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HomeMy WebLinkAbout2009-4723 KENNETH F. KODADEK, : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA : : : : : : : : v. : : : : : : FRANK KODADEK, : NO. 09-4723 CIVIL Defendant : : IN RE: NON-JURY TRIAL ORDER OF COURT th AND NOW , this 12 day of December, 2011, after non-jury trial in the above captioned matter and in consideration of the post trial briefs filed by the parties, IT IS HEREBY ORDERED AND DIRECTED that the Court finds in favor of the Defendant, Frank Kodadek and accordingly judgment is entered in his favor. By the Court, M. L. Ebert, Jr., J. John M. Kerr, Esquire Attorney for Plaintiff Peter M. Good, Esquire Jessica E. Mercy, Esquire Attorneys for Defendant 2 KENNETH F. KODADEK, : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA : : : : : : : : v. : : : : : : FRANK KODADEK, : NO. 09-4723 CIVIL Defendant : : IN RE: NON-JURY TRIAL OPINION AND ORDER OF COURT Ebert, Jr., J., December 12, 2011 - Statement of Facts Plaintiff, Kenneth Kodadek, currently resides in LaPorte, Indiana and is attending 1 Valparaiso University School of Law. He expects to graduate in May 2012. Plaintiff is the son 2 of the Defendant, Frank Kodadek. For a period of approximately ten (10) years, Plaintiff and Defendant lived together at a property located at 9750 Upper Strasburg Road, Upper Strasburg 3 Township, Franklin County (“Franklin County Property”). The total payment for the Franklin 4 County Property was paid for by the Defendant. Because of Defendant’s financial difficulties, the Franklin County Property was titled solely in the name of Plaintiff. 1 Notes of Testimony, June 3, 2011, pages 10-11 (hereinafter N.T. __). 2 N.T. 12. 3 N.T. 12-13. 4 N.T. 13-14. In 2004, Father and Son moved from the Franklin County Property to 3298 Enola Road, 5 Carlisle (“Carlisle Property”). The Franklin County Property was sold and $36,000.00 from the 6 proceeds of that sale were used as the down payment on the Carlisle Property. The Carlisle 7 Property was jointly titled in the names of both Plaintiff and Defendant. Plaintiff lived at the Carlisle Property with his wife and daughter until November of 2007 at which time they moved 8 to 5 Mountainview Road in Carlisle before relocating to Indiana. During the time that Plaintiff lived at the Carlisle Property, Defendant paid all mortgage payments and taxes with the 9 exception of the first month. Eventually Defendant purchased a 2001 GMC 1500 step-side Truck (“GMC Truck”) and 10 1968 Oldsmobile convertible. These vehicles were purchased with Defendant’s funds, 11 however, both vehicles were titled in both Defendant and Plaintiff’s name. Given the father and son relationship between the parties one might consider this action totally altruistic, however, Defendant admitted that he did have ulterior motives. The following testimony is enlightening: By Mr. Good: Q: So you wanted, as a matter of estate planning, you wanted to add Ken’s name to the house even though the house was purchased in your name only? A: Even though I was told I could not do it, I made a deal with the title clerk. She understood --- Q: So the house, at your urging, after you bought it in your name, was re-titled in your name and Ken’s name? A: It wasn’t re-titled. She managed to catch it and get his name on it to the title. So he was a joint owner. 5 N.T. 13-14. 6 N.T. 13. 7 N.T. 13. 8 N.T. 10. 9 N.T. 108, 111. 10 N.T. 63, 102, 108. 11 N.T. 15. 2 Q: Was that the same thing, sir, with the automobiles? A: Absolutely. Q: So even though it was your money, you put his name on it for estate planning purposes? A: Not for estate planning. I had, I had a severe problem. In one of the properties that I owned, unbeknownst to me, I rented it to somebody that was what you would call a trip and fall expert. They sued me for x number of dollars, which I was never privy to. The word was coming out that they were going to take everything they could get. Q: You wanted to make yourself judgment proof by having your son on your assets? A: I took all the titles that were in my name only, I took them and Ken to, I guess it’s a title place where you get stuff like that done. And I had all of it, I had his name added so the titles that I had were no longer any good. New titles were issued with his name on it. Q: And was there any, ever any monetary contribution made by Ken for any of the automobiles that you owned? A: No. Q: Now, regarding the Enola Road house, who made the Mortgage payments on that house? A: I did. Q: Who paid the taxes? 12 A: I did. Defendant Father decided to sell the GMC Truck to Team Toyota in Langhorne, 13 Pennsylvania in Bucks County. The transfer of the title of this truck was done by Defendant 14 without his son’s signature. Plaintiff upon learning about the transaction, given his legal training and even though he knew he had not in any way contributed funds for the purchase of 12 N.T. 107-08. 13 N.T. 16. 14 N.T. 16. 