author: SCHMEHL, J.,

text:
    Orange Stones Co. v. Borough of Hamburg Zoning Hearing Board
    C.P. of Berks County,
    no. 09-4049.

      Daniel F. Schranghamer, for appellant.

      Charles F. Fitzpatrick, for appellee.

      James E. Gavin, for intervenor.

      January 15, 2010
   SCHMEHL, J.,

Orange Stones

Co., appellant in the above-captioned case, appeals this court’s September 16, 2009 order which denied appellant’s land use appeal.

I. FACTUAL AND PROCEDURAL BACKGROUND

On September 11, 2008, appellant filed a zoning permit application for property located at 215 Pine Street in the Borough of Hamburg, County of Berks, Pennsylvania. This was the third permit application appellant had submitted for the same property, and the zoning officer denied the zoning permit application.

Appellant then filed an appeal with the Zoning Hearing Board of the Borough of Hamburg on November 3, 2008, requesting that the decision of zoning officer be reconsidered. The Zoning Hearing Board denied the application, and affirmed the decision of the zoning officer. In its decision, the Zoning Hearing Board determined that the use proposed in the zoning permit application, to use the property as a rehabilitation center, was not met by evidence presented, and instead constituted a jail or prison under section 508.8.7 of the Hamburg Zoning Ordinance, a use prohibited in the flood plain location of the property.

Appellant Orange Stones Co. filed a notice of land use appeal with this court on April 6, 2009, listing the Borough of Hamburg Zoning Hearing Board as appellee. On April 14,2009, the Borough of Hamburg, Berks County, Pennsylvania filed a notice of intervention to the present land use appeal, and has since been listed as intervenor to the appeal. The appellant filed briefs of argument to argue in favor of the overturning of the zoning officer’s decision. The intervenor filed a brief in opposition to the appellant’s appeal, to which the appellant joined its brief of argument.

Argument was heard on this matter on July 6, 2009. On September 16,2009, this court entered an order which denied the land use appeal by appellant Orange Stones Co. On October 13, 2009, Orange Stones Co. filed its notice of appeal from this court’s order, following which apppellant also filed its concise statement of matters complained of in its appeal to the Commonwealth Court.

II. DISCUSSION

To begin, this court notes that many of these same issues were litigated at docket no. 08-14650, and are still being litigated on appeal at docket no. 951 CD 2009, in an action with many of the same common elements. The April 29, 2009 decision by Judge Scott E. Lash, Berks County Court of Common Pleas, entered at docket no. 08-14650 is incorporated herein by reference. Further, in brief, the action presently before this court could well be precluded by both res judicata and collateral estoppel. Nonetheless, this court addresses the merits of the present appeal below.

In appellant’s lengthy statement of matters complained of on appeal, filed on November 20, 2009, appellant raised three issues:

(1) The board exceeded its authority in considering whether the proposed facility was a jail or prison;

(2) There is no evidence that the proposed halfway house would be a jail or prison; and,

(3) Orange Stones’ application clearly showed all setbacks.

Appellant first argues that appellee exceeded its authority when it determined that the proposed facility was a jail or prison, a sua sponte decision on a matter not then before the appellee, and that this court erred when it affirmed that same determination. To the contrary, however, appellee Zoning Hearing Board was fully vested with the authority to make the determination it made. A zoning hearing board is a quasi-judicial body which can perform “formal fact-finding and deliberative functions in a manner similar to that of a court.” Kennedy v. Upper Milford Township Zoning Hearing Board, 575 Pa. 105, 121, 834 A.2d 1104, 1114 (2003). Those functions include conducting hearings and receiving evidence upon which to draw factual findings. East Allegheny Community Council v. Oncology-Hematology Associates, 783 A.2d 375, 379-80 (Pa. Commw. 2001). The board’s findings led them to conclude that the property fit the definition of “a jail or prison,” a use clearly prohibited on the subject premises.

Where there was no additional evidence presented subsequent to appellee’s determination, this court’s scope of review was limited to whether there had been an abuse of discretion or error of law on the part of the appellee, a conclusion that could be reached only if the appellee’s findings were not supported by substantial evidence. Valley View Civic Association v. Zoning Board of Adjustment, 501 Pa. 550, 554-55, 462 A.2d 637, 639-40, (1983). Substantial evidence is evidence that a reasonable person would find adequate to support a conclusion, and which the reviewing court must view in the light most favorable to the party that prevailed before the factfinder. Reed v. PennDOT, 872 A.2d 202, 206 (Pa. Commw. 2005).

This court found that there had been no abuse of the appellee’s discretion. The Zoning Hearing Board’s decision was not unreasonable, a result of partiality, prejudice, bias or ill will. Dennis v. Whitney, 844 A.2d 1267, 1269 (Pa. Super. 2004). Furthermore, this court was more than satisfied that the Zoning Hearing Board’s decision was supported by substantial evidence. The appellee, in this court’s opinion, reviewed the appellee’s application which had been denied by the zoning officer, as well as details of the proposed use and applicable zoning ordinances.

Appellant next argues that there is no actual evidence that the proposed halfway house would be a jail or prison. To the contrary, appellant’s own evidence shows that the proposed halfway house, a community confinement center, meets the definition of a jail or prison, where the facility would be for individuals sent to that location to serve the final months of their sentences. As described above, the court has previously determined that this facility was correctly decided to be a jail or prison.

Appellant finally argues that the proposed application clearly showed all setbacks, and that the appellee erred in finding that appellant had not set out the setbacks on the site plan. Despite appellant’s assertion, appellee was qualified to make such a determination. As this court has already detailed in addressing appellant’s first matter complained of on appeal, above, the Zoning Hearing Board was fully vested with the power to make said determination based on the evidence presented to it, including the setbacks appellant may have shown. Furthermore, the fact that the use requested is prohibited and Judge Scott Lash of this court has previously ruled on said issues, this instant appeal must be denied.

The prothonotaiy shall forward the remainder of the file to the Commonwealth Court.


source: Caselaw Access Project

author: CARPENTER, J.,

license: Public Domain

text:
    Hankin v. Graphic Technology Inc.

      C.P. of Montgomery County,
    no. 2006-30821.

      John Fiorillo, for plaintiff.

      Daniel R. Utain and David L. Black, for defendant.
    January 27, 2010
   CARPENTER, J.,

FACTUAL AND PROCEDURAL HISTORY

Appellant/defendant, Graphic Technology Inc. (GTI), appeals several orders issued by this court. All orders are now final based upon our October 16, 2009 order in which we entered a final judgment in favor of appellee/ plaintiff, Mark Hankin in the amount of $184,443.88.

Hankin commenced the underlying action by filing a confession of judgment against GTI on December 13, 2006 in the amount of $184,443.88 for GTI’s alleged breach of a lease agreement.

By way of background, Hankin is the owner of a commercial property located at Willow Grove Industrial Commons, 2940 Turnpike Drive, Willow Grove, Pennsylvania. On August 20,1998, Hankin and GTI executed a lease for the premises. OnNovember 30,2004, GTI assigned the lease to Vestcom New Century LLC to occupy the premises and assume the lease. By letter dated April 11,2006, Vestcom informed Hankin of its intention to terminate the lease effective October 31,2006. However, Vestcom, occupied the premises until November 30,2006. Because Vestcom did not vacate the premises until November, paragraph 25 of the lease allowed Han-kin to either disregard the notice of termination and renew the lease for another year, or to treat the tenant as an involuntary holdover on a month-to-month lease at triple the rent. Hankin elected to renew the lease for another year term.

On December 13, 2006, Hankin filed the confessed judgment against GTI. GTI filed a petition to strike and/ or open on January 22, 2007. In addition, Hankin also filed a separate lawsuit against Vestcom in this court, at docket number 2006-30536.

While the petition to srike and/or open was pending, Hankin transferred the judgment to Kansas and obtained an order of garnishment from the District Court of Johnson County (Kansas court), attaching $184,443.88 (garnished funds). As a result of the garnishment, on July 2, 2007, GTI filed an emergency petition for stay of execution in this court. As a result of the emergency petition, on July 5,2007, an agreed order was entered, staying all execution proceedings.

