Gulla, R. v. Howard Hanna Company

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RONALD J. GULLA AND LAUREL M. : IN THE SUPERIOR COURT OF
GULLA, HUSBAND AND WIFE : PENNSYLVANIA
:
Appellants :
:
:
v. :
:
: No. 814 WDA 2017
HOWARD HANNA COMPANY, :
HOWARD HANNA REAL ESTATE :
SERVICES, HOWARD HANNA :
COMMERCIAL REAL ESTATE :
SERVICES AND WILLIAM MATTHEWS :
Appeal from the Order May 8, 2017
In the Court of Common Pleas of Washington County Civil Division at
No(s): No. 2012-155
BEFORE: BOWES, J., OLSON, J., and KUNSELMAN, J.
MEMORANDUM BY BOWES, J.: FILED SEPTEMBER 19, 2018
Ronald J. and Laurel M. Gulla, husband and wife, appeal from the May
8, 2017 order granting summary judgment in favor of Howard Hanna
Company, Howard Hanna Real Estate Services, Howard Hanna Commercial
Real Estate Services, and licensed real estate agent William Matthews
(collectively “Howard Hanna”), on their claim under the Unfair Trade
Practices and Consumer Protection Law (“UTPCPL”), 73 P.S. § 2-101 et seq.
After thorough review, we vacate the order granting summary judgment and
remand for further proceedings.
We present the facts in the light most favorable to the Gullas, the non-
moving party, in accordance with our standard of review from the grant of
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summary judgment. The Gullas owned a 141-acre farm (the “Gulla Farm”)
in Hickory, Washington County, Pennsylvania. In 2002, the Gullas leased
their oil and gas rights to Great Lakes Energy, the predecessor to Range
Resources Company (collectively “Range”). Range drilled wells on their
property, which were described by Mark Hunneshagen, the district landman
for Range, as being “very, very, very good.” Plaintiffs’ Response in
Opposition to Summary Judgment, 1/13/17, at Exhibit 9 (Deposition of Mark
Hunneshagen, 2/24/16, at 84). However, in and around 2007, the Gullas
complained to Range that its drilling and associated operations had
contaminated their pond and property.
The record also reveals that, in the spring of 2007, Range was
interested in purchasing a Washington County property for its field
operations office. Mr. Matthews, a licensed real estate agent associated with
Howard Hanna, was assisting Range in that endeavor. According to Mr.
Matthews, he informed Mr. Hunneshagen of the availability of the Smith
Farm in Mt. Pleasant prior to May 2007. Mr. Hunneshagen was interested in
the property because he had been told by Range analysts that Range had an
oil and gas lease on the Smith Farm. Id. at 83, 84, 172. Mr. Matthews
accompanied Mr. Hunneshagen when he went to see the property.
However, the Smith Estate did not want to sell the farm to Range as other
members of the family owned and lived on adjacent properties.
Shortly thereafter, in May 2007, Range representatives suggested to
the Gullas that Range buy the Gulla Farm for its field operations office.
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There were negotiations between the Gullas and Range for the purchase of
the Gulla Farm, but no signed sales agreement. Range proposed the idea of
a 1031 tax-free exchange1 of property, and specifically mentioned the Smith
Farm as a possible replacement property for the Gullas. Range told the
Gullas that they would like them to use their broker, Howard Hanna, and
specifically Mr. Matthews, to facilitate such a transaction.
On May 31, 2007, Mr. Gulla met with Mr. Matthews at a restaurant in
Cranberry, Butler County, to discuss Range’s purchase of the Gulla Farm and
a 1031 tax-free exchange. Mr. Matthews had a sales agreement with him,
which he hoped the Gullas would sign, and which mentioned the tax-free
exchange. Mr. Gulla advised Mr. Matthews that he would not sell unless an
adequate unencumbered replacement parcel was available, i.e., a property
with its mineral rights attached.2 They discussed the Smith Farm. Mr. Gulla
asked Mr. Matthews to do a title search to make sure that the mineral rights
of the Smith Farm were not encumbered, and Mr. Matthews assured him
that he would do so.
On that day, the Gullas entered into an Exclusive Buyer Agency
Contract (“EBAC”) with Mr. Matthews and Howard Hanna, retaining Howard
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1 According to Mr. Matthews, the 1031 exchange was his idea.
