Spuhler, M. v. Mass Mutual Life Ins. Co.

J-A08016-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MARY BETH SPUHLER IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
Appellee No. 911 MDA 2014
Appeal from the Order Entered April 28, 2014
In the Court of Common Pleas of Cumberland County
Civil Division at No.: 2013-02696
BEFORE: SHOGAN, J., WECHT, J., and STRASSBURGER, J.*
MEMORANDUM BY WECHT, J.: FILED OCTOBER 01, 2015
Mary Beth Spuhler appeals from the trial court’s April 28, 2014 order
sustaining the preliminary objections of Massachusetts Mutual Life Insurance
Company (“MMLIC”), MML Investor Services (“MMLIS”), Connecticut Mutual
Life Insurance Company (“CMLIC”), and Matthew J. Dobbie d/b/a/ uFinancial
Group (“Dobbie”) and dismissing Spuhler’s amended complaint. For the
reasons that follow, we reverse.
The trial court set forth the following factual and procedural history:
[Spuhler] is an adult individual residing at 422 Deerfield Road,
Camp Hill, PA 17011. [Spuhler] is licensed to sell securities,
retirement plans, insurance, and other financial products. As
part of this occupation, [Spuhler] entered into a Career Contract
with Dobbie on January 2, 2008. Under the Career Contract,
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
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[Spuhler] would serve under Dobbie, who is a general agent for
MMLIC, as an insurance sales agent for MMLIC and CMLIC. The
Career Contract contained the terms of the relationship.
Similarly, [Spuhler] entered into a Representative’s Agreement
whereby [Spuhler] was registered to sell securities for MMLIS.
During the course of their relationship, [Spuhler] maintained an
office within Dobbie’s headquarters, located in Camp Hill,
Pennsylvania.
Louis F. Grammes (hereinafter, “Grammes”) was also an agent
with Dobbie. [Spuhler] avers that Grammes was Dobbie’s top-
producing life insurance agent. [Spuhler] and Grammes had an
oral agreement that they would split the commissions resulting
from new clients that they secured jointly. [Spuhler] alleges
that she would develop leads and Grammes would act as the
closer. On January 23, 2011, [Spuhler] discovered that
Grammes had written a life insurance policy for a principal of one
of their joint clients as to which he would receive all of the
commissions, a violation of their oral agreement. Subsequently,
[Spuhler] discovered that there were other instances where
Grammes directed 100% of the commission from joint clients to
himself. [Spuhler] believes that the value of these converted
commissions is in excess of $20,000.
Between January and August of 2011, [Spuhler] confronted
Grammes several times regarding the violations of their
agreement. Subsequently, on July 22, 2011, Dobbie informed
[Spuhler] that she would no longer be allowed to work from
Dobbie’s office due to her dispute with Grammes. As a result,
[Spuhler] had to remove her personal belongings and files and
establish a new office, which she believes to be a violation of her
Career Contract.
[Spuhler] further avers that, nearly a year after being told to
leave Dobbie’s office, she received a letter from Dobbie
terminating her employment relationship with him, MMLIC,
CMLIC, and MMLIS. The termination letter alleged that
[Spuhler] had engaged in “selling away”[1] as well as other
unspecified non-compliance and misbehavior. Within two hours
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1
Spuhler’s amended complaint explains that “selling away” refers to the
sale of financial products not submitted to MMLIS. See Spuhler’s Amended
Complaint, 8/22/2013, at 7.
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of receiving the termination letter, [Spuhler] claims that she sent
Dobbie documents proving that she did not engage in selling
away. [Spuhler] contends that the selling away allegations are
damaging to her career. [Spuhler] sought, without success, to
affiliate with another Massachusetts Mutual agency so that she
[c]ould continue to collect renewal commissions on existing sales
and make new sales.
Notwithstanding [Spuhler’s] assertion that she provided Dobbie
with proof that the selling away allegations were unfounded,
Dobbie initially did nothing. Dobbie eventually issued a
backdated termination letter that did not contain allegations of
selling away after [Spuhler’s] attorney threated MMLIC’s chief
counsel with litigation. Nonetheless, [Spuhler] has been
unsuccessful in securing employment with another Mass Mutual
agency. [Spuhler] avers that a Mass Mutual agency in
Philadelphia wanted to hire her, but the MMLIS home offices
directed the agency not to hire her because their database lists
[Spuhler] as “do not hire.” [Spuhler] avers that the do not hire
designation was per Dobbie’s direction and that no independent
investigation took place to confirm any allegations.