On January 8, 2008, the confessed judgment was opened. Subsequently, on March 24, 2008, GTI filed a motion to compel arbitration.

Also on March 24, 2008, while the stay was in force, GTI filed in the Kansas court a motion to strike and vacate foreign judgment and immediately release fund to defendant. The court in Kansas granted the motion to strike and vacate and entered an order directing that the garnished funds be released on May 8, 2008.

In response, Hankin filed a motion for contempt on April 11, 2008 in this court, bringing to our attention GTI’s recent legal action in Kansas.

On April 30,2008 we held a hearing on Hankin’s motion for contempt, and on that date we issued an order. So as to maintain the status quo, we directed GTI to instruct or to take any such action as may be necessary for the Kansas court to transfer and/or commence transfer of the $184,443.88 to the prothonotary of this court. We deferred ruling on the issue of contempt and counsel fees. Additionally, the April 30, 2008 order contained a self-executing remedy in the event that GTI failed to comply. Specifically, it provided that if GTI. did not comply with the order on or before May 5, 2008, GTI would be sanctioned by the automatic entry of final judgment in favor of Hankin in the amount of $184,443.88.

On May 2, 2008, GTI filed a notice of appeal of this court’s order and obtained a stay of the entry of judgment.

During the time these events were unfolding in this court, Hankin appealed the Kansas court’s decision to release the garnished funds and expressly requested and obtained a stay of the release of the funds pending the appeal. A stay was granted until May of 2009.

On April 29, 2009, the Pennsylvania Superior Court quashed GTI’s appeal of the April 30, 2008 order as interlocutory and remanded the case for further proceedings. Significantly, our Superior Court specifically directed GTI to “immediately comply” with this court’s April 30, 2008 order.

A day after our Superior Court filed its April 29,2009 memorandum decision, GTI filed another motion in the Kansas court seeking to have the garnished funds immediately released directly to the company. See Hankin’s motion for contempt 8/21/09, exhibit “G,” GTI’s 4/30/09 motion. This was another attempt by GTI to have the garnished funds directly released to the company, contrary to this court’s April 30, 2008 order, the Superior Court’s April 29,2009 order, and the July 5,2007 agreed order.

As the May 2009 expiration date of the Kansas stay was approaching, Hankin filed a motion with the Kansas court requesting an extension of the Kansas stay to prohibit the Kansas court from releasing the garnished funds. On May 1, 2009, after argument, the Kansas court granted Hankin’s motion for an extension of the Kansas stay and entered an “order continuing stay of judgment pending final resolution of appeal” (Kansas stay extension order) declaring that the garnished funds would not be released in the absence of an order from the Kansas appellate court.

Back in Pennsylvania, on May 11, 2009, after the Superior Court issued its April 29, 2009 memorandum decision, GTI filed an emergency motion for reconsideration of the April 30, 2008 order, and Hankin filed a response. On June 24, 2009 we heard argument on the emergency motion. On June 30,2009 we issued an order vacating our April 30, 2008 order. With respect to the garnished funds being held by the Kansas court, we instructed GTI to take whatever action necessary for the Kansas court to transfer the garnished funds to the Montgomery County Prothonotary, at the time they are released from the Kansas court. Additionally, we stayed this matter pending the receipt of the garnished funds to our prothonotary.

In the interim, this court held argument on GTI’s motion to compel arbitration. We denied the motion on June 30, 2009. GTI appealed from our order to the Pennsylvania Superior Court, docketed at 2610 EDA 2009. That appeal is pending, and has been consolidated with this appeal.

Subsequently on August 21,2009 Hankin filed a motion requesting the court find the defendant in contempt for violating an order of court. GTI filed a response on September 17, 2009. On September 18, 2009 we held a hearing on the matter. After careful consideration, we issued an order on September 18, 2009, in which we directed GTI to apply to the Kansas court for the direct transfer of the garnished funds within 10 days from the date of the order. We warned that GTI’s failure to comply could result in a final judgment in favor of Hankin. We held the motion for contempt in abeyance, pending compliance with the order.

On September 25,2009, GTI filed a pleading captioned “application to the district court.” On October 1, 2009, the Kansas court conducted a hearing on GTI’s application. GTI’s “application” was nothing more than a futile exercise designed to give the appearance of complying with the September 18,2009 order, in an effort to avoid being held in contempt, while maintaining the funds in Kansas. We emphasize that the “application” never asked for the garnished funds to be transferred. Rather, it is a 15-paragraph pleading, in which the first 11 paragraphs set forth a brief recitation of the factual background. Paragraphs 12 and 13 advised the Kansas court that it did not have jurisdiction, and that there was an “inherent conflict between the orders of this court and the directive from the Pennsylvania court” regarding the garnished funds. In paragraph 14, GTI sought “direction” as to how it should proceed.

Thereafter, on October 7,2009 Hankin filed a supplemental motion requesting this court to find defendant in contempt for violating an order of court (supplemental motion for contempt). On October 15, 2009, GTI filed its response. The following day, on October 16,2009 we held a sanctions hearing. Based upon the evidence and the arguments presented by counsel we found GTI in contempt for failing to comply with orders of this court and the order of the Pennsylvania Superior Court, GTI acted in bad faith and without clean hands and was no longer deserving of the original equitable relief granted by this court. Accordingly, we issued two orders. Having found GTI in contempt, first, we entered final judgment in favor of Hankin and against GTI, in the amount of $184,443.88. Second, we vacated our order dated January 8, 2008 granting the petition to open the confessed judgment, and then denied the petition to open.

GTI has filed this timely appeal.

ISSUES

(I) Whether we properly denied GTI’s petition to strike.

(II) Whether we properly denied GTI s motion to compel arbitration.

(III) Whether we properly awarded sanctions against GTI.

(IV) Whether full faith and credit principles are implicated.

(V) Whether we properly required GTI to pay to transfer the garnished funds into this court’s prothonotary.

(VI) Whether GTI disturbed the status quo through the Kansas court.

(VII) Whether GTI was deprived of its due process rights.

(VIII) Whether this court’s October 16, 2009, order was proper.

(IX) Whether this court had jurisdiction to enter both October 16, 2009 orders, when an appeal is pending in the Superior Court at docket number 2610 EDA 2009.

DISCUSSION

I. We Properly Denied GTI’s Petition To Strike

On January 22,2007, GTI filed a petition to strike and/ or open. Therein, GTI asserted numerous reasons as to why the confessed judgment should be stricken. In addition, GTI set forth several reasons why the confessed judgment should be opened. After argument was held, we denied the petition; however, after reconsideration we exercised the equitable powers of this court and opened the judgment on January 9, 2008. Now, GTI complains that we improperly denied its petition to strike, and asserts the same argument on appeal as it did in its original petition. However, there was no fatal defect appearing on the record which could allow for a striking of the judgment.

A petition to strike operates as a demurrer to the record. A demurrer admits all well-pleaded facts for the purpose of testing conclusions of law drawn from those facts. Because a petition to strike operates as a demurrer, a court may only look at the facts of record at the time the judgment was entered to decide if the record supports the judgment. A petition to strike can be granted if a fatal defect appears on the record. Cintas Corp v. Lee’s Cleaning Services Inc., 549 Pa. 84, 93, 700 A.2d 915, 918-19(1997).

In contrast to a petition to strike is a petition to open, which is an appeal to the equitable powers of the court. As such, it is committed to the sound discretion of the hearing court and will not be disturbed absent a manifest abuse of discretion. PNC Bank v. Kerr, 802 A.2d 634, 638 (Pa. Super. 2002). A court should open a confessed judgment if the petitioner promptly presents evidence on a petition to open, which in a jury trial would require that the issues be submitted to the jury. Germantown Savings Bankv. Talacki, 441 Pa. Super. 513, 520, 657 A.2d 1285, 1288-89 (1995). A petitioner must offer clear, direct, precise and believable evidence of a meritorious defense, sufficient to raise a jury question. Id. at 520, 657 A. 2d at 1289. In determining whether sufficient evidence has been presented, we employ the same standard as in a directed verdict: view all the evidence and proper inferences therefrom supporting the defense while rejecting adverse allegations of the party obtaining the judgment. Crum v. F.L. Shaffer Co., 693 A.2d 984, 986 (Pa. Super. 1997).

