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HomeMy WebLinkAbout2009-3189 Civil COMMERCIAL/INDUSTRIAL : IN THE COURT OF COMMON PLEAS OF REALTY COMPANY d/b/a : CUMBERLAND COUNTY, PENNSYLVANIA NAI/CIR, : Plaintiff : : v. : CIVIL ACTION – LAW : TOD G. SHEDLOSKY and : LISA T. SHEDLOSKY, : Defendants : NO. 09-3189 CIVIL TERM IN RE: DEFENDANTS’ PRELIMINARY OBJECTIONS TO PLAINTIFF’S AMENDED COMPLAINT BEFORE OLER, J. OPINION and ORDER OF COURT OLER, J., November 17, 2009. In this civil case involving commercial real estate, a broker has sued the owners of certain real estate for breach of a listing agreement and unjust enrichment in connection 1 with a lease of the property. It is alleged that Plaintiff provided the lessee, but was not 2 paid for its work. For disposition at this time are preliminary objections filed by Defendants to 3 Plaintiff’s amended complaint. The case has been submitted on briefs, and the 4 preliminary objections being pursued in Defendants’ brief may be summarized as follows: (a) a demurrer to Plaintiff’s claims against Defendant Lisa T. Shedlosky, based Plaintiff’s Amended Complaint, filed June 26, 2009 (hereinafter Pl.’s Am. Compl.____). 1 Pl.’s Am. Compl., ¶12; and Ex. D. 2 Defendants’ Preliminary Objections to Plaintiff’s Amended Complaint, filed July 31, 2009 3 (hereinafter Defs.’ Prelim. Objections to Pl.’s Am. Compl.____). Under Cumberland County Rule of Procedure 1028(c)(5), issues raised, but not briefed, are 4 deemed abandoned. 5 upon the absence of a designation of her as a party on the listing agreement; (b) a demurrer to Plaintiff’s claims against both Defendants, based upon alleged nonconformities of the listing agreement to the Pennsylvania Real Estate Licensing and 6 Registration Act; and (c) a demurrer to Plaintiff’s claims against both Defendants for unjust enrichment, based upon a proscription under the said act on a licensee’s collection 7 of a fee in the absence of a written agreement. For the reasons stated in this opinion, Defendants’ preliminary objections will be sustained in part and denied in part. STATEMENT OF FACTS The facts alleged in Plaintiff’s amended complaint may be summarized as follows: Plaintiff, Commercial/Industrial Realty Company (hereinafter NAI/CIR), is a corporation organized under the laws of the Commonwealth of Pennsylvania, with its principal place of business located at 1015 Mumma Road, Wormleysburg, Cumberland 8 County, Pennsylvania. Defendants Tod G. Shedlosky and Lisa T. Shedlosky are a husband and wife, who reside at 6345 North Powderhorn Road, Mechanicsburg, Hampden Township, Cumberland County, Pennsylvania, and who own, as tenants by the 9 entireties, a tract of land in Shippensburg Township, Cumberland County, Pennsylvania. Defs.’ Prelim. Objections to Pl.’s Am. Compl., ¶¶7-22. 5 Defs.’ Prelim. Objections to Pl.’s Am. Compl., ¶¶23-32. 6 Defs.’ Prelim. Objections to Pl.’s Am. Compl., ¶¶33-42. 7 Pl.’s Am. Compl., ¶1. 8 Pl.’s Am. Compl., ¶¶2-3. The parcel of property is identified as Tax Parcel 36-12-0320-052. Id. at 9 ¶3; see generally Plaintiff’s Exhibits B, C, attached to Plaintiff’s Amended Complaint. 2 Defendant Tod G. Shedlosky, who is himself a licensed Pennsylvania real estate 10 salesperson, executed, as Lessor, a “One Party Listing Contract—Leases” with Plaintiff 11 NAI/CIR in April, 2007, which provided as follows: This agreement, made this ______ day of April, 2007, between NAI/CIR, hereinafter referred to as “BROKER”, and Tod Shedlosky, hereinafter referred to as “LESSOR”. WITNESSETH that said BROKER has produced prospective Lessee for the Property Situate in the Township of Shippensburg, described as follows to wit: NOW, in consideration thereof, LESSOR agrees to pay BROKER a commission of four (4%) percent of the net lease, due and payable at commencement of the lease and payment of the first month’s rent with Kazi Foods of New Jersey, Inc./KFC and/or other Yum Brand Restaurants. If, during the term hereof, the property is sold, exchanged, or otherwise transferred to the Lessee, the BROKER shall be entitled to a commission of N/A (0%) percent. No commissions due on options exercised by Kazi Foods. THIS AGREEMENT shall be binding upon the undersigned LESSOR, its heirs, executors, administrators, successors, and assigns. THE LESSOR, having carefully read and considered this Agreement, hereby acknowledges receipt of a copy of this Agreement. IN WITNESS WHEREOF, intending to be legally bound, the BROKER and LESSOR have caused this Agreement to be executed and delivered the 12 day and year first written above. Pl.’s Am. Compl., ¶4. 