Custom Building Systems, LLC v. Nipple, R. ( 2017 )

J-A20012-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CUSTOM BUILDING SYSTEMS, LLC; : IN THE SUPERIOR COURT OF
PRACTICAL SOFTWARE SOLUTIONS, : PENNSYLVANIA
INC.; PROFESSIONAL BUILDING :
SYSTEMS, INC., AS ITSELF AND AS A :
MEMBER OF AMERICAN MODULAR :
TRANSPORT, LLC; AMERICAN :
MODULAR TRANSPORT, LLC :
:
Appellants :
:
v. :
:
RONALD H. NIPPLE, INDIVIDUALLY; :
CONNIE I. NIPPLE, INDIVIDUALLY :
AND AS AN OWNER OF ICON :
REALTY, LLC; KEVIN HICKS, :
INDIVIDUALLY AND AS PRESIDENT :
OF ICON LEGACY CUSTOMER :
MODULAR HOMES, LLC; ICON :
LEGACY CUSTOM MODULAR HOMES, :
LLC A/K/A LEGACY MODULAR :
HOMES, LLC AND LEGACY CUSTOM :
MODULAR HOMES, LLC; ICON : No. 127 MDA 2017
LEGACY TRANSPORT, LLC
Appellees
Appeal from the Order Entered December 30, 2016
In the Court of Common Pleas of Snyder County
Civil Division at No(s): CV-194-2011
BEFORE: GANTMAN, P.J., PANELLA, J., and FORD ELLIOTT, P.J.E.
MEMORANDUM BY GANTMAN, P.J.: FILED OCTOBER 31, 2017
Appellants, Custom Building Systems, LLC (“CBS”), Practical Software
Solutions, Inc. (“PSS”), Professional Building Systems, Inc. (“PBS”), as itself
and as a member of American Modular Transport, LLC (“AMT”) and AMT,
appeal from the order entered in the Snyder County Court of Common Pleas,
J-A20012-17
which granted summary judgment in favor of Appellees, Ronald H. Nipple,
Connie I. Nipple, and Kevin Hicks, Legacy Custom Modular Homes, LLC
(“Icon”) a/k/a Legacy Modular Homes, LLC and Legacy Custom Modular
Homes, LLC, and Icon Legacy Transport, LLC in this employment contract
action. We affirm.
The relevant facts and procedural history of this care are as follows.
William French owns several entities in the manufactured-home industry,
including Appellant companies, CBS, PBS, PSS, and AMT. PBS and CBS
manufacture and sell modular homes. PSS and AMT provide software and
transportation services, respectively, to CBS and PBS. On August 1, 2005,
Appellee Ronald Nipple entered into an employment agreement
(“Agreement”) to serve as general manager of CBS. The Agreement
provided, in relevant part, as follows:
1. General
* * *
F. As used in this Agreement, the term “Companies” shall
mean (i) [CBS], (ii) [PBS], ([iii]) Professional Building
Systems of North Carolina LLC (“PBS-NC”); ([iv]) [AMT].
([v]) Professional Structures, Inc. (“PSI”), ([vi]) [PSS],
([vii]) all subsidiaries and successors of any of the
[Companies], and ([viii]) any other companies owned in
whole or in part by William D. French.
* * *
3. Non-Solicitation Covenants
* * *
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C. During the term of this Agreement, and for a period of
three years from the date of termination of this
Agreement, the Employee shall not, directly or indirectly,
sell, or attempt to sell, any modular structure to any
builder, or other person or entity, to whom any of the
Companies sold modular structures at any time during the
twelve months prior to the Employee’s cessation of
employment hereunder.
(See Ronald Nipple Employment Agreement with CBS; Appellees’ Statement
of Undisputed Facts, Exhibit E at 1-3; R.R. at 417a-419a). CBS
subsequently terminated Mr. Nipple’s employment on April 20, 2007.
In early 2008, Appellee Icon formed as a modular home manufacturing
company.1 Icon Legacy Transport, LLC (“Icon Transport”), which hauls
Icon’s modular homes, also formed. Mr. Nipple’s wife, Appellee Connie
Nipple, invested in Icon and served as Icon’s secretary until 2011. Mr.