In this case, after reconsideration of the petition we believed that equity required this court to open the confessedjudgment. On appeal, GTI only contests our decision not to strike the confessed judgment.

a. Alleged Illegal Penalty Provision

First, GTI argues that the judgment should have been stricken because the judgment was premised upon an illegal penalty provision (paragraph 25 of the lease), which was not reasonably related to the injury allegedly caused by the one-month delay in vacating the premises, but was designed solely to punish GTI.

Paragraph 25 A of the lease in relevant part provides:

“ In the event that lessee or lessor shall have given an expiration notice, and lessee shall fail to refuse to vacate completely the premises and restore the same to the condition required by this lease on or before the expiration date to which the expiration notice applied, without lessor’s prior written consent, then it is expressly agreed that lessor shall have the option:

“(i) to disregard the expiration notice as having no force and effect, whereupon the expiration notice shall be null and void, ab initio, as if never given; or

“(ii) to declare the lessee to be holding over, in accordance with section 39 hereof.” See complaint in confession of judgment 12/13/06, exhibit “A,” lease, ¶25.

As Hankin notes in his brief in opposition to GTI’s, petition to strike, GTI’s argument relies on the false premise that Hankin recovered possession of the premises and the right to collect 11 months of rent. Vestcom did not surrender the premises to Hankin, as a surrender can only be accomplished by mutual consent, and it relieves the tenant from liability for further rent. Ralph v. Deiley, 293 Pa. 90, 141 A. 640 (1928). Rather, Vestcom voluntarily ceased to occupy the premises. This distinction is important in analyzing GTI’s argument because there is no issue of double recovery.

When Vestcom did not vacate the premises by October 31, 2006, Hankin elected to disregard Vestcom’s notice of termination as having no force or effect in accordance with paragraph 25, subsection (i); therefore, the lease agreement was automatically renewed for the year. Accordingly, when Vestcom did vacate the premises November 30, 2006, in breach of the lease agreement, Hankin accelerated the rent. Consequently, Hankin confessed judgment for money, and not for possession. A confession of judgment for money allows a landlord to recover all monies due for the entire lease term. Homart Development Co. v. Sgrenci, 443 Pa. Super. 538, 557, 662 A.2d 1092, 1101 (1995). This is contrasted with a confession of judgment for possession, which allows the landlord to possession and limits recovery to all monies then due. Id.

Additionally, paragraph 25 is intended to give the landlord some degree of certainty that a tenant, who has issued a termination letter, will in fact vacate the premises on a date certain. It is reasonable for a landlord to rely upon a tenant’s termination letter so a landlord can plan and take steps to secure a new tenant. This effort is hampered when a landlord does not have certainty that the tenant in possession will in fact vacate the premises. Paragraph 25 of the lease is not a penalty provision.

Finally, the lease was negotiated by two sophisticated business entities, and now GTI seeks to have this court renegotiate the terms of the lease, eliminate the option contained in paragraph 25, and require Hankin to treat GTI as a month-to-month hold-over tenant. This is not this court’s province.

b. No Double Recovery

Next, GTI argues that the judgment should have been stricken because the automatic yearly renewal provision of paragraph 25 of the lease created an impermissible result of double recovery of possession of the leased premises and acceleration of rent for the remainder of an unexpired term, as evidenced by the entry of judgment against GTI for rent through October 31,2007 and Han-kin’s collection of rent from another tenant for the use of that property during that same period.

GTI presented this argument in its motion for reconsideration requesting that the judgment be stricken or in the alternative, the judgment be opened. Specifically, GTI asserted that as of late August or beginning of September of 2007, Hankin had re-let the premises to an organization known as “Planet Aid.” GTI argued that since the judgment includes accelerated rent through October 31,2007, Hankin has recovered a double recovery, which is not allowed under Pennsylvania law, holding that a landlord may not recover possession of leased premises and collect an acceleration of rents for the remainder of an unexpired term. GTI cited and currently cites Homart Development Co. v. Sgrenci, 443 Pa. Super. 538, 662 A.2d 1092 (1995) for this proposition.

We found this argument convincing, and accordingly we opened the judgment on this basis. We did not strike the judgment because no fatal defect appeared on the face of the record when the confessed judgment was entered on December 13, 2006. Rather, the lease specifically authorizes Hankin to accelerate rent and to confess judgment for all rent for the unexpired balance of the term. At the time the judgment was entered on December 13,2006, the judgment amount was arguably correct because, at that time, Hankin had not yet re-let the premises resulting in a possible double recovery. Where a petitioner claims that the judgment is invalid for reasons beyond the record, he is seeking to open the judgment. Scott v. 1523 Walnut Corporation, 301 Pa. Super. 248, 251, 447 A.2d 951, 952 (1982).

c. Condition Precedent

Third, GTI contends that the judgment should be stricken because Hankin failed to comply with a condition precedent to confessing judgment requiring Hankin to serve GTI with prior written notice of default when GTI’s assignee, Vestcom, vacated the premises pursuant to paragraph 20 of the lease agreement.

In this case, plaintiff was not required to give notice prior to confessing judgment. The pertinent part of the lease agreement, paragraph 20 states:

“Notwithstanding anything in this paragraph or elsewhere contained to the contrary, lessor agrees that lessor will not exercise any right or remedy provided for in this lease or allowed by law, because of any default of the lessee, unless lessor shall first have given written notice thereof to lessee and (i) within a period of 10 days thereafter, lessee shall have failed to pay the sum or sums due if the default consists of the failure to pay money, or (ii) if said default shall consist of anything other than the failure to pay the sum or sums due hereunder, lessee shall have failed within the period of 20 days after notice from lessor to have cured said default, except that if such default cannot be cured within said 20 days, lessee shall only be in default if lessee shall have failed to begin and actively and diligently in good faith proceed with the correction of the default until it shall be fully corrected not later than 60 days after such notice; providedfurther however, that no such notice from lessor shall be required if lessee shall have removed from, shall manifest an intention to remove from, or shall be in the course of removing from the premises. ...” (emphasis added)

A plain reading of this paragraph shows that if the lessee removes itself from the premises, then notice is not required. That is what happened in this case, Vestcom removed itself from the premises on November 30, 2006 — with 11 months remaining in the term of the lease.

An important point must be emphasized. Vestcom’s failure to vacate the premises on or before October 31, 2006, in accordance with the letter of termination, was the predicate act that brought the election of the remedy provision of paragraph 25 into play. Under paragraph 25, Hankin elected the remedy of a one-year lease term. Accordingly, Vestcom vacated the premises during the lease term on November 30, 2006; therefore, no notice was required.

d. Arbitration Provision

Fourth, GTI argues that the confessed judgment should have been stricken because the arbitration provision divested this court of jurisdiction to enter the judgment.

The lease agreement contains the following arbitration provision, which reads in relevant part:

“(38) Miscellaneous.

“(A) Lessor and lessee agree, at the request of either party, that any controversy or claim arising out of or relating to this agreement, or the breach thereof, may be submitted to final and binding arbitration by the American Arbitration Association, as modified herein, and judgment upon the award rendered by the arbitrator shall be entered in any court having jurisdiction thereof. The following standards shall supplement the regulations of the American Arbitration Association and shall control in the even of conflict:

“(i) The aggrieved party shall request arbitration after the dispute arises and promptly serve notice of submission to the other party;

“(a) The above notwithstanding, the lessee shall be required to request such arbitration no later than 30 days after the dispute arises and failure by lessee to make such timely request shall be deemed to be a waiver of lessee’s rights, hereunder and full award shall be granted to lessor.

