Klein, J. v. Gladstone, K. ( 2020 )

J-A18028-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
JENS KLEIN : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
KATHERINE GLADSTONE : No. 1808 WDA 2018
Appeal from the Order Entered November 27, 2018
In the Court of Common Pleas of Allegheny County Family Court at
No(s): FD 15-008881
BEFORE: BOWES, J., NICHOLS, J., and MUSMANNO, J.
MEMORANDUM BY NICHOLS, J.: FILED JANUARY 07, 2020
Jens Klein (Husband) appeals from the order granting the petition filed
by Katherine Gladstone (Wife) to enforce a separation agreement between the
parties. Husband argues that the trial court erred by concluding that Wife was
entitled to a lump sum payment of $25,000. He asserts that the agreement
pertaining to the lump sum payment was ambiguous. Husband further claims
that he satisfied his obligations under the agreement by making other
payments to Wife. Finally, he argues that Wife fraudulently induced him to
enter the agreement. We affirm.
The trial court summarized the facts and procedural history of this
matter as follows:
The parties married in 2008 and separated in 2013. They are the
parents of one daughter (Child). At separation, the parties
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entered into a July 19, 2013 agreement[1] which resolved some of
their economic claims. The provision at issue required Husband
to pay $25,000 to Wife in two lump sums—$12,500 prior to Wife’s
August 2013 move to New York City with Child and the remainder
“shortly thereafter.” The parties’ agreement also provided that
Husband was to pay a trial amount of $1,250 per month in child
support until January of 2014, when support could be revisited
and likely increased.
Wife filed a petition to enforce the agreement and, on November
15, 2017, [the trial court] appointed the Special Master to hear
Wife’s claim. Wife alleged Husband never paid her the $25,000.
The Master heard the case on February 5, 2018, with the parties
as the only witnesses. At [the hearing before the Master],
Husband raised two defenses, the first and foremost being his
allegation that the agreement was invalid due to fraud in the
inducement. Husband claimed that Wife concealed her romantic
involvement with another woman with whom she eventually
cohabited in New York. He claimed he never would have signed
the agreement had he known of Wife’s relationship and that, upon
learning of the relationship, he unilaterally rescinded the
agreement.
The only other defense Husband raised to Wife’s enforcement
action was that he actually had complied with the agreement,
making payments to Wife over and beyond the agreement’s
contemplated $1,250 monthly child support payments. Husband
submitted his bank statements as evidence of these payments. At
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1 The agreement provided, among other things, the following: (1) Wife and
Husband would move to New York City “separately but together;” (2) Wife
and Child “can live in an apartment that [Wife] has found and will sublease,
and [Child] will attend one of the very good public schools in that area;” (3)
Husband will pay child support in the amount of $1,250 per month; and (4)
“a separate lump sum of $25,000 will be provided to [Wife] over the course
of the next several months, $12,500 of this will be provided before the move
in August 2013; the rest will be paid shortly thereafter, as per a separate
written agreement.” See Agreement, 7/9/2013. Further, the agreement
provided that “[t]his is by no means a comprehensive list. There are still
many outstanding issues including, but not limited to, company assets, etc.
We will resolve those in the near future in a separate written agreement but
for now we agree to the terms above . . . .” Id.
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trial, Husband’s testimony was equivocal. When questioned,
Husband claimed the payments were for both child support and
toward the $25,000 but when asked if this represented an
acknowledgement of his obligation to pay the $25,000, he
demurred and asserted the payments were “just money I’m
sending to my daughter.” No evidence was entered that Husband
made either lump sum $12,500 payment.
The Master found Husband to be in violation of the July 19, 2013
agreement and recommended that he pay Wife the $25,000 owed
within 45 days of a final order. He denied Wife’s claim for child
support as well as her claim for attorney fees, finding that
Husband demonstrated child support payments and noting that
[W]ife did not file a support complaint.[2]
Both parties filed exceptions,[3] which [the trial court] dismissed
on November 27, 2018.[4] Husband filed a motion for
reconsideration and sought to reopen the record, citing criminal
charges of grand larceny Wife currently faces in New York State.
While the averments of Husband’s motion to reconsider, if true,
raise questions regarding Wife’s trustworthiness, they do not alter
[the trial court’s] finding that the parties entered into a valid and
enforceable agreement in July of 2013. [The trial court] denied
the motion on December 20, 2018.
