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HomeMy WebLinkAbout92-4097 civilCARL J. AVARA, IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA Vo MELAR CORPORATION, NO. 4097 CIVIL 1992 Formerly CAPITAL PETROLEUM, INC., and JOSEPH GENTILE and BEVERLY ANN GENTILE CHERMAK, Defendants IN RE: PLAINTIFF'S POST TRIAL MOTION ORDER OF COURT AND NOW,I /) ~~ (¢~t~ , pursuant to the opinion filed this date, all issues raisect~Plaintiff's Post Trial Motion are denied. By the Court, ~P.J. Samuel L. Andes, Esquire 525 North 12th Street Lemoyne, PA !7043 For the Plaintiff Jonathan H. Rudd, Esquire McNees, Wallace & Nurick 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 For the Defendants CARL J. AVARA, IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA V. MELAR CORPORATION, formerly CAPITAL PETROLEUM, INC., and : NO: 4097 CIVIL 1992 JOSEPH GENTILE and BEVERLY ANN GENTILE CHERMAK, Defendants IN RE: PLAINTIFF'S POST TRIAL MOTION OPINION HOFFER, P.J.: This addresses Plaintiff's Post Trial Motion. At a jury trial it was determined that Plaintiff, Carl J. Avara, began work for Mobil Oil in 1969. Through his employment with Mobil, Plaintiff came to know Defendant, Joseph Gentile, who was involved in the gasoline industry in Dunmore, Pennsylvania, near Scranton. Plaintiff was a salesman, working on commission, out of Mobil's Harrisburg office. In late 1983, Plaintiff learned that a major Mobil customer, Checker Oil, was selling its retail operations in central Pennsylvania. Checker sold approximately eighty million gallons of gasoline per year and Plaintiff and Mobil did not want to lose the account. Plaintiff believed purchasing Checker Oil to be an excellent business opportunity. The listed price for Checker Oil was $500,000. Plaintiff testified that he believed the real estate alone to be worth considerably more and the business's value to be at least $1.5 million. Plaintiff contacted Joseph Gentile about purchasing and running Checker Oil NO. 4097 CIVIL 1992 with him. Although Gentile did not need a partner to buy the stations, Gentile and Plaintiff, according to Plaintiff's testimony, entered into an oral agreement to purchase Checker's central Pennsylvania operation. Plaintiff and Gentile were to be partners and upon the sale of the corporation they would split the profits equally? The agreement was not reduced to writing because Plaintiff did not want Mobil to know of his involvement in the deal; such an arrangement violated Plaintiff's employment conditions with Mobil. To finance the purchase, according to Plaintiff, Plaintiff and Gentile each took loans of $100,000, arranged by Gentile, from the Bank of Dunmore, a $275,000 mortgage was taken from the bank using the Checker real estate as collateral, and any additional funds necessary were contributed by Gentile personally. Initially, the deal contemplated that Plaintiff would leave his employment with Mobil and run the Checker operations full time. Plaintiff did not attend settlement because he continued to hide the deal from Mobil. In May of 1984, after settlement, Capital Petroleum, Inc. was formed from the original Checker Oil assets. No stock was issued at that time. When Plaintiff started his employment with Mobil Oil, he signed a contract which contained a conflict of interest clause. A number of witnesses testified that Plaintiffs involvement in Capital Petroleum constituted a conflict of interest with ~ A third partner was originally contemplated but in the end he did not participate. 2 NO. 4097 CIVIL 1992 Mobil. Although Capital Petroleum generally bought its gasoline from Mobil, a clear conflict arose when Capital Petroleum bought a new location and was under a two year contractual obligation to sell Texaco gas at that station. Plaintiff himself testified that, although he did not believe that his work with Capital Petroleum created a conflict of interest, he did not want Mobil to know of his involvement with the business. After Capital Petroleum was formed, Plaintiff did not leave his employment with Mobil, as contemplated by the agreement. Instead, Capital Petroleum hired Hervie Krodel, a former Checker Oil employee, to manage the day to day operations. Plaintiff took more of a minimal supervisory role in the new business. Plaintiff checked the station sites occasionally during the week, on weekends he signed the business's checks, and was responsible for pricing the gasoline to be sold. Plaintiff was paid for this work in goods and cash. The record reflects that Plaintiff received $2000 cash per month, a Mercedes and a Jeep. In December 1986, Capital Petroleum issued one hundred per cent of its stock to Beverly Ann Gentile Chermak, Joseph Gentile's daughter. Gentile testified that he wanted his daughter to have a business of her own, just as he had set up her brothers. After the stock issuance, Gentile continued to manage the business for his daughter. The business expanded as Gentile bought more station sites in the area. 3 NO. 4097 CIVIL 1992 While Plaintiff was doing some supervision of the expanding business, Capital Petroleum began to flounder near bankruptcy. There were problems with a number of stations including: a leaking fuel tank that Plaintiff failed to fix as directed by Gentile and a general failure to upgrade the sites. In 1989, Robert