“(ii) Within 20 days of submission, each party shall submit a proposed award to the American Arbitration Association.” See complaint, exhibit “A”, lease, paragraph 38. (emphasis added)

We found the arbitration provision to be voluntary and not mandatory as evidenced by the use of the term “may” rather than “shall.” Specifically the language in paragraph 38 of the lease agreement states that “lessor and lessee agree, at the request of either party, that any controversy or claim arising out of or relating to this agreement, or the breach thereof, may be submitted to final and binding arbitration by the American Arbitration Association ....” See complaint in confession of judgment, exhibit “A”, lease, paragraph 38. (emphasis added) Strictly construing the arbitration provision, the parties did not clearly and unmistakably agree to arbitrate this matter. Rather, the language demonstrates that the decision to arbitrate is voluntary and not mandatory. Additionally, in order to invoke the voluntary arbitration provision, GTI should have complied with the prerequisites set forth in subsections (i) and (ii). However, GTI clearly did not.

II. We Properly Denied GTI’s Motion To Compel Arbitration

GTI contends that this court erred as a matter of law or abused its discretion by refusing to enforce the arbitration provision set forth in the lease. Additionally, GTI asserts that this court erred as a matter of law or abused its discretion in failing to enter an order consistent with the final order entered in the companion case against GTI’s assignee, Hankin v. Vestcom Internation Inc., C.C.P. Montgomery County, Pennsylvania, no. 2006-30536, wherein a court of coordinate jurisdiction determined that the underlying dispute was within the scope of the arbitration provision, and, as a matter of law, should be dismissed in favor of arbitration. Because both of these issues are addressed in our September 9, 2009, opinion, we will not discuss them here. Attached to this supplemental opinion is our September 9,2009 opinion, (not published herein)

III. We Properly Awarded Sanctions Against GTI

Third, GTI contends that this court erred as a matter of law or abused its discretion by awarding sanctions against GTI, i.e., the entry of the two orders dated October 16, 2009, without finding that GTI violated the court’s order dated September 18, 2009. GTI cites In re Contempt of Cullen, 849 A.2d 1207, 1210 (Pa. Super. 2004) (“an order whose specific terms have not been violated will not serve as the basis for a finding of contempt.”). (emphasis in original)

As each court is the exclusive judge of contempts against its process, the Superior Court will reverse an order of contempt only upon a showing of a plain abuse of discretion. Diamond v. Diamond, 792 A.2d 597, 600 (Pa. Super. 2002).

The Cullen court stated the law of civil contempt as follows:

“In proceedings for civil contempt of court, the general rule is that the burden of proof rests with the complaining party to demonstrate, by preponderance of the evidence, that the defendant is in noncompliance with a court order. However, amere showing of noncompliance with a court order, or even misconduct, is never sufficient alone to prove civil contempt.

“To be punished for civil contempt, a party must not only have violated a court order, but that order must have been ‘ definite, clear, and specific — leaving no doubt or uncertainty in the mind of the contemnor of the prohibited conduct.’ Because the order forming the basis for civil contempt must be strictly construed, any ambiguities or omissions in the order must be construed in favor of the defendant. In such cases, a contradictory order or an order whose specific terms have not been violated will not serve as the basis for a finding of... civil contempt, the complainant must prove certain distinct elements: (1) that the contemnor had notice of the specific order or decree which ... is alleged to have disobeyed; (2) that the act constituting the contemnor’s violation was volitional; and (3) that the contemnor acted with wrongful intent. A person may not be held in contempt of court for failing to obey an order that is too vague or that cannot be enforced.

“When holding a person in civil contempt, the court must undertake (1) a rule to show cause; (2) an answer and a hearing; (3) a rule absolute; (4) a hearing on the contempt citation; and (5) an adjudication of contempt ... Cullen, 849 A.2d at 1210-11.

GTI was sanctioned for ignoring the orders of this court, directing it to transfer the garnished funds to our prothonotary, for ignoring the order of the Superior Court, directing GTI to comply with our April 30, 2008 order and GTI’s attempts in Kansas to have the garnished funds released directly to the company, contrary to previous orders. The latest order GTI ignored was the September 18, 2009 order which required GTI to make application to the Kansas court to have the garnished funds transferred to our prothonotary.

By way of background, on September 18,2009, Han-kin’s motion for contempt was before this court. After a hearing, we entered the September 18,2009 order which required GTI to apply to the Kansas court to secure the direct transfer of the garnished funds from Kansas to our prothonotary. Application was to have been made within 10 days. We held the motion for contempt in abeyance pending compliance with the order. GTI was warned that sanctions could be imposed for noncompliance, specifically stating that final judgment could be entered in favor of Hankin.

In the guise of complying with the September 18,2009 order, on September 25,2009, GTI filed a pleading captioned “application to the district court” in the Kansas court. However, GTI’s “application” was nothing more than a futile exercise designed to give the appearance of complying with the September 18,2009 order in an effort to avoid being held in contempt, while maintaining the funds in Kansas. We emphasize that the “application” never asked for the garnished funds to be transferred. Rather, it is a 15-paragraph pleading, in which the first 11 paragraphs set forth a brief recitation of the factual background. Paragraphs 12 and 13 advised the Kansas court that it did not have jurisdiction, and that there was an “inherent conflict between the orders of this court and the directive from the Pennsylvania court” regarding the . garnished fluids. In paragraph 14 GTI sought “direction” as to how it should proceed. The fact that GTI entitled its motion “application” does not make it so.

It is significant that Hankin attempted to remediate the jurisdictional issue, by offering to withdraw its appeal in the Kansas appellate court, if GTI would consent to the direct transfer of the garnished funds to this court’s prothonotary. See Hankin’s supplemental motion for contempt, exhibit “B”, proposed order. The withdrawal of the appeal would have allowed GTI to fully comply with the September 18,2009 order. GTI never responded to Hankin’s overture. Instead, GTI filed its “application,” which did not request the transfer of the garnished funds.

Hankin highlighted to this court during the October 16,2009 hearing, GTI’s argument that Hankin could have unilaterally discontinued its appeal so as to allow the Kansas court to have jurisdiction, is disingenuous because such action would have left Hankin unprotected. A unilateral discontinuance of the appeal would have meant that the garnished funds would have been released directly to GTI. (Sanction hearing 10/16/09 pp. 11-12, 17.)

It is clear to this court that GTI sought and continues to seek the transfer of the garnished funds directly to the company. GTI never intended to request or allow for the direct transfer of the garnished funds to this court.

Accordingly, we found that GTI did not in fact apply to the Kansas court for the transfer of the garnished funds, in violation of the September 18, 2009 order. GTI had notice of the specific order which it is alleged to have disobeyed, GTPs behavior was volitional and GTI acted with wrongful intent.

IV. Full Faith and Credit Principles Are Not Implicated

Fourth, GTI asserts that we erred as a matter of law or abused our discretion by failing to give full faith and credit to the determination of the Kansas court, including the determination that: (a) the opened confessed judgment is not entitled to full faith and credit under Kansas law and that GTI is entitled to the return of the funds that Hankin garnished in Kansas held by the Kansas court; (b) Hankin’s execution upon the confessed judgment is invalid and thus, was not a valid lien against GTPs property; (c) the Kansas court lacked jurisdiction to transfer the garnished funds to Pennsylvania, or consider any request, including a joint request, to do so, pending Han-kin’s appeal; and (d) GTPs “application” constituted an application to the Kansas court for the transfer of the garnished funds.

The Kansas court entered an order relinquishing the garnished funds, and our original April 30, 2008 order simply directed GTI what to do with those relinquished funds, i. e., transfer them to our prothonotary. This has no bearing on the Kansas court’s determination that under Kansas law, an opened confessed judgment is not entitled to full faith and credit, and that GTI is entitled to the return of the garnished funds. Also, our April 30, 2008 order has nothing to do with the fact that the Kansas court determined that Hankin did not have a valid lien against GTI’s property. The April 30, 2008 order was simply trying to re-establish the status quo as it existed at the time the agreed order was entered into. There was no conflict between the Kansas court rulings and our April 30, 2008 order to transfer the funds from Kansas to Pennsylvania.

Additionally, GTI failed to make any request to the Kansas court to transfer the garnished funds to this court, even the “application” was nothing more than a exercise designed to give the appearance of complying with the September 18,2009 order in an effort to avoid being held in contempt, while maintaining the funds in Kansas.

V. We Properly Required GTI To Pay Transfer the Garnished Funds Into This Court’s Prothonotary

Next, GTI contends that we erred as a matter of law or abused our discretion by requiring it to pay money into the court’s registry to secure an opened confessed judgment even though Hankin had no valid lien in Pennsylvania against GTI’s property and/or after GTI had sought and received a stay on execution. We disagree.

