Kennedy, T. v. McClarin Properties, LLC ( 2019 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
TODD KENNEDY : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
MCCLARIN PROPERTIES, LLC AND :
MARTIN STEIN :
: No. 979 MDA 2018
Appellants :
Appeal from the Order Entered May 17, 2018
In the Court of Common Pleas of York County Civil Division at No(s):
2017-SU-001621
BEFORE: LAZARUS, J., DUBOW, J., and NICHOLS, J.
MEMORANDUM BY LAZARUS, J.: FILED DECEMBER 09, 2019
McClarin Properties, LLC (McClarin” and Martin Stein (collectively,
Appellants) appeal from the order, entered in the Court of Common Pleas of
York County, granting partial summary judgment in favor of Todd Kennedy
regarding his claims for breach of contract, specific performance, and
injunctive relief.1 After careful review, we affirm.
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1 We note the Appellants’ appeal, which pertains to the issuance of an
injunction and an order for specific performance, is properly before this Court
as an interlocutory appeal as of right. See Pa.R.A.P. 311(a)(4) (permitting
interlocutory appeal as of right where court issues order that “grants or denies
. . . an injunction unless the order was entered . . . [p]ursuant to 23 Pa.C.S.
§§ 3323(f), 3505(a); or [a]fter a trial but before then entry of the final
order[,]” circumstances which are not implicated in instant appeal); see also
Wynnewood Development, Inc. v. Bank and Trust Co. of Old York
Road, 711 A.2d 1003, 1003–1005 (Pa. 1998) (finding order dismissing
portion of complaint requesting injunctive relief and specific performance, but
leaving for trial compensatory damages claim, interlocutory order appealable
as of right pursuant to Rule 311(a)(4)).
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On January 15, 2015, Stein, the managing partner of McClarin, executed
a written agreement (Letter Agreement) with Kennedy, under which Stein and
Kennedy would each personally guarantee McClarin’s payment and
performance on a loan agreement between McClarin and Adams County
National Bank (ACNB) in the principal amount of $3,750,000. In consideration
for taking on the responsibilities of a guarantor, Kennedy was to receive
$50,000 on or before June 15, 2015. Both Kennedy and Stein signed the
Letter Agreement.
The Letter Agreement, in its entirety, reads as follows:
Reference is hereby made to the Loan Agreement (“Loan
Agreement”) between McClarin Properties, LLC and ACNB Bank, a
Pennsylvania financial institution (“ANCB”), for the acquisition of
certain real properties owned by McClarin Plastics, Inc. located at
15 Industrial Drive and 211 North Blettner Avenue. Capitalized
terms used herein which are not otherwise defined shall have the
meanings ascribed to such terms in the Loan Agreement.
ANCB requires that personal guaranties be executed in connection
with the financing set forth in the Loan Agreement, which you
[Kennedy] and I [Stein] have agreed to provide subject to the
terms set forth herein. Thus, intending to be legally bound, the
parties agree as follows:
1. Martin Stein and Todd Kennedy shall each execute a
personal guaranty in favor of ANCB guarantying the
payment and performance of the obligations of McClarin
Properties to ANCB under the terms of the Loan Documents
(together, the “Guaranties,” and individually, the “Todd
Kennedy Guaranty”). The Todd Kennedy agreement will
expire after 6 months from the date of execution.
2. McClarin Properties, LLC, in the first instance, and Martin
Stein agree to indemnify and hold you [Kennedy] and your
affiliates harmless from and against all claims, liabilities,
obligations, costs, damages, losses and expenses (including
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reasonable attorneys’ fees and costs of investigation) of any
nature (collectively, “Losses”) arising out of or relating to
any claims made under the Todd Kennedy Guaranty.
3. In consideration for your execution of the Todd Kennedy
Guaranty referenced in paragraph 1, McClarin Properties,
LLC will pay you [Kennedy] $50,000 the sooner of June 15,
015 [sic], a refinance of the underlying loan or when the
Todd Guaranty is removed (which in no case will be more
than 6 months from the date of execution).
Letter Agreement, 1/15/15, at 1.
On August 17, 2017, Kennedy filed a complaint raising claims of breach
of contract, unjust enrichment, and fraud against McClarin, and claims of
permanent injunctive relief and specific performance against the Appellants.
