NON-PRECEDENTIAL DECISION SEE SUPERIOR COURT I.O.P 65 · Insite Realty Advisors, LLC (“Insite...
Transcript of NON-PRECEDENTIAL DECISION SEE SUPERIOR COURT I.O.P 65 · Insite Realty Advisors, LLC (“Insite...
J-A26026-13
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37
MAHONEY REALTY GROUP, INC., : IN THE SUPERIOR COURT OF
: PENNSYLVANIA Appellant :
: v. :
: DAVIN LAMM, INDIVIDUALLY AND D/B/A
DEEP SEA ASSOCIATES, LP, FERRY DEVELOPMENT, LP, INSITE REALTY
ADVISORS, LLC, PARLIAMENT CONSULTING AND LAMM REALTY
GROUP, EDWARD ALAN WEBBER,
INDIVIDUALLY AND DOING BUSINESS AS DEEP SEA ASSOCIATES, FERRY
DEVELOPMENT, LLC, INSITE REALTY ADVISORS, LLC, PARLIAMENT
CONSULTING, AND LAMM REALTY GROUP, LLC AND DEEP SEA-GP, LLC
D/B/A DEEP SEA ASSOCIATES, LP AND FERRY DEVELOPMENT GENERAL, LLC
D/B/A FERRY DEVELOPMENT, LP, INSITE REALTY ADVISORS, LLC, PARLIAMENT
CONSULTING, LAMM REALTY GROUP, LLC AND HARVEY LAMM,
:
: :
: :
:
: :
: :
: :
: :
: :
: :
: Appellees : No. 499 EDA 2013
Appeal from the Order dated January 8, 2013, Court of Common Pleas, Philadelphia County,
Civil Division at No. August Term, 2010, No. 1551
BEFORE: BOWES, DONOHUE and OTT, JJ.
MEMORANDUM BY DONOHUE, J.: FILED JANUARY 28, 2014
Mahoney Realty Group, Inc., (“MRG”) appeals from the January 8,
2013 order of the Court of Common Pleas, Philadelphia County, granting the
motion for summary judgment filed by Davin Lamm (“Lamm”), Edward Alan
Webber (“Webber”), Deep Sea-GP, LLC (“Deep Sea, LLC”) d/b/a/ Deep Sea
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Associates, LP (“Deep Sea”), Ferry Development General, LLC (“Ferry
Development, LLC”) d/b/a/ Ferry Development, LP (Ferry Development”),
Insite Realty Advisors, LLC (“Insite Realty”), Parliament Consulting
(“Parliament”), Lamm Realty Group, LLC (“LRG”) and Harvey Lamm
(collectively, “the Appellees”).1 After careful review, we reverse in part,
affirm in part, and remand.
MRG is a Pennsylvania corporation licensed as a real estate brokerage
with its primary location in Ardmore, Pennsylvania. By agreement dated
June 19, 1999 (“the Agreement”), MRG entered into an independent
contractor relationship with Lamm, a real estate salesperson. In 2005,
Lamm obtained a license as an Associate Broker. Lamm’s title with MRG
was that of Vice President. In 2007, Webber became an unpaid intern at
MRG. After Webber completed college and became a licensed real estate
agent in 2008, MRG engaged him as a real estate salesperson. The
relationship between MRG and Webber was never formalized in writing.
However, the parties do not dispute that the terms of Webber’s relationship
1 Deep Sea, LLC is a Pennsylvania limited liability corporation; Lamm serves as its managing member. Deep Sea, LLC is the general partner and Lamm
is the limited partner of Deep Sea. Lamm is also the managing member of Ferry Development, LLC, a Pennsylvania limited liability corporation, and
Harvey Lamm is a member. Ferry Development, LLC is the general partner of Ferry Development; Lamm and Harvey Lamm are limited partners of Ferry
Development. Insite Realty is a Delaware limited liability corporation; Lamm is a shareholder of Insite Realty. Webber started Parliament, which is a
Pennsylvania limited liability corporation. LRG is a Pennsylvania limited liability corporation.
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with MRG were the same as those found in the Agreement between Lamm
and MRG. See Appellant’s Brief at 30, Webber’s Brief at 12.
During the period of Lamm and Webber’s relationship with MRG, Lamm
negotiated the purchase of four properties in his capacity as managing
member of Deep Sea, LLC and Ferry Development, LLC. On September 1,
2004, Deep Sea, LLC purchased property located at 3156 Kensington
Avenue, Philadelphia, PA 19134, for a contract price of $325,000. A five
percent broker’s commission was paid to the seller’s broker, The Prestige
Group, Inc. On February 17, 2006, Deep Sea paid a contract price of
$150,000 for property located at 3162-64 Kensington Avenue Philadelphia,
PA 19134. A three percent commission was paid to both the seller’s broker
and MRG. Ferry Development purchased properties located at 3000 Grays
Ferry Avenue and 3000 Oakford Street in Philadelphia County on December
17, 2007. The contract prices for the respective properties was $1,450,000
and $1,925,000. No commission was paid on Ferry Development’s purchase
of either property.
