PPG Architectural Finishes v. N. Siperstein ( 2018 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
PPG ARCHITECTURAL FINISHES : IN THE SUPERIOR COURT OF
INC. : PENNSYLVANIA
:
Appellant :
:
:
v. :
:
: No. 1960 WDA 2016
N. SIPERSTEIN WEST-END PAINT :
COMPANY INC., SIPERSTEIN WEST :
END PAINT CORPORATION AND :
SIPERSTEIN'S BRICKTOWN PAINT :
CORPORATION
Appellees
Appeal from the Order December 4, 2016
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): GD-11-001095
BEFORE: BOWES, J., LAZARUS, J., and OTT, J.
DISSENTING MEMORANDUM BY BOWES, J.: FILED MARCH 26, 2018
Although I agree with portions of the learned majority’s analysis, I
believe that the issues raised by Appellant, PPG Architectural Finishes Inc.
(“PPG”), are barred by collateral estoppel. As such, I would affirm the trial
court’s order sustaining the preliminary objections of Appellees, N. Siperstein
West-End Paint Company Inc., Siperstein West End Paint Corporation, and
Siperstein’s Bricktown Paint Corporation. Hence, I dissent.
As the resolution of this matter requires an understanding of previous
litigation relevant to these proceedings, see PPG Architectural Finishes
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Inc. v. Siperstein, 60 A.3d 561 (Pa.Super. 2012), appeal denied, 7 A.3d 812
(Pa. 2013), I begin by recounting this Court’s recitation of the factual
background of that case. That proceeding involved a complaint filed by PPG
against fifteen separate legal entities, not including the above-named
Appellees, doing business under the trademark “Siperstein’s,” (referred to in
that matter as the “Siperstein Companies”) and Lawrence Katz (“Katz”), an
officer and owner of a number of the Siperstein Companies. We previously
set forth the following:
PPG and the Siperstein Companies had a business
relationship that dated back to the early 1980s, by which the
Siperstein Companies submitted purchase orders to PPG in
Pennsylvania for varying quantities of paint on open account. PPG
shipped the orders from Harrisburg, Pennsylvania to the various
Siperstein Companies’ locations in New Jersey, Massachusetts,
and Connecticut. The business typically amounted to sales of $2
million to $3 million each year.
The invoices for the shipments indicated the specific
Siperstein Company to which the products were being shipped and
billed, and PPG kept an accounting of the amounts owed by each
Siperstein Company. However, PPG internally had only one
account number that included all of the Siperstein Companies,
excepting the Bergenfield store, which requested its own account.
The Siperstein Companies then submitted payment to PPG in
Pennsylvania, either with a check from the relevant company’s
individual account or with a check from a consolidated account
that indicated for which store payment was being made.
In the mid-to-late 2000s, PPG began having difficulty
obtaining timely payment from Siperstein Companies. Katz
executed several promissory notes in his individual capacity, each
relating to an amount owed by a specific Siperstein store, to
secure continued shipments of products from PPG. Katz also
repeatedly informed individuals at PPG that he would see to it that
PPG was paid amounts not secured by one of the promissory
notes. PPG eventually required immediate payment for new
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orders, plus an additional 50% to be applied to past-due orders,
before it would ship any additional product to any of the Siperstein
Companies. Eventually, because the Siperstein Companies failed
to pay down the debt, PPG ceased filling orders.
PPG filed a complaint in the Allegheny County Court of
Common Pleas on June 5, 2009 [(the “2009 action”)]. The
complaint states counts of breach of contract, quantum meruit,
and account stated against the Siperstein Companies for past-due
invoices totaling over $800,000, as well as counts of breach of
contract, promissory estoppel, and negligent misrepresentation
against Katz individually for his oral promises to see that PPG was
paid.
PPG, supra, 60 A.3d 561 (unpublished memorandum at *2-4). Following a
non-jury trial, the trial court entered a verdict in favor of PPG, and against
Siperstein Bergenfield Paint & Wallpaper Co., Inc. in the amount of
$43,901.25, and against the remaining Siperstein Companies, jointly and
severally, in the amount of $794,747.60. Both parties appealed.
As is pertinent here, on appeal PPG contended that the trial court “erred
in excluding from the amount awarded to PPG in its verdict the amounts due
for product delivered by PPG to Siperstein’s Long Branch location and
Bricktown location when the undisputed evidence of record established that
the Long Branch and Bricktown locations were part of the “Siperstein Chain,”
. . . and where the trial court held that the other members of the “Siperstein
Chain” were jointly and severally liable for the entire debt owed to PPG by the
chain.” Id. at *8.
