Chestnut Creek Construction v. Murphy, E. ( 2017 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CHESTNUT CREEK CONSTRUCTION : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
EDWARD MURPHY AND MAGGIE :
MURPHY A/K/A MARGARET MURPHY :
: No. 452 EDA 2016
Appellant :
Appeal from the Judgment March 15, 2016
In the Court of Common Pleas of Montgomery County
Civil Division at No(s): 09-04149
CHESTNUT CREEK CONSTRUCTION : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
v. :
:
:
EDWARD MURPHY AND MAGGIE :
MURPHY, A/K/A MARGARET MURPHY :
: No. 551 EDA 2016
Appeal from the Judgment Entered March 15, 2016
In the Court of Common Pleas of Montgomery County
Civil Division at No(s): 09-04149
BEFORE: OTT, J., RANSOM, J., and FITZGERALD, J.*
MEMORANDUM BY RANSOM, J.: FILED MAY 04, 2017
In this consolidated appeal, Chestnut Creek Construction (“Chestnut”)
appeals from the judgment entered March 15, 2016,1 in its favor and against
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1
Chestnut and Murphy purported to appeal from the January 8, 2016 order
denying their motion for post-trial relief; however, entry of final judgment
(Footnote Continued Next Page)
*
Former Justice specially assigned to the Superior Court.
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Edward Murphy and Maggie Murphy a/k/a Margaret Murphy (collectively,
“Murphy”) in the amount of $87,821.21. Murphy cross-appeals from the
judgment against them. We affirm.
The trial court outlined the relevant procedural and factual history as
follows:
The instant appeals arise out of a joint venture between the
parties to subdivide and develop a parcel of property located at
1252 Meetinghouse Road in Lower Gwynedd, Pennsylvania (the
“Property.”) [In January 2005], the parties entered into a
Construction and Land Development Agreement (the
“Agreement”) the purpose of which was clearly set out in its
preamble, as follows:
This Agreement is executed by and between Edward
Murphy and Maggie Murphy (Owner) and Chestnut Creek
Construction, Inc. (Builder), for the purpose of subdividing
the property located at 1252 Meetinghouse Road,
Gwynedd, PA. 19426 (Property) into three lots and
constructing custom homes on two newly subdivided lots,
which will be named lots #2 and #3 (New Lots). The
Owner will retain ownership of Lot #1, which currently
contains his existing residence, and retains all rights
thereon for said Lot #1. This Property is currently a 5.5
acre tract situate between Route 202 and Evans Road,
Lower Gwynedd Township (Township), Montgomery
County, Pennsylvania.
In six paragraphs thereafter, the Agreement, in relevant part,
provided inter alia that: legal Ownership was to remain with
_______________________
(Footnote Continued)
was required to make the instant matter properly appealable. See Pa.R.A.P.
301. The Montgomery County Prothonotary entered judgment on March 15,
2016, thereby perfecting this Court’s jurisdiction. See Pa.R.A.P. 905(a)(5)
(“A notice of appeal filed after the announcement of a determination but
before the entry of appealable order shall be treated as filed after such entry
and on the day thereof.”).
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Owner ([Murphy]) until the new lots were sold; Builder
([Chestnut]) was to work with Owner to obtain subdivision
approval, the costs of which were to be paid by Builder and
reimbursed from proceeds of the sale of the new lots and homes
thereon; Builder would improve the new lots, build new homes
on each for which Builder would be paid costs of improvements
and construction, plus 10% overhead, plus 10% profit; “Owner
and Builder agree to jointly acquire a construction loan for the
total amount of the Construction Costs and improvement costs.
