HomeMy WebLinkAbout2009-661 Civil
TERRY J. SHETRON, : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
:
v. :
: CIVIL ACTION—LAW
SHETRON WELDING :
AND FABRICATION, :
INC., and RAY CULLEN :
and KIRK NAUGLE, in :
their official and individual :
capacities, :
Defendants : NO. 09-661 CIVIL TERM
IN RE: DEFENDANTS’ PRELIMINARY
OBJECTIONS TO PLAINTIFF’S COMPLAINT
BEFORE HESS, OLER and GUIDO, JJ.
OPINION and ORDER OF COURT
OLER, J., September 28, 2009.
In this civil case involving a commercial lease, a lessor has sued a corporate
lessee and two officer/shareholders of the corporation for breach of the lease due
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to nonpayment of rent. For disposition at this time are Defendants’ preliminary
objections to Plaintiff’s complaint in the form of a demurrer to Plaintiff’s assertion
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of individual liability on the part of the officers/shareholders.
Defendants’ preliminary objections were briefed and argued on September
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9, 2009. For the reasons stated in the accompanying opinion, the preliminary
objections will be sustained.
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Plaintiff’s Complaint, filed February 9, 2009.
2
Defendants’ Preliminary Objections to Complaint, filed March 2, 2009.
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A motion filed by Plaintiff to dismiss Defendants’ preliminary objections, or in the alternative to
continue the argument from the July 22, 2009, argument court to the September 9, 2009,
argument court based upon the alleged untimeliness of the submission of Defendants’ brief on the
occasion of the earlier argument court was mooted by the occurrence of the argument at the later
argument court. See Plaintiff’s Motion To Deny and Dismiss Defendants’ Preliminary
Objections, filed July 15, 2009.
STATEMENT OF FACTS
The averments of Plaintiff’s complaint may be summarized as follows: On
January 12, 2004, Plaintiff executed a commercial lease as lessor with respect to
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property at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania. The term
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of the lease was ten years.
The agreement stated that it was “by and between Shetron Welding and
Fabrication, Inc. (hereinafter called Lessee) and Terry J. Shetron (hereinafter
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called Lessor).” The lease contained an integration clause, and was signed at the
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end by Terry Shetron as Lessor, and by Defendants Ray Cullen and Kirk Naugle.
Below the signature lines of the latter were the following inscriptions:
Ray Cullen, Owner and Officer Kirk Naugle, Owner and Officer
For Shetron Welding & Fabrication, Inc., Lessee For Shetron Welding & Fabrication, Inc., Lessee
Nothing in the text of the lease suggests that the Lessee was other than
Shetron Welding & Fabrication, Inc., or that the individual defendants were acting
as guarantors of the corporation’s obligations under the lease. Nor does Plaintiff’s
complaint allege circumstances that would warrant a piercing of the corporate veil.
No fraud, accident or mistake is averred. In an attempt to secure an interpretation
of the lease which would render the individual Defendants personally liable,
however, Plaintiff alleges:
24. Cullen and Naugle executed the Lease both on behalf of Shetron
Welding in their capacity as officers of the corporation and in their
individual capacities as owners of Shetron Welding.
25. Plaintiff and Defendants agreed that Defendants would sign the
Lease in their individual capacities to provide security of the Lease
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payments.
4
Plaintiff’s Complaint, ¶5 and Exhibit A.
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Plaintiff’s Complaint, Ex. A.
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Plaintiff’s Complaint, Ex. A.
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Plaintiff’s Complaint, Ex. A, ¶19.
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Plaintiff’s Complaint, Ex. A.
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Plaintiff’s Complaint, ¶¶24-25.
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DISCUSSION
Statement of law. In the context of the interpretation of a commercial lease,
the Pennsylvania Superior Court has described the parol evidence rule in the
following terms:
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. 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.
Therefore, for the parol evidence rule to apply, there must be a
writing that represents the entire contract between the parties. To
determine whether or not 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. 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.
Once a writing is determined to be the parties’ entire contract, the
parol evidence rule applies and evidence of any previous oral or written
negotiations or agreements involving the same subject matter as the
contract is almost always inadmissible to explain or vary the terms of the
contract.
. . . Only where a contract’s language is ambiguous may extrinsic or
parol evidence be considered to determine the intent of the parties.
Giant Food Stores, LLC v. THF Silver Spring Development, L.P., 2008 PA Super
245, ¶10, 959 A.2d 438, 444-45 (citation omitted). For purposes of the rule, parol
evidence also includes contemporaneous oral agreements. Youndt v. First Nat’l
Bank, 2005 PA Super 42, ¶13, 868 A.2d 539, 545-46.
The parol evidence rule obviously assumes particular significance in the
context of agreements to which the Statute of Frauds applies. Under Section 202
of the Landlord and Tenant Act of 1951, it is provided that
[r]eal property, including any personal property thereon, may be leased for
a term of more than three years by a landlord to a tenant or by their
respective agents lawfully authorized in writing. Any such lease must be in
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writing and signed by the parties making or creating the same, otherwise it
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shall have the force and effect of a lease at will only . . . .