Nipple’s son-in-law, Appellee Kevin Hicks, has been president of Icon since
its formation. Between the date of Icon’s formation and April 2010, Mr.
Nipple was not an Icon employee, but he had an office at Icon, maintained
regular working hours at Icon, and occasionally sat in on company meetings.
Between its formation and April 2010, Icon submitted bids and sold modular
homes to several of Appellants’ customers.
On April 19, 2011, Appellants and Mr. French filed a writ of summons
against Appellees. Appellants and Mr. French filed a complaint against
____________________________________________
1The name of Icon changed several times since its formation. Icon’s former
names included Legacy Custom Modular Homes, LLC.
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Appellees on August 19, 2011, for breach of contract, unjust enrichment,
and breach of fiduciary duty. On September 1, 2011, Appellants and Mr.
French filed a first amended complaint. Appellees filed on September 19,
2011, preliminary objections to the first amended complaint, which the court
sustained in part and overruled in part on November 28, 2011. On
December 19, 2011, Appellants and Mr. French filed a second amended
complaint, to which Appellees filed preliminary objections on January 5,
2012.
Appellants and Mr. French filed a third amended complaint on January
23, 2012, raising multiple counts of breach of contract, breach of the duty of
loyalty and fiduciary duty, misappropriation of trade secret and proprietary
information, unfair competition, tortious interference with existing
contractual and business relationships, tortious interference with prospective
contractual and business relationships, and civil conspiracy. That same day,
Appellants filed a motion to discontinue the claims of Mr. French and remove
Mr. French from the caption, which the court granted on January 24, 2012.2
Appellees filed preliminary objections to the third amended complaint, which
the court sustained in part and overruled in part on September 14, 2012,
striking all unfair competition claims against Appellees. Appellees filed an
____________________________________________
2 As a result of the January 24, 2012 order, Mr. French was no longer a
party to the trial court proceedings in this matter. Mr. French is not a party
to this appeal.
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answer and new matter to the third amended complaint on November 5,
2012.
By stipulation on July 15, 2016, Appellants discontinued their claims
asserting breach of duty of loyalty and fiduciary duty and misappropriation
of trade secrets and proprietary information. That same day, Appellees filed
a motion for summary judgment on the remaining claims, which the court
granted on December 30, 2016. Appellants filed a timely notice of appeal on
January 17, 2017. On January 19, 2017, the court ordered Appellants to file
a concise statement errors complained of on appeal per Pa.R.A.P. 1925(b);
Appellants timely complied on February 6, 2017.
Appellants raise the following issues for our review:
IS THERE A GENUINE ISSUE OF MATERIAL FACT AS TO
WHETHER [APPELLEE] RONALD NIPPLE INDIRECTLY SOLD
MODULAR HOMES TO CUSTOMERS OF [CBS] AND [PBS] IN
VIOLATION OF HIS RESTRICTIVE COVENANT, WHERE THE
RECORD SHOWS THAT [ICON] SOLD MODULAR HOMES TO
28 OF THE RESTRICTED CUSTOMERS DURING THE YEARS
OF [APPELLEE] RONALD NIPPLE’S RESTRICTED PERIOD,
AND WHERE THE RECORD SHOWS THAT RONALD NIPPLE
WAS THE KEY PERSON IN FORMING, FINANCING, AND
OPERATING ICON AND HAD DE FACTO CONTROL OF THE
COMPANY?
DID THE TRIAL COURT ABUSE ITS DISCRETION WHERE IT
MADE A FINDING OF FACT THAT ENFORCEMENT OF THE
“INDIRECT” SALES RESTRICTION WOULD PROHIBIT
[APPELLEE] RONALD NIPPLE FROM CONTINUING HIS
CAREER IN “ANY CAPACITY,” WHERE THERE IS NO
EVIDENCE OF RECORD TO SUPPORT SUCH A
CONCLUSION, AND WHERE THE RESTRICTIVE COVENANT
APPLIED ONLY TO SELECT CUSTOMERS OF [APPELLANTS]?