Funds from construction loan will be disbursed to Builder
periodically to cover the costs of the construction. Any fees or
costs associated with the construction loan, including interest
payments, shall be borne equally by Owner and Builder,” and;
from proceeds of [] new lots and homes constructed thereon,
Owner shall receive $450,000.00 for price of lots; Builder shall
receive costs, plus overhead, and profit and balance to be
divided equally. ([Notes of Testimony,] N.T. 6/8/15, at Ex. P-1
(“Agreement”), 11/10/15). []
Pursuant to the Agreement, [Chestnut] (Builder) promptly
sought subdivision and land development approvals from Lower
Gwynedd Township (the “Township”) as indicated by
[Chestnut’s] submission of an Application for Approval of Plans
dated January 31, 2005 (N.T. 6/8/15, at 15, Ex. P-2 (“Township
Application for Approval of Plans”), 11/10/15). In preparing the
Application, [Chestnut’s] owner and president, Jim Held testified
that he had hired an engineer, [] who presented a set of plans,
and then attended and participated in numerous meetings with
the Township’s planning commission, engineer, and zoning
officer. (N.T. 6/8/15, at 16 -17). [In September 2006], by virtue
of [Chestnut’s] efforts, the Township entered into a land
development agreement with [Chestnut] as the developer and
[Murphy] as the owners. [In October 2008], the site subdivision
plan was filed with the Montgomery County Recorder of Deeds,
thereby effectuating subdivision of the Property.
[In February 2007], however, without [Chestnut’s] knowledge
or consent (and in breach of the parties’ Agreement), [Murphy]
executed a note and mortgage in the amount of $3.375M []
which was recorded against the Property. [Murphy] fell into
arrears on the mortgage and eventually lost the Property in
foreclosure. (Prior to [Murphy’s] instant above-referenced
refinancing, and at the time the parties executed the Agreement,
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the Property was encumbered by a mortgage of approximately
$1.6M. (N.T. 6/8/15, at 162 -63.))
[In February 2009], [Chestnut] instituted the instant action
by filing a two–count complaint, sounding in breach of contract
and unjust enrichment. The complaint asserted, inter alia, that
[Murphy] breached the Agreement by virtue of their refinancing
and default thereon, and sought reimbursement of costs
expended and future lost profits as a result of that breach. []
After accepting service of the complaint[,] [] [Murphy]
thereafter failed to timely respond. [In August 2009], [Chestnut]
sought entry of default judgment with the filing of the requisite
praceipe [asking the Prothonotary to] [] [“][a]ssess [d]amages
at a trial limited to a determination of the amount of the
damages, as per [Pa.R.C.P.] 1037(b)(1) . . .[”] Upon
[Chestnut’s] filing of the above-referenced praecipe, the
Montgomery County Prothonotary entered a default judgment in
favor of [Chestnut] []. Thus, by virtue of [Murphy’s] default,
they admitted a material breach of the Agreement by
encumbering the Property with a $3.375M mortgage without the
consent or knowledge of [Chestnut], defaulting on that financing
and losing the Property in foreclosure. ([Complaint] at ¶¶ 113-
16, 2/11/09). Despite the serious implications of this judgment,
Defendants failed to seek relief from the entry of judgment until
more than a year and a half later. Then, [in February 2011],
[Murphy] filed a petition to open, which [was denied in October
2011]. [] [In March 2013], the Superior Court affirmed the trial
court’s denial of the petition, and [] the Pennsylvania Supreme
Court denied [Murphy’s] petition for allowance of appeal [in
November 2013]. Upon remittal, the [] Montgomery County
Court Administration [was directed] to place the matter in the
trial list i.e., bench trial for assessment of damages.
[] [In June 2015], the case proceeded to an assessment of
damages bench trial []. By order dated September 21, 2015, a
verdict [was entered] in favor of [Chestnut] and against
[Murphy] in the amount of $87,821.21, plus costs and interest at
6% from the date of the Judgment thereon until paid.
Trial Court Opinion, 7/26/2016, at 1-5 (footnotes and unnecessary
capitalization omitted).
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Thereafter, Murphy timely filed a post-trial motion for judgment non
obstante verdicto (“JNOV”) or a new trial in the alternative. See Pa.R.C.P.
227.1. Defendant’s Post Trial Motion for New Trial or in the Alternative
Judgment Notwithstanding the Verdict (“Murphy Motion for JNOV”),
9/30/2015. In this motion, Murphy asserted that the court’s decision was
against the weight of the evidence, specifically claiming that Chestnut failed
to show (1) that they were entitled to payment in the event that no buyers
were willing to develop the lots; (2) that Chestnut made any effort to
mitigate their damages; and generally (3) failed to show that Murphy was
the cause of Chestnut’s damages.
