Cornell Ardmore v. Isen, L. ( 2022 )

J-A04018-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CORNELL ARDMORE, LP : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
LORNA ISEN :
_____________________________ :
LORNA ISEN : No. 1257 EDA 2021
:
:
v. :
:
:
CORNELL ARDMORE, LP, CORNELL :
ARDMORE, TH, LLC, CORNELL :
HOMES, LLC, AND THE RYLAND :
GROUP, INC. :
:
:
APPEAL OF: CALATLANTIC GROUP, :
INC., SUCCESSOR BY MERGER TO :
THE RYLAND GROUP, INC. AND THE
RYLAND GROUP, INC.
Appeal from the Judgment Entered March 23, 2021
In the Court of Common Pleas of Montgomery County Civil Division at
No(s): 2015-11943,
2015-15607
BEFORE: LAZARUS, J., NICHOLS, J., and McLAUGHLIN, J.
MEMORANDUM BY NICHOLS, J.: FILED MAY 12, 2022
Appellant Calatlantic Group, Inc., successor by merger to the Ryland
Group, Inc., appeals from the judgment entered in favor of Appellee Lorna
Isen following a bifurcated trial in these consolidated actions. Appellant
contends that the trial court erred in holding that Appellant had explicitly or
J-A04018-22
implicitly assumed the liabilities of co-defendants Cornell Ardmore, LP, Cornell
Ardmore, TH, LLC, and Cornell Homes, LLC. We affirm.
The trial court summarized the relevant factual and procedural history
of this matter as follows:
A. Evidentiary Facts
1. [Appellee’s] purchase and the defects in her home
The case arises from the sale of a home by defendant Cornell
Ardmore, LP (Cornell Ardmore), to [Appellee] in a development
known as Waterford Walk, located in the Ardmore section of Lower
Merion Township, Montgomery County. Cornell Ardmore is a
limited partnership whose sole general partner is defendant
Cornell Ardmore, TH, LLC. That general partner is in turn owned
by Cornell Homes of Delaware, LLC [(Cornell Delaware)], an
umbrella for various residential developments marketed under the
Cornell Homes name. [Cornell Delaware], was not named as a
party in this litigation. The construction of the homes in Waterford
Walk, as in many other Cornell Homes developments, was done
by defendant Cornell Homes, LLC, a construction general
contractor, primarily through subcontractors. Cornell Homes,
LLC, is itself owned by [Cornell Delaware].
The evidence[fn4] showed that [Appellee] signed a purchase
agreement with Cornell Ardmore on June 24, 2013, for the
purchase of a unit at Waterford Walk. . . .
The evidence is summarized in a light most favorable to
[fn4]
[Appellee], as the verdict winner.
In connection with the purchase, [Appellee] received a written
Cornell Homes Premier Protection Plan. The Plan set forth in detail
the warranties provided by the “Builder” for one, two, or ten years,
depending on the component at issue.
Closing on the purchase occurred in November 2013, subject to a
punch list and an escrow to cover uncompleted work. [Appellee]
finally moved into the home in early January 2014 and
immediately experienced repeated floods at the property. . . .
Despite repairs by Cornell Homes, LLC, [Appellee] continued to
experience floods and water leaks, including flooding of the
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backyard deck, totaling ten such incidents between January 2014
and February 2017. [Appellee] encountered other issues,
including blown fuses, electrical vibration when she inserted plugs
into sockets, sharp edges on tiles, and uneven and insufficient
heat in parts of the house. . . .
* * *
[Appellee] finally moved out of her home in February 2017, feeling
that it was unsafe to remain in the home as a result of repeated
flooding, missing parts of floors, the absence of heat in parts of
the house, and electrical issues. . . .
2. The Purchase Agreement and the Services Agreement
between [Appellant] and [Cornell Delaware]
On May 23, 2013, prior to [Appellee’s] purchase agreement,
[Cornell Delaware], entered into a separate purchase agreement
with [Appellant], under which [Appellant] agreed to purchase the
assets of several Cornell developments, including Waterford Walk,
as well as rights to the name “Cornell Homes.” On July 15, 2013,
[Appellant] and [Cornell Delaware], entered into amendment no.