DID THE TRIAL COURT ABUSE ITS DISCRETION IN
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DISMISSING THE CLAIM FOR TORTIOUS INTERFERENCE
WITH PROSPECTIVE CONTRACTUAL RELATIONSHIPS
WHERE THERE IS A GENUINE ISSUE OF MATERIAL FACT
REGARDING WHETHER THE PRIOR CUSTOMER
RELATIONSHIPS BETWEEN [CBS], [PBS], AND THEIR 28
CUSTOMERS DEMONSTRATE THAT THERE WAS A
REASONABLE LIKELIHOOD THAT THESE CUSTOMERS
WOULD HAVE PLACED THEIR ORDERS WITH [CBS] OR
[PBS], ESPECIALLY IF [ICON] WAS RESTRICTED FROM
SELLING TO THESE CUSTOMERS?
DID THE TRIAL COURT ERR IN FINDING THAT
[APPELLEES] DID NOT COMMIT CIVIL CONSPIRACY EVEN
THOUGH THE RECORD ESTABLISHES THAT ALL
[APPELLEES] WERE AWARE OF RONALD NIPPLE’S
RESTRICTIVE COVENANT, HELPED CONCEAL HIS INITIAL
INVOLVEMENT WITH [ICON], AND HIRED SALESMEN WITH
CUSTOMER ACCOUNTS FROM CBS AND PBS IN ORDER TO
SELL MODULAR HOMES TO THE VERY CUSTOMERS TO
WHOM RONALD NIPPLE WAS PROHIBITED FROM SELLING?
DID THE COURT ERR IN FINDING THAT [CBS] AND [PBS]
DID NOT DEMONSTRATE PROBABLE, INFERENTIAL, OR
DIRECT PROOF OF THEIR LOSS WHERE THEY PRODUCED
PRECISE CALCULATIONS OF REVENUE, LABOR, MATERIAL,
AND OTHER COSTS, AND PROJECTED PROFIT FOR THE
SALE OF MODULAR HOMES?
(Appellants’ Brief at 3-5).
In reviewing a trial court’s grant of summary judgment,
[W]e apply the same standard as the trial court, reviewing
all the evidence of record to determine whether there
exists a genuine issue of material fact. We 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.
Only where there is no genuine issue as to any material
fact and it is clear that the moving party is entitled to a
judgment as a matter of law will summary judgment be
entered. All doubts as to the existence of a genuine issue
of a material fact must be resolved against the moving
party.
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Motions for summary judgment necessarily and directly
implicate the plaintiff’s proof of the elements of [a] cause
of action. Summary judgment is proper if, after the
completion of discovery relevant to the motion, including
the production of expert reports, an adverse party who will
bear the burden of proof at trial has failed to produce
evidence of facts essential to the cause of action or
defense which in a jury trial would require the issues to be
submitted to a jury. In other words, whenever there is no
genuine issue of any material fact as to a necessary
element of the cause of action or defense, which could be
established by additional discovery or expert report and
the moving party is entitled to judgment as a matter of
law, summary judgment is appropriate. Thus, a record
that supports summary judgment either (1) shows the
material facts are undisputed or (2) contains insufficient
evidence of facts to make out a prima facie cause of action
or defense.
Upon appellate review, we are not bound by the trial
court’s conclusions of law, but may reach our own
conclusions.
Chenot v. A.P. Green Services, Inc., 895 A.2d 55, 61 (Pa.Super. 2006)
(internal citations and quotation marks omitted).
Significantly:
A plaintiff cannot survive summary judgment when mere
speculation would be required for the jury to find in
plaintiff’s favor. A jury is not permitted to find that it was
a defendant’s [actions] that caused the plaintiff’s injury
based solely upon speculation and conjecture; there must
be evidence upon which logically its conclusion must be
based. In fact, the trial court has a duty to prevent
questions from going to the jury which would require it to
reach a verdict based on conjecture, surmise, guess or
speculation. Additionally, a party is not entitled to an
inference of fact that amounts merely to a guess or
conjecture.
Krishack v. Milton Hershey School, 145 A.3d 762, 766 (Pa.Super. 2016)
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(internal citation omitted).
