County Restorations, LLC v. Simone, A. ( 2021 )

J-S13032-21
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COUNTY RESTORATIONS, LLC : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
ADAM SIMONE : No. 2325 EDA 2020
Appeal from the Order Entered November 4, 2020
In the Court of Common Pleas of Lehigh County Civil Division at No(s):
No. 2020-C-0837
BEFORE: OLSON, J., KING, J., and PELLEGRINI, J.*
MEMORANDUM BY PELLEGRINI, J.: FILED: JUNE 14, 2021
County Restorations, LLC (County Restorations) appeals from the order
entered in the Court of Common Pleas of Lehigh County (trial court) sustaining
the preliminary objections filed by Adam Simone (Simone) to its amended
complaint and dismissing the complaint. County Restorations seeks payment
from Simone of half of the $85,000.00 they both agreed to pay under a
Settlement and Mutual Release Agreement (Settlement Agreement) to settle
an employment non-compete action with a third party. We affirm.
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* Retired Senior Judge assigned to the Superior Court.
J-S13032-21
I.
A.
The relevant background and procedural history of this case are as
follows. County Restorations is a Lehigh Valley company that performs
remediation and restoration services for properties damaged by water, fire,
storm, flooding and mold. Simone was hired by County Restorations but
before he was employed there, he worked for RestoreCore (RestoreCore), a
company that performs similar services.
When hired by RestoreCore, Simone executed a Noncompete and
Confidentiality Agreement (Employment Agreement) which included post-
employment restrictive covenants. After Simone left RestoreCore, he filed a
declaratory judgment action seeking to have the Employment Agreement
deemed unenforceable. RestoreCore filed counterclaims and sought a
preliminary injunction against Simone and County Restorations because of
Simone’s alleged breach of the Employment Agreement.
On March 25, 2018, the parties entered a Settlement Agreement
pursuant to which Simone and County Restorations were jointly and severally
liable to pay $85,000.00 to RestoreCore. Specifically, the agreement states
under the heading “Settlement Payment” that “Subject to the terms and
conditions herein set forth, Defendants shall be obligated jointly, severally
and individually to pay RestoreCore the sum of eighty-five thousand dollars
and zero cents ($85,000.00)[.]” (Settlement Agreement, at 1, Paragraph
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1(a)) (emphasis added). The Settlement Agreement provides for an initial
lump sum payment of $20,000.00 to RestoreCore and for the remaining
payments to be made in 24 monthly installments. It does not allocate a
separate amount that Simone or Country Restorations are to pay as part of
settlement, only that they are jointly and severally liable for the payment of
the entire amount.
The Settlement Agreement also includes mutual releases whereby
RestoreCore “in consideration of the Settlement Payment and other
obligations set forth herein” released and discharged Simone and County
Restorations from any and all claims associated with the declaratory judgment
litigation, including Simone’s release from the terms of his Employment
Agreement. (Id. at 2, Paragraph 2) (emphasis added). Simone and County
Restorations reciprocally released and discharged any claims against
RestoreCore. The parties agreed to return certain confidential information
that each of them may have had in their possession within five days of
execution of the Settlement Agreement. The parties further agreed to keep
the terms of the Settlement Agreement confidential, except for limited
purposes. The agreement provided a notice requirement in the event of a
default in payment, a means of curing the default and a liquid damages clause
to remedy a violation of the agreement.
The Settlement Agreement also included a paragraph stating: “This
document sets forth the entire agreement between the parties and fully
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supersedes any and all prior agreements or understandings, written or oral,
between the parties.” (Settlement Agreement at 4, Paragraph 8(b)). The
parties represented that: “EACH PARTY CONSULTED WITH AN
ATTORNEY PRIOR TO SIGNING THIS AGREEMENT AND THAT EACH
PARTY HAS CAREFULLY READ THIS AGREEMENT PRIOR TO SIGNING
IT, FULLY UNDERSTANDS ITS TERMS, AND SIGNED IT VOLUNTARILY.”
(Id. at 5, Paragraph 7) (emphasis in original).
B.
Sometime after the execution of the Settlement Agreement, Simone left
his employment with County Restorations. County Restorations then brought
an action against Simone contending that it paid a disproportionate amount
of the payment to RestoreCore totaling $55,000.00, while Simone paid only
$30,000.00 of the joint and several obligation. It contended that since Simone
was the one that benefited from the transaction, he was required to pay the
entire $85,000.00. Because it had paid $55,000.00, it sought that amount
from Simone. In seeking that amount, it asserted two causes of action. In
Count I, it contended that under Section 3116 of Pennsylvania’s Uniform
Commercial Code (PUCC), 13 Pa.C.S. § 3116, the Settlement Agreement was
a negotiable and instrument1 entitling it to contribution for payment amounts
purportedly owed by Simone and, in Count II, for unjust enrichment.