8 to purchase agreement. Among other changes, amendment no.
8 amended the purchase agreement by excluding Waterford Walk
from the assets to be purchased by [Appellant]. The document
recited that the development was being excluded because Ryland,
as a result of its due diligence inspections, had determined that
“certain environmental and/or other concerns” may exist on the
Waterford Walk property.
Although Waterford Walk was thereby excluded from the acquired
assets, [Appellant] and [Cornell Delaware], entered into a
separate services agreement regarding Waterford Walk and other
excluded assets on or about July 18, 2013, the same date as the
closing on the purchase by [Appellant]. The services agreement
provided that in consideration for the assets that [Appellant] was
acquiring, [Appellant] agreed to provide services “in connection
with the assets that were not acquired and the ongoing operation
associated with these assets.” Accordingly, [Appellant] agreed to
provide, through July 31, 2014, “certain accounting, customer
service and other operational and supervisory services utilizing
[Appellant] employees.” The services agreement went on to
establish certain limitations on [Appellant’s] obligations under the
agreement. The services agreement was extended by agreement
through November 30, 2014.[fn6]
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[fn6]The services agreement dated July 18, 2013, was not
marked as an exhibit at trial. Instead, a services agreement
dated July 28, 2014, was admitted [at trial] as Exhibit P-25.
In testimony at trial, [Mark McSorley, one of Appellant’s
representatives] confirmed that “this particular document is
an amendment to a similar agreement that was executed on
or around July 18, 2013,” and that “even though this
document is dated July 28, 2014, the reality is it’s a
continuation of what really began to happen on July 18,
2013 going forward in time.” There was no objection to this
oral testimony of the content of the prior agreement.
Pursuant to the purchase agreement, Gregory Lingo, one of the
three members of [Cornell Delaware], became President of the
Philadelphia Division of [Appellant] (one of many divisions in the
corporation), and Mark McSorley, another of the three members,
became Vice President of Finance of the Philadelphia Division [of
Appellant]. At trial, Mr. McSorley explained the purpose of the
services agreement as follows:
So when [Appellant] purchased the assets of [Cornell
Delaware], some of the assets, they realized that they were
buying the majority assets but not all the assets. And so
they recognized that these other assets that weren’t being
purchased were going to need manpower to complete the
homes. And even in some cases a home that was
constructed and closed by Cornell, a month before that may
have a service issue and they didn’t want us to need to go
and hire temporary service people in these different
locations and be distracted by those activities. So we
entered into a services agreement, which allowed
employees that became [Appellant] employees to still
represent themselves and represent Cornell Homes as
Cornell Homes employees.
[Mr. McSorley further testified that prior to the purchase
agreement between Cornell Delaware and Appellant, employees
of Cornell Homes, LLC performed work on Waterford Walk
pursuant to a service agreement between Cornell Homes, LLC and
Cornell Ardmore. He explained that while Cornell Ardmore owned
the land on which Waterford Walk was being built, it did not have
any employees. Mr. McSorley described Cornell Homes, LLC as
the builder of Waterford Walk. He also explained that although
Cornell Homes, LLC, was not named in the services agreement, it
was included in that agreement because Cornell Delaware owns
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Cornell Homes, LLC. Additionally, Mr. McSorley testified that
Appellant entered into a licensing agreement with Cornell
Delaware, which allowed Appellant to use the Cornell Homes
brand name and logo. A copy of this licensing agreement was
admitted into evidence.]
Prior to [Appellant’s] purchase, the construction of Waterford Walk
was overseen by two employees of Cornell Homes, LLC — James
Kildea, the project manager, and Matthew Egan, Mr. Kildea’s
supervisor. After the purchase, they became employees of
[Appellant] but continued to manage Waterford Walk, apparently
pursuant to the services agreement. Mr. Egan is listed on the
services agreement as a[n employee of Appellant] who would
provide services [to Waterford Walk] under the agreement. Mr.