10 One Party Listing Contract—Leases, attached to Plaintiff’s Amended Complaint as Exhibit A. The 11 contract does not state the specific date in April on which it was executed. Pl.’s Am. Compl., Ex. A. 12 3 13 The contract was signed by Bill Gladstone on behalf of NAI/CIR as Broker. 14 Lisa T. Shedlosky was not a signatory to the contract. However, according to Plaintiff’s amended complaint, Defendant Tod G. Shedlosky, in addition to acting on his own behalf, was “acting with actual authority, or, in the alternative, with apparent authority 15 for his spouse, Defendant . . . Lisa T. Shedlosky” in executing the listing agreement. Furthermore, Defendant Lisa T. Shedlosky subsequently confirmed her personal obligation in this regard, by acknowledging the obligation in a document described more 16 specifically hereafter. Kazi Foods of New Jersey, Inc. subsequently entered into a Ground Lease as Tenant with respect to the Shippensburg Township property with both Defendants, Tod 17 G. Shedlosky and Lisa T. Shedlosky, on October 19, 2007. The Ground Lease named 18 both Defendants as Landlord. Article Thirty-Seven of the Ground Lease discussed brokers’ commissions in the following terms: Landlord and Tenant represent to one another that no broker has been engaged by either or is entitled to a commission in connection with the negotiation of this Lease EXCEPT for William M. Gladstone of NAI-CIR, to whom Landlord has agreed to pay a commission under separate 19 agreement. Pl.’s Am. Compl., Ex. A. 13 See Pl.’s Ex. A. 14 Pl.’s Am. Compl., ¶5. 15 Pl.’s Am. Comp., ¶¶10-11 and Ex. C. 16 Pl.’s Am. Compl., Ex. B. 17 Pl.’s Am. Compl., Ex. B. 18 Pl.’s Am. Compl., Ex. B, p. 19, Art. 37 (emphasis in original). 19 4 On September 3, 2008, Defendants and Kazi Foods of New Jersey, Inc. executed a document entitled Lease Addendum No. 1, which established the date that rental 20 payments would commence. The document was signed by both Defendants as Landlord 21 and by Kazi Foods of New Jersey, Inc. as Tenant. On September 25, 2008, Defendants and Kazi Foods of New Jersey, Inc., executed 22 a document entitled Lease Addendum No. 2. Again, the document was signed by both 23 Defendants as Landlord and Kazi Foods of New Jersey, Inc. as Tenant. On or about May 8, 2009, Plaintiff requested payment of a commission in the 24 amount of $69,615.00 from Defendants. Defendants have not paid any amount toward the requested commission, and Plaintiff now seeks to recover $69,615.00 under theories of breach of contract and unjust enrichment, plus interest and costs. DISCUSSION Demurrers, in general. A preliminary objection to a complaint in the nature of a demurrer is appropriate where the complaint is legally insufficient to sustain a cause of action recognized by law. Pa.R.C.P. 1028(a)(4). Preliminary objections in the nature of a demurrer require the court to resolve the issues solely on the basis of the challenged pleading; in general, no testimony or other evidence outside of the pleading may be Pl.’s Am. Compl., Ex. C. 20 Pl.’s Am. Compl., Ex. C. 21 Pl.’s Am. Compl., Ex. B, “Lease Addendum No. 2”. The subject matter of Lease Addendum No. 2 is 22 irrelevant to the instant dispute. Pl.’s Am. Compl., Ex. B, “Lease Addendum No. 2.” 