All claims concerned the Appellants’ failure to pay Kennedy $50,000 or release
him as a guarantor. On December 7, 2017, Kennedy filed a motion for partial
summary judgment with regard to all claims except fraud.2 Kennedy’s motion
specifically requested the trial court issue an order “directing [the Appellants]
to take all necessary action to remove the Guaranty and thereby release
[Kennedy] from any liability of any kind . . . related to the Loan Agreement
between McClarin and ACNB.” Motion for Partial Summary Judgment,
12/7/17, at 11.
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2 The trial court has yet to assess Kennedy’s fraud claim.
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On May 17, 2018, the trial court granted Kennedy’s motion and entered
partial summary judgment on his claims for breach of contract,3 injunctive
relief, and specific performance. On June 7, 2018, the Appellants filed a
motion for reconsideration. On June 15, the Appellants timely filed a notice
of appeal. On June 27, 2018, the trial court denied their motion for
reconsideration. Both the Appellants and the court complied with Pa.R.A.P.
1925.
The Appellants raise the following issues for our review:
1. Whether the lower court erred as a matter of law and abused
its discretion by applying the incorrect legal standard for the
granting of mandatory injunctive relief?
2. Whether the lower court erred as a matter of law and abused
its discretion when it determined that there were no material
facts in dispute, and drew all factual inferences in the favor
of [Kennedy]?
3. Whether the lower court erred as a matter of law and abused
its discretion by granting relief to [Kennedy] requiring
[Appellants] to take action that they have no legal or
contractual authority and/or ability to take?
4. Whether the lower court erred as a matter of law and/or
abused its discretion by granting [Kennedy’s] request for
specific performance where [Kennedy] failed to establish
the elements necessary for such relief?
Brief of Appellant, at 5.
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3As the court granted relief with respect to breach of contract, it did not assess
Kennedy’s claim for unjust enrichment, which he pleaded in the alternative.
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Preliminarily, we examine which claims are preserved for our review.
“[A]rguments not raised initially before the trial court in opposition to
summary judgment cannot be raised for the first time on appeal.” Moranko
v. Downs Racing LP, 118 A.3d 1111, 1116 (Pa. Super. 2015). As we
previously stated:
[A] non-moving party’s failure to raise grounds for relief in the
trial court as a basis upon which to deny summary judgment
waives those grounds on appeal. . . . A decision to pursue one
argument over another carries the certain consequence of waiver
for those arguments that could have been raised but were not.
This proposition is consistent with our Supreme Court’s efforts to
promote finality, and effectuates the clear mandate of our
appellate rules requiring presentation of all grounds for relief to
the trial court as a predicate for appellate review.
Rohrer v. Pope, 918 A.2d 122, 128 (Pa. Super. 2007).
The trial court found the Appellants first, third, and fourth claims4
waived, as the Appellants failed to raise these arguments “when responding
to [Kennedy’s] request for partial summary judgment.” Pa.R.A.P. 1925(a)
opinion, 8/14/18, at 6–7. The court explained its decision as follows:
[The Appellants’] brief in opposition to [Kennedy’s] motion for
partial summary judgment only discussed the issue of whether
[the Appellants] had sufficiently answered the complaint. [The
court was] not asked to consider whether it would be impossible
or impractical for [the Appellants] to perform under the injunction.
[The court was] also not asked to address the issue of an
injunction on the merits. . . . [The Appellants] were very much
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4 The court referred to the first, third, and fourth issues in the Appellants’ Rule
1925(b) statement; these correspond directly to the first, third, and fourth
issues in the Appellants’ brief. See Pa.R.A.P. 1925(a) Opinion, 8/14/18, at
5–6; see also Brief of Appellant, at 5.
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aware of what [Kennedy] was requesting in his counts for
injunctive relief and specific performance. If [the Appellants] felt
that it was impossible for them to take action pursuant to a
preliminary injunction, then they should have raised this issue
specifically in their answer, or in new matter, or at the very least,
in their opposing brief.
Id.
