author: NEALON, J.,

text:
    Weinkopff v. Mericle 100 Baltimore, LLC

      Debra A. Jensen, for plaintiff.

      Thomas J. Kelley; for defendant Mericle 100 Baltimore LLC.

      Eugene P. Feeney, for defendant Petras.

      John B. Day, for additional defendant RCN Telecom Services Inc.
    January 11, 2011
   NEALON, J.,

Defendant Mericle 100 Baltimore, LLC (“Mericle”) has filed a motion for summary judgment in this personal injury action arising out of a fall that occurred on water in the lobby of a commercial building owned and occupied by Mericle. Mericle seeks summary judgment based upon the language of a lease agreement between Mericle and its tenant, additional defendant RCN Telecom Services, Inc. (“RCN”), which was the employer of plaintiff Irene Weinkopff (“Weinkopff’) at the time of her fall. Mericle submits that the plain language of the lease agreement placed sole responsibility upon RCN for the maintenance of the lobby floor.

Summary judgment is appropriate only where the record clearly demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Barnish v. KWI Bldg., Co., 602 Pa. 402, 420, 980 A.2d 535, 546 (2009). The moving party bears the burden of proving the absence of a genuine issue of fact and its entitlement to judgment as a matter of law. Stimmler v. Chestnut Hill Hospital, 602 Pa. 539, 554, 981 A.2d 145, 154 (2009). When considering a motion for summary judgment, the record must be viewed in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Chepkevich v. Hidden Valley Resort, L.P., 2 A.3d 1179, 1175 n. 1 (Pa. 2010); Abrams v. Pneumo Abex Corp., 602 Pa. 627, 634-635, 981 A.2d 198, 203 (2009). “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.” Mull v. Ickes, 994 A.2d 1137, 1139-40 (Pa. Super. 2010); Kurowski v. Burroughs, 994 A.2d 611, 616 (Pa. Super. 2010).

On December 23, 1999, Mericle and RCN entered into a ten (10) year lease agreement with respect to the subject property. Paragraph 9(a) of the lease addresses RCN’s proportionate share of utility expenses, insurance costs and maintenance fees and states that “[ajnything contained in this lease to the contrary notwithstanding, [RCN] shall be responsible, at its sole cost and expense, for the cleaning of the leased premises” (Mericle-RCN lease agreement dated 12/23/99, p.9). The agreement defines the “leased premises” as “constituting the entire first (1st), second (2nd) and third (3rd) floors of the building (excluding the common areas hereinafter defined)...” {Id., p. 1). Although RCN did not lease the “common areas,” the agreement entitled them to the non-exclusive use of such common areas which “include any and all public access corridors... foyers and lobbies...” {Id., p. 2). Paragraph 9(a) further provides that “[ajnything contained in this Lease to the contrary notwithstanding, [RCN’s] Proportionate Share of the costs and expenses attributable to snow removal only shall be grossed up to be that percentage derived by dividing the number of square feet of space contained in the leased premises by the total number of square feet of space in the building which is then being occupied by all tenants” (Id).

Paragraph 10 of the Mericle-RCN lease agreement is entitled “maintenance of leased premises; parking area, access area and common areas” and sets forth the responsibilities of Mericle and RCN with regard to those areas (Id., p.13). Paragraph 10(a) indicates that RCN is responsible for repairs to the leased premises (excluding structural repairs to the roof, foundation and outside walls and the base electrical, plumbing, HVAC and mechanical systems) and all removal of refuse from the leased premises (Id., pp. 13-14). Paragraph 10(b) addresses the maintenance obligations of Mericle, and in its original form read:

[Mericle] shall be responsible for the exterior landscape maintenance of the real property, the parking area and the access area... and snow and ice removal from the access area and the parking area; provided, however, [RCN] shall reimburse to [Mericle], its Proportionate share of all Grounds maintenance costs... incurred by [Mericle] with respect to the grounds maintenance and upkeep of the real property including, without limitation... snow and ice removal from all exterior portions of the building, including all sidewalks, stairways, entrances and exits with respect to all areas of the building and the real property including, without limitation, the parking area, the access area and the common areas. (Id., p. 14).

On September 9, 2002, Mericle and RCN executed a “second amendment to agreement of lease” which amended certain provisions ofthe original lease. Paragraph 6 of the second amendment modifies paragraph 9(a) of the original lease and provides, inter alia, that “[RCN] shall be responsible at its sole cost and expense, for the cleaning of the leased premises and for the cleaning of the entire first three (3) floors of the building (including ALL lobbies and common areas thereto)” (Mericle-RCN second amendment, p.6) (emphasis in original). Thus, unlike the original lease which excluded the “common areas” from RCN’s “cleaning” responsibilities, the second amendment expanded RCN’s cleaning duties to expressly include the lobbies and common areas of the first three floors. Furthermore, paragraph 9 of the seond amendment amends paragraph 10(b) of the original lease to state that although Mericle remained responsible for “snow and ice removal from the access area and the parking area,” the “common areas” were no longer included among Mericle’s snow and ice removal duties and RCN became obligated to reimburse Mericle for “all grounds maintenance cost” rather than RCN’s proportionate share of those costs (Id, p. 11) (emphasis in original).

Examining the summary judgment materials in the light most favorable to Weinkopff the record reflects that on March 7, 2007, Weinkopff was employed by RCN which leased office space in Mericle’s building. Due to active and ongoing inclement weather, the floor mats located at the entrance to the Mericle building had snow and ice present on them. As Weinlcopff walked across the first floor lobby area of the building en route to work at approximately 9:00 a.m., she slipped and fell on water which had originated from the snow and ice caused by the continuous precipitation that day.

Weinkopff instituted this litigation against Mericle and defendant Charles E. Petras d/b/a Charles E. Petras Landscape Design (“Petras”) who had been retained by Mericle to clear snow and ice from “all parking areas, access areas, walkways, steps, ramps, and all ingress and egress areas leading to and from the property and building” in question (See correspondence from Don Middleton to Charles E. Petras dated 11/13/06). Mericle joined RCN as an additional defendant and averred that the Mericle-RCN lease agreement obligated RCN to maintain the lobby and common areas free from liquid or other hazards. Mericle subsequently filed the instant motion for summary judgment on September 15,2010, and following the completion of oral argument on January 5, 2011, that motion was submitted for a decision.

Relying upon Leary v. Lawrence Sales Corp., 442 Pa. 389, 275 A.2d 32 (1971) and Fitzpatrick v. Consolidated Rail Corp., 1991 WL 61114 (E.D. Pa. 1991), Mericle posits that the owner/lessor is generally responsible for the maintenance of common areas and passageways absent a contrary provision in the lease between the lessor and lessee (Mericle’s Brief in Support, pp. 3-5). Based upon the above-quoted language of paragraph 6 of the second amendment modifying the original lease, Mericle contends that it owed no duty to Weinkopff with regard to the condition of the lobby floor (Id., p. 6). Rather, according to Mericle, Weinkopff’s employer and Mericle’s tenant, RCN, contractually assumed sole responsibility for the detection and removal of any moisture or liquid from the lobby floor (Id.).

Weinkopff advances three arguments in opposition to Mericle’s summary judgment motion. First, noting that Mericle clearly had the responsibility to remove snow and ice from the exterior access and parking areas, Weinkopff asserts that her “injuries were caused by [Mericle’s] negligence in the removal of snow and ice from the parking and access areas to the building, which resulted in the accumulation of ice and water in the lobby that caused [Weinkopff] to fall” (Weinkopff’s Memorandum of Law, p. 7). Second, Weinkopff maintains that Leary and Fitzpatrick “are inapplicable to the case at bar because, contrary to the facts in those cases, [Mericle] did in fact retain control over snow and ice removal under the lease agreement” (Id., pp. 8-9). Third, Weinkopff submits that the second amendment places responsibility upon RCN for “cleaning” the lobby, but does not “state that RCN is responsible for removing snow, water, and ice accumulation from the lobby” (Id., p.9). Citing various dictionary definitions of the term “clean,” Weinkopff alleges that cleaning is confined to the removal of dirt, soil or impurities and would merely “entail dusting the desk surfaces, sweeping the floor, vacuuming the mats, and performing other typical janitorial services”. (Ici). Arguing that “[sjnow removal is an entirely different function” than “cleaning,” Weinkopff avers that Mericle is not clearly entitled to judgment in its favor based upon the language of the second amendment (Id.).

Weinkopff’s second and third arguments are best addressed in consolidated fashion since they both involve interpretation of the Mericle-RCN lease. In Pennsylvania, lease agreements are governed by contract law and general contract law principles. Giant Food Stores, LLC v. The Silver Spring Development, L.P., 959 A.2d 438, 447 (Pa. Super. 2008), app. denied, 601 Pa. 697, 972 A.2d 522 (2009). When interpreting a contract, the court must ascertain the intent of the contracting parties, and in cases of a written contract, the parties’ intent is the writing itself. Kripp v. Kripp, 578 Pa. 82, 90, 849 A.2d 1159, 1163 (2004). In making that determination, “[tjhe accepted and plain meaning of the language used, rather than the silent intentions of the contracting parties, determines the construction to be given the agreement.” J.K. Willison v. Consolidation Coal Company, 563 Pa. 49, 54, 637 A.2d 979, 982 (1994). Accord, Guaranty Towers, LLC v. Cellco Partnership, 2008 WL 5378286 at *2 (M.D. Pa. 2008).

