Benton Student Housing v. Lion Construction

J-A04022-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BENTON STUDENT HOUSING, LLC : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
LION CONSTRUCTION, LLC LION :
CONSTRUCTION MANAGEMENT, LLC, :
SEAN SCHELLENGER, AND MICHAEL : No. 1941 EDA 2018
STILLWELL, :
:
Appellants. :
Appeal from the Order Entered, May 25, 2018,
in the Court of Common Pleas of Philadelphia County,
Civil Division at No(s): August Term, 2016 No. 000749.
BEFORE: LAZARUS, J., KUNSELMAN, J., and COLINS*, J.
MEMORANDUM BY KUNSELMAN, J.: FILED MAY 29, 2019
Lion Construction, LLC, Lion Construction Management, LLC, Sean
Schellenger, and Michael Stillwell (collectively, “Lion Construction” or
“Defendants”) appeal from the trial court’s order denying their emergency
petition to strike and/or open the $95,000 stipulated judgment following
remand from this Court to determine whether Lion Construction had a right to
cure an untimely payment under certain ambiguous provisions of the parties’
settlement agreement. Upon review, we affirm.
This matter was previously before the Court on appeal from the trial
court’s initial order denying Lion Construction’s emergency petition to strike
and/or open the $95,000 stipulated judgment. We have restated below the
*Retired Senior Judge specially assigned to the Superior Court.
J-A04022-19
facts and procedural history from that case pertinent to the issues now before
us:
Benton, a student-housing development company, entered into a
construction contract with Streamline Solutions, LLC, for work on
one of its student-housing developments. When Streamline
breached its contract with Benton, Benton filed an action against
Streamline that resulted in a $115,245.45 arbitrator's award in
favor of Benton, dated October 16, 2015. On October 22, 2015,
the owners of Streamline, Schellenger and Stillwell, formed Lion
Construction, LLC and Lion Construction Management, LLC. The
Streamline award was reduced to judgment on January 13, 2016;
however, Benton was unsuccessful in collecting against it. As a
result, on August 5, 2016, Benton instituted the “underlying
action” against Lion Construction seeking to impose successor
liability and to pierce Streamline's corporate veil with respect to
Schellenger and Stillwell in order to recover its Streamline
judgment.
In the midst of discovery in the underlying action, the parties
agreed to settle the case. To that end, the parties executed a
settlement agreement (the “Agreement”) on May 22, 2017,
wherein they agreed to settle their respective claims relating to
the Streamline judgment and to dismiss the Lion Litigation. The
Agreement provided the following relevant terms:
• Lion Construction would pay Benton $65,000.00 as the
settlement amount;
• Lion Construction would pay $35,000.00 as an initial payment,
on or before the execution of the agreement or by May 19, 2017,
whichever is earlier;
• The balance of $30,000.00 shall be payment in equal monthly
installments of $6,000.00 on the 15th day of each month,
commencing on June 15, 2017, and continuing until paid in full.
No interest shall accrue on any such payments.
As security for payment of the settlement amount, Defendants
executed and delivered a stipulated judgment in the amount of
$130,000.00; the judgment would be filed in the event of an
“uncured” default under the Settlement Agreement.
In the event of a default, the Agreement provides that:
-2-
J-A04022-19
[If the] Defendants fail to make any of the payments set forth in
paragraph 2 above, on the date which payment is due (a
“Default”), Benton may: (a) seek to enter the Stipulated
Judgment in the face amount thereof, with a credit for any
payments made thereunder; and/or (b) pursue any further rights
and/or remedies against the Defendants under applicable law. No
such Default shall have occurred if, prior to the due date of such
payment, Defendants provide proof to Benton of the overnight
delivery of such payment, together with a tracking number for
said delivery. If such tracking number evidences that payment
was picked up for delivery before the due date, then that shall
constitute timeliness of delivery. If the Defendants' payment is
either lost or not delivered, Defendants shall provide a
replacement check upon notice from Benton, or its counsel, by the
next business day following receipt of such notice. For purposes
of this paragraph, notice shall be deemed proper if given by
electronic mail, fax, or other form of mail producing a receipt of
mailing, addressed to counsel for the Defendants[.]