On appeal, we determined, inter alia, that PPG had failed to satisfy the
procedural requirements necessary to allege that the Siperstein Companies
were jointly and severally liable as an unincorporated association. Id. at *18.
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Nevertheless, we affirmed the trial court’s conclusion that the entities sued
therein, which did not include Appellees, were estopped from denying joint
and several liability based on well-established principles of agency. Id. at
*19-23. In this vein, we found that the record supported the trial court’s
conclusion that PPG reasonably believed that the Siperstein Companies “were
a single entity, or a de facto partnership of companies.” Id. at *22. In
addition, the record supported its finding that “PPG reasonably relied on its
belief to its detriment in continuing to extend credit to the Siperstein
Companies with the expectation that the companies would cover each other’s
debts,” and thus, that the Siperstein Companies were jointly and severally
liable “for the entire debt on PPG’s group account.” Id. at *22-23.
Following this determination, we considered whether the trial court had
erred in excluding from the verdict the debts of the Long Branch and Bricktown
locations, since they were not named defendants in that case. We held that,
because “each and all of the Siperstein Companies whose orders were billed
to the main PPG account are jointly and severally liable for the entire debt of
that account, the entire debt of that account should be included in the verdict.”
Id. at *23. In addition, we noted, “[w]hether all of the legal entities that had
outstanding debts on the account were parties to the action is immaterial.”
Id. at *23-24. As the record did not include a stipulation as to the debts owed
by those stores, we remanded for the trial court to determine whether there
was sufficient proof of the debts of the Long Branch and Bricktown stores for
inclusion in the verdict against the Siperstein Companies.
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Subsequently, the Pennsylvania Supreme Court denied a petition for
review. PPG Architectural Finishes, Inc. v. Siperstein, 7 A.3d 812 (Pa.
2013). Thereafter, on remand, the trial court, by order dated March 19, 2014,
modified the original verdict to include the amounts stipulated as owed by the
Long Branch and Bricktown stores, and which were otherwise included in the
invoice of the main PPG account. Despite our finding that each of the legal
entities with debts owed on PPG’s main account were jointly and severally
liable, PPG could only enter judgment against the defendants named in the
2009 action.
While the 2009 action was pending, PPG filed the instant complaint in
2011, seeking damages for breach of contract and quantum meruit against
Appellees, who represent Siperstein’s Long Branch and Bricktown locations.
PPG raised many of the same allegations it raised in the 2009 action, including
that Appellees were jointly and separately liable for the indebtedness of the
entire Siperstein enterprise. Appellees filed preliminary objections contending
that the matter was barred by collateral estoppel and res judicata. Before the
trial court ruled on Appellees’ preliminary objections, the matter was stayed
pending the resolution of the 2009 action. On December 4, 2016, the trial
court sustained Appellees’ preliminary objections on the basis of res judicata
and collateral estoppel. PPG filed a timely notice of appeal and complied with
the trial court’s order to file a Rule 1925(b) concise statement of errors
complained of on appeal. The trial court authored its Rule 1925(a) opinion,
and this matter is now ready for our review.
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PPG raises five questions for our consideration:
1. Whether the trial court erred in finding that res judicata and
collateral estoppel applied because the named defendants in
this action were not named parties and no verdict was entered
against them in the [2009 action].
2. Whether the trial court erred in concluding that it previously
considered the adequacy of the evidence as to whether the
stores operated by the defendants in this action formed part of
the “Siperstein chain” and concluded that these stores were not
part of such chain.
3. Whether the trial court erred in finding that res judicata and
collateral estoppel were applicable because, in doing so, the
[trial court] failed to distinguish store locations operated by
defendants with corporate entities that have been sued or may
be sued.
4. Whether the trial court erred in sustaining preliminary
objections because res judicata and collateral estoppel are
affirmative defenses that are not properly raised by way of
preliminary objections.
5. Whether the requirements of res judicata and collateral
estoppel have been met.
Appellant’s brief at 2-3.
As a preliminary matter, I agree with the majority’s determination that
PPG waived its fourth issue, which challenged the procedural propriety of
sustaining Appellees’ preliminary objections based on res judicata and
collateral estoppel. I believe that the majority correctly reasoned that PPG
waived this argument by failing to preserve this issue by filing preliminary
objections to Appellees’ preliminary objections.