Kennedy’s Brief in Support of Motion for Summary Judgment highlighted
the following: 1) the standard by which permanent mandatory injunction
claims are assessed;5 2) the elements of a specific performance claim; and 3)
the nature of relief sought under both permanent mandatory injunction and
specific performance claims. See Brief in Support of Plaintiff’s Motion for
Partial Summary Judgment, 12/7/17, at 7–13. At no point in the Appellants’
Brief in Opposition to Plaintiff’s Motion for Partial Summary Judgment do they
address the standard by which they believed permanent mandatory
injunctions claims should be evaluated,6 the elements of a specific
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5 Kennedy and the court referenced identical language outlining the standard
governing permanent mandatory injunctions. See Brief in Support of
Plaintiff’s Motion for Partial Summary Judgment, 12/7/17, at 10; see also
Order Granting Plaintiff’s Motion for Summary Judgment, 5/17/18, at 14
(quoting J.C. Erlich Co., Inc, v. Martin, 979 A.2d 862, 864 (Pa. Super. 2009)
(“In order to establish a claim for a permanent mandatory injunction, the party
must establish his or her clear right to relief. However, unlike a claim for a
preliminary injunction, the party need not establish either irreparable harm or
immediate relief and a court may issue a final injunction if such relief is
necessary to prevent a legal wrong for which there is no adequate redress at
law.”)).
6 We note the Appellants incorrectly conflate the standard for preliminary
mandatory injunctions with that for permanent mandatory injunctions. See
Brief of Appellants, at 15 (citing Mazzie v. Commonwealth, 432 A.2d 985,
986 (Pa. 1981) (concerning preliminary mandatory injunction)); see also
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performance claim, or the impossibility of Kennedy’s requested relief pursuant
to either a permanent mandatory injunction or specific performance.7 See
Brief in Opposition to Plaintiff’s Motion for Partial Summary Judgment, 2/2/18,
at 1–11. Instead, the Appellants exclusively focus on whether there was a
genuine issue of material fact, entirely neglecting to entertain the arguments
put forth by Kennedy as to why he was “entitled to relief as a matter of law[.]”
Murphy, supra at 429 (emphasis added).
____________________________________________
supra at n.5. Further, the Appellants largely support their argument with
decisions from the Commonwealth Court—decisions by which we are not
bound. See Beaston v. Ebersole, 986 A.2d 876, 881 (Pa Super. 2009)
(“[D]ecisions rendered by the Commonwealth Court are not binding on this
Court”).
7 Pennsylvania has adopted the definition of legal impossibility put forth by
section 261 of the Restatement (Second) of Contracts, which states as follows:
Where, after a contract is made, a party’s performance is made
impracticable without his fault by the occurrence of an event the
non-occurrence of which was a basic assumption on which the
contract was made, his duty to render that performance is
discharged, unless the language or the circumstances indicate to
the contrary.
Restatement (Second) of Contracts § 261 (1981); accord Felix v. Giuseppe
Kitchens & Baths, Inc., 848 A.2d 943, 947 (Pa. Super. 2004) (“It is well[-
]settled that a party assumes the risk of his or her own inability to perform
contractual duties. A claim of personal inability to perform the actions
contemplated . . . does not rise to the level of legal impossibility.”). Though
the Appellants are not party to the agreement between Kennedy and ACNB,
the Appellants could potentially seek to have Kennedy removed as a guarantor
by refinancing the loan, an action explicitly contemplated by the Letter
Agreement. See Letter Agreement, at 1. (“McClarin Properties, LLC will pay
you [Kennedy] $50,000 the sooner of June 15, 015 [sic], a refinance of the
underlying loan or when the Todd Guaranty is removed (which in no case will
be more than 6 months from the date of execution).”) (emphasis added).
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As the Appellants failed to argue the appropriateness of the standard
under which permanent mandatory injunctions are imposed, the elements of
a specific performance claim, or the impossibility of performing the relief
requested by Kennedy as “grounds for relief in the trial court as a basis upon
which to deny summary judgment[,]” the Appellants’ first, third, and fourth
claims are consequently waived. Rohrer, supra at 128.
The sole claim preserved for our review is, therefore, whether “the lower
court erred . . . when it determined . . . there were no material facts in dispute,
and drew all factual inferences in favor of [Kennedy]?” Brief of Appellants, at
5. The Appellants argue the following errors rendered partial summary
judgment improper: 1) the Letter Agreement itself is ambiguous as to
whether the Appellants owed a duty to remove Kennedy as a guarantor,
necessarily making the court’s interpretation of the Letter Agreement an
impermissible inference in favor of the moving party; and 2) the lower court
improperly construed certain denials in the Appellants’ pleadings as
admissions and compounded that error by relying on that assessment in
determining whether there was a material difference of fact. See id. at 20–
26. We address these arguments in reverse order, as the first argument turns
on the second.