Kildea is not so listed, but he continued to oversee the
construction work on [Appellee’s] home both before and after she
acquired title on November 15, 2013. Mr. Kildea was confused
over whether his continued work on Waterford Walk was in his
capacity as an employee of [Appellant] or of a Cornell entity, and
he remained uncertain at the time of trial. In any event, in his
work on completion of Waterford Walk, he was paid by
[Appellant].
On July 23, 2013, ten days after the closing on [Appellant’s]
purchase, [Appellee] received an email from Ms. Zefferino,
reading as follows:
Hi All,
I just wanted to be one of the first to let you know about a
recent event that just occurred in our Custom Homes family!
On Friday, July 19th it was announced that [Appellant]
acquired the assets and operations of Cornell Homes. (I’ve
attached the link to the Wall Street Journal article below). I
wanted to assure all of you that it will be “business as usual”
here at Waterford Walk and this acquisition does not change
anything to do with the personnel, construction, and quality
of your home. This influx of capital into the already
successful Cornell Homes company will provide endless
opportunities in land acquisition and allow our company to
grow.
* * *
All of us here at Cornell will continue to work diligently to
complete your beautiful new homes at Waterford Walk! . . .
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Rose Zefferino
General Manger
Cornell Custom . . .
At the time that she received this email, [Appellee] did not have
a deposit at risk, so she could have canceled the agreement of
sale without penalty. She did not do so, in part because she was
reassured by Ms. Zefferino’s email that the construction of her
home was now being backed by [Appellant], a well-capitalized
publicly held company with a good reputation.
Following the services agreement, in the course of sending emails
to [Appellee], Mr. Kildea and Mr. Egan sometimes used an email
address with the domain of “ryland.com” and a signature block
reading “Cornell Homes by Ryland Homes.”
B. Procedural History
On March 29, 2015, Cornell Ardmore commenced this action
against [Appellee], docketed at No. 2015-11943, seeking to
recover the funds escrowed at the closing on her home. On July
8, 2015, [Appellee] commenced a separate action against Cornell
Ardmore, Cornell Ardmore TH, LLC (the general partner of Cornell
Ardmore), and Cornell Homes, LLC (collectively, “the Cornell
Defendants”), and [Appellant], docketed at No. 2015-15607. Her
First Amended Complaint, filed August 24, 2015, asserted six
counts — Count I, for breach of contract; Count II, for breach of
express written warranty; Count III, for breach of implied
warranties; Count IV, far violation of the Interstate Land Sales Pull
Disclosure Act; Count V, for violation of the Uniform Planned
Community Act; and Count VI, for violation of the Unfair Trade
Practices and Consumer Protection Law (UTPCPL).
By orders of the Honorable Calvin S. Drayer, Jr., dated March 11,
2016, the two cases were consolidated under No. 2015-11943,
the first-filed case. [Order, 2015-15607, 3/11/16; R.R. at 372a.1]
____________________________________________
1We may cite to the parties’ initial or supplemental reproduced record for the
parties’ convenience. We also cite to the reproduced record when there was
(Footnote Continued Next Page)
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Shortly before trial, Cornell Ardmore withdrew its claim against
[Appellee] in No. 2015-11943.
Prior to trial, it was agreed that trial would be bifurcated, with the
three common-law claims to be tried to a jury and the three
statutory claims to be subsequently tried non[-]jury. Jury trial
was held on February 25 through 28, 2020. At the close of
[Appellee’s] case-in-chief, [Appellant] moved for a compulsory
nonsuit on the issue of its successor liability, arguing that there
was insufficient evidence to submit to the jury the issue of its
liability for breaches by the Cornell Defendants. The court denied
the motion. At the close of all the evidence, [Appellant] renewed
its argument by a motion for directed verdict, which the court also
denied.
After closing arguments, the charge to the jury, and the jury’s
deliberations, the jury returned a verdict that [Appellee] had not
proved a breach of contract but that she had proved a breach of
express and implied warranties by Cornell Homes, LLC, and
[Appellant], but not by Cornell Ardmore. The jury awarded
damages for such breaches in the amount of $165,000.
The non[-]jury phase of trial was held on November 24, 2020.[fn13]
After briefing, the court rendered a decision on January 15, 2021.
