Front Street Development Associates, L.P. v. Conestoga Bank

J-A24015-16
2017 PA Super 125FRONT STREET DEVELOPMENT IN THE SUPERIOR COURT OF
ASSOCIATES, L.P. AND JOSEPH PACITTI PENNSYLVANIA
Appellants
v.
CONESTOGA BANK, DAVID BUTTE,
RICHARD ELKO, 130 FRONT STREET L.P.
123 EAST LLC, PHILLIP MCFILLIN,
NATIONAL REALTY INVESTMENT
ADVISORS LLC, THE LOCAL
DEVELOPMENT COMPANY, LLC AND
GRACE LUTERO
Appellees No. 553 EDA 2016
Appeal from the Order Entered January 26, 2016
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): August Term, 2014 Case No. 03867
BEFORE: BOWES, OTT AND SOLANO, JJ.
OPINION BY BOWES, J.: FILED APRIL 26, 2017
Front Street Development Associates, L.P. (“Front Street” or
“Borrower”) and Joseph Pacitti (“Pacitti” or “Guarantor”) (collectively
“Plaintiffs” or “Borrowers”) appeal and challenge the trial court’s grant of
judgment on the pleadings in favor of Conestoga Bank, David Butte, Richard
Elko (“Bank Defendants” or “Lender”) and the Local Development Company,
LLC (“LDC”). Additionally, they challenge the order striking their demand for
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a jury trial.1 After thorough review, we affirm the grant of judgment on the
pleadings to the Bank Defendants and LDC, thus rendering moot the
propriety of the order striking the jury trial demand.
This action arises from a loan transaction between sophisticated
commercial parties. Front Street owned several parcels of property located
at Front and Sansom Streets in Philadelphia. The property identified as 130
S. Front Street (“the Property”) is at the center of this controversy.
Defendant Conestoga Bank held a note and a mortgage on the Property
securing a $5.5 million loan made on April 26, 2006, to Front Street. The
loan was to mature on June 1, 2007.
Despite several allonges to the note that extended the maturity date,
Front Street was in default on the loan in 2010. On April 13, 2010, Plaintiffs
and Bank Defendants entered into a Loan Modification and Forbearance
Agreement (“the Forbearance Agreement”), by which Plaintiffs acknowledged
default, but the Bank agreed to forbear and extend the maturity date on the
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1
Plaintiffs settled their claims against the buyer, 130 Front Street L.P., its
general partner, Grace Lutero, and National Realty, and these parties were
dismissed on March 31, 2015. On January 26, 2016, Appellants voluntarily
discontinued the only remaining claims against 123 East LLC (“123 East”)
and Phillip McFillin, which effectively rendered the case final. Thus, the
instant appeal filed February 3, 2016 is timely. Appellants challenge the
propriety of the trial court’s May 22, 2015 order striking their demand for a
jury trial as to all parties; the August 24, 2015 order granting judgment on
the pleadings in favor of the Bank defendants; and the October 29, 2015
order granting judgment on the pleadings in favor of Local Development
Company, LLC.
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loan until March 30, 2012. That Forbearance Agreement was amended in
writing on March 30, 2012, and again on July 8, 2013, ultimately extending
forbearance and the maturity date to March 5, 2014. The Forbearance
Agreement contained a release (“the Release”) that is the focus of judgment
on the pleadings.
On June 4, 2014, three months after the apparent lapse of the second
amendment to the Forbearance Agreement, Mr. Pacitti brought the Mazolla
brothers, who were local investors, to a meeting with the Bank Defendants.
According to Plaintiffs, the Bank Defendants represented that the purpose of
the meeting was to discuss how the Mazolla brothers could buy and develop
the Property. A purchase price of $5.8 million was mentioned. Discussion
purportedly focused on the Bank taking title to the property through a
“friendly foreclosure,” and the investors and Mr. Pacitti would develop
sixteen residential homes on the property.
