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HomeMy WebLinkAbout2004-691 Civil (3) GIUSSEPPE BARONE and : IN THE COURT OF COMMON PLEAS OF LUIGI AMBROSINO, : CUMBERLAND COUNTY, PENNSYLVANIA PLAINTIFFS AND : COUNTERCLAIM DEFENDANTS: : V. : : VINCENZO PUGLIESE, : DEFENDANT AND : COUNTERCLAIM PLAINTIFF : 04-0691 CIVIL TERM IN RE: THE PIZZA CASE POST-TRIAL MOTION OF VINCENZO PUGLIESE OPINION AND ORDER OF COURT Bayley, J., November 3, 2009:-- On September 10, 2009, following a bench trial, the following order was entered: (1) Giusseppe Barone and Luigi Ambrosino are awarded damages against Vincenzo Pugliese for breach of the Business Purchase Agreement and the promissory note totaling $105,000, plus total prejudgment interest of $35,065, for a total of $140,065. (2) Vincenzo Pugliese is awarded damages against Giusseppe Barone and Luigi Ambrosino for breach of the restrictive covenant in the Business Purchase Agreement of $50,000, plus prejudgment interest of $19,750, plus attorney fees of $94,078.80, plus costs of $681.62, for a total of $164,510.42. The order was supported by written opinions filed on July 13, 2009 and September 10, 2009, which are incorporated into this opinion. Vincenzo Pugliese filed a motion for post-trial relief raising three issues which were briefed and argued on October 20, 2009. In considering a post-trial motion following a non-jury trial, the court can grant relief if it concludes that a factual or legal mistake was made and that, on consideration of the particular circumstances of the Eighth North- case, the mistake forms a sufficient basis to grant the requested relief. 04-0691 CIVIL TERM Val, Inc. v. Parkinson, 773 A.2d 1248 (Pa. Super. 2001). The court has inherent Hiscott authority to enter any appropriate order regarding a request for post-trial relief. and Robinson v. King, 626 A.2d 1235 (Pa. Super. 1993). Pugliese maintains that he demonstrated damages from diminution of value of his Brother’s Pizza business caused by the breach of the restrictive covenant by Barone and Ambrosino. He argues in his brief: At trial, Plaintiffs’ own expert testified that the contract price in 2000 was increased because payments were being made over a period of time, with the cash value of the sale in 2000 being approximately $181,500. This testimony was not disputed by Pugliese. Therefore, by Plaintiffs’ own testimony, Pugliese demonstrated a diminution in value between the date of the original sale and the date of the 2006 sale of at least $66,500 ($181,500 less $115,000). The same evidence of reduced sales credited by the Court in awarding lost profits damages to Pugliese equally supported additional damages from diminution in value. Henschke v. Moore, Pugliese cites 257 Pa. 196 (1917), for his position that in the purchase of a business that includes a non-competition covenant by the seller, the seller’s breach of that covenant depreciates the value of the business purchased. That 1 could be but the purchaser must prove it. Based on the evidence we could not draw a reasonable inference that when Pugliese sold his Brother’s Pizza business in 2006, the prior breach of the restrictive covenant by Barone and Ambrosino reduced the value by at least $66,500. Pugliese presented evidence that his Brother’s Pizza business was operated __________ 1 Pugliese had the burden of proving any damages for the breach of contract by Barone Spang & Co v. United States Steel Corp., and Ambrosino. See 519 Pa. 14 (1988). -2- 04-0691 CIVIL TERM with cash. A handwritten notebook was kept to record sales. Suffice to say that without 2 cash register receipts the ability to “adjust” the record as to sales was substantial. Pugliese offered into evidence the price he paid for the Brother’s Pizza business compared to the price he sold it for in an attempt to establish the loss of value based on the breach of the restrictive covenant by Barone and Ambrosino. He offered no evidence that the price for the business he operated from February, 2000 into 2006, with used equipment, furniture and fixtures and a shorter lease period, would have been the same as when it was purchased. The evidence credited in awarding $50,000 in loss profits to Pugliese did not equally support additional damages for diminution in value for the 2006 sale. It was one thing to weave through a record of product purchases to estimate lost profit from the breach of a restrictive covenant and another to have accurate receipts to reflect sales and then have all the other records necessary to support what the total profit of the restaurant was each year. Pugliese maintains that the evidence does not support the finding that he breached the Business Purchase Agreement and the promissory note for failing to Darius Int’l, Inc. make $105,000 in payments required by those instruments. He cites v. Young, No. 05-6184, 2008 U.S. Dist. LEXIS 33489 (E.D.Pa. April 23, 2008) for the position that in a non-compete setting, the buyer of a business may offset his damages for the seller’s breach of a non-competition covenant by withholding payment __________ 2 As set forth in the opinion in support of the order of July 15, 2009, Barone wove his own tax evasion plan into the $2,000 cash monthly payments that Pugliese made on the promissory note. -3- 04-0691 CIVIL TERM Darius of the selling price to the extent of damages suffered. , however, involved