Chestnut responded and filed a motion for JNOV as well, asserting that
the trial court’s decision was contrary to law because (1) Murphy was
erroneously permitted to present a defense to liability for damages; (2)
Chestnut should have received the full amount of damages claimed as their
evidence was uncontroverted; and (3) the court improperly accepted
Murphy’s testimony of real estate market conditions at the relevant time.
Plaintiff’s Post Trial Motion for Judgment Notwithstanding the Verdict
(“Chestnut Motion for JNOV”), 10/6/2015.
Following briefing and argument on the parties’ cross motions, the trial
court denied both parties’ motions for post-trial relief in January 2016. In
February 2016, the parties timely filed cross-appeals from the trial court’s
denial of their respective motions for post-trial relief. Both parties timely
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filed court-ordered Pa.R.A.P. 1925(b) statements, and the court filed a
responsive opinion in July 2016.
On appeal, Chestnut presents the following issues for our review:
1. Did the [c]ourt err in allowing [Murphy] to present a defense
which went to the merits of the case and was not restricted to
the amount of damages as per [Pa.R.C.P. No.] 1037?
2. Did the [c]ourt err in not awarding [Chestnut] the full
measure of damages in the absence of any testimony to the
contrary?
Chestnut’s Brief at 3.2 Murphy presents the following issues for our review:
1. Did the trial court properly deny [] [Chestnut’s] post trial motion
since it had not proven it’s [sic] claim for lost profits?
2. Did the trial court improperly deny [Murphy’s] motion for judgment
NOV and a new trial as a result of its award of subdivision costs to
[] [Chestnut]?
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2
Chestnut’s brief is soundly out of compliance with the Pennsylvania Rules
of Appellate Procedure. Chestnut flouts Rule 2111 by omitting a scope of
review and standard of review and omitting a copy of the statement of
errors complained of on appeal. Chestnut provides a woefully deficient
statement of the case, a section required by Pa.R.A.P. 2117. Moreover,
Chestnut has failed to comply with Pa.R.A.P. 2119, in that its argument is
not divided into as many parts as there are questions presented, and its
argument is devoid of any citation to the record. Additionally, as Murphy
notes, Chestnut failed to include a reproduced record with its brief.
Chestnut does not qualify for any of the exceptions listed in Rule 2151,
which would excuse this error, and has not requested a waiver from the
requirement to file the record. However, Murphy did not move for dismissal
of Chestnut’s appeal on this ground, as permitted by Rule 2188. This
potpourri of failures by Chestnut has complicated our review of Chestnut’s
arguments. See In re R.D., 44 A.3d 657, 674 (Pa. Super. 2012) (“[W]hen
defects in a brief impede our ability to conduct meaningful appellate review,
we may dismiss the appeal entirely or find certain issues to be waived.”);
Pa.R.A.P. 2101, 2119.
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Murphy’s Brief at 4.
Following trial, both parties filed post-trial motions seeking judgment
notwithstanding the verdict and, in Murphy’s case, a new trial. We review a
denial of JNOV in the following manner:
When reviewing an appeal from the denial of a request for
[JNOV], the appellate court must view the evidence in the light
most favorable to the verdict-winner and give him or her the
benefit of every reasonable inference arising therefrom while
rejecting all unfavorable testimony and inferences.... Thus, the
grant of a [JNOV] should only be entered in a clear case and any
doubts must be resolved in favor of the verdict-winner.
Furthermore, [i]t is only when either the movant is entitled to
judgment as a matter of law or the evidence was such that no
two reasonable minds could disagree that the outcome should
have been rendered in favor of the movant that an appellate
court may vacate a jury's finding.
Thomas Jefferson Univ. v. Wapner, 903 A.2d 565, 569 (Pa. Super. 2006)
(internal citations and quotations omitted, formatting modified.).
When considering a challenge to the trial court's ruling denying a
motion for a new trial, we are guided by the following standard of review:
We must review the court's alleged mistake and determine
whether the court erred and, if so, whether the error resulted in
prejudice necessitating a new trial. If the alleged mistake
concerned an error of law, we will scrutinize for legal error.