The court determined that Cornell Homes, LLC, committed an
unfair or deceptive act or practice pursuant to section 2(4)(xiv) of
the UTPCPL, 73 P.S. § 201-2(4)(xiv) (relating to failure to comply
with a written warranty); that Cornell Homes, LLC, acted
wrongfully but not maliciously, and therefore double, but not
treble, damages would be awarded under section 9.2(a) of the
UTPCPL, 73 P.S. § 201-9.2(a); and that attorney fees and costs
would be awarded in the amount of $120,000 under the UTPCPL.
. . . Consistent[] with the jury’s finding of successor liability
____________________________________________
no dispute as to whether a particular document was part of the certified
record.
However, we note that in the supplemental record, the face sheet for the notes
of testimony from the November 24, 2020 non-jury phase of the trial states
that the non-jury trial was held on February 24, 2020. The notes of testimony
in the certified record have the correct date on the face sheet. Based on our
review of the certified record, we discern no other typographical errors in the
notes of testimony included in the supplemental reproduced record.
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against [Appellant], the court awarded the foregoing relief against
[Appellant] as well as Cornell Homes.
[fn13]The non[-]jury trial was originally scheduled for late
March 2020 but could not be held because of the COVID-19
judicial emergency. The non[-]jury trial was conducted by
videoconference.
Trial Ct. Op., 7/16/21, at 2-9 (some citations and footnotes omitted, and
formatting altered).
Appellant and its co-defendants filed a timely post-trial motion, which
requested judgment notwithstanding the verdict (JNOV) and a new trial. R.R.
at 998a-1066a. The trial court denied the post-trial motion on March 22,
2021. Judgment was entered in favor of Appellee the following day.
Appellant filed a timely notice of appeal2 and a court-ordered Pa.R.A.P.
1925(b) statement.3 The trial court issued a Rule 1925(a) opinion addressing
Appellant’s claims.
On appeal, Appellant raises one issue for our review:
Whether the trial court erred in refusing to grant [Appellant’s]
motion for directed verdict/judgment notwithstanding the verdict
____________________________________________
2As stated above, this matter began as two separate cases, but the trial court
consolidated both cases under docket number 2015-11943. See R.R. at 372a.
Therefore, Appellant’s filing of a single notice of appeal does not run afoul of
Commonwealth v. Walker, 185 A.3d 969 (Pa. 2018) or Pa.R.A.P. 341. See
Always Busy Consulting, LLC v. Babford & Co., 247 A.3d 1033, 1043-44
(Pa. 2021).
3 In its Rule 1925(b) statement, Appellant raised multiple issues that it does
not include in its brief. Therefore, we conclude that Appellant has abandoned
those issues on appeal. See Allied Envtl. Serv., Inc. v. Roth, 222 A.3d
422, 424 n.1 (Pa. Super. 2019) (stating that “[a]n issue identified on appeal
but not developed in the appellant’s brief is abandoned and, therefore,
waived” (citation omitted)).
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and in issuing its decision against [Appellant] on the issue of
successor liability where there was no legal or factual basis to find
that [Appellant] was a successor to Cornell Homes, LLC because,
inter alia (A) [Appellant] did not implicitly or expressly assume
any liability of Cornell Homes, LLC; (B) pursuant to a purchase
agreement between [Appellant] and nonparty [Cornell Delaware],
[Appellant] acquired some but not all of the assets of nonparty
[Cornell Delaware] only and none of the assets or liabilities of
Cornell Homes, LLC; and (C) the purchase agreement expressly
excluded as an acquired asset the Waterford Walk development
and [Appellant’s] liability relating thereto?
Appellant’s Brief at 6 (formatting altered).
The crux of Appellant’s claim is that the trial court erred in concluding
that Appellant was a successor in liability to Cornell Homes, LLC. Id. at 23-
33. Appellant notes that, in general, when one company purchases the assets
of another, the purchaser is not liable for the debts or liabilities of the seller.