Defendants made the initial $35,000.00 payment under the
Agreement. However, Defendants defaulted on the first $6,000.00
installment payment by failing to make the scheduled payment by
June 15, 2017, or provide proof, pursuant to paragraph C(6) of
the Agreement, that such payment was delivered. Accordingly,
Benton filed a praecipe for a stipulated judgment. Thereafter, on
June 19, 2017, Benton received a $6,000.00 check dated June 13,
2017, from Lion Construction, LLC; the postage Lion used to mail
the payment did not bear a postmark. Defendants also attempted
to hand-deliver a check to Benton on June 20, 2017, but counsel
for Benton refused the delivery.
On June 20, 2017, Lion's counsel received a notice, by email, from
the trial court indicating that Benton had filed a “Praecipe to Enter
Stipulated Judgment” in the amount of $95,000.00; the court
entered judgment against Lion on that same date. On June 21,
2017, Defendant filed a petition to open and/or strike the
stipulated judgment alleging that it mailed the installment check
on June 13, 2017, and that Benton's counsel did not contact them
or their attorney to notify them that payment was not received.
On July 17, 2017, the trial court denied Defendants' petition to
strike and/or open the stipulated judgment. The Honorable Gary
Glazer explained his reason for denying Lion Construction's
petition as follows:
-3-
J-A04022-19
“[C]ontrary to Defendants' assertions, the Settlement Agreement
provides Defendants with no right to cure a default. The language
in section 6 permits Defendants to replace a check that was timely
picked up for overnight shipping if it went astray, if a tracking
number and overnight shipping were provided. It is not argued
that Defendants provided Plaintiffs with a tracking number for
overnight shipping. There is no language in the Agreement
requiring notice and opportunity to cure. Accordingly, the Petition
is denied.”
Defendants filed a motion for reconsideration and request for an
evidentiary hearing on July 21, 2017. The court denied the motion
on July 28, 2017.
Benton Student Hous., LLC v. Lion Constr., LLC, No. 2609 EDA
2017, 2018 WL 1386988, at 1–3 (Pa. Super. Mar. 20, 2018) (citations
and footnotes omitted). Lion Construction appealed.
On appeal, Lion Construction argued that it had asserted meritorious
defenses, and therefore the judgment should be opened. First, Lion
Construction argued that under paragraph 6, of the Agreement titled “Default”
had the right to a one day cure. Benton was required to notify Lion
Construction that it had not received payment timely; within one day
thereafter, Lion Construction had the opportunity to provide a replacement
check.
We agreed with the trial court that this “cure” provision applied only
where Lion Construction sent payment by overnight delivery with tracking and
not where Lion Construction sent it via regular mail, as Lion Construction had
done. Therefore, we concluded that Lion Construction failed to establish that
under the circumstances it had a right to cure under the Default paragraph of
-4-
J-A04022-19
the Agreement, and was in default under the Agreement for failure to timely
pay.
Regarding Lion Construction’s alternative argument that “the default
was cured by Benton’s possession of the check prior to [] Benton’s filing” of
the stipulated judgment, we concluded that this was a meritorious issue. Id.
at 7. Paragraph 3 of the Agreement provided that “the Stipulated Judgment
shall not be filed of record unless and until the occurrence of an uncured
Default hereunder.” Paragraph 7 also referenced an “uncured Default”.
Benton claimed that although a prior version of the Agreement had included
a 10 day cure provision, it was removed in exchange for pushing back the due
date for the monthly installments. However, we found that these “uncured
Default” references in the Agreement were ambiguous, and “further discovery
in the matter and/or testimony at a hearing [was] required to determine the
true intent of the ‘uncured’ language in the Agreement.” Id. Thus, we
reversed the trial court’s order denying Lion Construction’s petition to open
and/or strike the stipulated judgment, and remanded for further proceedings.