“To support a claim for breach of contract, a plaintiff must allege: (1)
the existence of a contract, including its essential terms; (2) a breach of a
duty imposed by the contract; and (3) resultant damage.” Pittsburgh
Construction Company v. Griffith, 834 A.2d 572, 580 (Pa.Super. 2003),
appeal denied, 578 Pa. 701, 852 A.2d 313 (2004).
Contract construction and interpretation is a question of law for the
court to decide. Profit Wize Marketing v. Wiest, 812 A.2d 1270, 1274
(Pa.Super. 2002); J.W.S. Delavau, Inc. v. Eastern America Transport &
Warehousing, Inc., 810 A.2d 672, 681 (Pa.Super. 2002), appeal denied,
573 Pa. 704, 827 A.2d 430 (2003) (reiterating: “The proper interpretation of
a contract is a question of law to be determined by the court in the first
instance”). In construing a contract, the intent of the parties is the primary
consideration. Tuscarora Wayne Mut. Ins. Co. v. Kadlubosky, 889 A.2d
557, 560 (Pa.Super. 2005).
When interpreting agreements containing clear and
unambiguous terms, we need only examine the writing
itself to give effect to the parties’ intent. The language of
a contract is unambiguous if we can determine its meaning
without any guide other than a knowledge of the simple
facts on which, from the nature of the language in general,
its meaning depends. When terms in a contract are not
defined, we must construe the words in accordance with
their natural, plain, and ordinary meaning. As the parties
have the right to make their own contract, we will not
modify the plain meaning of the words under the guise of
interpretation or give the language a construction in
conflict with the accepted meaning of the language used.
On the contrary, the terms of a contract are ambiguous if
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the terms are reasonably or fairly susceptible of different
constructions and are capable of being understood in more
than one sense. Additionally, we will determine that the
language is ambiguous if the language is obscure in
meaning through indefiniteness of expression or has a
double meaning.
Profit Wize Marketing, supra at 1274-75 (internal citations and quotation
marks omitted).
Where there is any doubt or ambiguity as to the meaning
of the covenants in a contract or the terms of a grant, they
should receive a reasonable construction, and one that will
accord with the intention of the parties; and, in order to
ascertain their intention, the court must look at the
circumstances under which the grant was made. It is the
intention of the parties which is the ultimate guide, and, in
order to ascertain that intention, the court may take into
consideration the surrounding circumstances, the situation
of the parties, the objects they apparently have in view,
and the nature of the subject-matter of the agreement.
Giant Food Stores, LLC v. THF Silver Spring Development, L.P., 959
A.2d 438, 448 (Pa.Super. 2008), appeal denied, 601 Pa. 697, 972 A.2d 522(2009) (internal citations and quotation marks omitted). In either event,
“the court will adopt an interpretation which under all circumstances ascribes
the most reasonable, probable, and natural conduct of the parties, bearing in
mind the objects manifestly to be accomplished.” E.R. Linde Const. Corp.
v. Goodwin, 68 A.3d 346, 349 (Pa.Super. 2013).
“To maintain a cause of action in breach of contract, a plaintiff must
establish: (1) the existence of a contract, including its essential terms; (2) a
breach of a duty imposed by the contract; and (3) resulting damages.”
Lackner v. Glosser, 892 A.2d 21, 30 (Pa.Super. 2006) (citing Gorski v.
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Smith, 812 A.2d 683, 692 (Pa.Super. 2002), appeal denied, 579 Pa. 692,
856 A.2d 834 (2004)). The elements of interference with prospective
contractual relations are as follows:
(1) a prospective contractual relationship;
(2) the purpose or intent to harm the plaintiff by
preventing the relation from occurring;
(3) the absence of privilege or justification on the part of
the defendant; and
(4) the occasioning of actual damage resulting from the
defendant’s conduct.
Phillips v. Selig, 959 A.2d 420, 428 (Pa.Super. 2008), appeal denied, 600
Pa. 764, 967 A.2d 960 (2009). The plaintiff bears the burden of pleading
and proving each element. International Diamond Importers, Ltd. v.