At that meeting, defendant David Butte, Executive Vice-President of
Conestoga Bank, presented a Deed in Lieu of Foreclosure (“Deed”) dated
June 4, 2014, to Mr. Pacitti. According to Mr. Pacitti, the Bank Defendants
secured his signature on the Deed by representing it was the same
document he had signed earlier and that the Bank just wanted to update its
documents. The Bank Defendants allegedly reassured Mr. Pacitti that the
Bank was not going to take any adverse action against Plaintiffs, and
Plaintiffs believed that the Deed was intended to facilitate the deal with the
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Mazolla brothers. Based upon those assurances, Mr. Pacitti signed the Deed,
although he averred that he did not realize the name of the grantee in the
Deed was blank.
According to Plaintiffs, the meeting was a ruse to trick Mr. Pacitti into
signing the Deed to facilitate the Bank’s conveyance of the Property to
another buyer. Unbeknownst to Plaintiffs, the Bank Defendants had already
agreed to sell the loan documents (“Loan Documents”) to LDC, an agent for
123 East, an entity affiliated with Phillip McFillin. Plaintiffs were already
embroiled in a lawsuit with Mr. McFillin and his associated entities involving
the Property.2 Plaintiffs’ second amended complaint added Phillip McFillin
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2
When Plaintiffs asserted these claims against McFillin and 123 East, there
was already an action pending by 123 East and McFillin against Plaintiffs in
the Court of Common Pleas of Philadelphia County at No. 816 December
Term 2013 (“Related Case”). In that action, 123 East alleged that Plaintiffs
breached an Agreement for the Sale of Land dated March 30, 2010,
regarding the Property. The agreement provided that McFillin and his
related entity, Avantissimo, LLC or their assignee, would assist Pacitti with
the marketing and sale of the Property. For their efforts, they would receive
fifty percent of any amount exceeding the $5.6 million owing to the Bank.
Each party owed the other the right of first refusal. Avantissimo allegedly
procured a buyer willing to pay $6.5 million for the Property, assigned its
rights under the agreement for sale to 123 East, and that entity sued
Plaintiffs for breach of agreement when Plaintiffs herein refused to sell the
Property to the buyer it procured.
On December 3, 2014, 123 East, McFillin, and Plaintiffs entered into a
stipulation to dismiss the Related Case and to litigate all claims among the
parties in this action. On January 26, 2016, after the entry of judgment on
the pleadings as to the Bank defendants and LDC, Plaintiffs discontinued this
action as to 123 East and McFillin.
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and 123 East as defendants. They pled claims for declaratory judgment,
fraud, slander of title, negligent misrepresentation, and civil conspiracy
against those defendants. The substance of the claim was that McFillin,
acting on behalf of Avantissimo and 123 East, tricked Plaintiffs into
executing an Agreement for Sale of the Property and subsequently conspired
with the Bank Defendants to divest Plaintiffs of the Property. Plaintiffs
alleged that LDC was prepared to cancel the loan purchase agreement, but
decided to move forward after conferring with Mr. McFillin on May 22, 2014.
McFillin purportedly took steps to remove the lis pendens on the property
that the lawsuit filed by 123 East created so that LDC could purchase the
loan and the property. According to Plaintiffs, the Bank Defendants
pretended to work with them on the deal with the Mazollas while proceeding
to sell the loan to LDC for the benefit of LDC, McFillin, and 123 East. On
August 14, 2014, the Bank assigned and transferred the mortgage on the
Property to defendant 130 Front Street L.P. (“130 Front Street”), and the
Deed naming that entity as grantee was recorded on August 19, 2014.
Plaintiffs commenced this action against the Bank Defendants on
August 28, 2014, by praecipe for writ of summons, and subsequently filed a
complaint requesting a jury trial. In their fourth amended complaint,
Plaintiffs alleged that the maturity date of the loan was extended by course
of dealing to March 2015, and the Bank breached the Forbearance
Agreement when it treated the loan as being in default and filed the Deed in
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lieu. Plaintiffs also averred that the Bank breached its contractual duty of
good faith and fair dealing when it procured the signed Deed by
misrepresenting its purpose and consequences and conspired with the other
defendants to divest Plaintiffs of the Property. The complaint contained
counts of fraud in fact, fraud in the inducement, tortious interference with
prospective contract, invasion of privacy/commercial disparagement, breach
of fiduciary duty, misrepresentation, and civil conspiracy. Plaintiffs alleged
they were deprived of prospective economic opportunities with the Mazolla
brothers when the Bank wrongfully divested them of the Property. Plaintiffs
sought both compensatory and punitive damages from the Bank Defendants.