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1 See 13 Pa.C.S. §§ 3101-3119 (governing negotiable instruments).
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Simone filed preliminary objections averring that the obligation to
RestoreCore was not a negotiable instrument, and even if were, the
obligations under the Settlement Agreement had been satisfied so there was
no obligation for which he was required to contribute. He also argued that
there was no unjust enrichment because Country Restorations made
payments that were for its own benefit because it was jointly and severally
liable for the entire amount. Agreeing with Simone’s arguments, the trial
court sustained his preliminary objections and dismissed the action. This
timely appeal followed. The trial court and County Restorations complied with
Rule 1925. See Pa.R.A.P. 1925(a)-(b).2
II.
County Restorations first challenges the trial court’s ruling that the
Settlement Agreement is not a negotiable instrument falling within the ambit
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2
In determining whether a trial court properly sustained
preliminary objections granting a demurrer, we examine the
averments in the complaint, together with the documents and
exhibits attached thereto, to evaluate the sufficiency of the facts
averred. The purpose of the inquiry is to determine the legal
sufficiency of the complaint and whether the pleading would
permit recovery if ultimately proven. We will reverse the trial
court where there has been an error of law or abuse of discretion.
Because the trial court’s decision to grant or deny a demurrer
involves a matter of law, our standard of review is plenary. Where
a doubt exists as to whether a demurrer should be sustained, this
doubt should be resolved in favor of overruling it.
Mercer v. Newell, 2021 WL 1916957, at *3 (Pa. Super. filed May 13, 2021)
(citations omitted).
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of the PUCC. It argues that because Simone is jointly and severally liable for
the settlement payment to RestoreCore, Section 3116(b) of the PUCC requires
that he can be sued for contribution. Although County Restorations
acknowledges that the Settlement Agreement includes obligations other than
the payment to RestoreCore, it argues that these terms are separate promises
made in addition to the payment provision, and that this payment was not
conditional on fulfillment of these additional terms.
Section 3104 of the PUCC defines the term negotiable instrument and
provides:
(a) Definition of “negotiable instrument”.─Except as provided
in subsections (c) and (d), “negotiable instrument” means an
unconditional promise or order to pay a fixed amount of money,
with or without interest or other charges described in the promise
or order, if it:
(1) is payable to bearer or to order at the time it is issued
or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or
instruction by the person promising or ordering payment to
do any act in addition to the payment of money, but the
promise or order may contain:
(i) an undertaking or power to give, maintain or
protect collateral to secure payment;
(ii) an authorization or power to the holder to confess
judgment or realize on or dispose of collateral; or
(iii) a waiver of the benefit of any law intended for the
advantage or protection of an obligor.
13 Pa.C.S. § 3104(a)(1)-(3)(iii) (emphasis added).
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Accordingly, a negotiable instrument must: 1) be payable to bearer or
to order at the time it is issued or first comes into possession of a holder; 2)
be payable on demand or at a definite time; and 3) cannot state any other
undertaking or instruction by the person promising or ordering
payment to do any act in addition to the payment of money. See
Sovich v. Estate of Sovich, 55 A.3d 1161, 1164 (Pa. Super. 2012).
Additionally, a negotiable instrument is capable of transfer by endorsement or
delivery and provides a means of passing the rights of the holder to the
transferee. See id.Section 3116 of the PUCC provides for contribution as a remedy
regarding joint and several liability:
(a) Joint and several liability.─Except as otherwise provided in
the instrument, two or more persons who have the same liability
on an instrument as makers, drawers, acceptors, indorsers who
indorse as joint payees, or anomalous indorsers are jointly and
severally liable in the capacity in which they sign.
(b) Contribution.─Except as provided in section 3419(e)
(relating to instruments signed for accommodation) or by
agreement of the affected parties, a party having joint and several
liability who pays the instrument is entitled to receive from any
party having the same joint and several liability contribution in
accordance with applicable law.
13 Pa.C.S. § 3116(a)-(b).
In this case, the Settlement Agreement executed by Simone and County
Restorations memorializes an agreement between them and RestoreCore to
end the underlying declaratory judgment action and details the conditions of
payment. The agreement contains several interdependent obligations and the
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paragraph detailing the release by RestoreCore specifically states that this act
is made “in consideration of the Settlement Payment.” (Settlement
Agreement at 2, Paragraph 2). Additionally, nothing in the document suggests
that it was intended to be capable of transfer. See Sovich, supra at 1164.
As the trial court explained:
The Settlement Agreement is not a negotiable instrument
and County Restorations cannot succeed on a cause of action
arising out of Section 3116. The plain language of the Settlement
Agreement contains far more than a mere promise to pay money.