23 Pl.’s Am. Compl., Ex. D. 24 5 considered to dispose of the legal issues presented by the demurrer. Cooper v. Church of St. Benedict, 2008 PA Super 171, ¶2, 954 A.2d 1216, 1218 (2008), citing Hess v. Fox Rothschild, LLP, 2007 PA Super 133, ¶18, 925 A.2d 798, 805 (2007) appeal denied 596 Pa. 733, 945 A.2d 771 (2008). When considering a demurrer to a complaint, the court must accept all material facts set forth in the complaint, as well as all inferences reasonably deducible therefrom, as admitted and true and decide whether, based on the facts averred, recovery is impossible as a matter of law. Wagner v. Waitlevertch, 2001 PA Super 100, ¶6, 774 A.2d 1247, 1250 (2001), citing Wiernik v. PHH US Mortg. Corp., 1999 PA Super 193, 736 A.2d 616 (1999), appeal denied, 561 Pa. 700, 751 A.2d 193 (2000). The demurrer should be sustained only if, after the averments of the complaint are assumed to be true, the plaintiff has failed to assert a legally cognizable cause of action and, therefore, cannot 11, prevail. Lerner v. Lerner, 2008 PA Super 183, ¶954 A.2d 1229, 1234 (2008), citing Kramer v. Dunn, 2000 PA Super 101, ¶18, 749 A.2d 984, 990. Liability of Defendant Lisa T. Shedlosky under Principles of Agency. Plaintiff’s amended complaint purports to state claims against Defendants Tod G. Shedlosky and 2526 Lisa T. Shedlosky for breach of contract and unjust enrichment. Defendants’ first 27 preliminary objection is a demurrer to both counts relating to Lisa T. Shedlosky. See Pl.’s Am. Compl., Count I, ¶¶14-17. 25 See Pl.’s Am. Compl., Count II, ¶¶18-25. 26 Defs.’ Prelim. Objections to Pl.’s Am. Compl., ¶¶7-22. 27 6 28 Defendants argue that Lisa T. Shedlosky is not a signatory to the Listing Contract, and therefore cannot be obligated to Plaintiff on the contract or on a theory that she was 29 unjustly enriched by Plaintiff’s undertaking pursuant to it. A person may be bound on a contract even if he or she did not actually sign the document, under principles of agency. One who asserts an agency relationship bears the burden of proof on the issue. Moyer v. Norristown-Penn Trust Co., 296 Pa. 26, 29, 145 A.2d 682, 683 (1929). An agency relationship, under which a principal is bound by the act of the agent, may exist on the basis of one or more of four grounds: (1) express authority directly granted by the principal to bind the principal as to certain matters; (2) implied authority to bind the principal to those acts of the agent that are necessary, proper and usual in the exercise of the agent’s express authority; (3) apparent authority; and (4) agency by estoppel. Sullivan v. Ski Liberty Operating Corp., 40 Pa. D. & C.4th 358, 361, 1999 WL 715183 (C.C.P. Adams 1999), citing Bolus v. United Penn Bank, 363 Pa. Super. 247, 259, 525 A.2d 1215, 1221 (1987), appeal denied, 518 Pa. 627, 541 A.2d 1138 (1988), citing Joyner v. Harleysville Insurance Co., 393 Pa. Super. 386, 574 A.2d 664 (1990), appeal denied 527 Pa. 587, 588 A.2d 570 (1990); Bolus, supra. Apparent authority exists where the principal, by words or conduct, leads people with whom the alleged agent deals to believe that the principal has granted the agent authority that he or she purports to exercise. Turney Hydraulics, Inc. v. Susquehanna Const. Corp., 414 Pa. Defs.’ Prelim. Objections to Pl.’s Am. Compl., ¶¶9-11. 28 Defs.’ Prelim. Objections to Pl.’s Am. Compl., ¶¶12-22. 29 7 Super. 130, 135, 606 A.2d 532, 534 (1992). The nature and extent of an agent’s authority is a question of fact. Id. at 136, 606 A.2d at 534. In the present case, Plaintiff’s amended complaint alleges, as facts, (a) that Defendant Lisa T. Shedlosky was a co-owner with Defendant Tod G. Shedlosky of the 30 property as to which the listing agreement sub judice pertained, (b) that Defendant Tod G. Shedlosky was acting as her agent, actual or apparent, when he executed the listing 31 agreement, and (c) that she subsequently executed a document acknowledging that she was obligated to pay Plaintiff a broker’s commission in connection with the lease of the 32 property. Given these allegations, the court is of the view that it would be premature to conclude at this stage of the case that no recovery is possible against Defendant Lisa T. Shedlosky in favor of Plaintiff, due to the absence of her signature on the listing agreement Liability of Defendants As Affected by RELRA. Defendants’ second preliminary objection is based on Plaintiff’s purported violations of the Real Estate Licensing and 33 Registration Act, in terms of the content of the listing agreement. 