When the language of a lease is clear and unambiguous, its meaning will be determined by its contents alone in ascertaining the intent of the parties. Giant Food Stores, supra. See also, Gustine Uniontown Associates, Ltd. v. Anthony Crane Rental, Inc., 892 A.2d 830, 837 (Pa. Super. 2006) (“The intent of the parties to a written contract is ascertained from that writing, the contractual terms are ascribed their ordinary meaning, and where the language is unambiguous, intent is gleaned from the language.”). Contract language is ambiguous if it is reasonably susceptible of different constructions and capable of being understood in more than one sense. Missett v. Hub International Pennsylvania, LLC, 6 A.3d 530, 541 (Pa. Super. 2010). “The ‘reasonably’ qualifier is important: there is no ambiguity if one of the two proffered meanings is unreasonable.” Trizechahn Gateway, LLC v. Titus, 601 Pa. 637, 653, 976 A.2d 474, 483 (2009). Moreover, the reviewing court must not distort the meaning of the language used or resort to a strained contrivance in order to find an ambiguity. D’Adamo v. Erie Insurance Exchange, 4 A.3d 1090, 1096 (Pa. Super. 2010); Nordi v. Keystone Health Plan West, Inc., 989 A.2d 376, 380 (Pa. Super. 2010). Instead, “[i]f left undefined, the words of a contract are to be given their ordinary meaning.” Kripp, supra; Nissley v. Candytown Motorcycle Club, Inc., 913 A.2d 887, 889 (Pa. Super. 2006).

As a general rule, if the owner of property leases various portions to several tenants, but retains possession and control of the common passageways and areas which are used by the tenants’ invitees, the owner/lessor has the duty to maintain those common areas in a safe condition “in the absence of a contraiy provision in the lease or leases.” Leary, 441 Pa. at 392, 275 A.2d at 34; Pagano v. Redevelopment Authority of City of Philadelphia, 376 A.2d 999, 1007 (Pa. Super. 1977). The original MericleRCN lease made RCN “responsible, at its sole cost and expense, for the cleaning of the leased premises” which, by definition, specifically excluded the lobbies, foyers, public access corridors and common areas for the first three floors. The Mericle-RCN second amendment in 2002 unquestionably expanded RCN’s cleaning obligations and imposed contractual responsibi-lity upon RCN “for the cleaning of the leased premises and for the cleaning of the entire first three (3) floors of the building (including all lobbies and common areas thereto).” Therefore, the clear and unambiguous wording of the second amendment transferred Mericle’s duty to safely maintain all common areas to RCN which expressly assumed the contractual obligation to clean all lobbies located on the first three floors.

Weinkopff contends that RCN’s contractual responsibility for “the cleaning” of “all lobbies and common areas” of “the entire first three (3) floors” does not include snow removal which she characterizes as “an entirely different function.” As phrased, Weinkopff’s argument assumes that snow or ice was physically present on the lobby floor and constituted the substance upon which Weinkopff fell. However, Weinkopff has testified that she fell on water that was present on the lobby floor and which Weinkopff maintains derived from the outside precipitation (See deposition of Irene Weinkopff dated 3/16/09, pp. 66, 73-74, 76). Therefore, the proper question to be decided is whether RCN’s “cleaning” duty encompassed the obligation to remove water or liquid from the lobby floor.

Common sense dictates that RCN’s responsibility “for the cleaning of... all lobbies” included the obligation to mop or eliminate any water present on the floor. The term “cleaning” may be deemed ambiguous only if Weinkopff’s proffered interpretation of that word is reasonable. Trizechahn Gateway, supra. It is wholly unreasonable to conclude that the cleaning of a lobby excludes wiping, mopping or otherwise removing any liquid from the floor surface. Cf., Camino v. WCAB (City Mission), 796 A.2d 412, 419 (Pa. Cmwlth. 2002) (referencing “[t]he janitorial-type activity of mopping and cleaning”); Lippincott v. Marriott Management Services, Inc., 1999 WL 552557 at *1 (E.D. Pa. 1999) (“by virtue of defendant’s responsibilities for cleaning Campbell headquarters,” defendant “would clean and mop the entrance areas of Campbell’s headquarters.”). See also Martino v. Great Atlantic & Pacific Tea Company, 419 Pa. 229, 232, 213 A.2d 608, 609 (1964) (employee had duty to “keep the floor clean,” and as a result, he “swept the floor and the floor was mopped.”).

Even if the term “cleaning” was somehow regarded to be less than clear and unequivocal, the contracting parties’ course of performance under the second amendment reflects the intent of the parties and substantiates that RCN had the exclusive duty to remove water from the lobby floor. It is an established principle of contract construction that the subsequent course of performance underthe contract demonstrates the intent ofthe contracting parties. Tindall v. Friedman, 970 A.2d 1159, 1166 (Pa. Super. 2009); South Hills Village Associates, LP v. Select Restaurants, Inc., 2010 WL 4340984 at *2 (W.D. Pa. 2010). Hence, when contracting parties perform pursuant to a contract, their performance establishes a common manifestation of their understanding of the agreement and their respective contractual responsibilities. Tindall, supra; Herzog v. Herzog, 887 A.2d 313, 316, (Pa. Super. 2005) (quoting “Murray on Contracts” §88A, at 424 (3rd Ed.)).

Instantly, the deposition testimony of RCN’s Senior Manager, Jeffrey Stage, confirms that RCN assumed the sole contractual responsibility for maintenance of the lobby floor in question. Mr. Stage testified that RCN was “100 percent” responsible for the cleaning and mopping of the first floor lobby, including the specific area where Weinkopff allegedly fell. (Deposition of Jeffrey Stage, dated 2/23/09, pp. 10-12,26). Upon being shown paragraph 6 of the second amendment, Mr. Stage agreed that it imposed exclusive responsibility upon RCN for maintenance and cleaning of the exact site where Weinkopff claims to have fallen (Id., p. 30).

In comiection with RCN’s cleaning duty under the second amendment, RCN contracted directly with a cleaning service and a day porter. (Id., pp. 26-27). The day porter was employed from 8:00 a.m. to 1:00 p.m. each weekday and was responsible for (a) periodically inspecting the lobby floor during periods of snow and rain, and (b) “mopping” and “cleaning” that area as needed (Id., pp. 42-43, 76-79). Since the county bus service was delayed on March 7, 2007 due to the snow storm, the day porter arrived late for work on the morning of WeinkopfPs fall (Id., p. 76). Once Mr. Stage was advised of Weinkopff’s fall, he instructed the day porter to mop any water or moisture present and to “make sure” that the lobby floor was clean (Id., pp. 17-18, 30-31, 43-44). Finally, in response to questioning by Petras’ counsel concerning the responsibility for maintenance of the situs of Weinkopff’s fall, Mr. Stage testified:

Q. The area where Mrs. Weinkopff fell, that’s an area that RCN is responsible for the maintenance, is that correct, —
A. Correct.
Q. — for inspection?
A. Correct.

(Id., p. 83)

Based upon the foregoing uncontroverted testimony, the contractual course of performance by Mericle and RCN manifests a common understanding that RCN bore sole and exclusive responsibility for cleaning and maintenance of the first floor lobby, including the mopping or removal of water or moisture. To the extent that the plain language of the second amendment did not unequivocally impose that obligation upon RCN, the parties’ subsequent conduct pursuant to the lease amendment firmly establishes that RCN alone assumed and exercised that responsibility. Consequently, both the wording of the second amendment and the contracting parties’ course of performance thereunder demonstrate that Mericle did not have a contractual or common law duty to remove water from the first floor lobby surface.

Equally unavailing is Weinkopff’s alternate assertion that Mericle’s duty to remove snow and ice from the parking and access areas somehow created potential liability for Weinkopff’s fall on water in the lobby since the water originated from the exterior snow or ice. It is undisputed that there was active snowfall and generally slippery conditions at the time of Weinkopff’s fall. Weinkopff testified that it was “snowing fairly heavily” during the entire morning of March 7, 2007, and that it continued to snow as she entered the Mericle building at 9:00 a.m. (Weinkopff depo. supra, atpp. 40-42, 54-55, 119). Jeffrey Stage similarly testified that there was continuous snowfall and generally slippery conditions on that morning (Stage depo., supra, at pp. 32-33, 56-57, 64).

The “hills and ridges” doctrine protects an owner of commercial property “from liability for generally slippery conditions resulting from ice and snow where the owner has not permitted the ice and snow to unreasonably accumulate in ridges or elevations.” Morin v. Traveler’s Rest Motel, Inc., 704 A.2d 1085, 1087 (Pa. Super. 1997), app. denied, 555 Pa. 708, 723 A.2d 1025 (1998). Stated otherwise, “there is no liability under the law for a generally slippery condition” and “[a] property owner is not required to keep his parking lot free from ice at all times, as climatic conditions would make doing so impossible.” Tucker v. Bensalem Township School District, 987 A.2d 198, 206 (Pa. Cmwlth. 2009). The hills and ridges doctrine applies to landlord-tenant situations and requires the plaintiff to prove that: (1) snow and ice had accumulated in ridges or elevations of such size and character as to unreasonably obstruct travel and constitute a danger to pedestrians; (2) the property owner had actual or constructive notice of the existence of those ridges or elevations; and (3) “it was the dangerous accumulation of snow and ice which caused the plaintiff to fall.” Biernacki v. Presque Isle Condominiums Unit Owners Association, Inc., 828 A.2d 1114, 1117 (Pa. Super. 2003).