In a subsequent amended complaint, Plaintiffs added LDC as a
defendant. Plaintiffs alleged that the Bank’s April 24, 2014 agreement to
assign the loan to LDC, which was affiliated with 123 East and McFillin, was
in furtherance of the conspiracy among those parties to wrongfully take the
Property from Plaintiffs.
On April 13, 2015, the Bank Defendants moved to strike the jury trial
demand, asserting the jury trial waiver contained in the Loan Documents.
The court struck the jury trial demand on May 22, 2015, and subsequently
extended that ruling to the other parties in the action. Plaintiffs challenge
that ruling on appeal.
Thereafter, the Bank Defendants moved for judgment on the pleadings
alleging that Plaintiffs released the claims that they were asserting against
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the Bank Defendants when they voluntarily and knowingly signed the
Forbearance Agreement containing a release on March 13, 2010. The trial
court agreed, and entered judgment on the pleadings in favor of the Bank
Defendants on all of the aforementioned tort and contract claims. The court
reasoned that the release provision in the Forbearance Agreement “explicitly
contemplated the precise claims asserted in the complaint, and released the
[bank] defendants from liability ‘whether statutory, in contract or in tort.’”
Order, 8/24/15, at 1. The court ruled in a subsequent order that since the
Release was valid, it was also enforceable by the assignee, LDC. Order,
10/29/15, at 1.
Plaintiffs appealed to this Court.3 They present five questions for our
review:
1. Did the trial court err in granting Defendant-Appellee the
Local Development Company LLC’s (“LDC”) and Defendants-
Appellees Conestoga Bank’s, David Butte’s, and Richard Elko’s
(collectively, the “Bank Defendants”) motions for judgment on
the pleadings where there are disputed issues of fact as
stated in the pleadings such that neither LDC nor the Bank
Defendants were entitled to judgment as a matter of law,
including where Plaintiffs made no admissions of fact, but
instead, specifically denied the applicability of the release as
to the claims alleged in the fourth amended complaint?
2. Did the trial court err by applying the release (executed in
2010) to unaccrued, future claims (including tort claims and a
claim for breach of the very contract containing the release)
against the Bank Defendants and LDC that did not arise until
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3
Plaintiffs filed three notices of appeal to this Court. We quashed two of the
appeals as duplicative on April 18, 2016.
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2014, where the release contains no such language, and
where the law of this Commonwealth is clear that releases are
to be strictly construed?
3. Did the trial court err by striking Plaintiffs’ jury demand based
on jury waiver provisions in the loan documents where
Plaintiffs’ causes of action against the Bank Defendants
(except for breach of contract) arise from the Bank
Defendants’ tortious conduct, independent of the loan
documents, and were not contemplated by the jury waiver?
4. Did the trial court err by striking Plaintiffs’ jury demand based
on jury waiver provisions in the loan documents where
Plaintiffs’ causes of action against the Bank Defendants
(except for breach of contract) arise from the Bank
Defendants’ tortious conduct, independent of the loan
documents, and were not contemplated by the jury waiver?
5. Did the trial court err by striking (a) the jury demand by
Pacitti (who did not execute a waiver), and (b) Plaintiffs’ jury
demand as to those co-defendants who are not parties to any
document containing a jury trial waiver, rather than
bifurcating the trial to include both the jury portion and non-
jury portion?
Appellants’ brief at 5-6.
Plaintiffs’ first two issues implicate the propriety of the trial court’s
grant of judgment on the pleadings. When we review the grant of judgment
on the pleadings, we apply the same standard applied by the trial court.
Angino & Rovner v. Jeffrey R. Lessin & Associates, 131 A.3d 502, 507
(Pa.Super. 2016). The grant is proper only “when there are no disputed
issues of fact and the moving party is entitled to judgment as a matter of
law.” Id. In making that determination, we confine our review to the
“pleadings and documents properly attached thereto.” Id. Accordingly, "We
must accept as true all well-pleaded statements of fact, admissions, and any
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documents properly attached to the pleadings presented by the party
against whom the motion is filed, considering only those facts which were
specifically admitted." Id. (quoting Lewis v. Erie Ins. Exch., 753 A.2d
839, 842 (Pa.Super. 2000)).
