Zokaites Properties v. Bell-Pug, Inc. ( 2018 )

J-A20015-18
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
ZOKAITES PROPERTIES, L.P., IN THE SUPERIOR COURT
OF
PENNSYLVANIA
Appellant
v.
BELL-PUG, INC., DENNIS M.
BLACKWELL, AND CAPUTO & CAPUTO,
P.C.,
Appellee No. 92 WDA 2018
Appeal from the Order Entered December 12, 2017
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD 17-000585
BEFORE: BENDER, P.J.E., LAZARUS, J., and MUSMANNO, J.
MEMORANDUM BY BENDER, P.J.E.: FILED NOVEMBER 20, 2018
Appellant, Zokaites Properties, L.P., appeals the December 12, 2017
order granting the preliminary objections filed by Caputo & Caputo, P.C., and
dismissing Appellant’s second amended complaint without leave to amend.
After careful review, we affirm.
The trial court summarized the relevant facts and procedural history of
this case in its Pa.R.A.P. 1925(a) opinion:
This matter arises from a debt allegedly owed to [Appellant]
by [] Bell-Pug[, Inc. (“Bell-Pug”)] for unpaid rent. On December
2, 2015, [Appellant] served a Notice of Distraint on [] Bell-Pug[]
and, as [Bell-Pug] never filed a response to said notice,
[Appellant] claims to have a valid lien on all of [Bell-Pug’s]
personal property. In spite of this lien, [] Bell-Pug entered into
an agreement to sell its liquor license to Emporio Village, LLC, on
March 3, 2016. Pursuant to the agreement, Emporio Village was
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to make payments to its own attorney, Louis Caputo, Esquire,
which Attorney Caputo was to hold in escrow.
In mid-March 2016, [Appellant’s] counsel allege[d] that he
had a telephone conversation with Attorney Caputo, in which the
latter agreed to hold all proceeds from the liquor license sale in
escrow pending a resolution of the matter between [Appellant]
and [] Bell-Pug. On March 21, 2016, [Appellant’s] counsel sent
Attorney Caputo a letter purporting to memorialize an agreement
arising out of the previous week’s conversation, writing: “Zokaites
Properties accepts your offer to escrow any sale proceeds to be
distributed pending order of court or agreement of the parties.”
Attorney Caputo did not reply to this letter.
On June 23, 2016, [Appellant] presented an Emergency
Motion for Injunctive Relief to enjoin Attorney Caputo to retain
any liquor license proceeds in escrow, as [Appellant] “did not trust
Caputo to uphold” his agreement. Judge Michael Della Vecchia of
this [c]ourt denied [Appellant’s] motion via an order dated
September 12, 2016.
On July 25, 2016, [Appellant’s] counsel sent Attorney
Caputo another letter citing the alleged March 2016 agreement
that the latter would retain any liquor license sale proceeds in
escrow. Again, Attorney Caputo did not reply.
At an unknown date, the sale of the liquor license was
executed, and Attorney Caputo tendered payment to [] Bell-Pug’s
attorney, Dennis Blackwell, Esquire.
Appellant filed suit, and included claims against Attorney
Caputo’s law firm, Caputo & Caputo, P.C., for breach of contract
and promissory estoppel.[1] [] Caputo & Caputo[, P.C.] filed
preliminary objections[ in the nature of a demurrer] and, on
December 12, 2017, Judge Timothy Patrick O’Reilly of this [c]ourt
issued an order sustaining the same. This timely appeal ensued[]
and, in light of Judge O’Reilly’s retirement, this opinion in support
of that order is being rendered by the undersigned[, Judge Patrick
Connelly].
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1 Counts I, II, and III of Appellant’s second amended complaint asserted
claims against Bell-Pug and Attorney Blackwell and were previously dismissed
with prejudice by order of court dated October 20, 2017. Counts IV and V
against Caputo & Caputo, P.C. are the only remaining claims.
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Trial Court Opinion (“TCO”), 3/1/18, at 1-2 (citations to record omitted).
On December 19, 2017, Appellant filed a timely notice of appeal,
followed by a timely court-ordered Pa.R.A.P. 1925(b) statement of errors
complained of on appeal. Herein, Appellant presents the following issues for
our review, which we have reordered for ease of disposition:
1. Whether the lower court committed errors of law and fact in
concluding that Appellant did not detrimentally rely on
[Attorney Caputo’s] promise such that a claim of promissory
estoppel arose thereby[?]
2. Whether the lower court committed errors of law and fact in
concluding that there was [no] valid contract between the
parties[?]
Appellant’s Brief at 3.
Before addressing the merits of Appellant’s claims, we note our well-
settled standard of review:
A preliminary objection in the nature of a demurrer is properly
granted where the contested pleading is legally insufficient.
Preliminary objections in the nature of a demurrer require the
court to resolve the issues solely on the basis of the pleadings, no
testimony or other evidence outside of the complaint may be
considered to dispose of the legal issues presented by the
demurrer. All material facts set forth in the pleading and all
inferences reasonably deducible therefrom must be admitted as
true.