Id. at 23. Appellant acknowledges that there is an exception to this rule when
the purchaser implicitly assumes the obligations of the seller. However,
Appellant claims that the exception is inapplicable here, as Appellant
purchased assets from Cornell Delaware, which is a separate entity from co-
defendant Cornell Homes, LLC and is not a party to this action. Id. at 23-25.
Appellant further argues that even if the exception for implicit
assumption of liabilities applied, the trial court erred in applying Bird Hill
Farms, Inc. v. U.S. Cargo & Courier Serv., Inc., 845 A.2d 900 (Pa. Super.
2004) (Bird Hill) to the facts of this case. Id. at 26.
Appellant asserts that “[t]here is no evidence to support a finding that
[Appellant] expressly assumed Cornell Homes, LLC’s obligations.” Id. at 25.
Appellant notes that the purchase agreement between Appellant and Cornell
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Delaware, as amended, stated that Appellant was not assuming any liabilities
for Waterford Walk. Id. at 28.
Appellant further contends that none of the three Bird Hill factors have
been established in this case. Id. at 28-32; see also Bird Hill, 845 A.2d at
905 (stating that relevant factors include “[(1)] whether the successor’s
conduct indicated its intention to assume the debt; [(2)] whether the creditor
relied on the conduct and the effect of any reliance; and [(3)] whether the
successor’s representatives admitted liability”).
First, Appellant asserts that it did not assume the operations of Cornell
Homes, LLC when it entered into the services agreement with Cornell
Delaware. Id. at 29. Second, Appellant contends that there is no evidence
that Appellee relied on Appellant’s purported assumption of Cornell Homes’
operations. Id. at 30-31. Third, Appellant claims that it has not admitted
liability. Id. at 31-32. Therefore, Appellant concludes that the trial court
erred in its application of Bird Hill to the facts of this case.
When reviewing an order resolving a post-trial motion for JNOV, our
standard of review is as follows:
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 all 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
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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 [trial court] 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.
Wag-Myr Woodlands Homeowners Ass’n v. Guiswite, 197 A.3d 1243,
1252 (Pa. Super. 2018) (Wag-Myr Woodlands) (citation omitted).
Our Supreme Court has explained that JNOV
should only be entered in a clear case with any doubts resolved in
favor of the verdict winner. An appellate court “stands on a
different plane” than a trial court, and it is the trial court that has
the benefit of an “on-the-scene evaluation of the evidence.” As
such, while the appellate court may disagree with a verdict, it may
not grant a motion for JNOV simply because it would have come
to a different conclusion. Indeed, the verdict must stand unless
there is no legal basis for it.
Menkowitz v. Peerless Publications, Inc., 211 A.3d 797, 804 (Pa. 2019)
(citations omitted).
The following standard of review applies to our review of the trial court’s
denial of a motion for a new trial:
We will reverse a trial court’s decision to deny a motion for a new
trial only if the trial court abused its discretion. 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.
Carlini v. Glenn O. Hawbaker, Inc., 219 A.3d 629, 643 (Pa. Super. 2019)
(citation omitted). Further, this Court may affirm the decision of the trial court
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on any valid grounds. See generally Liberty Mut. Ins. Co. v. Domtar
Paper Co., 77 A.3d 1282, 1286 (Pa. Super. 2013) (stating that “an appellate
court may affirm a trial court’s decision on any grounds supported by the
record on appeal” (citation omitted)).
Under Pennsylvania jurisprudence, a successor company is not
responsible for its predecessor’s liabilities unless one of the
following conditions is established: (1) the successor company
expressly or impliedly agreed to assume the obligations; (2) the
transaction was a consolidation or merger; (3) the successor
company merely was a continuation of the selling corporation; (4)
the transaction was a fraudulent attempt to escape liability; or (5)
the transfer lacked adequate consideration and no provisions were
made for creditors of the predecessor.
Bird Hill, 845 A.2d at 905 (citations omitted and emphasis in original).
“Whether an entity implicitly assumed the obligations and liabilities of another
entity is a question of law, albeit one that is dependent on the facts relating
to [the successor’s] conduct.” Id. at 903.