In 2005 and 2007, Deep Sea leased the 3156 Kensington Avenue
property to three tenants (Hispanic Community Services, Foot Locker and
Esperanza Health Center). The only broker to receive a commission was
Foot Locker’s broker, in the amount of $31,000. Ferry Development leased
the 3000 Grays Ferry Avenue property to three tenants (Rite Aid, Gray’s
Ferry Community Counseling Service, Inc. and Philadelphia Consortium for
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Community Services, LLC). No commission was paid to any broker because
of these leases.
Parliament engaged in marketing for the properties held by Deep Sea
and Ferry Development. In addition, Insite Realty marketed the Grays Ferry
Avenue property. Parliament received no commission or fees for its efforts.
Insite Realty received a development fee from Ferry Development for its
work on the Grays Ferry Avenue property.
On August 24, 2009, MRG terminated its relationship with both Lamm
and Webber. On August 8, 2010, MRG initiated the instant civil action by
filing a complaint. In its third amended complaint, MRG asserted causes of
action for breach of contract (Count I and II), fraud (Count III) and
conversion (Count VII) against Lamm and Webber and causes of action for
civil conspiracy (Count IV), unjust enrichment (Count V) and usurpation of
business opportunity (County VI) against the Appellees. Third Amended
Complaint, 1/31/2011, at ¶¶ 44-80. MRG alleged that it was in the business
of selling and leasing residential and commercial real estate and that Lamm
and Webber were “responsible for finding real estate available for lease and
for sale and finding potential buyers and tenants for properties” on behalf of
MRG. Id. at ¶¶ 16, 18. MRG asserted that Lamm and Webber violated their
statutory and contractual obligations pursuant to the Agreement by
engaging in business for themselves and acting in concert with the Appellees
to use MRG’s “services, facilities, reputation and market presence” to further
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their own business without informing MRG of their activities or providing
MRG with commission or other income. Id. at ¶¶ 26-28. MRG further
claimed that the Appellees all conspired to deprive MRG of income to which it
is entitled. Id. at 43.
By order dated January 8, 2013, the trial court granted Appellees’
motion for summary judgment with respect to all counts in MRG’s complaint.
The trial court explained,
[s]ummary judgment for the Defendants[] is
appropriate because [MRG] failed to produce any evidence on damages. Here, MRG must produce
evidence of: 1) either a contractual or a societal duty owed by Defendants to MRG, 2) Defendants[’] breach of that duty, and 3) damages MRG suffered as a result of that breach.
First, as a matter of law, the [c]ourt finds that the
Agreement between the parties does not preclude individual agents from selling, buying or leasing their
own property where there is no listing agreement and they receive no commission on behalf of their
broker. Based on this finding, the [c]ourt finds that [MRG] failed to show a breach of any contractual
duty[].[FN]15
Second, the [c]ourt finds that the plaintiff has still failed to prove damages; the only evidence on
damages offered a means of calculating damages for which [MRG] is not entitled to collect.
_________________ [FN]15 With respect to paragraph 5(g) [of the Agreement], which prohibits the use of MRG’s ‘trade dress[,]’[] the [c]ourt finds that there is sufficient evidence to show Defendants breached this provision
by misappropriating some or all of MRG’s trade-dress. Nevertheless, [MRG] failed to aver any facts
relating to damages for this breach.
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Trial Court Opinion, 1/8/2013, at 6-7 (citations omitted) (emphasis in
original).
Thereafter, MRG filed a timely notice of appeal. On February 14,
2013, the trial court filed its Pa.R.A.P. 1925(a) opinion in which it relies on
its January 8, 2013 opinion granting the Appellees’ motion for summary
judgment.
On appeal, MRG presents the following issues for our review:
[1]. The trial court erred in granting summary
judgment in favor of [] Lamm on Count I of the Complaint for breach of contract since Lamm, a real
estate broker associated with MRG, violated both the terms of the written independent contractors
agreement and the provisions of the Real Estate Licensing and Registration Act.
[2]. The trial court erred in granting summary
judgment in favor of [Appellees] on Count II of the Complaint against [] Webber since the evidence of
record shows that Webber breached his contract with MRG by acting in concert with [] Lamm and using
MRG’s resources to divert business opportunities and potential commission income and benefits from MRG.
[3]. The trial court erred in holding that the measure of damages suffered by MRG as a result of
[Appellees’] wrongful acts was anything other than lost commission.
[4]. The trial court erred in holding that Lamm and
Webber did not violate any duty to MRG and that they did not have a duty to disclose their activities to
MRG. Lamm and Webber owed a duty to act exclusively for MRG, in its best interests, within the
scope of their agency and breached that duty. Lamm, Webber, Harvey Lamm and the Corporate
[Appellees] were unjustly enriched thereby.
