Moore, K. v. Moore, M. ( 2021 )

J-A14039-21
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
KATHERINE M. MOORE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
MARK L. MOORE : No. 974 WDA 2020
Appeal from the Order Entered August 17, 2020
In the Court of Common Pleas of Erie County Civil Division at No(s): No.
12434-17
BEFORE: MURRAY, J., KING, J., and MUSMANNO, J.
MEMORANDUM BY MUSMANNO, J.: FILED: AUGUST 27, 2021
Katherine M. Moore (“Katherine”) appeals from the August 17, 2020,
Order granting the Motion for Summary Judgment filed by Mark L. Moore
(“Mark”) and denying Katherine’s Motion for Summary Judgment. After
careful review, we affirm.
The trial court provided the following history underlying this appeal:
The controversy in this case stems from a $200,000 KeyBank
Small Business Administration (SBA) loan [(the “SBA loan”)]
made to J.J. Moore Sales, Inc. [(“J.J. Moore”)][,] in May of 2002.
[Mark] was the sole owner and proprietor of J.J. Moore at the time
of the loan, and both [Katherine] and [Mark], who were married
at the time, individually guaranteed the loan. They executed a
suretyship agreement titled “Unconditional Guarantee” on May 15,
2002 [(the “Suretyship Agreement”)], which states[,] in relevant
part:
Guarantor unconditionally guarantees payment to
Lender of all amounts owing under the Note. This
Guarantee is in effect until the Note is paid in full.
Guarantor must pay all amounts due under the Note
when Lender issues written demand upon Guarantor.
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Lender is not required to seek payment from any other
source before demanding payment from Guarantor.
Under the Suretyship Agreement, both [Katherine] and [Mark]
also waived their rights to require demand be made upon the
borrower, J.J. Moore, and to notice of default under the Note.
Prior to the [SBA] loan’s scheduled date of maturity[,] on
May 15, 2009, both J.J. Moore and [Mark] filed for bankruptcy.
J.J. Moore filed for Chapter 11 bankruptcy on May 11, 2006[,] and
had its Chapter 11 Plan and Disclosure Statement approved on
May 16, 2007. [Mark] filed for Chapter 7 bankruptcy on December
7, 2008[,] and was discharged by [O]rder of court, dated April 7,
2009.
Meanwhile, on February 15, 2008, [Katherine] filed for
divorce in the Erie County Court of Common Pleas. [Katherine]
and [Mark] executed a Separation and Property Agreement [(the
“Separation Agreement”)] on May 1, 2012[,] whereby the marital
assets and liabilities were divided between [Katherine] and
[Mark]. On June 12, 2012, the [c]ourt adopted the terms of [the
Separation Agreement] and issued a [D]ivorce [D]ecree. One of
the paragraphs in the Separation Agreement, clause 11, is entitled
“Future Title, Ownership, and Liability.” The first paragraph of this
clause divided the claims and rights of both parties to the property
granted them under the [Separation Agreement], giving each
party full ownership of whatever property either was granted. The
second paragraph of clause 11 [(the “Indemnification Clause”)] …
reads:
The Husband and the Wife represent and warrant to
each other that they have not incurred debts or made
any contracts for which the other or his or her estate
may be liable and will not hereafter incur any such
debts or make any such contracts. Each party agrees
to indemnify the other from any debts or contracts
that may exist or come into existence in violation of
this clause.
[Separation Agreement, 5/1/12, at 5.]
In January of 2014, the SBA sent [Katherine] a [N]otice
demanding she satisfy the balance remaining on the SBA loan.
[Katherine] disputed her obligation to [the SBA] loan and hired
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counsel to seek her release from any obligation thereunder.
[Katherine] argued several claims before the SBA, including [that]
the SBA claim was time-barred; she detrimentally relied on the
SBA’s inaction to that point; and the SBA failed to join [Mark] as
an indispensable party. The SBA, by administrative [O]rder,
rejected [Katherine’s] claims in June of 2015. Since April of 2016,
the Department of the Treasury has been garnishing [Katherine’s]
wages to recover the balance of the SBA loan. [Katherine] filed
suit against [Mark] on August 30, 2017.
In the instant case, [Katherine] claims [Mark] has breached
the terms of the [Indemnification Clause] by not agreeing to
indemnify her SBA loan obligation. [Katherine] argues [that]
since [Mark] was required under the Separation Agreement to
notify her of any obligations or debts he incurred for which she
would be held liable, [Mark] was obligated to inform her of and
indemnify her against the SBA loan. She asserts [that Mark],
acting in his capacity as the sole owner and proprietor of J.J.
Moore, incurred a debt when J.J. Moore defaulted on the SBA loan,
which [Katherine] is now being held liable for. [Katherine] also
argues [that Mark] was not discharged of this debt in bankruptcy
proceedings. [Katherine] alleges in her Complaint that she did
not have any recollection of signing the Suretyship Agreement,
and that if she did, it was only at the “request and insistence” of
[Mark]. In [Katherine’s] view, however, and regardless of the
Suretyship Agreement, this debt was incurred by the actions of
[Mark], and [Mark] is liable under the Separation Agreement to
indemnify [Katherine].
