Pizzella, C. v. Auto Buddies, Inc.

J-A04012-18
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CAROLYN PIZZELLA IN THE SUPERIOR COURT
OF
PENNSYLVANIA
Appellee
v.
AUTO BUDDIES, INC.
Appellant No. 522 MDA 2017
Appeal from the Judgment Entered March 17, 2017
In the Court of Common Pleas of Luzerne County
Civil Division at No: 2015-9389
BEFORE: STABILE, NICHOLS, AND RANSOM,* JJ
MEMORANDUM BY STABILE, J.: FILED JUNE 12, 2018
Appellant, Auto Buddies, Inc. appeals from the March 17, 2017
judgment in favor of Appellee Carolyn Pizzella. We affirm.
On December 1, 2011, Appellant leased (the “Lease”) a commercial
building at 260 South River Street in Plains, Pennsylvania (the “Premises”)1
from Appellee for use in Appellant’s used automobile sales business. The
Lease was for one year, with nine options for additional one-year terms.
Lease, at ¶¶ 2, 18. It required Appellant to pay rent, utilities, maintenance,
and property taxes for the Premises. Id. at ¶ 6, 9. In February of 2012, the
____________________________________________
* Retired Senior Judge assigned to the Superior Court.
1 Appellant leased these premises for one year prior to December 1, 2011,
apparently under a different lease agreement.
J-A04012-18
Luzerne County Tax Bureau issued a delinquent notice for real estate taxes
due from the Premises. Appellant paid the past due amount within eight days
of the delinquent notice and without any apparent prompting from Appellee.
In September of 2012, Appellee sent Appellant a letter advising that Appellee
did not intend to permit Appellant to renew the lease for another year.
Appellant responded the next day, stating that it intended to exercise its right
of renewal under the Lease. In October of 2012, Appellee sent Appellant
notice of its intent to terminate the Lease.
On November 2, 2012, Appellant filed a declaratory judgment action to
determine its rights under the Lease. In early 2013, Appellee filed an eviction
action. The trial court consolidated the parties’ 2012 and 2013 actions
(collectively the “Prior Actions”). After a short non-jury trial, the trial court
found that Appellee had no right to terminate the Lease absent Appellant’s
material breach and that Appellee was not in material breach. See Order,
12/17/14; Trial Court Opinion, 12/17/14, at 1-11. Thus, the trial court did
not grant Appellee’s petition to evict. The court did order Appellant to pay all
outstanding rent and reimburse Appellee for property taxes she paid for the
Premises. Order, 12/17/14, at ¶¶ 2-3. Appellant claimed it was the successful
party and therefore entitled to fees, but neither party filed a fee petition in
connection with the Prior Actions.
On March 18, 2015, after the appeal period for the Prior Actions expired
without either party filing a fee petition or an appeal, Appellee filed a contempt
-2-
J-A04012-18
action based on Appellant’s alleged failure to pay back taxes to Appellee
pursuant to the December 17, 2014 order. Appellant responded that it was
entitled to attorneys’ fees under the Lease because it was the successful party
in the Prior Actions. The trial court did not disagree with Appellant’s claim for
attorney’s fees, but held that “the attorney’s fees could not offset the taxes
owed under the December 17, 2014 Order.” Trial Court Opinion, 6/16/17, at
2 (pagination ours). The court did not explain its reasoning for concluding
that Appellant could not offset its debt to Appellee with the attorney’s fees for
which Appellee was required to reimburse Appellant. In any event, there
remained no on-the-record determination of the amount of attorney’s fees
Appellant was entitled to collect because Appellant did not file a fee petition
in the Prior Actions. Ultimately, the trial court held Appellant in contempt and
ordered it to pay the outstanding taxes within 20 days. Appellant did not
appeal, and complied with the order. Thereafter, Appellant paid no further
rent from April 1, 2015 through the commencement of the instant action on
September 22, 2015.