In determining whether the trial court properly sustained
preliminary objections, the appellate court must examine the
averments in the complaint, together with the documents and
exhibits attached thereto, in order to evaluate the sufficiency of
the facts averred. The impetus of our inquiry is to determine the
legal sufficiency of the complaint and whether the pleading would
permit recovery if ultimately proven. This Court will reverse the
trial court’s decision regarding preliminary objections only where
there has been an error of law or abuse of discretion. When
sustaining the trial court’s ruling will result in the denial of claim
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or a dismissal of suit, preliminary objections will be sustained only
where the case [is] free and clear of doubt.
Lugo v. Farmers Pride, Inc., 967 A.2d 963, 966 (Pa. Super. 2009) (quoting
Strausser v. PRAMCO III, 944 A.2d 761, 764-65 (Pa. Super. 2008)).
Here, Appellant claims that the trial court erred in finding a lack of
consideration to establish the existence of a valid contract between Appellant
and Caputo & Caputo, P.C. Appellant’s Brief at 12. In support of its argument,
Appellant asserts that it detrimentally relied on Attorney Caputo’s promise to
retain the sale proceeds in escrow in its refraining from initiating other
collection action against Bell-Pug, id. at 22, and concludes that “detrimental
reliance serves as a substitute for consideration.” Id. at 12. Contrary to its
assertion, we deem Appellant’s claims to be wholly without merit.
Preliminarily, we note:
A cause of action for breach of contract must be established by
pleading (1) the existence of a contract, including its essential
terms, (2) a breach of a duty imposed by the contract and (3)
resultant damages. While not every term of a contract must be
stated in complete detail, every element must be specifically
pleaded. Clarity is particularly important where an oral contract
is alleged.
Pennsy Supply, Inc. v. American Ash Recycling Corp. of Pennsylvania,
895 A.2d 595, 600 (Pa. Super. 2006) (internal citations and quotation marks
omitted). “It is axiomatic that consideration is an essential element of an
enforceable contract.” Id. (internal citation and quotation marks omitted).
“A contract is formed when the parties to it 1) reach a mutual understanding,
2) exchange consideration, and 3) delineate the terms of their bargain with
sufficient clarity.” Weavertown Transport Leasing, Inc. v. Moran, 834
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A.2d 1169, 1172 (Pa. Super. 2003). “Consideration consists of a benefit to
the promisor or a detriment to the promissee.” Id.It is not enough, however, that the promisee has suffered a legal
detriment at the request of the promisor. The detriment incurred
must be the ‘quid pro quo’, or the ‘price’ of the promise, and the
inducement for which it was made…. If the promisor merely
intends to make a gift to the promisee upon the performance of a
condition, the promise is gratuitous and the satisfaction of the
condition is not consideration for a contract.
Id. (quoting Stelmack v. Glen Aiden Coal Co., 14 A.2d 127, 128 (Pa.
1940)). Whether a contract is supported by consideration presents a question
of law. Pennsy Supply, Inc., 895 A.2d at 601.
In the instant matter, Appellant’s breach of contract claim against
Caputo & Caputo, P.C. clearly fails, as the averments in its second amended
complaint fail to establish the exchange of consideration, which is an essential
component of a contract. Appellant’s complaint specifically avers:
[Appellant] detrimentally relied on this contract by refraining from
initiating other legal action to collect these proceeds including
refraining from initiating collection action against the license which
was liened by [Appellant] under the Notice of Distraint, the
Uniform Commercial Code, the Assignment of Leases and Rents
and/or further lien action against the license by initiating action
with the Liquor Control Board, among other action [Appellant]
could have taken but for the contract with [Attorney] Caputo.
Appellant’s Second Amended Complaint, 7/17/17, at 13 ¶ 63. While
forbearance from instituting legal action may constitute good consideration
for an agreement, “it must be bargained for and given in exchange for the
promise made by the promisor.” Cardamone v. University of Pittsburgh,
384 A.2d 1228, 1233 (Pa. Super. 1978) (internal citations omitted; emphasis
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added). Appellant’s complaint fails to aver that Attorney Caputo’s promise
was made for the purpose of inducing Appellant’s forbearance. See Pennsy
Supply, Inc., 895 A.2d at 601 (stating that to constitute consideration for a
contract, “the promise must induce the detriment and the detriment must
induce the promise”).
In support of its determination that Appellant failed to establish the
existence of a valid contract, due to lack of consideration, the trial court
reasoned as follows:
Even accepting all material facts set forth as true, it is not clear
that Attorney Caputo received any consideration in exchange for
his alleged promise. Moreover, [Appellant’s] allegation that “[it]
detrimentally relied on this contract” indicates that forbearance
was not explicit condition of the contract itself, but ancillary to the
same.