The summary judgment record is devoid of any suggestion that snow or ice had accumulated in ridges or elevations of such magnitude as to obstruct travel and create a danger outside or inside Mericle’s building. Similarly lacking is any indication that Mericle possessed actual or constructive notice of the presence of such ridges or elevations. More importantly, no evidence has been adduced, nor has an argument even been made, that hills, ridges or elevations of snow or ice caused Weinkopff to fall in the lobby. In the absence of such proof, Mericle’s obligation to remove snow and ice from the parking and access areas cannot possibly establish liability during general slippery conditions for Weinkopff’s fall inside the building.

In short, RCN alone had the duty to clean any water or liquid that was present on the lobby floor where Weinkopff fell. There is also no triable issue of fact with respect to Mericle’s lack of liability under the hills and ridges doctrine. Even when the record is viewed in the light most favorable to Weinkopff, it clearly demonstrates that Mericle is entitled to judgment as a matter of law. Accordingly, Mcricle’s motion for summary judgment will be granted.

And now, January 11, 2011, upon consideration of the motion for summary judgment of defendant Mericle 100 Baltimore, LLC, the memoranda of law and exhibits submitted by the parties, and the oral argument of counsel on January 5,2011, and based upon the reasoning set forth above, it is hereby ordered and decreed that the motion for summary judgment of defendant Mericle 100 Baltimore, LLC is granted.

      . Mericle has also referenced the deposition testimony of its Chief Operating Officer, Lewis Sebia, and its Senior Vice President, Don Middleton, In support of its motion for summary judgment (See, Mericle’s Brief in Support, pp. 5-6). Weinkopff aptly notes that the rule articulated in Nanty-Glo Borough v. American Surety Co., 309 Pa. 236, 163 A.523 (1932) stands for the well-settled proposition that oral testimony of the moving party or the movant’s witnesses, even if uncontroverted, does not provide a sufficient basis for the entry of summary judgment because the credibility of that arguably self-serving testimony is a matter for the jury to resolve. See, Weaver v. Lancaster Newspapers, Inc., 592 Pa. 458, 472, 926 A.2d 899, 907 (2007). The Nanty-Glo rule does not apply where, as here, the deposition testimony offered in support of summary judgment constitutes an adverse admission of a non-moving party. Com., Office of Atty. Gen. ex rel. Corbett v. Richmond Township, 2 A.3d 678, 681 (Pa. Cmwlth. 2010); Com. Department of Environmental Resources v. Bryner, 149 Pa. Cmwlth. 59, 65 n. 4, 613 A.2d 43, 46 n.4 (1992). Therefore, summary judgment may be granted based upon the sworn testimony of RCN’s representative without violating Nanty-Glo.


source: Caselaw Access Project

author: MOTTO, P.J.,

license: Public Domain

text:
    Barletto v. Heuschkel

      Robert O. Lampl, Este R. Lampl, and James R. Cooney, for plaintiff.

      Mark A. Willard, Stuart Kaplan, and Audrey K. Kwak, for defendants.
    February 7, 2011
   MOTTO, P.J.,

Before the court for disposition are preliminary objections filed on behalf of defendants Mark Fleuschkel (“Fleuschkel”), Ferrotech Corporation (“Ferrotech”), Ferromet Corporation (“Ferromet”), and Ferrotech Realty, LLC (“Ferrotech Realty”) in response to the complaint of plaintiff Charles Barletto (“Barletto”). Defendants contend that the asset purchase agreement (“APA”) at the heart of this dispute contains a broad arbitration clause which compels any and all disputes arising out of the APA be resolved through arbitration. Plaintiff argues that because three of the four defendants are non-signatories to the agreement, arbitration is not the proper venue for disposition of his claims and the court must hear the matter. After argument on the preliminary objections and reviewing applicable case law and the well-argued briefs submitted by the parties, the court sustains defendants’ preliminary objections for dismissal based on jurisdictional grounds.

The plaintiff in the action before the court today is CharlesBarletto,aself-averred“experiencedbusinessman” who ran a number of scrap metal processing enterprises. The primary defendant, Mark Heuschkel, was also involved in the scrap metal processing business and was a customer of Barletto’s. Barletto owned three separate businesses associated with the scrap metal industry, those being Barletto Equipment and Construction Company, Industrial Concerns, and Barletto Corporation. Defendant Heuschkel’s business, known as Ferromet, also a defendant in the present action, sent much of its scrap steel to Barletto Corporation to be processed.

In 2005, Barletto and Heuschkel entered into negotiations for the sale of Barletto Corporation and Barletto Equipment, and for a lease on the property owned by industrial concerns to a new company Heuschkel had founded, Ferrotech, which is also a defendant in the current action. The heart of the dispute between the parties rests on the rights and obligations contained within the APA that effectuated the sale. Under the agreement, Ferrotech agreed to employ Barletto as a consultant and to provide Barletto with twenty-five percent of the voting stock of Ferrotech. In order for Barletto to receive his twenty-five percent of the shares, there were several obligations he had to satisfy. The obligations included delivery of the fully executed sublease to the property owned by industrial concerns, the transfer of a dust collection permit, the attachment of the seller’s financial statements to the agreement, the full release of any and all claims and/or liens on the purchased assets, and a receipt of revenue notice.

After the execution of the APA, Ferrotech became a highly profitable business. Barletto believes that as an alleged minority shareholder he was entitled to share in the profits. Barletto avers that Heuschkel informed him he was not entitled to share in the profits, and that Heuschkel routinely refused to allow Barletto any share of the profits earned by Ferrotech. Barletto alleges in his complaint that Heuschkel, in an attempt to keep the profits from Barletto, funneled the profits to Ferromet, the parent corporation of Ferrotech.

In 2008, it became necessary for the parties to refinance the mortgage on the facility Ferrotech leased from Industrial Concerns Inc. In order to receive the refinancing, Heuschkel informed Barletto that the property owned by Industrial Concerns would have to be deeded over to Ferrotech. On June 24, 2009 the parties executed the document that Barletto believed would deed the property from Industrial Concerns to Ferrotech. In actuality, the document deeded the property from Industrial Concerns to Ferrotech Realty, another new corporation formed by Heuschkel and the final defendant in the current action.

Barletto alleges in his complaint that his signature on the 2009 agreement was procured through means of duress and fraud. Specifically Barletto alleges that when he was told he had to sign the document, he was imaware that the document was an agreement between the parties, and that when he asked to review the document Heuschkel refused to allow him and threatened Barletto with termination if he did not sign.

Plaintiff alleges that he only signed the 2009 agreement and deeded over the property owned by Industrial Concerns after he was given assurances by Heuschkel that he would still own twenty-five percent of the property as he was the owner of twenty-five percent of the stock of Ferrotech. Defendant Heuschkel avers that because plaintiff failed to fulfill his obligations under the original APA, plaintiff never became a minority stockholder in Ferrotech.

In October of 2009 the business relationship between Barletto and Heusclikel ended. On or about October 30, Barletto was in the offices of Ferrotech and a confrontation between himself and Heuschkel occurred. As a result of the confrontation, Barletto was fired from the employ of Ferrotech. Upon his termination, Barletto inquired into his position as minority shareholder in Ferrotech. Barletto alleges that he was informed his stock was worthless and all of the assets of Ferrotech were owned by Ferromet or Ferrotech Realty. Barletto was then frozen out of the business and corporate affairs of Ferrotech, which Barletto believes deprived him of his rights as a shareholder.

As a result of his termination from Ferrotech, Barletto started a new business. Since the start of his new business, Barletto alleges that Heuschkel has engaged in a campaign of defamation, trade libel, and interference with contractual relations. Barletto alleges that Heuschkel has contacted customers and potential customers of Barletto’s and informed them that Barletto is a “crack addict”, sleeps with “crack whores,” is not fit to be in business, is unreliable, and is a “liar” and “thief” who cannot be trusted. Barletto claims that these statements allegedly made by Heuschkel have had a “serious and deleterious impact” upon his new business. Based on the above mentioned facts, Barletto has instituted the current action before the court today.

Pursuant to Pa.R.C.P. § 1028(a)(6), a party may raise by preliminary objections an agreement for alternative dispute resolution. A court is required to sustain preliminary objections raising an agreement for alternative dispute resolution, if the court finds as a matter of law that the dispute falls within the ambit of a contractual arbitration provision. Shadduck v. Christopher J. Kaclick, Inc., 713 A.2d 635, 639 (Pa. Super. 1998).

In filing his complaint before the court, plaintiff attempts to avoid the arbitration clause contained within the APA. Plaintiff initially alleged that he was not a signatory to the agreement and therefore could not be compelled to arbitrate. Careful examination of the agreement, however, reveals that plaintiff is a signatory to the agreement. Barletto is directly listed as a party to the agreement, rights and obligations of Barletto are found throughout the agreement, and on the signature page Barletto signed as an individual party to the agreement. The record clearly establishes that Barletto is a signatory and party to the APA.

The arbitration clause contained within the agreement states that “any and all disputes, controversies, or claims arising out of or relating to this agreement or for the breach or validity of any term or provision of this agreement, shall be resolved by final and binding arbitration.” Pennsylvania appellate case law considering similarly worded clauses have held that such clauses are unlimited arbitration clauses and any claims implicating the contract can be compelled to arbitration. Dodds v. Pulte Home Corporation, 909 A.2d 348, 351 (Pa. Super. 2006) (artitration clause that read “Any controversy, claim, or dispute arising out of or relating to this agreement” compels arbitration of fraud claims); Smay v. Stuebner, Inc., 864 A.2d 1266, 1276 (Pa. Super. 2004) (arbitration clause that read “Any controversy or Claim arising out of or related to the contract,” interpreted broadly to include all claims arising from the contract regardless of whether the claim sounds in tort or contract). The arbitration clause at issue before the court is equally as broad as those found in Dodds and Smay and thus any disputes arising out of or relating to the APA or the validity or breaches of contractual obligations and duties contained therein may be compelled to arbitration. An examination of the nine counts of plaintiff’s complaint reveals that all counts arise out of or relate back to the APA or its breach.