In Bird Hill, Courier Unlimited, Inc. (Courier) leased commercial
property from the plaintiff, Bird Hill Farms. Id. at 902. Courier then entered
into an asset purchase agreement with the defendant, U.S. Cargo. Id.Courier began negotiating to assign its lease with Bird Hill Farms to the
defendant. Id. While those negotiations were pending, the defendant
conducted business operations in the leased property and paid rent to Bird Hill
Farms. Id. However, Bird Hill Farms never assigned the lease from Courier
to the defendant. Id. Eventually, the defendant vacated the property without
notice. Id. When Bird Hill Farms sued the defendant for violating the lease,
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the trial court concluded that the defendant had implicitly assumed Courier’s
lease under the principles of corporate successor liability. Id.The Bird Hill Court explained:
Our review of the case law has not identified an authoritative case
addressing an implicit assumption, and other jurisdictions
confronting this issue have reached different results.
In determining whether a successor corporation implicitly
assumed an obligation of its predecessor, the following factors are
relevant: [(1)] whether the successor’s conduct indicated its
intention to assume the debt; [(2)] whether the creditor relied on
the conduct and the effect of any reliance; and [(3)] whether the
successor’s representatives admitted liability.
The trial court applied similar factors to the case sub judice and
summarized its determination as follows:
This court finds that because [the defendant] occupied the
premises, paid rent directly to the landlord and paid the
utilities in its own name, maintained the property, and
conducted business from the site for eleven months, [it]
assumed Courier’s lease with Bird Hill farms and is bound
by the consequences of its breach of the lease obligations.
The trial court reasoned that under these facts, [the defendant]
was a successor-in-interest to the lease.
Mindful of the above-noted factors and in light of the trial court’s
express rationale, we affirm the trial court’s conclusion. [The
defendant’s] conduct toward [the plaintiff] and the leased
premises indicated an intent to assume the lease. [The plaintiff]
relied on [the defendant’s] actions and suffered damages when
[the defendant] abandoned the building without notice. Hence,
despite [the defendant’s] assertion to the contrary, it impliedly
assumed Courier’s obligation under the lease.
Id. at 905-06 (citations omitted). The Bird Hill Court did not explicitly
address the third factor concerning whether the defendant’s representatives
had admitted liability. Id.- 13 -
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Here, Appellee entered into an agreement with Cornell Ardmore to
purchase a townhome that was to be built as part of the Waterford Walk
development. See S.R.R. at 21b, 138b-39b. Prior to Appellant’s purchase
agreement with Cornell Delaware, Cornell Homes, LLC was the builder for
Waterford Walk. Cornell Homes, LLC provided employees to work on the
development via a service agreement with Cornell Ardmore, which owned the
real property. See id. at 118b-20b, 133b, 138b, 167b, 1246b. After
Appellant purchased many of Cornell Delaware’s assets, Appellant entered into
a services agreement with Cornell Delaware. See id. at 110b-12b; 1140b-
41b. The services agreement provided that Appellant’s employees would
render services at Cornell developments that were not covered by the
purchase agreement, which included Waterford Walk. See id. at 110b-12b,
528b.
At trial, Mr. McSorley explained that although Appellant entered into a
service agreement with Cornell Delaware, which was not a party to the action,
Cornell Homes, LLC was covered by the agreement because Cornell Delaware
owns Cornell Homes, LLC. See id. at 143b-44b. Further, the agreement
permitted Appellant’s employees to represent themselves as Cornell Homes,
LLC employees. See id. at 110b-11b, 113b, 426b-27b, 976b; see also id.at 541b-44b (reflecting that Appellant licensed the brand name “Cornell
Homes” from Cornell Delaware). Matt Egan and John Kildea were employees
of Cornell Homes, LLC who became Appellant’s employees. See id. at 751b-
52b, 1141b. Both were responsible for completing the work at Waterford Walk
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in their capacity as Appellant’s employees. See id. at 149b, 425b-27b, 531b-
34b, 759b-60b, 796b-97b, 1141b.
Ultimately, the trial court concluded that there was sufficient evidence
to conclude that Appellant implicitly assumed the liabilities of the Cornell
entities. In reaching this conclusion, the trial court considered the actions of
Appellant’s employees and Appellee’s testimony at trial.
