Domiano, L. v. Penn Security Bank ( 2014 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
LOUIS J. DOMIANO, JR. AND DEBRA IN THE SUPERIOR COURT OF
DOMIANO, PENNSYLVANIA
Appellants
v.
PENN SECURITY BANK, SUCCESSOR BY
MERGER TO OLD FORGE BANK,
Appellee No. 628 EDA 2013
Appeal from the Order Entered January 29, 2013
In the Court of Common Pleas of Monroe County
Civil Division at No(s): 2160-CV-2012
LOUIS J. AND DEBRA DOMIANO, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellants
v.
PENN SECURITY BANK, SUCCESSOR BY
MERGER TO OLD FORGE BANK,
Appellee No. 643 MDA 2013
Appeal from the Order Entered March 12, 2013
In the Court of Common Pleas of Lackawanna County
Civil Division at No(s): 1703 CV 2012
BEFORE: BENDER, P.J.E., BOWES, PANELLA, DONOHUE, SHOGAN, ALLEN,
LAZARUS, WECHT, and STABILE, JJ.
MEMORANDUM BY BOWES, J.: FILED NOVEMBER 24, 2014
This is a consolidated appeal by Louis J. and Debra Domiano (“the
Domianos”) from orders sustaining demurrers and dismissing their
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complaints in two breach of contract/quasi-contract actions that were filed in
actions instituted in two different counties. The actions are identical except
for the real estate collateral located in the respective counties.1 We affirm.
We discern the following facts from the complaints filed by the
Domianos. The Domianos were “debtors” in a Chapter 11 bankruptcy
proceeding filed in the United States Bankruptcy Court for the Middle District
of Pennsylvania. On June 15, 2010, the bankruptcy court approved a
settlement agreement between the Domianos and Penn Security Bank (“the
Bank”), successor by merger to Old Forge Bank; a copy of the agreement
was appended to the complaints. By its terms, the settlement agreement
imposed several conditions upon the Domianos before any performance
would be required of the Bank. The Domianos were to provide a written
commitment of financing sufficient to satisfy the remainder of their
obligation to the Bank within sixty days of the date of the settlement
agreement. In addition, within 120 days, the Domianos were obligated to
pay $145,000 to the Bank. If the Domianos fulfilled both conditions, Penn
Security would release a Scranton property from two mortgages, discontinue
a Lackawanna County foreclosure action, and return the consent to entry of
judgment and deed to the Domianos. Failure of the Domianos to tender the
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1
The parties were represented by the same respective counsel in both the
Monroe County and Lackawanna County actions, which explains the identical
pleadings.
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written commitment within sixty days or pay the property settlement
amount within 120 days constituted default. Settlement Agreement,
6/15/10, at 3-7.
The Domianos filed the instant complaints in contract and quasi-
contract against the Bank for breach of the settlement agreement. They
alleged that they complied with “all material aspects of the agreement and
delivered a mortgage commitment letter to the Defendant.” Complaints, at
¶6. They averred further that the mortgage commitment letter was
attached to each complaint as Exhibit C. Id. Exhibit C is correspondence
dated August 18, 2010, from E. Robert Blank, President of Penn Business
Credit, LLC., but unsigned by Mr. Blank. Specifically, the letter sets forth
proposed terms for financing, but the signature line for Mr. Domiano
reflecting that the terms were agreed to and accepted is blank. In addition
to the signature, acceptance required payment of $10,000. The proposal
expired on August 27, 2010.
In the Monroe County lawsuit, the Domianos maintained that they had
met the conditions and that the Bank was in breach of the settlement
agreement because it refused to execute and deliver a deed to the Monroe
County property. They asked the court to order the Bank to execute the
deed and sought damages in excess of $100,000 for lost income from the
non-returned property. Complaint, 4/23/12, at 2.
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The Bank filed preliminary objections in the nature of a demurrer
pursuant to Pa.R.C.P. 1028(a)(4), and a brief in support thereof, alleging
that the complaints, together with the appended unsigned documents, were
legally insufficient to state a claim for breach of contract or quasi–contract.