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[5]. The trial court erred in granting summary
judgment as the evidence of record shows that [Lamm and Webber] had an obligation to MRG to
disclose their illicit Activities, yet intentionally concealed those activities to the detriment of
plaintiff.
[6]. [Lamm and Webber] converted commission income to which [MRG] was entitled.
[7]. All [Appellees] conspired to deprive [MRG] of its
business opportunities and, therefore the trial court
erred in granting summary judgment on Count IV of the Complaint for civil conspiracy.
Appellant’s Brief at 21, 30, 32, 34, 36, 38.2
With respect to the grant of summary judgment, this Court has stated:
‘[A] proper grant of summary judgment depends upon an evidentiary record that either (1) shows the material facts are undisputed or (2) contains
insufficient evidence of facts to make out a prima
facie cause of action or defense [.]’ Under [Civil] Rule 1035.2(2), ‘if a defendant is the moving party, he may make the showing necessary to support the
entrance of summary judgment by pointing to
materials which indicate that the plaintiff is unable to satisfy an element of his cause of action.’ Correspondingly, ‘[t]he non-moving party must adduce sufficient evidence on an issue essential to
its case and on which it bears the burden of proof such that a jury could return a verdict favorable to
the non-moving party .’
2 Although MRG lists only four issues in the Statement of Questions in its appellate brief (see Appellant’s Brief at 2-3), the argument section of the
brief is broken into seven arguments with corresponding sub-headings. For the sake of clarity, we use MRG’s sub-headings as its statement of the
issues. In addition, we have formatted and re-ordered MRG’s issues for the ease of disposition.
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Basile v. H & R Block, Inc., 777 A.2d 95, 100–01 (Pa. Super. 2001) (citations omitted). Thus, a
plaintiff's failure to adduce evidence to substantiate any element of his cause of action entitles the
defendant to summary judgment as a matter of law.
Sass v. AmTrust Bank, 74 A.3d 1054, 1059 (Pa. Super. 2013) (quoting
Montagazzi v. Crisci, 994 A.2d 626, 629–630 (Pa. Super. 2010)).
Furthermore,
In reviewing an order granting summary judgment,
our scope of review is plenary, and our standard of review is the same as that applied by the trial court.
Our Supreme Court has stated the applicable standard of review as follows: An appellate court
may reverse the entry of a summary judgment only where it finds that the lower court erred in
concluding that the matter presented no genuine issue as to any material fact and that it is clear that
the moving party was entitled to a judgment as a matter of law. In making this assessment, we view
the record in the light most favorable to the nonmoving party, and all doubts as to the existence
of a genuine issue of material fact must be resolved against the moving party. As our inquiry involves
solely questions of law, our review is de novo.
Thus, our responsibility as an appellate court is to
determine whether the record either establishes that the material facts are undisputed or contains
insufficient evidence of facts to make out a prima
facie cause of action, such that there is no issue to
be decided by the fact-finder. If there is evidence that would allow a fact-finder to render a verdict in
favor of the non-moving party, then summary judgment should be denied.
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Majorsky v. Douglas, 58 A.3d 1250, 1257 (Pa. Super. 2012), appeal
denied, __ Pa. __, 70 A.3d 811 (2013) (quoting Jones v. Levin, 940 A.2d
451, 452–54 (Pa. Super. 2007)).
In its first three issues, MRG contends that the trial court erred in
granting summary judgment on its breach of contract claim against Lamm
and Webber. Appellant’s Brief at 21-32. “To maintain a cause of action in
breach of contract, a plaintiff must establish: (1) the existence of a contract,
including its essential terms; (2) a breach of a duty imposed by the contract;
and (3) resulting damages.” Lackner v. Glosser, 892 A.2d 21, 30 (Pa.
Super. 2006). Regarding contract interpretation, this Court has stated the
following:
[i]n 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.
McCausland v. Wagner, 78 A.3d 1093, 1101 (Pa. Super. Sept. 20, 2013)
(quoting Szymanowski v. Brace, 987 A.2d 717, 722 (Pa. Super. 2009)).
The Agreement governing the relationship between Lamm and MRG
provides, in relevant part, as follows:
1. RETAINING. Broker hereby retains Associate
as an independent contractor to perform the services
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of a licensed real estate sales person for the compensation and on the other terms hereinafter
specified. Associate shall perform such services in a diligent and professional manner and shall use best
efforts to solicit exclusive right to sell and/or lease listings, to develop clients, and to otherwise promote
the business of serving the public in real estate transactions so that each of the parties to this
Agreement may derive optimal profit from such business. Associate shall, for administrative support
or purposes, be associated with a specific office of Broker (the ‘Office’), which office shall initially be Broker’s Ardmore, PA office. While Associate is
associated with Broker and as required by the Act,[3] Associate shall not become associated with or
employed by another broker.