This Court evaluates the remaining claim under the following, well-
established standard:
Our review on an appeal from the grant of a motion for summary
judgment is well-settled. A reviewing court may disturb the order
of the trial court only where it is established that the court
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committed an error of law or abused its discretion. As with all
questions of law, our review is plenary.
In evaluating the trial court’s decision to enter summary
judgment, we focus on the legal standard articulated in the
summary judgment rule. The rule states that where there is no
genuine issue of material fact and the moving party is entitled to
relief as a matter of law, summary judgment may be entered.
Where the non-moving party bears the burden of proof on an
issue, he may not merely rely on his pleadings or answers in order
to survive summary judgment. Failure of a non-moving party to
adduce sufficient evidence on an issue essential to his case and
on which it bears the burden of proof . . . establishes the
entitlement of the moving party to judgment as a matter of law.
Lastly, we will 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.
Murphy v. Duquesne University of the Holy Ghost, 777 A.2d 418, 429
(Pa. 2001) (citations and quotations omitted).
The non-moving party cannot allege the existence of a genuine issue of
material fact when the issue alleged was generally denied in the pleading, as
“general denials constitute admissions where . . . specific denials are
required.” See Bank of America, N.A. v. Gibson, 102 A.3d 462, 466–67
(Pa. Super. 2014); see also Bayview Loan Servicing LLC v. Wicker, 163
A.3d 1039, 1044 (Pa. Super. 2017) (finding partial summary judgment
appropriate where answer contained general denial relating to mortgage
default, constituting admission); accord Pa.R.C.P. 1029(b) (“[A]verments in
a pleading to which a responsive pleading is required are admitted when not
denied specifically or by necessary implication. A general denial or a demand
for proof . . . shall have the effect of an admission.”).
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To determine whether a denial has been made with sufficient specificity,
we review the responsive pleading as a whole. Cercone v. Cercone, 386
A.2d 1, at 6 (Pa. Super. 1978). This Court views denials as insufficient where
that denial fails to inform the trial court or the opposing party of the grounds
forming the basis for that denial. Compare Swift v. Milner, 538 A.2d 28,
30 (Pa. Super. 1988) (stating “Denied” to salient averments constituted
general denial manifesting admission, warranting judgment on pleadings) and
Stimely v. Dutchmen Mobile Homes, 361 A.2d 733, 737 (Pa. Super. 1976)
(“Defendant’s broad denial that appellant’s rejection was pursuant to the
Uniform Commercial Code cannot be said to have made Appellant or the lower
court aware that it specifically denied that she had given timely notice of the
rejection.”) (emphasis added) with U.S. Bank, N.A. v. Pautenis, 118 A.3d
386, 395–98 (Pa. Super. 2015) (finding mortgagor did not admit to amount
of indebtedness alleged in complaint when mortgagor presented sufficient
evidence to support a finding that she as unable to ascertain amount owed on
loans).
At summary judgment, “it is [the non-moving party’s] responsibility to
show that a genuine issue of fact exists by affidavit or otherwise.” Johnson
v. Harris, 615 A.2d 771, 775 (Pa. Super. 1992). “Where the non[-]moving
party bears the burden of proof . . . he may not merely rely on his pleadings
or answers in order to survive summary judgment. Failure of a non-moving
party to adduce sufficient evidence on an issue essential to his case and on
which he bears the burden of proof establishes the entitlement of the moving
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party to judgment as a matter of law.” Krauss v. Trane U.S. Inc., 104 A.3d
556, 563 (Pa. Super. 2014).