63 P.S. §455.101 et. seq. (hereinafter “RELRA”). RELRA establishes specific standards of conduct, which Pl.’s Am. Compl. ¶3. 30 Pl.’s Am. Compl. ¶¶5, 11; Pl.’s Resp. to Defs.’ Prelim. Objections, ¶¶9-14. 31 Pl.’s Am. Compl. ¶11; Pl.’s Resp. to Defs.’ Prelim. Objections, ¶29. 32 Defs.’ Prelim. Objections to Pl.’s Am. Compl., ¶¶25-32. 33 8 34 pertain to all licensees engaged in the sale or transfer of any interest in real property within the Commonwealth of Pennsylvania. Myer v. Gwynedd Development Group, 2000 PA Super 193, ¶7, 756 A.2d 67, 69 (2000). RELRA states: 3536 A licensee may not perform a service for a consumer of real estate services for a fee, commission or other valuable consideration paid by or on behalf of the consumer unless the nature of the service and the fee to be charged are set forth in a written agreement between the broker and the consumer that is signed by the consumer. This paragraph shall not prohibit a licensee from performing services before such an agreement is signed, but the licensee is not entitled to recover a fee, commission or other valuable consideration in the absence of such a signed agreement. 63 P.S. §455.606a(14)(b)(1). RELRA further specifies certain information that is to be disclosed by the licensee. 63 P.S. §455. 608(a). This information includes: (1) A statement that the broker's fee and the duration of the contract have been determined as a result of negotiations between the broker and the seller/landlord or buyer/tenant. (2) A statement describing the nature and extent of the broker's services to be provided to the seller/landlord or buyer/tenant and the fees that will be charged. (3) A statement identifying any possibility that the broker, or any licensee employed by the broker, may provide services to more than one consumer in a single transaction and if so, an explanation of the duties that may be owed the other party and whether the broker may accept a fee for those services. (4) In an agreement between a broker and seller, a statement of the broker's policies regarding cooperation with subagents and buyer agents, a See 63 P.S. §455.201. “‘Real Estate’ includes any interest or estate in land . . . including leasehold 34 interest and time share and similarly designated interests.” “Licensee” is defined as “[a] person who holds a standard license or a reciprocal license.” 63 P.S. § 35 455.201. “Consumer” is defined as “[a] person who is the recipient of any real estate service.” 63 P.S. § 36 455.201. 9 disclosure that a buyer agent, even if compensated by the broker or seller will represent the interests of the buyer and a disclosure of any potential for the broker to act as a disclosed dual agent. (5) In an agreement between a broker and a buyer, a statement identifying any possibility that the broker's compensation may be based upon a percentage of the purchase price, a disclosure of the broker's policies regarding cooperation with listing brokers willing to pay buyer's brokers, a disclosure that the broker, even if compensated by the listing broker or seller, will represent the interests of the buyer and disclosure of any potential for the buyer broker to act as a disclosed dual agent. (6) A statement describing the purpose of the Real Estate Recovery Fund established under section 801 and the telephone number of the commission at which the seller can receive further information about the fund. (7) A statement regarding any possible conflicts of interest and informing the consumer of the licensee's continuing duty to timely disclose any conflicts of interest. 63 P.S. §455.608a. Pennsylvania courts have indicated that “a [principal] purpose of [RELRA] is to protect buyers and sellers of real estate, the most expensive item many persons ever buy or sell, from abuse by persons engaged in the business.” Coldwell Banker Commer. Diamond Realtors v. Dreslin, 2006 Pa. D. & C. LEXIS 31 (C.C.P. Mont. 2006), aff’d without opinion by, 2006 PA Super LEXIS 3733, 915 A.2d 137 (2006), citing Meyer v. Gwynedd Dev. Group, Inc., 2000 PA Super 193, ¶6, 756 A.2d 67, 69 (2000), citing Kalins v. Com., State Real Estate Com’n., 92 Pa. Commw. 