In her complaint that is the subject of this appeal, Appellee alleged that
Appellant failed to pay rent and property taxes, totaling $11,310.14, from
April through September of 2015. Complaint, 9/22/15, at ¶ 6. Appellee also
claimed Appellant owed $600.00 in late fees, for a total of $11,910.14. Id.
at ¶ 8. Appellant filed an answer, new matter, and counter claim in which it
claimed a setoff for the $11,700.00 in attorney’s fees incurred during the Prior
-3-
J-A04012-18
Actions. Answer, 10/15/15, at ¶¶ 27-30. Appellee filed a reply, alleging that
the trial court never awarded attorney’s fees in the Prior Actions and denying
the amount Appellant allegedly incurred. Reply, 12/10/15, at ¶¶ 27-30.
The trial court conducted a bench trial on August 1, 2016. Appellant
produced evidence in support of the attorney’s fees incurred during the Prior
Actions and argued for its ability to set that amount off against its financial
obligations under the Lease. N.T. Trial, 8/1/16, at 9-10, 18-26. Appellee
argued that neither party was completely successful in the Prior Actions. Id.
The parties introduced evidence of their competing financial claims, and the
trial court took the matter under advisement. On November 14, 2016, the
trial court entered two separate orders. In the first (“First Order”), it found
Appellant in material breach of the lease, ordered Appellant evicted, and
ordered Appellant to pay outstanding rent and tax obligations totaling
$7,201.29 “plus additional pro rata rent and tax debts accumulated prior to
eviction.” First Order, 11/14/16, at ¶ 4. The trial court further ordered
Appellant to compensate Appellee for $4,150.00 in attorney’s fees she
accumulated during her successful contempt proceeding. Id. at ¶ 5. The trial
court entered a Second Order (“Second Order”) that same day, directing
Appellee to pay Appellant $11,700.00 in counsel fees in connection with the
Prior Actions. Second Order, 11/14/16, at ¶ 1. The trial court did not permit
Appellant to use the Second Order as a setoff against the First. Appellee has
not filed a notice of appeal from the Second Order.
-4-
J-A04012-18
Appellant filed a timely post-trial motion on November 28, 20162
requesting entry of judgment in its favor or a new trial. The trial court denied
Appellant’s post-trial motion on January 30, 2017. According to Appellant’s
Brief, Appellant filed for Chapter 11 Bankruptcy protection on January 31,
2017 and the United States Bankruptcy Court, on March 2, 2017, granted
relief from the automatic stay to proceed with the eviction. Judgment was
entered on March 17, 2017, and Appellant filed this timely appeal one week
later.
Appellant presents six questions for review, four of which pertain to the
merits, and two of which pertain to the trial court’s refusal to stay the eviction
pending appeal. Appellant’s Brief at 5. The argument section of Appellant’s
brief does not address each question individually, in violation of Pa.R.A.P.
2119(a). Rather, the argument section challenges the trial court’s findings
that (1) Appellant was in breach of the Lease, and (2) Appellant was not
entitled to a setoff for previously incurred attorney’s fees.
Our standard of review is well settled:
Our appellate role in cases arising from nonjury trial verdicts
is to determine whether the findings of the trial court are
supported by competent evidence and whether the trial court
committed error in any application of the law. The findings of fact
of the trial judge must be given the same weight and effect on
appeal as the verdict of the jury. We consider the evidence in a
light most favorable to the verdict winner. We will reverse the
____________________________________________
2 The ten-day deadline for filing a post-trial motion (see Pa.R.C.P. No.
227.1(c)) expired on Thanksgiving Day, November 24, 2016. Appellant’s
motion, filed the following Monday, was therefore timely.
-5-
J-A04012-18
trial court only if its findings of fact are not supported by
competent evidence in the record or if its findings are premised
on an error of law. However, [where] the issue ... concerns a
question of law, our scope of review is plenary.
The trial court’s conclusions of law on appeal originating
from a non-jury trial are not binding on an appellate court because
it is the appellate court's duty to determine if the trial court
correctly applied the law to the facts of the case.
