Castner, J. v. Cross Castner Arch., P.C. ( 2020 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
JOHN C. CASTNER : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
CROSS CASTNER ARCHITECTS, P.C. :
AND CHARLES H. CROSS, III :
: No. 3536 EDA 2018
Appellants :
Appeal from the Order Entered November 1, 2018
In the Court of Common Pleas of Chester County Civil Division at No(s):
2013-09841-CT
BEFORE: PANELLA, P.J., OLSON, J., and FORD ELLIOTT, P.J.E.
MEMORANDUM BY OLSON, J.: FILED FEBRUARY 19, 2020
Appellants, Cross Castner Architects, P.C. (“Company”) and Charles H.
Cross, III (“Cross”) (collectively “Appellants”), appeal from an order entered
on November 1, 2018 in the Civil Division of the Court of Common Pleas of
Chester County. We affirm.
We derive our summary of the facts and procedural history in this matter
from the trial court’s opinion and the certified record on appeal. John C.
Castner (“Castner”) was a founding member and former minority shareholder
of the Company, an architectural firm. At all relevant times, Castner’s
colleague, Cross, served as the president, director, and controlling
shareholder of the Company. Based upon Cross’ alleged violation of a
shareholder agreement entered on or around November 10, 2009, together
with Cross’ alleged misapplication of Company assets for his personal benefit,
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Castner filed an action against both the Company and Cross in the Chester
County Court of Common Pleas raising breach of contract and related claims.
The case, which was docketed at 2013-09841, was scheduled for a bench trial
on February 4, 2016.
When the time for trial arrived, the parties entered into an on-the-record
settlement rather than proceeding to a bench trial on the merits. Among other
things, the settlement agreement provided that three valuators would
determine the value of Castner’s shares for the purpose of a buyout aimed at
concluding the operations of the Company. In view of the parties’ settlement
agreement, the trial court, acting sua sponte, entered an order on September
1, 2016 directing the prothonotary to mark the case settled.
Approximately 18 months after the parties placed their settlement
agreement on the record, performance of the agreement remained
unconcluded. Specifically, the three valuators were unable to agree on the
valuation method.1 On April 13, 2018, Castner commenced a parallel action
docketed in the Chester County Court of Common Pleas at 2018-03806 by
filing a petition to enforce settlement. See Chester County Court of Common
Pleas Docket No. 2018-03806. By order dated August 7, 2018, the trial court
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1 One of the valuators sought to calculate the value of the shares of the
Company in accordance with the method included in the 2009 shareholders
agreement, which differed from the method utilized by the other two
valuators. The February 2016 settlement agreement did not require the use
of the valuation mechanism included within the shareholders agreement.
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granted Castner’s petition and directed the parties to “achieve an agreed upon
valuation.” Trial Court Order, 8/7/18 (docketed at case number 2018-03806).
Pursuant to the August 7, 2018 order, the valuators met on August 31,
2018 to determine the agreed upon value of the Company and the value of
Castner’s shares for payment. The valuators determined that Castner’s
interest in the Company was valued at $148,000.00 and that Castner should
be reimbursed for taxes on phantom income in the amount of $14,429.80.
The value of Castner’s share of the Company was then reduced by $63,408.50
for an outstanding shareholder loan due to the Company. Based upon these
calculations, the valuators placed a net value of Castner’s shares at
$99,021.30.2
Even after the valuators completed a valuation of the Company, the
parties were still unable to conclude performance pursuant to the terms of
their settlement agreement. Accordingly, on September 11, 2018, Castner
moved to compel enforcement at case number 2013-09841. Castner’s motion
demanded payment of approximately $99,000.00, equal to the value of his
shares in the Company, together with a reimbursement for taxes, but less the
value of a shareholder loan. On September 21, 2018, Appellants filed a reply
and a cross-motion to enforce settlement. In their submissions, Appellants
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2 The report generated by the valuators also referred to other loans payable
to Cross, as well as possible interest on such loans, but did not place a value
on these obligations for purposes of determining the value of Castner’s
interest or shares in the Company or any sum Castner may have owed to
Cross.
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argued that Castner’s demand for nearly $99,000.00 should be offset by
approximately $83,000.00, representing a confessed judgment Cross
obtained against Castner pursuant to a prior agreement between the parties.
On September 26, 2018, Castner filed an answer to the cross-motion to
enforce settlement. By order entered on November 1, 2018, the trial court
granted Castner’s motion to compel enforcement of the parties’ settlement
agreement, directed Appellants to pay Castner $99,021.30, and released all
claims previously asserted by the parties.
On November 7, 2018, Appellants filed a notice of appeal docketed at
case number 2013-09841.3 On November 13, 2018, the trial court issued an
order directing Appellants to file and serve a concise statement of errors
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3 On November 16, 2018, a judgment for Castner was entered in the amount
of $99,021.30 on the docket at case number 2013-09841. Thus, Appellants
filed a timely notice of appeal from a final order. See Pa.R.A.P. 905(a)(5) (“A
notice of appeal filed after the announcement of a determination but before
the entry of an appealable order shall be treated as filed after such entry and
on the day thereof.”); see also Pa.R.A.P. 903(a) (notice of appeal must be
filed within 30 days of entry of order from which appeal is taken).
While we acknowledge that the parties’ valuation experts met pursuant to an
order entered on a separate docket, we shall not treat this case as one that
required entry of multiple notices of appeal because a single order resolved
issues that emerged from several trial court dockets. Here, the November 1,
2018 order (entered at case number 2013-09841 and from which Appellants
lodged this appeal) granted Castner’s motion to compel enforcement of the
parties’ settlement agreement, directed payment in favor of Castner, and
released all claims previously asserted by the parties. Because this appeal
revolves exclusively around issues that arose from a single trial court docket
that were addressed by a single dispositive order filed in the same case, the
matter before us does not implicate the principles addressed by our Supreme
Court in Commonwealth v. Walker, 185 A.3d 969 (Pa. 2018).