Turning to the merits of this matter, I disagree with the majority’s
conclusion that the trial court erred in sustaining Siperstein’s preliminary
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objections based on collateral estoppel. The following guidelines are relevant
to our analysis:
Our standard of review of an order of the trial court overruling or
granting preliminary objections is to 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.
Perelman v. Perelman, 125 A.3d 1259, 1263 (Pa.Super. 2015) (citation
omitted).
PPG contends, in part, that the trial court erred in sustaining Appellees’
preliminary objections based on the doctrine of collateral estoppel. This Court
has previously observed, “[c]ollateral estoppel, or issue preclusion, is a
doctrine which prevents re-litigation of an issue in a later action, despite the
fact that it is based on a cause of action different from the one previously
litigated.” Weissberger v. Myers, 90 A.3d 730, 733 (Pa.Super. 2014)
(citation omitted). Collateral estoppel applies to bar re-litigation of an issue
where
(1) the issue decided in the prior case is identical to one presented
in the later case; (2) there was a final judgment on the merits;
(3) the party against whom the plea is asserted was a party or in
privity with a party in the prior case; (4) the party or person in
privity against whom the doctrine is asserted had a full and fair
opportunity to litigate the issue in the prior proceeding and (5)
the determination in the prior proceeding was essential to the
judgment.
Id. (citation omitted).
PPG initiated the present action based on its claim that “recovery could
not be effected against the 2009 defendants.” Appellant’s brief at 8. PPG
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contends that the issue herein is whether Appellees, as opposed to the
Siperstein Companies named in the 2009 action, are jointly and severally
liable for the debt owed by the Long Branch and Bricktown stores. Appellant’s
brief at 10. It maintains that, since Appellees were not parties to the 2009
action, whether they were jointly and severally liable was not an issue in that
matter. PPG alleges that the corporate entities named in this action are
distinguishable from the store locations found to be jointly and severally liable
in the 2009 action.1 PPG argues that, since Pa.R.C.P. 2177 requires an action
against a corporate entity to be prosecuted in its corporate name, and
Appellees were not named in the 2009 action, they were not subject to the
verdict. Finally, PPG contends, without development, that since Appellees
were not parties to the 2009 action, “the other requirements for . . . collateral
estoppel are not met.” Appellant’s brief at 15.
The majority begins its analysis by reiterating this Court’s previous
holding in the 2009 action that the Siperstein Companies were jointly and
severally liable “because they ‘caused PPG to have the reasonable belief that
they were a single entity, or a de facto partnership of companies.’” Majority
Memorandum, at 14 (citing PPG, supra, 60 A.3d 561 (unpublished
memorandum at *22)). It also notes that PPG raised the same allegation in
the 2011 action. Nonetheless, the majority, apparently accepting PPG’s
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1 Nevertheless, PPG concedes that, on remand, the trial court modified its
original verdict to include the stipulated amounts owed by the Long Branch
and Bricktown stores. Appellant’s brief at 11.
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argument that it is dispositive that the corporate defendants in this matter are
different from the Long Beach and Bricktown Siperstein locations whose debts
were included in the 2009 verdict, determined that “[t]herefore . . . PPG may
pursue its claim of joint and several liability against the 2011 Defendants
based upon a de facto partnership theory.” Majority Memorandum, at 15.
Finally, the majority contests the trial court’s determination that PPG
should have sought to amend the 2009 complaint to include the Long Branch
and Bricktown locations, or to consolidate it with the instant matter. It
observes that Pa.R.C.P. 213 places it within the trial court’s discretion to
determine whether two matters should be consolidated. Although it may be
true that the trial court had discretion to consolidate the actions, it was not
obligated to do so. In any case, this reasoning does not otherwise implicate
collateral estoppel. Since I find that the elements of collateral estoppel are
clearly met in this case, I respectfully disagree with the majority’s analysis.
Regarding the first prong of the collateral estoppel analysis, I submit
that the issues in the two cases are identical. The issue decided in the 2009
action was whether the “Siperstein Companies,” who owed debts on PPG’s
main account, were jointly and severally liable for the debts owed by the entire
enterprise. The issue before us is identical. As noted above, the trial court
decided this issue, finding that the Siperstein Companies were jointly and
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severally liable, and, on appeal, we affirmed.2 Notably, in so affirming, we
observed that “[w]hether all of the legal entities that had outstanding debts
on the account were parties to the action [was] immaterial.” PPG, supra, at
*23-24 (emphasis added). Furthermore, I am not convinced that it is
dispositive that the corporate entities that represent the Long Beach and
Bricktown stores in this proceeding are legally distinct. We previously found
that the Siperstein Companies were jointly and severally liable for “all of the
legal entities that had outstanding debts” owed to PPG, id., and, unlike res
judicata, collateral estoppel does not require identity of the parties to be
applicable. Although PPG could have used collateral estoppel as a sword in
this action, the doctrine does not preclude Appellees herein, who were third
parties to the 2009 action, from employing it as a shield.