Trial Court Opinion (“T.C.O.”), 4/28/2014, at 2-4 (record citations omitted).
On May 13, 2013, Spuhler filed a complaint against MMLIC, CMLIC,
MMLIS, and Dobbie (collectively “Appellees”). Thereafter, Appellees filed
preliminary objections. On August 22, 2013, Spuhler filed an amended
complaint, which consisted of seven counts: breach of contract, conversion,
civil conspiracy, unjust enrichment, breach of fiduciary duty, and two counts
of tortious interference with business relations. The Appellees again filed
preliminary objections. On March 21, 2014, Spuhler filed a motion for leave
to file a second amended complaint.
On April 28, 2014, the trial court sustained Appellees’ preliminary
objections in the nature of a demurrer, dismissing Spuhler’s amended
complaint. Specifically, the trial court held that: (1) Spuhler’s breach of
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contract claim failed as a matter of law because she was classified as an
independent contractor and, therefore, could be terminated at will; (2) the
existence of a written contract between the parties precluded Spuhler from
asserting a claim for unjust enrichment; and (3) all of Spuhler’s other claims
were barred by the gist of the action doctrine. The trial court’s April 28,
2014 order also dismissed as moot Spuhler’s motion for leave to amend her
complaint. Spuhler timely appealed.2
Spuhler presents six issues for our review:
1. Whether the trial court committed reversible error and
abused its discretion in sustaining preliminary objections in
the nature of demurrers and dismissing the complaint
without allowing for leave to amend?
2. Whether the trial court committed reversible error and
abused its discretion in sustaining preliminary objections in
the nature of demurrers and dismissing the complaint
without giving any consideration to a pending motion for
leave to file [a] Second Amended Complaint?
3. Whether the facts and allegations of the complaint,
together with inferences deducible therefrom, adequately
state a claim for breach of contract?
4. Whether the trial court wrongfully dismissed the complaint
on the basis that no breach of duty claim could survive
termination of the at will employment contract?
5. Whether the trial court improperly dismissed the
alternative claim for unjust enrichment?
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2
The trial court did not order, and Spuhler did not file, a concise
statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b).
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6. Whether the trial court committed reversible error in
dismissing the tort claims based on the gist of the action
doctrine?
Spuhler’s Brief at 5-6 (numbering modified for clarity).
The scope of our review of an order sustaining preliminary objections
is plenary. Solomon v. Gibson, 615 A.2d 367, 368 (Pa. Super. 1992). “In
reviewing the grant of a demurrer, we are not bound by the inferences
drawn by the trial court nor are we bound by its conclusions of law.
Moreover, the novelty of a claim or theory, alone, does not compel
affirmance of a demurrer.” Neff v. Lasso, 555 A.2d 1304, 1305 (Pa. Super.
1989).
Our standard of review of an order of the trial court overruling or
granting preliminary objections is to determine whether the trial
court committed an error of law. When considering the
appropriateness of a ruling on preliminary objections, the
appellate court must apply the same standard as the trial court.
De Lage Landen Fin’l Servs., Inc., v. Urban P’ship, LLC, 903 A.2d 586,
589 (Pa. Super. 2006). “Preliminary objections, the end result of which
would be dismissal of a cause of action, should be sustained only in cases
that are clear and free from doubt.” Bower v. Bower, 611 A.2d 181, 182
(Pa. 1992).
A demurrer admits as true all well-pleaded facts and all
inferences reasonably deducible from them, but not any
conclusions of law. Only if upon the facts averred, the law says
with certainty that no recovery is permitted will this Court
sustain the demurrer. Where a doubt exists as to whether a
demurrer should be sustained, this should be resolved in favor of
overruling it.
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Buchanan v. Brentwood Fed. Sav. & Loan Ass’n, 320 A.2d 117, 120 (Pa.
1974) (citations and internal quotation marks omitted); Stahl v. First
Penna. Banking & Trust Co., 191 A.2d 386, 389 (Pa. 1963).