After the confessed judgment was entered, but before the petition to strike and/or open was decided, Hankin transferred the judgment to Kansas and obtained an order of garnishment from the Kansas court, attaching the $184,433.88. As a result of this garnishment, on July 2, 2007, GTI filed an emergency petition for stay of execution in this court. On July 5, 2007 an agreed order was entered. All matters were stayed pending further order of this court.

In complete disregard of the stay, on March 24,2008, GTI filed a motion to strike and vacate in the Kansas court seeking the immediate release of the garnished funds. The Kansas court granted the motion to strike and vacate, and entered an order directing that the garnished funds be released on May 8, 2008. In response, Hankin filed a motion for contempt in this court, bringing to our attention GTI’s legal action in Kansas while the stay here was in force.

After a hearing was conducted, we entered the April 30, 2008 order. So as to maintain the status quo we directed GTI to instruct or take any such action as may be necessary for the Kansas court to transfer the garnished funds to the prothonotary of this court.

At the hearing, it became clear to this court that despite the July 5,2007 agreed order, staying all execution proceedings, GTI insisted on pursuing further legal action and disrupting the status quo by having the garnished funds released to it. Our April 30,2008 order was necessary in maintaining the status quo as it existed at the time the July 5,2007 agreed order was entered. Directing GTI to transfer the garnished funds to our prothonotary was imperative in maintaining the status quo. It is of note that the status quo is what GTI requested when it earlier filed its emergency petition for stay of execution in this court, which resulted in the July 5,2007 agreed order. The April 30, 2008 order is consistent with that which GTI initially sought — maintenance of the status quo. The April 30, 2008 order merely restored the parties to their July 5, 2007 positions.

VI. GTI Disturbed the Status Quo Through the Kansas Court

Sixth, GTI argues that we erred as a matter of law or abused our discretion by finding that GTI’s challenge to the validity of the transferred confessed judgment under Kansas law disturbed the status quo or was otherwise prohibited by the court’s agreed order dated July 5, 2007.

The July 5, 2007 order stayed all execution proceedings so as to maintain the status quo. The agreed order could not have been any clearer. When the agreed order was signed by both parties, the garnished funds were being held by the Kansas court. It was GTI that upset the status quo when it decided to proceed with litigation in the Kansas court. This was clearly a violation of the agreed order.

VIL GTI Was Not Deprived of its Due Process Rights

Seventh, GTI contends that this court erred as a matter of law or abused our discretion by awarding sanctions against it that deprived it of its due process rights. However, GTI’s due process rights were protected.

The essential due process requisites for a finding of civil contempt are notice and an opportunity to be heard. In re Contempt of Cullen, 849 A.2d 1207, 1211 (Pa. Super. 2004). In this case, GTI had notice of the October 16, 2009 hearing, GTI was present for the hearing and GTI offered arguments and evidence against Hankin’s supplemental motion for contempt.

VIII. This Court’s October 16, 2009 Order Was Proper

In GTI’s concise statement, GTI asserts that this court erred as a matter of law or abused its discretion by entering the order dated September 18,2009 granting Hankin’s supplemental motion for sanctions. However, we did not rule upon Hankin’s supplemental motion for contempt until October 16, 2009. The September 18, 2009 order was entered in regard to Hankin’s motion for contempt. We believe, that GTI is actually referring to our October 16, 2009 order. Because we have already addressed the propriety of the October 16, 2009 order in issue III on page 476, we will not address it again here.

IX. This Court Had Jurisdiction To Enter Both October 16, 2009 Orders, When an Appeal Is Pending in the Superior Court at Docket Number 2610 EDA 2009

Finally, GTI argues that this court lacked jurisdiction to enter both October 16, 2009 orders due to the appeal pending in Superior Court at docket number 2610 EDA 2009. The appeal pending in the Superior Court at docket number 2610 EDA 2009, concerns our denial of GTI’s motion to compel arbitration. That appeal was consolidated sua sponte by our Superior Court with this appeal.

The two October 16, 2009 orders were a result of the adjudication of Hankin’s supplemental motion for contempt. After the conclusion of a hearing on October 16, 2009 we found GTI in contempt. Additionally, we found GTI acted in bad faith and without clean hands and was no longer deserving of the original equitable relief granted by this court. Accordingly, we issued two orders on October 16,2009. Having found GTI in contempt we entered final judgment in favor of Hankin and against GTI, in the amount of $184,443.88. Second, we vacated our order dated January 8, 2008 granting the petition to open the confessed judgment, and then denied the petition to open.

In essence what GTI is arguing is that this court did not have jurisdiction to enforce the September 18,2009 order issued by this court, because of the appeal pending in regard to its motion to compel arbitration.

We note generally, a trial court may not proceed on a matter after an appeal has been taken. Pa.R.A.P. 1701(a). However, absent supersedeas or a stay, a court may enforce its orders upon the parties while an appeal is pending. See Pa.R.A.P. 1701(b)(2); In re Griffin, 456 Pa. Super. 440, 457, 690 A.2d 1192, 1200 (1997) (trial court properly imposed sanctions for violations of its orders which occurred while appeal was pending); Tanglwood Lakes Community Association v. Laskowski, 420 Pa. Super. 175, 178, 616 A.2d 37, 39 (1992) (trial court has authority to impose sanction to force party to comply with its order, despite pendency of appeal).

In this case, after GTI filed the appeal at docket number 2610 EDA 2009 in our Superior Court, it did not seek a stay or supersedeas. Accordingly, we had authority to enforce our previous order on GTI. Our October orders were entered for just that reason. GTFs continual refusal to take such action necessary to transfer the garnished fund to our prothonotary resulted in our finding of contempt. GTI ignored multiple orders of this court in an attempt to directly get ahold of the garnished funds.

Additionally, Pa.R.A.P. 1701(b)(1) allows a court to, “[tjake such action as may be necessary to preserve the status quo, correct formal errors in papers relating to the matter, cause the record to be transcribed, approved, filed and transmitted, grant leave to appeal in forma pauperis, grant supersedeas, and take other action permitted or required by these rules or otherwise ancillary to the appeal or petition for review proceeding.” Here, we found the issues of contempt and sanctions to be ancillary to the appeal on GTI’s motion to compel arbitration. Accordingly, we had jurisdiction to issue the two orders issued on October 16, 2009.

CONCLUSION

The bottom line is that GTI had no intention of complying with the orders of this court or the order of the Pennsylvania Superior Court.

Based on the forgoing analysis, our June 30, 2009 order denying GTI’s motion to compel arbitration and our two October 16, 2009 orders should be affirmed.

      . The April 29, 2009 Superior Court memorandum decision directed GTI to “immediately comply with the trial court’s order dated May 2,2008.” Reading this directive in context of the entire decision shows that our Superior Court is referring to the order dated April 30, 2008, which was entered onto the docket on May 2,2008.


author: CULLEN, J,

text:
    Price v. Freeze & Frizz Inc.

      C.P. of Lancaster County,
    no. CI-08-03590.

      Gary G. Krafft, for plaintiff.

      John J. Del Casale, for defendant.
    November 19, 2009
   CULLEN, J,

Before the court for resolution are the preliminary objections filed by defendant, Freeze & Frizz Inc., to the amended complaint of William J. Price Sr. For the reasons set forth below, defendant’s preliminary objections will be sustained in part and overruled in part.

PROCEDURAL AND FACTUAL BACKGROUND

This action arises out of the sale of a parcel of commercial real estate by defendant, Freeze & Frizz Inc., to plaintiff, William J. Price Sr. The initial complaint was filed March 28,2008. Defendant filed preliminary objections on July 10, 2008, and an amended complaint was filed on July 30, 2008.

In his amended complaint, plaintiff alleges that on January 27,2006, he entered into a written contract with defendant for the sale of commercial real estate located on Hartmann Bridge Road in Ronks, Lancaster County, Pennsylvania, and that settlement occurred March 30, 2006. Plaintiff alleges that after settlement he learned that various structural defects existed in the property, that certain equipment did not function and that the applicable zoning ordinance did not permit the rental of a portion of the property as an apartment. Plaintiff contends that defendant knowingly made false and material misrepresentations to him and concealed material facts and that he suffered financial losses as a result of his reliance on defendant’s representations and omissions.