[Mark] claims, on the other hand, he had no duty under the
Separation Agreement to notify [Katherine] of her obligation to
the SBA loan and he has no duty to indemnify her against her
obligation, either. [Mark] argues J.J. Moore, a corporate entity,
and not [Mark] individually, defaulted on the SBA loan, and
[Katherine] incurred her obligation through the Suretyship
Agreement she signed in 2002. [Mark] also argues he was
discharged of this debt in bankruptcy court and, therefore, did not
have any debt to notify [Katherine] of when he signed the
Separation Agreement. [Mark] argues it is absurd for [Katherine]
to require him to notify her and indemnify her against her own
debt obligation.
Both parties filed respective Motions for Summary
Judgment. The parties are not disputing the formation or validity
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of the Suretyship Agreement, nor is either party disputing whether
both [Katherine] and [Mark] signed the Suretyship Agreement, as
indicated during the hearing on the record. The parties are not
disputing the formation or validity of the Separation Agreement,
nor that both parties have signed and are bound by the Separation
Agreement. And, as explained above, whether [Mark] or J.J.
Moore were discharged of liability for the SBA loan during the
relevant bankruptcy proceedings does not affect the outcome in
this case, and is, therefore, not material to this case. There is one
substantive issue before this [t]rial [c]ourt: whether [Mark] is
liable under the Separation Agreement to indemnify [Katherine]
against her obligation to secure the SBA loan. In other words,
whether the [Indemnification Clause] relieves [Katherine] of her
obligation under the Suretyship Agreement and places it on
[Mark].
Trial Court Opinion, 8/17/20, at 2-4 (citation and footnotes omitted).
The trial court held a hearing on the parties’ Motions for Summary
Judgment on August 3, 2020. Thereafter, the trial court entered an Order
denying Katherine’s Motion for Summary Judgment and granting Mark’s
Motion for Summary Judgment. Katherine filed a timely Notice of Appeal,
and a court-ordered Pa.R.A.P. 1925(b) Concise Statement of matters
complained of on appeal.
Katherine presents the following question for our review:
Did the [t]rial [c]ourt err in denying [Katherine’s] Motion for
Summary Judgment and granting [Mark’s] Motion for Summary
Judgment where: (i) the parties’ [Separation Agreement]
requires [Mark] to indemnify [Katherine] for any debts [Mark]
incurred or any contracts [Mark] made for which [Katherine] may
be liable, (ii) during their marriage, [Mark] made a contract in the
form of a SBA [l]oan, (iii) [Mark] solely and unilaterally incurred
a debt to the benefit of his business of which he was the President
and sole shareholder, (iv) [Katherine] was held liable for the SBA
[l]oan, and (v) [Mark] failed to indemnify [Katherine] for the SBA
[l]oan?
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Appellant’s Brief at 2-3.1
Our standard of review of a trial court’s grant or denial of a motion for
summary judgment is well settled:
We view the record in the light most favorable to the nonmoving
party, and all doubts as to the existence of a genuine issue of
material fact must be resolved against the moving party. Only
where there is no genuine issue as to any material fact and it is
clear that the moving party is entitled to a judgment as a matter
of law will summary judgment be entered. Our scope of review of
a trial court’s order granting or denying summary judgment is
plenary, and our standard of review is clear: the trial court’s order
will be reversed only where it is established that the court
committed an error of law or abused its discretion.
Good v. Frankie & Eddie’s Hanover Inn, LLP, 171 A.3d 792, 795 (Pa.
Super. 2017) (citing Hall v. CNX Gas Co., LLC, 137 A.3d 597, 601 (Pa. Super.
2016) (citation omitted)).
In support of her appeal, Katherine argues that the trial court erred
because the plain language of the Indemnification Clause was triggered when
Mark incurred a debt for which Katherine may be liable. Brief for Appellant at
13. Specifically, Katherine argues that “[Mark] agreed to indemnify
[Katherine] for [] any debts ‘incurred’ or [] any ‘contracts’ that [Mark] ‘made’
from either of which [Katherine] ‘or her estate may be liable.’” Id. at 14.
Katherine argues that the undisputed facts show that Mark, on behalf of J.J.
Moore, made a contract, and that the Indemnification Clause does not place
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1 In her brief, Katherine also argues that she is entitled to reimbursement for
legal fees accrued in conjunction with defending the collection activity as well
as the instant breach of contract litigation. Brief for Appellant at 21-23.
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any qualifiers on the phrase “made a contract.” Id. at 15. She asserts that
the Indemnification Clause does not limit the scope of debts nor the means by
which Katherine may be liable. Id. She further avers that, according to
Pennsylvania’s rules of contract interpretation, this Court is required to
“ascertain and give effect to the intent of the contacting parties.” Id.