Plaintiffs allege that, after the execution of the Agreement containing
the release language at issue (the “Release”), LDC and the Bank Defendants
conspired to fraudulently divest Plaintiffs of the Property. Appellants’ brief at
25. Since these claims survived preliminary objections, Plaintiffs maintain
that they are well pled and that the factual averments therein must be
accepted as true. Id. at 26. Plaintiffs contend further that the factual
allegations therein, which include averments that the Bank Defendants failed
to comply with the terms of the Loan Documents, together with Plaintiffs’
denials of the applicability of the doctrines of release or waiver, preclude
entry of judgment on the pleadings based on the Release.
Plaintiffs’ argument evinces a misunderstanding of judgment on the
pleadings.4 The trial court granted judgment on the pleadings based on the
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4
Plaintiffs devote considerable argument to their contention that there were
facts pled that, when deemed to be true, established a genuine dispute as to
the applicability of the Release. For instance, Plaintiffs contend that they
were not in default when the Deed in lieu was executed in 2014. They
maintain that the Forbearance Agreement had been extended by the Bank
Defendants’ oral representations or course of dealing, and that the Bank’s
filing of the Deed was a breach of its agreement to forbear.
(Footnote Continued Next Page)
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Release. The issue before us is whether Plaintiffs alleged facts that, when
deemed to be true, would take their causes of action outside the scope of
the Release. Plaintiffs’ denials that the Release precluded claims of fraud
and breach of contract are not facts that we must view as true for purposes
of our review. Nor do those denials preclude the Bank Defendants and LDC
from relying upon the Release for purposes of judgment on the pleadings as
Plaintiffs contend. While we assume that the non-moving party’s well-pled
facts are true when we review the grant of judgment on the pleadings, the
same deference is not accorded legal conclusions, for instance, the
inapplicability of legal doctrines such as release or waiver. If, assuming the
facts as pled by Plaintiffs to be true, the Release nevertheless forecloses
Plaintiffs’ claims of breach of contract, tortious interference with prospective
contract, commercial disparagement, misrepresentation, conspiracy, and
fraud, then judgment on the pleadings was proper as a matter of law. Thus,
this claim misses the mark and affords no potential for relief.
We now address whether the Release contained in the Agreement
operated to bar the Plaintiffs’ claims herein. The Release is located in
_______________________
(Footnote Continued)
The Plaintiffs’ position is undermined by the provision in the Forbearance
Agreement providing that it is a fully integrated document and that any
modifications must be in writing, as well as two prior amendments in writing
that extended the maturity date of the loan. Even assuming the truth of
Plaintiffs’ allegation that the Bank Defendants made oral representations
extending the maturity date of the loan, the efficacy of the Release is not
implicated.
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section 11.1 of the Forbearance Agreement. It is recited therein that, “[i]n
order to induce Lender to enter into this Agreement, Borrower and
Guarantor do agree as follows:”
(a) Borrower and Guarantor do hereby fully, finally and forever
acquit, quit claim, release and discharge lender and its
past and present officers, directors, employees, agents,
attorneys, successors and assigns of and from any and all
obligations, claims, liabilities, damages, demands, debts,
liens, deficiencies or cause of action to, of or for the
benefit (whether directly or indirectly) of Borrower and
Guarantor at law or in equity, known or unknown,
contingent or otherwise, whether asserted or unasserted,
whether now known or hereinafter discovered, whether
statutory, in contract or in tort, as well as any other kind
or charter of action now held, owned or possessed
(whether directly or indirectly) by Borrower or Guarantor
on account of, arising out of, related to or concerning,
whether directly or indirectly, approximately or remotely
(i) the negotiation, review or preparation or documentation
of the Loan Documents or any other documents or
agreements executed in connection therewith, (ii) the
enforcement, protection or preservation of lender’s rights
under the Loan Documents, or any other documents or
agreements executed in connection therewith, and/or (iii)
any action or inaction by Lender in connection with such
documents, instruments and agreements (the “Released
Claims”).
Loan Modification and Forbearance Agreement, 4/13/10, at § 11.1.