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2In denying Wife’s request for counsel fees, the Master stated that “Husband’s
attempts to invalidate the agreement based upon what he characterizes as
Wife’s surreptitious intentions to enter the agreement [] may be inaccurate,
but do not rise to the level of . . . conduct necessitating an award of . . .
counsel fees.” See Master’s R. & R., 4/24/18, at 3.
3 Husband raised two exceptions to the Master’s report: (1) the Master erred
“in finding that a valid enforceable agreement existed between the parties,”
and (2) the Master erred “in awarding Wife $25,000 within 45 days.”
Husband’s Exceptions to Master’s R. & R., 4/24/18, at 1. In his supporting
brief, Husband argued that Wife fraudulently induced him to enter the
agreement by failing to disclose that she was in a romantic relationship with
a woman.
4 The trial court also adopted the Master’s findings.
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Trial Ct. Op., 2/26/19 at 2-4 (record citations omitted and some formatting
altered).
On December 27, 2018, Husband filed a timely notice of appeal. He
also timely filed a court-ordered Pa.R.A.P. 1925(b) statement.5 The trial court
issued a Rule 1925(a) opinion addressing Husband’s claims.
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5 Husband raised the following issues in his Pa.R.A.P. 1925(b) statement:
1. The trial court erred in finding a valid enforceable agreement
that required Husband to pay Wife $25,000 when the provision in
question states, “that a separate lump sum of $25,000 will be
provided to [Wife] over the course of the next several months.
$12,500 of this will be provided before the move in August 2013;
the rest will be paid thereafter, as per a separate written
agreement” when there was no provision that it was to be
provided in any specific manner or amount and no separate
written agreement for the second $12,500 as introduced or
testified to at trial.
2. The trial court erred in finding a valid enforceable agreement
that required Husband to pay Wife $25,000 when the agreement
states “$25,000 will be provided...” and the term “provided” is
ambiguous.
3. Assuming arguendo that an [a]greement existed, the trial
court erred in finding that Wife was still due monies under the
[a]greement, when Husband demonstrated that he paid Wife, or
Wife took, in excess of $12,500 before and after the date of the
alleged [a]greement.
4. The trial court erred in failing to find that Wife engaged in
Fraud in the Inducement thus invalidating and/or voiding any
alleged [a]greement.
Husband’s Rule 1925(b) Statement, 1/28/19.
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On January 19, 2019, Wife filed a motion to enforce the trial court’s
November 27, 2018 order. On January 22, 2019, Husband filed an application
for stay with this Court. That same day, the trial court entered an order
stating that if this Court denied Husband’s application, then the trial court
would automatically grant Wife’s motion to enforce the agreement. The
following day, we denied Husband’s application. See Order, 1/23/19.
On February 12, 2019, Husband filed a petition for stay with the trial
court. See Husband’s Pet. to Stay, 2/12/19. Husband stated that although
he previously discovered that Wife “made multiple unauthorized transfers and
withdrawals” from the business account, “at that time[,] Husband did not have
actual proof.” Id. at 4-5. Husband attached several exhibits to his petition,
including two withdrawal slips from the business account for $12,500 and
$3,000 that Wife signed on July 11, 2013.6 On February 19, 2019, the trial
court denied Husband’s petition. See Order, 2/19/19.
Husband raises the following issues on appeal:
1. Whether the trial court erred in finding a valid enforceable
agreement that required Husband to pay Wife $25,000 when
the provision in question states, “That a separate lump sum of
$25,000 will be provided to [Wife] over the course of the next
several months. $12,500 of this will be provided before the
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6We note that although these materials appear in the reproduced record, they
were not included in the certified record filed with this Court. Therefore, we
cannot consider them. See Commonwealth v. Preston, 904 A.2d 1, 7 (Pa.
Super. 2006) (stating that this Court is limited to “the materials in the certified
record when resolving an issue” and explaining that “any document which is
not part of the officially certified record is deemed non-existent—a deficiency
which cannot be remedied merely by including copies of the missing
documents in a brief or in the reproduced record”); see also Pa.R.A.P. 1921.
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move in August 2013; the rest will be paid thereafter, as per a
separate written agreement” when there was no provision that
it was to be provided in any specific manner or amount and no
separate written agreement for the second $12,500 as
introduced or testified to at trial and the word provided is
ambiguous?
2. Whether the trial court [erred], assuming arguendo that an
agreement existed, in finding that Wife was still due monies
under the agreement, when Husband demonstrated that he
had paid Wife, or Wife took, in excess of $12,500 before and
after the date of the alleged agreement.