Specifically, the trial court explained:
The reasoning of Bird Hill applies to the present case. The
evidence supports the inference that although [Appellant] did not
acquire Waterford Walk, it still assumed responsibility for the
operations of the Waterford Walk development, including the
completion of construction. [Appellant] entered into the services
agreement to operate the Waterford Walk development,
essentially taking over the relevant Cornell companies’
obligations, even while avoiding ownership of a property that
raised concerns of environmental or related liability. [Appellant]
did so in consideration for its acquisition of other Cornell
developments and in order to preserve and control the value of
the “Cornell Homes” name that it had purchased. Pursuant to the
services agreement, [Appellant’s] employees oversaw the ongoing
construction of [Appellee’s] home and the responses to
[Appellee’s] complaints of defects in the home. [Appellant] did so
through James Kildea and Matthew Egan, formerly employed by
Cornell Homes, LLC. Further, [Appellee] proceeded with the
transaction in reliance on the understanding, as conveyed by Ms.
Zefferino, that the home construction was now backed by
[Appellant], a large, reputable company. This understanding was
reinforced by repeated conflation of the Cornell and [Appellant]
names in email communications from Waterford Walk
representatives.
These facts, based on the evidence at trial, were sufficient to
support the jury’s finding that [Appellant] implicitly assumed the
obligations of the Cornell Defendants to [Appellee], pursuant to
the holding in Bird Hill. As in Bird Hill, the asset purchaser could
not rely on non-assumption language in the purchase agreement
when its own conduct after the purchase showed that it was
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assuming the obligations of the seller. Just as [the defendant in
Bird Hill] enjoyed the benefits of Courier’s lease by continuing to
occupy the premises, so did [Appellant] benefit from its
completion of Waterford Walk operations by the protection of its
investment in the “Cornell Homes” name and goodwill that it had
purchased and by its acquisition of the employees charged with
operating that development.
It is true that the purchase agreement between [Appellant] and
[Cornell Delaware], dated May 23, 2013, provided that [Appellant]
was assuming only specified “Assumed Liabilities” and was not
assuming “any Liability arising from the Excluded Assets” and that
the subsequent amendment no. 8, dated July 15, 2013, added
Waterford Walk to the list of excluded assets. But the original
services agreement, under which [Appellant] assumed
responsibility for the operation of Waterford Walk, was dated three
days later, July 18, 2013, so to the extent that it is in conflict with
amendment no. 8, the later document would govern. In any
event, Bird Hill makes clear that the purchaser’s conduct after
the purchase can result in an implied assumption of liability, even
if the purchase agreement contains language disclaiming any such
assumption. Finally, the jury could find from the evidence that
[Appellant’s] exclusion of Waterford Walk from the purchased
assets, in order to avoid liability for “environmental and/or other
concerns”, while still assuming responsibility for the operation of
the development, was a contractual sleight-of-hand that obscured
the reality of the allocation of responsibility between the parties
to the purchase.
This analysis does not address which [of the] Cornell companies’
obligations were impliedly assumed by [Appellant], but a
concession made by defense counsel at trial makes such an
analysis unnecessary. Prior to the jury trial, pursuant to direction
of the court to agree upon the points for charge to the jury, the
parties filed Proposed Joint Points for Charge (Seq. 208). During
the charge conference near the end of the jury trial, the court
noted that the joint proposal repeatedly used the term “Cornell
Defendants,” without distinguishing between Cornell Ardmore and
Cornell Homes, LLC (or, indeed, any other Cornell entities). The
court specifically inquired whether defense counsel wanted the
court to distinguish between the two Cornell Defendants in the
charge to the jury, and defense counsel expressly stated that it
was not necessary to do so.
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Accordingly, the court substantially adopted the agreed points for
charge and did not distinguish between the “Cornell Defendants”
in charging the jury. By returning a verdict for breach of
warranties against Cornell Homes, LLC, and [Appellant], the jury
necessarily found that [Appellant] was liable as successor to
Cornell Homes, LLC. In view of the position it took at trial,
[Appellant] cannot now argue that the jury found (or was
permitted to find) that [Appellant] was successor to the “wrong”
Cornell entity.
