error of law in its conclusion. Specifically, the record confirms that, as a

customer of JPMC, Glen Willow agreed to the General Terms for Accounts

and Services (“General Terms”). Stipulation of Agreed-Upon Facts, 9/11/15,

at Exhibit D. The General Terms contain an indemnification provision:

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J-A04014-17

I [Glen Willow] agree to indemnify and hold you [JPMC] and all
Morgan Affiliates harmless from any claim, loss, liability, or
expense, including, without limitation, collection costs,
reproduction and search costs and the reasonable fees and
disbursements of counsel and other advisers incurred by you
or them (i) in rendering services hereunder; (ii) in connection
with any breach of this Agreement by me; or (iii) in connection
with claims, suits or proceedings brought against you by
third parties as a result of your providing products and
services to me, except any claim, loss, or liability that results
from your gross negligence or willful misconduct.

Id. at ¶ 17 (emphases supplied). Under the plain language of this provision,

Glen Willow unambiguously agreed to indemnify JPMC for attorneys’ fees

and costs incurred in connection with Orchards’ third-party suit against JPMC

on the cashier’s check. Thus, we affirm the trial court’s entry of judgment in

favor of JPMC and against Glen Willow for attorneys’ fees and costs.

Judgment in favor of Orchards and against Glen Willow for $150,000

affirmed; judgment in favor of Orchards and against Glen Willow for

$533,333.33 reversed; judgment in favor of Orchards and against JPMC for

$200,000 reversed; judgment in favor of JPMC and against Glen Willow for

attorneys’ fees and costs affirmed; judgment in favor of JPMC and against

Glen Willow for indemnification of $200,000 reversed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 4/24/2017

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