Gamesa Energy USA, LLC v. Ten Penn Ctr. Assocs., L.P., ___ A.3d ___,
2018 WL 1372202 at *2 (Pa. Super. Mar. 19, 2018).
The instant dispute arises under the Lease, including a provision in the
Lease governing attorney’s fees. “A lease is in the nature of a contract and is
to be controlled by principles of contract law.” Id. at *3. Further,
The interpretation of any contract is a question of law and
this Court’s scope of review is plenary. Moreover, we need not
defer to the conclusions of the trial court and are free to draw our
own inferences. In interpreting a contract, the ultimate goal is to
ascertain and give effect to the intent of the parties as reasonably
manifested by the language of their written agreement. When
construing agreements involving clear and unambiguous terms,
this Court need only examine the writing itself to give effect to the
parties’ understanding. This Court must construe the contract
only as written and may not modify the plain meaning under the
guise of interpretation.
Id. A material breach of a contract by one party allows the party not in breach
to suspend performance. Widmer Eng’g, Inc. v. Dufalla, 837 A.2d 459,
467 (Pa. Super. 2003), appeal denied, 852 A.2d 313 (Pa. 2004). “If,
however, the breach is an immaterial failure of performance, and the contract
was substantially performed, the contract remains effective.” Id.-6-
J-A04012-18
Appellant offers a general discussion of the law of breach and
materiality, but it does not specifically refute the trial court’s finding that it
owed Appellee $7,021.29 in rent and property taxes pursuant to the Lease.
Order, 11/14/16, at ¶ 4. Further, Appellant fails to explain why a default of
more than $7,000.00 was not a material breach of the Lease, given Appellant’s
monthly rental obligation of $1,500.00.3 Rather, Appellant’s argument seems
to hinge on its right to a setoff for previously incurred attorney’s fees.
The Lease provides as follows: “In the event that any action is filed in
relation to this Lease, the unsuccessful party in the action will pay to the
successful party, in addition to all the sums that either party may be called
upon to pay, a reasonable sum for the successful party’s attorney fees.”
Lease, ¶ 24. Neither party disputes that the Prior Actions were “filed in
relation to” the Lease, as per the first clause of Paragraph 24. Likewise,
neither party disputes that an unsuccessful party must pay the successful
party a reasonable sum for attorney’s fees.4 Attorney’s fees in this case are
____________________________________________
3 We observe that Rule 2119(b) and (c) requires citation to pertinent record
evidence and legal authorities. Pa.R.A.P. 2119(b), (c).
4 Appellee argues that Appellant was not the successful party in the Prior
Actions because both parties were partially successful. That is, the trial court
found Appellant in breach and ordered Appellant to pay damages, but the
court also found the breach not material and enforced Appellant’s right of
renewal. Whatever the merit of this argument, Appellee has not filed an
appeal from the Second Order directing her to pay Appellant’s attorney’s fees.
We therefore will not consider her challenge to the attorney’s fees award.
-7-
J-A04012-18
dependent entirely upon the Lease, as there was no other authority for the
trial court to award them. Merlino v. Delaware Cty., 728 A.2d 949, 951
(Pa. 1999) (“This Court has consistently followed the general, American rule
that there can be no recovery of attorneys’ fees from an adverse party, absent
an express statutory authorization, a clear agreement by the parties or some
other established exception.”).
The trial court justified its setoff holding as follows:
[Appellant] persistently justified not paying its Lease
obligations on the bases that any amounts it owed were less than
the amounts Pizzella owed it for attorney’s fees. [Appellant]
based this argument on two elements: first, on Lease Paragraph
24, stating that the unsuccessful party in an action between
[Appellee] and [Appellant] must pay the successful party’s
attorney’s fees; and second, this Court’s order in favor of
[Appellant] dated December 17, 2014. This Court clearly refuted
the offset, or credit argument in the hearing held March 18, 2015,
stating, ‘there’s no law that provides you with a setoff for any
number of reasons.’