2 Mr. Matthews does not dispute that Mr. Gulla expressed this requirement.
Plaintiffs’ Response in Opposition to Summary Judgment Exhibit 5
(Deposition of William Matthews, 5/20/14, at 262).
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Hanna and Mr. Matthews to represent them regarding any property that the
Gullas chose to buy during the term of the contract. The Gullas also agreed
to a dual agency, meaning that Howard Hanna could represent the seller of
the property that the Gullas might buy. Paragraph 6 of the EBAC, entitled
“OTHER,” contained additional typed disclosures and provisions peculiar to
the parties’ arrangement. Howard Hanna disclosed therein that Range “has
consulted with Howard Hanna to assist Ron Gulla to seek council [sic] (Legal
& Accounting) to facilitate a 1031 exchange if [Range] purchases 29 Gulla
Lane, Hickory PA 15340.” EBAC, 5/31/07, at 1-2. In addition, the
agreement recited that Range had agreed to pay Howard Hanna a “minimal
fee” if, through Howard Hanna’s efforts, the 1031 exchange was
accomplished and Range purchased the Gulla property. Id. at 2. Howard
Hanna disclaimed any notion that it was “doing the 1031” transaction, and
defined its role as “assisting Ron Gulla obtain professional council [sic] to
facilitate this transaction.” Id. The Gullas acknowledged their
understanding that “if a 1031 transaction is not done correctly[,] all tax
savings could be lost,” and that it was Mr. Gulla’s sole “responsibility to
make sure that the tax savings/1031 will apply.” Id. It was further clarified
therein that Howard Hanna would represent Ron Gulla in purchasing the
replacement property, but that Range was also employing Howard Hanna to
find other properties if it could not come to terms with the Gullas. Howard
Hanna represented that “up to this point,” it had not been involved in
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negotiating with Mr. Gulla for the Gulla Farm, but that its licensee, Mr.
Matthews, had answered Range’s real estate questions “and provided a
Pennsylvania Association of Realtors Sales Agreement for their offer to Ron
Gulla.” Id. At the end of paragraph 6, Mr. and Mrs. Gulla expressly
authorized Howard Hanna’s involvement in the negotiations with Range for
the purchase of the Gulla Farm, and agreed that Howard Hanna would serve
as a dual agent representing both Mr. Gulla and Range, with any fee to be
paid by Range. Id.
The EBAC also contained the “Notices to Buyers,” which provided inter
alia, that Mr. Matthews could show or present the same properties to other
buyers, and defining conflict of interest as “when a Broker or Licensee has
financial or personal interest in the property where Broker or Licensee
cannot put Buyer’s interest before any other[,]” and in that event, requiring
Broker to notify Buyer in a timely manner. Id. at 3. The Buyer, herein the
Gullas, acknowledged that they had received the Pennsylvania State Real
Estate Commission Consumer Notice, 49 Pa. Code §35.336, which was
incorporated within the Notice.3 By its terms, the EBAC was the “entire
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3 The Consumer Notice defines a buyer agent as a licensee who works
exclusively for the buyer and acts in the buyer’s best interest, even if paid
by the seller. A dual agent works for both the buyer and seller, but cannot
take any action that is adverse or detrimental to either party. 49 Pa.Code §
35.336(c). The Notice provides further that all licensees owe consumers,
inter alia, the duty to deal honestly and in good faith and meet the practice
(Footnote Continued Next Page)
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agreement between Broker and Buyer[,]” Howard Hanna and the Gullas
respectively. Id. at 2. There was no mention of the Smith Farm or any
particular properties in the EBAC.
By email dated June 7, 2007, Mr. Matthews provided Mr. Gulla with
listings for thirty-three commercial properties for sale in Washington,
Westmoreland, and Allegheny counties. Neither the Smith Farm nor any
other farm property was included.
Three weeks after the execution of the EBAC, Mr. Matthews was still
entertaining the possibility that Range would purchase the Smith Farm
instead of the Gulla Farm. In a June 27, 2007 email to Mr. Hunneshagen,
Mr. Matthews suggested that Range offer $1.5 to $1.6 million dollars for the
Smith Farm. He told Mr. Hunneshagen that although the Smiths did not
want Range as a neighbor before, he thought a higher offer “might make
them reconsider” since a $1.1 million offer had fallen through in the interim.
Exhibit 8 to Plaintiffs’ Response in Opposition to Motion for Summary
Judgment. Attached to that email was a flier that Mr. Matthews proposed to
forward to Howard Hanna agents asking them to prospect for a thirty to
100-acre property available for immediate purchase near the Gulla Farm.