The Bank argued that the unexecuted writings relied upon by the Domianos
and their failure to attach a copy of the $10,000 check and the
countersigned letter to the complaint were legally insufficient to establish
that the Domianos had secured a financing commitment from Penn Business
Credit, which was a condition of the settlement agreement.
The Domianos filed answers to the preliminary objections and asserted
that the Bank was in possession of the signed documents, had acknowledged
same, and that an additional production of the executed documents would
constitute the pleading of evidence. Answer to Preliminary Objections,
10/12/12, at ¶¶ 7, 11. The Domianos did not amend their complaint as of
right or seek leave to amend their complaint to attach a signed copy or to
plead additional facts to cure any deficiencies.
Following oral argument on the preliminary objections in Monroe
County, the trial court issued its January 29, 2013 order and opinion
sustaining the Bank’s demurrer and dismissing the Domianos’ complaint with
prejudice. The court found that, even if a copy of the executed letter had
been appended to the complaint, the complaint could not survive a demurrer
since the letter, in order to constitute a commitment, had to be both signed
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by Mr. Domiano and returned with a check for $10,000. The Domianos did
not attach a copy of the check or allege that they had tendered the $10,000
payment to Penn Business Credit. Furthermore, the letter/proposal was
dated beyond the sixty-day period for performance under the settlement
agreement.
In the Lackawanna County case, the parties, causes of action, claims,
and requested relief were identical with respect to the collateral involved.
Preliminary objections in the nature of a demurrer were pending in that
action when the Monroe County order sustaining the demurrer was entered.
Therein, the Bank filed a supplemental brief asking the trial court to take
judicial notice of the January 19, 2013 Monroe County order and opinion.
The Lackawanna County court heard oral argument on the preliminary
objections on March 11, 2013, and sustained the demurrer, concluding that
the claims, causes of action, and identities of the parties and their capacities
were identical to those in the Monroe County action, and that the prior
decision constituted res judicata.
The Domianos timely appealed from both adverse rulings and this
Court, at the request of the Bank, consolidated them. The Domianos raise
three issues for our review:
I. Whether the courts below properly considered a demurrer
which did not raise the issue on which the court based its
conclusion?
II. Whether the courts below properly concluded that no
cognizable action did exist or could have been pleaded?
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III. Whether the courts below improperly refused to permit an
amended complaint?
Appellants’ brief at 4.
In reviewing a trial court order overruling or sustaining preliminary
objections, we must
“determine whether the trial court committed an error of law.
When considering the appropriateness of a ruling on preliminary
objections, the appellate court must apply the same standard as
the trial court.” De Lage Landen Fin. Servs., Inc. v. Urban
P'ship, LLC, 2006 PA Super 169, 903 A.2d 586, 589 (Pa. Super.
2006).
“Preliminary objections in the nature of a demurrer
test the legal sufficiency of the complaint.” When
considering preliminary objections, all material facts
set forth in the challenged pleadings are admitted as
true, as well as all inferences reasonably deducible
therefrom. Preliminary objections which seek the
dismissal of a cause of action should be sustained
only in cases in which it is clear and free from doubt
that the pleader will be unable to prove facts legally
sufficient to establish the right to relief. If any doubt
exists as to whether a demurrer should be sustained,
it should be resolved in favor of overruling the
preliminary objections.
Hykes v. Hughes, 2003 PA Super 397, 835 A.2d 382, 383 (Pa.Super.
2003) (citations omitted).
Haun v. Cmty. Health Sys., 14 A.3d 120, 123 (Pa.Super. 2011).
The Domianos’ arguments pertain to both cases. For convenience, we
will reference the Monroe County pleadings and briefs in addressing them.
At the outset, the Domianos claim that the trial court “sustained an
unasserted demurrer.” Appellants’ brief at 18. They allege that the only
basis for relief the Bank asserted in its preliminary objections was a lack of
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capacity to sue, which should have been raised via new matter. Appellants’
brief at 11.