Singularity Clark, L.P., 40 A.3d 1261, 1275 (Pa.Super. 2012). To sustain
the cause of action, the plaintiff must show a “reasonable probability or
likelihood” that contractual relations will follow. Phillips, supra at 428. In
determining “reasonable probability or likelihood,” Pennsylvania courts apply
an objective standard and consistently required more evidence than the
mere existence of a current business relationship between the parties. Id.To state a claim for civil conspiracy, “a complaint must allege: (1) a
combination of two or more persons acting with a common purpose to do an
unlawful act or to do a lawful act by unlawful means or for an unlawful
purpose; (2) an overt act done in pursuance of the common purpose; and
(3) actual legal damage.” Goldstein v. Phillip Morris, Inc., 854 A.2d 585,
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590 (Pa.Super. 2004). Civil conspiracy requires proof by full, clear and
satisfactory evidence. Phillips, supra at 437. “The mere fact that two or
more persons, each with the right to do a thing, happen to do that thing at
the same time is not by itself an actionable conspiracy.” Id. Additionally,
“absent a civil cause of action for a particular act, there can be no cause of
action for civil conspiracy to commit that act.” McKeeman v. Corestates
Bank, N.A., 751 A.2d 655, 660 (Pa.Super. 2000).
After a thorough review of the record, the briefs of the parties, the
applicable law, and well-reasoned opinions of the Honorable Michael T.
Hudock, we conclude Appellants’ issues on appeal merit no relief. The trial
court opinions comprehensively discuss and properly dispose of the
questions presented. (See Trial Court Opinion, filed January 31, 2017, at 1
unpaginated; Trial Court Opinion, filed December 30, 2016, at 6-13)
(finding: (1-2) although Icon made sales to prohibited customers during
restricted covenant period, no facts of record indicate Mr. Nipple was
involved in sales to any of CBS’ customers; record does not support finding
that Mr. Nipple made sales directly or indirectly to any customers, much less
customers prohibited by non-solicitation provision in Agreement; that Mr.
Nipple had office at Icon and Mrs. Nipple and Mr. Hicks worked at Icon do
not show Mr. Nipple was involved in sales to prohibited customers; record
shows Mr. Nipple merely provided general advice to individuals at Icon;
Appellants offered no evidence to show Mr. Nipple’s involvement at Icon
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exceeded advisory role; non-solicitation provision does not prohibit
employees of Icon nor Icon itself from contracting with CBS customers; to
apply terms of non-solicitation provision per Appellants’ interpretation would
effectively prohibit Appellee from continuing his career in modular home
industry in any capacity; under Appellants’ view, employer in modular home
industry that hired Mr. Nipple in any capacity would be unable to sell to
prohibited customers during the restricted covenant period; Agreement,
however, does not prohibit Mr. Nipple from competing with PBS and CBS;
(3) Appellants’ relationships with customers do not rise to level of
prospective contractual relationship; providing customers quotes in normal
course of business does not lead to reasonable likelihood or probability of
enforceable contractual relationship; although Appellants provide customers
with price quote for project, customers are free to seek out multiple quotes
and choose any quote; merely providing quote does not create prospective
contract; also, record does not indicate Appellees intended to harm
Appellants; (4) record does not demonstrate Appellees conducted unlawful
act or acted with unlawful purpose; non-solicitation provision does not bar
Mr. Nipple from competing in same field as Appellants; Agreement does not
require Appellees to disclose to Appellants Mr. Nipple’s lawful involvement
with Icon; non-solicitation provision merely prohibits Mr. Nipple from
engaging in sales, directly or indirectly, to customers of Appellants;
Appellants have not offered facts of record to support claim that Mr. Nipple
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violated terms of non-solicitation provision; (5) Appellants are not entitled
to damages for lost sales because Appellants’ claims for breach of contract,
conspiracy, and tortious interference are without merit; further, Appellants
failed to demonstrate probable, inferential, or direct proof of their loss
attributable to Appellees). The record supports the trial court’s rationale.
Accordingly, we affirm on the basis of the trial court’s opinions.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/31/2017
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