Thus, as of the end of June 2007, Range had not committed to purchasing
(Footnote Continued) _______________________
standards required by the Real Estate Licensing and Registration Act
(“RELRA”), 63 P.S. § 455.101 et seq.
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the Gulla Farm, and Mr. Matthews was actively looking for a suitable
property for Range’s field operation in the event Range did not purchase the
Gulla Farm.4
On July 26, 2007, Mr. Matthews accompanied the Gullas on their first
visit to the Smith Farm. At Mr. Matthews’ urging, they made an oral offer of
$900,000 for the property. The Gullas maintain that, at that time, they
were willing to offer more to purchase the property, even as much as the
$1.3 million dollar list price. Later that same day, they met with Mr.
Matthews and prepared a written offer to sell their farm to Range. The offer
was not contingent on the Gullas obtaining the Smith Farm or any other
replacement property or on the successful completion of a 1031 tax-free
exchange. After the offer had been conveyed to Range, Mr. Matthews told
the Gullas that their $900,000 verbal offer on the Smith Farm had been
rejected. In a July 28, 2007 email, Mr. Matthews sent the Gullas more than
four dozen listings for farms and acreage in Beaver, Butler, and Washington
counties, including the Smith Farm. Two days later, Mr. Matthews advised
the Gullas that Range had accepted their offer to sell the Gulla Farm for
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4 Mr. Matthews acknowledged in his deposition that, although he had a
buyer’s relationship with the Gullas, he “was more concerned in facilitating
the transaction between the buyer and the seller on the initial thing with
Range and Gulla. Then [his] focus was on buying a separate property for
Ron Gulla.” Plaintiffs’ Response in Opposition to Summary Judgment,
Exhibit 5 (Deposition of William Matthews, 5/20/14, at 102).
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$1.52 million, resulting in a fully executed sales agreement for that
property.
The Gullas advised Mr. Matthews that they wanted the Smith Farm. In
September, Mr. Matthews encouraged them to pursue that property, and on
September 19, 2007, they submitted a $1.1 million offer expressly including
all mineral rights. After the presentation of that offer, Mr. Matthews
informed the Gullas that sixty-five acres of the 165-acre Smith Farm was
subject to an oil and gas lease with Range executed in 2006. He also told
the Gullas that he had not performed the title search they wanted on that
property. The Smiths subsequently declined the Gullas’ $1.1 million offer
and, with the new information about the oil and gas lease encumbering the
Smith Farm, the Gullas abandoned any interest in that property. Thereafter,
the Gullas refused to close on the sale of the Gulla Farm. Range sued them
for specific performance of the sales agreement, and Range prevailed on
summary judgment.
The Gullas commenced this action under the UTPCPL against Mr.
Matthews and Howard Hanna to recover damages for the broker and agent’s
deceit and misrepresentations regarding the suitability of the Smith Farm as
a replacement property. They alleged that the misrepresentations and non-
disclosures induced the Gullas to sell their farm to Range. They averred that
Mr. Matthews misrepresented that he had performed a title search on the
Smith Farm, when he had not, and they justifiably relied upon that
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representation. Alternatively, Mr. Matthews intentionally, recklessly, and
wrongfully concealed that he had not performed a title search to convince
the Gullas to sell to Range and further Howard Hanna’s relationship with
Range. They alleged further that Mr. Matthews intentionally, recklessly, and
wrongfully concealed the fact that the Smith Farm was encumbered with an
oil and gas lease so that the Gullas would sell to Range. Had he not
deceived them, the Gullas maintain that they would not have sold their farm
to Range.
Howard Hanna moved for summary judgment on the UTPCPL action on
six grounds.5 The trial court determined that summary judgment was
appropriate based on the parol evidence rule, concluding that any
misrepresentations by Mr. Matthews prior to the EBAC merged into that
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5 In support of summary judgment, Howard Hanna also contended that
there was no evidence that Mr. Matthews or Range knew there was a gas
lease on part of the Smith Farm prior to the execution of the agreement of
sale for the Gulla Farm. In addition, Howard Hanna asserted that the Gullas
could not prove that they justifiably relied upon Mr. Matthews’ performance
of a title search on the Smith Farm, as they made two offers on that
property with no assurances from Mr. Matthews that he had performed one.