In addition, the Borrower and Guarantor promised not to prosecute
any claim or counterclaim related to the Released Claims. Loan Modification
and Forbearance Agreement, Section 11.2. (“Borrower and Guarantor do
hereby agree that they will never prosecute nor voluntarily aid in the
prosecution of any action or proceeding related to the Released Claims,
whether by claim, counterclaim or otherwise.”).
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The Bank Defendants sought judgment on the pleadings based on
Plaintiffs’ express release of all claims “arising out of, relating to or
concerning” the Loan Documents, the enforcement and preservation of the
Lender’s rights, as well as any action or inaction by the Lender regarding the
documents and instruments. Loan Modification and Forbearance Agreement,
4/13/10, at Section 11.1. They contend that Plaintiffs’ claims, whether in
contract or tort, arise out of and are related to the Loan Documents, and are
thus barred by the Release.
Plaintiffs counter that, under Pennsylvania law, “a release covers only
those matters which may be fairly said to have been within the
contemplation of the parties when the release was given.” Restifo v.
McDonald, 30 A.2d 199, 201 (Pa. 1967). Otherwise, they argue, a release
would unfairly operate to bar claims that the parties would never have
foreseen. Appellants’ brief at 30. The claims herein, according to Plaintiffs,
accrued four years after the execution of the Agreement containing the
Release. Plaintiffs maintain that releases must be strictly construed so as
not to bar claims that had not accrued when the release was executed.
Fortney v Callenberger, 801 A.2d 594 (Pa.Super. 2002); Vaughn v.
Didizian, 648 A.2d 38, 40 (Pa.Super. 1994). It is only where a release
contains language that can be fairly construed to release unaccrued, future
claims, that it will be enforced to bar such claims. They argue that the
Release at issue does not contain such language.
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In support of their position, Plaintiffs rely upon Bowersox Truck
Sales & Serv., Inc. v. Harco Nat. Ins. Co., 209 F.3d 273 (3d Cir. 2000)
(applying Pennsylvania law). They charge the trial court herein with
improperly inserting the word “future” into the Release where it was not
intended by the parties. Plaintiffs contend that their conspiracy claims
against LDC and the Bank Defendants did not accrue until 2014, four years
after the execution of the Release and unaccrued future claims were not
contemplated in the Release.
In response, the Bank Defendants allege that Plaintiffs have merely
recast contract claims as tort-based causes of action that they claim arise
from conduct outside the lending relationship. They assert that this tactic is
of no avail as the Release bars all claims, “whether statutory, in contract or
in tort.” The Bank Defendants maintain further that all of Plaintiffs’ claims
are related to the Loan Documents, as modified and amended from time to
time, and the parties’ ongoing contractual relationship. Finally, the Bank
Defendants contend that there was no temporal limitation to the Release.
Although the claims at issue herein arose after the execution of the Release,
they were contemplated by the parties when the Release was executed. In
support of that contention, the Bank Defendants point to the fact that the
execution and recording of a deed in lieu was expressly authorized in the
Agreement. They characterize the execution of the 2014 Deed in lieu as
merely a subsequent modification of an existing loan document, namely the
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2010 deed in lieu. Not only did the Release apply to claims “now held,”
according to the Bank Defendants, but to claims “unknown,” or “hereinafter
discovered,” even remotely connected with the enforcement or preservation
of the Bank’s rights under the Loan Documents or any other documents
executed in connection therewith. Such language was intended to include
not only existing claims, but claims that would subsequently arise related in
any way to the Loan Documents and the Bank’s enforcement of its rights.
Nor, according to the Bank Defendants, are all releases that purport to
release future unaccrued claims unenforceable. They direct our attention to
Three Rivers Motors Co. v. Ford Motor Co., 522 F.2d 885 (3d Cir. 1975),
where, applying Pennsylvania law, the Court of Appeals for the Third Circuit
recognized that future claims may be released if they were contemplated by
the parties at the time of the release. They also point to our High Court’s
decision in Buttermore v. Aliquippa Hosp., 561 A.2d 733, 735 (Pa. 1989),
where a general release of “past, present and future claims” was upheld and
enforced.
It is undisputed that the parties entered the Loan Modification and
Forbearance Agreement that contained the Release. There are no
allegations that the Release itself was procured by fraud, duress, or mutual
mistake, and thus, it is binding between the parties. Strickland v.