Samella, a former Mobil employee and Gentile's nephew, was brought in to manage the business. Gentile characterized this as firing Plaintiff for his failure to properly manage Capital Petroleum. Plaintiff had little contact with Gentile and Capital Petroleum after Robert Samella became the business manager. Samella was able to turn the business around. In 1991, two years after Plaintiff had anything to do with Capital Petroleum, the business was sold. The buyer was another Pennsylvania gasoline distributor whom Plaintiff knew through his employment with Mobil. Plaintiff claimed that he put the buyer in touch with Gentile. Plaintiff learned the details of the sale. Plaintiff did not receive any money from the sale. Gentile claimed that no profit was made on the sale. Plaintiff still owes a substantial sum on the $100,000 note from the Bank of Dunmore, but Gentile has pledged personal assets to cover the outstanding balance. Plaintiff tried, but was unable to convince Gentile, to split the Capital Petroleum sale proceeds, pursuant to their oral agreement. Gentile claimed the 4 NO. 4097 CIVIL 1992 agreement was more of an employment contract that was terminated upon Plaintiff's unsatisfactory performance. Plaintiff filed the complaint in this case in 1993, to recover the money he believed he was owed by Gentile. Defendant filed a motion for summary judgment in 1997, alleging that, because the purchase of Checker Oil was a purchase of land, failure to reduce the agreement to writing was in violation of the statute of frauds and rendered the agreement unenforceable. The Court previously denied that motion. The case later proceeded to jury trial. At the close of trial, the jury was given the following interrogatories to aid in deciding the case: 1. Do you find that Joseph Gentile formed an enforceable agreement with Carl Avara to acquire, operate, and sell gasoline stations and assets and to divide the proceeds of the sale of those assets? 2. Did Joseph Gentile breach the agreement? 3. Did Carl Avara breach the agreement? 4. Did Joseph Gentile defraud Carl Avara? Jury Interrogatories. Upon deliberation, the jury answered: number one, yes; number two, yes; number three, yes; and number four, no. Plaintiff recovered nothing. Plaintiff filed the post trial motion currently addressed by the Court and oral argument was held approximately one year later when counsel were ready. Plaintiff alleges two categories of error by the Court in his post trial motion: (1) the Court erred in dismissing claims and refusing to allow Plaintiff to amend his pleadings to contain additional claims, based upon an agency theory, against 5 NO. 4097 CIVIL 1992 Beverly Ann Gentile Chermak and Melar Corporation, formerly known as Capital Petroleum, Incorporated; and (2) the Court failed to properly instruct the jury on the requirement that Plaintiff's breach of the agreement must be matedal to prevent him from recovering and that the language of the jury interrogatories misstated the law and mislead the jury about the materiality requirement. The Court addresses each of these claims, and we revisit the issue raised by summary judgment that the agreement between the parties was an agreement for the sale of land and that failure to reduce it to writing rendered the agreement unenforceable as a violation of the statute of frauds. Discussion A.~encv At the time of trial, Plaintiff had pending claims of fraud against Beverly Ann Gentile Chermak and Melar Corporation. Upon hearing all of the testimony, the Court dismissed Plaintiff's fraud claims against Mrs. Chermak and Melar Corporation. In order to state a claim for fraud, the following elements must be shown: (1) a representation; (2) which is material to the transaction at issue; (3) made falsely with knowledge or with recklessness as to whether it is true or false; (4) with intent to mislead another into relying on the representation; (5) justifiable reliance on the 6 NO. 4097 CIVIL 1992 misrepresentation; and (6) the resulting injury was proximately caused by the reliance. Huddleston v. Infertility Center of America, Inc., 700 A.2d 453, 461 (Pa. Super. 1997). Plaintiff's claims were dismissed because he did not establish the necessary elements of fraud on the part of Mrs. Chermak and Melar Corporation. Any fraud complained of took place at the time the "agreement" was entered into, before Capital Petroleum was formed and before Mrs. Chermak became the sole stockholder. Plaintiff was dealing with Gentile alone. Mrs. Chermak and Melar Corporation could not have acted through an agent to induce Plaintiff to rely to his detriment on a misrepresentation of the agreement contemplated between Plaintiff and Gentile before the corporation existed and before Mrs. Chermak became a stockholder. It is impossible for Gentile to have been an agent for a corporation not yet in existence or for a stockholder who did not yet own stock. Whether he later acted as an agent for Mrs. Chermak and Melar Corporation is irrelevant because at the time of the purported fraud, his daughter was not a stockholder and the corporation did not exist. Plaintiff's fraud claims against Mrs. Chermak and Melar Corporation were properly dismissed.2 2 Furthermore, Plaintiff's claims of fraud against Gentile were addressed by the jury. No fraud was found. If Gentile himself did not commit fraud, it is impossible to find that Ms. Chermak and Melar Corporation acted fraudulently through Gentile's actions as an agent. 