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The “owner” of a corporation is its shareholder(s). The status of
shareholder in a corporation does not of itself subject one to personal liability for
contracts of the corporation. Loeffler v. McShane, 372 Pa. Super. 442, 539 A.2d
876 (1988).
Thus, in First Realvest, Inc. v. Avery Builders, Inc., 410 Pa. Super 572, 600
A.2d 601 (1991), the Pennsylvania Superior Court affirmed a trial court’s grant of
a demurrer to the portion of a complaint for breach of contract asserting individual
liability of shareholders, where the contract itself did not name the shareholders as
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parties and the complaint lacked specifics to support a participation theory or
piercing of the corporate veil. In so ruling, the Court observed:
The complaint herein is based solely upon a cause of action for
breach of contract. The law in Pennsylvania is clear that where a party
enters into a contract with a corporation, no action will lie against the
shareholders of that corporation individually for a breach of that contract.
The breach of the contract is the breach of a promise made by the
corporation, and not the breach of any promise extended by the corporate
officer. Shareholders, officers and directors are not held liable for the
corporation’s breach of a contract, absent an establishment of participation
theory or the successful assertion of the equitable doctrine of piercing the
corporate veil. . . . [T]he complaint at issue established neither theory
and . . . the demurrer was proper.
Id. at 576, 600 A.2d at 603 (citations omitted).
In the present case, the lease, which had to be in writing under the Statute
of Frauds, is unambiguous in stating that the parties to the contract were Plaintiff
as lessor and Defendant corporation as lessee, and that the individual Defendants
executed the contract in their capacities as shareholders and officers for the
corporate lessee, and not in their individual capacities. Based upon the foregoing
principles, the court is unable to agree with Plaintiff that the complaint sets forth a
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Act of April 6, 1951, P.L. 69, §202, 68 Pa. C.S. §250.202.
11
Detlev F. Vagts, Basic Corporation Law 124 (3d. ed. 1985).
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“Participation theory, in simple terms, is a theory which imposes personal liability on corporate
officers or shareholders where they have personally taken part in the actions of the corporation.”
First Realvest, Inc. v. Avery Builders, Inc., 410 Pa. Super. 572, 577, 600 A.2d 572, 603 (1991).
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cognizable claim against the individual Defendants for breach of the named
lessee’s obligations.
Accordingly, the following order will be entered:
ORDER OF COURT
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AND NOW, this 28 day of September, 2009, upon consideration of
Defendants’ Preliminary Objections to Complaint, and for the reasons stated in the
accompanying opinion, the preliminary objections are sustained and Plaintiff’s
Complaint is dismissed as it relates to Defendants Ray Cullen and Kirk Naugle in
their individual capacities.
PLAINTIFF’S Motion To Deny and Dismiss Defendants’ Preliminary
Objections is deemed moot.
BY THE COURT,
s/ J. Wesley Oler, Jr.
J. Wesley Oler, Jr., J.
Glenn R. Davis, Esq.
Andrea E. Dean, Esq.
1700 Bent Creek Boulevard
Suite 140
Mechanicsburg, PA 17050
Attorneys for Plaintiff
Dean F. Piermattei, Esq.
Stephanie E. DiVittore, Esq.
Jillian M. Petrosky, Esq.
Rhoads & Sinon, LLP
One South Market Square
th
12 Floor
P.O. Box 1146
Harrisburg, PA 17108-1146
Attorneys for Defendants
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TERRY J. SHETRON, : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
:
v. :
: CIVIL ACTION—LAW
SHETRON WELDING :
AND FABRICATION, :
INC., and RAY CULLEN :
and KIRK NAUGLE, in :
their official and individual :
capacities, :
Defendants : NO. 09-661 CIVIL TERM
IN RE: DEFENDANTS’ PRELIMINARY
OBJECTIONS TO PLAINTIFF’S COMPLAINT
BEFORE HESS, OLER and GUIDO, JJ.
ORDER OF COURT
th
AND NOW, this 28 day of September, 2009, upon consideration of
Defendants’ Preliminary Objections to Complaint, and for the reasons stated in the
accompanying opinion, the preliminary objections are sustained and Plaintiff’s
Complaint is dismissed as it relates to Defendants Ray Cullen and Kirk Naugle in
their individual capacities.
PLAINTIFF’S Motion To Deny and Dismiss Defendants’ Preliminary
Objections is deemed moot.
BY THE COURT,
_________________
J. Wesley Oler, Jr., J.
Glenn R. Davis, Esq.
Andrea E. Dean, Esq.
1700 Bent Creek Boulevard
Suite 140
Mechanicsburg, PA 17050
Attorney for Plaintiff
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Dean F. Piermattei, Esq.
Stephanie E. DiVittore, Esq.
Jillian M. Petrosky, Esq.
Rhoads & Sinon, LLP
One South Market Square
th
12 Floor
P.O. Box 1146
Harrisburg, PA 17108-1146
Attorneys for Defendants