They characterized the allegations as sounding in negligence on the part of
Mr. Matthews for failing to make the sale of the Gulla Farm contingent on
their acquisition of the Smith Farm or other suitable property, a claim that
was time-barred. Howard Hanna contended that collateral estoppel
operated to bar the Gullas from arguing that they relied on any
representation that the Smith Farm was unencumbered, and finally, that
there was no causal connection between the alleged misrepresentations and
the non-occurrence of the 1031 exchange for which they were seeking
damages.
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agreement, and hence, were inadmissible.6 The court held further that any
discussions or representations after the execution of the EBAC were
subsequent oral modifications that had to be in writing in order to be
enforceable. The Gullas timely appealed from the order granting summary
judgment, and raise three issues for our review:
1. Whether the trial court committed an error of law and/or
abused its discretion by refusing to liberally construe the
Unfair Trade Practices and Consumer Protection Law, 73 P.S.
§ 2-101, et seq. “UTPCPL”) and dismissing the Gullas’
cognizable statutory cause of action where the competent
record evidence demonstrated that Matthews and Howard
Hanna’s statements, assurances, writings and conduct were
capable of being interpreted in a misleading way and created
a likelihood of confusion or misunderstanding for the Gullas,
which requires that the Gullas’ claim be submitted to a trier of
fact?
2. Whether the trial court committed an error of law and/or
abused its discretion by misapplying the parol evidence rule
to the Gullas’ independent statutory cause of action arising
from Matthews and Howard Hanna’s violations of their
fiduciary duties and the UTPCPL?
3. Whether the trial [court] committed an error of law and/or
abused its discretion by misapplying the parol evidence rule
to bar the consideration of evidence relating to both subject
matter not addressed in a contract and oral statements,
assurances, writings, and conduct subsequent to the
execution of a collateral agreement?
Appellants’ brief at 4.
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6 The trial court did not address whether summary judgment was proper on
any of the other five grounds asserted by Range. Nor do Appellees argue on
appeal that these other grounds offer additional or alternative bases to
affirm the grant of summary judgment.
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At issue herein is the propriety of the trial court’s grant of summary
judgment in favor of Howard Hanna and Mr. Matthews based on the parol
evidence rule and the integration clause contained in the EBAC. The law is
well settled that
[s]ummary judgment is appropriate where the record clearly
demonstrates there is no genuine issue of material fact and the
moving party is entitled to judgment as a matter of law. When
considering a motion for summary judgment, the trial court must
take all facts of record and reasonable inferences therefrom in a
light most favorable to the non-moving party. Whether there
are no genuine issues as to any material fact presents a question
of law, and therefore, our standard of review is de novo and our
scope of review plenary.
Estate of Agnew v. Ross, 152 A.3d 247, 259 (Pa. 2017) (internal citations
omitted). “This means we need not defer to the determinations made by the
lower tribunals. To the extent that this Court must resolve a question of
law, we shall review the grant of summary judgment in the context of the
entire record.” Wells Fargo Bank, N.A. v. Joseph, 183 A.3d 1009, 1012
(Pa.Super. 2018) (quoting Summers v. Certainteed Corp., 997 A.2d
1152, 1159 (Pa. 2010) (internal citations and quotation marks omitted)).
Preliminarily, we note that this is not an action seeking to void the sale
of the Gulla Farm to Range. Rather, the Gullas seek to recover damages
under the UTPCPL from their licensed real estate agent and broker, Mr.
Matthews and Howard Hanna, for losses they sustained as a consequence of
Mr. Matthews’ misrepresentations regarding the existence of oil and gas
leases on the Smith Farm. They maintain that, but for the
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misrepresentations, they would not have sold their farm to Range. Thus,
the focus herein is on the EBAC and Howard Hanna’s conduct vis-à-vis its
clients, the Gullas. Howard Hanna concedes that a cognizable claim under
the UTPCPL may be asserted against an agent in the context of a real estate
transaction, but maintains that no claim will lie herein because the parol
evidence rule operates to preclude evidence of the alleged
misrepresentation.