Id.
Upon remand the trial court ordered the deposition of Lion
Construction’s attorney, and required the attorneys who drafted the
Settlement Agreement to submit affidavits attesting to their interpretation of
the “uncured Default” language in the Agreement. This information was
sufficient for the trial court to render a decision without a hearing. By order
dated May 25, 2018, the trial court reinstated its original order of July 17,
-5-
J-A04022-19
2017, denying Lion Construction’s emergency petition to strike and/or open.
This timely appeal followed.
On appeal, Lion Construction raises the following single issue:
1. Whether the judgment should be opened because, in
accordance with Pennsylvania Rule of Civil Procedure 2959,
Lion Construction alleged a meritorious defense and provided
sufficient evidence to create an issue for a jury that the
technical default was cured by the delivery of Lion
Construction’s payment to Benton prior to Benton’s filing of the
stipulated judgment and/or Lion Construction’s tender of a
replacement check within one day of receiving notice of a late
payment from Benton?
See Lion Construction’s Brief at 4.
Lion Construction argues that this Court should reverse the trial court
and open the judgment because, as it alleged, it had a right to cure its default
under the Agreement by tendering its replacement check to Benton prior to
Benton’s filing of the stipulated judgment. The trial court concluded that
based upon its interpretation of the Agreement’s “uncured Default” language,
as clarified by deposition evidence and affidavits, Lion Construction did not
establish that it had a right to cure. We agree.
We first note, as the trial court and Benton did, that Lion Construction
again argues that the Agreement provided for a one-day cure period,
regardless of the shipping method used. Lion Construction’s Brief at 18. This
Court affirmed the trial court’s previous ruling on that issue, holding that Lion
Construction could provide a replacement check within one day of being
notified by Benton that it did not receive payment. However, this cure only
-6-
J-A04022-19
applied when Lion Construction sent payment using an overnight delivery
service. We further observe that much of the deposition testimony from Lion
Construction’s Chief Operating Officer at the time the Agreement was drafted
primarily focused on this issue and the Agreement’s language providing for
the one-day cure. Similarly, counsel for Lion Construction who negotiated the
Agreement on its behalf, focused on the interpretation of the Default
paragraph in his affidavit. We therefore agree with the trial court that Lion
Construction failed to explain the intent behind the phrase “uncured Default”
referenced in paragraphs 3 and 7 of the Agreement which was the purpose of
our remand. The trial court further observed:
Conversely, counsel for [Benton] credibly attests that the inclusion
of the words ‘uncured default’ was a scrivener’s error. In his
affidavit he states,
We unfortunately overlooked the fact that paragraphs 3 and
7 reference to an ‘uncured default.’ However that reference
was in error and should have been removed from the
settlement agreement once the parties agreed that [Lion
Construction] had no right to cure the default, was clearly
stated in paragraph 7.”
Trial Court Opinion, 5/25/18, at 2. The trial court found this explanation
logical “given the many revisions the parties’ agreement underwent prior to
its finalization.” Id. “Initially, the [A]greement provided for a ten day cure
period, but that cure period was removed from the [A]greement’s final version
in exchange for extending defendants’ monthly payment date from the 1 st of
the month to 15th of the month” with which Lion Construction’s counsel
agreed. Id. Therefore, as the trial court found, the “uncured Default”
-7-
J-A04022-19
language in paragraphs 3 and 7 did not afford Lion Construction with another
method for curing a default. Consequently, Lion Construction’s assertion that
it could cure its technical default by giving Benton another check, so long as
it was done prior to the filing of the Stipulated Judgment, is without merit.
Thus, there was no basis upon which the trial court could open the judgment.
Because Lion Construction did not comply with the terms of the settlement
agreement, the trial court concluded the stipulated judgment filed by Benton
was proper. We therefore conclude that the trial did not abuse its discretion
or commit an error of law when it again denied Lion Construction’s emergency
petition to open and/or strike the stipulated judgment.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/29/19
-8-