Count one of the complaint is against defendant Heuschkel for breach of contract. Plaintiff alleges that various actions committed by Heuschkel constitute repeated breaches of the APA. Plaintiff avers that the first alleged breach occurred when Heuschkel refused to recognize the twenty-five percent interest in Ferrotech that Barletto believed he was entitled to under the agreement. The second alleged breach occurred when Barletto was terminated from Ferrotech despite the twenty-five percent interest he believed he held in the company. Plaintiff claims the third breach came as a result of Heuschkel’s failure to share the profits earned by Ferrotech with Barletto since the date of the agreement. The final alleged breach is for the deprivation of salary and benefits Barletto felt he was entitled to receive under the “consulting agreement” agreed upon by the parties when signing the agreement. All of the claims in count one of the complaint arise out of the terms of the APA and the alleged breach of those terms.

In count two of the complaint, Barletto alleges that Heuschkel breached the fiduciary duty owed to Barletto as a minority shareholder. Plaintiff claims that Heuschkel, as a majority shareholder, owed plaintiff a fiduciary duty to not exclude plaintiff from his “proper share of benefits accruing from the enterprise.” Plaintiff alleges that Heuschkel breached his fiduciary duty by refusing to allow Barletto to participate in the profits earned by Ferrotech and for terminating Barletto despite his holding a twenty-five percent interest in the company. The alleged breach of fiduciary duty by Heuschkel arises directly out of the obligations of the parties found within the APA.

Count three of the complaint is against defendant Heuschkel for alleged corporate oppression of a minority shareholder. This court also arises directly out of the terms of the original APA. Barletto bases this count of the complaint on 15 Pa.C.S. 1767(a)(2) and avers that the breach of fiduciary duty by Heuschkel alleged in count two also constitutes corporate oppression of a minority shareholder.

In count four of the complaint, plaintiff brings claims against Heuschkel, Ferrotech, and Ferromet for fraud. Barletto alleges that the promise by Heuschkel of a twenty-five percent interest in Ferrotech was a significant inducement for Baiietto in signingthe APA. Plaintiff alleges further that Fleuschkel’s representations that Ferrotech would earn substantial profits that would be split between Fleuschkel and plaintiff was additional inducement for plaintiff’s entering into the APA. In his complaint, plaintiff avers that Ferrotech did indeed earn substantial profits, but plaintiff was excluded in the sharing of the profits as a result of Heuschkel’s tunneling the profits made by Ferrotech into Ferromet for the purpose of preventing plaintiff from receiving his rightful share of the profits. This count arises directly out of alleged violations of the duties and obligations contained within the APA.

The fifth count of plaintiff’s complaint is for an accounting of the profits earned by Ferrotech. This count is against defendants Heuschkel, Ferrotech, and Ferromet and also arises directly from rights and obligations of the parties found within the APA. Plaintiff asserts that as a result of the alleged fraud perpetrated by the defendants in the previous count, he is entitled to an accounting of all the profits earned by Ferrotech from the date of the APA until the present date, as well as accountings of any transfers Ferrotech may have made to Ferromet The sixth and seventh counts of plaintiff’s complaint are for fraud against defendants Heuschkel and Ferrotech Realty, LLC and for rescission against the same. These counts of the complaint arise directly from the lease agreement contained in the APA. Plaintiff alleges that he was fraudulently induced to deed the property owned by industrial concerns to Ferrotech Realty when the parties refinanced the property in 2008.

The eighth and ninth counts of the complaint are against defendant Heuschkel for defamation/trade libel and intentional interference with contractual relations. These counts originated with HeuschkeTs alleged breach of the APA forcing Barletto to start a new business. Barletto alleges that since he started his new business, Heuschkel has participated in a campaign of defamation and trade libel against him. Plaintiff alleges that this campaign has intentionally interfered with his current and potential customers.

In the nine counts filed by plaintiff, multiple defendants have been named. Defendant Heuschkel has been named individually as defendant in each count. At counts four and five, Ferromet and Ferrotech have also been included as defendants, and at counts six and seven, Ferrotech Realty is included as a defendant. While four separate parties are involved as defendants in the complaint, the close relationship between the four parties renders their individual interests intricately linked.

Of the four defendants, only Ferrotech is a signatory to the APA, and based on this fact Barletto avers that he cannot be compelled to arbitration. Pennsylvania case law, however, supports the notion that non-signatory agents, parent corporations, or sister corporations may enforce arbitration clauses when the interests of the parties overlap or are closely linked. Dodds v. Pulte Home Corporation, 909 A.2d 348, 351-352 (Pa. Super. 2006). Defendant Heuschkel is the president and owner of Ferrotech, and as such he is the agent through which Ferrotech, a corporation and creature of legal fiction, must act. Ferromet is the parent company of both Ferrotech and Ferrotech Realty. Defendant Heuschkel is the owner of all three corporate defendants, and all of the charges against the corporate defendants stem directly from Fleuschkel’s conduct as the owner and president of the corporations. For the reasons that follow this court finds that plaintiff Barletto is compelled to arbitrate all his claims at the insistence of the non-signatory defendants.

Arbitration is contractual by nature and it is well established that absent an agreement between the parties to arbitrate an issue, they cannot be compelled to arbitrate. Hoffman v. Gekoski, 378 A.2d 447 (Pa. Super. 1977). As a matter of public policy, courts of the commonwealth favor agreements to arbitrate and such agreements will be found valid, enforceable and irrevocable save for grounds that exist at law or in equity that relate to the validity, enforceability, or revocation of any contract. Quiles v. Financial Exchange, 879 A.2d 281, 287 (Pa. Super. 2005), quoting Keystone Tech. Group, Inc. v. Kerr Group, Inc., 824 A.2d 1223 (Pa. Super. 2003) and Emmaus Municipal Auth. v. Eltz, 416 Pa. 123, 204 A.2d 926 (1964). When a party to an agreement is attempting to prevent another from proceeding to arbitration, the court must apply a two-part test. The court must first determine whether a valid agreement to arbitrate exists between the parties, and if so, determine whether the dispute involved is within the scope of the arbitration provision. Highmark, Inc. v. Hospital Service Association of Northeastern Pennsylvania, 785 A.2d 93, 98 (Pa. Super. 2001).

The first step the court must take is to determine whether a valid arbitration clause exists. There can be little doubt that a valid agreement exists between Barletto and Ferrotech. The parties to the APA are listed on the first page of the agreement as Charles Barletto, Barletto Corporation, Barletto Equipment and Construction Co., Industrial Concerns, and Ferrotech Corporation. On the signature page of the agreement, the same page on which the arbitration clause is found, both Ferrotech and Charles Barletto, as an individual, are signatories. The validity issue the court must resolve is whether the non-signatory defendants, Heuschkel, Ferromet, and Ferrotech Realty, may enforce the arbitration clause for the claims brought against them by Barletto.

When confronted with the question before the court today, Pennsylvania courts and federal district courts have relied upon traditional principles of contract and agency law. See Dodds v. Pulte Home Corporation, 909 A.2d 348 (Pa. Super. 2006) (allowing parent corporation to invoke arbitration clause signed by subsidiary based on obvious and close nexus between contract and non-signatory); Smay v. E.R. Stuebner, Inc., 864 A.2d 1266 (Pa. Super. 2004) (third-party beneficiary bound by arbitration clause); Pritzker v. Merrill Lynch, Pierce, Fenner, & smith, Inc., 1 F.3d 1110 (3rd Cir. 1993) (agent of signatory bound by arbitration clause). In Thomson-CSF v. American Arbitration Association, 64 F.3d 773 (2nd Cir. 1995), the second circuit discussed five traditional theories arising out of common law principles of contract and agency that can bind non-signatories to arbitration agreements. The theories identified by the court were: 1) incorporation by reference; 2) assumption; 3) agency; 4) veil-piercing/ alter ego; and 5) equitable estoppel. Thomson-CSF at 776. This court holds that Baiietto is bound to arbitrate by the contract theories associated with agency, the parent-subsidiary relationship, and equitable estoppel.

Particularly important to the question sub judice is the principle that non-signatories can enforce an arbitration agreement where there is an obvious and close nexus between the non-signatories and the contract or contracting parties. Weiner v. Pritzker, Nos. 2846, 1011251, 2001 WL 1807929 citing Dayoff Inc. v. H.J. Heinz Inc., 86 F.3d 1287 (3rd Cir. 1996). One instance in which such an obvious and close nexus exists is the relationship between a principal and an agent. Weiner at 2. Under traditional agency theory, an agent is subject to contractual provisions entered into by the principal. Therefore, because a principal is bound under the terms of a valid arbitration clause, its agents, employees, and representatives are also covered under the terms of such agreements. Pritzker v. Merrill Lynch, Pierce, Fenner, & Smith, Inc., 7 F.3d 1110, 1121 (3rd Cir. 1993).

In the commonwealth, agency is defined as the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other to so act. Restatement (Second) of Agency § 1. The relationship necessary to create an agency does not depend on the intent of the parties to create it, nor their belief that they have done so. What is necessary to create the relation is an agreement between the parties, which need not be contractual, that results in the factual relation to which the legal consequences of an agency are attached. This is the case even if the parties did not call the relationship an agency or did not intend for an agency to exist. Restatement (Second) of Agency § 1 comment b.

