Cappiali and Blumenthal, P.C. v. Nichols, H. ( 2016 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CAPPIALI AND BLUMENTHAL, P.C. AND IN THE SUPERIOR COURT OF
ANTHONY CAPPIALI PENNSYLVANIA
v.
HARE NICHOLS & COMPANY, LLC,
JOSEPH HARE AND JOSEPH NICHOLS
-----------------------------------------------
HARE NICHOLS & COMPANY, LLC
v.
ANTHONY P. CAPPIALI, CPA AND CECILE
R. BLUMENTHAL, CPA AND CAPPIALI &
BLUMENTHAL, P.C.
APPEAL OF: HARE NICHOLS &
COMPANY, LLC, JOSEPH HARE AND No. 2205 EDA 2015
JOSEPH NICHOLS
Appeal from the Judgment Entered June 16, 2015
In the Court of Common Pleas of Delaware County
Civil Division at No(s): No. 2013-1033
No. 2013-902
BEFORE: BENDER, P.J.E., PANELLA, J., and STEVENS, P.J.E.*
MEMORANDUM BY PANELLA, J. FILED OCTOBER 13, 2016
____________________________________________
*
Former Justice specially assigned to the Superior Court.
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Appellants, Hare Nichols & Company, LLC (“HNC”), Joseph Hare, and
Joseph Nichols, appeal from the judgment entered against them after a
bench trial over claims arising from an aborted merger of two accounting
firms. Appellants contend that the trial court erred in applying the terms of
the contract to the facts established at trial. After careful review, we affirm.
Joseph Hare and Joseph Nichols are Certified Public Accountants
(“CPAs”) and principals in HNC. Sometime in 2006, they engaged the
services of Global Force, a brokerage firm, to identify other CPA firms that
they could affiliate with in order to grow their practice. Under the terms of
the brokerage agreement, HNC paid an initial fee of $2,000 to Global Force.
If Global Force successfully brokered an agreement between HNC and
another firm, HNC would pay Global Force a fee of 10% of the average
annual revenues of the other firm.
In November 2009, Global Force brokered an agreement between HNC
and Appellee, Cappiali and Blumenthal, P.C. (“CB”). Appellees, Anthony
Cappiali and Cecile Blumenthal, are CPAs and were principals in CB at the
time. The agreement brokered by Global Force, entitled “CAPPBLUM/N&H
AFFILIATION AGREEMENT” (“the Agreement”), provided for an arrangement
whereby Cappiali and Blumenthal would work out of offices supplied by HNC
while servicing their clients. In exchange for 60% of the income generated
by Cappiali’s and Blumenthal’s work, HNC would cover the overhead and
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staffing expenses. The remaining 40% of income would paid to CB, which
would then pay Cappiali and Blumenthal according to its structure.
The Agreement also explicitly provided for the retirement of
Blumenthal in twelve to eighteen months, as well the expected retirement of
Cappiali in ten years. Under the Agreement, both Cappiali and Blumenthal
were entitled to certain payments in exchange for a continuing prohibition on
competing with HNC.
Of most importance to this appeal, the Agreement contained a clause
regarding an unwinding of the affiliation, entitled “Demerger Option.” Under
this clause, Cappiali and Blumenthal retained the right to unwind the
affiliation of CB with HNC during the first two years of the affiliation, through
the provision of 90 days written notice to HNC. If either Cappiali or
Blumenthal chose to end the affiliation, that person would be liable to HNC
for half of the fee paid to Global Force, $13,500.
On June 6, 2011, Cappiali handed the following letter to Hare entitled
“Re: Demerger.”
In light of the breaches of the Affiliation Agreement of November
16, 2009 by Hare Nichols & Company, Hare, and Nichols …
including failure to pay significant monies due to Cappiali &
Blumenthal, PC and the hostile work environment created by
[HNC], among other issues, Cappiali & Blumenthal PC, Anthony
Cappiali and Cele Blumenthal are Demerging from [HNC].
We intend to work with Hare Nichols toward a fair accounting of
monies due to us.
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After this letter, the parties continued to negotiate their dispute, and HNC
granted several requests for the delay of the date when the affiliation would
be terminated.
It is undisputed that as of December 1, 2011, the affiliation had been
terminated. However, HNC allowed CB to sublet space within their office
while seeking a new location for CB. In February 2012, CB moved out of
HNC’s offices and into a new office space nearby.
Approximately one year later, CB filed a complaint against HNC
asserting claims in breach of contract, unjust enrichment, and quantum
meruit. Prior to being served with this complaint, HNC filed its own complaint
against CB asserting claims for breach of contract, an accounting of the
affiliation, and interference with business relations. Once served with CB’s
complaint, HNC filed an answer with new matter and counterclaim,
incorporating the claims in its complaint by reference.
The cases were consolidated for a non-jury trial. At trial, Cappiali and
Blumenthal both testified to HNC’s failure to adequately staff during the
affiliated period and to pay medical benefits. In contrast, Hare and Nichols
testified to Cappiali’s and Blumenthal’s failure to work the number of hours
required under the Agreement. At the conclusion of the trial, the trial court
entered defense verdicts in both actions, essentially leaving the parties as
they stood.