University of Scranton, 700 A.2d 979, 986 (Pa.Super. 1997).
Furthermore, it is well-settled law that "commercial parties are free to
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contract as they desire." Mellon Bank, N.A. v. Aetna Business Credit,
Inc., 619 F.2d 1001, 1009 (3d Cir. 1980) (citing Brokers Title Co., Inc. v.
St. Paul Fire & Marine Ins. Co., 610 F.2d 1174 (3d Cir. 1979)).
In construing a general release, "it is crucial that a court interpret
[the] release so as to discharge only those rights intended to be
relinquished. The intent of the parties must be sought from a reading of the
entire instrument, as well as from the surrounding conditions and
circumstances." Vaughn, 648 A.2d at 40.
The construction of the Release presents an issue of contract.
[T]he 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.
Nevyas v. Morgan, 921 A.2d 8, 15 (Pa.Super. 2007) (quoting Currid v.
Meeting House Restaurant, Inc., 869 A.2d 516, 519 (Pa.Super. 2005)).
Where, as here, there is no allegation that the Release was
ambiguous, "[t]he courts of Pennsylvania have traditionally determined the
effect of a release using the ordinary meaning of its language and
interpreted the release as covering only such matters as can fairly be said to
have been within the contemplation of the parties when the release was
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given." Omicron Sys. v. Weiner, 860 A.2d 554, 559 (Pa.Super. 2004)
(quoting Fortney v. Callenberger, 801 A.2d 594, 597 (Pa.Super. 2002)).
The issue herein is whether the Release in the Forbearance Agreement was
intended to bar claims of the nature asserted by Plaintiffs herein.
The Forbearance Agreement provides generally as follows. The Loan
Agreement, the Note, the allonges, the Forbearance Agreement and all other
loan documents, “with all prior and future modifications” collectively
constitute the Loan Documents. Loan Modification and Forbearance
Agreement, 4/13/10, at 1 subsection (A) (emphasis added). It is recited
therein that “(C) Borrower and Guarantor are in default of their respective
obligations under the Loan Documents as a result of, inter alia, Borrower’s
failure to pay the installments of interest due under the Note, late charges
and certain fees.” Id. at 1. Lender agreed to “forebear from enforcing any
of its rights to collect the indebtedness until the Maturity Date, as same may
be extended pursuant to the terms of this Agreement.” Id. at 3 § 6.1.
One of the conditions of forbearance was that Borrower and Guarantor
execute a deed in lieu of foreclosure and related documents that would be
held in escrow until either the debt was satisfied or a monetary event of
default occurred. If the debt was not satisfied prior to default, the deed in
lieu would be released to the Bank and it could record the deed at its sole
discretion. Id. at § 6.2(b). Upon expiration of the forbearance, the Lender
could terminate its agreement to forbear without notice or demand, and, at
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Lender’s option, the entire outstanding principal balance of the Loan would
become due and payable in full. Id. at §§ 9.2-10.2. The Forbearance
Agreement provided that the obligations of Borrower and Guarantor
expressly “shall remain in full force and effect” but, in consideration for the
Bank’s agreement to forbear execution on the loan and the property,
Plaintiffs released all claims arising out of the Loan Documents.
In addition to releasing claims related in any way to the Loan
Documents, Guarantor Pacitti affirmed and ratified his guaranty and his
confession of judgment, acknowledged the obligation, and confirmed that he
had no defense, counterclaim or set-off of any kind. The Forbearance
Agreement further provided that the law of Pennsylvania governed its
interpretation, and that it was fully integrated and could not be orally
modified. Id. at §§ 14.3 and 14.4. Notably, Borrower and Guarantor also
agreed to execute and deliver to Lender such other documents as Lender
believed necessary or convenient to carry out the terms of the Forbearance
Agreement. Id. at § 14.5.
Thereafter, the parties executed a First Amendment to the Loan
Modification and Forbearance Agreement dated March 30, 2012, extending
the maturity date to March 5, 2013, and a Second Amendment extending
the maturity date to March 5, 2014. All of these documents, by definition,
are Loan Documents as defined in the Forbearance Agreement.