Katherine also argues that Mark incurred the debt – the SBA loan – in
his capacity as the President of J.J. Moore. Id. at 16. She posits that even
though she signed the Suretyship Agreement for the debt, the debt would not
have come due if J.J. Moore had not defaulted on the loan. Id. She further
claims that the Indemnification Clause contains no limit on the mechanism of
liability, and the term “may be liable” applies regardless of whether the liability
was caused by Mark’s actions alone or only incurred during the marriage. Id.
at 17. Katherine also points to the fact that her interpretation of the
Indemnification Clause is consistent with the remainder of the Separation
Agreement, because the Indemnification Clause is listed after the provisions
that distribute assets and liabilities. Id. at 17-18.
Thus, Katherine contends that she was entitled to summary judgment
on her breach of contract claim as a matter of law, because Mark had a duty
to indemnify her for the SBA loan; he failed to do so; and that breach caused
Katherine’s damages. Id. at 19.
In his brief, Mark argues that Katherine’s claim must fail because she
entered into the Suretyship Agreement of her own undertaking and that the
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Suretyship Agreement formed the sole basis for her liability. Brief for Appellee
at 6. Mark further claims that the purpose of the Indemnification Clause “was
not to allocate responsibility for known obligations because, presumably, the
parties would have done that explicitly and directly.” Id. He posits that “the
parties distributed the known assets and obligations of the marital estate, and
wanted to ensure, through [the Indemnification Clause], that the other spouse
had not and would not incur any additional debt on their behalf.” Id.
Mark asserts that, ultimately, Katherine’s claim must fail because he did
not incur any debt or contracts on behalf of Katherine. Id. He avers that the
Suretyship Agreement was an individual obligation of Katherine’s and the sole
basis for liability for the SBA Loan. Id. Pursuant to that Agreement, the SBA
could seek repayment of the SBA loan from Katherine, individually, without
seeking payment from either Mark or J.J. Moore. Id. 6-7.
Alternatively, Mark argues that even if Katherine’s general interpretation
of the Indemnification Clause were correct, it is undisputed that Mark did not
incur the debt, but rather, it was a non-marital debt of J.J. Moore. Id. at 8.
Mark further asserts that the fact that he was the sole shareholder and
President of J.J. Moore is insufficient “to consider the SBA [l]oan as a personal
obligation or undertaking of Mark.” Id. (citing Marano v. Granata, 24 A.2d
148, 149 (Pa. Super. 1942), as standing for the proposition that an agent
acting for a disclosed principal is not a party to the contract.). Moreover, Mark
points to the fact that the Note identifies the borrower as J.J. Moore and his
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signature line stated, “Mark L. Moore, President,” and he signed the Note
followed by the word “Pres.” Id. at 9. This is in contrast to the signature line
on the Suretyship Agreement which reads, “Mark L. Moore, Individual.” Id.
Thus, in the absence of fraud or wrongdoing, Mark contends that the law does
not support Katherine’s argument that the obligation of the principal should
be attributed to the agent. Id. Finally, Mark argues that Katherine has failed
show that the corporate veil should be pierced, and Mark held liable for the
debt of J.J. Moore. Id. at 10.
In its Opinion, the trial court aptly addressed Katherine’s issue on
appeal, set forth the relevant law, and found no merit to that issue. We adopt
the sound analysis and Opinion of the trial court as if set forth fully herein.
See Trial Court 1925(a) Opinion, 11/16/20, at 4-12.
Further, the contract between Katherine and the SBA is one for a
suretyship. See McIntyre Square Assocs. v. Evans, 827 A.2d 446, 452 n.7
(Pa. Super. 2003) (discussing suretyship and guarantee agreements, and
noting “[w]hile both guaranty and suretyship agreements are agreements to
be liable for the debt of another, the principal difference is that the creditor
may look to the surety for immediate payment upon the debtor’s default,
without first attempting to collect the debt from the debtor, whereas the
creditor must first seek payment from the debtor before going after a
guarantor.”); see also 8 P.S. § 1 (providing that all agreements to answer
for the debt of another will be considered a suretyship unless the agreement
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specifically states otherwise). Thus, pursuant to the terms of the Suretyship
Agreement, Katherine agreed to repay the SBA loan upon the default of J.J.
Moore, and not upon any action on the part of Mark.
In the instant case, Katherine has failed to show that Mark breached the
duties imposed upon him by the Indemnification Clause and consequently, her
claim must fail. See McCausland v. Wagner, 78 A.3d 1093, 1101 (Pa.
Super. 2013). (To succeed on a breach of contract claim, a plaintiff must
prove the following elements: 1) existence of a contract, including essential
terms, 2) a breach of the duty imposed by the contract, and 3) resulting
damages.) As the trial court found, Katherine’s obligation to repay the SBA
loan is the result of the Suretyship Agreement, which she individually signed.
See Trial Court 1925(a) Opinion, 11/16/20, at 12. The trial court’s findings
are supported in the record, and its legal conclusions are sound. Finding no
abuse of discretion or error of law on the part of the trial court in granting
summary judgment in favor of Mark and denying Katherine’s Motion for
Summary Judgment, we affirm the trial court’s Order.2
Order affirmed.
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2 Given our disposition of Katherine’s first issue, we conclude she is not entitled
to attorneys’ fees.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/27/2021
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Circulated 08/19/2021 11:51 AM