With these principles of agency in mind, there can be no doubt that defendant Heuschkel was acting as an agent of Ferromet Ferrotech, and Ferrotech Realty when he allegedly breached the APA. As president and sole-owner of the three corporate defendants, Heuschkel was the means through which the corporate entities acted. In Weiner v. Pritzker, the plaintiff attempted to avoid the arbitration agreement by suing two employees of the principal with which he had signed the agreement. Weiner, 2001 WL 1807929 at 2. Like Heuschkel, Pritzker was the president and active controlling shareholder for the principal company, Omicron. Id. at 2. The court recognized that this relationship created the factual relation necessary for an agency to be found at law, and likewise an agency relationship exists in the case sub judice. Id. Heuschkel, as the president and controlling shareholder of Ferrotech, is the agent of Ferrotech, the signatory to the APA, and as such he may enforce the arbitration clause found within the APA for claims against him that arise out of or relate to the agreement.

Having established that the arbitration clause is valid as to Heuschkel for the actions he took as the agent of Ferrotech, the court now must determine if the clause is valid as to Ferrotech Realty, the sister corporation of Ferrotech. In Pritzker v. Merrill Lynch, Pierce, Fenner, & smith, 7 F.3d 1110 (3rd Cir. 1993), the Third Circuit found that the non-signatory corporate sister of Merril Lynch, Pierce, Fenner, & Smith (“MLPFS”) could enforce an arbitration clause to which MLPFS was the signatory. The holding in Pritzker was based on the principle that arbitration agreements may be upheld against non-signatories where their interests are directly related to, if not congruent with a signatory. Pritzker at 1122.

In reaching its holding, the court focused on the fact that Merril Lynch Asset Management, Inc. (“MLAM”), as a sister corporation to MLPFS, held interests that were directly related to those of MLPFS. Id. at 1122. The issue in Pritzker centered on investment purchases the plaintiffs believed were in violation of the fiduciary duties owed them through the cash management agreements they had with MLPFS. Id. at 1113. The cash management agreements contained clauses that designated arbitration as the forum to resolve any controversies arising between MLPFS and the plaintiffs. Id. The plaintiffs filed three claims, one of which was against MLAM for participation in the knowing breach of fiduciary duties owed to the plaintiffs through the agreements. Id.

In holding that MLAM could compel arbitration, the court relied on the plaintiffs’ own theory of liability to find that the interests of MLAM were directly related to, and potentially predicated upon the actions of MPFS, who was a signatory to the agreement. Id. at 1122. The court found this to be determinative in holding that MLAM had interests congruent with its sister corporation. Id. The court ruled that where parties unmistakably intend to arbitrate all controversies which might arise between them, their agreement should be applied to claims against agents or entities related to the signatories. Id.

The same principles relied upon by the Third Circuit are equally applicable to Ferrotech Realty. Barletto alleges that in early 2008 the parties needed to refinance the mortgage on the property leased to Ferrotech by Industrial Concerns through the APA. Barletto claims that Heuschkel, acting as agent of Ferrotech, informed him that to receive the financing the property needed to be deeded to Ferrotech. Instead of the property being deeded to Ferrotech, the complaint alleges that the property was fraudulently deeded to Ferrotech Realty for the purpose of depriving Barletto of his property rights. The claims that arise out of this transaction are directly related to the actions Heuschkel allegedly took as the agent of the signatory. Just as the plaintiffs in Pritzker were basing liability against MLAM for actions taken on behalf of their sister corporation, Barletto is claiming knowing participation by Ferrotech Realty in the fraudulent refinancing done on behalf of Ferrotech. The claims for fraud and rescission against Ferrotech Realty are directly related to transactions arising out of the APA and thus are subj ect to the arbitration clause. This is an instance, much like in Pritzker, where the parties have unmistakably agreed to arbitrate any and all controversies which might arise between them, and as such the agents and related corporate entities of the parties have the right to enforce the arbitration clause for any such controversies.

Another similar situation in which a sister corporation was bound by an arbitration clause is found in the case of Ketchum v. Almahurt Bloodstock IV, 685 F. supp. 786 (D. Kan. 1988).

The district court in Ketchum had to decide whether an affiliate corporation was bound by an arbitration clause entered into by a corporate sister. Without basing its decision on the affiliate status of the corporation, the court held that the sister corporation was bound by the arbitration clause. The court rested its decision on four specific circumstances present in the case. First, the affiliate corporation agreed to be bound by the arbitration clause as evidenced by its motion to compel arbitration. Id. at 793. Second, the claims against the affiliate corporation were identical to the claims against the signatory corporation. Id. Third, the plaintiff’s claims against both defendants arose out of the same transactions. Id. at 794. Finally, the claims against both defendants fell within the broad language of the arbitration clauses. The district court concluded that based on the four described circumstances it was reasonable for the non-signatory corporate affiliate to be bound by the arbitration clause. Id. at 794.

The four circumstances the district court relied upon to find it reasonable for a non-signatory corporate affiliate to compel arbitration are also present in the case sub judice. First, Ferrotech Realty has agreed to be bound by the arbitration clause based on its motion to compel arbitration. Second, the claims Barletto has against Ferrotech Realty are identical to the claims against Heuschlcel, who was acting on behalf of and as the agent of Ferrotech when the alleged fraud was committed. Third, the two claims filed against both Ferrotech Realty and Heuschkel arise out of the same transaction. And finally, the claims against Ferro tech Realty are within the ambit of the broadly construed arbitration clause. As was the case in Ketchum, based on the above stated circumstances, it is reasonable for Ferrotech Realty to compel Barletto to arbitrate the two claims filed against the entity.

The court’s attention must next turn to the question of whether Ferromet, as the parent company of Ferrotech, m ay enforce the arbitration clause in the claims filed against it. In the case of Dodds v. Pulte Home Corporation, 909 A.2d 348 (Pa. Super. 2006), the Pennsylvania Superior Court held that a non-signatory parent company could enforce an arbitration clause to which its subsidiary was a signatory. Dodds at 352. In Dodds, the plaintiffs sought to avoid the arbitration agreement they entered into with the Pulte Home Corporation of the Delaware Valley (PFICDV) by including the parent of PFICDV, Pulte Flome Corporation (PHC), who was a non-signatory to the agreement, in their claim. Id. at 348.

The plaintiffs inDodds argued that because a fraud claim was asserted against the non-signatory PHC, the alleged parent of PHCDV, the claim was no longer in the ambit of the arbitration agreement. Id. at 351. The defendants argued that non-signatories to an arbitration agreement are able to enforce the agreement when an obvious and close nexus between the non-signatories and the contract or contracting parties is found. The Superior Court agreed with the defendants. Id.

The Superior Court started its analysis of the issue by citing instances in which the court had found that non-signatories to a contract have fallen within the scope of the arbitration clause found in the contract. In the cases of Smay v. E.R. Stuebner, Inc., 864 A.2d 1266 (Pa. Super. 2004) and Highmark Inc. v. Hospital Service Ass’n, 785 A.2d 93 (Pa. Super. 2001), the Superior Court found that non-signatory third party beneficiaries could fall within the scope of an arbitration clause if that was the signing parties’ intent. Dodds at 351. The court examined the interests of the parties in Smay and found that the claims from the signatory and the claims from the non-signatory were indistinguishable, arose from the same incident and implicated identical legal principles. Because of the close and obvious nexus between the claims, the non-signatoiy’s claim was subject to the arbitration agreement. Dodds at 352.

The Superior Court extended the rationale in Smay to find that claims against PHC fell within the ambit of the arbitration clause signed by the Dodds and PHCDV. Dodds at 352. The Superior Court found that the interests of PHC and PHCDV were identical and that the arbitration agreement was enforceable by the non-signatory parent. Specifically the court held that:

An arbitration agreement would be of little value if a party could obviate the effect of the agreement merely by finding a way to join another party. In no event could the arbitration clause of PHCDV be defeated by adding PHC to the complaint, and because PHC wishes to enforce the arbitration agreement rather than avoid it, plaintiffs, as signatories to the arbitration agreement, should not be able to avoid the requirement to arbitrate by a non-signatory when the non-signatory wants to arbitrate. Dodds at 352.

The holding in Dodds thus blocks signatories to an arbitration agreement from attempting to avoid their bargained for contractual obligation by joining a non-signatory parent who shares interests that are obviously and closely related to the interests of a signatory subsidiary. This is especially the case when the non-signatory parent company wishes to enforce the arbitration agreement the signatory party is attempting to avoid. Dodds at 352.

When the rationale of the Superior Court in Dodds is applied to the case sub judice, the attempts by plaintiff Barletto to block enforcement of the arbitration clause must fail. Examining the interests of signatory defendant F errotech with the interests of the non-signatory defendants Ferromet, Heuschkel, and Ferrotech Realty it is clear that an obvious and close nexus exists among the interests of all defendants. Ferrotech is a subsidiary of Ferromet, Ferrotech Realty is a sister-corporation to Ferrotech, and Heuschkel, who as president and owner of all three corporations, was the agent through which the corporate entities functioned. The claims filed by plaintiff Barletto all arise as a result of actions Heuschkel took on behalf of the corporate entities, and therefore the interests of the defendants are indistinguishable. As the Superior Court stated in Dodds, an arbitration agreement has little value if it can be avoided simply by adding another party to an action. Dodds at 352. This is especially true in the Instant action where plaintiff has attempted to avoid the bargained for arbitration agreement by filing claims arising directly out of the APA against non-signatory parties closely related to the signatory, whose interests are indistinguishable from the signatory and those who wish to arbitrate.