In short, under Bird Hill, the evidence was sufficient to submit to
the jury the issue of [Appellant’s] successor liability and to support
the jury’s verdict against [Appellant] for the liability of Cornell
Homes, LLC.
* * *
There is no dispute that [Appellant] itself never gave any
warranties, express or otherwise, directly to [Appellee]. There is
also no dispute that Cornell Homes, LLC, did issue express
warranties to [Appellee]. Further, as a home builder, Cornell
Homes, LLC, gave [Appellee] an implied warranty of reasonable
workmanship — i.e., that the home is constructed in a reasonably
workmanlike manner and that it is fit for its intended purpose.
See Elderkin v. Gaster, 288 A.2d 771, 777 (Pa. 1972). Finally,
there was ample evidence, discussed above, to support the jury’s
finding that these warranties were breached.
Although [Appellant] itself did not make these express and implied
warranties, the jury found (and the [c]ourt agreed) that
[Appellant] assumed the liability of Cornell Homes, LLC, for breach
of warranty under the Bird Hill standard.
Trial Ct. Op. at 11-16 (some citations and footnotes omitted).
Based on our review of the record, we agree with the trial court that
Appellant’s conduct indicated its intent to assume the liabilities of Cornell
Homes, LLC. See Bird Hill, 845 A.2d at 905. Appellant entered into a
services agreement to provide employees to oversee the completion of
Waterford Walk, including Appellee’s home, an obligation imposed on Cornell
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Homes, LLC pursuant to its own services agreement with Cornell Ardmore.
Therefore, the trial court correctly concluded that the first Bird Hill factor
weighed against Appellant.4
The record also reflects that Appellee relied on Appellant’s conduct when
she proceeded with the purchase of her home. As noted by the trial court,
Appellee testified that after receiving the July 19, 2013 announcement that
Appellant had acquired Cornell Homes, she believed that Appellant would
finish building her home. See S.R.R. at 239b. Appellee further stated that
although she had some problems with Cornell Homes, she chose to move
forward with the purchase of her home because Appellant, “a reputable public
company[,] was now behind” the construction of Waterford Walk. See id. at
240b-41b. Although Appellant claims that Appellee’s testimony was not
credible, this Court may not substitute our judgment for that of the finder of
fact. See Wag-Myr Woodlands, 197 A.3d at 1252. Therefore, we agree
with the trial court that the second Bird Hill factor weighs against Appellant.
See Bird Hill, 845 A.2d at 905.
Finally, we note that the trial court did not address the third Bird Hill
factor concerning whether Appellant’s representatives admitted liability.
____________________________________________
4 However, we disagree with the trial court’s conclusion that Appellant waived
its claim as to which of Cornell company’s obligations Appellant had implicitly
assumed. Nevertheless, for the reasons stated above, we conclude that the
evidence, viewed in the light most favorable to Appellee as the verdict winner,
established that Appellant intended to assume the obligations of Cornell
Homes, LLC. See Liberty Mut., 77 A.3d at 1286 (stating that this Court may
affirm on any valid basis supported by the record).
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However, Bird Hill did not require all three factors to be present in order to
find successor liability, nor did it address how much weight had to be afforded
to each factor. See id. at 905-06. Indeed, the Bird Hill Court did not discuss
the third factor at all when it found that the defendant had assumed the lease
of its predecessor. See id. at 906. Therefore, although Appellant claims that
the third factor weighs in its favor, it is not entitled to relief.
For these reasons, notwithstanding any disclaimer of liability in the
agreements between Appellant and Cornell Delaware, we conclude that
Appellant implicitly assumed the liabilities of Cornell Homes, LLC with respect
to Appellee. See id. at 905-06. Therefore, we affirm the trial court’s denial
of Appellant’s motion for JNOV and its motion for a new trial. See
Menkowitz, 211 A.3d at 804; Carlini, 219 A.3d at 643; Wag-Myr
Woodlands, 197 A.3d at 1252. Accordingly, we affirm the trial court’s
judgment in favor of Appellee.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/12/2022
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