569, 500 A.2d 200 (1985). The act is applicable to one who negotiates or provides a leasehold interest to another. 37 See Meyer, 2000 PA Super at ¶13, 756 A.2d at 71-72; see also 63 P.S. §455.201. “Broker” is defined by the act as “any person who, for another and for a fee, commission, or other 37 valuable consideration: (1) negotiates with or aids any person in locating or obtaining for 10 Defendants argue that the listing agreement sub judice “fails to include any of the language required” in subparagraphs (1), (2), (3), (6) and (7) of the above-quoted section 38 of RELRA. In this regard, Pennsylvania courts have indicated that a signed, written agreement disclosing the broker’s fee, duration of the contract, and the nature of the broker’s services is a necessary prerequisite to the collection of the broker’s commission for the transaction. See Coldwell Banker, 2006 Pa. D. & C. Lexis 31. In the present case, although the listing agreement does not utilize the language of 39 the statute verbatim, the broker’s fee, duration of the contract, and nature of the broker’s services are set forth. It would be premature to assume on the basis of Plaintiff’s complaint that at the time of the agreement the broker had reason to believe that it was going to be providing services to more than one consumer or that a conflict of interest existed in connection with the transaction, which had to be disclosed. Finally, the materiality of the omission from the agreement of information as to the Real Estate Recovery Fund is far from clear at this stage of the proceeding, particularly where it is alleged that Defendant Tod G. Shedlosky was himself a licensed real estate agent. purchase, lease or acquisition of interest in any real estate; (2) negotiates the listing, sale, purchase, exchange, lease, financing or option for any real estate; (3) manages or appraises any real estate; (4) represents himself as a real estate consultant, counselor [sic], house finder; (5) undertakes to promote the sale, exchange, purchase or rental of real estate: provided however, that this provision shall not include any person whose main business is that of advertising, promotion or public relations; or (6) attempts to perform any of the above acts.” 63 P.S §455.201 Defs.’ Prelim. Objections to Pl.’s Am. Compl., ¶30. 38 Where the listing agreement, as here, states that the lessee has already been procured by the 39 broker, the “term” of the agreement in the classic sense is not operative. To the extent that “term” applies to the period when the lessee is to pay the broker, the agreement is clear that it begins and ends when the lease commences and the first month’s rent is paid. 11 For the foregoing reasons, Defendants’ preliminary objection in the nature of a demurrer to Plaintiff’s claims on the theory that the listing agreement was fatally defective under the Real Estate Licensing and Registration Act will be denied. Viability of Claim for Unjust Enrichment. Count II of Plaintiff’s amended complaint purports to state a claim for unjust enrichment predicated on the allegations recited at the beginning of this opinion. Defendants seek dismissal of this count due to the 40 existence of a signed, written agreement in the form of the listing agreement. 41 The general rule that a plaintiff may plead in the alternative has been recognized 42 with respect to claims for breach of contract and unjust enrichment. However, there are some instances where a plaintiff’s case is so clearly based on a contract theory that a demurrer will be sustained to an alternative count for unjust enrichment. See, e.g., Hudson & Keyse, LLC v. Patlatyuk, No. 08-5886 Civil Term (Cumberland Co. September 3, 209)(Hess, J.) (action by assignee of credit card company against credit card holder for debt). In this regard, a claim for unjust enrichment is ultimately not sustainable where the relationship between the parties is founded on a written agreement. Blackburn v. Mixter, 2004 WL 3310130 (C.C.P. Allegheny 2004), citing Mitchell v. Moore, 72 A.2d 1200, 1203 (Pa. Super. 