3. Whether the trial court erred in failing to find that Wife engaged
in fraud in the inducement thus invalidating and/or voiding any
alleged agreement?
Husband’s Brief at 4 (some formatting altered).7
All of Husband’s claims challenge the validity of the parties’ settlement
agreement. “A marital support agreement incorporated but not merged into
the divorce decree survives the decree and is enforceable at law or equity. A
settlement agreement between spouses is governed by the law of contracts
unless the agreement provides otherwise.” Kraisinger v. Kraisinger, 928
A.2d 333, 339 (Pa. Super. 2007) (citations omitted). “[A]bsent fraud,
misrepresentation, or duress, spouses should be bound by the terms of their
agreements.” Stackhouse v. Zaretsky, 900 A.2d 383, 386 (Pa. Super.
2006) (citation omitted).
Because contract interpretation is a question of law, this Court is
not bound by the trial court’s interpretation. Our standard of
review over questions of law is de novo and to the extent
necessary, the scope of our review is plenary as the appellate
court may review the entire record in making its decision.
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7 Wife did not file a brief.
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However, we are bound by the trial court’s credibility
determinations.
When interpreting a marital settlement agreement, the trial court
is the sole determiner of facts and absent an abuse of discretion,
we will not usurp the trial court’s fact-finding function. On appeal
from an order interpreting a marital settlement agreement, we
must decide whether the trial court committed an error of law or
abused its discretion.
Kraisinger, 928 A.2d at 339 (citations omitted).
When construing agreements involving clear and unambiguous
terms, this Court need only examine the writing itself to give effect
to the parties understanding. The court must construe the
contract only as written and may not modify the plain meaning of
the words under the guise of interpretation. When the terms of a
written contract are clear, this Court will not re-write it or give it
a construction in conflict with the accepted and plain meaning of
the language used.
Lang v. Meske, 850 A.2d 737, 739-40 (Pa. Super. 2004) (citations omitted);
see also Trizechahn Gateway LLC v. Titus, 976 A.2d 474, 483 (Pa. 2009)
(explaining that “contractual terms are ambiguous if they are subject to more
than one reasonable interpretation when applied to a particular set of facts”
(citation and some formatting omitted)).
In his first issue, Husband challenges the trial court’s interpretation of
the following clause: “a separate lump sum of $25,000 will be provided to
[Wife] over the course of the next several months, $12,500 will be provided
before the move in August 2013, the rest will be paid shortly thereafter as per
a separate written agreement.” Husband’s Brief at 9. Husband argues that,
in the context of the agreement, the term “provided” is ambiguous. Id. He
further claims that, as drafted, the agreement “arguably does not require
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Husband to pay anything” and “certainly does not require the lump sum
payments found by the trial court.” Id. Husband asserts that “Wife took the
first $12,500 and the second $12,500 was to be paid per separate agreement,
which never occurred.” Id. at 10. Husband therefore argues that “it was an
error for the trial court to find an enforceable provision requiring Husband to
pay Wife. Id.
The trial court addressed Husband’s claim8 as follows:
Neither ambiguity in terms nor the lack of a separate agreement
[were] raised at trial before the Master. Neither issue was raised
in Husband’s exceptions. Husband’s exceptions raised only the
following two issues: “(a) The Master erred in finding that a valid
enforceable [a]greement existed between the parties; and (b) The
Master erred in awarding Wife $25,000 within 45 days.” Husband
briefed only that Wife was guilty of fraud in the inducement, which
justified his failure to pay the $25,000, and that there had been
no testimony that Husband was capable of paying $25,000 within
45 days. The lack of a separate agreement was not mentioned
once at trial nor at argument on Husband’s exceptions.
“Matters not covered by exceptions [to a Master’s report and
recommendation] are deemed waived unless, prior to entry of the
final decree, leave is granted to file exceptions raising those
matters.” Pa.R.C.P. 1920.55-2(b). As evidenced . . . in the
history above, both parties filed exceptions from this Report;
however the matters specified in Husband’s . . . issues herein were
not raised by him in his exceptions. Accordingly, the issues, which
Husband failed to raise in his exceptions, are waived for appeal,
as they must be raised at the first opportunity. Metzger v.
Metzger, 534 A.2d 1057, 1058 (Pa. Super. 1987). Accordingly,
by not raising or briefing these issues in his exceptions, Husband
has waived them.