2. COMPENSATION.
(a) Associate shall, as Associate’s sole compensation for all services rendered hereunder,
receive a commission in respect of all transactions in which Associate participates, in accordance with
Broker’s commission schedule in effect on the date with such commission becomes payable hereunder,
except as may otherwise be agreed in writing between Broker and Associate before completion of
any particular transaction. Broker may change its
commission schedule from time to time during the term hereof and a copy of the current schedule shall
be made available to Associate at any time upon request made to the Manager of the Office. In no
event shall Associate charge less than the commission or fee established by Broker without a
prior written agreement between, Associate and Broker to that effect, nor may Associate pay
commissions to others. Associate’s share of any commission shall be paid to Associate as soon as
reasonably practicable after its collection. Associate shall not be entitled to any drawing account or any
3 The Act referenced in the Agreement is the Real Estate Licensing and Registration Act (“RELRA”), 63 P.S. § 455.101, et seq.
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other advance payment from Broker against further commissions. In no event shall Broker or Associate
be liable to any other party for such other party’s share of commission not collected.
* * *
5. BUSINESS DEVELOPMENT.
* * *
(a) Broker’s Available Listings and Leads.
Broker shall make available to Associate, upon oral
or written request, any current exclusive right to lease and/or sell listings in[ t]he various Broker’s offices. Upon Associate’s request, Broker may, from time to time, supply Associate with the name of
prospective clients. Nothing herein shall be construed to give Broker any right or authority to
direct Associate to meet or otherwise to service particular clients or to restrict Associate’s business geographically, or to prohibit Associate from engaging in any other lawful business or commercial
activity, profession, occupation or the like.
(b) Associate’s Acceptance of Broker’s Listing and Leads. If Associate accepts any of the
listings or leads made available to him pursuant to
this paragraph, Associate shall use best efforts to sell, lease or rent such listings and to develop such
leads.
(c) Listings Developed by Associates. Associate agrees to obtain all listings and to close all
lease and/or sales in the name of Broker for the benefit and use of Broker, subject however, to
paragraph 2(c), 2(d) and 5(h) hereof.
* * *
(g) Business Methods. Associate and Broker agree to perform their business in accordance with
the Act and all other Federal, state and local laws,
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statutes, rules and regulations, including without limitation those relating to civil rights and fair
housing and with the ethical and professional standards required by the Pennsylvania Real Estate
Commission and the various state and local Boards of Realtors of which Associate and Broker are
members and to maintain licensed [sic] as required by [the] Act. Associate agrees to use the trade
name and trademark of Broker only, in conformity with all applicable standards for such use developed
by Broker as promulgated from time to time in Broker’s sole discretion. Associate specifically may not use materials or leatherheads showing Broker’s name, trademark or trademark for correspondence or communications in Associate’s personal business in which Broker is not involved. Associate shall not make any untrue statement of a material fact or fail
to state a material fact necessary to make the statement made not misleading to clients or
customers.
(h) Authority to Contract. Associate shall have no authority to bind, obligate or commit Broker
by any promise or representation, unless Associate secures prior written authorization in connection with
a specific transaction.
* * *
12. MISCELLANEOUS.
* * *
(c) Nature of Relationship. The parties
agree that the relationship between them is that of independent contractors and not that of
employment, agency, partnership or otherwise whatsoever, and specifically but without limitation,
Broker shall not be liable for [the] acts of Associate except as specifically required by law. Associate will
be treated as an independent contractor and not as an employee for federal unemployment
compensation, for social security tax and for federal
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and Pennsylvania income tax withholding or other state or federal tax purposes. Associate will be
responsible for satisfying Associate’s federal income tax and self-employment tax and Pennsylvania
income tax withholding liability on compensation received from Broker through Associate’s timely estimated income tax payments.
The Agreement, 6/19/1999, at ¶¶ 1, 2(a), 5(a)-(c), (g)-(h), 12(c) (footnote
added).
With respect to Lamm, MRG asserts that he breached paragraphs 1,
2(a),4 5(c), 5(g) and 5(h) of the Agreement. MRG first argues that Lamm
breached paragraph 1 of the Agreement by engaging in business that
directly conflicted and competed with MRG all while using his position as a
broker at MRG, including contacts and resources. Appellant’s Brief at 22.
MRG further claims that Lamm failed to charge a commission in his
transactions and waived MRG’s commission without its knowledge or
consent. Id.
MRG also asserts that Lamm breached paragraph 2(a) of the
Agreement because Lamm “entered into agreements of sale and leases, in
his own name, and as principal of various entities he created, in which he
either did not claim a commission on behalf of MRG or expressly waived
MRG’s commission.” Id. at 23. MRG contends that Lamm did not have
written consent from MRG to waive its commission nor did Lamm provide
4 MRG refers to paragraph 2(c) in its brief followed by a quotation from the
relevant paragraph. Appellant’s Brief at 23. The quoted portion of the Agreement set forth by MRG, however, is from paragraph 2(a).