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After reviewing the Release and the entire Forbearance Agreement, we
are unpersuaded by Plaintiffs’ contention that they “explicitly only released
claims they ‘held, owned or possessed’ in 2010 at the time of execution of
the Release.” Appellants’ brief at 33. The Release contains language clearly
indicating an intent to bar claims even remotely arising out of or connected
to the Loan Documents as subsequently modified. The definition of Loan
Documents included future modifications to existing documents and
instruments such as the deed in lieu. Claims involving the Forbearance
Agreement itself and the simultaneously executed deed in lieu could only
arise after execution of the Release, yet they were released specifically.
Furthermore, the Plaintiffs expressly released contract or tort claims
“known or unknown, contingent or otherwise, whether asserted or
unasserted, whether now known or hereinafter discovered” arising out of or
related to the Loan Documents. See Loan Modification and Forbearance
Agreement, 4/13/10, at § 11.1 (Release), supra at 11. The scope of the
Release was not limited to contract claims that had accrued by the time of
the Agreement. The parties intended it to apply to claims of any kind in any
way related to the Loan Documents as subsequently modified.
The misrepresentation, fraud, tortious interference and civil conspiracy
claims all pertain to the Bank Defendants’ actions in inducing Plaintiffs to
sign the 2014 Deed. The Forbearance Agreement specifically required that
Borrower and Guarantor execute a deed in lieu. It also anticipated and
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provided for the execution of additional documents in the future to protect
Lender’s rights under the Loan Documents, which would include the 2014
Deed. Even the commercial disparagement/invasion of privacy claim arose
from the Bank Defendants’ alleged obligations to Plaintiffs under the Loan
Documents.
We conclude that the Release, when read in the context of the
Agreement as a whole, was intended to release claims that would accrue in
the future and which arose from or were remotely related to the Loan
Documents. Thus, it was contemplated that claims could arise from Loan
Documents that were not yet in existence as of the date of the Agreement
and Release. Crediting Plaintiffs’ well-pled facts, as we must, and
considering the documents appended to the pleadings, we find that the
Release operates to preclude Plaintiffs from maintaining the causes of action
pled in their Fourth Amended Complaint against the Bank Defendants as a
matter of law.
The question remains whether LDC, as the assignee of the loan, is
entitled to the benefit of the Release. The trial court concluded that LDC, as
the Bank’s assignee, was entitled to assert the Release. Plaintiffs argue that
LDC cannot avail itself of the Release because it was not a party to the
Forbearance Agreement. Furthermore, they allege that the claims arose
after the execution of the Forbearance Agreement and the Release applied
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only to claims existing at the time the Release was executed. We rejected
the latter argument vis ‘a vis the Bank Defendants.
LDC counters that the Release, by its terms, purported to release and
discharge the Bank Defendants and “assigns.” Loan Modification and
Forbearance Agreement, 4/13/10, at § 11.1. Thus, LDC contends,
assignment of the loan was “obviously contemplated and permitted.” LDC’s
brief at 17. LDC was the owner of the loan when the Deed was executed on
June 4, 2014.
We agree with the trial court that LDC, as the assignee of the loan, is
entitled to the protection of the Release in the Forbearance Agreement.
Assignment of the loan was both sanctioned and contemplated, and the
validity and effectiveness of the assignment is not challenged herein. LDC,
as the assignee, stands in the shoes of the assignor. Crawford Cent. Sch.
Dist. v. Commonwealth, 888 A.2d 616, 620 (Pa. 2005). It assumes all of
the assignor’s rights as well as the defenses, set-offs, and counterclaims of
the obligor, provided the latter are based on facts existing at the time of the
assignment. Smith v. Cumberland Group, 687 A.2d 1167, 1172
(Pa.Super. 1997); Restatement (Second) of Contracts § 336 (1981).
We find that the Release forecloses the Plaintiffs’ claims against LDC,
the Bank’s assignee, for the same reasons we concluded that it barred the
instant claims against the Bank Defendants. Thus, we affirm the trial court’s
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J-A24015-16
grant of judgment on the pleadings as to both the Bank Defendants and
LDC.
In light of the foregoing disposition, Plaintiffs’ final three issues
involving the enforceability of the jury trial waiver are moot.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/26/2017
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