Trial Court Opinion, 6/16/17, at 8. The trial court never cited the law it refers
to with respect to setoff or credit, and we have found no legal authority to
support the trial court’s position.5
____________________________________________
5 Nothing in the Lease prohibits a setoff of attorney’s fees against outstanding
rent. Furthermore, it seems a waste of judicial resources to force both parties
to participate in a separate proceeding wherein Appellant seeks collection
under the Second Order rather than to permit Appellant a setoff against the
amount he owes Appellee under the First Order. Both orders arose out of the
same proceeding. Moreover, both orders award damages under the same
contract.
-8-
J-A04012-18
The interrelated procedural history of this action, the contempt action,
and the Prior Actions, is very puzzling. Appellant apparently never filed a fee
petition while the Prior Actions were still pending, nor did Appellant put on any
evidence of the fees it incurred until its defense of the current eviction action.
For her part Appellee, until this appeal, failed to argue that Appellant is not
entitled to recover attorney’s fees for the Prior Actions because neither party
was wholly successful in the Prior Actions (as set forth above, the trial court
found Appellant in non-material breach and ordered Appellant to pay
damages). Neither party addresses the propriety of the trial court’s decision
to enter an award in the instant action to cover fees incurred during the Prior
Actions.
Subsequent to the Prior Actions, Appellant, apparently believing it was
entitled to a setoff for the outstanding attorney’s fees, has persistently
defaulted on its financial obligations under the Lease. The first such default
prompted Appellee’s contempt action. In that action, the trial court rejected
Appellant’s setoff argument and found in Appellee’s favor, ordering Appellant
to pay damages. An order holding a party in contempt and imposing sanctions
is final and appealable. K.M.G. v. H.M.W., 171 A.3d 839, 841-42 (Pa. Super.
2017). Appellant did not appeal from the contempt order.6
____________________________________________
6 Arguably, the trial court’s treatment of the setoff issue has become law of
the case. Law of the case doctrine holds that “a court involved in the later
phases of a litigated matter should not reopen questions decided by another
-9-
J-A04012-18
In the present appeal, finally with an order for attorney’s fees in hand,
Appellant is claiming that it has been entitled all along to a setoff against its
financial obligations under the Lease. In light of the tortuous procedural
history of the parties’ various disputes under the Lease, we are constrained to
leave the parties to this appeal as we have found them because neither has
preserved or articulated a sufficient basis for disturbing the judgment.
Appellant has persistently refused to remain current with its financial
obligations under the Lease, in clear defiance of the trial court’s rejection of
its setoff argument. While our result is not an endorsement of the trial court’s
setoff analysis, we conclude that Appellant, after it failed to appeal from the
contempt order, continued to defy the trial court at its own risk. Appellant’s
failure to refute the trial court’s specific findings on the amount and materiality
of its breach of the Lease warrants affirmance of the judgment and renders
its stay of eviction arguments moot. Regarding Appellee, she did not appeal,
and therefore has failed to preserve any challenge to the trial court’s award
of attorney’s fees, including her argument that Appellant was not the
____________________________________________
judge of that same court or by a higher court in the earlier phases of the
matter.” Commonwealth v. Starr, 664 A.2d 1326, 1331 (Pa. 1995).
Granted, the contempt proceeding and the instant action technically are not
phases of the same litigation, and this Court has yet to visit the merits setoff
issue. But Appellant’s failure to present the setoff issue to this Court at the
earliest opportunity, combined with its failure to abide by the trial court’s
ruling on the matter, contributed significantly to the current posture of the
case, wherein Appellant has been evicted from the Premises. A timely appeal
from the contempt order, or better yet, a fee petition and timely appeal in the
the Prior Actions would have alleviated many procedural problems.
- 10 -
J-A04012-18
successful party in the Prior Actions. For all of the foregoing reasons, we
affirm the judgment.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 06/12/2018
- 11 -