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The trial court subsequently denied Appellants’ post-trial motions and
entered judgment on the verdicts. This timely appeal followed.
On appeal, Appellants argue that the trial court erred in failing to grant
them a judgment notwithstanding the verdict (“JNOV”) or a new trial. We
review this issue according to the following standard of review.
A JNOV can be entered upon two bases: (1) where the movant is
entitled to judgment as a matter of law and/or (2) the evidence
was such that no two reasonable minds could disagree that the
verdict should have been rendered for the movant. When
reviewing a trial court’s denial of a motion for JNOV, we must
consider of the evidence admitted to decide if there was
sufficient competent evidence to sustain the verdict. In so doing,
we must also view this evidence in the light most favorable to
the verdict winner, giving the victorious party the benefit of
every reasonable inference arising from the evidence and
rejecting all unfavorable testimony and inference. Concerning
any questions of law, our scope of review is plenary. Concerning
questions of credibility and weight accorded the evidence at trial,
we will not substitute our judgment for that of the finder of fact.
If any basis exists upon which the jury could have properly made
its award, then we must affirm the trial court’s denial of the
motion for JNOV. A JNOV should be entered only in a clear case.
Griffin v. Univ. of Pittsburgh Med. Center-Braddock Hosp., 950 A.2d
996, 999 (Pa. Super. 2008) (citing Buckley v. Exodus Transit & Storage
Corp., 744 A.2d 298, 304-05 (Pa. Super. 1999)). “[A]bsent an abuse of
discretion, the reviewing court is bound by the trial court’s credibility
determinations.” De Lage Landen Financial Services, Inc. v. M.B.
Management Co., Inc., 888 A.2d 895, 898 (Pa. Super. 2005) (citation
omitted).
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“Our standard of review from an order denying a motion for a new trial
is whether the trial court committed an error of law, which controlled the
outcome of the case, or committed an abuse of discretion.” Polett v.
Public Communications, Inc., 83 A.3d 205, 214 (Pa. Super. 2013)
(citation omitted), reversed on other grounds, 126 A.3d 895 (Pa. 2015). “A
trial court commits an abuse of discretion when it rendered a judgment that
is manifestly unreasonable, arbitrary, or capricious, has failed to apply the
law, or was motivated by partiality, prejudice, bias, or ill will.” Id. (citation
omitted).
Unless an error of law controls the outcome of a case, we will not
reverse an order denying a new trial. See Lockley v. CSX Transportation,
5 A.3d 383, 388 (Pa. Super. 2010). “[A] litigant is entitled only to a fair trial
and not a perfect trial.” Id. (citation omitted).
Appellants first argue that the trial court erred in finding that Cappiali
and Blumenthal had not invoked the demerger option clause with the June
6, 2011 letter. The trial court found that while the letter indicated a desire to
end the affiliation, it also stated that Cappiali and Blumenthal felt that the
Agreement had been breached. Furthermore, the trial court found that
Cappiali and Blumenthal had established that HNC had materially breached
the Agreement, and therefore they had no duty to pay the demerger option
fee, or perform any other duty under the contract.
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Generally, a party who has materially breached a contract may not
“complain if the other party refuses to perform his obligations under the
contract.” Ott v. Buehler Lumber Co., 541 A.2d 1143, 1145 (Pa. Super.
1988) (citation omitted). “[A] material breach of a contract, which is vital to
the existence of the contract, relieves the non-breaching party from any
continuing duty of performance under the contract.” Umbelina v. Adams,
34 A.3d 151, 159 (Pa. Super. 2011) (citation omitted) (emphasis in
original).
Cappiali testified that HNC did not maintain staffing levels during the
time that the firms were affiliated. See N.T., Trial, 9/5/14, at 10-16. The
staff provided was insufficient to allow Cappiali to do his work in a timely,
professional manner. See id., at 16-17. Furthermore, the lack of staffing
frustrated Blumenthal’s desire to retire within 18 months of the affiliation, as
explicitly provided for in the Agreement. See id., at 90.
Based upon this testimony, the trial court found that Cappiali and
Blumenthal had established that HNC had materially breached the
Agreement prior to June 6, 2011. We cannot conclude that the trial court
abused its discretion in making these findings. Thus, we cannot conclude
that the trial court erred in refusing to grant JNOV or a new trial.
Alternatively, HNC argues that the trial court’s verdicts cannot be
logically reconciled, as the trial court found that HNC’s breach of the
Agreement excused Appellees’ duties under the contract, but did not award
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Appellees any damages on their claim for breach against HNC. Verdicts
enjoy a presumption of consistency. See McDermott v. Biddle, 674 A.2d
665, 667 (Pa. 1996). This presumption can only be overcome by showing
that there is no reasonable theory that can support the verdicts. See id.Here, the trial court’s verdicts can be reconciled. It is plausible that
while the trial court concluded that Appellees had established a material
breach on the part of HNC, it found that Appellees had failed to establish
that they had suffered any damages pursuant to the breach. Therefore, this
argument merits no relief.
Judgment affirmed. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/13/2016
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