Our examination of the pleadings in their totality belies the Appellants’
assertion that the trial court erred in finding certain pleadings constituted
admissions. See Bayview Loan Servicing LLC, supra at 1044. The
Appellants’ admitted “Exhibit A” to the Plaintiff’s Complaint8 was a true and
accurate copy of the Letter Agreement, and that the Letter Agreement spoke
for itself. See Answer with New Matter, 9/6/17, at 1. In paragraph 8 of
Kennedy’s complaint, he stated “[p]ursuant to the Letter agreement, Kennedy
executed a Guaranty and Suretyship Agreement in January 2015 in favor of
ACNB,” Complaint, 8/17/17, at 2, to which the Appellants replied, “Admit.[9]”
Answer with New Matter, 9/6/17, at 2. Paragraph 36 of the complaint states,
“[a]s set forth in the Guaranty, in the event McClarin Defaults, Kennedy is
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8 Exhibit A to the Complaint, which was signed by both Kennedy and Stein,
states the guaranty was to be removed no more than “6 months from the date
of execution.” Letter Agreement, at 1–3. Moreover, the Letter Agreement
states Kennedy would be paid $50,000 at the earliest occurring of the three
following circumstances: 1) “June 15, 015 [sic] [;]” 2) “a refinance of the
underlying loan[;]” or 3) “when the Todd Guaranty is removed.” Letter
Agreement, at 1.
9 The Appellants argued in their motion opposing partial summary judgment
that the admission to paragraph 8 did not constitute an admission of
Kennedy’s complete performance under the Letter Agreement; they, however,
failed to provide any additional facts that would support that assertion. See
Defendants’ Response in Opposition to Plaintiff’s Motion for Partial Summary
Judgment, at 4; see also Johnson, supra at 775 (“it is [the non-moving
party’s] responsibility to show that a genuine issue of fact exists by affidavit
or otherwise.”).
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personally obligated to guaranty payment and performance of a $3,750,000
obligation of McClarin[,]” Complaint, 8/17/17, at 6, to which the Appellants
replied, “[t]he Kennedy Guaranty speaks for itself and any characterization
thereof by [Kennedy] is denied.” Answer with New Matter, 9/6/17, at 5. The
above-mentioned pleadings in Appellants’ answer constitute either an outright
admission or a general denial failing to inform Kennedy or the court as to the
nature of the Appellants’ disagreements with Kennedy’s averments, fatally
frustrating the second aspect of the Appellants’ argument. See Swift, supra
at 30; see also Stimely, supra at 737.
Finding the trial court properly assessed the averments above to be
either general denials or outright admissions, we turn to the court’s
interpretation of the Letter Agreement. The court made the following findings
in determining there were no material facts at issue regarding the letter
agreement: 1) the terms of the Letter Agreement were clear, including the
provision that Kennedy would be released as a guarantor; 2) the Appellants
admitted Kennedy fulfilled his obligations under the Letter agreement; and 3)
the Appellants admitted Kennedy would be responsible for the entirety of
McClarin’s $3,750,000 obligation in the event McLarin defaulted on the loan.
See Order Granting Plaintiff’s Motion for Partial Summary Judgment, 5/17/18,
at 14–18.
The Appellants initially asserted the Letter Agreement spoke for itself.
See Answer with New Matter, at 1 (“The Letter Agreement speaks for
itself[.]”). Kennedy, in support of partial summary judgment, stated “[t]he
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terms of the Letter Agreement are straightforward and unambiguous.”). Brief
in Support of Partial Summary Judgment, at 5. The Appellants never refuted
that assertion, instead focusing their brief in opposition to partial summary
judgment exclusively on whether denials had been made with sufficient
specificity, neglecting to assert that ambiguities in the Letter Agreement
raised a material question of fact. See Brief in Opposition to Plaintiff’s Motion
for Partial Summary Judgment, at 5–10. Consequently, we find the material
facts of this matter were not in dispute as a result of the Appellants’ failure to
specifically deny the veracity of material facts averred in Kennedy’s complaint,
and because the Appellants lack any support, via affidavit or otherwise, to
lend credence to the argument that there was an issue of material fact.10 See
Bayview Loan Servicing LLC, supra at 1044 (regarding general denials);
Johnson, supra at 775 (“[I]t is [the non-moving party’s] responsibility to
show that a genuine issue of fact exists by affidavit or otherwise.”).
Order affirmed.
Judge Dubow joins this Memorandum.
Judge Nichols notes her dissent.
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10Beyond alleging ambiguities in the Letter Agreement, the Appellants have
not disputed any facts material to claims for specific performance or
mandatory permanent injunctions. See Brief of Appellant, at 20–26. We
decline to search for any such factual disputes. Bombar v. West American
Ins. Co., 932 A.2d 78, 93 (Pa. Super. 2007) (“This Court will not act as
counsel and will not develop arguments on behalf of an appellant.”).
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/9/2019
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