3 15 the vehicle, decided to file criminal charges against his own father in Bucks County. A 16 preliminary hearing on the charges was held on Wednesday, April 22, 2009. The charges 17 against Defendant were dismissed. According to Plaintiff and his “common-law wife” Nicole Freysinger, Father called out to Son outside of the Magisterial District Judge’s Court in an act of apparent reconciliation in the 18 parking lot so that they could talk about settling the disputes between them. Plaintiff and his wife state that Defendant agreed to pay his son $20,000.00 in cash in exchange for Plaintiff 19 transferring his interests in the Carlisle Property and the 1968 Oldsmobile to Defendant. Plaintiff contends that he immediately accepted this “offer,” that there was a “meeting of the minds” and that upon his acceptance an oral contract was created. Defendant, on the other hand, while indicating that this arrangement would be acceptable, made it clear that the agreement was 20 contingent upon him being able to sell the Carlisle Property for $120,000.00 within six months. After the April 22, 2009 conversation between Plaintiff and Defendant, Plaintiff 21 contacted his attorney, John M. Kerr (“Attorney Kerr”), to draft a written settlement agreement. On April 24, 2009, Attorney Kerr forwarded an e-mail to Defendant’s attorney, Roger Morgenthal (“Attorney Morgenthal”), outlining the terms of the proposed settlement agreement 22 between Plaintiff and Defendant. On May 1, 2009, Attorney Morgenthal responded to Attorney Kerr’s e-mail confirming that Attorney Kerr would prepare a written settlement agreement for 23 review and include within that written settlement agreement a list of provided terms. On May 15 N.T. 17. 16 N.T. 17. 17 N.T. 17, 59. 18 N.T. 17, 89. 19 N.T. 18, 90. 20 N.T. 19. 21 N.T. 60, 62. 22 N.T. 75-76; Plaintiff’s Exhibit 6 (hereinafter Pl’s Ex. __). 23 N.T. 76-77; Pl.’s Ex. 17. 4 8, 2009, Attorney Morgenthal sent an e-mail to Attorney Kerr asking for an update on the status of the draft settlement agreement and asking if Plaintiff would be willing to apply a portion of 24 the $20,000 payment from Defendant to stop foreclosure on the Carlisle Property. Attorney Kerr responded that Plaintiff was absolutely unwilling to use any of the $20,000 payment to 25 bring the mortgage on the Carlisle Property current. Attorney Kerr and Attorney Morgenthal proceeded to draft, revise, and prepare a written 26 settlement agreement to be signed by Plaintiff and Defendant. Although Defendant was aware that Attorney Kerr and Attorney Morgenthal may have been working on preparing a settlement agreement, he did not know the process had begun and was never consulted about the terms used 27 in the written document. The e-mail correspondences and written settlement agreement did not include the contingent, condition precedent term requiring the Carlisle Property be sold within 28 six months for $120,000 as discussed between Plaintiff and Defendant on April 22, 2009. 29 Plaintiff and Defendant never signed the prepared written settlement agreement. Discussion Oral Settlement Agreement “There is a strong judicial policy in favor of parties voluntarily settling lawsuits.” Rothman v. Fillette, 469 A.2d 543, 546 (Pa. 1983); see also Manzitti v. Amsler, 550 A.2d 537, 543 (Pa. Super. 1988); Greentree Cinemas, Inc. v. Hakim, 432 A.2d 1039, 1041 (Pa. Super. 1981). A settlement agreement “may take the form of written agreements or oral statements, both of which are recognized as valid and enforceable.” Storms ex rel. Storms v. O’Malley, 779 A.2d 24 N.T. 79; Pl.’s Ex. 18. 25 N.T. 79; Pl.’s Ex. 18. 26 N.T. 81; Pl.’s Ex. 19. 27 N.T. 128. 28 N.T. 18, 73; Pl.’s Ex. 6-9, 17-19. 29 N.T. 84-85. 5 548, 557 (Pa. Super. 2001). “The enforceability of settlement agreements is ordinarily determined by general principles of contract law.” Id. The Superior Court has elaborated on the general principles of contract law, stating: Contemporary contract law generally provides that a contract is enforceable when the parties reach mutual agreement, exchange consideration and have outlined the terms of their bargain with sufficient clarity. An agreement is sufficiently definite if the parties intended to make a contract and there is a reasonably certain basis upon which a court can provide an appropriate remedy. Greene v. Oliver Realty, Inc., 526 A.2d 1192, 1194 (Pa. Super. 1987) (citation omitted). “An oral settlement agreement may be enforceable and legally binding without a writing.” Kazanjian v. New England Petroleum Corp., 480 A.2d 1153, 1157 (Pa. Super. 1984). “If parties agree upon essential terms and intend them to be binding, ‘a contract is formed even though they intend to adopt a formal document with additional terms at a later date.’” Johnston v. Johnston, 499 A.2d 1074, 1076 (Pa. Super. 1985) (quoting Courier Times, Inc. v. United Feature Syndicate, Inc., 445 A.2d 1288, 1295 (Pa. Super. 1982)); see also Compu Forms Control, Inc. v. Altus Group, Inc., 574 A.2d 618, 624 (Pa. Super. 1990) (“As we have recognized, if the parties agree on essential terms and intend them to be mutually binding, a contract is formed even though the parties intend to adopt a formal document later which will include additional terms.”). However, “it is essential to the enforcement of such an [oral settlement agreement] that the minds of the parties should meet on all the terms as well as the subject matter. If anything is left open for future negotiation, the [oral settlement agreement] cannot form the basis of a binding contract.” GHM Associates, Inc. v. Prudential Realty Group, 752 A.2d 889, 900 (Pa. Super. 