Plaintiff’s claims against defendant are breach of contract (Count I), fraud (Count II) and punitive damages (Count III).

On August 13,2008, defendant again filed preliminary objections challenging the legal sufficiency of all three counts against it.

First, defendant asserts that Count II alleging fraud must be dismissed because it is barred by the gist of the action doctrine, the parol evidence rule and the economic loss doctrine. Defendant next argues that Count III seeking punitive damages must be dismissed because such damages are not recoverable in an action based on breach of contract. Lastly, defendant requests that plaintiff’s claims for breach of contract regarding structural defects and zoning as set forth in Count I be stricken on the ground that the written contract was fully integrated and that any evidence or testimony regarding alleged misrepresentations by defendant is barred by the parol evidence rule.

After the parties filed briefs in support of their positions, the preliminary objections were assigned to the court.

DISCUSSION

Rule 1028(a) of the Pennsylvania Rules of Civil Procedure states that “[preliminary objections may be filed by any party to any pleading [on the grounds of] . . . legal insufficiency of a pleading (demurrer)[.]” PA.R.C.R 1028(a).

“Preliminary objections calling for dismissal of a cause of action should be sustained only in cases that are clear and free from doubt.” Alston v. PW-Philadelphia Weekly, 980 A.2d 215, 219 (Pa. Commw. 2009) (citing Anelli v. Arrowhead Lakes Community Association, Inc., 689 A.2d 357, 359 (Pa. Commw. 1997)) (citing Bower v. Bower, 531 Pa. 54, 57, 611 A.2d 181, 182 (1992). (citation omitted)) When ruling on preliminary objections, the court must generally accept as true all well and clearly pleaded facts, together with such reasonable inferences as may be drawn from those facts, but not the pleader’s conclusions or averments of law. Santiago v. Pennsylvania National Mutual Casualty Insurance Company, 418 Pa. Super. 178, 185, 613 A.2d 1235, 1238-39 (1992). The question presented by a demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Id. at 184, 613 A.2d at 1238. Any doubt as to whether a demurrer should be sustained should be resolved in favor of overruling the demurrer. Id.

Defendant argues that the fraud count of the amended complaint should be dismissed as barred by the gist of the action doctrine. The gist of the action doctrine bars tort claims that: (1) arise 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 essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of the contract. eToll Inc. v. Elias/Savion Advertising Inc., 811 A.2d 10, 19 (Pa. Super. 2002). (citations omitted)

The doctrine concerns itself with the “essential ground” or material part of the entire complaint and precludes plaintiffs from recasting ordinary breach of contract claims into tort claims. Id. at 15.

In applying the gist of the action doctrine to a fraud claim, it is necessary to distinguish between “fraud in the inducement” and “fraud in the performance” of a contract. Id. at 17, 19. A plaintiff’s claim of fraud in the inducement may escape dismissal under the gist of the action doctrine because “fraud to induce a person to enter a contract is generally collateral to {i.e., not interwoven with) the terms of the contract itself. Id. (citing Foster v. Northwestern Mutual Life, 2002 WL 31991114, at *2 (E.D. Pa. 2002) (applying Pennsylvania law)). However, the gist of the action doctrine applies in a “fraud in the performance” context. Id. at 20.

Plaintiff alleges that defendant committed fraud by misrepresenting the structural soundness, zoning and quality of the equipment associated with the sale of the real property. (Am. compl. ¶¶16-18, 36.) Plaintiff also alleges that defendant committed fraud by “intentionally withholding] from plaintiff information as it pertains to the structural problems associated with the real property, the zoning problems related to operation of the real property and the non-functioning equipment.” \Id. at ¶¶ 15, 37). Plaintiff avers that he “justifiably relied upon the representations of [defendant] in both signing the agreement and proceeding to settlement.” (Id. at ¶38.)

Plaintiff states that he and defendant entered into an agreement for the sale of commercial real estate and has not asserted that the parties entered into any other agreement. (Id. atfll, exhibit A.) Plaintiff has alleged defendant acted fraudulently by conveying non-functioning equipment. (Id. at ¶¶ 15(d), 18, 34, 37.) Plaintiff’s fraud claim with respect to the equipment involves and arises out of the defendant’s alleged breach of duties grounded in the agreement. Specifically, the agreement contains an addendum, incorporated by reference by paragraph 5(A) of the agreement, which states in pertinent part:

“All equipment listed in attachment A shall be a part of this sale and that on the date of conveyance, all equipment being conveyed with the premises will be in good working order, except for the broken equipment stored in the basement area for parts and the water softening equipment. In addition to the equipment, all HVAC, electric and plumbing systems shall be in good working order at settlement. In the event any equipment or systems are not in good working order, [defendant] at its option may repair the non-working equipment or the parties shall negotiate what reduction in purchase price, if any, is appropriate, specifically considering the age of the equipment.” (Id. at exhibit A, “Agreement for the sale of commercial real estate,” “Addendum to agreement for the sale of commercial real estate between [defendant] and [plaintiff] dated January 29, 2006,” |5(A)(1).)

Further, the damages sought (i.e., lost revenue, replacement costs) are the types of damages which would be compensable in an ordinary breach of contract action. (Id. at ¶34.) The fraud at issue was not so tangential to the parties’ relationship as to make fraud the gist of the action. Rather, the gist of the fraud action lies in contract (i.e., the agreement) and, thus, to the extent plaintiff’s fraud claim is based on the condition of the equipment conveyed, it will be dismissed under the gist of the action doctrine.

To the extent that plaintiff’s fraud claim alleges defendant “intentionally withheld information as it pertains to the structural problems associated with the real property [and] the zoning problems related to operation of the real property” as averred in paragraph 37 of the amended complaint (emphasis added), it is not barred by the gist of the action doctrine. In this instance, plaintiff’s fraud claim is collateral to, and not intertwined with, the performance obligations created by a particular term of the agreement.

To the extent that plaintiff’s fraud claim alleges fraud in the inducement, such a claim is barred by the parol evidence rule. The parol evidence rule bars the introduction of evidence to vary or modify the terms of an integrated contract. Yocca v. Pittsburgh Steelers Sports Inc., 578 Pa. 479, 497, 854 A.2d 425, 436 (2004). The Pennsylvania Supreme Court has explained the parol evidence rule as follows:

“Where the parties, without any fraud or mistake, have deliberately put their engagements in writing, the law declares the writing to be not only the best, but the only, evidence of their agreement. All preliminary negotiations, conversations and verbal agreements are merged in and superseded by the subsequent written contract ... and unless fraud, accident or mistake be averred, the writing constitutes the agreement between the parties, and its terms and agreements cannot be added to, nor subtracted from, by parol evidence.” Id. (citation omitted)

Thus, for the parol evidence rule to apply, there must be a writing that represents the “entire contract between the parties.” Id. (citing Gianni v. Russell & Co., 281 Pa. 320, 323, 126 A. 791, 792 (1924)). To determine whether a writing is the parties’ entire contract, the writing must be looked at and “if it appears to be a contract complete within itself, couched in such terms as import a complete legal obligation without any uncertainty as to the object or extent of the [parties’] engagement, it is conclusively presumed that [the writing represents] the whole engagement of the parties____” Id. (citation omitted) “An integration clause which states that a writing is meant to represent the parties’ entire agreement is also a clear sign that the writing is meant to be just that and thereby expresses all of the parties’ negotiations, conversations, and agreements made prior to its execution.” Id. (citation omitted)

Further “parol evidence of prior representations is inadmissible as to matters covered by the written agreement with an integration clause, unless the parties agreed that those representations would be added to the written agreement but they were omitted because of fraud, accident, or mistake.” Glassmere Fuel Service Inc. v. Clear, 900 A.2d 398, 402 (Pa. Super. 2006). (citation omitted)

The situation described above is commonly referred to as “fraud in the execution” since the party proffering the evidence contends that he executed the agreement because he was defrauded by being led to believe that the document contained terms that actually were omitted from it. Plaintiff does not assert that such is the case here.