In addition to County Restorations and Simone agreeing to pay a
certain amount of money to a third party, numerous other
provisions and conditions were included in the Settlement
Agreement. County Restorations, Simone and the third-party
agreed to “fully and finally conclude all claims, causes of action,
proceedings and disputes,” return all confidential information to
each other, discontinue prior litigation filed in Lehigh County and
keep the terms of the settlement confidential. Consequently, the
Settlement Agreement was not just an instrument for payment
due by a certain date, but rather reflected the terms of a global
settlement of the various claims held by three different
entities/groups in connection with an underlying employment
agreement. The Settlement Agreement was not a negotiable
instrument.
(Trial Court Opinion, 11/04/20 at 2, n.1) (record citations omitted).
Because we agree with the trial court that the Settlement Agreement
was not a negotiable instrument under the PUCC, the associated statutory
remedy of contribution for joint and several liability is unavailable to County
Restorations.
III.
County Restorations next contends that the trial court erred in finding
that the Settlement Agreement constitutes a writing between it and Simone
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which would foreclose his claim based on unjust enrichment. While it
recognizes that they were both parties to the Settlement Agreement, it
contends that because the Settlement Agreement was silent with respect to
allocation of the $85,000.00 payment, there was no written agreement
between them precluding an award based on unjust enrichment.
“Unjust enrichment is essentially an equitable doctrine.” Gutteridge v.
J3 Energy Grp., Inc., 165 A.3d 908, 916 (Pa. Super. 2017) (citation and
quotation marks omitted). Courts sitting in equity hold broad powers to grant
relief that will result in an equitable resolution of a dispute and must formulate
a remedy that is consistent with the relief requested. See id.A claim for unjust enrichment arises from a quasi-contract. See id. “A
quasi-contract imposes a duty, not as a result of any agreement, whether
express or implied, but in spite of the absence of an agreement, when
one party receives unjust enrichment at the expense of another.” Id.(emphasis added). “The elements of unjust enrichment are benefits conferred
on defendant by plaintiff, appreciation of such benefits by defendant, and
acceptance and retention of such benefits under such circumstances that it
would be inequitable for defendant to retain the benefit without payment of
value.” Id. (citation omitted). “Critically, the doctrine of unjust
enrichment is inapplicable when the relationship between parties is
founded upon a written agreement or express contract.” Wilson v.
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Parker, 227 A.3d 343, 353 (Pa. Super. 2020) (citation omitted; emphasis
added).
In making the contention that its claim for unjust enrichment is not
founded on the Settlement Agreement, County Restorations ignores that the
agreement obligates both of them to pay that amount because settling the
dispute was for the benefit of both parties, as well as making each of them
jointly, severally and individually liable for that amount. In rejecting County
Restorations’ claim for unjust enrichment, the trial court reasoned that:
This dispute is governed by the express terms of the written
agreement. The Settlement Agreement clearly provides that the
parties intended to “resolve and fully and finally conclude all
claims, causes of action, proceedings and disputes between the
Parties” and that the Settlement Agreement “sets forth the entire
agreement between the parties and fully supersedes any and all
prior agreements or understandings, written or oral, between the
parties.” The parties could have negotiated and included a
payment allocation provision in the Settlement Agreement, but
they voluntarily chose not to do so. That County Restorations is
now dissatisfied with the terms of the Settlement Agreement is of
no consequence. The court can neither disregard the Settlement
Agreement nor read into it a term that the parties did not bargain
for. Moreover, both County Restorations and Simone benefitted
from the Settlement Agreement. Simone was relieved of the
restrictions imposed on him by his employment contract with a
third-party and County Restorations was able to hire and employ
Simone without the risk of litigation by the third-party. County
Restorations cannot, as a matter of law, succeed on a cause of
action for unjust enrichment.
(Trial Ct. Op., at 2-3, n.1).
We agree with the trial court that the relationship between parties is
clearly founded upon a written agreement, i.e., the Settlement Agreement
and the doctrine of unjust enrichment is, therefore, inapplicable. See Wilson,
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supra at 353. The parties could have included a payment allocation provision
in the document or could have executed a companion agreement but elected
not to do so after consultation with their respective attorneys. In fact, the
Settlement Agreement states that “Defendants shall be obligated jointly,
severally and individually to pay RestoreCore the sum of eighty-five
thousand dollars and zero cents ($85,000.00)[.]” (Settlement Agreement, at
1, Paragraph 1(a)). County Restorations and Simone expressly agreed that
this document set forth “the entire agreement between the parties and fully
supersedes any and all prior agreements or understandings, written or oral,
between the parties.” (Settlement Agreement, at 4, Paragraph 8(b)). The
parties also represented that each of them had consulted with legal counsel
before executing the agreement and had fully reviewed and understood all its
terms. (See id. at 5, Paragraph 7).
Based on the foregoing, we conclude that the trial court did not err in
sustaining Simone’s preliminary objections and in dismissing this action.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/14/21
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