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MRG with notice that it was entitled to commission as required by paragraph
2(a) of the Agreement. Id. at 23-24.
Regarding Lamm’s breach of paragraphs 5(c), (g) and (h), MRG first
argues that Lamm violated paragraph 5(c) by failing to claim and waiving
commission for MRG on the sales and leases of Lamm’s properties. Id. at
24. According to MRG, Lamm breached paragraph 5(g) by “using [MRG’s]
name, letterhead, and business systems and materials to further his own
personal business, without MRG’s permission.” Id. at 25. With respect to
paragraph 5(h), MRG claims Lamm breached this provision by “waiving
commission on behalf of MRG, without its permission, and entering into
contracts and agreements purportedly on behalf of MRG, with third parties
concerning those transactions all without MRG’s prior written authorization.”
Id. at 25-26.
As to Webber, MRG argues that he breached the Agreement by
assisting Lamm in his real estate activities, including unauthorized use of
MRG’s email, letterhead, and proprietary database in furtherance of Lamm’s
private business, all of which deprived MRG of commission and income.
Appellant’s Brief at 30-32.
Our review reveals that the clear and unambiguous language of the
Agreement states that Lamm and Webber were independent contractors for
MRG. The Agreement, 6/19/1999, at ¶¶ 1, 12(c). As independent
contractors, however, Lamm and Webber were required to perform the
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services of licensed real estate sales persons “in a diligent and professional
manner and shall use best efforts to solicit exclusive right to sell
and/or lease listings, to develop clients, and to otherwise promote the
business of serving the public in real estate transactions so that each of the
parties to this Agreement may derive optimal profit from such business.”
Id. at ¶ 1 (emphasis added). Regarding business development, the
Agreement provides that upon request, MRG shall provide Lamm and
Webber with “any current exclusive right to lease and/or sell [MRG’s] listings
[…] .” Id. at ¶ 5(a). However, “[n]othing herein shall be construed […] to
prohibit [Lamm or Webber] from engaging in any other lawful business or
commercial activity, profession, occupation or the like.” Id. (emphasis
added). Furthermore, if Lamm or Webber accept any of MRG’s listings or
leads, they “shall use best efforts to sell, lease or rent such listings and to
develop such leads.” Id. at ¶ 5(b). In developing listings, Lamm and
Webber “agree[] to obtain all listings and to close all lease and/or sales
in the name of [MRG] for the benefit and use of [MRG]” with the
proviso that neither Lamm nor Webber have the “authority to bind, obligate
or commit [MRG] by any promise or representation, unless [they] secure[]
prior written authorization in connection with a specific transaction.” Id. at
¶¶ 5(c) and (h) (emphasis added).
In our view, paragraphs 1 and 5(a)-(c) clearly contemplate that Lamm
and Webber will pursue deals culminating in the sale and/or lease of
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property arising from MRG’s listings and leads as well as listings procured
through the initiative of Lamm and Webber for the benefit of MRG. The
Agreement provides that Lamm and Webber may engage in “any other
lawful business or commercial activity” (id. at ¶ 5(a)), which the trial court
concluded gave Lamm and Webber “an unfettered right to buy, sell and
lease any properties owned by them or their companies, so long as they did
not receive any commission or fee.” Trial Court Opinion, 1/8/2013, at 7.
We cannot agree that Lamm and Webber’s conduct related to leasing
properties constitutes “other lawful business,” especially when there is
evidence in the record that they used MRG’s trade-dress in furtherance of
their endeavors (see Trial Court Opinion, 1/8/2013, at 5, 7, n.15) and
waived commissions on behalf of MRG.5 The language of the Agreement
5 For example, paragraph 31 of the November 28, 2011 ground lease
between Ferry Development and Rite Aid of Pennsylvania Inc., provides as follows:
31. Broker’s Fee: Landlord and Tenant mutually warrant, one to another, that there are no real
estate brokers entitled to commission as a result of producing this Lease, and that neither employed or
engaged a real estate broker or agent to effectuate this Lease Agreement. Landlord and Tenant shall
indemnify and hold each other harmless from any claims made by any real estate broker for a
commission as a result of allegedly effectuating this Lease.