Plaintiff alleges that defendant knowingly made false representations which “Plaintiff reasonably relied upon ... in both signing the agreement and proceeding to settlement.” (Am. compl. ¶¶16-19, 31.) The courts of this Commonwealth, however, have refused to permit the introduction of parol evidence where a plaintiff alleges he was fraudulently induced to enter into a contract. Toy v. Metropolitan Life Insurance Company, 593 Pa. 20, 53, 928 A.2d 186, 207 (2007). See generally, Yocca v. Pittsburgh Steelers Sports Inc., 578 Pa. 479, 854 A.2d 425 (2004). “[W]hile parol evidence may be introduced based on a party’s claim that there was fraud in the execution of a contract, i.e., that a term was fraudulently omitted from the contract, parol evidence may not be admitted based on a claim that there was fraud in the inducement of the contract, i.e., that an opposing party made false representations that induced the complaining party to agree to the contract.” Yocca, 578 Pa. at 498 n.26, 854 A.2d at 437 n.26 (citation omitted); see also, HCB Contractors v. Liberty Place Hotel Associates, 539 Pa. 395, 652 A.2d 1278 (1995) (stating that admitting parol evidence in claims for “fraud in the inducement” would make mockery out of parol evidence rule).

Paragraph 26(A) of the agreement states in pertinent part: “It is further understood that this agreement contains the whole agreement between [defendant] and [plaintiff] and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise of any kind whatsoever concerning this sale.” (Am. compl., exhibit A, “Agreement for the sale of commercial real estate,” ¶26.) The integration clause explicitly stating that the agreement is the “whole agreement” between the parties coupled with provisions expressing the essential terms of the parties’ understanding regarding the sale of the property and conveyed equipment triggers the parol evidence rule and bars the admission of any evidence of prior oral or written negotiations, representations or agreements made by the parties concerning the sale of the property and conveyed equipment.

Accordingly, insofar as Count II of the amended complaint alleges fraud in the inducement with regard to alleged affirmative misrepresentations concerning the condition of the equipment, zoning and structural defects of the property, such a claim is barred by the parol evidence rule. However, to the extent that plaintiff is alleging that defendant concealed material facts with respect to the condition of the equipment, zoning and structural defects of the property, further discussion is necessary.

There is a narrow exception to the strict application of the parol evidence rule in sales and leases of real property. This exception was discussed at length in the seminal case of LeDonne v. Kessler, 256 Pa. Super. 280, 389 A.2d 1123 (1978), where the Superior Court stated, “If we seriously desire to preserve the integrity of written contracts ... then we must insist upon the application of the parol evidence rule when a party knows about the existence of substantial problems, yet contractually stipulates that he has received no promises about these problems.” Id. at 294, 389 A.2d at 1130. As a result, the court “should balance the extent of the party’s knowledge of objectionable conditions derived from a reasonable inspection against the extent of the coverage of the contract’s integration clause in order to determine whether that party could justifiably rely upon oral representations without insisting upon further contractual protection or the deletion of an overly broad integration clause.” Id.

In LeDonne, the plaintiffs purchased a home from the defendants pursuant to a written contract and thereafter brought suit alleging that they purchased the home in reliance on the defendants’ fraudulent misrepresentations that a drainage problem in the septic system had been repaired and that the sundeck and cellar did not leak water. The court held that the integration clause in the home sale agreement — that the parties have full knowledge of the physical appearance of the land and building and of the value thereof and that there are no verbal representations as to character or quality — denied only existence of land and building conditions reasonably apparent from inspection of the premises and, thus, the plaintiffs’ allegations concerning repair of an underground septic system were not barred by the parol evidence rule. Their allegations concerning the sundeck and cellar were barred because their inspection strongly suggested the existence of such water leakage problems, yet they signed a contract stipulating that they received no representations concerning those defects.

Plaintiff’s fraud allegations concerning the intentional withholding of information with respect to structural defects fall within the LeDonne exception and are not barred by the parol evidence rule. Paragraph 15(b) of the amended complaint alleges that “[structural repairs needed to be performed to the real property ....” (Am. compl. |15(b).) There is no indication that the necessity for these repairs would have been “reasonably apparent from inspection of the premises.” See Le-Donne, 256 Pa. Super, at 294, 389 A.2d at 1130. The record warrants the opposite conclusion with respect to plaintiff’s allegations that defendant intentionally withheld information concerning the condition of the equipment and zoning of the property. The LeDonne exception operates to protect purchasers of real property from subsequently discovered latent defects that are not easily ascertainable by a reasonable inspection and because of which the purchasers would have no reason to insist upon contractual protection before signing an integrated contract. Id. However, the exception does not apply when purchasers “fail to explain why they ignored the most basic protection against fraud available: reading the agreement before signing it and insisting upon the deletion of offending provisions or the insertion of desired guarantees.” Id. at 295, 389 A.2d at 1130.

Here, the agreement provides specific contractual protection to plaintiff regarding the condition of the equipment as reflected in paragraph 5(A)(1), quoted above, and with respect to the zoning of the property as illustrated in paragraph 10.

“(10) Zoning Contingency (5-01)

“□ Waived

“13 Elected. Within 20 days of the execution of this agreement by all parties, [plaintiff] will verify that the proposed use of the property as continued operation is permitted. In the event the proposed use is not permitted, [plaintiff] will, within the time given for verification, notify

“[defendant] in writing that the proposed use of the property is not permitted and [plaintiff] will:....

“Within the time for verifying the zoning classification, notify [defendant], in writing, of [plaintiff’s] decision to proceed with the purchase of the property or terminate the agreement. Should [plaintiff] elect to terminate the agreement all deposit monies paid on account of purchase price will be returned promptly to [plaintiff] and this agreement will be void. Failure of [plaintiff] to provide written notice of [plaintiff’s] decision will constitute a waiver of this contingency and [plaintiff] accepts the property and agrees to the release set forth in paragraph 25 of this agreement. ” (Am. compl., exhibit A, “Agreement for the sale of commercial real estate,” ¶10. (emphasis in original))

Since the LeDonne exception does not govern this situation, as plaintiff had specific contractual protections, plaintiff cannot circumvent application of the parol evidence rule which precludes the admission of evidence to modify the terms of the agreement regarding the condition of the equipment and the issue of zoning of the property.

Defendant also argues that the fraud count should be dismissed because it is barred by the economic loss doctrine. In Pennsylvania, this doctrine precludes recovery for economic losses in a negligence action where the plaintiff has suffered no physical or property damage. Spivack v. Berks Ridge Corporation Inc., 402 Pa. Super. 73, 78, 586 A.2d 402, 405 (1990); Aikens v. Baltimore and Ohio Railroad Company, 348 Pa. Super. 17, 20, 501 A.2d 277, 279 (1985). When the doctrine is applicable, the plaintiff’s recovery for purely economic losses is limited to an action on the contract. New York State Electric & Gas Corporation v. Westinghouse Electric Corporation, 387 Pa. Super. 537, 551, 564 A.2d 919, 926 (1989).

The foundation of this doctrine rests in a “concern for maintaining the separate spheres of the law of contract and tort.” Id. at 550, 564 A.2d at 925. (citation omitted) However, while the economic loss doctrine applies to claims based on a defendant’s negligence, the courts of this Commonwealth have declined to broaden the doctrine’s scope to include tortious claims other than negligence. Ellenbogen v. PNC Bank, 731 A.2d 175, 188 n.26 (Pa. Super. 1999). “Although it makes sense to allow parties to allocate the risk of mistakes or accidents that lead to economic loss, it does not make sense to extend the doctrine to intentional acts taken by one party to subvert the purpose of a contract.” Smith Reinhart Ford, 69 D.&C.4th 432, 437 (Lancaster Cty. 2004) (citing First Republic Bank v. Brand, 50 D.&C.4th 329, 342 (Phila. Cty. 2000)) (quoting Stoughton Trailers Inc. v. Henkel Corp., 965 F. Supp. 1227, 1236 (W.D. Wis. 1997)). Because the economic loss doctrine is inapplicable to fraud claims, defendant’s argument in this respect lacks merit.