Second, this issue was litigated to a final judgment on the merits in the
prior action. Following trial, it proceeded to direct appeal, and after this Court
affirmed the trial court’s order, our High Court denied the petition for
allowance of appeal. Third, it is undisputed that PPG, the party against whom
collateral estoppel is being asserted, was a party to the 2009 action. Fourth,
given the extended litigation, numerous pre-trial motions, and hearings, which
culminated in a non-jury trial followed by lengthy appellate proceedings, PPG
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2 As noted, infra, we found that “each and all of the Siperstein Companies
whose orders were billed to the main PPG account are jointly and
severally liable for the entire debt of that account[.]” PPG Architectural
Finishes Inc. v. Siperstein, 60 A.3d 562 (Pa.Super. 2012) (unpublished
memorandum at *23) (emphasis added). It is undisputed that the Long
Branch and Bricktown locations owed debts on the main PPG account.
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was certainly afforded a full and fair opportunity to litigate the issue. Indeed,
PPG’s allegations that individual Siperstein Companies were jointly and
severally liable for the debts owed by other Siperstein Companies was
ultimately adjudicated in its favor. Finally, the finding that individual
Siperstein Companies were jointly and severally liable to PPG was essential to
the prior judgment, as that was the primary focus of the prior litigation, and
resolved the question of liability among the myriad defendants.
I am unpersuaded by PPG’s assertion that, since the corporate entities
named as defendants herein were not named parties in the 2009 action, the
elements of collateral estoppel are somehow inapplicable or unmet. Indeed,
the doctrine of collateral estoppel speaks directly to this situation. As we
observed above, collateral estoppel is intended to “prevent re-litigation of an
issue in a later action, despite the fact that it is based on a cause of action
different from the one previously litigated.” Weissberger, supra. A prior
court of concurrent jurisdiction determined, as a factual and legal matter, that
the whole of the Siperstein enterprise is jointly and severally liable for the
debts of its separate legal entities, including the corporations named in this
suit that represent the Long Branch and Bricktown stores. Indeed, the
stipulated amounts of those stores’ debts were added to the modified verdict
at the conclusion of the 2009 action.
Further, we must be mindful of the distinction between issue preclusion
and claim preclusion. Whereas res judicata bars re-litigation of a particular
claim, collateral estoppel applies more broadly. Collateral estoppel bars all
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claims where the factual or legal predicate supporting those claims, i.e. the
underlying issue, has previously been determined. Hence, when issue
preclusion applies, it may bar multiple claims if they all rely upon identical
legal or factual underpinnings.
In this case, collateral estoppel operates to bar PPG from relitigating
whether third parties are liable for the debts previously adjudicated because
that issue was decided in its favor in the 2009 action. It is irrelevant what
cause of action it asserts in this proceeding to reach the conclusion that
Appellees are jointly and severally liable for the debts of the Siperstein
enterprise, or even merely the Long Branch and Bricktown stores, as the
factual and legal basis of that issue has been decided.
Nor does PPG’s inability to satisfy its judgment against the 2009
defendants alter this conclusion. In the 2009 action, the court determined
that PPG was entitled to recover the amounts owed by the Siperstein
Companies, including the balances owed by the Long Branch and Bricktown
locations participating in this matter. Whether PPG can collect on those debts
is not relevant to the outcome of this proceeding.3 Appellees, as legal entities
within the Siperstein enterprise who owed debts on PPG’s main account, have
been found to be jointly and severally liable for that award. PPG, supra at
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3In this sense, I agree with the trial court’s insistence that PPG should have
ensured that Appellees were a party to the 2009 action. If PPG truly cannot
collect on the 2009 verdict, it has only itself to blame since it could have
ensured that all of the Siperstein Companies indebted on its main account
were parties to that proceeding.
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*23-24. As such, there are no other relevant factual and legal matters left to
be decided in this case. Thus, I would find that the trial court did not err in
sustaining Siperstein’s preliminary objections on the basis of collateral
estoppel, and I would affirm its order. For these reasons, I respectfully
register this dissent.
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