We find the Domianos’ position to be somewhat disingenuous. In their
brief in opposition to the preliminary objections, they acknowledged that the
Bank was seeking a demurrer and argued that the complaint was legally
sufficient. See Memorandum of Law of the Plaintiffs in Opposition to the
Preliminary Objections of the Defendant, 12/31/12, at 5-7. Our review of
the preliminary objections confirms that the Bank articulated that the
Domianos’ complaint was legally insufficient because the allegations,
together with the unexecuted supporting documents, failed to state a claim
for breach of contract or quasi-contract. Such allegations constitute a
demurrer. While the Bank also asserted a lack of capacity to sue, that was
not the ground upon which relief was afforded. This issue is without merit.
The Domianos next contend that they alleged in their complaint at
“paragraph 6” that “the fully executed documents had been delivered to the
counsel for the Bank.” See Appellants’ brief at 10. We find this to be a
misrepresentation of the averments of the complaint. The Domianos
actually pled that they “complied with all material aspects of the
[settlement] agreement and delivered a mortgage commitment letter to the
Defendant[,]” a copy of which was attached as Exhibit C.2 Exhibit C was a
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2
The Bank argued below that the Domianos were in default of the
settlement agreement when they received the financing proposal dated
(Footnote Continued Next Page)
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copy of an unexecuted letter from Penn Business Credit setting forth the
terms of a financing proposal. In order to proceed, Mr. Domiano was
required to sign the letter on the line evidencing acceptance and return the
signed letter with a $10,000 check to Penn Business before August 27,
2010. The Domianos did not attach a copy of the signed letter or the check,
nor offer any explanation in their complaint why they could not do so. See
Pa.R.C.P. 1019.3 Hence, we conclude that the Bank’s preliminary objections
sufficiently pled the basis for a demurrer, i.e., that the allegations of the
complaint and supporting documents were legally insufficient to state a
claim for breach of the settlement agreement.
In their answer to the preliminary objections, the Domianos asserted
that they had provided copies of the executed proposal to the Bank.
However, the Bank denied this averment in its reply brief. The Domianos
contend that the trial court, in sustaining the demurrer, impermissibly
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(Footnote Continued)
August 18, 2010, since more than sixty days had elapsed from the June 15,
2010 approval of the settlement agreement by the Bankruptcy Court.
3
The Domianos assert in their brief to this Court that, “It would be a
needless redundancy to require the Domianos to annex documents long
since in the possession of the Bank and even drafted by the Bank counsel.”
Appellants’ brief at 11. Although the Domianos do not identify the
documents to which they refer, the only documents alleged to be missing
were an executed copy of Exhibit C, the letter/proposal ostensibly authored
by Mr. Blank of Penn Business Credit, LLC, and a copy of the $10,000 check
required for acceptance. Pa.R.C.P. 1019(i) requires the pleader to attach a
copy of any writing upon which the claim or defense is based, or, if the
writing is not accessible, to so state and provide the reason why it is
inaccessible. The Domianos did not comply with this requirement.
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looked outside the pleadings and credited the Bank’s representation that it
did not have a signed copy of the commitment letter.
We disagree. The Monroe County trial court looked solely to the
pleadings and attachments in sustaining the demurrer. Initially, the court
observed that the letter from Penn Business Credit was dated more than
sixty days after the settlement agreement and agreed with the Bank that the
Domianos were in default of the provision requiring that a financing
commitment be provided to the Bank within sixty days. Furthermore, the
court concluded that Exhibit C was merely a financing proposal from Penn
Business Credit LLC, not a commitment, and that financing would only “be
provided upon execution of all required loan documents and the payment of
specified fees in connection with your transaction.” Trial Court Opinion,
1/29/13, at 5 (quoting Exhibit C). The proposal provided further that, if the
Domianos “would like to proceed[,]. . . please countersign this term sheet
where indicated below and return it by overnight mail together with your
check in the amount of $10,000.00” Id. (quoting Exhibit C). Exhibit C was
not signed.