In summary, plaintiff’s claim of fraud in Count II, to the extent it is based on fraud in the performance concerning the condition of the equipment, is barred by the gist of the action doctrine. Insofar as Count II alleges fraud in the inducement with respect to defendant’s alleged affirmative misrepresentations regarding zoning, structural soundness and the condition of the equipment, it is barred by the parol evidence rule. To the extent plaintiff claims defendant fraudulently concealed material facts regarding the zoning of the property and the condition of the equipment, the claim cannot be sustained in light of the contractual provisions addressing these issues and the prohibition embodied in the parol evidence rule which precludes him from altering or modifying the contractual language. Plaintiff’s claim of intentionally withholding information regarding structural defects is governed by LeDonne and is not barred.

Next, defendant seeks to dismiss Count III, a claim for punitive damages, on the basis that such damages are not recoverable in an action based on breach of contract. A request for punitive damage cannot stand as an independent cause of action; rather, a request for punitive damages is incidental to a cause of action. Hilbert v. Roth, 395 Pa. 270, 276, 149 A.2d 648, 652 (1959) (“[t]he right to punitive damages is a mere incident to a cause of action . .. and not the subject of an action itself”); Nix v. Temple University of the Commonwealth System of Higher Education, 408 Pa. Super. 369, 380, 596 A.2d 1132, 1138 (1991). Accordingly, this preliminary objection will be sustained.

Finally, defendant requests that the court strike from the breach of contract claim in Count I all claims based upon structural defects and zoning issues. Plaintiff alleges that defendant breached the agreement by, inter alia, “fail[ing] to disclose information pertaining to the structural integrity of the real property, together with the zoning problems... constituted a material breach of the parties’ agreement.” (Am. compl. ¶30.) Plaintiff appears to be complaining of conduct that occurred prior to the parties’ execution of the agreement. Plaintiff has not alleged defendant breached any specific contractual provision of the agreement nor has he even cursorily addressed in his brief how such a prior failure to disclose is a “breach of contract.” A careful review of the agreement reveals that there is no provision dealing with representations by defendant with regard to zoning and structural issues.

As discussed above, the contract between the parties contained an integration clause stating that “this agreement contains the whole agreement between [plaintiff] and [defendant] and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise of a kind whatsoever concerning this sale.” (Am. compl., exhibit A, “Agreement for the sale of commercial real estate,” ¶26.) Any representations that defendant may have made prior to the execution of the agreement are barred by the parol evidence rule. Plaintiff has not alleged any facts to support a claim that such representations were deliberately not included in the agreement due to fraud in the execution. See Yocca, 578 Pa. at 497, 854 A.2d at 436. Accordingly, the parol evidence rule bars the admission of any evidence of prior oral or written negotiations, representations, or agreements entered into between the parties concerning structural defects and zoning issues.

Paragraph 10 of the agreement expressly states the parties’ obligations with respect to zoning.

“(10) Zoning Contingency (5-01)

“□ Waived

“El Elected. Within 20 days of the execution of this agreement by all parties, [plaintiff] will verify that the proposed use of the property as continued operation is permitted. In the event the proposed use is not permitted, [plaintiff] will, within the time given for verification, notify

“[defendant] in writing that the proposed use of the property is not permitted and [plaintiff] will:....

“Within the time for verifying the zoning classification, notify [defendant], in writing, of [plaintiffs] decision to proceed with the purchase of the property or terminate the agreement. Should [plaintiff] elect to terminate the agreement all deposit monies paid on account of purchase price will be returned promptly to [plaintiff] and this agreement will be void. Failure of [plaintiff] to provide written notice of [plaintiff’s] decision will constitute a waiver of this contingency and [plaintiff] accepts the property and agrees to the release set forth in paragraph 25 of this agreement. ” (Am. compl., exhibit A, “Agreement for the sale of commercial real estate,” ¶10. (emphasis in original))

The agreement contains an express provision with respect to zoning matters. The language of paragraph 10, quoted above, makes clear that it is solely plaintiffs responsibility to verify the zoning classification and to notify defendant of any discrepancies within the time agreed upon in paragraph 10. Plaintiff did not allege that he notified defendant of zoning discrepancies. Plaintiff has not alleged that he complied with the obligations set forth under paragraph 10 and cannot now benefit from any of defendant’s alleged representations not included in the fully integrated agreement. Plaintiff cannot modify or alter existing contractual provisions to shift the burden from himself to defendant to verify the zoning. The zoning of the property was a matter contemplated by the parties and specific provisions with respect to the process for determining and addressing zoning issues were included in the agreement. Plaintiff cannot expand upon or alter these provisions without violating the parol evidence rule. Thus, his claim for breach of contract on this ground lacks merit.

With regard to the purported structural defects of the property, plaintiff has not alleged that defendant breached any specific provision of the agreement nor has plaintiff alleged that he even inspected the property. Even if certain structural conditions were not disclosed, which could support a tort claim, plaintiff has failed to indicate how such conduct would constitute a breach of contract. Plaintiff appears to be attempting to insert a provision into the agreement which is not there. This preliminary objection will be sustained and plaintiff will be permitted to file an amended pleading.

For the reasons stated above, the court enters the following:

ORDER

And now, November 19,2009, upon consideration of the preliminary objections filed by defendant, Freeze & Frizz Inc., and the response of plaintiff, William J. Price Sr., it is ordered that defendant’s preliminary objections are sustained in part and overruled in part.

To the extent that Count II alleges defendant intentionally withheld information with respect to the structural defects of the property, the preliminary obj ection is overruled.

In all other respects, the preliminary objection is sustained.

The preliminary objections are sustained with respect to Counts I and III.

Plaintiff is granted 20 days from the date of this order to file a second amended complaint.

      . It is unclear from the amended complaint whether the alleged misrepresentations and the intentional withholding of pertinent information are intended to describe different conduct, e.g., affirmative misrepresentations and the intentional withholding of information, or the same conduct, i.e., the intentional withholding of information is the misrepresentation. Defendant has not challenged the specificity of the allegations, see PA.R.C.P. 1019(b), so the court will view the language under the liberal standard applicable to preliminary objections in the nature of a demurrer.

      . Plaintiff has not alleged that defendant committed fraud in the performance of the agreement with respect to zoning matters and the structural soundness of the property. That is, there is no allegation that defendant failed to perform any of the specific contractual provisions set out in the agreement with respect to those two matters.

      . A claim that the plaintiff’s cause of action is barred by the parol evidence rule may be raised by preliminary objection. See Yocca v.

        Pittsburgh Steelers Sports Inc., 578 Pa. 479, 502-503, 854 A.2d 425. 436 (2004).

      . Paragraph 16 of the amended complaint avers, “From the time the agreement was signed, through settlement, [defendant] represented the real property was zoned in such a manner as to allow for the continued operation as both a commercial business and a resident apartment.” (Am. compl. ¶16.) Paragraph 17 alleges, “From the time the agreement was signed, through settlement, [defendant] represented that the real property was constructed in such a manner to permit continued operation of the real property as a restaurant.” {Id. at ¶17). Paragraph 31 states, “Plaintiff reasonably relied upon the representations of [defendant] in both signing the agreement and proceeding to settlement.” {Id. at ¶31) Plaintiff does not indicate which specific representations defendant made before signing the agreement and which misrepresentations, if any, were made after signing but before settlement. This issue may be addressed in the amended pleading.

      . Plaintiff alleges that plans submitted to the Commonwealth to obtain a certificate of occupancy contained information which was different from the manner in which the building was actually constructed. (Am. compl. ¶20.)

      . Plaintiff cannot assert that he justifiably relied on any representations by defendant regarding zoning, or that he was mislead by any alleged withholding of information by defendant, when he had the opportunity under the agreement to investigate this matter for himself and to terminate the agreement and obtain the return of his deposit if he was not satisfied with the results of his inquiry concerning any zoning matters. See Ellison v. Lopez, 959 A.2d 395,398 (Pa. Super. 2008) (stating “justifiable reliance by the recipient upon the misrepresentation” to be essential element of establishing fraud claim.)