Even if the court were to assume arguendo that the above mentioned theories do not compel Barletto to resolve his claims in arbitration, the theory of equitable estoppel compels that Barletto does so. The theory has been adopted by several courts of appeal as an appropriate method by which non-signatories to arbitration agreements may compel signatories to arbitrate their claims. See Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 757-58 (11th Cir. 1993), cert. denied, 513 U.S. 869, 115 S.ct. 190, 130 L. Ed 2d 123 (1994); J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315, 320-321 (4th Cir. 1988); McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., 741 F.2d 342, 344 (11th Cir. 1984); Thomson-CSF, S.A. v. American Arbitration Association, 64 F.3d 773 779-780 (2nd Cir. 1995); Hughes Masonry Co. v. Greater Clark County School Bldg. Corp., 659 F.2d 836, 838-839 (7th Cir. 1981). In these cases, the courts identified three factors that compelled a signatory to an arbitration agreement to arbitrate with a non-signatory at the non-signatory’s insistence. Signatories were bound to arbitrate because of (1) the close relationship between the entities involved in the disputes; (2) the relationship of the alleged wrongs to the non-signatory’s obligations and duties found in the contract; and (3) because the claims involved in the disputes were intimately founded in and intertwined with underlying contractual obligations. Thomson-CSF, 64 F.3d at 779 (quoting Sunkist, 10 F.3d at 757).

Of the three factors, the third factor, whether the claims are intimately founded in and intertwined with underlying contractual obligations, is the most important. Sunkist, 10 F.3d at 757-758. At issue in Sunkist was a license agreement that contained an arbitration clause. The non-signatory to the agreement, Del Monte, was attempting to compel Sunkist to arbitrate the claims between them. Sunkist claimed that it could not be equitably estopped from avoiding arbitration because no references to duties or obligations of del monte were present in the license agreement. Id. at 757. The eleventh circuit court of appeals disagreed. Id. at 758.

The court began its analysis by discussing case law across the circuits where the theory of equitable estoppel was used to compel a signatory to arbitrate with a non-signatory. Id. at 757. In those cases, the courts relied on the close relationship between the entities involved in the dispute and on the relationship of the alleged wrongs to the non-signatory’s obligations and duties in the contract to determine that the claims were “intimately founded in and intertwined with the underlying contractual obligations.” Sunkist, 10 F.3d at 757 (quoting McBro Planning, 741 F.2d at 344). Sunkist hinged its arguments against the imposition of equitable estoppel on the absence of any mention of Del Monte in the licensing agreement. The eleventh circuit held that this reliance was legally insufficient. Id. at 757.

In distilling the rationale behind the decisions that used equitable estoppel to bind a signatory, the eleventh circuit discovered that the crucial and dispositve factor in those holdings was not the inclusion of the non-signatories in the contracts at issue. Rather, the crucial factor in each case was “the foundation that ultimately, each party must rely on the terms of the written agreement in asserting their claims.” Sunkist at 757. The references in the contracts to non-signatories added support to the conclusion that the claims were “intimately founded in and intertwined with the underlying contract obligation,” but the references alone were not a deciding factor. Id. The deciding factor for the court in Sunkist was the degree to which the claims arose out of the obligations and duties contained in the contract at the heart of the dispute. Id.

To add support to its position, the eleventh circuit discussed the case of J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315 (4th Cir. 1988). The holding in J.J. Ryan allowed a parent company to arbitrate claims based on a contract entered into by its subsidiary. The court did so based on the fact that the claims against both the parent and subsidiary arose from the same facts and were inherently inseparable. The fourth circuit cited the eleventh circuit’s use of equitable estoppel in McBro as a justification for its holding. The eleventh circuit then used the holding of the fourth circuit in J.J Ryan to more fully develop the theory of equitable estoppel as it relates to the binding of signatories to an arbitration agreement at the insistence of non-signatories.

Using the holding in J.J Ryan, the eleventh circuit in Sunkist determined that for equitable estoppel to be applicable, an examination of the nature of the claims being asserted must be conducted to determine if the claims fall within the scope of the agreement and therefore compel the signatory to arbitrate. Sunkist at 758. The Sunkist court stated:

Therefore, the focus of our inquiry should be on the nature of the underlying claims asserted by Sunkist against Del Monte to determine whether those claims fall within the scope of the arbitration clause contained in the license agreement. Id.

The court examined the claims filed by Sunkist and found that all of them made reference to the license agreement to which Del Monte was not a signatory'. Id. The claims did not rely exclusively on the license agreement, but the court found that each claim at least presumed the existence of such an agreement. Each claim arose out of and was directly related to the agreement, and therefore a sufficient nexus between the claims and the agreement existed such that Sunkist could be equitably estopped from avoiding arbitration of its claims. Id. at 758.

To determine if Barletto can be equitably estopped from avoiding arbitration of his claims, those claims must be examined to determine if a sufficient nexus exists between the claims and the APA. As has already been established, each claim does arise out of and relate to the terms of the APA. Count one is for breach of the APA. Count two is for breach of fiduciary duties that arose out of the APA. In count three, Barletto is suing for oppression of a minority' shareholder. Barletto’s alleged position as a minority shareholder arises directly out of the duties and obligations found in the APA. Count four of the complaint alleges fraud regarding the percentage of profits

Barletto was entitled to receive under the APA and where said profits were actually distributed. Count five is tied to count four, and asks for an accounting of the profits that have been earned as a result of Barletto entering into the APA. Counts six and seven are tied to the refinancing of the property leased to Ferrotech via the APA, and the alleged fraud associated with the refinancing.

The two final counts of Barletto’s complaint are for defamation/trade libel and for intentional interference with contractual relationships. It is well established in Pennsylvania that when parties to a contract have included a broad arbitration clause in an agreement, disputes arising out of the contractual relationship must, when requested, be arbitrated. Foster v. Philadelphia Manufacturers, 592 A.2d 131, 133 (Pa. Commw. Ct. 1991). Doubts as to whether an arbitration clause covers a particular dispute should be resolved in favor of arbitration. McNulty v. H&R Block, Inc., 843 A.2d 1267, 1271 (Pa. Super. 2004). In JJ Ryan, three of the counts at issue were for libel, defamation, and injurious falsehood. The counts centered around the malicious sending of untrue notices by the defendant to business associates of the plaintiff informing them that the plaintiff had defaulted on security agreements. The court concluded that the dispute over the security agreements arose in connection with the contract and therefore all the claims regarding the security agreement disputes could be referred to arbitration. JJ Ryan, 863 F.2d at 320.

As was the case in JJ. Ryan, the alleged defamation/ trade libel and intentional interference with contractual relationship claims brought by Barletto can be resolved in arbitration. The arbitration clause contained in the APA is broadly worded and covers “any and all disputes, controversies or claims arising out of or relating to this agreement or for the breach or validity of any term or provision of this agreement.” As has been previously discussed, these claims originate out of the allegedly wrongful breaches of the APA by defendant Heuschkel. Plaintiff, in his complaint, admits that because of the alleged breaches of the APA he was forced to start a new business and since then defendant Heuschkel has “engaged in a campaign of defamation and trade libel,” the purpose of which is to drive Barletto out of business. The defamatory statements allegedly made by Heuschkel arose out of the disintegration of the relationship formed between the two parties through the APA and thus stem from the dispute between the parties regarding the duties and obligations contained within the agreement. Therefore these counts also arise out of or relate back to the agreement. Barletto is estopped from avoiding arbitration of these claims.

Having established that a valid arbitration agreement exists between all of the parties, the court’s final task is to determine whether all of the alleged claims against the defendants are within the ambit of the arbitration clause. Based on the foregoing analysis of the theory of equitable estoppel, and the previous discussion of plaintiff’s claims, the court finds that each of the nine counts in the complaint arise directly out of or relate back to the duties and obligations contained within the APA or for the breach of said duties and obligations and therefore may be compelled to arbitration.

In conclusion, plaintiff Charles Barletto must arbitrate his claims against defendants Heuschkel, Ferrotech, Ferromet, and Ferrotech Realty. Traditional contract theories of agency and estoppel compel Barletto, a signatoiy to the agreement, to arbitrate at the insistence of non-signatory defendants who are the agents or affiliates of the signatory to the agreement when the claims and positions of all parties are intimately founded on and intertwined with the underlying contractual obligations found in the APA. “In short, plaintiff cannot have it both ways. It camiot rely on the contract when it works to its advantage, and repudiate it when it works to its disadvantage.” Hughes Masonry, 659 F.2d at 839. Barletto bargained for the provision found in the APA, and relies on those same provisions in his claims against the defendants. He cannot now avoid his contractual obligations by repudiating the portions of the contract that are not in his favor. Defendant’s preliminary objections are sustained and plaintiff’s claim is dismissed so that it may be filed within the proper venue.

ORDER OF COURT

And now, February 7, 2011 in accordance with the accompanying opinion of even date herewith, it is ordered and decreed as follows:

1. Defendant’s first preliminary objection raising lack of subject matter jurisdiction pursuant to Pa.R.C.P. § 1028(a)(6) and the Pennsylvania Uniform Arbitration Act is granted.

2. The parties are directed to submit their dispute, as set forth in the complaint, to arbitration in accordance with the commercial arbitration rules of the American Arbitration Association.

3. All further proceedings in this matter are stayed pending the conclusion of arbitration.

4. All remaining preliminary objections are overruled as rendered moot by this order.


author: PICCIONE, J.,

text:
    Cousins v. Shenango Twp.

      Susan M. Papa, for plaintiff.