an agreement that provided that: “in the event of . . . default, [company] may set off actual reasonable damages incurred by it against payment otherwise due . . . under the agreement.” Pugliese cites two other cases in support of his position that he was entitled to withhold paying the $105,000 due under the Business Purchase Agreement Van Oort Constr. Co. v. Nuckoll’s Concrete Serv., Inc. and promissory note: 599 Gary’s Implement, Inc v. Bridgeport Tractor Parts, N.W.2d 684 (Iowa 1999), and Inc., 702 N.W.2d 355 (Neb. 2005). In both of those cases buyers of a business agreed sub judice, to pay a specific amount for a non-competition clause. In the case there was no provision that in the event of a default the buyer could set off actual reasonable damages incurred by it in payment incurred otherwise due the seller under the Agreement, nor did the Business Purchase Agreement set out a specific amount of the consideration for the restrictive covenant. What Pugliese is essentially arguing is that the Business Purchase Agreement is an executory contract and that the breach of the restrictive covenant relieved him from paying any of the $105,000 owed on that Agreement and the promissory note. Pugliese started operating the Brother’s Pizza business pursuant to the Business Purchase Agreement in February, 2000. When he stopped making payments on the promissory note in September, 2002, and on the Business Purchase Agreement in February, 2003, the only remaining performance thereunder was that he make the monthly payments toward the purchase price as required. “When the only performance -4- 04-0691 CIVIL TERM In remaining under a contract is the payment of money the contract is not executory.” re: W/B Associates, 227 B.R. 635 (Bankr. W.D.Pa. 1998). The existence of a non- Leonard competition provision does not make an agreement an executory contract. Bluman, 125 B.R. 359 (Bkrtcy. E.D.N.Y. 1991). If such a provision is violated, the other party which has equitable and legal remedies for the breach may not cease its Id. own compliance with the agreement. A contract is executory if it is so far unperformed by both parties that the failure of either party to complete performance Counties would constitute a material breach, excusing performance of the other. See Contracting and Construction Co. v. Constitution Life Insr. Co., 855 F.2d 1054 (3d sub judice, Cir. 1988). In the case Barone and Ambrosino had performed their part of 3 the bargain. Pugliese maintains that he is entitled to attorney fees to obtain an assignment of the lease for the Brother’s Pizza from Barone and Ambrosino. In the opinion in support of the order of September 10, 2009, we stated that Pugliese could only recover attorney fees for the prosecution of his claims for breach of contract upon which he prevailed. Out of the total attorney fees sought, we deducted $4,454.50 incurred with regard to the sale of the Cumberland Parkway Brother’s Pizza and assignment of the lease related to the space occupied, and $13,145 incurred in an attempt to force plaintiffs to assign to defendant the lease to the property upon which the Pizza Shop was __________ 3 Having concluded that the Agreement between Barone and Ambrosino and Pugliese was not executory, it is unnecessary to consider their additional argument that even if it was not executory Pugliese was still not relieved of his contractual duty to make -5- 04-0691 CIVIL TERM operating. Pugliese argues in his brief that he “should be permitted to recover the fees related to the lease assignment, as Plaintiff’s failure in refusal to assign the lease was a material breach of the Agreement which Pugliese pleaded in his Amended Answer, New Matter, and Counterclaim.” Any alleged breach of the Business Purchase Agreement relating to the assignment of the lease was not a claim that was presented to the court. Pugliese did not prevail on such a claim before this court. Therefore, he 4 is not entitled to recover an award of contractual attorney fees. For the foregoing reasons, the following order is entered. ORDER OF COURT AND NOW, this day of November, 2009, the motion of Vincenzo IS DENIED. Pugliese for post-trial relief, By the Court, Edgar B. Bayley, J. Robert E. Kelly, Jr., Esquire Lee S. Cohen, Esquire 300 North Second Street th 10 Floor Harrisburg, PA 17101 For Plaintiffs Alan R. Boynton, Jr., Esquire 100 Pine Street payments upon their breach of the restrictive covenant. 4 It has been represented by counsel that Pugliese ultimately was assigned the lease to the business premises by the owners of the property who were not Barone and Ambrosino. -6- 04-0691 CIVIL TERM P.O. Box 1166 Harrisburg, PA 17108-1166 For Defendant :sal -7- GIUSSEPPE BARONE and : IN THE COURT OF COMMON PLEAS OF LUIGI AMBROSINO, : CUMBERLAND COUNTY, PENNSYLVANIA PLAINTIFFS AND : COUNTERCLAIM DEFENDANTS: : V. : : VINCENZO PUGLIESE, : DEFENDANT AND : COUNTERCLAIM PLAINTIFF : 04-0691 CIVIL TERM IN RE: THE PIZZA CASE POST-TRIAL MOTION OF VINCENZO PUGLIESE ORDER OF COURT AND NOW, this day of November, 2009, the motion of Vincenzo IS DENIED. Pugliese for post-trial relief, By the Court, Edgar B. Bayley, J. Robert E. Kelly, Jr., Esquire Lee S. Cohen, Esquire 300 North Second Street th 10 Floor Harrisburg, PA 17101 For Plaintiffs Alan R. Boynton, Jr., Esquire 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 For Defendant :sal