MRG’s Motion for Summary Judgment, 10/15/2012, at Exhibit X ¶ 31. A July
19, 2005 lease between Deep Sea and Foot Locker Retail, Inc. states:
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provides that Lamm and Webber’s duty to MRG ran not only to the sale and
lease of properties listed with MRG, but it also required Lamm and Webber
to obtain all listings and to close all lease and/or sales in the name of [MRG]
for the benefit of [MRG.]” Id. at ¶ 5(b), (c). Thus, the leasing of properties,
whether they are listed with MRG or obtained through the efforts of Lamm
Section 40.01. Other than Tenant’s agreement with NAI Hiffman neither party has had any contact or
dealings regarding the Demised Premises, or any communication in connection with the subject matter
of this transaction, through any licensed real estate broker or other person who can claim a right to a
commission or finder’s fee as a procuring cause of the lease contemplated herein. In the event that
any broker or finder brings a claim for a commission or finder’s fee based upon any such contact dealings or communication, the party through whom the broker or finder makes his claim shall be responsible
for said commission or fee and all costs and
expenses (including reasonable attorneys’ fees) incurred by the other party in defending against the
same and shall indemnify, defend and hold harmless the other against same. Notwithstanding the
foregoing, Landlord agrees to pay any brokerage commissions related to this Lease, including all
respective fees and/or commissions owed the above listed party, based upon the terms and conditions set
forth in a separate written agreement and any claim that may be brought by [MRG]. The indemnification
in this Section 40.01 shall survive the expiration or earlier termination of this Lease.
Id. at Exhibit I § 40.01.
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and Webber, is an activity within the scope of the Agreement and does not
fall within the permitted conduct of “any other lawful business.”6
Regarding damages for MRG’s claims, the trial court found that MRG
failed to meet its burden to prove damages because “the only evidence on
damages offered a means of calculating damages for which [MRG] is not
entitled to collect.” Trial Court Opinion, 1/8/2013, at 7. Even though the
trial court determined that evidence shows that Lamm and Webber breached
paragraph 5(g) “by misappropriating some or all of MRG’s trade-dress,” it
concluded that summary judgment was appropriate because MRG “failed to
aver any facts relating to damages for this breach.” Id. at 7 n.15, 9.
“In order to recover for damages pursuant to a breach of contract, the
plaintiff must show a causal connection between the breach and the loss.”
Logan v. Mirror Printing Co. of Altoona, Pa., 600 A.2d 225, 226 (1991)
(citation omitted). Furthermore,
[A] party seeking damages for breach of contract ‘must be able to prove such damages with reasonable certainty.’ Wilcox v. Regester, 417 Pa. 475, 484, 207 A.2d 817 (1965). See also Nakles v.
Union Real Estate Co. of Pgh., 415 Pa. 407, 411, 204 A.2d 50 (1964). ‘Compensation for breach of contract cannot be justly refused because proof of the exact amount of loss is not produced ... [T]he
law does require ... that the evidence shall with a fair degree of probability establish a basis for the
6 Regarding the initial purchase of the properties by Lamm with Webber’s assistance, we conclude that this activity was permitted by the Agreement.
The Agreement specifically references the sale and/or lease of real estate in paragraphs 1 and 5(a)-(c), not the purchase of real estate.
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assessment of damages.’ Massachusetts Bonding & Ins. Co. v. Johnston & Harder, Inc., 343 Pa.
270, 280, 22 A.2d 709 (1941).
Id. at 227 (quoting Exton Drive-In, Inc. v. Home Indemnity Co., 436
Pa. 480, 488, 261 A.2d 319, 324 (1969)).
In response, MRG asserts that “the only reasonable measure of
damages, and the method of compensation set forth in the Independent
Contractor Agreement, […] is the income that MRG lost as a result of
[Appellees’] actions.” Appellant’s Brief at 35. According to MRG, “[t]here is
no other reasonable method of determining the value of the benefit obtained
by [Appellees] from the use of MRG’s systems, proprietary information and
business reputation.” Id. MRG contends that it is fair to calculate damages
based upon the commission that MRG would have received because Lamm
and Webber’s commission would have been deducted from the total
commission that MRG should have received. Id. at 35-36. We agree.
Contrary to the trial court’s determination, as discussed above, Lamm
and Webber breached the Agreement by leasing real estate for their own
benefit while associated with MRG. In pursuit of their endeavors, Lamm and
Webber used “MRG’s trademark, email address, and other like commercial
identifiers in commerce.” Trial Court Opinion, 1/8/2013, at 15. MRG points
to its expert’s report discussing the benefit of acting without a broker and
counsel’s letter calculating the amount in controversy based on commissions
for several lease transactions. See MRG’s Answer to Motion for Summary
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Judgment, 11/15/2012, at Exhibits C and E. This proffer satisfies MRG’s
burden to produce evidence that Lamm and Webber’s breach caused a loss
and provides a basis for the assessment of damages within a fair degree of
certainty. Logan, 600 A.2d 226-27.
In MRG’s fourth, fifth, and sixth issues, MRG challenges the trial
court’s determination that summary judgment was appropriate with respect
to its causes of action for breach of fiduciary duty, fraudulent concealment,
conversion and civil conspiracy. Appellant’s Brief at 32-34, 36-39. We do
not reach the merits of these claims, however, as we conclude that they are
all barred by the gist of the action doctrine. Although the trial court did not
dismiss MRG’s claims on this basis, this Court may affirm the trial court on
any basis. Mirizio v. Joseph, 4 A.3d 1073, 1085 (Pa. Super. 2010), appeal
denied, 609 Pa. 691, 14 A.3d 829 (2010). Because the application of the
gist of the action doctrine presents a question of law, our review is plenary.