Furthermore, the court found that even if Exhibit C had been
countersigned by Mr. Domiano, the complaint could not survive the
demurrer. The court agreed with the Bank that, since the Domianos did not
append to the complaint a copy of a check for $10,000, a demurrer was
proper. In short, the Domianos failed to plead facts and supply documents
demonstrating that they had timely secured the financing commitment that
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was one of the conditions precedent to the Bank’s performance under the
settlement agreement. We find no error or abuse of discretion on the part of
the trial court in sustaining the demurrer.
The Domianos complain on appeal that the trial court should have
permitted them to amend their complaint. The Bank counters that the
Domianos have waived any right to challenge the trial court’s decision to
sustain the demurrer with prejudice, i.e., without leave to amend, since they
failed to seek leave to amend below. In addition, the Bank directs our
attention to Stempler v. Frankford Trust Company, 529 A.2d 521(Pa.Super. 1987), where we held on similar facts that it was not an abuse of
discretion to dismiss the complaint without an opportunity to amend where
an amendment would have been futile.
We note first that the Domianos were permitted to amend their
complaint as of course within twenty days of the filing of the preliminary
objections, but opted not to do so. See Pa.R.C.P. 1028(c)(1). Furthermore,
the record reveals that the Domianos never filed a motion with the trial court
seeking leave to amend with a proposed amended complaint attached
thereto. See Pa.R.C.P. 1033. There is no indication that they asked for
leave to amend at oral argument on the preliminary objections. In their
brief in opposition to preliminary objections, the Domianos did not even
suggest that they could amend the complaint to cure any alleged
deficiencies. Instead, the Domianos steadfastly maintained that, “the
complaint adequately sets forth what events took place and beyond
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[that] . . . a copy of the document was annexed to the complaint.”
Memorandum of Law of the Plaintiffs in Opposition to the Preliminary
Objections of the Defendant, 12/31/12, at 4.
Thus, the Domianos failed to preserve this issue for appeal by
neglecting to raise it in the trial court. See Pa.R.A.P. 302(a). However,
waiver aside, they are not entitled to relief. We recognized in Harley
Davidson Motor Co., Inc. v. Hartman, 442 A.2d 284, 286 (Pa.Super.
1982), that there are cases “where it is clear that amendment is impossible
and where to extend leave to amend would be futile.” The Bank is correct
that, in those instances, it is not an abuse of discretion for the court to
dismiss the complaint upon a demurrer. In re Estate of Luongo, 823 A.2d
942, 969 (Pa.Super. 2003).
The Monroe County trial court concluded that amendment would have
proved futile because no cause of action for breach of contract or quasi-
contract would lie. Trial Court Opinion, 1/29/13, at 6. The court found it
evident from the face of the complaint that the Domianos did not comply
with the terms and conditions of the settlement agreement by timely
procuring a financing commitment with Penn Business Credit, which was a
condition precedent to the Bank’s performance pursuant to the settlement
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agreement.4 Thus, no action for breach of contract could be maintained
against the Bank. We agree that no amendment could cure this deficiency.
For the foregoing reasons, we find no error or abuse of discretion on
the part of the Monroe County trial court in sustaining the demurrer and
dismissing the complaint with prejudice. The Domianos do not challenge on
appeal the res judicata effect afforded that decision by the Lackawanna
Court of Common Pleas in the action pending before it, and hence, we affirm
that order as well. See Robinson Coal Co. v. Goodall, 72 A.3d 685, 689
(Pa.Super. 2013) (“Application of the doctrine of res judicata as an absolute
bar to a subsequent action requires that the two actions possess the
following common elements: ‘(1) identity of the thing sued upon; (2)
identity of the cause of action; (3) identity of the parties; (4) identity of the
capacity of the parties.’”).
Orders affirmed.
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4
The trial court also noted that the Domianos did not plead that they had
tendered $145,000 to the Bank within 120 days of the date of approval of
the settlement agreement, another condition to the Bank’s performance
under the settlement agreement.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/24/2014
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