In her first and second issues, Spuhler argues that the trial court erred
in dismissing her amended complaint without granting leave to amend,
despite her pending motion requesting the same. Because we reverse the
trial court’s order sustaining Appellees’ preliminary objections, we need not
consider whether the trial court erred in issuing that order without first
granting Spuhler’s motion for leave to amend her complaint.
Spuhler’s third and fourth issues challenge the trial court’s dismissal of
her breach of contract claim (Count I of Spuhler’s amended complaint) as to
all Appellees. In sustaining the Appellees’ demurrers on this count, the trial
court reasoned that Spuhler had failed to state a claim for breach of contract
because, “[a]s a general rule, there is no common[-]law cause of action
against an employer for termination of an at-will employment relationship.”
T.C.O. at 5 (citation omitted). The court further reasoned that, because the
contracts at issue unambiguously provided that either party could terminate
the employment relationship at any time, with or without cause, “it cannot
be claimed that the [Appellees] breached a duty imposed by the contract.”
Id. at 6.
A cause of action for breach of contract must be established by
pleading (1) the existence of a contract, including its essential
terms, (2) a breach of a duty imposed by the contract and (3)
resultant damages. See Gen. State Auth. v. Coleman Cable
& Wire Co., 365 A.2d 1347, 1349 (Pa. Cmwlth. 1976). While
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not every term of a contract must be stated in complete detail,
every element must be specifically pleaded.
CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa. Super. 1999)
(citations modified).
In her amended complaint, Spuhler averred that Dobbie breached the
career contract when, inter alia, he “sought to take control of the client base
that Spuhler had spent decades developing.” See Spuhler’s Amended
Complaint, 8/22/2013, at 9. Spuhler maintained that Appellees “materially
breached the contracts by refusing to allow Spuhler to affiliate with another
of its general agents, and thereby continue to service her existing clients
and draw commissions from their accounts[] and sell additional Mass Mutual
products to new clients.” Id. Spuhler also alleged that Appellees breached
the career contract when they required her to “return her key to the office,
remove all files and materials from [Dobbie’s] office, and set up her own
private office from which she could continue to serve as a Mass
Mutual/uFinancial agent.” Id. at 6. Finally, Spuhler pleaded that, as a
result of Appellees’ breaches, she was deprived of “hundreds of thousands of
dollars in commissions.” Id. at 10.
Because Spuhler pleaded the essential terms of the agreement, a
breach, and damages, she set forth a legally sufficient claim for breach of
contract. Although the agreement provided that either party could
terminate the contract, with or without cause, it also imposed additional
rights and duties, some of which survived the termination of Spuhler’s
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employment as an insurance sales agent. See e.g., id. Exh. A at ¶ 5
(providing for the payment of vested renewal commissions after termination
of the career contract). A fair reading of Spuhler’s amended complaint
reveals breach of contract allegations that extend beyond the assertion that
Dobbie wrongfully terminated Spuhler’s career contract. The trial court
erred in reading Spuhler’s amended complaint so narrowly that it concluded
otherwise.
Spuhler’s fifth issue challenges the trial court’s dismissal of her claim
for unjust enrichment, which she asserted against all defendants. “To
sustain a claim of unjust enrichment, a claimant must show that the party
against whom recovery is sought either wrongfully secured or passively
received a benefit that it would be unconscionable for her to retain.”
Torchia v. Torchia, 499 A.2d 581, 582 (Pa. Super. 1985). A claim for
unjust enrichment arises from a quasi-contract. “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.” AmeriPro Search, Inc. v.
Fleming Steel Co., 787 A.2d 988, 991 (Pa. Super. 2001).
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. Whether the
doctrine applies depends on the unique factual circumstances of
each case. In determining if the doctrine applies, we focus not
on the intention of the parties, but rather on whether the
defendant has been unjustly enriched.
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Moreover, the most significant element of the doctrine is
whether the enrichment of the defendant is unjust.
Stoeckinger v. Presidential Fin. Corp. of Delaware Valley, 948 A.2d
828, 833 (Pa. Super. 2008) (emphasis in original).