Id. at 1079.
The “gist of the action” doctrine “is designed to maintain the
conceptual distinction between breach of contract claims and tort claims. As
a practical matter, the doctrine precludes plaintiffs from re-casting ordinary
breach of contract claims into tort claims.” eToll, Inc. v. Elias/Savion
Advertising, Inc., 811 A.2d 10, 14 (Pa. Super. 2002) (internal citations
omitted). This Court has provided the following explanation as to the
difference between breach of contract claims and tort claims:
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[a]lthough 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 promise 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. Bash v. Bell Tel. Co., 601 A.2d 825, 829
(Pa. Super. 1992).
Mirizio, 4 A.3d at 1079 (quoting eToll, 811 A.2d at 14). “[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.” eToll, 811 A.2d at 14 (citation omitted). “[I]n
determining whether a particular tort claim is barred by the gist of the action
doctrine, the central analysis is whether the tort claim is based on
contractual duties, or conversely, whether the contract is collateral to a tort
claim that is based on duties imposed by ‘larger social policies embodied in
the law of torts.’” Mirizio, 4 A.3d at 1084 (quoting Bohler-Uddenholm
America, Inc. v. Ellwood Group, Inc., 247 F.3d 79, 105 (3rd Cir. 2001)).
“Importantly, in any given case, there may be particular tort claims that are
barred by the gist of the action doctrine while others are not.” Id.
Furthermore,
[P]ersuasive authority interpreting Pennsylvania law has restated the gist of the action doctrine in a
number of similar ways. These courts have held that
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the doctrine bars tort claims: (1) arising solely from a contract between the parties; (2) where the duties
allegedly breached were created and grounded in the contract itself[; (3)] where the liability stems from a
contract; [or] (4) where the tort claim essentially duplicates a breach of contract claim or the success
of which is wholly dependent on the terms of a contract.
Id. at 1080 (quoting eToll, 811 A.2d at 10).
Regarding its breach of fiduciary duty claims, MRG asserts that the
trial court erred in holding that Lamm and Webber did not violate any duty
owed to MRG. Appellant’s Brief at 32. MRG asserts that, as real estate
agents, both Lamm and Webber owed MRG a fiduciary duty to act in its best
interests in their conduct as real estate agents. Id. at 32. MRG also claims
that Lamm, as a vice president of MRG, breached his fiduciary duty when he
usurped a business opportunity by purchasing commercial real estate and
developing and leasing that real estate without the knowledge or consent of
Tim Mahoney, MRG’s broker of record. Id. at 33. According to MRG, Lamm
developed these opportunities using MRG’s resources and further benefitted
by waiving MRG’s commissions. Id.
While an agent is subject to a duty not to compete with the principal in
connection with the scope of the agency, “‘an agent can properly act freely
on his own account in matters not within the field of his agency and in
matters in which his interests are not antagonistic to those of the principal.’”
Levy and Surrick v. Surrick, 524 A.2d 993, 994 (Pa. Super. 1987)
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(quoting Restatement (Second) of Agency § 393 (1958)). On the other
hand, the corporate opportunity doctrine “imposes liability on officers and
directors who take personal advantage of business opportunities when these
opportunities fall within the ‘scope of activities’ of, and constitute a ‘present
or potential advantage’ to, the corporation.” Levy and Surrick, 524 A.2d at
995 (citation omitted). This duty of loyalty “prohibits the officer or director
from competing with the corporation in any way, even in areas unrelated to
the work that the officer or director performs for the corporation.” Id.
In some cases, a fiduciary duty may be the gist of the action and the
contract duty merely collateral. See Bohler-Uddeholm, 247 F.3d at 105
(concluding that the fiduciary duty imposed on joint venturers went beyond
the obligations in the contract).7 As concluded above, Lamm and Webber’s
conduct regarding the lease of properties for their own account was not
permitted by the Agreement. The Agreement expressly defined Lamm and
Webber’s duties and obligations to MRG, requiring them to obtain all listings
and to close all lease and/or sales in the name of [MRG] for the benefit
of [MRG.]” The Agreement, 6/19/1999, at ¶ 5(b), (c) (emphasis added).
7 In Mirizio this Court found the reasoning of the Bohler-Uddenholm court persuasive and discussed it at length. Mirizio, 4 A.3d at 1081-84.
We stated the Bohler-Uddenhom court’s conclusion that the breach of fiduciary duty claim was not barred by the gist of the action doctrine and
pointed out that the claim for breach of fiduciary duty in that case “was based on actions by [the Appellee] that were outside the scope of the
parties’ contractual duties, i.e., they were neither permitted nor proscribed by the parties’ agreements.” Id. at 1083.