Were these issues not waived, [the trial court] would still find
them unpersuasive. The language of the agreement may not be
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8 Although Husband presented this claim as two separate issues in his
Pa.R.A.P. 1925(b) statement, he has combined them into one issue on appeal.
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precise but it is far from ambiguous. The subject provision states:
“A separate lump sum of $25,000 will be provided to [Wife] over
the course of the next several months. $12,500 of this will be
provided before the move in August 2013. The rest will be paid
shortly thereafter, as per a separate written agreement.”
Husband’s assertion that the term “provided” is ambiguous is
meritless, as the agreement actually sets forth how the funds will
be “provided”—one payment of $12,500 in August of 2013 and
the rest within “the next several months.” Even without a
“separate written agreement,” the intention of the parties is
clearly set forth that the money was to be paid to Wife before and
soon after her move.
Trial Ct. Op. at 4-5 (some formatting altered).
Based on our review of the record, we agree with the trial court that
Husband waived this issue by failing to raise it in an exception to the Master’s
findings. See Pa.R.C.P. 1920.55-2(b) (stating that “[e]ach exception shall set
forth a separate objection precisely[; m]atters not covered by exceptions are
deemed waived”). Moreover, because the contract was clear and
unambiguous with respect to the $25,000 payment, we discern no error of
law in the trial court’s analysis of this claim. See Lang, 850 A.2d at 739-40;
see also Kraisinger, 928 A.2d at 339. Therefore, Husband is not entitled to
relief on this issue.
In his next claim, Husband contends that even if the agreement was
valid, he has already given Wife more than $25,000. Husband’s Brief at 11.
Husband argues that he fulfilled his obligations under the agreement because
he “demonstrated that he had paid Wife, or Wife took, in excess of $12,500
before and after the date of the alleged agreement.” Id. at 10. In support,
Husband refers to evidence that he presented to the Master, including
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personal bank statements showing payments to Wife in excess of $14,000 and
his own testimony that “he had sent money to Wife in New York and she had
taken money from the business account.” Id.
The trial court addressed Husband’s claim as follows:
In his [next] issue, which was also not raised on exceptions but
was argued at [the hearing before the Master], Husband argues
that, because his bank statements demonstrate that Husband
gave Wife more than the $1,250 monthly child support amount
contemplated in the agreement, he has demonstrated that she is
no longer entitled to the separate $25,000. As noted by the
Master in his Report and Recommendation, Husband’s bank
statements, introduced in support of this contention, do not
contain any reference to the two lump sum payments, and show
payments in amounts close to the child support payments
contemplated in the agreement.
The parties’ agreement provided for two separate economic
payments—a distribution payment of $25,000, which was to be
paid to Wife in two lump sums; and child support payments to be
made on a monthly basis. Both the Master and [the trial court]
found that the payments made from Husband’s account and
shown through [Husband’s personal bank statements] related
solely to child support.
In fact, Husband specifically stated that he did not intend to
comply with the agreement and that he did not make the
payments toward the lump sum. He himself testified that the
payments were for his daughter and related to the child support.
Trial Ct. Op. at 6 (some formatting altered).
Based on our review of the record, we agree with the trial court that
Husband waived this issue by failing to raise it in an exception to the Master’s
findings. See Pa.R.C.P. 1920.55-2(b). Further, the trial court evaluated the
witnesses’ credibility and concluded that Husband’s previous payments to Wife
were unrelated to the $25,000 set forth in the agreement. See Kraisinger,
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928 A.2d at 339. In light of the trial court’s credibility determinations, we
discern no abuse of discretion or error of law. See id. Therefore, Husband’s
claim warrants no relief.9
In his remaining issue, Husband argues that the trial court erred by
denying relief on his claim of fraudulent inducement. Husband’s Brief at 12.
Husband argues that Wife concealed that she was moving to New York to
continue a romantic relationship with another woman. Id. at 12. He also
asserts that Wife made material misrepresentations that “the schools were
better” and that she “had obtained suitable housing” in New York City. Id.
Husband also claims that Wife misrepresented the fact that she “took large
sums of money from the company bank account” before the parties signed
the agreement. Id. at 13. Husband concludes that, “had he known the true
facts, he would not have signed the [a]greement as written.” Id.
A fraud in the inducement claim asserts that “an opposing party made
false representations that induced the complaining party to agree to the
contract.” Toy v. Metro. Life Ins. Co., 928 A.2d 186, 205 (Pa. 2007)
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9 To the extent Husband relies on newly discovered evidence that Wife
withdrew money from the business account, we reach the same result.