2000) (quoting Isenbergh v. Fleisher, 145 A.2d 903, 907 (Pa. Super. 1958)). Additionally, the Superior Court has said “for a contract to be enforceable, the nature and extent of the mutual obligations must be certain, and the parties must have agreed on the material and necessary 6 details of their bargain” because “[w]hen performance under a contract is uncertain, the court will not write the contract for the parties.” Krebs v. United Refining Co. of Pennsylvania, 893 A.2d 776, 783 (Pa. Super. 2006). “When oral contracts are disputed, the issues of what was said, done, and agreed upon by the parties are ones of fact to be determined by the fact finder.” Id. at 783. “When there exists conflicting evidence as to whether the parties intended that a particular writing would constitute a complete expression of their agreement, the parties’ intent is a question to be resolved by the finder of fact-in this case, the [trial court].” Mazzella v. Koken, 739 A.2d 531, 536 (Pa. 1999). Therefore, this Court now turns to an analysis of the evidence on record to determine whether an enforceable settlement agreement existed between Plaintiff and Defendant. This Court finds no enforceable oral settlement agreement existed between Plaintiff and Defendant. Plaintiff and Defendant agreed to the essential terms of a settlement agreement but did not intend for their negotiation to be a binding oral contract. Both parties confirm that there was a “meeting of the minds” regarding the terms discussed on Wednesday, April 22, 2009, outside of the preliminary hearing at Bucks County. Both parties agree that the following terms were discussed: (1) Defendant would pay Plaintiff $20,000; (2) Plaintiff would transfer title of the Carlisle property and the 1968 Oldsmobile to Defendant; and (3) the transfer of payment for the titles was conditioned on the sale of the Carlisle property for $120,000 within six months. Although the essential terms were agreed upon, the parties did not have the intention to be bound by their discussion. The subsequent actions of both parties do not demonstrate an intention to be bound by the nd April 22 conversation. Plaintiff claims that both parties had agreed to, and were intending to be bound because an oral contract was formed. However, the actions of both parties and 7 nd representations through their respective attorneys demonstrate that the April 22 conversation was merely a starting point or a stage in the negotiation rather than a solidified oral contract. This th Court finds an April 24e-mail correspondence by Plaintiff’s Attorney, Mr. Kerr, to Defendant’s Attorney, Mr. Morgenthal, informative: Ken’s offer shall remain open for one (1) week, through May 1, 2009 … [i]f Frank Kodadek wants to end this ordeal, I need to have the funds by next Friday with a Settlement Agreement acceptable to the parties. Ken will perform his obligations at that time. If not, we will file our lawsuits the following week. Contrary to Plaintiff’s claim, the language of an “offer” remaining “open” for a period of time, as well as a need to reach an “acceptable” position with the threat of proceeding with legal action is indicative of an offer to settle rather than memorializing a settlement agreement that had already been achieved. Additionally, Attorney Morgenthal’s testimony reinforces the understanding that no settlement agreement was formed prior to the anticipated signing of a written document: Q: Did [Attorney Kerr] ever indicate to you at that point there was a binding oral agreement? A: I don’t think that there was any indication there was anything except the discussion and we, our job was to put it into a written form. * * * Q: Now looking back to Exhibit P-6, which is the initial e-mail from John Kerr to yourself, does John Kerr discuss that, that there will be a written settlement agreement being drafted? A: Yes, let me take a look here. Yeah, I need to have the funds with a settlement acceptable to the parties, which implies, yes, there will be something prepared that is signed. The record reflects an understanding that the parties had come to a “handshake” decision to further negotiate a settlement through their attorneys with the purposed terms they had discussed nd on April 22. The e-mail correspondence between their attorneys within two days of Plaintiff and Defendant’s conversation represents the hashing out of an actual settlement agreement. This 8 Court refuses to acknowledge that an oral contract was formed when the parties express nothing more than an “agreement to agree” with no intention to be bound by their conversation. Mazella, 739 A.2d at 535. Therefore, this Court finds that the Plaintiff and Defendant did not enter into an enforceable oral contract. Written Settlement Agreement Additionally, this Court finds no enforceable settlement agreement was created between the parties based upon the chain of e-mails between counsel. Plaintiff argues that even if an oral nd contract did not exist between the parties as of April 22, the parties were bound by a settlement agreement that had been