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An addendum to the Agreement further provided that “[Lamm’s] title for
the purpose of this agreement and for developing new business of
[MRG] is Vice President.” Id. at Addendum A ¶ 2 (emphasis added). As
such, the Agreement defines Lamm and Webber’s duties to MRG and Lamm’s
duties as an officer of MRG. Because their duties as salespeople and Lamm’s
duties as an officer are defined and controlled by the contract, the gist of the
action doctrine bars MRG’s tort claims for breach of fiduciary duty.
With respect to MRG’s claim of fraud, it argues that the trial court
erred in granting summary judgment because Lamm and Webber, “as sales
agents associated with MRG, had contractual, fiduciary and statutorily
mandated obligations to disclose their real estate business activity to MRG.”
Appellant’s Brief at 37. MRG further asserts that but for Lamm and
Webber’s concealment of their activity, MRG would have asserted its right to
receive commissions. Id.
When determining whether a fraud claim is barred by the gist of the
action doctrine, this Court has stated:
[T]he cases seem to turn on the question of whether the fraud concerned the performance of contractual
duties. If so, then the alleged fraud is generally held to be merely collateral to a contract claim for breach
of those duties. If not, then the gist of the action would be the fraud, rather than any contractual
relationship between the parties.
eToll, 811 A.2d 10, 19. Instantly, MRG premises its claim on the belief that
it is entitled to commission involving Lamm and Webber’s conduct in leasing
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property. As discussed at length above, the Agreement prevented Lamm
and Webber from leasing property for their own benefit. MRG’s argument --
that Lamm and Webber committed fraud by deliberately and wrongfully
concealing their business activities -- involves Lamm and Webber’s
performance of contractual duties and is grounded in the contract. Thus,
MRG’s claim of fraud is barred by the gist of the action doctrine.
For its claim of conversion, MRG again premises its argument on the
belief that it is entitled to commission for Lamm and Webber’s conduct. See
Appellant’s Brief at 38 (asserting that Lamm and Webber “wrongfully and
without justification, converted the commissions payable to [MRG] to their
own use and benefit”). The Agreement, however, governs Lamm and
Webber’s conduct and any liability stems from its breach. See Mirizio, 4
A.3d at 1080. Therefore, the gist of the action doctrine bars MRG’s claim for
conversion.
In its final issue, MRG challenges the trial court’s grant of summary
judgment for its cause of action for civil conspiracy. Appellant’s Brief at 38-
39. We do not reach the merits of MRG’s claim. It is well settled that it is
the appellant’s burden to fully develop its argument with citation to and
discussion of authority, along with references to the record in support of its
claim. This Court has stated:
[I]t is an appellant's duty to present arguments that are sufficiently developed for our review.
Commonwealth v. Gould, 912 A.2d 869, 873 (Pa.
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Super. 2006). The brief must support the claims with pertinent discussion, with references to the record
and with citations to legal authorities. Id.; Pa.R.A.P. 2119(a), (b), (c). Citations to authorities must
articulate the principles for which they are cited. Pa.R.A.P. 2119(b).
This Court will not act as counsel and will not
develop arguments on behalf of an appellant. Gould, 912 A.2d at 873. Moreover, when defects in
a brief impede our ability to conduct meaningful appellate review, we may dismiss the appeal entirely
or find certain issues to be waived. Id.; Pa.R.A.P.
2101.
Commonwealth v. Kane, 10 A.3d 327, 331 (Pa. Super. 2010) (citation
omitted), appeal denied, 612 Pa. 689, 29 A.3d 796 (2011).8
While MRG cites authority regarding the elements of civil conspiracy, it
does no more than baldly assert that Lamm and Webber, in conjunction with
Harvey Lamm and the corporate entities, conspired to direct business away
from MRG in violation of contractual and fiduciary obligations and
fraudulently concealed improper activities. Appellant’s Brief at 39. MRG
then presumptively concludes that the trial court erred because “there are
material facts of record from which a jury could conclude that [the
Appellees] engaged in a civil conspiracy to commit tortious acts against []
MRG.” Id. Other than its bare assertions, MRG fails to direct this Court to
anything in the record that supports its claim. It is not the function of an
8 The principles stated in criminal cases regarding the Pennsylvania Rules of Appellate Procedure are “equally applicable” in civil cases because the Rules of Appellate Procedure apply to both civil and criminal cases. Lineberger v. Wyeth, 894 A.2d 141, 148 n.4 (Pa. Super. 2006).
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appellate court to scour the record for evidence that supports the appellant’s
claim for relief. Commonwealth v. Mulholland, 549 Pa. 634, 648 n.5, 702
A.2d 1027, 1034 n.5 (1997). Because MRG has failed to present this Court
with properly developed argument so that we can meaningfully review its
claim, we find that it has been waived.
We accordingly vacate the trial court’s order granting summary
judgment in part and remand for further proceedings consistent with this
decision.
Order reversed in part; affirmed in part. Case remanded. Jurisdiction
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 1/28/2014