The UTPCPL forbids unfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or commerce. 73
P.S. § 201-3. The statute proscribes twenty specific acts, id. at § 201-
2(4)(i)-(xx), and contains a catch-all provision that prohibits persons from
"[e]ngaging in any other fraudulent or deceptive conduct which creates a
likelihood of confusion or of misunderstanding.” Id. at § 201-2(4)(xxi). The
law, enacted in 1968, was amended in 1976 to add a private cause of action
for “[a]ny person who purchases or leases goods or services primarily for
personal, family or household purposes and thereby suffers an ascertainable
loss of money or property . . . .” Id. at § 201-9.2.7 The UTPCPL is a
remedial statute that is to be liberally construed to effectuate its purpose of
preventing “‘unfair or deceptive’ business practices.” Commonwealth by
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7 In private actions under the UTPCPL, the court has the discretion to award
up to three times the actual damages sustained, as well as costs and
attorney fees.
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Creamer v. Monumental Properties, Inc., 329 A.2d 812, 815 (Pa. 1974);
see also DeArmitt v. New York Life Ins. Co., 73 A.3d 578, 591
(Pa.Super. 2013) (reaffirming remedial goals of the statute to protect
consumers from unfair or deceptive practices).
The trial court ruled that the Gullas were purchasers of real estate
brokerage services, and thus had standing to bring a private cause of action
under the UTPCPL to seek redress for fraudulent and deceptive conduct
allegedly perpetrated by Mr. Matthews and Howard Hanna. In order to
maintain such a claim, however, “a plaintiff must show that he justifiably
relied on the defendant's wrongful conduct or representation and that he
suffered harm as a result of that reliance.” Yocca v. Pittsburgh Steelers
Sports, Inc., 854 A.2d 425, 438 (Pa. 2004) (citing Weinberg v. Sun Co.
Inc., 777 A.2d 442, 446 (Pa. 2001)). Reliance is not merely a simple causal
connection between the misrepresentation and the harm. A plaintiff must
“show that he justifiably bought the product in the first place (or engaged in
some other detrimental activity) because of the misrepresentation.”
Slemmer v. McGlaughlin Spray Foam Insulation, Inc., 955 F. Supp. 2d
452 (E.D. Pa. 2013). However, justifiable reliance need not be proven if
there is a fiduciary relationship between the parties. A confidential
relationship for purposes of the UTPCPL can be established by a showing of
either “overmastering influence” or of “weakness, dependence or trust.”
Basile v. H & R Block, Inc., 777 A.2d 95, 101 (Pa.Super. 2001); see also
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Yenchi v. Ameriprise Fin., Inc., 161 A.3d 811, 820 (Pa. 2017) (holding
that even where a fiduciary duty does not exist as a matter of law, fiduciary
duties may be found in “circumstances where the relative position of the
parties is such that the one has the power and means to take advantage of,
or exercise undue influence over, the other.”).
The Gullas pled that their relationship with Howard Hanna and Mr.
Matthews was a fiduciary relationship. They also alleged that they justifiably
relied on Mr. Matthews’ misrepresentations regarding his performance of a
title search on the Smith Farm, and that it was free and clear of all oil and
gas encumbrances. According to the Gullas, those misrepresentations
induced them to sell their farm to Range. The Howard Hanna defendants
countered that evidence of the misrepresentations was barred by the parol
evidence rule, and hence, summary judgment was proper.
The parol evidence rule is an evidentiary rule that precludes the
parties to a written contract that was intended to be their entire agreement
from introducing prior oral representations or negotiations concerning a
subject specifically dealt with in the written contract, in order to vary or
modify the contract terms. The prior oral representations are deemed to be
merged into the writing. The only exceptions to the rule are where fraud,
accident, or mistake are alleged and proven. See Bardwell v. The Willis
Co., 100 A.2d 102, 104 (Pa. 1953) (articulating the parol evidence rule).
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The purpose of the rule is “to preserve the integrity of written
agreements by refusing to permit the contracting parties to attempt to alter
the import of their contract through the use of contemporaneous [or prior]
oral declarations.” Rose v. Food Fair Stores, Inc., 262 A.2d 851, 853 (Pa.
1970); see also Lenzi v. Hahnemann University, 664 A.2d 1375, 1379
(Pa.Super. 1995) (“The parol evidence rule seeks to preserve the integrity of
a written agreement by barring the contracting parties from trying to alter
the meaning of their agreement through use of contemporaneous oral
declarations.”). “Where parties, without any fraud or mistake, have
deliberately put their engagements in writing, the law declares the writing to
be not only the best, but the only, evidence of their agreement.” Gianni v.
Russell & Co., 126 A. 791, 792 (Pa. 1924).