Instantly, Spuhler’s amended complaint alleged that Dobbie was
unjustly enriched by his “hijacking” of Spuhler’s clients and commission
streams. See Spuhler’s Amended Complaint, 8/22/2013, at 8, 13.
According to Spuhler, “Dobbie appreciated the benefit of his acquisition of
[her] clients and commission streams,” which Spuhler estimated to be worth
“hundreds of thousands of dollars.” Id. at 10, 13. Nevertheless, the trial
court held that Spuhler had failed to state a viable claim for unjust
enrichment because “it is manifest that the relationship between [Spuhler]
and Dobbie was governed by a written contract.” T.C.O. at 9. The court
cited Wilson Area School District v. Skepton, for the well established
proposition that “the doctrine of unjust enrichment is inapplicable when the
relationship between parties is founded upon a written agreement or express
contract. . . .” 895 A.2d 1250 (Pa. 2006).
Spuhler argues that the Pennsylvania Rules of Civil Procedure
specifically authorize a party to allege separate claims in the alternative.
See Spuhler’s Brief at 36 (citing Pa.R.C.P. 1020(c)). Although Spuhler
concedes that a plaintiff may not recover for both unjust enrichment and
breach of contract, she nevertheless maintains that such claims may be
pleaded in the alternative. Id. at 38. We agree.
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Spuhler was free to plead unjust enrichment as an alternative theory
of liability. Such a claim provides a basis for recovery if Spuhler’s career
contract with Dobbie is found to be unenforceable, or in the event that the
issue of Spuhler’s right to continuing commissions following her termination
falls outside of the scope of the contract.
This court has previously rejected the argument that a cause of action
for breach of contract cannot be pleaded in the alternative with a claim for
unjust enrichment because the former is predicated upon the existence of an
express contract while the latter is predicated upon the non-existence of an
express contract. See Lugo v. Farmers Pride, Inc., 967 A.2d 963, 969-70
(Pa. Super. 2009) (holding that “appellee’s argument confuses the bar
against recovering under both causes of action with a notion that pleading
both causes of actions is also prohibited”). Indeed, we have held that a
subcontractor can recover based upon unjust enrichment when it performed
work outside of the scope of the parties’ contractual provisions. See
Ruthrauff, Inc. v. Ravin, Inc., 914 A.2d 880 (Pa. Super. 2006) (noting
that the plaintiff asserted a “claim for unjust enrichment for work it
performed outside any promises made in the written contractual
documents”). Accordingly, the trial court erred in sustaining Appellees’
preliminary objection to Count VI and dismissing Spuhler’s unjust
enrichment claims.
In her final issue, Spuhler argues that the trial court committed
reversible error in dismissing her tort claims based upon the gist of the
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action doctrine. The trial court—finding that Spuhler merely had reframed
her ordinary breach of contract claims into tort claims—dismissed Counts III
through V, and VII of Spuhler’s amended complaint, wherein she asserted
claims for tortious interference with business relations, conversion, civil
conspiracy, and breach of fiduciary duty against both Dobbie and the Mass
Mutual defendants. Specifically, the trial court reasoned that, because all of
Spuhler’s tort claims arose out of her employment contract, they were
barred by the gist of the action doctrine. See T.C.O. at 8.
“The gist of the action doctrine bars a plaintiff from re-casting ordinary
breach of contract claims into tort claims.” Mirizio v. Joseph, 4 A.3d 1073,
1079 (Pa. Super. 2010) (citation omitted). This court has explained the
doctrine as follows:
Although they derive from a common origin, distinct differences
between civil actions for tort and contract breach have
developed at common law. Tort actions lie for breaches of
duties imposed by law as a matter of social policy, while contract
actions lie only for breaches of duties imposed by mutual
consensus agreements between particular individuals. . . . To
permit a promisee to sue his promisor in tort for breaches of
contract inter se would erode the usual rules of contractual
recovery and inject confusion into our well-settled forms of
actions.
Id. (quoting eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10,
14 (Pa. Super. 2002)). The gist of the action doctrine does not preclude an
action in tort simply because it resulted from a breach of a contract. “To be
construed as in tort, however, the wrong ascribed to defendant must be the
gist of the action, the contract being collateral.” Id. at 1080.