7 NO. 4097 CIVIL 1992 Plaintiff further complains that the Court erred when it did not allow him to amend his pleadings to conform to the evidence presented at trial to include claims of breach of contract against Mrs. Chermak and Melar Corporation. Mrs. Chermak and Melar Corporation were not parties to any contract between Plaintiff and Gentile. As discussed above, Gentile could not have acted as an agent for a corporation not yet in existence and a stockholder who does not yet own stock while he was negotiating the oral agreement with Plaintiff. No error was committed when the Court refused to allow Plaintiff to amend his pleadings. Materiality Plaintiff claims that the Court erred when it failed to instruct the jury that Plaintiff's breach of the contract must be material to prevent him from recovering and when it failed to define materiality. Plaintiff alleges that the error was compounded by jury interrogatory number three which asked only if Plaintiff breached the agreement and omitted any reference to materiality. "Only those issues properly raised in the trial court may be reviewed on appeal." Harding v. Consolidated Rail Corp., 423 Pa. Super. 208, 227, 620 A.2d 1185, 1194 (1993). Failure to object to a trial court's charge to the jury results in waiver of the issue. Id__~. 8 NO. 4097 CIVIL 1992 In the case at bar, the Court gave the jury lengthy instructions on the law.3 At the close of the charge, the Court asked counsel for both sides if any misstatements of fact or errors of law had been made in the charge. A sidebar conference was held.4 The discussion, held on the record, reflects that Plaintiff's counsel made no objection to the Court's omission of a materiality instruction or the phrasing of jury interrogatory number three and its omission of a materiality definition.5 As such, all claims of error related to the omission of a materiality instruction are deemed waived and are therefore moot. The Statute of Frauds Although not raised in post trial motions, the Court feels it would helpful to revisit an issue raised by summary judgment. Defendants filed a motion for summary judgment claiming that the agreement between Plaintiff and Gentile was, 3 The Charge of the Court can be found on pages 573-588 of the trial transcript. A re-clarification of the fraud instruction was given on pages 593-596. 4 The sidebar conference is recorded in the trial transcript at pages 588- 591. ~ Plaintiff's counsel has submitted an affidavit claiming that he gave to the Court, in chambers, on the night before trial commenced, a proposed interrogatory that contained a reference to materiality. Plaintiff's counsel's assertion is irrelevant because the Court gave him an opportunity to object to the charge and the phrasing of the interrogatories and he failed to do so. Regardless of what was proposed in chambers, the proper time to object the content or the omissions in the charge and the interrogatories was at trial, on the record. Plaintiff's counsel has failed to preserve this allegation of error for review. 9 NO. 4097 CIVIL 1992 in essence, an agreement for the sale of land and, pursuant to the statute of frauds, must be in writing to be enforceable. By order dated August 19, 1997, the Court denied Defendants' motion stating that the case was replete with material issues of fact and that the late filing date of the motion had the effect of unnecessarily delaying trial. As with any summary judgment motion in a close case, the Court ruled with caution, allowing Plaintiff an opportunity to prove his case at trial. The statute of frauds requires agreements for the sale of land to be in writing and signed by the seller or the party to be charged. 33 P. S. {}1. The purpose of the statute of frauds is to "prevent perjury and fraudulent claims." Empire Properties, Inc. v. Equireal, Inc., 449 Pa. Super. 476, 485, 674 A.2d 297, 302 (1996). The evidence presented at trial makes it clear that Plaintiff believed he was entering a partnership purchasing land. Plaintiff testified that he believed that the Checker Oil deal to be an excellent business opportunity because the land alone was worth more than the asking price. When the final purchase was made, Plaintiff did not attend settlement. Plaintiff chose not to reduce to writing the agreement made with Gentile because he did not want Mobil Oil, his employer, to know of his involvement. Capital Petroleum became a business dedicated to owning and operating gasoline service stations. The business became more valuable as more land was purchased for station sites. Throughout his dealings with Gentile, Plaintiff 10 NO. 4097 CIVIL 1992 has received legal advice from a neighbor and others. It is axiomatic in Pennsylvania law that the statute of frauds controls contracts for the sale of land. It is assumed therefore that Plaintiff, as a partner in a deal for land, knew that the agreement had to be in writing to be enforceable. Because Plaintiff claims to be a partner in a business involving the purchase of land, the Court is of the view that the oral agreement between Plaintiff and Gentile is unenforceable as a violation of the statute of frauds. 11