Nonetheless, the parol evidence rule does not bar all evidence of prior
dealings between the parties. Any writing must be interpreted, and to the
extent that a contract is ambiguous, parol evidence is admissible to clarify
indefinite terms. Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co., 905
A.2d 462, 468-69 (Pa. 2006). Moreover, the parol evidence rule only
operates to bar evidence of prior oral or written agreements or negotiations
about subject matter covered in the contract. As our Supreme Court
clarified in Yocca, supra at 436 (emphasis added), “[o]nce a writing is
determined to be the parties’ entire contract, the parol evidence rule applies
and evidence of any previous oral or written negotiations or agreements
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involving the same subject matter as the contract is almost always
inadmissible to explain or vary the terms of the contract.” See also Youndt
v. First Nat'l Bank, 868 A.2d 539, 545 (Pa.Super. 2005). The bottom line
is that prior inconsistent statements and negotiations between the parties
are inadmissible to vary the terms of the written contract.
The EBAC contained an integration clause, which has been held to
“make the parol evidence rule particularly applicable.” Hart v. Arnold, 884
A.2d 316, 340-41 (Pa.Super. 2005) (quoting 1726 Cherry Street
Partnership by 1726 Cherry Street Corp. v. Bell Atlantic Properties,
Inc., 653 A.2d 663, 665 (Pa.Super. 1995)). Where a written contract is
unambiguous, it “must be held to express all of the negotiations,
conversations, and agreements made prior to its execution, and neither oral
testimony, nor prior written agreements, or other writings, are admissible to
explain or vary the terms of the contract.” Id.
In ruling on Range’s claim that the parol evidence rule precluded
evidence of the alleged misrepresentation, the trial court examined the
EBAC, the written contract between the Gullas and Howard Hanna. It noted
that the EBAC did not specifically discuss the Smith Farm or make the sale of
the Gulla Farm contingent upon the Gullas finding a suitable replacement
property. Trial Court Opinion, 5/8/17, at unnumbered 4. Moreover, the
EBAC contained an integration clause providing:
This is the entire agreement between Broker and Buyer. Any
verbal or written agreements that were made before are not a
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part of this agreement. Any changes or additions to this
agreement must be in writing and signed by Broker and Buyer.
EBAC, 5/31/07, at 2.
The trial court concluded that since the EBAC was the whole
agreement of the parties, the parol evidence rule applied and precluded
evidence of the parties’ prior oral negotiations or agreements. Id. at
unnumbered 5. The court rejected the Gullas’ argument that the parol
evidence rule was inapplicable because the subject of the evidence, the
Smith Farm, was not addressed in the EBAC. Instead, the court found that
the EBAC’s general discussion of replacement properties met the same
subject matter requirement for applying the rule and barring the evidence.
Id. at unnumbered 6. Furthermore, to the extent that the Gullas were
relying upon oral representations made after the EBAC was executed, the
trial court concluded that these were oral modifications that had to be in
writing and signed by the parties to be admissible. A.D.P., Inc. v. Morrow
Motors, Inc., 969 A.2d 1244 (Pa.Super. 2009). The court viewed Mr.
Matthews’ representation that he would perform a title search on the Smith
Farm as an amendment to the EBAC that was not placed in writing and
signed by the parties. Furthermore, there was no evidence of conduct on
the part of Howard Hanna establishing an intent to waive the writing
requirement, and hence, no genuine issue of fact. Trial Court Opinion,
5/8/17, at unnumbered 6.
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The Gullas argue that they presented a cognizable claim under the
UTPCPL. Mr. Matthews held himself out as their agent. Mr. Gulla submitted
an affidavit to the effect that Mr. Matthews assured him through his conduct
and statements that the Smith Farm was free of oil and gas leases and that
he had performed the promised title search. They contend that the trial
court erred in disregarding that sworn testimony in finding no genuine issue
of material fact that would preclude entry of summary judgment.
The Gullas also contend that the trial court erred in applying the parol
evidence rule to preclude evidence of Mr. Matthews’ misleading and
deceptive conduct and representations. In support of their contention, they
direct our attention to Youndt, supra, holding parol evidence admissible in
fraud cases.
Finally, the Gullas maintain that the written contract, the EBAC, is
collateral to the issue, as the statutory action herein is not based upon that
writing. Furthermore, the subject matter of the misrepresentations is not
addressed in the EBAC, and the misrepresentations are not offered to
contradict the terms of that contract. Moreover, the misrepresentations and
deceitful conduct occurred subsequent to the EBAC, and did not purport to
vary the terms of the EBAC. Finally, the Gullas argue that whether Mr.