Husband testified that in 2013, he discovered that Wife took “large amounts
of money” from the business account. See N.T., 2/5/18, at 52. He also
testified that he maintained online access to the business bank account before,
during, and after he signed the agreement. Id. at 63-64. Therefore, even if
he had properly preserved this issue, Husband’s failure to produce the
evidence at the Master’s hearing or file a timely request for relief with the trial
court is fatal to his claim.
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(plurality) (citation omitted); see also Porreco v. Porreco, 811 A.2d 566,
570 (Pa. 2002).
To prove this claim, the party alleging fraud in the inducement must
establish the following elements:
(1) a representation; (2) which is material to the transaction at
hand; (3) made falsely, with knowledge of its falsity or
recklessness as to whether it is true or false; (4) with the intent
of misleading another into relying on it; (5) justifiable reliance on
the misrepresentation; and (6) the resulting injury was
proximately caused by the reliance.
Eigen v. Textron Lycoming Reciprocating Engine Div., 874 A.2d 1179,
1187 (Pa. Super. 2005) (citation omitted).
“A misrepresentation is material if the party would not have entered into
the agreement but for the misrepresentation.” Id. (citation omitted).
However,
[t]o be actionable, a misrepresentation need not be in the form of
a positive assertion but is any artifice by which a person is
deceived to his disadvantage and may be by false or misleading
allegations or by concealment of that which should have been
disclosed, which deceives or is intended to deceive another to act
upon it to his detriment. Concealment can be a sufficient basis
for finding that a party engaged in fraudulent conduct, provided
that the other requisite elements of fraud are established.
Wilson v. Donegal Mut. Ins. Co., 598 A.2d 1310, 1315-16 (Pa. Super.
1991) (citations omitted). While “concealment may constitute fraud . . . mere
silence is not sufficient in the absence of a duty to speak.” Id.
Here, trial court addressed Husband’s fraudulent inducement claim as
follows:
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Husband sets forth the only argument he made at trial and on
exceptions - what his counsel called “the crux of our case” - that
the agreement was invalid due to fraud in the inducement.
Husband claims [that] Wife engaged in fraud by concealing from
him her romantic involvement with another woman and,
therefore, the agreement should not be enforced.
* * *
Husband alleges that Wife misrepresented material facts to him
on which he justifiably relied and which, when he discovered them
not to be true, caused him to rescind the agreement with
justification.
At trial and in his pleadings, Husband alleged that, prior to
execution of the agreement, Wife concealed her romantic
relationship with another woman. The provision, which is the
subject of Wife’s enforcement action, is one of property division.
There was no evidence presented that there was any concealment
of a financial nature. There was no evidence that the payment to
Wife was contingent upon her remaining celibate, single, or
heterosexual. Therefore, Wife’s concealment was not of a
material fact on which Husband relied to his detriment.
Husband claimed that Wife did not put their Child first, reside with
her in a suitable apartment, or enroll her in a good school, as she
promised to do in the agreement. Yet Husband did not file a
motion to enforce the agreement, nor did he take any custody
action for well over [two] years. He simply did not pay as agreed.
Husband agreed to provide Wife with $25,000 in two payments,
one prior to her August 2013 move, and the other within a few
months of the move. He now argues that, had he known that
there was another romantic involvement, he would not have
executed the agreement. That may in fact be true but it does not
rise to the level of fraud such that his agreement with Wife should
be deemed invalid.
Trial Ct. Op. at 7-8 (some formatting altered).
Based on our review, the record supports the trial court’s finding that
Husband failed to establish his fraudulent inducement claim. See Eigen, 874
A.2d at 1187. As noted by the trial court, Husband testified that he did not
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expect Wife to remain single or celibate after the separation. See N.T.,
2/5/18, at 55. Instead, Husband stated that the sole purpose of the
agreement was for Child “to have a better life.” Id. at 71. Husband cites no
authority for his position that Wife’s failure to disclose her own romantic
relationship should invalidate the contract, which settled the parties’ dispute
over portions of their marital property and the terms of their relocation to New
York City. See id. Therefore, because Husband failed to establish Wife’s
concealment was material and her intent to mislead Husband and otherwise
induce him to enter into the agreement, Husband cannot establish fraudulent
inducement on that basis. See id.
Finally, to the extent Husband argues that Wife misrepresented facts
about the schools and the apartment or concealed that she withdrew money
from the business bank account, these claims are waived. See Pa.R.C.P.
1920.55-2(b).
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/7/2020
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