formed through a chain of e-mails between counsel from April 24, 2009 to May 15, 2009. Although it is true that Attorney Kerr and Attorney Morgenthal, as of May 15, 2009, had reached a point in negotiations where they believed their clients were amicable to a settlement agreement, even Plaintiff’s counsel, Attorney Kerr, was of the understanding that the written agreement would be signed by the parties. The written settlement agreement that counsel had drafted was never signed by their respective clients. Therefore, considering “neither one of the parties trusted each other,” this Court finds that Plaintiff and Defendant did not have the intention to be bound by the negotiations of their counsel without first signing the written settlement agreement. Also, this Court finds that Attorney Morgenthal was never given explicit authority to enter into binding settlement agreement. As Plaintiff correctly stated, the Pennsylvania Supreme may Court is well settled on the law that an attorney bind his client to a settlement agreement when express authority has been given. See Reutzel v. Douglas, M.D., 870 A.2d 787, 789-90 may not (Pa. 2005). However, “[a]s such, a client’s attorney settle a case without the client’s grant of express authority, and such express authority can only exist where the principal 9 specifically grants the agent the authority to perform a certain task on the principal’s behalf.” Id. at 790 (emphasis added). In the case sub judice, the record does not reflect Defendant giving Attorney Morgenthal a specific grant to bind Defendant to any settlement agreement. To the contrary, Defendant testified as follows: Q: Did you understand that Mr. Kerr and Mr. Morgenthal were attempting to draft and create a written settlement document that both you and Ken would sign? A: I heard something of that. I didn’t know that it was actually taking place though. The record lacks any evidence that Attorney Morgenthal had the express authority required under Reutzel, and apparent authority will not meet the strict standard established by the Supreme Court to bind Defendant through Attorney Morgenthal’s actions. Id. (“Hannington’s statement that an attorney can bind his client to a settlement based on apparent authority alone is simply an incorrect statement of the law ….”). Therefore, this Court finds that no enforceable settlement agreement was formed through the chain of e-mails between Attorney Kerr and Attorney Morgenthal. Condition Precedent nd Finally, assuming, arguendo, a contract was formed orally on April 22, the contract never became enforceable because the condition precedent to sell the Carlisle Property for $120,000 within six months was not met. In Pennsylvania, “[i]t is well settled that if a contract contains a condition precedent, the condition precedent must occur before a duty to perform under the contract arises.” Keystone Tech. Group, Inc. v. Kerr Group, Inc., 824 A.2d 1223, 1228-29 (Pa. Super. 2003); see also Acme Markets, Inc. v. Federal Armored Express, Inc., 648 A.2d 1218, 1220 (Pa. Super. 1994). Although the parties may not have expressly used the term nd “condition precedent,” Plaintiff testified that Defendant made clear during the April 22 10 discussion that one of the terms of the agreement would be selling of the Carlisle Property within six months for $120,000. Plaintiff did not dispute Defendant’s condition requiring the sale of the Carlisle Property within six months for $120,000 and thought that they had an agreement at the end of their conversation. This Court finds that an oral contract formed through the conversations nd of Plaintiff and Defendant on April 22 must include the condition precedent of selling the Carlisle Property within six months for at least $120,000. See Acme Markets, Inc., 648 A.2d 1220 (“While the parties to a contract need not utilize any particular words to create a condition precedent, an act or event designated in a contract will not be construed as constituting one unless that clearly appears to have been the parties’ intention.”). A fair reading of the testimony clearly indicates that Father, Frank Kodadek, did not have the $20,000.00 cash to pay his son. Clearly the house had to be sold in order to have the $20,000.00 cash available for payment to son. The son’s continued insistence that the Carlisle property has a serious mold problem for all intents and purposes has made the property unsellable. Therefore, considering the Carlisle nd Property was never sold for at least $120,000 within six months from the date of April 22, a duty to perform under any contract never arose. Conclusion This Court finds that no enforceable settlement agreement formed between Plaintiff and Defendant. Accordingly the following Order is entered: th AND NOW , this 12 day of December, 2011, after non-jury trial in the above captioned matter and in consideration of the post trial briefs filed by the parties, 11 IT IS HEREBY ORDERED AND DIRECTED that the Court finds in favor of the Defendant, Frank Kodadek and accordingly judgment is entered in his favor. By the Court, M. L. Ebert, Jr., J. John M. Kerr, Esquire Attorney for Plaintiff Peter M. Good, Esquire Jessica E. Mercy, Esquire Attorneys for Defendant 12