Matthews’ words were intended to modify the earlier agreement is a
question of fact for the factfinder.
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After a thorough review of the record, we conclude that the trial court
misapplied the parol evidence rule. The EBAC defined the exclusive buyer
agency relationship between Mr. Matthews, Howard Hanna, and the Gullas.
It also served as a disclosure of Howard Hanna’s relationship with Range,
and contained the Gullas’ consent to Howard Hanna acting in a dual agency
capacity if they should sell their property to Range. In addition, the EBAC
clarified the respective responsibilities of the parties should a 1031 tax-free
exchange become a possibility, placing the onus upon the Gullas to obtain
the legal and financial expertise necessary to obtain the tax benefits. The
agreement did not include details regarding the manner in which Howard
Hanna would perform its services, nor did it incorporate discussions about
the Gullas’ requirements for a suitable replacement property. The Smith
Farm was not part of the written agreement between the parties, and the
search for replacement properties was not limited to the Smith Farm.
Even assuming the parties discussed the Smith Farm as a possible
replacement property prior to or contemporaneously with the execution of
the EBAC, it was not the subject of the written agreement. Mr. Gulla
discussed with Mr. Matthews that a replacement property would have to be
free of oil and gas leases, and Mr. Matthews acknowledged that
understanding. Response in Opposition to Summary Judgment Exhibit 5
(Deposition of William Matthews, 5/20/14, at 62). He purportedly asked Mr.
Matthews to do a title search on the Smith Farm to check whether it met
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that requirement. According to Mr. Gulla, Mr. Matthews assured him that he
would conduct such a search. These and similar discussions about the
suitability of possible replacement properties were not spelled out in the
EBAC.
In order to make out a claim under the UTPCPL, the Gullas necessarily
have to introduce the substance of the misrepresentations Mr. Matthews
made about the Smith Farm. We find that the content of discussions relative
to the Smith Farm that occurred prior to or contemporaneously with the
execution of the EBAC were not offered by the Gullas to vary the terms of
that written contract. Nor did they contradict the terms of the written
contract. We agree with the Gullas that, in this case, the EBAC was largely
collateral to the UTPCPL claim.
We observe further that the parol evidence rule does not fit squarely
within the construct of the UTPCPL. In Yocca, supra, our High Court
framed the parol evidence issue in terms of justifiable reliance. It concluded
that one asserting a claim under the UTPCPL “cannot justifiably rely on a
defendant’s representations that are in direct conflict with the terms of the
contract.” Yocca, supra at 439 (finding that plaintiffs/buyers could not
justifiably rely upon representations in a brochure that contradicted the
terms of the subsequent written contract). When we view the
representations through the lens of justifiable reliance rather than as parol
evidence, we find that the EBAC presents no impediment to the Gullas’
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ability to prove that they justifiably relied upon representations about the
Smith Farm. The proffered evidence simply does not contradict or refute the
written terms of the EBAC.
Notably, the misrepresentations at the center of this UTPCPL claim
were alleged to have been made by Mr. Matthews after the execution of the
EBAC, and thus do not implicate the parol evidence rule. Consequently, the
trial court excluded evidence of Mr. Matthews’ later assurances that he had
performed a title search on the Smith Farm and that it was free of oil and
gas encumbrances as subsequent oral modifications of the EBAC that were
not placed in a writing.
We do not find the alleged misrepresentations to be an oral
modification of any term in the EBAC as the EBAC did not address the Smith
Farm and it did not purport to delineate how Mr. Matthews would perform
his services on behalf of the Gullas. The EBAC’s general reference to
replacement properties does not foreclose evidence of later discussions and
representations about the Smith Farm in particular. In short, Mr. Matthews’
subsequent representations about a particular property did not modify the
terms of the EBAC, and thus did not have to be in writing. Nor were they
offered by the Gullas for that purpose. The evidence was offered to
substantiate allegedly deceitful practices on the part of Mr. Matthews that
violated the UTPCPL, upon which the Gullas justifiably relied in selling the
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Gulla Farm to Range, to their detriment.8 For these reasons, we find the
trial court erred in applying the parol evidence rule and the contractual
prohibition against subsequent oral modifications to grant summary
judgment herein.