      Suzanne B. Merrick, for defendants.
    February 9, 2011
   PICCIONE, J.,

Before the court for consideration are preliminary objections filed on behalf of the defendants, Shenango Township and Brian Tanner, individually and as agent/manager of Shenango Township. After hearing argument on defendants’ preliminary objections, having considered the applicable case law as well as briefs filed on behalf of the respective parties, defendants’ preliminary objections are granted in part and denied in part for the following reasons.

According to plaintiff’s complaint, plaintiff became entitled to certain benefits pursuant to a qualified domestic relations order (“QDRO”) from the divorce action between her and her former spouse, David Rishel. Mr. Rishel was previously employed by Shenango Township and was a member of the township’s pension plan. Mr. Rishel began receiving his pension benefits in April of 2003.

Brian Tanner is purported to be an authorized agent of Shenango Township and solely responsible for its business affairs, including distribution of pension benefits. Plaintiff contends that the defendants knew she was entitled to a portion of David Rishel’s pension benefits, upon said benefits obtaining payment status, but failed to distribute the benefits due to plaintiff pursuant to the QDRO previously entered. Plaintiff believes the inaction of the defendants is willful and intentional, thereby constituting fraud, malice or oppression, and plaintiff, therefore, requests punitive and exemplary damages.

On August 18,2009, the plaintiff filed a complaint, and the defendants subsequently filed preliminary objections, which present the following arguments:

1. Plaintiff has failed to allege any facts to show the existence of a contract between plaintiff and defendants.
2. Plaintiff has failed to allege any facts to suggest that defendant, Brian Tanner, was a party to a contract with plaintiff.
3. Plaintiff’s claim for “bad faith” should be dismissed pursuant to Pa.R.Civ.P. 1028(2) and (4), as it is duplicative of plaintiff’s breach of contract claim set forth in count 1 of the complaint.
4. Plaintiff’s claims for punitive damages should be dismissed pursuant to Pa.R.Civ.P. 1028(2) and (4) as punitive damages are not recoverable for a breach of contract.
5. Plaintiff’s claim of fraud should be stricken pursuant to Pa.R.Civ.P. 1028(2), (3) and (4), as plaintiff has failed to allege any facts to support such a claim.
6. Plaintiff has violated Pa.R.Civ.P. 1019(i) because a copy of the written contract has not been attached to the original complaint.

On October 25,2010 this court heard oral argument on defendants’ preliminary objections, and the matter is now before the court for determination.

Defendants’ first preliminary objection is raised in the nature of a demurrer, and asserts that plaintiff has failed to set forth any facts to support the statement that a contract existed between the plaintiff and the defendants. Pennsylvania Rule of Civil Procedure 1028(a)(4) allows for preliminary objections based on legal insufficiency of a pleading. It is well established in Pennsylvania law that a preliminary objection in the nature of a demurrer can be sustained and a complaint dismissed when the complaint is clearly insufficient on its face to establish the pleader’s right to relief. Cooper v. Franford Health Care System, Inc., 960 A.2d 134, 143 (Pa. Super. 2008); See, e.g., Mazzagatti v. Everingham, 512 Pa. 266, 516 A.2d 672 (1986); County of Allegheny v. Commonwealth, 507 Pa. 360, 490 A.2d 402 (1985); Cianfrani v. State Employees’ Retirement Board, 505 Pa. 294, 479 A.2d 468 (1984).

In testing the legal sufficiency of a complaint, a court may only look to the pleadings itself, and may not consider testimony or other evidence outside of the complaint. Cooper v. Franford Health Care System, Inc., 960 A.2d 134, 143 (Pa. Super. 2008). However, all well-plead allegations and material facts averred in the complaint, as well as all reasonable inferences deducible therefrom, must be accepted as true. Hess v. Fox Rothchild, LLP, 925 A.2d 798, 805 (Pa. Super. 2007); Tucker v. Philadelphia Daily News, 757 A.2d 938, 941-42 (Pa. Super. 2000). “To sustain preliminary objections in the nature of a demurrer, it must appear with certainty that, upon the facts averred, the law will not permit recovery by the plaintiff.” Harkins v. Zamichieli, 405 A.2d 495, 497 (Pa. Super. 1979), quoting Schott v. Westinghouse Electric Corporation, 259 A.2d 443, 445 (Pa. 1969). The sustaining of a demurrer results in the denial of a claim or the dismissal of a suit, and should therefore be sustained only in cases that are clear and free from doubt. R. W. v. Manzek, 888 A.2d 740, 749 (Pa. 2005); Bourke v. Kazara, 746 A.2d 642, 643 (Pa. Super. 2000).

With respect to count I. of the complaint, the court finds there are sufficient facts to support a finding that there was in fact an affirmative duty owed to the plaintiff by the defendants to properly distribute specific benefits from her former spouse’s pension plan as required by order of court. The complaint specifically sets forth that the plaintiff’s former spouse, David Rishel, started receiving benefits on April 23, 2003. From these facts, the court can reasonably infer that a contractual relationship exists between the defendants’ and the plaintiff’s former spouse. See Abbott v. Schnader, Harrison, Segal & Lewis, LLP, 805 A.2d 547 (Pa. Super. 2002) (citing Retirement Board of Allegheny County v. McGovern, 174 A. 400, 404-05 (Pa. 1934) (when conditions are satisfied and an employee has earned retirement pay, pay becomes a vested right of which the employee cannot be deprived, since it has ripened into full contractual obligation).

At this stage of the proceedings, however, the court is not convinced that the complaint states sufficient facts to establish or reasonably infer that the same contractual duty owed to David Rishel was owed to the plaintiff. Additionally, plaintiff has not provided the court with any case law in support of this proposition, nor was the court able to find any that the contractual rights belonging to David Rishel are transferable to plaintiff via a QDRO. For the reasons set forth above, defendants’ first preliminary objection that plaintiff’s complaint fails to establish the existence of a contract is sustained.

' The court will grant plaintiff leave to amend her amended complaint with respect to count I, and is directed to include a copy of the writing upon which her contract claims are based, or in the alternative, set forth legal justification for this court to impose some contractual duty upon the defendants.

The court finds that allowing plaintiff leave to amend is appropriate in this case, because the defective pleading has the ability to be cured by filing an appropriate amended compliant. “The right to amend should not be withheld where there is some reasonable possibility that amendment can be accomplished successfully.” Otto v. American Mutual Insurance Company, 393 A.2d 450, 451 (Pa. 1978). “In the event a demurrer is sustained because a complaint is defective in stating a cause of action, if it is evident that the pleading can be cured by amendment, a court may not enter final judgment, but must give the pleader an opportunity to file an amended complaint....This is not a matter of discretion with the court but rather a positive duty.” Framlau Corporation v. County of Delaware, 223, 299 A.2d 335, 337 (Pa. Super. 1972). See also: Longo v. Rago, 430 A.2d 1006, 1007 (Pa. Super. 1981); Mace v. Senior Adult Activities Center of Montgomery County, 423 A.2d 390, 391 (Pa. Super. 1980); Itri v. Lewis, 422 A.2d 591, 593 (Pa. Super. 1980).

Defendants’ second preliminary objection argues that plaintiff’s complaint has failed to state a claim against defendant Brian Tanner. In support of their objection, the defendants argue that Brian Tanner was not a party to any alleged contract between the plaintiff and Shenango Township. Defendants further cite the case of Banacol Marketing Corp. v. Penn Warehousing and Distribution, Inc., 904 A.2d 1043, 1048 (Pa. Cmwlth. 2006) (a contract cannot be maintained against a person or entity who is not a party to the contract).

Although defendants’ enunciation of the applicable case law is accurate, the court finds that it is necessary and appropriate to include Brian Tanner as a defendant in this action, as the complaint sets forth sufficient facts to establish that Brian Tanner is an agent of Shenango Township and solely responsible for its business affairs, including distribution of pension benefits. See e.g. Campanaro v. Pennsylvania Electric Company, 656 A.2d 491 (Pa. Super. 1995). In the event that it is later discovered that the actions of Brian Tanner were outside the scope of his employment plaintiff’s argument, that she would be remiss in failing to name Brian Tanner as a defendant at this time, is correct. Defendants’ second preliminary objection is therefore dismissed.

Defendants’ third preliminary objection asserts that plaintiff’s count II of the complaint is duplicative of count I and should therefore be dismissed pursuant to Pa.R.C.P. 1028(2) and (4). In support of this objection, defendants in their brief cite the case of LSI Title Agency, Inc. v. Evaluation Servs., 951 A.2d 384, 391-92 (Pa. Super. 2008) (the claim for breach of the implied covenant of good faith and fair dealing is subsumed in a breach of contract claim). Although plaintiff counters in her brief to the court that count II of the complaint is a separate and distinct claim from her claim for breach of contract, the court is unaware of any unauthorized claim in Pennsylvania for bad faith, with the exception of a bad faith claim against an insurer, pursuant to 42 Pa.C.S. § 8371. Accordingly, the court sustains defendants’ third preliminary objection, and count II of the complaint is dismissed.

The court finds that a determination on the remainder of defendants’ preliminary objections is not necessary in light of the discussion set forth above. Accordingly, the court will enter the attached order in accordance with this opinion.

ORDER

And now, February 9, 2011, the court having heard oral argument on preliminary objections filed on behalf of the defendants, and the court also receiving briefs filed on behalf of the parties, it is hereby ordered, adjuged and decreed as follows:

1. Defendants5 first preliminary obj ection that plaintiff has failed to allege any facts to show the existence of a contract between plaintiff and defendants is sustained, however, plaintiff is granted leave to amend his amended complaint with respect to count I.

2. Defendants’ second preliminary objection that plaintiff has failed to allege any facts to suggest that defendant, Brian Tamier, was a party to a contract with plaintiff, is dismissed.