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The important difference between contract and tort actions is
that the latter lie from the breach of duties imposed as a matter
of social policy while the former lie for the breach of duties
imposed by mutual consensus. In other words, a claim should
be limited to a contract claim when the parties’ obligations are
defined by the terms of the contracts, and not by the larger
social policies embodied by the law of torts.
Id. (citation omitted).
Recently, our Supreme Court approved of the above articulation of the
gist of the action doctrine.
If the facts of a particular claim establish that the duty breached
is one created by the parties by the terms of their contract—i.e.,
a specific promise to do something that a party would not
ordinarily have been obligated to do but for the existence of the
contract—then the claim is to be viewed as one for breach of
contract. If, however, the facts establish that the claim involves
the defendant’s violation of a broader social duty owed to all
individuals, which is imposed by the law of torts and, hence,
exists regardless of the contract, then it must be regarded as a
tort. See Ash v. Cont’l Ins. Co., 932 A.2d 877, 885 (Pa. 2007)
(holding that action against insurer for bad[-]faith conduct
pursuant to 42 Pa.C.S. § 8371 is for breach of a duty “imposed
by law as a matter of social policy, rather than one imposed by
mutual consensus”; thus, action is in tort); see also W. Page
Keeton, Prosser & Keeton on Torts 656 (5th ed. 1984)
(reviewing extant case law, and noting the division therein
between actions in tort and contract based on the nature of the
obligation involved, observing that “[t]ort obligations are in
general obligations that are imposed by law on policy
considerations to avoid some kind of loss to others . . . [which
are] independent of promises made and therefore apart from
any manifested intention of parties to a contract, or other
bargaining transaction”). Although this duty-based demarcation
was first recognized by our Court over a century and a half ago,
it remains sound, as evidenced by the fact that it is currently
employed by the high Courts of the majority of our sister
jurisdictions to differentiate between tort and contract actions.
We, therefore, reaffirm its applicability as the touchstone
standard for ascertaining the true gist or gravamen of a claim
pled by a plaintiff in a civil complaint.
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****
[T]he mere existence of a contract between two parties does
not, ipso facto, classify a claim by a contracting party for injury
or loss suffered as the result of actions of the other party in
performing the contract as one for breach of contract.
Bruno v. Erie Ins. Co., 106 A.3d 48, 68-69 (Pa. 2014) (some citations
omitted, others modified; footnotes omitted).
Viewing the facts contained in Spuhler’s amended complaint as true—
as our standard of review requires—the gist of the action doctrine does not
bar Spuhler’s tort claims. As set forth above, Spuhler’s amended complaint
alleged that, prior to informing her that she was being terminated as a
uFinancial insurance sales agent, Dobbie sent letters to Spuhler’s clients
telling them that Spuhler was no longer affiliated with uFinancial, and that
Spuhler’s existing accounts would be reassigned to another agent. See
Spuhler’s Amended Complaint, 8/22/2013, at 7. Spuhler also alleged that
Dobbie prevented her from accessing her client files. Id. at 8. Finally,
Spuhler alleged that she was unable to obtain a broker contract with another
Mass Mutual agent, because MMLIS, at Dobbie’s direction, had assigned
Spuhler a “do not rehire” designation in its database. Id. As a result,
Spuhler was unable to collect any renewal commissions on her existing
policies, and the insurance portfolio that she had built throughout her
decades-long career was substantially devalued. Id.
Spuhler asserted claims for tortious interference with business
relations, conversion, civil conspiracy, and breach of fiduciary duty based
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upon the above facts. These are not claims for breach of contract
masquerading as tort claims. As in Bruno, supra, the gist of the action on
these averments lies in tort, and the contract is collateral to the matters
alleged. Compare Mirizio, 4 A.3d at 1079-80. It was not Spuhler’s career
contract per se that created a duty not to deprive Spuhler of possession of
her property or to interfere with her prospective business relations; it is the
law itself that imposes those duties. See Bruno, 106 A.3d at 70.
Accordingly, the trial court erred in granting Appellees’ preliminary
objections as to Counts III through V and Count VII. The gist of the action
doctrine did not warrant the dismissal of Spuhler’s tort claims.
For the foregoing reasons, we reverse the order granting appellees’
preliminary objections and dismissing Spuhler’s amended complaint.
Order reversed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/1/2015
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