Once we determine whether an error occurred, we must then
determine whether the trial court abused its discretion in ruling
on the request for a new trial.
Underwood ex rel. Underwood v. Wind, 954 A.2d 1199, 1206 (Pa.
Super. 2008) (citing Gbur v. Golio, 932 A.2d 203, 206–207 (Pa. Super.
2007)).
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Collectively, the parties dispute the damages awarded by the trial
court. The calculation of damages is a question of fact, determined by the
fact finder. Hatwood v. Hosp. of the Univ. of Pennsylvania, 55 A.3d
1229, 1240 (Pa. Super. 2012) (stating that the calculation of damages is a
question of fact).
We review a court’s assessment of damages according to the following
standard:
The duty of assessing damages is within the province of the
factfinder and should not be interfered with by the court, unless
it clearly appears that the amount awarded resulted from
caprice, prejudice, partiality, corruption or some other improper
influence. In reviewing the award of damages, the appellate
courts should give deference to the decisions of the trier of fact
who is usually in a superior position to appraise and weigh the
evidence. If the verdict bears a reasonable resemblance to the
damages proven, we will not upset it merely because we might
have awarded different damages.
Newman Dev. Grp. of Pottstown, LLC v. Genuardi’s Family Mkt., Inc.,
98 A.3d 645, 659-60 (Pa. Super. 2014) (citations, brackets, and quotation
marks omitted).
It is well-established that in a breach of contract action, damages must
be proved with reasonable certainty. Helpin v. Trustees of Univ. of
Pennsylvania, 10 A.3d 267, 270 (Pa. 2010) (citing Ferrer v. Trustees of
the University of Pennsylvania, 825 A.2d 591, 610 (Pa. 2002)). A
damage award should place the non-breaching party as nearly as possible in
the same position it would have occupied had there been no breach.
Lambert v. Durallium Products Corporation, 72 A.2d 66, 67 (Pa. 1950).
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The measure of damages for breach of contract is compensation for the loss
sustained. Id. However, “[a]s a general rule, damages are not recoverable
if they are too speculative, vague or contingent and are not recoverable for
loss beyond an amount that the evidence permits to be established with
reasonable certainty.” Spang & Co. v. U.S. Steel Corp., 545 A.2d 861,
866 (Pa. 1988).
Damages for lost profits, like other contract damages, may not
be awarded when the evidence leaves the trier of fact without
any guideposts except his or her own speculation. Sufficient
evidence must be introduced to permit a reasonably certain
estimate of the amount of anticipated profits lost due to the
breach.
Merion Spring Co. v. Muelles Hnos. Garcia Torres, S.A., 462 A.2d 686,
695 (Pa. Super. 1983).
In its first claim, Chestnut asserts that the trial court erred in
permitting Murphy to introduce a defense of liability rather than strictly
disputing calculation of damages. Chestnut Creek Brief at 6-8. Chestnut
characterizes Murphy’s evidence of the real estate valuation as going to the
cause of the loss instead of factoring into the calculation of damages. Id.Chestnut is mistaken. The issue before the trial court was limited to the
award of damages, and Murphy properly challenged Chestnut’s evidence by
introducing expert testimony which established that the amount Chestnut
claimed in lost profits was belied by real estate market conditions. N.T.,
6/8/2015 at 120-46. The trial court considered this expert testimony, along
with the other evidence presented, and concluded that Chestnut’s claim of
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lost profits was overly speculative. See Trial Court Opinion, 7/26/2016, at
13-16. Accordingly, the court did not err. Spang & Co., 545 A.2d at 866;
Merion Spring Co., 462 A.2d at 695.
Second, Chestnut asserts its evidence of damages was unrebutted.