3. Defendants’ third preliminary objection that plaintiff’s claim for “bad faith” should be dismissed is sustained.

4. Defendants ’ remaining preliminary obj ections were not considered by the court, as they pertained to count II of the complaint which was dismissed by the court.

5. The plaintiff is granted 30 days from the date this order is docketed in which to file an amended complaint with respect to count I.

6. The prothonotary is directed to serve a copy of the this order and opinion upon counsel of record and any party not represented by counsel at their last known address as contained in the court’s file.


author: FOX, J,,

text:
    Tsokas v. Joobeen

      James J. Duryea and Samuel A. Rossitto, for plaintiffs.

      John M. Cahill Jr., for defendant.
    December 22, 2010
   FOX, J,,

Lien creditor, Parvin K. Aras (Aras) and mortgagees, Orang Joobeen and Ceil Marie Joobeen (mortgagees), have appealed this court’s order of August 6, 2010 which sustained plaintiff’s objections to the sheriff’s schedule of distribution and further ordered a distribution in accordance with the order attached herein.

FACTUAL and PROCEDURAL HISTORY

This case, as captioned, has a long and tortured history with numerous appeals to and remands from the Superior Court. Flowever, this court’s decision on appeal concerns only the distribution of proceeds from a sheriff’s sale of the properly located 3315 North Park Avenue (property) in Philadelphia. In 1994 Michael Tsokas and Aaron Pogach (plaintiffs) received a money judgment in their favor and against Ali Joobeen (defendant). Thereafter followed the numerous appeals to and remands from the Superior Court. These appeals were ultimately resolved and judgment was finally entered in favor of plaintiffs and against defendant effective February 8, 2008. Judgment was liened on all properties owned by defendant. Thereafter plaintiffs filed a writ of execution and the property was scheduled for sheriff sale. Initially, the sheriff sale was to take place on July 12, 2005. However, more appeals were filed as well as proceedings in Bankruptcy Court. After the appeals were resolved and the bankruptcy filings dismissed, the property was sold at sheriff sale on January 5,2010. Aras, defendant’s mother, was the successful bidder for the property in the amount of $260,000.00. Aras deposited $28,000.00 towards this purchase price. The balance remains outstanding. There is no dispute regarding the sheriff costs of $82,776.63. The amount of plaintiffs’ claim, inclusive of interest as of January 5,2010 and cost, is $94,501.10 and not in dispute. The only issue is the priority of liens.

As previously stated, Aras was the successful bidder at the sheriff sale for $260,000.00. She also claimed to be a lien creditor, due $205,160.00 pursuant to two confessed judgments. The first is Parvin Aras v. Ali Joobeen CCP, July Term, 2000 No. 3743, docketed July 28, 2000 in the amount of $172,250.00. The second is Parvin Aras v. Ali Joobeen, December Term, 2001 No. 1476, docketed December 12, 2001 in the amount of $32,910.00. Aras contends that as a lien creditor purchaser of the property, Pa.R.C.P. 3133 applies and she should be relieved from posting the balance of the purchase proceeds.

In addition, defendant gave a mortgage on the same property to his brother and former sister-in-law in the amount of $8,000.00. This mortgage was recorded on June 16, 1997. Although the recorded mortgage stated that the debt would be repaid by July 1, 2007, a mortgage modification agreement was recorded on July 28, 2008. This modification agreement increased the mortgage debt to $101,083.82.

The sheriff issued a distribution statement which set forth a purchase price of $260,000.00; its charges of $82,776.63; and the deposit of $28,000.00. The balance due from Aras as the purchaser at the sale was thereafter reduced by the previously mentioned judgments by confession which totaled $205,160.00. Accordingly no further funds were available.

Plaintiffs filed a timely appeal from the sheriff’s distribution. After hearing argument and receiving the documents into the record, this court entered an order which sustained the objections to the sheriff’s proposed schedule of distribution and directed distribution as follows:

1. To the sheriff’s office of Philadelphia the sum of $75,800.00.

2. Orang Joobeen and Ceil Marie Joobeen in satisfaction of the mortgage upon the premises 3315 North Park Avenue, Philadelphia, Pa. 19140 the sum of not more than $8,000.00.

3. To Aaron Pogach, Esquire and Dr. Michael Tsokas the sum of $94,501.10, inclusive of interest to January 5, 2010 and cost.

4. The balance remaining to Parvin Aras, the purchaser of the premises herein.

This appeal was thereafter filed to the Superior Court.

DISCUSSION

The only issue before this court is the priority of the liens. Parvin Aras confessed judgment against her son the defendant in 2000 and 2001. Each of the judgments was allegedly revived by the fillings of a writ of revival. The first writ was filed on July 28, 2005; the second writ was filed in 2006. There is no dispute that plaintiffs’judgment was in effect as of February 8, 2008. Plaintiffs contend that the writs of revival filed by Aras were not properly perfected and therefore her confessed judgments did not retain their priority. Plaintiffs also questioned the validity of the confessed judgments and contend that the writs of revival were filed solely to interfere with their ability to collect on the judgment against defendant judgment.

Pa.R.C.P. 3022(b)(1) states, “...the lien of a verdict or order for a specific sum shall have priority as prescribed by §8141 of the judicial code from the time the verdict or order is entered and the judgment indexed.”

Pa.R.C.P. 3023(c) states that, “the lien shall continue for five years from the date the judgment was entered in the judgment index unless the judgment is sooner discharged or the lien is soon revived.”

Pa.R.C.P. 3025 sets forth the process to revive a lien. It requires either a praecipe in the form designated under Pa. R.C.P. 3032 or an agreement.

Pa.R.C.P. 3026(a) requires the original name of the defendant and any terre-tenant against whom the [plaintiff] seeks to revive the lien of judgment.

Pa.R.C.P. 3028(a) requires service of the writ within ninety (90) days after its issuance in the manner prescribed by Pa.R.C.P. 402, or by mailing a copy in the manner prescribed under Pa.R.C.P. 403. Pa.R.C.P. 405 also requires the filing of a return of service by either the sheriff or the person who made service.

Plaintiffs contend that Aras lost her priority position because the writs of revival were not perfected. Tn order to perfect the revival of the judgment, the rules require the filing of a return of service. Plaintiffs provided the court with the docket entries for each confessed judgment. The docket for the first confession of judgment, under CCP July Term, 2000 No. 3743, does not contain a return of service for the writ of revival. Neither does the docket for the second confessed judgment under CCP December Term, 2001 No. 1476. Plaintiffs contend this is a fatal defect resulting in the loss of priority. Counsel for Aras contends that plaintiffs do not have standing to challenge the judgments by confession nor the writ of revival filed in each. Counsel for Aras contends that only the named defendant in the specific case has standing to raise this issue. This court disagrees. The plaintiffs have not challenged the underlying judgments. The Aras’s argument that plaintiff’s cannot challenge the confessed judgments is not relevant in this matter because only the writs of revival are at issue. This is not a collateral attack on the judgment. The issue is the priority of the liens due to the failure to properly revive them. The rules are clear and specific as to the requirements necessary to revive a lien. The revival is to maintain priority. Failure to perfect the lien revival doesn’t cause the judgment to disappear but merely changes its priority in the line of creditors. In this case, plaintiffs have properly challenged the lien revival and Aras’ failure to properly perfect that revival; the effect is to change the priority. The properly liened judgment of plaintiffs has priority over the judgment liens of Aras. This court properly sustained plaintiffs objections to the sheriff’s proposed distribution.

The second issue in this matter is the mortgage held by Orang Joobeen and Ceil Marie Joobeen, the brother and former sister-in-law of the defendant. This court awarded the sum of $8,000.00 to repay the mortgage. However, the Joobeens contend that the mortgage modification agreement recorded on July 29, 2008 increased the amount due under the original mortgage to $101,083.82; and any distribution would be subject to the repayment of the mortgage. Plaintiffs contend that this initial mortgage of $8,000.00 should have been paid as of July 1, 2007. Accordingly, the document titled “Modification” is a new lien not recorded until 2008 and after the indexing of plaintiffs’ lien. Clearly the modification cannot and should not receive the same priority position of the first recorded mortgage. Again, this court’s decision is not to invalidate the modification and sums due the Joobeens. The priority of that modification is as of2008 and therefore not subject to distribution in this matter. This court’s decision is based solely on the priority of the liens. If Ali as the mortgagor had defaulted on the original mortgage, the Joobeens had the right to file a foreclosure action. If judgment had been entered they might have asked the court to reassess the damages to include the expenditures alleged to have been made by the Joobeens to protect their interest. Instead Ali and the Joobeens executed and filed a document titled “modification” of mortgage after plaintiffs’ judgment had been entered and indexed. This court properly found that the use of the term “modification” should not change the priority position of the increased second debt back to the original mortgage. The affidavit of the Joobeens which described the reason for the “modification” of the mortgage debt is self-serving and clearly intended to circumvent plaintiffs’ ability to collect the judgment.

Finally, Aras’ claim to the benefits of Pa.R.C.P. 3133 for the balance due the sheriff after the payments set forth in this court’s decision is not addressed in this opinion. The Joobeens have not challenged that issue nor is it relevant to this court’s decision as entered.

For the reasons set forth above, this court’s order sustaining the objections of plaintiffs to the sheriff’s proposed distribution and this court’s order of distribution should be affirmed.

      . In error this court’s order listed the sheriff’s costs as $75,800.00. The amount above is the correct amount and this court’s order should be modified accordingly.

      . This amount should be corrected to $82.776.63.