This reading is further supported by the March 21, 2016
letter purporting to memorialize the agreement, which mentions
Attorney Caputo’s alleged promise “to hold any sales proceeds in
escrow pending a resolution between [Appellant] and Bell-Pug,”
but makes no reference to [Appellant’s] refraining from initiating
other legal action. In fact, the March 21, 2016 letter never
references any consideration from [Appellant] for said promise.
Accordingly, lacking consideration, [Appellant] fails to allege the
existence of a contract. See Geisinger Clinic v. DiCuccio, 606
A.2d 509, 512 (Pa. Super. 1992) (“A contract is evidenced by
mutuality of obligation. A mutuality of obligation exists when both
parties to the contract are required to perform their respective
promises.”).
Even assuming arguendo that, contemporaneous to
Attorney Caputo’s alleged promise, [Appellant] had pledged to
refrain from initiating further legal action, this alone does not
constitute consideration. A contract would arise if Attorney
Caputo’s alleged promise was made for the purpose of inducing
[Appellant’s] forbearance, but [Appellant] makes no such
allegation. See Pennsy Supply, Inc. … , 895 A.2d [at] 601 …
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(“If, however, the promisor made the promise with no particular
interest in the detriment that the promisee had to suffer to take
advantage of the promised gift or other benefit, the detriment was
incidental or conditional to the promisee’s receipt of the benefit.”)
(emphasis removed). Indeed, Attorney Caputo was merely an
escrow agent in this transaction, “had no other rights or duties”
than to hold and ultimately transmit $4,500, and would have
gained nothing from [Appellant’s] forbearance.
TCO at 3-4 (citations to record omitted). After careful review of the record,
we discern no error of law or abuse of discretion by the trial court.
Next, Appellant claims that the trial court erred in finding that it failed
to establish a cause of action for promissory estoppel. Appellant asserts that
it properly averred detrimental reliance in its second amended complaint, and
that the trial court failed to accept the statements in its complaint as true in
accordance with the applicable standard of review. Appellant’s Brief at 12,
18. After careful review, however, we conclude that, even while accepting all
factual averments as true, Appellant’s second amended complaint is legally
insufficient to sustain a claim for promissory estoppel.
It has been well-established that:
The doctrine of promissory estoppel permits a claimant to enforce
a promise in the absence of consideration. To maintain a
promissory estoppel action[,] a claimant must aver the following
elements: (1) the promisor made a promise that it should have
reasonably expected would induce action or forbearance on the
part of the promise; (2) the promisee actually took action or
refrained from taking action in reliance on the promise; and (3)
injustice can be avoided only by enforcing the promise.
Sullivan v. Chartwell Inv. Partners, LP, 873 A.2d 710, 717-18 (Pa. Super.
2005) (internal citations and quotation marks omitted). “However, the
doctrine of promissory estoppel does not apply if the complaining party acted
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on its own will and not as the result of the [promisor’s] representations.” GMH
Associates, Inc. v. Prudential Realty Group, 752 A.2d 889, 904 (Pa.
Super. 2000).
Here, it is apparent based on Appellant’s own averments, that it did not
rely on Attorney Caputo’s alleged promise and refrain from taking legal action
to collect the liquor license sale proceeds. Appellant expressly admitted in its
complaint to the filing of a motion for preliminary injunction against Attorney
Caputo, “because it did not trust [him] to uphold [their] agreement to retain
the proceeds in escrow.” Appellant’s Second Amended Complaint at 7 ¶ 26.
As the trial court so aptly stated:
Promissory estoppel requires that “the promisee actually took
action or refrained from taking action in reliance on the promise.”
V-Tech Services, Inc. v. Street, 72 A.3d 270, 276 (Pa. Super.
2013). While [Appellant] does specifically allege this forbearance
(“[Appellant] detrimentally relied on this contract by refraining
from initiating other legal action”), [Appellant] also admits it did
bring further legal action by seeking a preliminary injunction
against Attorney Caputo to enforce his alleged promise.
Moreover, [Appellant’s] admission that it sought the preliminary
injunction “because it did not trust Caputo to uphold its agreement
to retain the proceeds in escrow,” belies [Appellant’s] claim that
it reasonably believed Attorney Caputo would keep his alleged
promise.
TCO at 4-5 (citations to record omitted). Moreover, we note that enforcement
of the alleged promise is not the only means by which to avoid injustice. See
Sullivan, supra. Rather, Appellant’s remedies lie with Bell-Pug. Caputo &
Caputo, P.C. was merely acting as an escrow agent in accordance with a
written purchase and escrow agreement regarding the sale of the liquor
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license and has no other connection to Appellant’s underlying dispute between
Appellant and Bell-Pug. Thus, we discern no error of law or abuse of discretion
by the trial court.
In light of the foregoing, we affirm the December 12, 2017 order
sustaining Caputo & Caputo, P.C.’s preliminary objections and dismissing
Appellant’s second amended complaint without leave to amend.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/20/2018
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