1999) (relief on theory of unjust enrichment held not appropriate where Defs.’ Prelim. Objections to Pl.’s Am. Compl., ¶36-38. 40 Pa. R.C.P. 1020 (c). 41 JK Roller Architects, LLC v. Tower Invs., Inc., 2003 WL 1848101 (C.C.P. Phila. 2003), citing 42 Birchwood Lakes Community Ass’n, Inc. v. Comis., 296 Pa. Super. 77, 85, 442 A.2d 304, 308 (1980). 12 “written or express contract between parties exists”). In general, the essence of the doctrine of unjust enrichment is that there is no direct relationship between the parties. Gee v. Eberle, 279 Pa. Super. 101, 119, 420 A.2d 1050, 1060 (1980). If there is a relationship in the form of a promise to, or for the benefit of, the plaintiff, he or she has a right to recover on the promise, and the existence of that right is not consistent with pursuit of a claim for unjust enrichment. Id. In Summit Management Co. v. Tow Path Valley Business Park Development Co., the Lehigh County Court of Common Pleas noted that RELRA “precludes a real estate broker from recovering any fee, commission or other consideration for brokerage services in the absence of a written agreement or a written memorandum stating the terms of the agreement.” 2006 Pa. D. & C. Dec. LEXIS 192, *12-13 (C.C.P. Lehigh 2006) (holding where complaint alleges express agreement under RELRA recovery on theory of unjust enrichment not possible, since expectation of commission payment rests on parties’ 43 express agreement). In the present case, Plaintiff’s claim against Defendants is not only clearly based upon a written agreement, but is statutorily precluded from being otherwise based. Under these unique circumstances, the court will grant Defendants’ demurrer to Plaintiff’s claim for unjust enrichment. The case of Barlow v. Sutphen, 8 D. & C.4 421 (C.C.P. Adams 1990), does not, in the court’s view, 43th support Plaintiff’s position that a claim for breach of a contract governed by RELRA and a claim for unjust enrichment may be pled in the alternative, inasmuch as the court in Barlow was not able to conclude on the basis of the complaint whether plaintiff’s transaction with defendant was encompassed by the act. See id. at 424. 13 For the foregoing reasons, the following order will be entered: ORDER OF COURT th AND NOW, this 17 day of November, 2009, upon consideration of Defendants’ Preliminary Objections to Plaintiff’s Amended Complaint, and for the reasons stated in the accompanying opinion, it is ordered and directed as follows: 1. Defendants’ demurrer to Plaintiff’s claim for unjust enrichment is sustained, and Count II of Plaintiff’s amended complaint is dismissed; and 2. Defendants’ preliminary objections are otherwise denied. BY THE COURT, s/ J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. Jason A. Copley, Esq. Michael L. Solomon, Esq. th 7 Floor 240 North Third Street Harrisburg, PA 17101 Attorneys for Plaintiff Stephen C. Nudel, Esq. Bret Keisling, Esq. 219 Pine Street Harrisburg, PA 17101 Attorneys for Defendants 14 15 COMMERCIAL/INDUSTRIAL : IN THE COURT OF COMMON PLEAS OF REALTY COMPANY d/b/a : CUMBERLAND COUNTY, PENNSYLVANIA NAI/CIR, : Plaintiff : : v. : CIVIL ACTION – LAW : TOD G. SHEDLOSKY and : LISA T. SHEDLOSKY, : Defendants : NO. 09-3189 CIVIL TERM IN RE: DEFENDANTS’ PRELIMINARY OBJECTIONS TO PLAINTIFF’S AMENDED COMPLAINT BEFORE OLER, J. ORDER OF COURT th AND NOW, this 17 day of November, 2009, upon consideration of Defendants’ Preliminary Objections to Plaintiff’s Amended Complaint, and for the reasons stated in the accompanying opinion, it is ordered and directed as follows: 1. Defendants’ demurrer to Plaintiff’s claim for unjust enrichment is sustained, and Count II of Plaintiff’s amended complaint is dismissed; and 2. Defendants’ preliminary objections are otherwise denied. BY THE COURT, ________________ J. Wesley Oler, Jr., J. 17 Jason A. Copley, Esq. Michael L. Solomon, Esq. th 7 Floor 240 North Third Street Harrisburg, PA 17101 Attorneys for Plaintiff Stephen C. Nudel, Esq. Bret Keisling, Esq. 219 Pine Street Harrisburg, PA 17101 Attorneys for Defendants