Chestnut Creek Brief at 7-14. This claim is without merit, as it is simply not
supported by the record. As mentioned supra, Murphy challenged
Chestnut’s evidence with expert testimony, suggesting that Chestnut’s
evidence of profit loss was speculative. Assessment of damages is a
question of fact within the discretion of the fact finder. Hatwood, 55 A.3d
at 1240. The trial court found Murphy’s evidence credible and persuasive, as
such, we discern no abuse of discretion. Id.For these reasons, the court did not err or otherwise abuse it’s
discretion in denying Chestnut’s motion for JNOV. Thomas Jefferson
Univ., 903 A.2d at 569.
In light of our disposition of Chestnut’s claims, we need not address
Murphy’s first issue. Murphy argues in its second issue that the trial court
improperly denied its post-trial motions for JNOV and a new trial. We first
address Murphy’s contention that the trial court erred in denying its motion
for JNOV, where Murphy asserted that the court’s decision was against the
weight of the evidence.
We reiterate that the cause of the breach of the underlying contract is
admitted by the default judgment entered against Murphy, and Murphy is
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precluded from re-litigating that fact. Wilson v. Maryland Cas. Co., 105
A.2d 304, 312 (Pa. 1954) (recognizing that a default judgment operates as
an admission by the defendant of the truth of all facts well-pleaded); see
Pa.R.C.P. 1037(b)(1). In the instant case, there was no liquidated damages
provision indicating a “sum certain” or language outlining damages
calculations in the event of a breach. See Construction and Land
Agreement. Accordingly, the trial court was responsible for ascertaining
what, if any, damages were due to Chestnut. Pa.R.C.P. 1037(b)(1).
Here, the trial court outlined the “ample evidence of expense” incurred
by Chestnut as presented at the damages hearing and found that Chestnut
sustained $87,821.21 in damages. See Trial Court Opinion, 7/26/2016, at
8-13; see also Hatwood, 55 A.3d at 1240. This figure was based on (1)
the fact that Murphy was in breach of the contract; (2) the detailed
testimony of Jim Held explaining the money Chestnut had expended in
furtherance of the agreement; (3) an independent accountant’s report and
accompanying testimony describing the sums expended by Chestnut; and
(4) the reasonable conclusion of the court that subdivision costs would be
paid from the sale of the home prior to the distribution of profits to either
party. Trial Court Opinion, 7/26/2016, at 10-13.
Conversely, the court found that the profit losses claimed by Chestnut
were too speculative, reasoning:
Simply put, [Chestnut] failed in its proof to establish that profits
would have been realized absent [Murphy’s] breach. Unlike
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subdivision costs which were to be distributed from the sale
proceeds first, profits, according to the Agreement, and by their
very nature, were to be distributed last. [Chestnut] produced
little evidence beyond Mr. Held’s projections that the sale of the
lots with luxury homes at the time they would be marketed
pursuant to the Agreement would have realized a sale price
sufficient to pay subdivision costs, construction costs (including
financing cost thereon), $450,000.00 per lot to [Murphy], and
thereafter, profits to be split equally between [Chestnut] and
[Murphy] in that order as called for in the Agreement.
Trial Court Opinion, 7/26/2016, at 13-15. In conjunction with the lack of
lost profits evidence presented by Chestnut, Murphy presented an expert on
real estate valuation, who opined that a change in market conditions
undercut real estate values at the prospective time of sale. N.T., 6/8/2015
at 120-46. As such, the court was left without enough evidence to permit a
reasonably certain estimate of anticipated profit loss, and the court was not
permitted to award damages based on pure speculation. Merion Spring
Co., 462 A.2d at 695.
Here, the court’s findings were supported by the evidence of record,
therefore the court did not abuse its discretion in awarding subdivision costs
expended and declining to award lost profits. Newman Dev. Grp. of
Pottstown, LLC, 98 A.3d at 659-60. Accordingly, when viewed in the light
most favorable to the verdict-winner, we conclude that the court properly
denied Murphy’s motion for JNOV. Thomas Jefferson Univ., 903 A.2d at
569.
Applying our standard of review for denial of a new trial to the above
facts, we conclude that the award of damages for subdivision costs was also
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supported by the evidence of record. Thus, we discern no abuse of
discretion and therefore no error which would warrant the grant of a new
trial. Underwood ex rel. Underwood, 954 A.2d at 1206.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/4/2017
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