Given our standard and scope of review, there is no prohibition against
this Court affirming the grant of summary judgment on one of the
alternative bases urged by Howard Hanna below. However, viewing the
record in the light most favorable to the Gullas, we find sufficient evidence of
misrepresentations and deceitful practices to create a genuine issue of
material fact, and preclude the entry of summary judgment on that basis.9
____________________________________________
8 The purported misrepresentations of Howard Hanna do not merge into the
integrated sales agreement between the Gullas and Range as the integration
clause in that contract only merged prior oral representations and
agreements between the parties to that contract. In pertinent part, the
sales agreement provided: “This Agreement contains the whole agreement
between Seller and Buyer, and there are no other terms, obligations,
covenants, representations, statements or conditions, oral or otherwise, of
any kind whatsoever concerning this sale.” See Standard Agreement for the
Sale of Real Estate, 7/30/07, at ¶28(A). Hence, we reject Howard Hanna’s
argument that its misrepresentations to the Gullas prior to the agreement of
sale for the Gulla Farm are inadmissible as violative of the parol evidence
rule.
9 Pa.R.C.P. 1035(b) provides that summary judgment will be granted only if
the pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law. In his affidavit, Mr. Gulla attested that Mr.
Matthews either actively misrepresented or failed to disclose information
that he knew about the status of the mineral rights of the Smith Farm. Mr.
Matthews denied that he knew the Smith Farm was encumbered by the oil
(Footnote Continued Next Page)
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There was sufficient evidence of a fiduciary relationship between
Howard Hanna and the Gullas or justifiable reliance by the Gullas upon the
misrepresentations of Mr. Matthews to present a genuine issue of material
fact for the factfinder.10 We find no merit in Howard Hanna’s contention that
the instant claim is merely a time-barred negligence claim against Mr.
Matthews and Howard Hanna for failing to make the sale of the Gulla Farm
contingent on their acquisition of the Smith Farm or other suitable property.
The UTPCPL presents a remedy for damages caused by deceit and
misrepresentations in the conduct of trade or commerce. Moreover,
collateral estoppel is inapplicable as the issue in the prior action against
Range was not identical to the issue herein involving Mr. Matthews and
Howard Hanna.11
(Footnote Continued) _______________________
and gas lease. In light of Mr. Matthews’ prior involvement with Mr.
Hunneshagen in Range’s possible purchase of the Smith Farm, and Mr.
Hunneshagen’s knowledge of the oil and gas lease on that property, one
might reasonably infer that Mr. Matthews learned about the lease.
10 In prior litigation between the Gullas and Range, summary judgment was
granted based on the fact that the parol evidence rule, together with the
integration clause in the sales agreement for the Gulla Farm, operated to
preclude the Gullas from offering evidence of Range’s prior oral
representations about the Smith Farm.
11 Range commenced an action against the Gullas for specific performance of
the sales agreement for the Gulla Farm. The Gullas defended by alleging
that misrepresentations by Range employees had induced them to enter the
contract. Summary judgment was granted in favor of Range based on the
parol evidence rule and the merger of any such representations into the fully
integrated sales agreement.
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We find considerable merit, however, in Howard Hanna’s contention
that there is no causal connection between the alleged misrepresentations
and the non-occurrence of the 1031 tax-free exchange for which the Gullas
are seeking damages. Neither the sale of the Gulla Farm nor the purchase
of a replacement property was contingent upon qualifying for favorable 1031
tax-free exchange benefits.12 Nonetheless, since the Gullas have alleged
damages beyond the lost 1031 tax benefits, and resolution of that narrow
issue is not dispositive of damages generally, we decline to grant partial
summary judgment without the benefit of the trial court’s reasoning or
briefing by the parties regarding this issue.
Order vacated. Case remanded. Jurisdiction relinquished.
Judge Olson joins the memorandum.
Judge Kunselman concurs in the result.
____________________________________________
12 The Gullas’ own evidence suggests that the Gulla Farm would not have
qualified for section 1031 tax benefits. The Gullas’ expert opined that the
exchange of a principal residence did not qualify for section 1031 tax
treatment; both the new and the old property must have been held for
investment or business use to qualify. Even if the Gullas could have treated
the portion of their property subject to the oil and gas lease with Range as
an investment property, a replacement property would also have to have
been held for investment purposes. The expert noted that the Gullas did not
want a replacement property that was encumbered by a lease, which was
the case with the Smith Farm. See Expert Report of Robert D. Hoag, CPA,
MST, CGMA, 11/11/16.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/19/2018
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