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complained of on appeal. Appellants filed a timely concise statement on
December 3, 2018 and the trial court issued its Rule 1925(a) opinion on March
4, 2019.
Appellants raise the following issues for our review:
Whether the release described in the [the parties’ settlement
agreement was immediately effective] as of the date of the
settlement agreement, or whether it was to take effect after
payment?
Whether Cross may set-off the amounts owed to him by Castner
against the value of Castner’s shares?
Appellants’ Brief at VI.
Appellants’ claims are closely related; hence, we shall address them in
a single discussion. Appellants claim that the trial court incorrectly construed
the terms of the parties’ settlement agreement when it directed them to pay
Castner in accordance with the valuation reached by the valuators pursuant
to the parties’ settlement agreement and without a setoff for a prior judgment
Cross obtained against Castner. Appellants explain their position as follows.
Initially, Appellants note that Castner agreed to pay Cross $125,000.00 under
the terms of an agreement the parties entered in November 2009. When
Castner failed to pay approximately $83,000.00 of that amount, Cross
obtained a confessed judgment against Castner. According to Appellants,
both the trial court and Castner are incorrect that the full and complete release
provision in the parties’ February 4, 2016 settlement agreement voids
Castner’s unpaid obligation created under the November 2009 settlement
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agreement. Instead, Appellants argue that the release provision in the second
settlement agreement did not go into effect until after Castner’s shares were
valued and Castner tendered his original payment obligation under the 2009
agreement. Appellants, therefore, claim they are entitled to a setoff of
approximately $83,000.00.
The applicable standard and scope of review, together with the
substantive principles that govern this dispute, are as follows.
The enforceability of settlement agreements is determined
according to principles of contract law. 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.
Ragnar Benson, Inc. v. Hempfield Township Mun. Auth., 916
A.2d 1183, 1188 (Pa. Super. 2007) (citations and quotation marks
omitted). With respect to factual conclusions, we may reverse the
trial court only if its findings of fact are predicated on an error of
law or are unsupported by competent evidence in the record.
Skurnowicz v. Lucci, 798 A.2d 788, 793 (Pa. Super. 2002)
(citation omitted) [(superseded by statute)].
The law of this Commonwealth establishes that an agreement to
settle legal disputes between parties is favored. Compu Forms
Control Inc. v. Altus Group Inc., 574 A.2d 618, 624 (Pa. Super.
1990). There is a strong judicial policy in favor of voluntarily
settling lawsuits because it reduces the burden on the courts and
expedites the transfer of money into the hands of a complainant.
Felix v. Giuseppe Kitchens & Baths, Inc., 848 A.2d 943, 946
(Pa. Super. 2004). If courts were called on to re-evaluate
settlement agreements, the judicial policies favoring settlements
would be deemed useless. Greentree Cinemas Inc. v. Hakim,
432 A.2d 1039, 1041 (Pa. Super. 1981). Settlement agreements
are enforced according to principles of contract law. Pulcinello v.
Consolidated Rail Corp., 784 A.2d 122, 124 (Pa. Super. 2001),
appeal denied, 796 A.2d 984 (Pa. 2002). “There is an offer (the
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settlement figure), acceptance, and consideration (in exchange
for the plaintiff terminating his lawsuit, the defendant will pay the
plaintiff the agreed upon sum).” Muhammad v. Strassburger,
McKenna, Messer, Shilobod and Gutnick, 587 A.2d 1346,
1349 (Pa. 1991), cert. denied, 502 U.S. 867 (1991).
Where a settlement agreement contains all of the requisites for a
valid contract, a court must enforce the terms of the agreement.
McDonnell v. Ford Motor Co., 643 A.2d 1102, 1105 (Pa. Super.
1994), appeal denied, 652 A.2d 1324 (Pa. 1994)[.]
Mastroni-Mucker v. Allstate Ins. Co., 976 A.2d 510, 517-518 (Pa. Super.
2009), appeal denied, 991 A.2d 313 (Pa. 2010).
Appellants assert that the terms of the February 4, 2016 settlement
agreement establish that a general release of all claims between the parties
would not become effective unless and until the valuators determined the
value of Castner’s shares in the Company and the parties exchanged
payment. Appellants reason that if the release in the February 4, 2016
agreement were immediately effective, Castner could have demanded a
release long before he filed his September 2018 motion to compel
enforcement, and the trial court could have ordered execution of the release
prior to the entry of the order which is challenged in this appeal. Appellants
conclude that Cross is entitled to setoff the amount of his judgment against
Castner since the release does not become effective until payment is made.
As a preliminary matter, we adopt the trial court’s recitation of the
parties’ on-the-record settlement agreement as if set forth fully herein. See
Trial Court Opinion, 3/4/19, at 3-6. Based upon our review of the plain terms
of the parties’ agreement, we agree with the trial court that the settlement
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terms are clear and unambiguous and that they direct the parties to enter a
full and complete release after a valuation of Castner’s shares in the Company
has been determined. See id. at 7. There simply is no support in the
agreement for implying a nonexistent payment term as a prerequisite to
execution of a general release of all claims asserted by the parties. For this
reason, we conclude that Appellants are not entitled to relief and that the trial
court’s order should be affirmed.4
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/19/20
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4 Our holding in no way invalidates Cross’ confessed judgment against
Castner. We merely conclude that, under the terms of the agreement the
parties reached to resolve the claims presented in the instant case, payment
of all debts and obligations running between the parties does not form a
precondition to execution of a general release.
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